What does this mean for HR? More "glocalization," the need to treat each global outpost in its local context.
We are now operating in a world where all markets are local. HR, training, talent acquisition -- we have to figure out how to adjust our practices to take advantage of that.
founder and principal, Bersin by Deloitte
For HR, the rise of glocalization means sourcing and developing local leaders instead of -- or in addition to -- transferring American executives to global branches. It also requires operating the HR function in a more distributed model. Throughout the conference, testimonials from HR leaders and experts showed just how effective, if challenging, such initiatives can be.
Local leaders drive global success
Bersin, founder and principal of Bersin by Deloitte, explained that going "glocal" means blending features that are unique to the organization with the customs and preferences that define the specific market. One example is the auto industry. "Every time they tried to build a world car, it failed," he said. So, instead of trying to manufacture an American car and sell it overseas, or to scrap all American components and build a car for a particular country, Ford struck a balance with its Figo model, which "has global parts, but is a local car," he explained. The car's size, shape and styling were tailored to Indian tastes, and it became the fastest-selling car in India.
During the panel discussion "The Bold, New CHRO [chief human resources officer] and the Strategic Role of HR in the Year Ahead," Garry Randall, HR senior vice president of Disney Consumer Products and Disney Interactive at Walt Disney Co., headquartered in Burbank, Calif., said Disney has relied on glocalization to build international theme parks. For instance, when Disney opened its Paris park -- the first one owned and operated by the American headquarters -- one aspect of French culture initially clashed with Disney's.
"One of the things we knew all along but we were dismissing was that the French like to drink wine, and we were not going to allow any alcohol on our premises," Randall said. "We had a riot in the streets, so we awakened to the need to let the French drink." Today, Disney is building a theme park in China, and he explained that it will not have a main street because the Chinese aren't familiar with the concept. "We need to be uniquely Disney but authentically Chinese in everything we do," he said.
The glocal business strategy has also informed the company's HR processes, Randall said. "That has changed how we staff those particular locations," he said. While the company does deploy American expatriates to establish new global branches, "local leadership really brought us to where we wanted to be," he said.
Bersin agreed that developing local leadership talent is often more effective than the "expat" model. "The idea of transplanting an executive from corporate headquarters to another country does not work as well as you'd think," he said. He also pointed out that effective leadership skills differ from country to country.
In this vein, human capital management lead analyst Katherine Jones and benchmarking lead analyst Karen O'Leonard, both from Bersin by Deloitte, presented a session on leadership development in China. While relocated American executives are initially helpful in setting up global outposts, these expats should start looking for their local successors almost immediately, they said.
Of the eight capabilities that Jones and O'Leonard identified as requirements for successful global leaders, the top three were strategic thinking, persuasive communication and the ability to deliver results. These traits, however, might be more difficult to find or foster in China, they cautioned, where workers are loath to question authority figures, and communication is less direct and carefully tailored to avoid damaging relationships.
Distributed HR model supports glocalization
The way the HR function is organized also can be affected by glocalization. Since business units located in different parts of the world require a level of unique treatment, HR leaders at multinational and globally expanding companies should consider reorganizing the HR model from "centers of excellence" to "networks of expertise," Bersin advised. In other words, HR should become a more distributed function, and HR business partners should be empowered to operate at the level of the business unit while still using integrated systems and employing overarching company initiatives. However, HR leaders, however, often struggle with deciding what aspects of processes to localize and what should remain standard across the organization, he said.
In Disney's distributed HR model, the proportions of what's local and what's global have recently been recalibrated, Disney's Randall said. "We've [had] a distributed HR model for a long period of time, but only recently have we realized that … there remains a whole host of common elements we can bring to the center," he said.
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With this in mind, Disney has recently introduced seven new centers of excellence, Randall said. "We now have an integrated HR operating model that allows us to flex and move," he said. "[There's] much greater scalability with the centers of excellence."
Organizations that employ a distributed, "high-impact" HR operating model got greater return on their HR compared to others, Bersin said. "What we found is that of all the companies studied, there were a small number that were getting 30% to 40% higher returns on their HR, and they had certain characteristics: local authority with greater amounts of training [and] skills, networks of expertise connecting HR business partners, [and] learning from local capabilities and experiences and bringing that information back to the central organization." Two additional characteristics were a strong focus on gathering internal and external data and benchmarking, and having a "bold, business-driven CHRO."
"If you can make this work, business partners will ideally have a new job, and the technology will start to directly inform the workforce," Bersin said. "We are now operating in a world where all markets are local. HR, training, talent acquisition -- we have to figure out how to adjust our practices to take advantage of that."