CIPD Podcast 13 - Globalisation and HR

Date: 08/11/07 Duration 00:16:51

This podcast focuses on The future of HR in Europe: key challenges through 2015, research about globalisation from the Boston Consulting Group in association with the European Association of Personnel Management and CIPD. HR professionals Philip Krinks, Partner and Managing Director of BSC, Martin Ferber, Executive Director HR, International Region, R&D and Director and Chair, Pfizer Pension Trustees Ltd,  David Fairhurst, Senior Vice President, Chief People Officer – Northern Europe with responsibility for HR, Training, Education, and Customer Services, McDonald’s Restaurants Ltd,  Kay Penney, Global HR Vice President of Invensys APV and Nick Thripp, Vice President of HR and member of the Corporate Leadership Team of Infineum International Ltd,  discuss the challenges associated with delivering HR across international boundaries.


Philippa Lamb: Welcome to the globalising HR podcast. In this programme we reflect on the impact that globalisation is having on businesses and the challenges it presents for the HR profession. While much of our focus is on international and global business, the effect that globalisation is having on the way that domestic organisations operate also provides interesting food for thought. We’ll be hearing from a number of very different organisations but it seems that they’re wrestling with very similar issues. Research into the future of HR in Europe conducted by the Boston Consulting Group in association with the CIPD and the European Association for Personnel Management, has highlighted globalisation and its consequences as a priority for the HR profession. Philip Krinks, author of the report, set the scene for us. 

PK: The purpose of the research was to try to identify the future issues for HR departments looking out about ten years till, we said, 2015. And so there’s a range of things that we’ve looked at in that of which one thing is the growing importance of international issues and globalisation which has emerged as one the top three concerns across the whole of HR. 

Philippa: And we hear a lot about globalisation in the wider business context now but was it particular sorts of organisations that you were focusing on it for your report – large ones, small ones, private sector, public sector – who was it?
PK: Well, the primary focus of this was private sector and I think there were two types of organisation who were replying and saying it was an issue. One were companies who are themselves already international, so they’re operating in three or four, or ten or forty countries. And the other case would be companies that are currently domestic companies but that either have international businesses in terms of their customer base or they imagine themselves becoming international in terms of their operation over the next five to ten years.
Philippa: Would you expect to see a great many more organisations facing these international challenges in the coming ten years?
PK: Yes, I think all the evidence is that we will do. 

Philippa: One organisation that knows about globalising HR is pharmaceutical giant Pfizer. With 12,000 employees in R&D sites around the world, I asked their Executive Director of International HR,Martin Ferber what he saw as the key considerations for organisations and HR professionals taking on international responsibilities.
MF: They certainly need to think about how they’re structured to meet that international challenge. They need to understand what it is they are, what the business is thinking about from an international perspective. So I think a dialogue immediately with what is the business doing internationally, where can HR’s thinking intersect, how to structure HR to meet that thinking, that business challenge, and then to pick out some key topics, and I’m sure there are many, a plethora of things to be done, but pick out some key topics and get focused on those. 

Philippa: Establishing your focus is a first step. The research also looked at the priorities for an organisation seeking to embed an international HR strategy. Philip talks us through the findings. 

Philip Krinks: If you were to take Europe as a whole there were three priorities that emerged around the issue of globalisation. The first was the challenges of managing international teams; secondly, creating a strong enough corporate culture to cross national boundaries; and, thirdly, increasing diversity in the workforce.
Philippa: Now of those, I know that managing teams was the one that preoccupies people most. What are the key issues there that HR should think about?
PK: Well, the three issues we identified there, the first one was around incentives, so the importance of having incentives for the team members, which are aligned or harmonised. The second was the critical importance of personal networks in making those teams work. So that comes down to quite concrete things like the need to have training programmes that are international as opposed to by country so that people meet each other outside the workplace. And then thirdly that the many challenges of working cross culturally and having good cultural awareness in your way of working. 

Philippa: While it’s important to understand the challenges what impact do they have on HR itself? I chatted with Kay Penney, Vice President for HR at Invensys APV. Although APV has been established for almost 100 years Kay explained why it considers itself to be the first generation taking a global approach to HR. 
How important would you say it is for a company like APV to have an international HR department within an international team.
KP: For me it’s absolutely fundamental. I inherited, a year ago, a group of people who, apart from personnel managers in-country, were largely British. And albeit that they had a good understanding of the business, for the way in which we want to grow the organisation going forward, which is very much against what we call a ‘glocal’ culture, i.e. we have, where it makes sense, we have a one size fits all, but we do respect local needs and requirements, and what’s glocal, what’s local, has to be debated in each case. Actually having a nationality imposed upon you with a culture that isn’t terribly understanding isn’t helpful. And so my new HR team that report directly into me represent, are representative of all the continents of the globe. And I’m finding that we’re making decisions in a different way, we work in a different way than we would if I had a completely British team.
Philippa: Could you expand on that a little for me please?
KP: Yes, of course. By understanding how the Far East views line management we have changed radically our first employee survey. And so most surveys in the West would ask in some way either directly or indirectly questions about your line manager: Are you receiving an appraisal on a regular basis? Do you understand what you’re doing? Do you have the tools to be able to do your job? In many cultures, particularly in Asia, that has a vague criticism of your boss if you answer “no”. But they are questions an organisation needs to understand in order to be able to provide assistance, training, development, coaching, etc. to line managers who may be struggling. And so we have been able to word the questions in such a way that nobody’s offended but we get the information. 

Philippa: Some interesting points there, not least that it can be all too easy for you to believe you understand your own culture. David Fairhurst, Vice President of People in the UK for McDonald’s gives a word of caution about keeping your eye on the ball.
DF: The challenge of managing people across countries is that even if you take your own country, just take UK for a minute is that for the first time we’re seeing the largest generational diversity that’s ever existed in the workplace. The millennial generation, their expectations of multitasking, of constant stimulation. So within your own country there is massive growing diversity. Now, take that alongside the cultural diversity and challenges of organisations that work beyond borders. The challenge for HR is enormous but it’s a challenge we really need to get into because this is going to be key in how we engage people in the country and across borders so that we can drive the overall organisation forward. 

Philippa: To find out more about the practical challenges I chatted more to Martin from Pfizer 
Based on your very wide experience what are the diversity issues around managing an international workforce?
MF: Now this is an interesting one. Now one of the things I try to remind people is that it’s not just the people you work with on an everyday basis around you that may be diverse. It’s actually that you’re working in a global world where so much of our contact is virtual. And that’s where actually also you can hit some real diversity barriers and is important to get an understanding, I think, across, for example, two countries, global team, lets take the two extremes, UK, Japan. These people are talking – they may not get a chance to meet. They’re talking on the telephone, they’re talking on video conference. I think some basic training on the cultural differences, the cultural understanding, where people come from, is helpful. 

Philippa: David Fairhurst thinks that HR needs to think about how this affects them too.
DF: HR professionals can get very mixed up because you can see different behaviours and assume that means different values, and that is not the case. If organisations are really going to work on values and culture, it really needs to have the intelligence and insight to interpret the different behaviours within a country, within generations and across borders to really understand what their drivers are, and then how to manage the culture, how to manage that diversity for the benefit of the organisation. And that takes effort, and that takes insight. 

Philippa: Next I asked Martin about the role of values and behaviour. 
The received wisdom, I think it’s fair to say, is that it’s important to apply consistent global values across your organisation, across international boundaries. What’s your take on that? Do you think that is desirable or indeed, possible?
MF: I think it is desirable actually. I think it needs to be done very sensitively and I think probably the sorts of sets of values that were perhaps prevalent in companies which were either nationally based or perhaps international, but not truly global, that may have promulgated maybe ten years ago would probably need a bit of a rethink but I have no doubt that basic human nature is pretty much the same the whole world over and the values that we aspire to in our businesses can be applied globally and probably should be applied globally. The wording needs to be thought about and you certainly need to think about its translation. So even in a world which is increasingly, where English is the second and the main business language, I think it is useful to be able to translate those values into the languages you need to and then check that they make sense.And I think the underlying philiosphies of the values I’m sure make sense – I really don’t think there’ll be a problem. But the translation of those words if they’re not thought through properly could be problematical.
Philippa: So HR shouldn’t be anxious about being perceived as, perhaps, being colonial in trying to export their values?
MF: That’s another whole thing. That’s more to do with inflicting the way we do things. I think that’s different to values. I think values are about the way we want to operate and I think they, generally speaking, values appeal to basic human nature, which I think in the world is pretty ubiquitous. I think the way we do things and our priorities and our approaches is another matter. And I think, there, in an international context, one has to be extremely careful and centralisation does tend to pull the pendulum towards a one, one solution fits all. And I think we need to be very careful. I understand centralisation. I can understand having a headquarters approach and systems that are rolled out across the globe, you need to collect data from your global business. But I think you can do that in a sensitive way and recognise that people in other countries have perfectly good ideas and different ways of delivering the same result. 

Philippa: There’s no doubt that striking a balance between global and local is critical. APV offers us a great example. Kay talks us through their challenge.
KP: Fundamentally, somewhere between 60-65% of our business is in Europe and we’re in some fairly traditional West European countries which have very distinctive cultures, ways doing things. And inevitably that means that there’s a real sense of pride because we’re at the top level of engineering, there’s a real sense of pride in what we do and a real misunderstanding about the need to change that. It’s about adapting rather than fundamentally losing something and that’s the message that’s difficult for employees to understand.
Philippa: So from what you’re saying it sounds like you’ve had some difficulties with selling the values of globalisation to the organisation as a whole, because you’ve encountered these not so much difficulties, as differences.
KP: I think there’s a difference between people’s heads and people’s hearts. I think there is no difficulty in the organisation in people fundamentally understanding the one APV strategy. It’s when you get into the operation of it which means they’ve got to do things differently, it’s the ‘how’ rather than the ‘what’. At that point you start to get fairly emotive arguments against it, and it’s at that point that the organisation needs to be prepared to work at a slightly slower pace at enrolling people and bringing them on board the idea rather than just forcing it on them. 

Philippa: Now I know you’ve encountered this issue in Denmark in particular.
KP: Well Denmark is a particular challenge for us because we have – although our three thousand employees, we have some 850 in Denmark – and so it’s an extremely, it is a very important group of employees and the enrollment has been particularly difficult because it’s a small country, it doesn’t really, fundamentally, see globalisation as its number one issue and trying to persuade and enroll people who fundamentally work to live and for whom quality of life is extremely important, and can’t really understand why there’s a problem that they’re not in the office from 3 o’clock on a Friday afternoon onwards, just because someone from China or across the world wants a quote right now. That can be a much more difficult conversation to have with people. And for us as an organisation it’s a huge challenge in trying to work out at what point do we stop giving up persuading the Danes to be different and we actually organise the organisation differently.
Philippa: The way they’re operating in Denmark is the work/life balance we’re all aspiring to over here so, as you say, is it more a question of chaning the way we operate things over here in order to fit with that?
KP: I think it’s a healthy compromise. At the end of the day we have a 24h a day, 7 day a week business globally and if you are trying to rely on a group of individuals for whom that is a problem then as an organisation you then have to think about plan B, albeit that Denmark remains an extremelyimportant site for us we’re also growing an engineering capability in China. 

Philippa: An interesting insight there into truly global thinking. The importance of HR being able to operate on a global stage was reinforced by Nick Thripp, Vice President, HR at Infineum International Limited.
NT: I think that what we’ll find is that we look more globally in order to meet our global needs so instead of trying to meet all of our needs from within the geographies with which we’re most familiar, we’re going to have to take more risks in order to meet the needs of resourcing our organisations with places with which we’re less familiar. And that means that there will be challenges in terms of capability development, in terms of our own management processes and systems, in terms of our own ability to handle diversity, and particularly in terms of our own inclusiveness. And I think a key skill, a key capability that all organisations will have to be able to master is that of being inclusive. But that goes right back to the core purpose, that it’s getting the best out of the resource that you have. 

Philippa: A good summary from Nick there of HR’s core purpose. However, increasing globalisation means, its seems that HR professionals will more and more, be filling that core purpose in a global market place. At the same time, globalisation is just one of the influences affecting the role and shape of HR. In our next podcast, we’ll be taking a wider look at the key influences changing the HR function. In the mean time, if you’d like to know more about the issues raised in this programme you can find the notes that accompany the podcast at But for now, goodbye. 


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