Human Resources Global Strategy

SEIIC HR

Doing business internationally can be very different from a human resource perspective versus doing business domestically. Each country has its own laws and norms with respect to the labor market. For this reason, human resources is almost always a national function. Companies are limited with respect to what they can do globally. Globally, a company can set basic human resource strategy and principles, though the actual implementation of any general strategy will vary by country. Even generalizing about "EU" or "Asia" is laughably ignorant -- you cannot make labor market generalizations about Canada and the U.S., let alone about the twenty-odd EU countries or 60-something Asian ones.

In the EU, workers can come from any member country, as labor has freedom of movement within the EU. This also makes it nearly impossible to recruit non-EU workers to work in Europe. Labor laws within the EU, however, vary by country. This creates a situation where the choice of countries in which to operate is dictated partially by market considerations and partially by labor considerations, and partially by tax considerations. Whether the company operates, there is usually a need to have training programs in order to build the workforce, unless there is a surplus of workers available in that particular country. Recruiting in nations where there is a shortage of insurance workers will require pulling workers from other countries, who will then need to be trained on the local insurance market, laws, and languages; or locals are hired who must then be trained in insurance. Thus, training is a key element of HR practice in Europe, despite the labor mobility (Costea, 2005).

The culture in the business will be different as well. Local HR professionals will need to be hired to find ways to implement the global strategy in accordance with the local culture and local labor market conditions. It is also worth noting that the EU has a lot of regulation in general, and this probably applies to the insurance business. Each country will have its own particularities, but in general Europe will have more regulation. Also, workers in Europe actually have rights -- the idea of "employment at will" would not work for Europeans. Again, while the company can set out strategy in broad terms (such as paying more than the market rate to poach talent from competitors, or conversely undercutting on wages to offer better spreads on insurance products), every country has different labor laws, and there are significant differences between labor cultures in the north, south and east of Europe.

Asia is an even bigger and more diverse place than Europe, but without the overarching government structure that the EU provides. It is absurd to even contemplate making generalizations about a continent as diverse as Asia -- there is literally nothing similar between, say, Uzbekistan and Japan, or Vietnam and Kuwait. The company at this point can only narrow down its expansion ambitions to a specific country or at best a region before there is even any point to doing research on labor markets and culture. Anybody thinking such an exercise is worthwhile has no business attempting to open up shop overseas.

All HRM activities are affected by overseas expansion. Recruiting is done differently, because labor market conditions are different. In the U.S., there are probably experienced insurance professionals looking for work, plus thousands of college grads every year with business degrees. In many countries, neither will be the norm. In many countries, recruiting is done through word-of-mouth and through connections only. Training requirements will thus be different for each, though realistically the company has its own products and software that it needs to train for. In that respect, training can be fairly standardized since everybody in the world needs to learn the same things (give or take some product differences). Performance management is not going to work the same everywhere, though it is reasonable that some quantitative elements can be used. But while workers in the U.S. are likely to respond to quantitative performance reviews, many cultures are entirely unfamiliar with this approach. Labor relations are completely different around the world, even just for the category of white collar workers.

The advantages of a global systems are that they are standardized so that everybody worldwide is measured the same way, on the same things. This is easy to implement, in theory at least, and allows for easy comparisons between workers. The disadvantages are more significant. First, there is not much value in comparing workers in different countries -- it's apples and oranges, really. Second, each country is so different that seeking to implement a global system is inevitably going to be a poor fit at times. Of course, it costs a lot more to have different HR systems in each country, so a balance needs to be struck between a global and local system.