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Global Culture Who's the Gatekeeper

November 1, 1997
Related Topics: Global Business Issues, Featured Article
The growth of international business is phenomenal. According to the U.S. Department of Commerce, in the last 25 years U.S. investment overseas catapulted from more than $75 billion to in excess of $717 billion in 1996. Foreign investment in the United States went from $13 billion to $630 billion during the same period, and about one-third of all of this growth occurred since 1990. And the estimate of the number of U.S. expatriates is 350,000 by the National Foreign Trade Council. Activity—both in dollars and in human resources—continues to heat up and will only get more complex and demanding as the new century approaches.

This adapted excerpt from "Capitalizing on the Global Workforce: A Strategic Guide for Expatriate Management" by Michael S. Schell and Charlene Marmer Solomon (McGraw-Hill 1997), offers global HR managers a preview of what to expect. Based on interviews with dozens of senior human resources managers from Europe, Asia and the United States, it enumerates the primary challenge facing human resources in the next decade: creating a global corporate culture.

Driven by global competition and accelerated by technological achievements, organizations and their workforces are in an unparalleled transformation process. In 1987, Indianapolis-based Hudson Institute's landmark study, "Workforce 2000: Work and Workers for the 21st Century" (by William B. Johnston and Arnold H. Packer) predicted the increasingly diverse composition of the American workforce by the turn of the century and also examined several of the economic factors shaping this trend. Yet, changing demographics of the workforce are only part of the picture. What about the revolutionary changes in organizations that these people would staff? Moreover, despite its accuracy, the report forecast demographic trends based on predictable events. And while those predictions stunned American business leaders at the time, they pale in significance when compared to the impact of globalization on business in the 21st century.

In 1991, hard on the heels of that study, Armonk, New York-based International Business Machines (IBM) and New York City-based consulting firm Towers Perrin undertook an extensive survey that examined the role of human resources professionals in helping organizations gain a competitive advantage. Building on the findings of "Workforce 2000," this study melded the workforce issues with business challenges to explore the implications of both the changing organization and workforce on the human resources management function. Entitled, "Priorities for Competitive Advantage," it predicts the following vision for the Year 2000.

Human resources will be:

  • Responsive to a highly competitive marketplace and global business structures
  • Closely linked to business strategic plans
  • Jointly conceived and implemented by line and HR managers
  • Focused on quality, customer service, productivity, employee involvement, teamwork and workforce flexibility.

Even though those predictions still are currently accurate, they didn't anticipate the importance of the following factors:

  • The impact of the global workforce and the proactive role that the HR function must assume in order to capitalize on it
  • The need to create a corporate culture with global application
  • The need to build HR competencies into the line manager function—in streamlined, reengineered organizations
  • The urgency to reengineer the HR function to make it consistent with the strategic business mission and structure of the organization.

It's certainly not surprising that many forward-thinking organizations have already embarked on the arduous task of reinventing the human resources function—and the organization as a whole—with this paradigm shift in mind. But through thoughtful analysis and ongoing efforts, it's possible to avoid many obstacles and pitfalls while evolving toward a global mindset.

What organizations will look like in the future.
The trend toward smaller, independent operating units and smaller companies staffed by employees recruited from a worldwide talent pool will continue as we cross into the next millennium. These firms will focus on, and strive for, an empowered workforce. They will become increasingly flatter and faster than their predecessors, and they will move toward a strong corporate culture that binds employees into a unified organization. Managers in these organizations will require global skills and cultural fluency. Driven by the demands of a global workforce and the central role these individuals will play in the viability of the business, the human resources function will be part of the core business activity.

As the influence of technology expands and the business world relies on instant access to information to make quick decisions, global managers must be prepared. Those changes come at an ever-increasing rate accelerated by technology and the simultaneous momentum it picks up. Worldwide telecommunications, particularly computer networks, have made the transfer of information—and knowledge—a task achieved in seconds. That makes it possible for companies—and even individual workers in Malaysia or India—to play a key role in developing new products and making key discoveries. In the 21st century, new products and discoveries will as likely be generated in Malaysia and will need to be available in the United States.

Develop a cohesive culture. As access to markets, raw materials, capital and an educated workforce standardizes around the world, American companies lose some of the unique advantages enjoyed in the past. They compete with companies around the world that use the same technology, have equal access to materials and people, and might even have lower labor and other operating costs.

What will distinguish companies from one another? The vision of the organization and how clearly its values are integrated into the business function. In other words, how effectively those values can be translated and implemented into a powerful corporate culture. The global HR manager plays a pivotal role in developing, protecting and communicating the corporate culture. It occurs through every step of the process, from developing policies that can be embraced by all members of the organization to communicating corporate values at the recruiting and hiring stages, as well as to training and performance management that maintains consistent corporate messages.

Since organizations no longer will be ethnically uniform, corporate culture will take on far more important meaning. It will be the blending of the various values of the worldwide workforce into a single value system that embodies the organization's vision. That corporate culture, together with its norms, will unify an organization's workforce, enhance communications and enable global teams to work together to achieve a single common purpose.

Corporate culture is the glue that binds this organization together, but the greater the number of elements and the more diverse they are, the tougher it is to hold everything—and everyone—together.

HR managers are the guardians of the corporate culture.
Melding a common vision is no easy task; communicating it consistently across cultures is even more difficult. Yet, coalescing various nationalities and cultures into a streamlined organization capable of speed, teamwork and flexibility will become essential to ratcheting up profits and productivity. The challenge: to recruit and hire the most gifted, talented and qualified employees from all over the world and enable this diverse group of people to join in a common cause.

In other words, the thinking required for today's (and tomorrow's) global leaders will enable them to make decisions and take actions for which there's no clear precedent and no predetermined corporate position. They will need to factor in and value intuitive judgment and ambiguous data to create competitive products and services. Somehow, the culture of an organization will have to allow these global leaders the freedom to use their global intuitiveness and sensibilities with the same credibility as it accepts data from spreadsheets. This leadership will take courage and wisdom, which is, in reality, nothing new for winning organizations. Therefore, as the modern corporation is redesigned and the traditions and practices of the past are discarded, HR can choose to be at the forefront—reexamining, redefining and facilitating the change.

Workforce, November 1997, Vol. 76, No. 11, pp. 35-39.

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