Thursday, 15 November 2007

Global HR in a Flat World

People Management includes an article written by Cambridge lecturer Philip Stiles; 'A world of difference'.

Stiles' research in multinational companies has found that organisational culture has more influence on HR practice than national culture. To some extent, this contrasts with Hofstede's findings that national culture provides the strongest influence on the behaviour of employees. It also contrasts with Laurant's findings that national culture has an even greater impact in global companies than in domestic ones: "a multinational environment causes people to cling even more strongly to their own cultural values". (*)

Why do I say 'to some extent'? Well, firstly, just because this is what HR practice is, it doesn't mean that it's what HR practice should be.

For example, Stiles notes that:

"In performance management we might have expected a large divergence of views in areas such as pay for performance or merit-based promotion, but we found little
or no difference across the world."



To me this is less about global practice diversity than it is about practice diversity per se. It takes me back to Gary Hamel's point that although in most sectors there are a number of different business models, across all sectors there are very few variations in management practice.

We tend to apply 'best practices' without thinking too hard about their application - to sector, function or geography. As Stiles notes:

"Organisations seek what works - and, for HR in multinational companies, the range of options is limited to a few common practices that are believed to secure high performance... Companies imitate the practices of other successful firms to gain legitimacy".


So just because we don't vary our HR practices across countries doesn't mean they would perform much better if we did.

Secondly, Stiles does note that practices do vary, but that these variations are driven by regulatory criteria rather than variations in values:

"We did see local adaptations of global standards, of course, but these were often to do with a particular country's regulatory practices, labour market issues and stage of economic development, rather than its cultural values."



In my experience, it's often hard to disentangle these: regulatory practices are often a result of cultural values. So I'd argue that values are having an effect.

Thirdly, it turns out the culture itself, does actually make a difference:

"Rolls-Royce recognised that traditional, western-style performance appraisals and forms of upward feedback could be problematic in Asian countries. Other western-based multinational were careful when it came to recognising individual achievement in countries with collectivist cultures. But even here we saw in many cases that the companies took a "non-negotiable" approach to their global practices. The local variations they allowed were minor."



Well actually, these look like quite significant variations to me. And even if they are small, it doesn't mean that they're not important. In my book, I quote Thomas Davenport as explaining:

"God is in the details. Nuances make all the difference. Subtle shadings in the definition of human capital elements are magnified when applied in a strategic context."



I'm still with Hofstede - flat or not, I think cultural issues are bound to have a very significant impact on the way we manage our people around the world.


* = Note Stiles quotes research conducted by Gerhart and Fang which shows organisational differences accounted for more variance in employees' values than did country differences.


PS:



I will be speaking on these and related issues in a presentation at VIEW, the online and “virtual” conference and trade show for HR, Benefits, Staffing, Compensation, and Training professionals, on December 12-13, 2007. The event is 100% online, virtual and free to corporate HR practitioners.

My session on Global HR: Trends and Differences is scheduled at 9.00pm GMT / 4.00pm ET and will be followed by a live Q&A with attendees.

VIEW features all the benefits of a premier in-person HR conference without the cost, travel or hassle associated with traditional events. Attendees will be able to interact with over 1,000 people via chat or email, attend educational presentations by over 40 of the best thought leaders in each of 9 pavilions, visit over 70 booths in the exhibit hall and enter to win prizes. The best part is that it can be done without leaving the comfort of your office (in fact, you attend VIEW from wherever you happen to be, as long as you have a high speed Internet connection).

For more information, see www.hr.com/view.