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The crucial business of international people management
The need for a flexible and internationally mobile workforce is ever more pressing. As a result, organisations have recognised the need to regularly review their people management policies and practices in order to recruit, develop and retain the employees who will really impact on organisational performance. The CBI has responded to the needs of member organisations by developing specific benchmarking tools as well as providing ongoing information on some of the external factors which can impact on the way companies manage their global workforce.
Managing employees across geographical borders
Effective people management is now widely recognised as a source of sustainable competitive advantage. So, the question every organisation should be asking is ‘how well are we really managing our people?’
Whether an organisation places a strategic emphasis on effective people performance is the most fundamental issue. This requires a number of questions to be addressed: how important does the leadership team consider people management and performance issues? Is time set aside to address them? How visible is the leadership team in emphasising the importance of people management?
This sort of emphasis from the top is essential in driving forward the quality of management. It is also a means of connecting the organisation in shared values and culture and of ensuring that policies are applied consistently across different units and geographical borders. Organisational cohesion is a priority and requires some form of shared vision and mission.
There is a general trend towards greater organisational cohesion and synergy in general people management strategies across international groups. A good example of this was provided by the Allied Domecq Group’s drive for best practice in people management which resulted in the CBI’s people management tool HEADSTART being rolled out across the globe including sites in Mexico, India, the US, Canada as well as all over Europe. The aim of the project was to review the organisation’s HR processes globally and to externally assess the effectiveness of these policies and practices against ‘best in class’. The project would also play a key role in enabling the organisation to identify examples of good practice internally, which could then be shared across the group’s HR community.
As well as focusing on shared values and group-wide HR strategies, companies are focusing on some of the very specific issues relating to international and mobile employees. The management of an international workforce raises fundamental questions and Dr Hilary Harris, director of the Centre for Research into the Management of Expatriation, says that ‘expatriates are amongst the most expensive employees, invariably in critical positions, and yet, because of the complexities involved, they are one of the most difficult groups of employees to manage effectively’.
Key themes and messages that have emerged from recent CBI conferences and events in this area have included the need to determine which type of assignment and support provisions should be offered with regard to the immediate business need as well as to the overall culture and aims of the organisation. Controlling costs whilst ensuring that the expatriate package remains competitive is a major concern. The general trend seems to be towards more flexibility within the relocation policy with more tailored approaches to assignment requirements rather than ‘one size fits all’.
As well as enabling companies to address immediate resourcing needs, international employee mobility is increasingly seen as a key employee development tool. The role of the International HR function is often to manage and develop a company’s global talent.
External factors
There are a number of extremely high-profile external factors which have recently impacted on the development and management of an international workforce – in particular, the Euro. EU initiatives to enhance employee mobility and safety issues for expatriate employees following the international crisis.
The Euro
It is interesting to look at some of the immediate consequences the Euro will have on the management of an international workforce and on employee mobility in Europe as a whole.
There are a number of practical implications of the Euro for international HR policies – in particular expatriate pay issues . Of course, most companies have been preparing the ground for some time. An ORC survey back in 1998 indicated that a majority of companies believed that the advent of the Euro would result in a greater transparency in pay which would highlight areas of inconsistency, which in turn would lead to reviews of overall salary policy.
An interesting question is how the Euro – and possible reduction of cost-of living differences in EU member states – will affect the payment of special allowances to expats within the Euro-zone. Longer term implications may include increased co-ordination of tax and social security policies, general convergence of pay levels within the union. This in turn may make expatriate transfers simpler and possibly less expensive.
At the same time, the Euro should not lead non-EU companies to underestimate the differences between EU countries and the challenge of moving employees into and around the EU. As well as practical differences such as housing, taxation, cost of living, different educational systems, cultural issues there are key differences in the way different countries do business, ways of working, styles of people management.
EU mobility provisions
Certainly, the symbolic nature of the Euro cannot be underestimated. It has been argued that it will accelerate the promotion of a ‘European identity’ and the creation of a fluid and integrated European labour market. In turn this will surely play a key role in the European Commission’s ongoing campaign to promote greater employee mobility throughout the EU.
Within this context it is interesting to note that the launch of the Euro was closely followed by the publication report of the High Level Task Force on Skills and Mobility which was set up by the European Commission in June 2001.
The principal goals and mandate of the Task Force were to identify the main drivers and characteristics of the new European labour markets, with a particular focus on mobility and skills.
The final report confirms that geographic mobility in the EU is too low due to a number of factors such as cultural, and in particular linguistic barriers, regulatory barriers, insufficient or complex systems of recognition of skills and competencies, and an ageing of the labour force. The Task Force agreed a number of key recommendations – in particular, the need for modernisation of the regulatory framework governing the transferability of pensions and social security rights.
The Task Force also argued for the establishment of a One-stop European Mobility Information Site and called upon the Commission to launch a Europe-wide mobility information campaign.
Safety issues for expatriate employees
A recent workshop organised jointly by ORC Inc, CBI ERC and Control Risks Group on expatriation and the international crisis highlighted a number of important messages. In particular, the workshop emphasised the importance of creating coherent co-operation mechanisms between HR departments and those responsible for security provisions within companies. It is essential too have evacuation plans in place as well as communication strategies and employee tracking systems. The need to review emergency plans on a regular basis is increasingly acknowledged as well as the need for increased practical advice on issues such as immigration and travel regulations.
For employees being posted abroad, the importance of cultural awareness and pre-departure preparation has increased. Practical implications for company HR policies will include the possible review of hardship allowances when sending employees to particular locations.
The CBI’s aim is to disseminate good practice and highlight innovative approaches developed in company people management strategies and in specific relocation policies. It is these company strategies – together with the public policy developments and other developments such as the Euro – which continue to enhance the creation of a real culture of mobility in Europe as a whole as well as in specific organisations. Underpinning all discussions on people management is the bottom-line rationale for reviewing current policy and implementing change. Initiatives such as HEADSTART can play a key role by enabling companies to ‘feel the pulse’ of their workforce. This in turn will enable companies to implement efficient people management policies and practices which can provide the most tangible demonstration of an international organisation’s culture and values.
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