SHRM Workplace Domain PDF

License Agreement By opening and using these SHRM Learning System for SHRM- CP/SHRM-SCP student materials (the “Materials”), the user (“User”) hereby agrees as follows: i. That the Society for Human Resource Management is the exclusive copyright owner of the Materials. ii. Provided that the required fee for use of the Materials by User has been paid to SHRM or its agent, User has the right, by this License, to use the Materials solely for his/her own educational use. iii. User has no right to print or make any copies, in any media, of the materials, or to sell, or sublicense, loan, or otherwise convey or distribute these materials or any copies thereof in any media. Acknowledgments SHRM acknowledges the contributions of its volunteer leaders and staff members who have served as subject matter experts for the SHRM Learning System for SHRM‑CP/SHRM‑SCP. Subject matter experts Cheronn Collins, SHRM-SCP, SPHR Independent Consultant Gaithersburg, Maryland, U.S. Susan K. Craft, MSHRM, SHRM-SCP, SPHR, GPHR President, Consulting by Design of Princess Anne Virginia Beach, Virginia, U.S Ed Hasan, EdD, MBA, SHRM-SCP, SPHR CEO and Managing Partner, Kaizen Human Capital Adjunct Professor, Georgetown University Tom O’Connor, JD, SHRM-SCP, GPHR, SPHRi Human Resource Director, North America, BK Medical Boston, Massachusetts, U.S. Dr. Patricia A. Sullivan, SHRM-SCP Leadership Coach/Culture Strategist St. Petersburg, Florida, U.S. Past subject matter experts Dennis Carr, MSIR, SHRM-SCP Chief Human Resource Officer, Lane Community College Eugene, Oregon, U.S. Jennifer C. Loftus, MBA, SHRM-SCP, GPHR, SPHR, PHRca, CCP, CBP, GRP National Director, Astron Solutions New York, New York, U.S. Introduction to Workplace Domain This domain in the SHRM Learning System® for SHRM-CP/SHRM- SCP includes four Functional Areas: Managing a Global Workforce, Risk Management, Corporate Social Responsibility, and U.S. Employment Law & Regulations. Throughout the module, brief scenarios, titled “Competency Connection,” describe how the Behavioral Competencies listed in the SHRM Body of Applied Skills and Knowledge™ apply to the Functional Area under discussion. While this module includes legal content, it should not be construed as legal advice or as pertaining to specific factual situations. No general statement of law, no matter how seemingly simple, can be applied to any particular factual situation without a full, careful, and confidential analysis of all relevant facts, the employer’s policies and practices, and the applicable laws of the jurisdiction(s) in which the employer operates. Key Point The content in this domain accounts for 14% of the SHRM-CP and SHRM-SCP exams. Managing a Global Workforce Managing a Global Workforce focuses on the role of the HR professional in managing global and mobile workforces to achieve organizational objectives. Managing a Global Workforce Technology continues to create a more globally connected marketplace. Some organizations are expanding beyond their borders and creating multicultural workforces. Others are creating multinational markets for their goods and services or multinational supply chains. Human resources can help organizations fully access the benefits that globalization can provide, but, to do this, HR professionals must understand the principles behind globalization and the varying ways that organizations can approach it. Having a global strategy is crucial to successfully navigating the global environment. Creating and following organizational policies on important issues such as moving work across borders can help avoid some of the issues that arise as organizations expand globally. Those policies require the support of HR leadership to create and help embed the policies throughout the organization. As organizations expand globally, they may need to assign employees to foreign positions. Properly selecting, placing, and supporting candidates from the beginning of their assignment through their successful return and readjustment is a key concern for HR professionals who are charged with the task of supporting that process. Globalization Proficiency indicators related to this section include: Administers and supports HR activities associated with a global and mobile workforce. Balances the organization’s desire for standardization of cross- border HR programs, practices and policies with local needs. Maintains up-to-date knowledge of political, economic, social, technological, legal and environmental (PESTLE) factors and their influence on an organization’s universal workforce. Consults with business leaders to define global competencies and embed them throughout the organization. Recognizes and responds to global PESTLE issues that influence the organization’s strategy and workforce. Key concepts related to this section include: HR structures that support global work (examples include immigration and mobility specialists; geographic centers of excellence; global job classifications; international business travel policies). Globalization Understanding globalization is crucial to functioning successfully in today’s global economy, as the speed at which global events occur and impact businesses continues to increase. This understanding includes the background and definition of globalization as well as factors affecting it, such as global crises. Competency Connection Fulfilling the HR function in a global organization can be especially challenging. Differences in cultures and laws can combine with the challenges of language barriers and communicating over physical distances. In the following story, a termination case exposed these difficulties within the HR function itself. This case argues for the need to develop HR competencies not only in Global Mindset but also in Business Acumen and Relationship Management. HR for a multinational company was headquartered in the U.S., with country HR managers in the countries of operation. In one of these countries, the HR manager wanted to terminate an under-performing HR specialist and was hitting various obstacles. A clear case could be made for termination based on performance alone. The specialist had committed numerous errors, had probably led to the departure of many of her own reports, and had scored poorly on a 360-degree evaluation. However, the specialist had recently become pregnant, and the country’s benefits for maternity (about six months’ leave with pay) and for protection from termination (until the child is one year old) were significant. To complicate matters further, the company was downsizing and several HR personnel would be terminated as part of the reduction in force. A local legal consultant recommended terminating the specialist as part of the downsizing. The specialist rejected the employer’s standard separation agreement, which was not as good as the maternity benefits that the specialist believed she was entitled to. Negotiations stalled. The country general manager was familiar with the culture of the HR manager and the HR employee and the country’s laws, appreciated the difficulty of the situation, and approved a settlement. However, the settlement also had to be approved by the HR VP, located in the U.S. The HR VP vigorously rejected the specialist’s agreement, saying that it was inconsistent with the company’s policies and practices. The VP’s perspective was based on the U.S. principle of employment at- will (EAW)—the company had the right to terminate employees without cause. EAW did not apply in the employee’s country, however. In addition, the VP’s authoritarian and independent cultural style conflicted with the HR manager’s more collaborative and collectivist style. Significant language difficulties and distance seemed to make these differences more difficult to manage. Eventually the VP agreed to an offer that included benefits “in recognition of previous contributions” the specialist had made. But the conflict over how to settle the claim had damaged the relationship between the VP HR and the HR manager, and, as the dispute dragged on, there was evidence that it had affected the employer’s image in this host country. Defining Globalization Author Thomas L. Friedman views globalization in terms of the extent and accelerating speed of integration, defining it as: The inevitable integration of markets, nation-states and technologies to a degree never witnessed before—in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before and in a way that is enabling the world to reach into individuals, corporations and nation- states farther, faster, and deeper, cheaper than ever before. Technology has been the primary driver of globalization, and it continues to advance at a considerable rate. There are a number of ways that globalization has changed, and continues to change, the way we work and live. Communications. The Internet in particular but also advances in mobile technology have connected the world as never before. Organizations are no longer bound by national borders or physical proximity when it comes to seeking out top talent or collaboration. Advances in communications have also increased the pace of work. Diversity. People are coming into contact with a greater diversity of ideas, cultures, methodologies, and business partners. As global trade relations have become more substantial, so too have cultural exchanges increased and organizational change accelerated. As other countries emerge as major players on the global stage (for example, China and India), they have been able to exert certain pressures and preferences on how organizations operate globally. Greater diversity (and competition) has also increased the need for training and coaching, especially cross-cultural training. Automation. Automation has been a factor in business for decades, but as technology advances, the opportunities for automation grow. Advances in artificial intelligence and machine learning technology also have made certain aspects of work more efficient and effective. These advances have allowed organizations to be more nimble in the face of changing requirements and/or crises. Competition. Increased competition can have both positive and negative impacts on peoples’ lives. On the one hand, it can offer access to new markets, ideas, and products as well as greater mobility for workers and capital. On the other hand, it can lead to greater outsourcing, which can have downward pressure on wages in an organization’s home country. No organization can afford to ignore or minimize the impacts that globalization can have on their work and on their employees. Recognizing the ways globalization has changed work will help HR professionals to craft effective policies and processes to manage a global workforce. Globalization Time Line There are several dates that could mark the beginning of modern globalization. There are also several events and developments that have marked considerable shifts in the global economic system. Some of these dates can be seen in Exhibit 4-1. Exhibit 4-1: Globalization Time Line Globalization Time Line 1944 Bretton Woods Agreement: The first fully negotiated multilateral trade accord; considered the start of modern global commerce. 1984 Introduction of Apple Macintosh: Turning point in the popularization of the personal computer (and in the merging of work life and personal life). 1989 Fall of the Berlin Wall: Free market economics flourishes as communism and Soviet-style economic systems collapse. 1990 First web page posted on Internet: Marks the start of today’s hyperconnected global community. 1994 Ratification of NAFTA: North American Free Trade Agreement becomes part of a wave of trade agreements encouraging and simplifying global commerce. 1996 Smartphones: First smartphone introduced by Nokia. 2002 Euro: Euro replaces most European Union (EU) member currencies. 2003- Tech companies: Formation of LinkedIn, YouTube, and Facebook; Google’s IPO; 2005 and Apple’s introduction of the iPhone. Global interconnection increases. 2005 Google Maps launched: Provides readily accessible and interactive maps and other information to both individuals and organizations. 2006 Google Translate launched: Helps break down language barriers, allowing for some growth in collaboration and greater culture sharing and understanding. 2008 Recession: Global recession begins. 2012 Global shift in FDI: Foreign direct investment flows into developing economies exceed flows to developed countries for first time. 2016 TPP: Discussions on the Trans-Pacific Partnership trade agreement cause impacts—even before the agreement is formalized and accepted internationally— and HR departments have to respond and prepare. 2016 Brexit: An abbreviation of “British exit”—June 2016 referendum by British voters to exit the EU. The referendum roils global markets and currencies; the British pound falls to its lowest level in decades. At this writing, Brexit continues to unfold. 2018 Tariffs: Following a national election in the United States, tariffs are rapidly announced and begin to be implemented. This causes a chain reaction of tariffs throughout the global trade market, which requires rapid responses by organizations. Globalization Time Line 2018 General Data Protection Regulation (EU privacy law): The enactment of the General Data Protection Regulation (GDPR) in the EU, which regulates how user data is stored and used within the EU, causes a cascade effect for organizations with a multinational presence. Even though it is enforced only within the EU, many organizations change their policies in every country to ensure compliance with the law’s regulations. Global Crises Global crises have made it apparent that the world itself is a system in which changes in one part can affect other parts. Economics. Although the recession of 2009 began in the U.S. financial industry (in 2008), by 2009 it had become a sharp global economic downturn that affected developed and, to an even stronger degree, developing economies. The interlinked financial markets weakened sources of capital, and the sharp reduction of imports by developed economies weakened developing economies, which in turn weakened exports from developed economies. Climate change. Changes due to rising levels of carbon dioxide and other gases do not recognize political borders. The trend has been toward recognition of climate change and acceptance of some of its causes. Economies have been acting individually and as groups to respond. Pandemics. Like epidemic, pandemic refers to a contagious infectious or viral illness that spreads. Unlike an epidemic, a pandemic is not limited to one specific geographic region. According to the World Health Organization (WHO) description, a pandemic has the potential to include millions of people in many areas and countries across the globe. The growing understanding and awareness of pandemics, such as the COVID-19, H1N1, Ebola, or Zika virus outbreaks, underscore the need for communication and concerted global response—both during outbreaks and to prepare for outbreaks. Changes in governmental power. When the controlling party of a government changes, the new party may work to enact new policies concerning things like economics, trade, and immigration. If these policies are markedly different from previous policies, and if they are made rapidly, without allowing for countries and organizations to provide input, respond, or adjust, they may cause major issues across the world. Each of the above examples can affect HR, often in many different areas. No matter what the global crisis is, organizations must be prepared to understand and respond adequately. Crises may interplay with one another, too—for example, governmental power changes can lead to an economic crisis or climate change effects can spur a governmental power change. Global Forces When examining global forces that are shaping globalization today, it may help to understand the following overarching considerations. Global forces require careful analysis. HR should strive to understand which globalization events, forces, and trends are significant for a given organization and for HR responsibilities within that organization. It is important for HR to distinguish between large-scale forces and trends and more immediate events and “trendy” phenomena. All may be important and/or have a critical impact, but they need to be understood and interpreted differently. Global warming is different than, say, Hurricane Katrina or the Japanese tsunami of 2011. Likewise, the impact of social networks is different than the sudden popularity of LinkedIn over Facebook. Global forces should be viewed in terms of their connections. While the various forces shaping globalization can be labeled as PESTLE (political, economic, social, technological, legal, and environmental), these factors are in reality interconnected and can be fully understood only in light of such connections. Consider global warming as an example. It is an environmental phenomenon with social ramifications, but it is shaped by economic forces and political actions (or inaction) and by legal and technological responses. HR should understand the unique ways in which each significant global force, event, or trend is affecting: The parent organization’s home office and its various subsidiary or host countries. Its industry and competitive landscape. The organization’s overall goals and strategies. The role HR must play if the parent organization is to maximize the benefits and minimize the costs of that force, event, or trend. Global forces have unique cultural connotations. While the effects of a given globalization force are global, their impact may be uniquely felt by different cultures, industries, and organizations. To consider global warming again: It differently affects developing vs. developed countries, nonsustainable (oil, coal) vs. sustainable (wind, solar) industries, etc. The Global Organization The new global enterprise may be a corporation, a governmental agency, a nongovernmental organization, a nonprofit, an association, or an educational institution. It may be large or small, multinational in structure or simply engaged in international trade—a large Swiss pharmaceutical company with subsidiaries around the world or a Chinese firm with a few hundred employees that creates online gaming applications used by companies located around the world. In Going Global, editor Kyle Lundby defines the successful global organization as one that can “effectively leverage and capitalize upon [its] global footprint” by incorporating four structural/strategic components: Physical dispersion—the organization operates in multiple countries Diversity of thought, people, and culture that is actively leveraged by a strategic objective Unified through a clear single organizational identity Global for a reason; self-aware of their global reach and leveraging geographic and cultural diversity to achieve success as they have defined it As enterprises have become global, they have also learned that globally integrated organizations can often be more innovative. A global workforce contributes distinctive perspectives and processes to the entire learning organization. The research division of an American multinational technology company, for example, operates research centers in China, Egypt, Germany, India, Israel, the United Kingdom, and the U.S. Although this decision may have been made for many reasons, these worldwide research centers contribute to the organization’s character and increase its global competitiveness. The Role of Global HR Whatever an enterprise’s structure or scope might be, globalization offers both challenges and benefits. Leaders must develop strategies that align the organization’s objectives and resources with different countries’ operational, legal, and cultural requirements. The global HR professional will play a major role in supporting strategic management by: Participating in creating the organization’s particular global strategy. Aligning HR processes and activities with the organization’s global strategy. These activities include: Attracting and retaining leaders and employees with the knowledge and skills needed to implement the organization’s strategy. Developing an organizational awareness of globalization and an appreciation of the organization’s constituent cultures. Implementing processes to increase integration and exchange of knowledge. Enhancing communication between the organization and its stakeholders. Ensuring that the HR function possesses the skills, knowledge, and resources to fulfill its global role and demonstrate its value in global strategic management. Adapting processes as needed to the cultural and legal contexts of each area of the global organization. Given the complexity of cultural and legal frameworks, an HR professional may consult with local experts and the organization’s legal counsel. To better understand such legal advice, it may also help to perform preliminary research on the laws of the particular countries with which your organization does business. Global Strategy Proficiency indicators related to this section include: Administers and supports HR activities associated with a global and mobile workforce. Balances the organization’s desire for standardization of cross- border HR programs, practices and policies with local needs. Designs and oversees programs for international (i.e., expatriate) assignments that support the organizational strategy and workforce. Develops a comprehensive organizational strategy that addresses global workforce issues. Establishes and oversees the organization’s immigration and mobility policy and program in accordance with regulatory or compliance requirements. Identifies opportunities to achieve efficiencies and cost savings by moving work across borders. Key concepts related to this section include: HR structures that support global work (examples include immigration and mobility specialists; geographic centers of excellence; global job classifications; international business travel policies). Methods for moving work (examples include offshoring; onshoring; nearshoring; remote teams). Global Strategy Pursuing business expansion across borders involves considerable financial and strategic risks and investment in and deployment of resources. Such costs and risks help explain why formulating a globalization strategy is a critical precursor to global expansion. An organization may experience both positive and negative effects of these efforts, so it should have compelling reasons for global expansion. Competency Connection Global organizations challenge maintaining consistency and fairness throughout all of the organization’s locations. The following scenario shows how one HR function, at all levels, failed to anticipate these challenges. A multinational business maintained a manufacturing facility in a host country. The HR manager in the host country was responsible for hiring employees for a unit that provided services to the manufacturing function. These employees performed tasks that were demanding, required special training, and involved handling sensitive data. Some of the employees were part-time and had been with the company for over ten years. The business underwent restructuring that resulted in moving half of this unit to another country and automating the remaining half. All of the part-time employees lost their jobs. Throughout the restructuring, no one from headquarters had communicated with the host-country HR manager. There were rumors about possible changes, but when headquarters announced the unit’s closure and the employees’ termination, the part-time employees were shocked and distressed about their future. One of the affected employees e-mailed the HR manager in the host country and asked for a letter of recommendation. The HR manager declined the request, saying that it was not the organization’s policy to issue recommendations for part-time workers. The employee then directly contacted the HR director at the organization’s global headquarters and pointed out that the company had previously issued recommendation letters to part-time employees at a different site in the host country. Why were these employees being treated differently? The HR director issued the recommendation letters and apologized for the inconvenience. The HR director then blamed the host-country HR manager for the misunderstanding. The manager received a poor annual performance assessment and was denied promotion. The organization’s employer brand in the country suffered as well since its treatment of part-time workers was technically legal but not consistent with local business practices. The problem here started with the failure of HR headquarters to anticipate the impact of restructuring and to involve local HR managers. Business Acumen could have been used to predict and plan for possible outcomes. Global Mindset might have prepared the HR function for differences in business practices and legal requirements in its global operations. The Communication competency could also have been used to prepare the country HR managers and employees for possible changes. The HR organization failed to provide either standardized policies about the rights of part- time employees or guidance about the need for consistency in applying local policies. The host-country HR manager also could have done a better job, using the Leadership & Navigation competency to become more active in the change and more aware of employees’ needs. Push and Pull Factors for Globalization Global HR must understand an organization’s globalization strategy and orientation and how these characteristics influence global HR activities and then develop and implement appropriate HR strategies. Understanding the reasons for global expansion can help explain an organization’s subsequent strategic decisions about how to globalize. These reasons tend to fall into categories of “pushes” and “pulls.” Organizations may have been pushed toward globalization in reaction to changes in the business environment. They may have been pulled toward change through the promise of achieving greater organizational value through globalization. Some of the factors described in Exhibit 4-2 embody both push and pull motivations. Exhibit 4-2: Push/Pull Factors Push Factors Factor Definition New markets When domestic market opportunities are exhausted, organizations look overseas for new customers and opportunities. Cost pressures and Globalization has become a way to cut costs and maintain competition profitability—for example, through offshoring for labor or to move production closer to markets. Natural resources Sometimes it is more economical to relocate operations closer to and talent supply new sources of necessary resources. Government Relocation may be due to burdensome laws or regulations or may policies exploit opportunities only available in other markets/regions. (This strategy can be risky and can lead to a backlash in public relations.) Trade agreements When foreign competitors gain access to domestic markets, local firms are compelled to expand their markets elsewhere. Globalized supply Organizations might discover that following a client or customer chain overseas makes more business sense than maintaining domestic or existing production/facilities. Pull Factors Pull Factors Factor Definition Strategic control A multinational presence can give an organization greater control over its business (production, branding, sector consolidation, etc.). Government National policies that promote economic expansion (for example, policies China’s “Going Out” policy)—could include tax incentives, special financing terms, or investor risk insulation. Trade agreements These agreements can open markets and promote workforce mobility; they can also lower risks by enforcing laws, regulations, and treaties (for example, intellectual property protections). Strategic Approaches to Globalization An enterprise may “go global” or internationalize in different ways— through, for example: Creating a new entity—either by purchasing an already existing operation (a turnkey operation), by building a new operation from the ground up (a greenfield operation), or by repurposing an existing disused facility (a brownfield operation). Acquiring a subsidiary that will be wholly owned and operated through merger and acquisition. Entering into an alliance or partnership. Outsourcing all or specified tasks to a supplier or performer in the new market. Offshoring an existing capability to the new location. Offshoring is a distinctively global expansion tool; it is discussed in more detail elsewhere. The attractiveness of each strategy depends on many factors, including: The enterprise’s core strategic goals. Its capabilities and resources, both economic and organizational. The distances (physical, cultural, legal, sociopolitical) that the enterprise will have to bridge. Responses to given globalization pushes or pulls may be more tactical than strategic—a move to lower taxes or reduce production costs—or they may speak to larger strategic considerations. But no organization can long succeed with only a succession of tactical reactions to whatever pushes and pulls may come along. A comprehensive business strategy, enabling coordinated responses and proactive measures, is needed for success. So it is with globalization. Perlmutter described four orientations for multinational corporations, which are explained in Exhibit 4-3. Exhibit 4-3: Perlmutter's Four Multinational Corporation Orientations Orientation Definition Orientation Definition Ethnocentric Headquarters maintains tight control over subsidiaries, who are expected to follow the strategic pattern, values, policies, and practices expressed by headquarters. There is “one best way.” Management will usually share a common ethnic background, different from the ethnic make-up of subsidiaries. Polycentric Subsidiaries are allowed a large measure of independence as long as they are profitable. They may plot their own paths based on the business and cultural contexts of their countries. There are “many best ways.” Regiocentric Subsidiaries are grouped into regions (such as Europe, North America, or Asia-Pacific). Strategic coordination is high within the region but not as high between the region and headquarters. Geocentric Subsidiaries are neither satellites taking orders nor independent bodies setting their own course. Headquarters and subsidiaries are participants in a network, each contributing its unique expertise. There is essentially “a team way,” transcending national borders. Perlmutter’s global orientations are evident in the structural strategies of global organizations. There are a range of strategic options available to organizations that wish to (or find they must) compete in the global market. Global Integration vs. Local Responsiveness Organizations that choose to compete beyond their national borders develop strategies to meet the needs of their customers and expand their growth opportunities. These needs are commonly expressed as drives toward global integration or local responsiveness, and a broad range of global strategies is possible within the continuum this pair presents. Global integration (GI) emphasizes consistency of approach, standardization of processes and products, and a common corporate culture across global operations. It allows organizations to take advantage of standard processes and economies of scale to achieve greater efficiency, which can lower costs of operation, create greater pricing flexibility, and increase profit. For example, standardization of technology across global markets rewards companies that are successful in maintaining control and consistent quality levels. Global integration can be achieved in multiple ways: People. A focus on alignment helps to ensure that decisions made locally reflect the global perspective. Assignees, employees who work outside their home countries, have traditionally played a significant role in carrying the message and focus from headquarters into the organization’s global locations. Processes. Standardized processes, supported by technology that enables communication and transparency, support organizational control over strategic parts of the value chain. Performance. Performance targets and rewards are defined from a global perspective. This creates greater control over organizational activity and also helps avoid potential conflicts between individual performance objectives—for example, sales targets in one region that will damage efforts in other regions. Culture. Shared visions and values prepare members of the organization to make everyday decisions in a manner that is consistent with a global identity. Local responsiveness (LR) emphasizes adapting to the needs of local markets and allows subsidiaries to develop unique products, structures, and systems. It can make organizations more flexible and agile—equipped to identify and capitalize quickly on local market opportunities, correct misalignments of products and services with customers’ desires and habits, and adjust to local regulations and business practices. In an industry heavily influenced by cultural factors, such as clothing or food, global participants must be skilled in adapting their offerings to cultural preferences in their markets. Developing local management is key to achieving local responsiveness. Evans, Pucik, and Björkman have described the strengths of local responsiveness as: The ability to respond to local customer needs (for example, the tailoring of a global fast-food menu to reflect local tastes) or the demands of local distribution (for example, temperature sensitivity, unit sizes, packaging). Efficiency gained from using local substitutes (for example, a transnational food and beverage company varies the content of its infant cereal products by region: wheat in Europe, soy in Asia). The ability to remain compliant with local laws and regulations (for example, hours of operation, marketing strategies). This same basic choice between global and local considerations will apply regardless of the size and scope of the organization or its particular organizational structure or goals. While many factors lead to an organization’s strategic decisions, the choice of whether to emphasize global integration or local responsiveness is generally determined by a mix of four drivers, as shown in Exhibit 4-4. Exhibit 4-4: Four Drivers of Globalization Strategy Types of Drivers Examples Types of Drivers Examples Market Homogeneity of customer needs Availability of global distribution networks Opportunities for shared marketing Cost Economies of scale Transportation costs R&D costs Transferable technology advantages Governmental Trade policies Technical standards and requirements Regulatory climates Competitive Extent and methods of globalization by industry competitors The attraction of global integration is growing as borders become more permeable and the concept of a global consumer becomes more real. There are industries where there is little value in standardization of processes or economies of scale, especially in comparison with the value generated by stronger local ties. Cement companies, for example, rely heavily on local country resources and production. Similarly, in regulated industries such as petroleum exploration and marketing, the advantages of local responsiveness are significant. A company that is perceived as local may have more access to decision makers and more influence on policy and regulations. However, an abrupt change in the local political structure can have a strong impact on the locally responsive organization. There are strong arguments for both global integration and localization. However, the often-expressed warning to “think globally, act locally” reflects a belief that the best course is to strike a balance between these alternatives that fits each organization at each point in its life. GI-LR Matrix of Global Strategies A number of scholars have contributed to a conceptual grid (shown in Exhibit 4-5) that describes the strategic orientations of multinational enterprises (MNEs). The matrix describes ways in which an organization can combine GI and LR elements into a single globalization strategy. The grid has two axes, global integration (vertical) and local responsiveness (horizontal), that form a matrix containing four strategic options for MNEs: international, multidomestic, global, and transnational. Exhibit 4-5: Structures for Globalization Go to long description. Multiple sources, including Briscoe, Schuler, Tarique; Bartlett and Ghoshal Each strategy has a characteristic organizational philosophy about how headquarters and the various local subsidiaries relate to one another and where and how local activities are controlled. Each of these structures is discussed in Exhibit 4-6. Exhibit 4-6: Globalization Strategies Globalization Strategy Description Globalization Strategy Description International A firm exports a product or service to foreign countries. The company may open production facilities or service centers, but the product/service, processes, and strategy are developed in the home country. Examples: A German firm that manufactures robotics for specialized industrial purposes around the world; an American- based defense contractor, that, for security reasons, must maintain clear lines of separation among its various international subsidiaries. Multidomestic The organization is a decentralized portfolio of subsidiaries. Goals and strategies are developed locally because of competitive demands. Knowledge is shared on a local rather than global level. Example: A confectionery company, with different products and manufacturing and sales strategies for each market in which it operates. Global The firm views the world as a single global market and offers global products that have little or no national variation or that have been designed with customizable elements. Strategy, ideas, and processes emanate from headquarters. Example: A white goods manufacturer whose products are quite standardized (washing machines, dishwashers, etc.). Transnational The firm locates its value chain activities in the most advantageous geographic locations. Subsidiaries are allowed to adapt global products and services to local markets. Best practices and knowledge are shared throughout the organization. Example: A cosmetics company that markets products specifically to different regions and prioritizes diversity in talent acquisition. Two Other Approaches As the preceding content suggests, global integration and local responsiveness strategies are rarely a matter of simple either-or choices. GI and LR strategies can be achieved in different ways and are not mutually exclusive. Some organizations use both. Analysts have found different ways of describing and organizing the range of strategic choices available within that basic GI-LR continuum. Two are described here: upstream and downstream strategies and identity and process alignment. Upstream and Downstream Strategies Briscoe, Schuler, and Tarique use an upstream/downstream metaphor to describe different ways to apply these strategies. Upstream and downstream strategies are summarized in Exhibit 4-7. Exhibit 4-7: Upstream and Downstream Strategies Description Implications for Global HR Upstream Decisions are made at the Strategies for: organization’s headquarters level. Workforce alignment Decisions apply to strategy and Organizational development coordination and focus on Sharing of knowledge and experience standardization of processes and integration of resources. Downstream Description Implications for Global HR Decisions are made at the local level. Strategies for: Decisions aim at adapting strategic Agreements with local workforce goals and plans to local realities—in groups other words, local responsiveness. Adjustments to standard policies on working conditions to reflect local cultural practices (for example, holidays and break times) Adjustments based on local legal requirements Source: International Human Resource Management, Briscoe, Schuler, and Tarique Identity Alignment and Process Alignment In Going Global, Kyle Lundby and Jeffrey Jolton distinguish between identity alignment and process alignment, as summarized in Exhibit 4-8. Exhibit 4-8: Identity Alignment and Process Alignment Strategies Description Challenges Identity Alignment Description Challenges Extent to which: Unless corporate brand is well- established, localized offerings Diversity is embraced in management of may dilute brand. people, products/services, and branding. Local approaches may diffuse Differences among locations are embraced. core identity. Product/service offerings and brand identity may be adjusted to accommodate local cultures. Example: Global fast-food chains offer localized menu options in addition to standard menu items. Process Alignment Extent to which underlying operations such as IT, Businesses built through finance, or HR integrate across locations. acquisitions often have separate Example: Business where units have a common processes; tendency is for each platform: unit to operate independently and retain many of its original Single technology used in all locales. practices. Same business performance metrics in all locales. Unified HR systems in place in all locales. A key point of the identity/process distinction is that a given organization can have a diverse identity alignment but an integrated process alignment, or vice versa. For instance, no matter how localized the offerings on the menu at a global fast-food chain are, the underlying processes that deliver them may be highly integrated. This integration includes HR policies and practices. Moving Work Across Borders With the advent of globalization, moving work has become a worldwide practice. Many terms are a part of that landscape; some are often confused, including outsourcing, offshoring, onshoring, and near-shoring. Dealing with the functional, structural, and strategic aspects of moving work puts HR in the spotlight, so we’ll also explore HR’s role. Outsourcing Outsourcing (sometimes referred to as “contracting out”) is a practice where a company transfers portions of work (for example, processes or production) to outside suppliers rather than completing it internally. Generally, outsourcing contracts out (or subcontracts) activities with the goal of reducing costs and freeing up personnel and resources for other activities. Example: By outsourcing its customer support service function to an external vendor, a manufacturing company is able to reduce operating expenses and use some of the cost savings to increase its marketing and sales budgets. When a company outsources, it does not necessarily mean that a process or product is outsourced abroad, although it may be. In that regard, outsourcing is actually an umbrella term for several types of external work arrangements. Offshoring, onshoring, and near-shoring all are different forms of outsourcing. The key difference among these three is the location of the outsourcing. Offshoring As the name implies, offshoring is the practice of relocating processes or production to another country. Common reasons for offshoring include: Lower costs (for example, lower wages, less expensive facilities). Closer proximity to necessary production resources. More favorable economic climate for corporate taxation. Financial incentives (for example, direct cash payments, low- interest loans). Historically, offshoring has largely involved movement from developed countries to distant developing countries. Example: A United Kingdom financial services company opens a facility in Thailand to perform back-office banking transactions for its U.K. operations. The move results in significant cost savings from lower regional labor and facilities costs and various financial incentives. Offshoring typically involves relocating an operational process or service that is relatively self-contained. Considering the scenario above, the U.K. business might determine its requirements for banking transactions locally and then hand these over to the Thai operations. In Managing the Global Workforce, Paula Caligiuri, David Lepak, and Jaime Bonache propose other reasons (beyond those noted above) for offshoring: Access to talent. As developing countries have increased investment in education and training, they are becoming sources of scientific and technological expertise and innovation. Round-the-clock shifts. Having offshore shifts operating 24 hours a day can improve efficiency and reduce costs of operations. This can enable enterprises to deliver 24-hour customer service, such as call center access. Follow the sun. By taking advantage of time zone differences, work can proceed on a given project without interruption. As one group’s workday ends, the project is handed off to an offshore group in another time zone. This can decrease design and development time, allowing products to come to market sooner. The motivations for offshoring—and, consequently, where it is taking place and which firms are adopting it as a global strategy—are changing as a result of globalization forces. For example, the cost- saving dynamic from developed to developing countries is changing. Wages in India and China are rising steadily, which can reduce cost-saving benefits but might result in a growing market for products and services. Countries such as Vietnam, Indonesia, and the Philippines have kept wages low, but they lack efficiencies, scale, and supply chain—which incurs its own costs. The costs of shipping goods back by sea have risen sharply, and the weeks spent in transit add further costs. Robotics and other automation innovations have reduced labor’s share of total production costs. Offshoring can lead to political fallout in developed countries, as jobs are “shipped overseas” at the expense of home-country workers. In short, calculating the cost savings of offshoring has become more complex. Offshoring Risks and Challenges For all the potential benefits of offshoring, there are also multiple risks and challenges. Besides the potential political fallout mentioned above, additional risks and challenges associated with offshoring include: Cultural differences. Distance issues (for example, different time zones and getting remote teams to work together). High turnover rates. Problems in quality control. Technical degrees that do not reliably indicate actual technical skills. Language issues. Intellectual property loss. Impaired productivity due to political instability. Loss of reputation from unethical behavior or practices of local management. Onshoring True to its name, onshoring refers to the relocation of business processes or production to a lower-cost location inside the same country as the business. Sometimes called “home-shoring,” onshoring can also include the situation where businesses allow employees to work from home. Beyond the potential for lower operations costs, onshoring offers the added benefits of having local employees and avoiding many of the problems associated with distant offshoring scenarios. Example: An organization chooses to onshore activities that require deep process knowledge, direct customer interaction, the need to be close to customers, and the ability to communicate fluently in the same language. Near-Shoring Near-shoring refers to a company contracting a part of its business processes or production to an external company located in a country that is relatively close (for example, within its own region). For example, U.K. businesses might near-shore to Eastern Europe, or U.S. businesses might near-shore to Mexico or Canada. Considerations in near-shoring are that neighboring countries are often bound by similar financial and legal constraints or trade agreements that provide social and economic stability within a region. Countries that are closer in proximity are more likely to have shared cultural values and a similar mindset. And, the time difference is less and the cost to travel is reduced (compared to offshoring). Remote Teams As globalization’s influence on business and work continues to expand and evolve, organizations have become more reliant on geographically dispersed teams in order to better compete and succeed. Doing so allows organizations to draw on diverse experiences, perspectives, and knowledge that can spur innovation and improve business outcomes. HR professionals must be familiar with the interconnected challenges presented by remote teams and incorporate their specific requirements into plans and strategies. These challenges can include: Communication. Dispersed teams present a number of challenges when it comes to planning communications—most commonly, languages, technological constraints, and time zones. When communications challenges are not properly planned for and addressed, team discourse and interactions can easily deteriorate. Engagement. Remote team members can feel disconnected from the work and the wider team. It is essential that policies are established to bridge the physical distance. Remote teams must feel that they are connected to the organization and its leaders and that their concerns and feedback are not only heard but valued and reach the right audience. Building trust. Trust is essential to the proper and effective functioning of any team, but it can be difficult to build trust between geographically scattered teams. In addition to causing fatigue, excessive levels of communication may hamper trust building if the remote team gets the sense that headquarters feels the need to manage them more closely than their on-site peers. Alignment. Team members need to be on the same page with regard to understanding their individual and organizational goals, their roles within the team, the resources available to them, and the organization’s expectations in relation to personal interactions. The ability to maintain team alignment is closely linked with successful communications, as language differences or other disconnects can exacerbate misalignment. HR professionals with the Global Mindset competency will be able to adjust their behaviors to suit other cultures and create solutions to help bridge any differences. Strategies that can be used in order to address these challenges include: Communications reviews. It is important to ensure that communications with remote teams are effective and provide value. Periodically, communications plans should be reviewed to ensure that they are encouraging the desired engagement from others. For example, are all team members able to contribute appropriately? Should you incorporate follow-ups with team members whose first language is different to ensure that there’s been no miscommunication? Similarly, review how often and which media you are using. Are videoconferences the best tool, or are emails sufficient for check-ins? Is your remote team getting videoconference fatigue? Are they feeling micromanaged from afar? Getting these right will help maintain engagement and trust. Cross-cultural communication and diversity training. By employing cross-cultural communication and diversity training, an organization can minimize the adverse effects of cultural and linguistic differences. Providing this training can also help to prepare leaders for site visits. Site visits. One should not underestimate the two-way value of traveling to visit remote teams. When a leader travels to see a remote team, it can improve team engagement and connection, build trust, and ensure that the team remains in alignment with the organization’s goals. It can also improve headquarters’ understanding of the remote team’s work conditions, dynamics, personalities, and practices and of the local customs and culture, and it can generate reflective knowledge, in which the visitor gains insight into how they themselves are seen by others. When team members get to know each other, collaboration becomes more effective, smoother, and easier. Careful planning must be done to provide the best return on investment. HR’s Role in Moving Work Across Borders Whatever the current global climate may be, any organization considering moving work needs a clear sense of what it hopes to accomplish, what it needs from the venture, and what risks the venture entails. There are no cost-saving guarantees for any strategy, especially if it is poorly planned or executed. Example: A U.S. company moves a segment of its manufacturing to Malaysia. The product will be exported back to the U.S. While some costs associated with production decrease, there are other expenses that potentially mitigate the savings, such as increased management costs, travel costs, and additional rework expenses due to misunderstandings or quality control problems. Because so many of the factors for choosing one location over another relate to workforce and talent issues, HR plays a critical role by performing due diligence to support the decision to move work. Exhibit 4-9 highlights key areas for HR research during the due diligence period. While all of these considerations apply to offshoring, not all of them may be relevant in onshoring or near-shoring scenarios. Exhibit 4-9: HR Due Diligence for Moving Work Due Diligence Topics for Moving Work Cost and quality Risk levels Wage structure relative to other Political and labor unrest options Natural disasters Tax structure IT security Real estate Personal and property security, Infrastructure (examples include intellectual property rights telecommunications networks, Economic stability, including fluctuations transportation, energy) in currency exchange value Regulatory stability Sociopolitical environment Government receptivity, amount of Talent pool regulation Language and cultural differences Ethical environment of political and Size of labor force with required skills business communities Size of offshore sector and share of Quality of life exports Accessibility Availability of vendors for specific services, such as IT Overall, outsourcing has proven to be a great business model for reducing operating costs, boosting profit margins, and so forth. Which type of outsourcing works best depends on the organization’s goals, business processes, risk management strategies, and other factors. However, it is always harder to manage remote operations. The option chosen will determine the types of issues that will need to be addressed. Issues related to moving work across borders include immigration, global job classifications, business travel, and the use of geographic centers of excellence. Immigration HR professionals must familiarize themselves with immigration requirements and restrictions in order to support business in a global environment. This is true not only for moving work overseas but also for bringing foreign talent to the home country, sending team members for site visits, and hiring international contractors. Immigration policy is often altered by political leadership shifts, which can make it a volatile policy area prone to sudden changes. For example, regular national elections in countries such as the United States and the United Kingdom have resulted in stark, oscillating changes to their immigration laws in recent decades. These changes may result in additional burdens associated with travel to these countries for some prospective employers, employees, and tourists, depending on their nations of origin and whether the travel is for business or leisure purposes. Every country’s immigration policies are different, and applying for visas can be costly and time-consuming. There are a few general practices that all HR professionals should follow in order to better navigate any immigration requirements they may face. Stay connected. HR professionals should ensure that they keep abreast of any news, changes, and developments in immigration and global employment regulations. Understanding the nuances of immigration policy is a major challenge for HR, and it requires dedicated care and attention to stay current with changing rules. Some industry groups offer up-to-date information regarding these issues, and networking and engaging with other professionals can also provide useful information. Track employees. It is important for all organizations to have a system for tracking their employees’ immigration status and their location. Whether bringing a foreign worker to your home country, sending someone overseas, or contracting work to an international freelancer, HR must keep a database that clearly defines their role, their destination or location, and the parameters of any visas (duration, limitations, etc.) or work regulations. Conduct self-audits. HR should commit to periodically auditing its own processes and practices and also examining the experience of employees who are working with visas, are overseas, and so forth. While especially important during times when immigration politics are turbulent, it is good practice to ensure that policies, paperwork, and processes are in line with current legislation and best practices. It is far better to have everything in order before an immigration officer orders an audit. In addition, audits can identify improvements or refinements that should be instituted. Consider legal advice. In some circumstances, immigration law might be opaque. In these cases, it is worthwhile to hire outside counsel to avoid future costs from complications, mistakes, delays, or other pitfalls. If information is not readily available or if a situation is unclear, it is best to seek expert advice in order to avoid problems down the line. Global Job Classifications Not all countries use the same terminology for job roles, nor do all organizations across the globe use the same or similar structures and hierarchies. To better facilitate HR functions across a global organization—for example, workforce planning, promotions, crafting candidate profiles—HR professionals will have to become familiar with global job classifications and implement a job-leveling scale for their organization. Understanding global job classifications allows HR professionals to more clearly identify the relative value of a job position in the organization, regardless of where the work is done or local conventions. As organizations grow globally, the ability to properly identify and define jobs can help the organization ensure that it is properly structured, eliminate redundancies, increase effectiveness, avoid excess costs, and ease decision making. It can also ensure that hiring, remuneration, and rewards policies are fairly applied across the organization, regardless of branch or job location. HR can use industry-recognized job classifications or grades, or it might create its own depending on the nature of the work that the organization does. To do so, HR would need to gather information related to expected skill levels, compensation, and responsibility and compare accordingly. As an organization grows, or expands into ever-more territories, it is important for HR to revisit and refine any grading system it uses. Business Travel Over time, HR has become more involved in business travel management. With greater use of business travel, HR can play a pivotal role in crafting appealing and effective business travel policies. Clear travel policies can help organizations mitigate or avoid certain risks inherent in business travel. An appealing travel policy can also be used to attract top talent and make it clear that the organization takes its employees’ well-being on the road seriously. To perform this role, HR should establish a travel risk management plan and a travel orientation procedure. An organization’s travel risk management plan should include all relevant details regarding legal, security, and medical risks related to business travel. Some information will be general and applicable to all (or most) business travel. Plans will also need to include information tailored to the specific destination country. Common components include the following: Communication. The plan should include procedures for communicating the necessary contents of the plan and procedures to all relevant stakeholders. This includes providing information and documentation before, during, and after the trip and also providing information related to travel policy updates or changes based on legal, medical, or other reasons. Legal considerations. The plan should include information on the legal considerations related to business travel. Depending on the destination, this might include what type of visa or work permit is required, what prohibitions and restrictions there are on business travelers, and what work might result in taxation or legal scrutiny (for example, can deals be finalized by business travelers or are they limited to meetings and negotiations). Duty of care. The plan should include details relating to duty-of- care provisions. Organizations have a responsibility to look after their employees and, if applicable, the family members who accompany them on assignments. This duty begins before the travel takes place and can be incorporated into the orientation procedures. HR has to ensure that proper care is taken of traveling employees, ensuring that they have access to the resources they need to facilitate comfortable, productive, and safe business trips. Compliance checks. The plan should include checks to ensure that the traveling employee is adhering to the organization’s travel policies, visa obligations, and local laws. Similarly, the organization should ensure that their own procedures are in compliance (for example, paperwork and documents, fees payments). Travel reviews. The plan should include post-travel reviews to confirm that travel policies and requirements were followed and also to assess whether the employee was provided with appropriate and relevant resources and information. These reviews can generate valuable feedback that can be used to improve policies and procedures for future travel assignments. For travel orientation, HR should offer at least a couple of orientation meetings to employees who are about to embark on business travel (short- and long-term). The purpose of the orientation is to prepare the employee for their trip, from both an information and a well-being perspective. During these sessions, the employee will be educated on a number of topics related to their upcoming travel. They should also be given information to help them acquire any resources they need. Logistics. The employee will need to be informed about any visa and passport requirements for the trip and will possibly need to fill out some paperwork. HR should provide clear travel itineraries and also lodging information for the trip. HR might also give the employee information about useful travel apps that might help them on their journey (such as flight trackers or city guides). Medical. The employee should be provided with information related to medical and travel insurance coverage, relevant medical information (hospital locations, emergency phone numbers), and local and organizational contacts if an emergency should arise. For frequent business travelers, there is a growing concern regarding long-term health impacts, and HR might also want to provide information about wellness and health provisions for the trip (access to gyms, healthy food options, etc.). Security. In some situations, the employee will need to be briefed on the local political situation, environmental considerations (extreme weather, cold or hot climates), and what this might mean for their trip and safety. They should be provided with emergency contact information and embassy details (for international travel). Expectations. HR should make it clear to employees how they are expected to comport themselves on their trip. It is becoming increasingly common for business trips to have the option of personal travel added. Many organizations accommodate this request, but it remains essential that employees understand that their business responsibilities must be fulfilled appropriately and that their conduct can reflect on their employer. Centers of Excellence Given the complexities of a globalized business environment, organizations can benefit from establishing geographic centers of excellence (COEs). A COE is a team made up of individuals with specialized skills, expertise, and knowledge. They are tasked with developing strategic services and capabilities. They do this by providing leadership, disseminating their specialized knowledge across the organization, and gathering information and feedback to improve processes and capabilities. An organization can have multiple COEs, and specific departments can also contain multiple COEs. Depending on the organization’s needs and strategies, HR may have COEs dedicated to: Managing and improving policies and procedures related to management of compensation (payroll, salary planning, incentives, etc.). Managing and improving employee personal and financial welfare (for example, leaves of absence, vacation allowance, health services, income protection, and retirement planning). Managing and improving labor relations to ensure that all employees are treated fairly and respectfully (for example, ensuring that policies comply with local, national, and international laws and regulations). Managing and improving employee development, training, engagement, and retention policies and procedures. During the course of their work and support of other departments and individuals in the organization, the COE team would gather information to support continued improvement of the organization’s processes and policies. For example, it would collect information about reusable assets, ways to streamline and shorten delivery times, ways to standardize processes, and identify ways to improve efficiency. Managing Global Assignments Proficiency indicators related to this section include: Administers and supports HR activities associated with a global and mobile workforce. Manages and supports the organization’s immigration and mobility program in accordance with regulatory or compliance requirements. Manages the day-to-day activities associated with international (i.e., expatriate) assignments. Designs and oversees programs for international (i.e., expatriate) assignments that support the organizational strategy and workforce. Establishes and oversees the organization’s immigration and mobility policy and program in accordance with regulatory or compliance requirements. Key concepts related to this section include: Best practices for international assignments (examples include performance expectations and evaluations; health and safety; compensation adjustments; socialization; assessing employee and family readiness; training on culture and resources; language training; education travel grants; rental subsidies; transition plans; repatriation). Immigration and mobility (examples include laws; visa processes and requirements; sponsorship expenses). Managing Global Assignments According to a survey of CEOs and HR senior managers conducted by the workforce solutions provider Right Management, many global assignments hold great potential for loss—an enormous loss of opportunity and invested resources. Some of those failures are certainly due to missteps during the assignment process: flawed candidate selection criteria, poor training and preparation for the assignment, inadequate support during the assignment, or a repatriation/redeployment process that didn’t allow the assignee or the organization to fully benefit from the global experience. Competency Connection The global mobility department of a large corporation usually manages between six and ten international transfers a month to their headquarters. Due to business reorganization, one of the corporate functions currently based in another country will now be relocated to headquarters. The relocation involves the transfer of more than 80 mid-level executives; they are expected to move to headquarters within the next three months. These executives are highly experienced in industry-specific skills not readily available on the market. A successful transfer experience is crucial and brings a lot of visibility both to the project and this HR department. The relocation project will have unique communication requirements and greatly exceed the capacity of current approaches and processes. The global mobility manager, IT (information technology), and marketing are all part of the project team to help ensure a smooth transition. In regular operations, any questions received from international transferees are handled individually. The global mobility manager quickly realizes that the department will not be able to handle a much larger volume of requests with the same level of speed and quality. Working with IT and marketing, several new initiatives are designed for this project: A common e-mail ID to address questions related to the project A mini-site with logo and information about the project (in multiple languages) A frequently-asked-questions (FAQs) section to address questions received via the common e-mail ID A rolling schedule of regular conference calls with tax, health care, and benefits advisors Through this project, the global mobility manager applies the Communication competency to develop technology solutions that address the needs of a large volume of permanent international transfers and provide them with timely and relevant information. Using the Consultation competency, the manager creates a channel to receive their questions and concerns and maintains the level of quality and support expected of the department. Approaches to Global Assignments According to Stroh, Black, Mendenhall, and Gregersen, organizations approach global assignments from either a strategic-systematic or tactical-reactive perspective, as shown in Exhibit 4-10. Exhibit 4-10: Approaches to Global Assignments Strategic-Systematic Tactical-Reactive Approach global assignments as long-term Approach global assignments as short-term investments. expenses. Develop future executives with essential Focus on a quick-fix approach to a short- global perspectives and experiences to term problem in a foreign operation. formulate and implement competitive strategies. Increase the effectiveness of critical Randomly and haphazardly perform some coordination and control functions between functions of assignments and focus and among the home office and foreign attention as problems arise. operations. Effectively disseminate information, Fail to systematically integrate the technology, and values throughout the worldwide organization in terms of values, worldwide organization. technology, products, and brand. As the exhibit implies, approaching global assignments tactically or reactively rather than strategically means that, at the least, the organization foregoes the benefits of talent development and retention, building of cross-cultural fluency in its future leaders, and growth in institutional knowledge and knowledge sharing. A purely tactical approach may also lead to a higher rate of failure in global assignments. To a significant degree, the nature of an organization’s business strategy determines its approach to global assignments. Organizations that have, in Christopher Bartlett and Sumantra Ghoshal’s terminology, a more multidomestic or international strategy may: Choose average and good performers as assignees. Send their assignees to another country to manage a project or get a particular job done. In contrast, organizations with a global strategy (Bartlett and Ghoshal’s transnational enterprise): Use a wide variety of global assignment types. Choose high-potential managers and top executives as assignees. View assignments as leadership, career, and organizational development opportunities. Make assignments for many reasons other than situational project management or remedial intervention to fix a problem. Organizations that are entering the global marketplace for the first time may find it helpful to establish a staffing policy, such as staffing locally wherever possible and promoting from within the organization, before making assignee decisions or staffing a new operation. The presence of a core staffing policy can simplify the local staffing and global assignment decision-making process. Global Assignment Considerations Types of Global Assignments Not so very long ago, any mention of global assignments would have conjured up a single, well-defined image: the “expat.” An expatriate, or expat, was an employee from an organization’s home country assigned to relocate to an international jurisdiction for an extended period of time, generally two or more years. The organization was an MNE, its home country was almost certainly a developed nation, and the assignment was their idea, not the expat’s (who, in accepting the assignment, may well have expected considerable “perks” for his or her troubles). By the traditional definition, a European citizen assigned to work in another EU country would be considered an expat, while someone who had self-selected to live and relocate in another country would not. That notion of an expat has since lost its original meaning due to the degree and proliferation of globalization itself. The term “expatriate” is derived from the Latin “ex” (meaning “out”) and “patria” (“homeland”). But in today’s globalized marketplace, a Mexican employee of a Japanese multinational organization who was previously based in the Netherlands may now be assigned (or may request assignment) to the organization’s Canadian subsidiary. Key Point An employee who is being reassigned to an international jurisdiction is now generally referred to as an international assignee, or IA (while “expat” now generally refers to anyone who is not a citizen of the country in which they reside and doesn’t intend to become a permanent resident). Another key aspect of the traditional image of the expat has changed —the sense of isolation. The Internet, smartphones, tablets, Skype, Twitter, and related communications platforms and technologies have radically altered the international assignment experience. Contact with colleagues, family, and friends while abroad can now be constant and instantaneous. Maintaining a clear picture of how the world’s events look and are being interpreted back home is now easy. That doesn’t eliminate the “foreignness” of the international assignment (or shouldn’t—if overused or misused, virtual connections can create a cocoon that separates the assignee from the host culture), but it can change the comfort level. This is especially true for younger generations of workers who, tablet and smartphone in hand, feel “at home” (and, equally, “at office”) wherever they go. The changing shape of globalization has likewise meant a move away from the traditional, long-term expatriate assignment toward newer, more flexible uses of global talent. Briscoe, Schuler, and Tarique identify a dizzying array of international employee situations. Not all are strategic (some may not even be wise), but they reflect the full range of real-world possibilities. These include the assignment types shown in Exhibit 4-11. Exhibit 4-11: Types of Global Assignments Assignment Type Description Globalists Spend their entire careers in international assignments, moving from one locale to another Local hires Hired locally in subsidiary countries (and are also known as HCs, host-country nationals) Short-term assignees On assignment for less than a year but more than a few weeks, often without moving the family International assignees Traditional expatriates on full relocation assignments lasting from one to three years Commuters Travel across a country border for work regularly Just-in-time expatriates Ad hoc or contract workers hired for a single assignment Managing Allegiances Just as organizations use global assignments for a wide variety of business reasons, the individuals who accept or seek out these positions do so for a variety of personal, career, and other reasons. Regardless of an employee’s reason for accepting an assignment, these situations add another dimension to the individual’s experience and another category of responsibilities. They inevitably create some tension and conflict between the individual’s allegiance to the home- country/headquarters location and to the local operation and situation in the host country. The degree of tension can be affected by a variety of factors, including the length of the assignment, the assignee’s country of origin and age, and the number and types of previous assignments. To use language developed by Black, Gregersen, and Mendenhall, allegiances can range from a “homebound” refusal to assimilate into the local culture to a “go native” full embrace of local culture and work modes. Understanding the level and type of allegiance of a potential assignee may help the organization: Identify and recruit the individual who will be most successful in a particular type of global assignment. Acquaint the assignee with the ways their allegiance may be challenged and the stresses they may encounter. Anticipate repatriation and support any unique needs the assignee may have. Global Assignment Guidelines As organizations plan for and manage global assignments, there are several things they can do to ensure that the assignment will be successful for both the individual and the organization. Key steps are described in Exhibit 4-12. Exhibit 4-12: Guidelines to Enhance Global Assignment Success Step Activities/Considerations View assignments as a Consider assignments within the broader context of the process, not an activity. organization’s overall business strategy and leadership development activities. Make sure that the assignment process is clearly aligned with other organizational initiatives. Recognize and consider Consider family, logistical, legal, cultural, organizational, all dimensions of the and other issues in addition to the immediate concerns assignment experience. of the employee. Identify potential risks to the assignee and the organization—for example, health or security risks associated with specific assignments. Make sure that all criteria (not just a candidate’s functional competence and communication skills) are considered during the selection process. Step Activities/Considerations Conduct thorough and Confirm that the selection process is based on the professional assessments correct criteria. of candidates. Involve the right people in the selection process. Plan ahead and allow adequate time for selection. Establish and maintain Avoid turning the selection process into a selling or realistic expectations. marketing campaign. Communicate both the benefits and the challenges of the assignment. Encourage the candidate to talk to repatriated assignees. Provide training. Provide cross-cultural training for the whole family. Provide language training; it is usually an essential requirement. Provide appropriate health Make sure that assignees receive necessary and safety support. vaccinations. Make plans for in-country security, health-care coverage, and emergency evacuation if needed. Establish a communication system that allows the organization to locate assignees at all times and confirm their status. Assignees should also have the means for emergency contact. Provide well-planned, Anticipate potential assignee challenges and prepare ongoing training and contingency plans. support. Make sure that the assignee doesn’t feel abandoned during the assignment. Step Activities/Considerations Plan, prepare for, and Develop plans to ensure retention of the repatriate; support repatriation with repatriates who leave represent a loss of the the same care as organization’s investment in their development. expatriation. Recognize that the greatest contribution to both the organization and the employee may occur when the employee returns home. Address problems quickly, Recognize that problems will occur. thoroughly, and Look for the reason a problem occurred after responsively. responding to it. According to Michael Schell and Charlene Solomon, managers making global assignments need to be prepared to answer candidate questions and engage effectively in the selection process. Exhibit 4- 13 lists Schell and Solomon’s guidelines for required management knowledge. Exhibit 4-13: Schell and Solomon’s Management Knowledge Guidelines Management Knowledge Guidelines Managers should know as much as possible about: Management Knowledge Guidelines The country or countries to which they The process of cross-cultural are sending assignees. adjustment to anticipate the feelings Essential developmental assignments the assignee may experience. and experiences. Cultural dimensions and the effect The specific job function and these dimensions have on the way assignment objectives and what different cultures look at life. effects the assignment location will Potential problem areas associated have on these factors. with the assignment. Exhibit 4-14 provides a checklist for effective international assignment management. Exhibit 4-14: Checklist for Effective Assignment Management Effective International Assignment Management Effective International Assignment Management Use additional selection criteria Create policies, counseling, and (beyond fluency in the host language management systems that span the and technical skills). Evaluate process from pre-departure planning assignment candidates as well on key through on-site management to traits such as flexibility and completion and repatriation. adaptability. During the international assignment, Make cultural adaptability training for develop and implement ongoing assignee and spouse part of the programs that foster and retain selection process. intercultural competencies and global Mandate cross-cultural training for knowledge management practices. assignees and their families to reduce Begin post-assignment debriefing the risk of failed assignments, to before the assignee returns from the manage expectations, and to facilitate assignment and immediately upon adjustment and performance. return. Use debriefing information to Ensure that the international establish a database of relevant assignment policy is clear and learning. specific. Link social responsibility and ethics. Begin repatriation planning and Develop programs that foster ethical succession management before the conduct and support of the local assignee leaves the home country community. Tie ethical values directly and continue it at least one full year to accountability in practice. before the end of the assignment. Comply with applicable labor Maintain a point of contact for standards, laws, and regulations that assignees while on assignment. affect the business in different parts of the world, including national and Provide repatriation integration training extraterritorial laws. for the assignee and family. Use experientially derived pre- and on- arrival international assignment orientation programs for all inbound employees who are visiting headquarters as well as for all outbound employees visiting international operations. Global Assignment Process Most organizations follow a similar, sequential, multistep process in selecting, preparing, deploying, managing, and repatriating assignees, at least for assignments that are strategic or are intended to last several months or years. While the process appears chronological and straightforward, there are a number of business, strategic, cultural, financial, and other contextual factors that influence each stage. The stages of the process are shown in Exhibit 4-15 and discussed in detail below. Exhibit 4-15: Global Assignment Process Go to long description. Stage 1: Assessment and Selection The assessment and selection of assignees is one of the most important determinants of success. A primary purpose of the assessment and selection process is to ensure that the organization has the right people in the right places at the right times. Exhibit 4-16 lists the key activities involved in this stage. Exhibit 4-16: Global Assignee Assessment and Selection Global Assignee Assessment and Selection Develop the selection Develop specific selection criteria for the assignment. criteria. Create a potential global assignee talent pool. Involve the right people. Identify and contact candidates from the pool. Involve the candidates’ spouses, significant others, and family members, as appropriate and legally permissible. Contact and schedule home- and host-country managers to participate in the assessment. Coordinate vendors and consultants who will be involved in the selection process. Choose the best selection Develop multiple data-gathering instruments. methods and tools. Conduct interviews and ensure that surveys are completed. Complete the Analyze data. assessment/make a Schedule subsequent rounds of interviews and recommendation. assessment sessions, as required. Make the final recommendation and selection. Stage 2: Management and Assignee Decision Key Point Once the candidate has been selected, the organization has the information it needs to engage in due diligence regarding the costs, benefits, logistics, and other aspects of the global assignment. Likewise, the candidate must evaluate the assignment offer to be sure he or she is making a sound career and personal decision. Activities occurring during the decision-making point include: Analysis of the costs and benefits of the assignment. Global assignments, like other major organizational investments, must produce specific and quantifiable benefits to justify their funding and execution. Detailed analysis of the return on investment in assignments is a growing trend and an increasing concern in global organizations. Preparation of the assignment plan. The global assignment plan guides the assignment process and clarifies both the organization’s and the assignee’s expectations of the assignment situation. The global letter of assignment is a key document that evolves from the assignment plan. Typically, the letter of assignment is a memorandum of understanding (MoU) stipulating the business aspects of the assignment as well as compensation, benefits, and local work rules. Depending on regulations in the host country, other legal requirements may need to be satisfied by the letter of assignment. Candidate acceptance or rejection of the assignment offer. Just as the organization follows a process in assessing the potential costs and benefits of the global assignment, the candidate should also be given access to people and information needed to make a sound personal and career decision. Aspects the candidate should consider include: Long-term career advantages. Adequate financial incentives. Opportunities for growth and learning. Family support and opportunities to balance interruption of children’s education and spouse’s career. Desirability of the location. Stage 3: Pre-Departure Preparation By the completion of this stage, the assignee and his or her family should have the practical knowledge and day-to-day survival skills they will need during the first months in the host country. Because of the complexity of global assignments, organizations often use specialized third-party vendors to coordinate and manage key aspects of the deployment process. Organizations that don’t use the services of third-party vendors should create a pre-departure checklist to anticipate and address all the key issues to be resolved before the assignee leaves the home country. Three aspects of pre- departure preparation—visas/work permits, security briefings, and cross-cultural counseling—deserve special mention. Visas and work permits. Different countries have different visa and work permit (employment authorization) regulations and requirements and associated costs. Short-term assignments may be easier to arrange than periods over 90 days. An individual cannot enter most countries to look for a job; the job must already exist and the work authorization is usually contingent on the employer’s ability to demonstrate that comparable skills do not exist in the local workforce. Time is a critical factor in two senses—first, the organization must plan for how long it will take to obtain the necessary documents; second, the organization must be aware of any time restrictions (expiration dates) on the visa and/or permit. All these considerations are in the hands of the embassy or consulate office of the host country. Ensuring that there is compliance with all requirements is up to the organization, as is the responsibility to cover any sponsorship expenses that might be incurred. Security briefings. Briefings of this type are a requirement, especially for international assignments in volatile parts of the world. There are two important aspects of a security briefing: (1) personal and family safety abroad and (2) business aspects of security, including physical and intangible threats to the organization’s employees, assets, and intellectual property. Cross-cultural counseli

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