Original Article Source: HR Dive
There are rich rewards to be found when expanding your business internationally. However, without proper planning and understanding of the labor and employment laws, organizations can find themselves in some very time-intensive and costly situations. Fortunately, there are solutions, such as an Employer of Record service, that can mitigate the risk of global expansion roadblocks. For a better understanding of why HRM practices are so important abroad, continue reading the following:
Organizations that are expanding globally can find themselves facing two major obstacles:
- HR professionals without international competencies and,
- an overall lack of the knowledge needed to conduct HRM effectively in new locations.
Global and cultural effectiveness has been identified as one of the core competencies in the SHRM Competency Model, yet, according to Harvard Business Review’s “What Separates Great HR Leaders from the Rest,” there is a substantial gap between the ability of top HR leaders to connect their organization to the outside world and the ability of most other HR leaders.
Learning from mistakes
For a skilled HR professional, HRM in the local office can be relatively easy. You understand relevant regulations, legislation, and best practices, and you generally have a good idea how employees will react to HRM initiatives that you implement—but not always. You may, for example, notice that some of your employees aren’t reacting in the way that you had anticipated after you introduced a new incentive program. You thought that the new benefit of increased pay based on superior individual performance would be a great motivator; you did your research and learned that this type of compensation is considered to be a best practice by many reliable sources.
But now that the new practice has been in place for a few months, you’re noticing that while performance for some employees has increased, for others it has had no effect or even a negative effect on performance. You dig a little deeper and notice that the employees reacting best to the new incentive system are all “locals,” whereas your employees with international backgrounds (who, you note, are making up an increasingly large part of your workforce) do not seem to like the new way in which pay is allocated based on their individual performance. What’s happening?
National and cultural differences
Employees from different cultures have unique sets of values and beliefs that can influence how they respond to HR initiatives. For example, the United States is an individualistic society, and many Americans are very driven to achieve their personal goals (and in this example, highly motivated when told they can earn more money if they perform better as an individual). Other societies, including those from many Asian and Latin American countries, have a much stronger collectivist orientation. People from these cultures are more likely to believe it to be important not to stand out through individual achievements, but rather to ensure that you are working collectively with your colleagues to achieve shared goals. Individuals from these countries are, therefore, less likely to be motivated when told they are competing against each other to achieve higher pay.
Of course, cultural stereotypes are ultimately just that, stereotypes, and it does not mean that every person you meet from the United States will behave in an individualistic fashion, nor every person you meet from China will be more likely to succeed in a collectivistic working environment. But generally, these tendencies can be consistently noted across different cultures.
Why HR should care
If you transfer all your HRM practices from your U.S. headquarters and implement them in your internationally-based operations, you are going to hit some very severe roadblocks. Employee reactions to your HR practices may vary substantially, and you could find your business failing.
Continue reading the full article here.
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