Although cliché at this point, the reality is that due to rapid technological advancements geographic borders are not the barrier they once were – the world is getting smaller. International growth is an important element of Guidant Global’s own business strategy. However, in our experience, clients can sometimes struggle with the ‘how’ of growing internationally from a talent perspective – not only technically, but also culturally.
Businesses most often make the decision to expand overseas to diversify risk and income streams, while reducing dependence on a single market. However, success relies not only on an outward looking mind-set, but also a solid strategy and execution.
While many organizations may be keen to expand internationally, desire and readiness aren’t always the same thing. To evaluate if they are in a good position to consider global expansion, leaders must first question if they have developed a compelling business case, as well as a multitude of other factors such as change management, compliance, market maturity/readiness and organizational governance.
While the rewards can be great, the challenges associated with a multinational program should not be underestimated: local legislation, cultural nuances and time and language differences must all be considered.
Commercial decisions, of course, need to be made based on the volume of opportunities, profitability and a country’s political/regulatory realities. However, skills availability and wage arbitrage are crucial elements that demand principal consideration. In emerging markets in particular, scaling talent to business demand can be challenging. For this reason, due diligence should always be carried out to determine the local landscape – especially with regards to the extended workforce, where local employment models may differ drastically from those in an organization’s domestic market. Established processes for developing strategy and allocating resources can fail to adapt to the diversity of markets, customers, and channels.
Today, HR technology is increasingly being harnessed to plan and manage workforces more strategically. The rise of big data and people analytics, specifically, is enabling leaders to gain a ‘helicopter view’ of global resources, workforce mix, and international talent mapping so that resources can be deployed in the most efficient way. This type of insight also means a location of a business function can, in theory, be determined by regional skills availability.
Availability of data is key to ensuring that businesses are making full use of all available insights – and this comes with its own share of technical hurdles.
Integrated technology and/or organizational systems across offices and countries are crucial to success. Nonetheless, programs built for the US or UK can rarely be ‘lifted and shifted.’ Vendor Management System features which may be business critical in one country could be irrelevant or even prohibited in another culture. Global markets can be both complicated and/or immature and, in these instances, ‘localization’ will be a business necessity to reflect differences in both legislation and business practices. For example, many countries require structural contract differences with the client often having to ‘own’ the supplier contracts.
Research by McKinsey
shows that 40% of executives at global organizations feel that their product or service offerings were stronger than local options. Yet separate research
has shown that high-performing global companies are generally not as effective as local organizations at forging relationships with local partners and governments or implementing ideas and products. For this reason, companies which are entering new geographies must adopt a ‘global’ approach to business to ensure that they are culturally aligned with the market they are operating in.
Best practice can vary widely between locations: commonplace best practice in one country can be a deterrent to adoption – or even illegal – in another. For this reason, prudence dictates that you have a team of seasoned consultants working on localization efforts (legal, financial, etc.) and implementation solution design, and that each person on the team has the scope to refresh their knowledge of in-country culture and law.
Companies will need to develop a well-documented best-practice matrix globally and by country and also ensure that teams have access to resources and training to help them easily ‘sync’ with country and client culture.
For example, in the US it is best practice for a Managed Service Provider to pay suppliers. In China, however, it is often not within regulation for most worker types. In the Netherlands, freelancers are a driving force in the labor market – but must be registered with the government, which can take up to 800 days. In the US, freelancing is encumbered with regulatory uncertainly for the contracting organization. And while in the UK it’s welcomed to have dinner with clients, in Korea it’s considered positively rude not to dine with partners.
vIn short, successful global expansion relies on a solid strategy and plan of action around talent management, as well as forensic and authentic understanding of in-country culture so that workforces can be managed most effectively.