When Global Standards Becomes a "Catchphrase"

. . . . When a phrase or expression is recognized by its repeated utterance

As U.S. based organizations grow and begin to spread their wings overseas, they will find themselves having to deal with local employee populations in a diversity of countries.  For most, the first steps taken would likely involve initially a small number of employees, though questions of how to integrate these new employees will quickly become a challenge.

Note: if you suddenly acquire a business with a large employee footprint the concerns raised below will be staring you in the face from the start of the due diligence process.

Why the challenge?  Not every U.S. organization deals with foreigners well, because they’re viewed as different.  Because those differences create a layer of administrative, policy and procedural difficulty that the U.S headquarters hasn’t experienced before.  And which they may wish to avoid, if possible.  One of the last vestiges of consolidated Human Resource practices that would be given up is the effort to instill policies and practices that mirror activities and attitudes at home in the U.S. - because they work here.  Because we're comfortable with what we know.

And because we don't know any better. We don’t know what we don’t know about Human Resources on the international stage.

That ignorance can hurt you the longer you fail to deal with it.

Why So Different?

Here are a few of the basic country-specific elements that you would be dealing with while sitting in your U.S. office:

• Inflation: Higher or lower than the U.S., and is it stable or subject to fluctuation?
• Unemployment: What does the labor market look like; how available are qualified candidates?
• Labor laws: Do the country employment laws favor employees or the employer? Some countries are more difficult for Human Resources policies, practices, and legislation.
• Average pay increase: What are current and projected pay practices that you would be expected to adhere to?
• Health of economy: Does the environment present a robust economy, pockets of success/failure or an economic climate on a downward slope?
• Competitiveness: Are you paying below, even with or above market rates?  Do you know?
• Holidays and vacations: The U.S. is notoriously conservative with PTO. You should know the local common practice.
• Statutory requirements: Overseas a great of total reward provisions are mandated by the state, for which you will receive no credit for providing. Know where you’re granting only minimum coverage.
• Representation: Works Councils, unions and similar employee representative groups (national and local) are more common overseas than in the U.S., and the restrictions they can place on your freedom of action could be a real eye-opener.

The Cookie-Cutter Doesn’t Work

Trying to overlay country-specific issues with a global, everyone-does-it-the-same-way strategy (typically based on U.S. practice) creates problems in every country where the “answer” doesn’t fit.

• One client based international benefit coverage on U.S. practice and included USD language in the coverage
• U.S. based incentive programs do not account for the “guaranteed” portion often found within international programs
• Another organization wanted a standard global annual merit spend percentage (2%), while subordinate country practices varied from 0.5% to 12%.
• “What is that in USD?” is a common mistake in trying to equate rewards across borders
• The U.S has a “Live to work” attitude, while overseas it’s more “Work to live.”

There will also be pressure to “globalize” reward programs, which is a good thing for a balanced and fair treatment of all employees.  But what that becomes “standardization” can in practice transform into a cookie-cutter strategy that supplants country-specific realities with a corporate mandate. This is especially true when the employee footprint is small.

Employees in countries adversely affected by standardization will grow resentful, feeling as if they’re being treated as second class employees – an afterthought.  From that perception, it’s a short step to reduced morale and higher turnover. Which may be coupled with increased difficulty in recruiting necessary talent.

An organization’s growth can be traced from domestic U.S operations to domestic policies/practices with international operations (U.S. based) to a truly global organization, where individual countries are treated as separate entities for Human Resource operations.

It is not an easy path to take, but one that will effectively and efficiently acknowledge and empower local HR operations in support of the success of each country’s business.  

Chuck Csizmar CCP is the founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad-based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

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Comments

[Jacque Vilet]

Agree completely Chuck.