Posts belonging to Category globalization

Momentum continues to build in the European Union to give shareholders greater powers of oversight on executive-pay practices.

A release from New York-based Mercer announcing its latest perspective on the topic details some of what’s going on “across the pond”: In the United Kingdom, binding say-on-pay votes will be implemented starting in October; in Switzerland, a March referendum to introduce binding say-on-pay votes was just supported; and, with similar measures being discussed in France, German and Spain, the EU is planning to introduce legislation later this year to require all 27 EU countries to implement mandatory, binding say-on-pay votes. (The link takes you to Mercer’s “Perspectives” landing page; the April special issue, Executive Pay Regulation: The Potential Impacts of Proposed European Reforms, is at the top right.)

As the perspective notes, there’s a certain European “hardening of attitudes” going on:

The political impetus to regulate executive pay has accelerated in Europe. Recent regulatory developments that would give shareholders greater oversight of executive pay and cap bonuses in the financial services sector, reflect a hardening of attitudes among European politicians and the public. In an era of low or nonexistent economic growth, consumer price inflation, and falling average real wages, executive remuneration will continue to be a sensitive issue.

This is particularly true in the banking sector, where the continued payment of bonuses, in the face of taxpayer-funded bailouts and revelations such as the Libor fixing scandal in London, has sparked outrage. But with other countries and regions taking a less prescriptive approach, an unlevel playing field is emerging and may result in executives leaving the EU for less regulated markets.

These proposed regulations, which have, for the most part, been supported by shareholders, will nevertheless require them to be more active in their oversight of executive pay. One consequence of this greater investor workload may be to extend the influence of proxy advisory firms.

The piece goes on to note exactly what’s going on globally, including in the United States, where say-on-pay votes are still non-binding but have, nonetheless, “influenced executive pay practices [by eliminating] many problematic practices and [increasing] shareholder-engagement efforts.”

Indeed, in this blog post written by Senior Editor Andrew R. McIlvaine about a session at the recent WorldatWork Total Rewards 2013 conference, he goes into much more detail about some of the ways say-on-pay is impacting — pro and con — the business community.

One of the most notable quotes in his post comes from John England, managing partner of Philadelphia-based Pay Governance, who fears what the European binding-vote wave landing on U.S. shores might mean. (He is clearly not a fan.)

“When CEO pay escalates sharply against average worker pay, it will inflame things,” England says in the post. “I do believe we are just one or two scandals away from the prospect of a binding say-on-pay law … in this country.”

What are employers to do with this information? I ran that by two Mercer thought leaders. Here’s what they both had to say. First from Vicki Elliott, Mercer’s senior partner and global financial-services consulting leader:

Companies should not let tighter regulation in financial services and other sectors define their objectives for compensation and talent-management effectiveness. Be creative and don’t succumb to a one-size-fits-all. Companies will [also] need to rethink their employee value propositions and the power of non-pay methods — it can no longer be all about pay.

And from Gregg Passin, senior partner and executive rewards leader for North America:

As say-on-pay develops, it is very important to simplify and clearly communicate remuneration strategies and programs to shareholders. It is [also] likely that there will be more focus on building talent from within so processes for managing talent pipelines such as succession planning and career development will be critical.

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Josh Bersin, principal, CEO and founder at Bersin by Deloitte, delivered a content-rich, provoking opening keynote at Bersin’s Impact 2013 conference in Ft. Lauderdale, Fla., Tuesday morning. The message was, in essence, that businesses and their HR functions need to do business and HR completely differently than even just a few short years ago if they’re going to compete in the global marketplace.

His vision, if you will, involves a more distributed network of HR expertise, localized for every state, country and culture. No more preaching HR from above.

Some of the top drivers of change, he said, are clear gaps in leadership, skills and education — borne out by research, Bersin’s and others’; an explosive role of technology; and disparities in economic growth and opportunity, country to country.

“Successful global interconnectedness,” he said, “means understanding what true localization really is.” He offered some examples of companies that have learned the importance of understanding what doing business in a different culture really means. Ford, for instance, before it introduced its highly successful Ford Figo in  India, knew its people had to learn what the road conditions were, what colors would sell, etc.

For HR leaders, embracing the challenges of doing business globally will mean understanding and transforming the learning culture, optimizing local talent acquisition and localizing the leadership pipeline. “High-performing leaders in certain cultures have characteristics specific only to those cultures,” Bersin told attendees.

From a business standpoint, he told me privately after the keynote, HR leaders need to embrace a more distributed HR, veering away from the old Centers of Excellence model toward one involving Networks of Expertise. The future of HR, competing in a global business world, he said, needs to “be a model where local HR specialists are trained enough to tweak [programs and initiatives] at a local level and HR leaders are creating standards based on integrating skills and information” throughout the corporation, not innovating and then passing it on down the chain.

In fact, he even went so far as to say that the concept of the HR business partner needs to be rethought and redefined. “Business partners need to be held more accountable,” he said. “They need to be more powerful and [need to be] experts locally,” much the same way houses aren’t built by generalists, but by specialists — each contributing the best of what he or she can do.

To help HR-leadership expertise along, his company introduced at the conference its Bersin by Deloitte Playbooks, step-by-step programs to help business leaders and their teams tackle current HR, talent and learning challenges — locally throughout the world — based on Bersin’s WhatWorks research.

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A PricewaterhouseCoopers study, the 2012 Survey of Global Mobility Policies, recently confirmed a trend experts have long been telling us: Global companies have been replacing longer-term assignments with non-traditional workforce mobility programs, such as commuter and short-term assignments.Perhaps even to a greater extent than some previously might have thought.

The PwC report (exploring developments over the past 10 years and echoing some of the findings of a Cartus study I reported on earlier this year) also found that these programs tend to be much broader in reach, affecting more than 10 percent of employees, compared to traditional short- and long-term programs that impact only 1 percent.

Often, companies will launch an HR program and then forget about it. But for one of every two respondents in this PwC study, that hasn’t been the case for mobility.  Exactly 50 percent reported they’re focused on refining their policies. (Of course, the word focused is open to interpretation.)

No doubt cost is a key driver here. “Two or three years ago, there was huge pressure to take out costs,” says William Sheridan, vice president at the National Foreign Trade Council in New York. Because of this, he adds, employers have paid a lot closer attention to selecting the right people to send and the length of their assignments.

I suspect this greater scrutiny is also behind some of the study’s other findings:

• Forty-six percent offered permanent transfer policies, compared with 29 percent in 2002;
• Thirty-seven percent had localization policies, compared with 20 percent in 2002
• Twenty-one percent offered commuter policies, compared with 8 percent in 2002; and
• Seventy-one percent had extended business travel policies, compared with 30 percent in 2002.

At the end of the day, says PwC Principal Eileen Mullaney, it’s all about choice. Choice for both the employer and the employee. “Mobility packages,” she says, “should offer multiple options so business leaders as well as the employees can choose what works best for their specific situations or interests.”

In the coming years, that advice could certainly prove useful for those expanding into growing markets facing talent shortages. As examples, Sheridan points to the energy sector in Africa. Or perhaps slightly a bit closer to home (for me, that is): remote areas like North Dakota, where energy exploration is booming today.

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Came across an interesting perspective on treating workplace stress globally. Funny how invisible those obvious things you failed to contemplate before are until they’re brought to your attention.

In this recently published book, Work Stress and Coping in the Era of Globalization (here’s the release about it), three co-authors — James C. Segovis, Rabi S. Bhagat and Terry A. Nelson — raise the point that treating stress in today’s globalized marketplace has become a subject of increasing importance, particularly in the way it demands a more “holistic” approach, one less influenced by Western culture.

In the individualistic culture of the United States and other Western countries, “we see stress as ‘your fault, you should be stronger … you should cope better,’ ” Segovis says. According to him, westerners tend to treat symptoms of stress with exercises, relaxation techniques or medication rather than seeking an organizational int5ervention that deals with the actual causes of stress.

However, he says, 75 percent of the world’s labor force is collectivistic, and in such societies, stress is experienced and managed differently: One’s family, religion and spirituality play far more significant roles and one’s identity and resources for coping with stress depend on one’s community.

Western-style stress management, he says, has mixed results in such cultures, which means the ones crafting such programs — often HR professionals – need to be designing them differently. (The book purportedly offers research and suggestions for doing this.)

So … the need for cultural sensitization in today’s global-business spread now encompasses stress and how it’s treated and managed — in addition to language and religion and all the other aspects of cultural differences we’ve heard about and covered.

But of course. Why didn’t I think of that?

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I liked some of the thoughts that came out of Gary Kushner’s SHRM Conference session on Monday, “The Changing Nature of Work: Five Global Trends Affecting Strategic Human Resources.” Doing global business going forward won’t mean spending more money than the next organization, or getting your people cheaper than the next one. In the global dictionary of Kushner, president and CEO of Portage, Mich.-based Kushner & Co., it will come down to which one can think more differently … dare I say … “out of the box.”

Some of the ideas he threw out for the roomful of HR practitioners to chew on:

• Based on the research of Sylvia Ann Hewlett, baby boomers and Gen Yers are actually from the same mold. You heard right. They’re much more like one another in how they view the contract with their employers. It’s the Gen Xers and the boomers who are diametrically opposed. So globally, think about that, and how you’re doing your workforce planning and engagement strategies. It could be a game-changer.
• Consider the creative approach of McDonalds Corp. Some brillilant person there decided it might be worth it to outsource drive-thru orders to a call center in the mid-United States that would then transmit those orders on the web to cooks and order-takers. So they tried it. Accuracy of orders picked up dramatically and 10 seconds were saved per order. “Think about this,” said Kushner. “They changed the way they thought about delivering 99-cent burgers.”
• Or Sun Microsystems and its more well-known rethinking of how work gets done. By transmitting work along a chain of countries, all based on what their workday hours were, work and speed-to-market picked up exponentially.

“In HR,” Kushner said, “we need to be thinking like this. ‘How can I rethink HR practices to drive better workforce effectiveness?’ ”

Essentially, that means getting used to a complete transformation of how work gets done. Consider all the ramifications of telecommuting and make it work for your organization. In some cases, that won’t mean five-day telecommuting. Three-day telework arrangements might be better for some. Think about the future of video-conferencing. “Hey, all workers might even be equipped with Dick Tracy-like video wristband watches,” he said. “You don’t have to be in a doctor’s office to perform the work of a doctor.”

The greatest challenge to HR in the global world of business to come, he added, will be in deciding how new leadership approaches are communicated, and how the impact of what’s happening in the world (such as Spain and Greece today) is communicated to the workforce – how those events will impact them. “This will be crucial,” he said.

And social media? And what those policies should or even will be in the near future?

Forget about solcia-media policies. ”In 10 years, are you going to have a social-media policy? No!” Kushner practically shouted. “In 10 years, that policy will be, ‘Go forth, communicate with the world and be fair.’ ” Now get outta here … .

Get used to it.

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“Remember when they used to actually make things in this country?” How many of you have heard that from older relatives, or your parents? How many of you have actually said it yourselves? So now it’s time to talk about a nascent trend: The rebirth of manufacturing in the United States.

The auto industry, aided by its controversial bailout from the federal government, continues to add workers as sales stay strong despite the uncertain economy. Then there’s the (also controversial) “fracking” industry in states like Texas, Colorado and Pennsylvania: As oil-and-gas companies drill through shale rock to reach rich deposits of oil and gas, they’ve generated a big demand for steel piping and other equipment that’s helping to revitalize the steel industry in places like Ohio. And then there’s “re-insourcing,” touted by President Obama earlier this year, with companies like Master Lock and General Electric moving jobs that they outsourced to places like China back to the U.S. to save on shipping costs–and to take advantage of the fact that with rising labor costs overseas, it can make more sense to have goods made here instead of over there.

But there’s a risk that this trend may stall if one crucial problem isn’t solved: Finding the skilled talent necessary to actually do the work. This ain’t your grandfather’s assembly line: Today’s manufacturing jobs often require advanced skills in math and robotics that can be hard to find, especially given the fact that in our society, high-achieving students are pushed to enroll in four-year colleges and jobs that require working with your hands are not held in the highest esteem, shall we say, in many of today’s households. A SHRM poll from last year found that more than half the participating companies were having trouble finding skilled talent, with the manufacturing industry having a particularly tough time. Highly skilled technicians, engineers and tradespeople (electricians, carpenters) were among the most difficult-to-fill positions, according to SHRM.

The organization plans to address this topic during an upcoming half-day summit at its annual conference, to be held this year in Atlanta. Representatives from SHRM, the U.S. Dept of Labor and manufacturers will discuss potential solutions for filling the skills gap. The event will be held on Sunday, June 24, at the Georgia World Conference Center.

In the meantime, you can read about how some manufacturers are trying to grow their own talent through apprenticeship programs–in which students actually get paid to learn, rather than going into debt.

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Delivering the keynote at the 5th annual Bersin IMPACT conference, held once again at the historic and beautifully restored Vinoy Renaissance Resort in St. Petersburg, Fla., Josh Bersin told the packed room that the only way organizations can thrive in an era of unprecedented change is to embrace agility.

“Within 20 years, China will be the world’s No. 1 economy, followed by the U.S. and India,” said Bersin, founder and CEO of Bersin & Associates. “CEOs will be counting on HR’s expertise to help them expand the business in fast-growing countries like India and Brazil–and it just so happens these countries are facing a paradoxical imbalance of skills and demands.”

These nations tend to have large numbers of old and young citizens, but relatively few in the middle, he said. Even in the U.S., 47 percent of the workfore will be younger than 35 by next year, according to the U.S. Census Bureau. Research from Mercer indicates these younger workers are twice as likely to be looking for a new job as older workers, said Bersin. “So engagement is crucial,” he said.

Amid these demographic changes, the very structure of organizations is changing, said Bersin: “Thanks to the web, managers are no longer in charge of companies–customers are.” Dissatisfied customers can use the web to quickly find alternatives and tell others about their dissatisfaction–a company’s reputation can go from stellar to tattered in record time, he said.

When the Economist magazine polled CEOs for their definition of agility, they chose “rapid decision-making, high-performance culture and flexible teams,” said Bersin. But when they were asked which corporate function was contributing the most to organizational agility, HR ranked last out of 14, well behind sales, marketing and even legal.

Moving up from the bottom of the list requires HR to be a key player in helping the organization transform itself to an agile one by “implementing systems and strategies that foster expertise, collaboration and decision-making,” he said, reinventing processes such as performance management so that goals are frequently updated, “ratings” are done away with and social rewards and recognition–in which team members, not managers, decide who will be recognized for their contributions–is standard.

Agile organizations are ones that aren’t afraid to ditch old processes, even if they happened to pioneer those processes, said Bersin, citing Seagate Technology, widely credited with creating the “cascading goals” model. Seagate decided to abandon that model recently because it was “too limiting,” choosing instead to focus on the constant updating of goals, he said.

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Do HR folks have more of a global mind-set than most of their peers?  Not according to just released data from the Najafi Global Mindset Institute at Thunderbird School of Global Management in Glendale, Ariz.

Despite all of the attention globalization has been getting in recent years, GMI’s latest research suggests that HR’s global mind-set may be somewhat lacking, especially when it’s put up against other functions in the organization. On the GMI list, HR scored below management, educator, sales, marketing, financial, logistics/distribution and operations, though it managed to inch out R&D and IT.

In an environment where global talent strategies matter more than ever, that’s hardly encouraging news.

GMI defines an organization’s “global mind-set” as “the sum total of its individual employees’ global awareness and capacity to operate across cultures.” Its findings are based on an analysis of data from 13,000 people who have taken its Global Mindset Inventory assessment.

Joy McGovern, head of client services for GMI, told me she can only speculate as to why HR professionals ranked near the bottom of the list.  She suspects the function’s tendency to be “internally focused” might have something to do with it.

No doubt there are more than a few ways to interpret this data. But I agree with one of McGovern’s conclusions, which is that one of the key takeaways from the research is the need for HR leaders to focus more of their attention—and their teams’— on the business and less on the function. Of course, that’s something we have all heard before. But given GMI’s findings, it’s probably worth repeating.

Would that be enough to push HR past operations or logistics/distribution or finance? Who knows? But there’s little doubt it would go a long way to helping their businesses open up new markets and better compete in those where they already have a foothold.

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I didn’t realize the United States was among the world’s standard-bearers when it comes to vacation ogres until I read this story in today’s Wall Street Journal (subscription required). Seems an attempt by the Spanish government to save tons of money lost in worker productivity by moving holidays to the beginnings and ends of weeks is something we did here long ago.

I did not know that.

I guess there must have been a time when U.S. workers were doing (a whole lot more than they do now) what Spaniards have been doing for years — “deploying paid vacation days as ‘puentes’ — literally bridges — to skip town for an extra-long weekend whenever public holidays fall in the middle three days of a week,” according to the story.

For one Spanish worker, Tatiana Restrepo, that meant 36 legally mandated days off (OK, that does it, we must really be ogres) turned into more than 50 days of rest and relaxation, weekends included. But now, trying to boost productivity in a sagging economy and join with other countries trying to contain Europe’s debt crisis, Spain’s unions and business associations have agreed to suppress three bridges by moving those holidays to Mondays.

“The two sides, which rarely agree on anything, say the bridges cost the Spanish economy hundreds of millions of euros in lost production, as they result in idle plants and half-empty offices,” the story says.

Needless to say, the plan is not going over well among workers. Restrepo, a hotel marketer, calls her bridges an “escape valve” between the long breaks in August to the winter holidays. She refers to the idea as “just horrible.”

Seems the whole country is caught up in a debate now over what an appropriate balance between work and play should be in a country that relies heavily on tourism and where one government agency even “subsidizes vacations for hundreds of thousands of elderly people during the winter low season to help keep tourism workers employed,” according to the story.

But wait. Broken down, we’re talking about moving three of Spain’s 14 public holidays to Mondays. And no one’s planning to touch Spain’s guaranteed minimum of 22 additional vacation days. Is this really so “horrible”? Or is it, as one Alberto Nadal, who works on labor issues for a big business association in Spain, tells the WSJ, ”a symbol of a change in mentality, the idea that we have to change the way we do things to belong to the euro zone”? Hmmm.

And are we really just talking about the euro zone or are we talking about an entire, stingy global economy?

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The notion of modifying the Fair Labor Standards Act to bring it up-to-date with today’s more mobile, flexible and technology-driven workforce took a step forward last Thursday in a hearing before the House Subcommittee on Workforce Protections.

The hearing was chaired by Rep. Tim Walberg, R-Mich., and included statements by J. Randall MacDonald, senior vice-president of HR for Armonk-N.Y.-based IBM Corp.; Nobumichi Hara, senior vice president of human capital for Phoenix-based Goodwill Industries of Central Arizona (speaking on behalf of the Society for Human Resource Management); Richard L. Alfred, partner at Seyfarth Shaw in Boston; and Judith M. Conti, federal advocacy coordinator for the National Employment Law Project in Washington. Here’s a link to the hearing’s agenda, plus full testimonies of all who participated.

Almost everyone in attendance urged for revisions to the law’s exempt and nonexempt definitions, overtime regulations and other wage-and-hour stipulations that they say prevent employers from competing in today’s marketplace.

Hara cited an example in which his company would have to pay overtime to a group of employees in the first week of their proposed biweekly schedule even though the second week (a lighter schedule) would have satisfied the two-week hourly requirement. “SHRM believes the FLSA hinders employers’ abilities to provide the flexibility that millions of nonexempt employees want,” Hara said.

MacDonald, who also chairs the HR Policy Association (representing more than 300 CHROs of the nation’s largest companies) testified that “there are areas of major disconnect between this 70-year-old labor law and today’s rapidly changing workplace environment.” (Here’s a link to his testimony.)

“The business world of 2011 barely resembles that of the 1930s and 1940s, while our primary labor law is becoming ever more outdated, having barely changed in all that time,” he said. “Simply put, this law is now a job killer. It yields advantages to global competitors without commensurate payback to U.S. workers.

“If nothing is done to make necessary reforms,” MacDonald said, “we sustain a disincentive for job growth in America, hampering employees’ opportunities and giving U.S. employers another reason to invest elsewhere. … The disconnect between the FLSA and the modern workplace will continue to grow, increasing tensions between employers, employees and regulators, with the only true beneficiary being the plaintiff’s bar.”

MacDonald urged Congress to make six specific changes to the law, including updating the definition of computer employees to include more duties, expanding exemptions to include “well-compensated, commissioned inside salespeople” and allowing a broad pre-emption of state and local wage and hour laws.

“Why is it,” MacDonald asked, “that a 70-year-old law, enacted in a different century, which was based on a different model of the U.S. economy, and at a time that pre-dates global competition and nearly all technology we use today, should not be modernized, clarified and made relevant for today’s economic realities?”

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