Ready for takeoff
Despite the economic crisis, the force of globalisation has led to an increase in the number of employees taking to the skies for work assignments. How will this ultimately affect the business and HR? By Lisa Cheong
Do a search on Google and see how many Fortune 500 companies have offices in over ten countries,” Alice Yue-er Luo, executive in residence at Hong Kong University of Science and Technology Business School tells me over the phone.
“I recently talked to a logistics supply chain company that has 100 offices in 40 countries,” Luo adds. “That’s amazing,” she says. But soon, Luo adds, this example would be commonplace in time to come.
In 2005, author and Pulitzer Prize winner Thomas Friedman declared in his book The World Is Flat that geographical and historical boundaries have become increasingly unimportant to any particular country’s competitive business edge.
It has almost been a year since the crash of Lehmann Brothers. And yet, the financial crisis and global recession that we are all embroiled in only serves to remind us how tightly interlinked our global economies (and our fortunes) are tied to each other.
According to Mario Ferraro, group general manager for international HR at International SOS, the rise of globalisation has meant an increase in cross-border trade, foreign direct investment and employee movement. As more companies spread their wings overseas, this has a direct impact for International SOS – a medical, security and risk management solutions provider for companies and their travelling employees.
As a result of globalisation, business at International SOS now means having to understand their clients’ needs for expansion to provide the necessary medical and security infrastructure for the company and its employees.
The same holds true for business at IBM as well. Operating in 174 countries, Big Blue has shifted from what used to be a regional and siloed business model to one that is globally integrated, says Tom Vines, vice president of HR for IBM growth markets. The company’s strategy now is to locate its operations and functions based on the right cost, skills and business environment.
One example is IBM’s old strategy of having separate supply chains for its different markets. Now, the company has a global supply chain for all its markets. Furthermore, it has moved its global procurement global procurement mission to China, global services delivery to India, and many of the services that support the company’s external and internal web sites to countries such as Brazil and Ireland.
Because of the increasingly globalised environment, Ferraro says companies are now competing for customers and for market share in a number of ways, including penetration of new territories and development of innovative products, services and solutions.
And in the case of healthcare company, Novartis, part of the company’s plans to globalise means expanding the company’s presence in China and India where the company has R&D, production and global services.
The increase in trade also means an increase in employees who are willing to relocate out of their native country as well. Whether it is because of company-sponsored assignments, personal choices in seeking a better life and career opportunities or governments going out of their way to lure top talent, more workers are now more mobile and more willing to travel overseas than ever before.
Singapore is one such country where the idea of having both skilled and unskilled migrant workers land on our shores to work is not an alien concept. Currently, the island has 1.68 million foreigners in Singapore, 70% of whom are temporary and hold either an employment pass, S-pass or work permits for the low-skilled.
But on the flip side, open borders also means having to fight against losing talent to other countries or a brain drain – a scenario that the Singapore government wants to change.
In a recent speech made by Senior Minister Goh Chok Tong early in August this year, Goh said due to the increase in number of overseas scholarships and rise in parental wealth, smart and well-educated students may decide to stay on and work overseas and not return after their overseas education.
“We are already seeing a trend of more Singaporeans not returning after having studied overseas. I expect this trend to continue and more will settle abroad for work, marriage or other reasons. If more choose to do so, our talent pyramid will be chipped away at the top, with serious consequences for our long-term survival as a nation.”
“I consider this one of the most serious challenges which will threaten Singapore’s achievements in future. This challenge cannot be left to a future generation to resolve. It has to be solved now,” Goh adds.
And Singapore isn’t the only country in the fight against brain drain. New Zealand, with a population of 4.1 million, battles to retain its highly skilled workers. In a report by Organisation for Economic Cooperation and Development in 2005, it found that 24.2% of all New Zealand-born people with tertiary educations live overseas – the highest among developed nations.
Other countries not too far from New Zealand also include Ireland (also 24.2%) and Luxembourg at 22.2 per cent. By comparison, New Zealand’s brain drain is 10 times worse of Australia’s, where only 2.5% of college-educated people live outside their homeland now.
Even though the financial crisis has caused a blip on the radar and many companies have cut back on sending their employees on assignments, a trend that isn’t likely to last forever.
“This is because demographic factors eventually prevail over economic ones,” Ferraro says, adding that the shortage of talent in locations such as developing markets will create the demand for employee mobility.
And this seems to be backed up by a study conducted by KPMG in March earlier this year. In the report, 82% of 260 companies across 11 countries agreed that better labour mobility provides companies with a greater talent pool to choose from. Seventy-three percent of those surveyed also said better labour mobility allows for companies to hire better people.
The survey went on to add, “Sixty-nine percent of respondents felt that hiring people from other countries fosters better understanding of global markets, with 76% saying that foreign workers help develop a valuable global mindset.”
According to Vines, the very success of globalisation depends on the mobility of highly talented individuals who transfer “knowledge, new technologies, ideas, business capacities, and other creative capabilities”.
Vines adds that employees are often required to travel to new markets such as Sao Paulo, Johannesburg, Instanbul and other regions to transfer skills and knowledge to the local talent there.
Even as globalisation is expediting the transfer of human capital across borders, Vines adds that the organisation is also gaining deep insights into the talents of its employees in local markets who are excellent at serving both local and global IBM clients.
But mobility is not just contained to employees who have to live in another country for an extended period, as Ferraro sees the trend of short-term assignments and business trips to be on the rise. While short-term assignments are cumbersome in nature, Ferraro says some companies and employees prefer this option as it does not affect issues such as children’s schooling and the potential loss of the spousal income.
But how does it affect you?
But how is globalisation shaping the way HR practitioners do their jobs?
According to Jurgen Brokatzky-Geiger, head of HR and member of the executive committee for Novartis, the company will soon see a demand for employees willing to move between countries and sites. “For a globalised business it is important to create global teams who have a deep knowledge of the local businesses and cultures,” he adds.
And that means a company’s success will rest upon its ability to attract, retain and deploy the right talent to the right place, Ferraro adds. As such, policies, processes and infrastructure that help support the recruitment, deployment and administration of a large pool of mobile talent will be valued in time to come.
At International SOS, the company combs the market globally for medical and managerial employees to support its global businesss. Furthermore, by working closely with the general management, operations and business development teams, the HR team is able to understand the company’s needs and fulfill their HR requirements, Ferrro adds.
Having a portfolio that oversees 140 countries (a whopping 80% of the countries IBM has operations in), Vines says that working with various cultures has allowed him to interact with a wide-ranging number of cultural groups and has given him an insight into the work ethics of people in various countries. Learning from different people and drawing on a global pool of talent is definitely a plus point, he says.
Globalisation has also chipped away the traditional 9-to-5 working hours as low-cost communication makes it easy for employees to be working 24/7. In such cases, Vine says having an emphasis on work-life integration and flexibility like IBM does allows him to be more flexible about how his work gets done – just as long as business goals are met. “This enables me to effectively balance my work and personal commitments despite a demanding work schedule,” he adds.
The heart factor
While certain skills (such as nursing) are in constant in demand and can help a person gain employment overseas, those interviewed all agreed that leadership and personality traits will play a part in determining the success of overseas assignments.
As Ferraro explains, “Success is heavily reliant on having the right leadership skills to motivate staff and drive their performance, often in challenging and stressful situations, such as medical emergencies or major crises.”
But according to Luo, employees who are moving overseas and taking on leadership roles need to have strong people management skills.
“When you go abroad, you need to have the capability to attract, retain and develop your employees. So on top of having the skills to drive market growth, you need to build your team,” she says. And this can only be done by establishing a strong level of trust and rapport among employees, Luo says.
In addition to leadership and management skills, Ferraro adds that in order to work in a different country, employees would also need to be culturally sensitive, adaptable, self-reliant, flexible and able to work in a team. Brokatzky-Geiger agrees, adding that employees who move overseas generally show a willingness to learn, coach and work in a cross-cultural environment.
Luo adds that usually, assignees who succeed overseas are adventurous when it comes to taking personal risks and moving out of their comfort zone.
Build them up
So what can companies do in order to groom a sustainable pipeline of talent that is willing to uproot and travel abroad for work?
“The key is to start early,” says Luo.
“Imagine a person with ten years of experience and at the managerial level, but then his boss says, ‘Would you like to relocate to China?’” In situations like this, Luo says employees would be hard-pressed to convince their spouses to give up their jobs or pull their children out from their school system.
As such, Luo says during the interview and selection process, HR practitioners should position the company as a global organisation that may relocate its employees to other places. “So you will be looking for people who are open to new experiences and love to travel,” she adds.
For one, hiring the right employees who embrace the international mindset in the first place will help in the company in grooming employees who are willing to travel overseas. “The international mindset is ingrained in the culture and fabric of International SOS and it is an essential pre-requisite during candidate screening,” Ferraro says, adding that recruitment managers often have information about the various sites and can address a candidate’s concerns and questions during the selection stages.
Brokatzky-Geiger agrees, adding that Novartis invests a substantial amount of effort into identifying internal talent that can move to Asia to transfer business knowledge and scientific expertise into its Asian campuses.
“We also have programs in place to select Asian talent who will move permanently or for a number of years to our headquarters in Switzerland and in the USA,” adds Brokatzky-Geiger, who along with Luo and Vines will be speaking at the upcoming Singapore Human Capital Summit later this month.
At IBM, the company first provides employees to opportunities to work overseas via its Global Opportunity Market. In it, employees can access geography-specific key information such as frequently asked questions they might have before moving overseas.
IBM also has a portal for internal hiring managers to scout for suitable talent among the 400,000 headcount that IBM has.
Support from the HR team, as well as medical directors and general managers is also crucial in preparing and supporting employees before and during the overseas assignment. “Upon joining the company, every new employee undergoes a comprehensive induction programme, during which we emphasise the truly global nature of the organisation, together with a detailed description of how we operate globally,” Ferraro says.
As for IBM employee support, tools such as the online portal, Country Navigator, provides its employees with insight on how to interact with people of different cultures. Some of the Country Navigator’s features include access to updated country-specific knowledge and networking tools that will help IBMers fit into local cultures and be effective immediately.
International SOS also has a two full-time staff – a general manager for professional development and employees relations manager whose jobs are to ensure that both short and long-term needs of employees are fully met. They also provide an ever-ready channel of communication with the company, no matter how far away employees are from the headquarters, Ferraro adds.
Driven by a talent shortage in the future, it’s beyond a doubt that globalisation and talent mobility will become a bigger issue in the future. With advances in technology and communications, Ferraro puts it best when he says, “It is thanks to technology that more and more companies have been able to ‘go global’, starting the globalisation process and its HR implications.”
