Localizing HR doesn’t mean abandoning global standardization

Global standardization

Posted by Michael Stephan on June 19, 2014

For years we’ve worked with global organizations to help them standardize their HR practices around the world with the aim to lower costs while improving HR’s ability to efficiently serve the business and employees. This work often involves complex and sweeping transformation efforts, significant investments in ERP/SaaS platforms and shared service centers, and other changes in HR’s structure, technology, and processes. Now one of the Global Human Capital Trends 2014 looks at the ways a new model of “high-impact” HR is reshaping the global and local HR function. The idea is to retain globalized practices and infrastructure, but with localized flexibility to address the realities of specific countries or markets. It’s standardization with a twist — and that twist is what enables HR services to be more business-driven and ultimately more effective.

Projects to globalize and standardize HR have typically included some component of localization. For example, you might design a 10-step global process for bringing a new hire on board that includes seven steps that are the same everywhere and three steps that vary according to location. These are transactional variations — not the point of the global-local HR trend. Instead, the trend is toward actually tailoring how you deliver local HR services to address key market issues or business needs.

Say the business strategy calls for 30 percent growth in Japan over the next 5 years. So, what recruiting strategy will be needed to support that growth, given the local talent market in Japan? What type of leaders with what type of skills will be needed in Japan to foster such growth? What type of training will the workforce in Japan need?

Tailoring HR services such as talent acquisition, employee mobility, onboarding, learning & development, and leadership coaching/development so they (a) support broad business strategies, (b) adhere to globally established HR standards, and (c) address the needs and realities of the local market is what high-impact HR is all about.

Still, many organizations have struggled to create high impact as they continue to tackle issues with a myopic view. Say a business has a retention problem at a local level. A local compensation professional suggests offering a retention bonus. A local leadership development professional wants to invest more in developing people to encourage them to stay. A local recruiting professional considers better screening to look for the indicators that might signal likelihood of leaving. These are siloed solutions, and today’s business and geographic challenges are too complex to be solved by any one area.

Some global organizations we work with are seeing the value of developing Communities of Expertise (CoEs) in three key groupings — Total Rewards, Talent, HR Strategy. These allow local HR professionals of varying levels of experience and knowledge to connect with and learn from one another, share leading practices, and build the capacity to “connect the dots” to tackle business challenges holistically. An HR professional who can tap into the collective knowledge of a CoE will likely have a broader outlook: What’s the root cause of the retention issue? How can we address those areas at the hiring stage? Let’s develop a bonus plan tied to a performance plan to encourage high-performers to stay. Being able to think about business issues and potential solutions holistically ultimately brings more value to the business.

We have not suggested that global standardization of processes, technology, and shared services should be abandoned. That level of global “rationalization” is about removing inefficiencies to improve the delivery of services. Without it, you will struggle to deliver against the bare minimum expectations of any global business. What we are suggesting is a shift to “optimization” — making the services you deliver more effective and usable for the needs of the business in all of the individual markets you serve.

We’ve spent the better part of a year focusing on this trend toward high-impact HR and how to make it practical and sustainable for organizations as an HR operating model. This includes the need to design and develop programs that balance global consistency with local flexibility, and the overall elevation of HR skills and contributions to the broader business. Stay tuned as we roll out a detailed description of the model in the next few weeks. You might also tune in to a recent Dbrief webinar (The Global and Local HR Function: A Balance of Scale and Agility) for more about creating the kind of HR structure that blends global integration with local optimization.


MichaelStephan Michael Stephan is the global HR Transformation leader for Deloitte Consulting LLP. He develops and integrates HR service delivery models across the operations and technology spectrum, with a targeted focus on optimizing the delivery of HR services around the world.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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