Can You Be Globally Local? New Research Says Yes

Of all the topics companies ask us about, the one most challenging to businesses today is "how to globally localize" our business and human resources. The world has become very flat, but as we describe it "more local" and less "global."

A recent article in Harvard Business Review describes how L'Oreal has effectively built a global business over the years, maintaining its French design culture but building many local products in countries around the world. In most industries (autos, consumer products, retail, food service, hospitality) the ability to localize is key to success, especially in rapid growing markets like China, India, Brazil, and eastern Europe.

The issue companies face is how to hire, manage, and develop people in these local organizations while maintaining their corporate brand, values, and infrastructure. Do we let the local business run independently? Do we force them to use the corporate process for staffing and management? How much shared services do we provide?

Our new research on High-Impact HR points to a new model: a more distributed method of authority and decision-making. While companies need standard technology and service centers (for tactical and administrative activities), the key to good people management is local control. So much of the decades of work we've done to build HR Centers of Excellence needs to be adapted.

This last week I met with the head of HR for a global media company and the comments she made to me were very relevant. Each of their media brands has its own general manager, targets its own market, and has its own hiring, management, and leadership model. While they all want to use the same HR software, they really want very little else in common.

So her strategy over the years has been to offer standard tools and support for staffing, assessment, employee relations, and job leveling. But frankly, she told me, they really don't want much of it. In fact, the highest performing groups use very little of the corporation's "shared services."

What this points out is the fact that in today's fast-moving business, the best HR strategies are local. The way we lead, hire, manage, and train people must be very attuned to each business unit's needs, and while all companies need standard models for leadership and culture, the more global the company gets the more local HR becomes.

This begs the question of "how" we provide talent and HR services in this model.

Our research shows three things happening:

1. HR generalists and business partners must step up and take on larger roles. In order for the new model to work, we must empower, train, and hold accountable the local HR team. HR people supporting local business units must be highly trained in most areas of HR, and feel empowered to make local programs work locally.
2. The HR team must function as a "network of expertise" not a "center of excellence." In other words, as the media company found, we need to "connect" HR business partners to each other, so they can share tools and information with each other. Rather than let them each reinvent the wheel, they should use the COE as a "sharing mechanism" not a "control" mechanism.
3. Standard platforms and tools are more important than ever. And finally, since there are no many cloud-based HR tools and services, we need to provide standard tools and services so local HR teams can save time and money. The COE should be evaluating, standardizing, and continuously providing new integrated tools for the rest of the organization.
4. The organization must build what we call an "intelligence" function: listening, monitoring the outside world, staying up to date on labor market and legal changes, and continuously monitoring the global workforce.

This sounds easy but of course it isn't. What do we standardize and what do we localize?

Some of the tips we've uncovered:

• Standardize technology platforms and recruiting processes.
• Standardize payroll, benefits (where possible)
• Standardize global culture, mission, diversity, and inclusion programs
• Localize staffing, leadership, coaching, and team management.
• Localize employee relations.

The traditional model for HR was centralized, with allowance for local implementation by business partners. Now think of the HR organization as a "network of expertise," sharing information and best-practices, but empowered to operate locally. This makes local HR managers much more accountable to their business leaders, but also more relevant and strategic.

Read the preview of our upcoming research, High-Impact HR in a Globally Local World, for more information. Would love to hear your personal experience and comments here.