HR goes global

Globalization affects HR practices
By Shannon Klie
|Canadian HR Reporter|Last Updated: 02/14/2011

The globalization of the world’s economy has a number of critical implications for HR professionals. To find out the impact of globalization on human resources,

Canadian HR Reporter

and the Human Resources Professionals Association (HRPA) surveyed 259 HR professionals as part of the monthly pulse series.

Globalization refers to a number of different things. For the purposes of this survey, let's take it that there are three main areas where globalization could have an impact on your practice as an HR professional:

• the migration of certain kinds of work to other countries

• the global competition for talent

• the challenge of managing multi-national workforces.

Just how much are the above having an impact on your practice as an HR professional? That is the question we attempted to answer in the survey

HR goes global

The challenge of globalization for HR (Analysis)


HR goes global

Globalization affects HR practices

By Shannon Klie

The economy is truly global, with Canadian organizations looking abroad to recruit employees and often finding themselves in competition with international organizations for the same talent, according to the latest Pulse Survey.

Just more than one-half (51.1 per cent) of respondents said their organization looks outside of Canada for employees and 51.5 per cent said they often compete for the same talent as organizations from other parts of the world.

“Every country wants that qualified candidate,” said Terri Oliver, an HR consultant at TheMIGroup in Mississauga, Ont. “Globally, the war for those scarce skills and that talent is going to get more competitive.”

The 259 Canadian HR Reporter subscribers and members of the Human Resources Professionals Association (HRPA) surveyed were asked to consider three areas of globalization.

These include the migration of certain kinds of workers to other countries, the global competition for talent and the challenge of managing multinational workforces.

With that in mind, 67.6 per cent of respondents said globalization is having more than a small impact on their practice as an HR professional.

“In organizations and consulting practices, there is more and more global collaboration,” said Caroline Yang, an HR consultant at MultiCultural Business Solutions in Markham, Ont.

When a Canadian company has operations in another country, it’s important to fully understand the HR standards and norms of that country, she said.

“It’s really important for HR professionals to go in and do their research and not assume something that works here will work over there. But also, don’t assume that some of the best practices we have built over the years are not applicable,” she said.

When she worked at Nortel in China, Yang successfully implemented Nortel’s Canadian performance management and compensation structures.

“The local management was actually very keen on learning the best practices that have been built over the years by the Western business world,” said Yang.

Of the 23 per cent of respondents who work at an organization that owns or operates one or more foreign companies, 81.3 per cent said that has a significant effect on the HR function.

At these organizations, issues around pensions, medical benefits and immigration are more complicated, said Oliver. Some countries have a social security agreement with Canada, whereby a Canadian working in the foreign country pays into the Canada Pension Plan (CPP) and not the host country’s social security scheme. Without such an agreement, the question becomes who pays for those remittances and how can the company ensure the employee will still have full access to CPP, said Oliver.

HR also needs to understand how long it will take to bring in an employee from another country or send a Canadian to work abroad and ensure it has the proper paperwork.

“For companies recruiting internationally, intra-company transfers are typically easier than external hires,” she said.

Organizations should first look locally for talent but if it isn’t available, they will need to turn to international sources, said Oliver.

“There’s a lot more support required for the person coming in from overseas but, depending on the scarce skill that they’re looking for, it may well be worth it,” she said.

Of the 24.5 per cent of respondents that work at an organization that is the Canadian subsidiary of a foreign-based company, 80.9 per cent said that has a significant impact on how HR is practised in Canada.

Andrea Zanetti is a compensation and benefits specialist in the Toronto area. After 15 years in the profession, she recently completed her MBA and found the corporate world had changed significantly when she started interviewing for senior compensation and benefits positions at global companies.

“There were a couple of companies that actually said to me, ‘If you take this job, you will just be carrying out instructions.’ As a senior HR professional, that was a bit of a shock. It almost implies this is the end of that specialization in Canada, unless it’s a Canadian company,” she said.


The challenge of globalization for HR (Analysis)

Type of organization dictates effect of globalization on HR

By Claude Balthazard

Globalization is affecting our businesses and workforces, but how much of an impact is it having on our practice as HR professionals? There appears to be a wide spectrum — 19.4 per cent of respondents to the latest Pulse Survey indicated globalization was having a huge impact on their practice as an HR professional. One-quarter (24.8 per cent) indicated a big impact, 23.3 per cent indicated somewhat of an impact, 15.1 per cent indicated only a small impact and 17.4 per cent indicated no impact at all.

Slightly more than one-half (52.3 per cent) were from organizations that were neither subsidiaries of foreign-based companies nor Canadian-based companies with foreign operations; about one-quarter (24.6 per cent) were from organizations that were Canadian subsidiaries of foreign-based companies; and another one-quarter (23 per cent) were from organizations that owned or operated one or more foreign companies.

One would expect the degree of impact on HR to be related to whether one’s organization was a subsidiary of a foreign-based company, a Canadian-based company with foreign operations or a company that is neither — and that turned out to be the case. Of the respondents from organizations that were subsidiaries of foreign-based companies, 59.6 per cent indicated globalization had either a big or huge impact on their practice. For those respondents from Canadian-based organizations with foreign-based operations, the corresponding percentage was 64.4 per cent. For those respondents from organizations that were neither subsidiaries of foreign-based companies nor Canadian-based companies with foreign operations, the corresponding percentage was 28.3 per cent.

Of organizations that were subsidiaries of foreign-based companies, 47.6 per cent thought being a Canadian subsidiary of a foreign-based company had a huge or big impact on the manner in which HR is practised in Canada. Of organizations that owned or operated one or more foreign companies, 61 per cent thought owning or operating one or more foreign-based companies had a huge or big impact on how their HR function did its work.

The survey looked at three areas: global workforce shifts, foreign competition and global talent sourcing. For each of these areas, similar differences were found.

With respect to global workforce shifts, 38.7 per cent of the respondents from organizations that were subsidiaries of foreign-based companies indicated global workforce shifts were either a big or very big issue. For those from Canadian-based organizations with foreign-based operations, the corresponding percentage was 35.6 per cent. For respondents from organizations that were neither subsidiaries of foreign-based companies nor Canadian-based companies with foreign operations, the corresponding percentage was 23 per cent.

With respect to foreign competition, 38 per cent from organizations that were subsidiaries of foreign-based companies indicated foreign competition was either a big or very big issue. For those respondents from Canadian-based organizations with foreign-based operations, the corresponding percentage was 47.5 per cent. For those respondents from organizations that were neither subsidiaries of foreign-based companies nor Canadian-based companies with foreign operations, the corresponding percentage was 24.8 per cent.

With respect to competition for talent, 21 per cent of respondents from organizations that were subsidiaries of foreign-based companies indicated they compete for the same talent as organizations from other parts of the globe. For those respondents from Canadian-based organizations with foreign-based operations, the corresponding percentage was 39 per cent. For respondents from organizations that were neither subsidiaries of foreign-based companies nor Canadian-based companies with foreign operations, the corresponding percentage was 12.8 per cent.

The comments suggested some interesting, and potentially concerning, trends. One respondent noted how a reduced number of Canadian head offices had reduced the demand for true generalists because HR professionals within foreign-owned operations are often experts rather than generalists. A few respondents indicated they were now competing with HR practitioners in other parts of the world who were taking work away from Canadian HR professionals because they offered cheaper services and did not have to be located here to provide that service.

A number of respondents indicated practising HR in this new global landscape was the most challenging aspect of their work, involving coaching the workforce and business on how to operate efficiently and co-operatively with co-workers and leaders spread globally. By all accounts, the challenges of globalization will become a more important part of all of our practices as HR professionals.

Claude Balthazard is director of HR excellence and registrar at the Human Resources Professionals Association in Toronto. He can be reached at cbalthazard@hrpa.ca.

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