1. Align the HR Function with the Organization’s Global Business Strategy
Apply a global mindset to your HR priorities.
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2. Introduction
Global HR functions must be fully aligned with the business’ HR strategy to be successful. This means adopting new global HR capabilities, as well as determining the right global vs. local balance for all HR activities.
This Research Is Designed For:
This Research Will Help You:
Organizations on the brink of expanding their operations globally.
Organizations that are already global, but have opportunities to improve their HR function effectiveness on a global scale.
HR leaders who are looking to optimize and align their HR function in the context of globalization.
Review the organization’s global business strategy.
Align HR principles to global business strategy.
Make decisions around three key global HR issues.
Audit your HR capabilities within a global context.
Determine your global HR transition priorities.

3. Executive Summary
Align the global HR function with the global business strategy to ensure continued HR relevance.
Organizations globalize to leverage new markets, lower labor and operational costs, and skills in short supply in their traditional locations.
An increasingly geographically-dispersed workforce is impacting how HR approaches its own role and where that HR role is located. HR co-location with employees is no longer a given, impacting interactions, policies, and processes.
Ideally, HR leaders are involved in developing the overall business strategy, but this isn’t always the case. Understanding your organization’s strategy is the first step in developing an effective, aligned, and strategic HR function.
Effective global HR sets standards that support critical decision-making in three key areas:
The degree to which HR activities need to be controlled at a global level to ensure consistency, or customized for local relevance.
The degree to which HR should continue to perform all traditional HR activities, or shift certain activities to line managers or outsourcers to maximize effectiveness.
The degree to which HR activities must be performed by HR staff who are physically co-located with managers and employees, and which can be performed from a distance.
Three essential HR capabilities must be in place for a globalized HR function to be successful:
Integrating a global mindset by embracing the idea that there are differences between the global and local levels, and that these differences should be acknowledged and leveraged as a strategic business advantage.
Providing analytical insights on both global and local levels to inform business solutions and decisions, thereby increasing HR’s strategic value.
Communicating with intent to overcome the complexity of the global environment.

4. This solution set is tightly integrated with HR’s overall strategic planning process
If you’re a global HR organization, global issues should inform and be informed by your broader strategic planning process.
Discussing global HR issues and implications is like looking at HR strategic planning through a high-focus lens.
If you already have an existing HR strategic plan, use it as a foundation for a more focused global HR discussion.
Once you’ve made key decisions about global HR, revisit your strategic plan to make updates in light of new global insights and plans.
If you don’t have an HR strategic plan in place, start by developing one and use this set as one input to the strategic planning process.
Global analysis
Strategic planning
Strategic execution
To help you craft a broader HR strategic plan download McLean & Company’s solution set, Develop an HR Strategic Plan.

5. Make the case for aligning the HR function with global business strategy
Align HR principles to global business strategy
Make decisions around three key global HR issues
Audit your HR capabilities within a global context
Determine your global HR transition priorities
Learn about globalization trends.
Understand why globalization is impacting the HR function.
Get to know the benefits and challenges of aligning your HR function with global business strategy.
Find out how to transition your HR function to alignment with global business strategy using McLean & Company’s process and tools.

6. Organizations are globalizing to enter new markets, reduce costs, and gain access to broader talent pools
Globalization puts a spotlight on organizational design, and impacts organization structure, strategy, culture, roles, processes, and people.
Historically, organizations have globalized by expanding from their home country to one or more other countries to open up new markets for their products or to take advantage of lower labor and operational costs.
Today, organizations are opting to globalize for yet another reason: to leverage skills which may be in short supply in their traditional locations. This will only continue as workforce and skills shortages loom in key areas.
The “Virtualization” Trend:
As companies search for ways to reduce fixed costs such as brick and mortar operations, technology smoothes the way for employees to work virtually, either from their homes or in other flexible workspaces.
Similarly, technology allows individuals in multiple locations within and across countries to interact with each other and even form virtual teams.
The “Global vs. Local” Trend:
In the past, organizations have striven for global consistency and control. Now, in some sectors such as the Financial Services, organizations are prioritizing local relevance.
Organizations will struggle to find the right balance between centralized control and local flexibility for their geographically dispersed operations and workforces. +
Neither of these trends are new, but they are intensifying. Their interaction will make people management more complex. As a result, globalization will have significant implications for the human resources function.
Increasingly, HR executives are being promoted to carry out global responsibilities. Of those surveyed, 45 percent have taken on global roles within the last two to three years, while a full 40 percent have assumed such responsibilities within the last 12 months.
– Source: Mercer, “HR’s expanding frontier: From local to global strategic partner.”

7. % Citing Factor as Much or Somewhat More Common Today
An increasingly geographically-dispersed workforce is significantly impacting the HR function
A 2012 KPMG study found that workforces have experienced significant geographical changes in the previous three years.
Globalization Factor
% Citing Factor as Much or Somewhat More Common Today
Working across borders (e.g. teams in different geographies collaborating)
71%
Creating HR policies to address the global nature of the workforce
59%
Transferring key talent between cross-border operations
57%
Sourcing key talent outside our home market
55%
Cross-border reporting lines
54%
Adding new cross-border offices
52%
Where and how employees are working is shifting at a staggering rate. Employees are working in global teams and are transferring between countries.
As a result, HR is having to change both how it approaches its own role and where that HR role is located. HR co-location with employees is no longer a given, impacting interactions, policies, and processes.
…Many strategic business imperatives for HR are becoming global, including governance and compliance, risk management, benefits harmonization, talent management, and global mobility.
– Source: Mercer, “HR’s expanding frontier: From local to global strategic partner.”

8. A strategically aligned global HR function improves cost effectiveness and increases relevance
The business, HR function, and employees all benefit from a strategically aligned global HR operation.
HR will operate more cost effectively because it will:
Have greater, data-driven insight into both global and local cost patterns.
Operate more efficiently by reducing redundancies, reconciling conflicting agendas, and eliminating waste.
Source and develop local talent more effectively.
Globalization presents HR with an opportunity to transform itself. How?
If it hasn’t done so already, globalization presents the perfect opportunity for HR to separate the strategic and administrative aspects of its operations to allow both to function better.
For more information, refer to McLean & Company’s solution set Align the Role of HR with the Organization by Transitioning HR from Functional to Strategic.
HR will remain relevant to the business and employees because it will:
Create a shared corporate identity and culture that doesn’t devalue the role or perspectives of those in local operations.
Understand the impact of global decisions on local operations and people.
Understand the impact of local work realities on the business’ ability to achieve long- term global strategies.
Provide development and other programs that are designed to meet the needs of a diverse range of workers.
Identify knowledge and innovation that emerge at the local level, and ensure these are shared with others globally.
…HR effectiveness arises not only from the aggregate talent of the organization’s employees, but also from the coordinated deployment of this talent across the global organization’s network of relationships. The efficiency of this type of relational co-ordination is in turn a function of the global organization’s culture context.
– Source: Timothy Kiessling and Michael Harvey, International Journal of Human Resource Management

9. A misaligned HR function can derail globalization efforts
HR leaders must make alignment with global business strategy a priority, otherwise they risk negatively impacting globalization efforts.
However, only 40% of HR professionals reported that HR-business alignment was a top or medium priority for their organization in This number is far too low, and creates risk for global HR operations. (Source: McLean & Company, 2013; N=94).
Global/local imbalance: Globally-dominated business models can be too broad for local managers to operate in effectively, creating risks for globalization efforts. Even where control is imposed globally, it can be challenging for executives to have line of sight to far flung operations and to be sure policies are being followed.
Magnitude of error: The consequences of HR getting it wrong are more severe on a global scale. There is a heightened risk that people issues can derail costly globalization business initiatives. HR leaders must not only be acutely aware of business strategy, but must also have a clear understanding of the impacts of environmental factors in other countries.
In a global firm that used this popular phrase, ‘think globally, act locally,’ on the first page of its annual report, one local HR manager commented on its application in practice: ‘Our firm is organized on a simple premise. When operating under stress, and that is most of the time, they do the thinking, and we do the acting.’ In other words, the global thinking and local acting become two separate roles. The headquarters launches the global initiatives, which the subsidiaries are simply asked to implement within local constraints.
What drives this dichotomy is the misguided view of what it means to be ‘global’…[There is a tendency] to see global…as superior to local.
– Dr. Vladimir Pucik, “Managing HR Globally”
To be effective, HR must have a deep understanding of the local environment and be able to make decisions that take the local environment and the global business strategy into account.
Just as our enterprises study local markets and consumer behaviors before launching products into a new marketplace, shouldn’t we engage in similar due diligence before we inflict our HR practices? Shouldn’t there be scrutiny on whether our people management practices will help or hinder us in other countries and cultures?
– Source: Lance Jensen Richards, SPHR, GPHR

10. Low management bench strength
HR will face a series of challenges when planning for globalizing the HR function
“Enterprises only get to enter a market once…Countries such as India and China, despite the staggering populations, can be very, very small places when it comes to word-of-mouth.” – Source: Lance Jensen Richards, SPHR, GPHR
Challenges
Solutions
Global elements may not be clearly articulated in the business strategic plan, making it hard for HR to interpret what its role is and where opportunities could be.
HR needs to work closely with the business to understand and even help develop the global strategy, and work from there to define the global HR vision.
Lack of a global vision
Western-based companies in particular have an international reputation of being isolationist and ethnocentric, imposing their “way of doing things” on units in other countries. However, not every corporate culture can be easily “exported.”
Some organizations will need to pull back on global consistency and control in favor of being locally relevant.
HR needs to help business leaders wrap their heads around the global/local duality, especially where the business is currently entrenched in HQ-centric thinking.
HR must decide between global vs. local decision-making control.
Cultural conflict
Some local operations may not be large enough to have a physical HR presence.
Local managers may need to function as HR proxies in some areas and take on more significant leadership responsibilities.
HR will need to ensure that these managers are sufficiently prepared and empowered, and provide easy-to-access virtual HR support resources.
Low management bench strength

11. Strategic HR behavioral prerequisites
Strategic HR behaviors must be in place before an HR function can successfully align to global business strategy
Area
Strategic HR behavioral prerequisites
Information: How HR collects, stores, analyzes, and acts on employee data.
Metrics are established to measure the progress and success of HR initiatives.
Data is analyzed to identify threats and opportunities and support business decision-making.
Direction: How HR envisions and sets work goals and priorities over time.
Daily transactional tasks are fully automated or outsourced.
Long-term (3-5 years) planning in place.
Workforce forecasting and planning is a staple.
Change: How HR approaches organizational transformation.
Change initiatives in the organization are identified and led by HR.
Other leaders look to HR leadership to serve as a change management role models.
Command: How HR shapes the way management governs employees.
Formal leadership skills development programs are in place.
Succession planning is used to anticipate and mitigate potential gaps in key roles.
Policy: How HR manages rules for HR processes and employee behavior.
Comprehensive policy portfolio is in place and is consistently enforced.
Optional policies are in place to support organizational culture.
Problem Management: How HR responds to and resolves employee issues.
Comprehensive programs are in place to consistently and fairly deal with common and exceptional employee issues.
Risk management techniques are in place.
Performance Management: How HR affects employee efficiency and effectiveness.
Performance management occurs daily through feedback, coaching, and development programs.
Mentoring programs are in place.
High potential employees are identified and developed.

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