Human Resources: Executive Summary: Managing a Global Workforce

Globalization is a fact of life for forward-looking companies, one that will likely transform business for decades to come. Firms entering the global sphere are caught up in high-stakes foreign investment and face fierce competition for low-cost labor amid worldwide economic and market forces. As they revamp their workforce management strategies, leaders in business recognize that they must adopt a global mindset to remain competitive in the world's marketplace.

Globally scattered workforces demand a new skill set for managers, CEOs and HR professionals, and competition for such talent is heating up. Especially critical is the need for leaders with international business skills who can also work with diverse cultures and convey knowledge across vast geographic distances. Sensitivity to cultural and political differences is proving to be a key factor in the management of outsourced operations and corporate mergers.

As global activity grows, analysts say, the number of international assignments will continue to expand as well. Notable changes in profiles of expatriates - and the work/life issues they generate - are also evident. A 2004 GMAC relocation survey reports that the share of female assignees to the overall expatriate population has grown gradually from 10% to 18% over the last decade, while the portion of married male expats has fallen from 64% to 55%. Nontraditional family groupings are occurring with greater frequency, as are dual-income families, who may require company support for a working spouse.

The trend toward shorter assignments reflects the demands of a fast-globalizing business environment. The same GMAC survey reports that between 2002 and 2003, permanent assignments dropped from 30% to 19%, but the share of assignments lasting six months to one year increased from 9% to an impressive 62%. The proliferation of very short assignments, often used for company quick-fixes and brief training programs, has spawned a growing number of "stealth expats," assignees not supervised or monitored by HR protocols.

As firms face global competition, a 2004 Management Recruiters International survey finds that relocation issues will become more critical to core profits. Companies are shortening assignments to cut family expenses, tightening compensation and incentive plans and encouraging assignees to take less-costly hybrid benefits packages. Local talent pools, which typically garner lesser wages, are of mounting importance, as are competitive regional wage levels for call-center workers.

Though overseas assignments with a spouse and two children can cost a company from $300,000 to more than $1 million, measuring return on investment (ROI) has eluded many firms. A 2004 Cendant Mobility survey of 45 global organizations found that just 14% measured ROI for assignments abroad; 71% did not. HR workers can support ROI by developing better pre-departure strategies to prevent assignment failure and constructing repatriation programs that can staunch the high rate of returnee attrition.

Constructing equitable pay and compensation schemes for globally diverse workers moving from one country to another is one of many dilemmas companies face trying to balance home-company business policies with local workforce and market demands.

Globally scattered operations call for heightened effectiveness in overall communication and better alignment of local HR functions with corporate headquarters. But other issues, such as persistent labor/management conflicts, suggest that the interests of local workers and global business practices will likely continue to collide.

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The Institute for Corporate Productivity (i4cp, inc.) improves corporate productivity through a combination of research, community, tools and technology focused on the management of human capital. With more than 100 leading organizations as members, including many of the best-known companies in the world, i4cp draws upon one of the industry’s largest and most-experienced research teams and Executives-in-Residence to produce more than 10,000 pages annually of rapid, reliable and respected research and analysis surrounding all facets of the management of people in organizations. Additionally, i4cp identifies and analyzes the upcoming major issues and future trends that are expected to influence workforce productivity and provides member clients with tools and technology to execute leading-edge strategies and "next" practices on these issues and trends. i4cp is a for-profit company with offices in St. Petersburg, Florida.