oct-dec 2000 Jrnl

Globalizing HRIS:The New Transnational ModelBy Karen Beaman and Alfred J.Walker

October - December 2000 • IHRIM Journal30

“It is not the strongest of thespecies that survive, nor themost intelligent, but the onemost responsive to change.”

— CHARLES DARWIN

INTRODUCTIONThe term “global HRIS” (human re-

source information system) has beenused to denote many different types oforganizations, systems and environ-ments. Indeed, the word “global” has be-

come one of the hottest buzzwords of re-cent years. With the accelerating pace ofchange brought about by the Internetand by high-speed communications andtransportation, distances are shrinkingand borders are breaking down. Everyorganization is now running into so-called global issues. A direct outcome ofthe Digital Age, there are two majortrends that are having a profound effecton the way we do business:◆ Increasing globalization and acceler-ating change in the international busi-ness environment is drawing more andmore companies beyond their nationalborders. Studies show that 50 percent ofall major corporations now have at leastsome international operations.◆ The complexity of inter-organiza-tional relationships between companiesand their stakeholders (e.g., employees,outside service providers, regulatory au-thorities) is growing, as corporateboundaries become permeable and, insome cases, even disappear. Increasing

competition due to the ease of doingbusiness across borders is putting pres-sure on companies to be more competi-tive. Hence, organizations are lookingfor strategies to contain costs in order toincrease productivity and effectiveness.In addition, the continuous quest forbest practices has companies lookingbeyond their borders for solutions to in-creasingly complex problems.

Yet local and regional differences, evenwith the accelerating rate of globalization,

remain strong. Cultural and national iden-tities still play a prominent role in the in-ternational business world. While the newinternational business environment isclearly pushing us closer together, it is op-posed by a strong counterforce attractingus to our own local customs and tradi-tions.1 Balancing needs on the interna-tional front with local and/or nationalagendas is far from a simple task.

This new Sturm und Drang2 is bringingabout momentous change. Trends arebarely recognized before they becomepassé in the “blur” of new approaches toage-old problems.3 The connectedeconomy has catapulted us into a pe-riod of unprecedented change and weare being forced to develop new, cre-ative approaches if we want to stay com-petitive. Indeed, only organizations whoare able to escape from traditionalthinking will survive.

Likewise in HR and HRIS, our tradi-tional models are no longer adequate.The world has changed and so must our

thinking about how we organize andmanage ourselves, our companies, andour systems. In this article we define anew model for global HRIS that encom-passes a new organizational structure,alternative system architectures, and dis-tributed methods of HR service delivery.Drawing on the work of ChristopherBartlett and Sumantra Ghoshal, as wellas on our own previous work in this area,we attempt to elucidate and evaluate themyriad models and architectures thathave appeared over the past decade andto craft a new model for Global HRIS.

We also wanted to test our model byusing a small sample of large global cor-porations to determine the real-world fitbetween what organizations are actuallydoing and what we, as consultants andtheorists, are saying. Thus, we presentthe results of a small survey we con-ducted with 35 global companies and dis-cuss the implications of our new modelon corporations today and in the future.

FOUR TYPES OF HRIS ORGANIZATIONAL MODELS

In Managing Across Borders: The Transna-tional Solution, Christopher Bartlett andSumantra Ghoshal4 categorize world-wide organizational models into the fol-lowing four types:◆ Multinational◆ Global◆ International◆ Transnational

Each of these models differs accord-ing to its degree of centralization, itslevel of responsiveness to local issues,and its ability to leverage and share in-novation and learning worldwide. Wewill discuss the applicability of each ofthese models to HRIS.5

◆ Multinational HRIS. The first ofthese models — the “MultinationalHRIS” — comprises a portfolio of sepa-rate, distinct organizations that are de-

The connected economy has catapulted us into a periodof unprecedented change and we are being forced

to develop new,creative approaches if we want to stay competitive . . . only organizations who stay away

from traditional thinking will survive.

IHRIM Journal • October - December 2000 31

FEATURE

lineated by national boundaries (seeFigure 1). Within each independent or-ganization, many key assets, responsi-bilities, and decision-making are local-ized (decentralized with respect to thecore), giving local business units consid-erable freedom, autonomy, and controlover their own operations. This type ofHRIS is particularly adept at addressingand responding to local needs and isthus most sensitive to individual cul-tural and national differences.

The Multinational HRIS is less fo-cused on centralized corporate direction.Central management’s role is informaland consists of little more than consoli-dated financial reporting. The disadvan-tage of such extreme decentralization isthat such organizations can turn intomulti-headed monsters, where “anythinggoes,” and whose various heads don’tcommunicate or coordinate with one an-other, causing needless re-invention.

On the other hand, this type of organi-zational model can be quite suitable forlarge conglomerates in which there is lit-tle benefit to be gained from centralizedprocessing or decision-making (such as,certain types of retailers or service organi-zations). Likewise, organizations withstrong autonomous cultures can benefitfrom the Multinational HRIS because re-sponsiveness and sensitivity to local busi-ness unit needs play a paramount role.◆ Global HRIS. At the opposite extremeis the highly centralized organization,what Bartlett and Ghoshal call the“Global Organization” (see Figure 2). TheGlobal Organization views overseas oper-ations merely as delivery pipelines fromthe parent company to an undifferenti-ated worldwide market. Most strategic as-sets, resources, responsibilities, and de-cision-making are centralized. The drivingforce behind the Global HRIS is a focuson maximizing efficiency and on buildinga single standardized organization withina uniform operating environment.

Naturally, this approach minimizesthe needs of local, national, and re-gional business units. One single, sani-tary solution is developed — “one sizefits all” — or is supposed to. The disad-vantage to this model is the tendency toforce diverse operating units into suchrigid structures that they rebel, causingrenegade or covert behaviors to developoutside the established standards.

The Global HRIS organizational modelis appropriate for organizations with aneed to deliver a single standardizedproduct (e.g., software providers) or ser-vice (e.g., telecommunications providers)to a worldwide market. The focus on effi-ciency and standards provides for greatervolume, promotes ease of integration,

and reduces overall costs. In addition, or-ganizations with strong homogeneouscultures benefit from such a model.◆ International HRIS. Between thesetwo extremes lies the third model — the“International Organization” (see Figure3). While allowing for local control overmany decisions, responsibilities, and as-

Figure 1. “Multinational” HRIS.

Source: Bartlett and Ghoshal 1998.

Decentralized Federation:many key assets, responsibilitiesand decisions decentralized

Personal Control:informal HQ-subsidiaryrelationships overlaid withsimple financial controls

Management Mentality:regards overseas operationsas a portfolio of indepen-dent businesses

Figure 2. “Global” HRIS.


Centralized Hub:most strategic assets, responsi-bilities and decisions centralized

Operational Control:tight central contol overdecisions, resources andinformation

Management Mentality:regards overseas operationsas delivery pipelines to aunified global market


FEATURE

sets, this type of organization viewsoverseas units as appendages that existonly to carry out the goals of the centralorganization. The International HRISstrikes a balance between local auton-omy and central oversight.

The great advantage of the Interna-tional model is its focus on sharing cross-

border learning and innovation. Thismodel facilitates the transfer and adapta-tion of knowledge to other business unitsfrom any country that develops it. Thewhole organization benefits when ad-vances made in one country are sharedimmediately across all the others. Thus,this model retains many of the advan-

tages of centralized control and process,while at the same time shares best prac-tices across local business units.

This type of HRIS is useful for devel-oping organizations that still have unbal-anced skills sets and operations aroundthe world. Resources, knowledge, inno-vation, etc. can be shifted and sharedamong operating units such that thewhole is greater than the sum of its parts.◆ Transnational HRIS. However, noneof these models addresses simultane-ously all three sides of the paradox fac-ing us: the need to be sensitive to the re-quirements of local business units, thedesire to obtain efficiencies that resultfrom centralized operations, and thekeenness to share and leverage learningand innovation across the worldwide or-ganization. A completely new model —the Transnational HRIS — is centered onresolving this paradox (see Figure 4).

With the Transnational HRIS, re-gional business units are treated as dis-tributed resources. Each one con-tributes to the rest of the organizationbased on its particular area of strength.Corporate HR consists of a complex setof processes for the coordination and fa-cilitation of sharing among the differentoperational units. Although corporateheadquarters still lies at the center ofthis model, local units are genuinely in-terdependent. No one unit has morecontrol than any other. This model isparticularly useful for large, multina-tional conglomerates with heteroge-neous cultures, under significant com-petitive pressures due to the increasingglobalization and fast-paced changebrought about by the Internet.

For example, if one regional unit hasdeveloped a particularly effective solutionto the challenge of recruiting, it can easilyand quickly share its solution with otherunits around the world. HR is the advo-cate, and HRIS is the tool for facilitating ahigh degree of inter-unit information flowand coordination. Clearly, the advantageto the Transnational HRIS model is itsability to respond effectively and swiftly tothe demands brought about by the Sturmund Drang of the Digital Age. ◆ The Developmental Curve. Our ex-perience suggests that these four modelsrepresent a development curve as shownin Figure 5.6 The 1980s were dominatedby HRIS in the first stage — the Multina-

Figure 3. “International” HRIS.


Coordinated Federations:many key assets, responsibilitiesand decisions still decentralized,but controlled from headquarters

Adminsitrative Control:formal management planningand control systems allowtighter HQ-subsidiary linkage

Management Mentality:regards overseas operationsas appendages to a centraldomestic corporation

Figure 4. “Transnational” HRIS.


Distributed, specializedresources and capabilities

Large flows of components, products,resources, people and informationamong independent units

Complex process of coordinationand cooperation in an environ-ment of shared decision making


FEATURE

tional stage. Many organizations juststarting their overseas operations knewlittle about local business practices andconstraints and thus let regional compa-nies pretty much run themselves.

In the 1990s, however, large organiza-tions came up against issues of costcontrol and containment. Such concernsswung the pendulum in the direction oftotally centralized control, and theGlobal model began to dominate theHRIS landscape. With this approach,centralized organizations began to forcecorporate standards onto their regionaland local operating units.

However, this forcing of corporatestandards and practices onto local opera-tions was not always perceived positively.Thus, the next trend in the evolution ofHRIS models was toward balancing localand corporate needs through the Interna-tional model. However, the limitationswith the International model were quicklyuncovered as being neither “fish nor foul”— not particularly responsive to localneeds and not particularly focused on op-erational efficiency.

This has led us to the final stage — theTransnational Model — which attemptsto resolve the paradox by finding the rightbalance between local responsivenessand centralized control, while at the sametime promoting learning, sharing and in-novation across the organization.

Each of these models differs system-atically in such attributes as capabilities,operations, management, knowledgeand control (see Figure 6). Considerknowledge as an example. In the Multi-national model, knowledge is developedand retained in the local units, whereasin the Global model, it is developed andretained in central headquarters. In theInternational model, knowledge is de-veloped at central headquarters andthen distributed to the internationalsubsidiaries. In the Transnationalmodel, knowledge is developed in anyunit that has the skills and resourcesand is then shared with all other unitsthroughout the organization.

THREE TYPES OF SYSTEMARCHITECTURES AND THEFOUR HRIS MODELS

One defining difference with the fourHRIS models is the technological archi-tecture of the systems they use. Al-

though there is considerable variationwe can identify, broadly speaking, three

basic systems architectures commonlyfound in HRIS7:◆ Standalone System Model

◆ Data Warehouse Model◆ Single Integrated System Model

◆ Standalone System Model. Themost basic of models is the StandaloneSystem Model, in which each operatingunit runs its own independent system,

Figure 5. HRIS Model Development Curve.

Figure 6. Moving to the Transnational HRIS.


Deg

ree

of G

loba

lizat

ion

Time

Multinational Stage

Global Stage

InternationalStage

TransnationalStage

MULTINATIONAL GLOBAL INTERNATIONAL TRANSNATIONAL

CAPABILITIES:Decentralized andself-sufficient

OPERATIONS:Seeking and exploitinglocal opportunities

MANAGEMENT:Subsidiaries comprisea portfolio of inde-pendent businessesKNOWLEDGE:Knowledge developedand retained withineach unitCONTROL:Personal and informal;simple financial controls

Centralized and globally scaled

Implementing parentcompany strategies

Subsidiaries are deliv-ery pipelines to globalmarket

Knowledge developedand retained at thecenter

Operational andstrict; tight controlover everything

Only sources of corecompetencies centralized

Leveraging parentcompany competencies

Subsidiaries ap-pendages to domestic corporation

Knowledge developedat center and trans-ferred overseas

Administrative andformal; tight linkagewith headquarters

Dispersed, interdepen-dent and specialized

Differing contribu-tions by national units

Coordination; coop-eration and shareddecision-making

Knowledge developedjointly; shared world-wide

Large flows among in-dividual business units

This has led us to the final stage — the TransnationalModel — which attempts to resolve the paradox by finding

the right balance between local responsiveness and centralized control, while at the same time promotinglearning, sharing and innovation across the organization.

with no worldwide standards in placeand no integration (see Figure 7). In fact,there may be no systems at all in someareas. Consolidated reporting, perhapsdone through a global data warehouse,is often quite basic, even primitive, be-ing built off of extracts of reported data.Business units may send in updates viafax, telephone, mail, or in person. Thesecommunications may necessitate exten-sive translation and heavy data entry.

The Standalone System Model makesit difficult to do data analysis. Even themost basic headcount reporting becomeslaborious. This type of architecture clearlyidentifies a company as a MultinationalHRIS model — the “many-headed mon-ster” approach. This model is quite com-mon in large, diversified multinationalorganizations, particularly those thathave grown through acquisition.◆ Data Warehouse Model. Anothercommon but more advanced architec-tural model is the Data WarehouseModel. In this model, all operating unitsuse the same software system (e.g., Ora-cle, PeopleSoft, or SAP) (see Figure 8),albeit with separate database instancesset up for each region or country. In thebest of these models, all units run thesame version of the software, maximiz-

ing resources and saving costs throughcommonality, shared applications, andenterprise advantages in dealing withthe vendor.

This type of system is completely cen-tered on the data mart; however, as op-posed to the Standalone System model,the data come from all operating unitsautomatically and in a standardized for-mat. Such standardized data require lit-tle or no translation and are available toall operating units as soon as updated(within the rules of data privacy and pro-tection, of course). All users know howthe data were generated and what eachdata element means. The limitation tothis type of architecture, however, is thatnot everyone uses the same database.We typically see this type of architecturein an International HRIS model.◆ Single Integrated System Model.This third type of system architecture —Single Integrated System Model — isthe most advanced (see Figure 9). Thereis only one instance of the database,generally located at corporate headquar-ters (a worldwide Brazilian-based com-pany in Figure 9).. Updating a name any-where in the system automaticallyupdates it throughout the organization.There is no need for a separate reporting

database, although some organizationsdo opt for one in order to separate trans-action processing from analytical report-ing. The single-system HRIS also usesthe same screens worldwide, with ap-propriate changes for different lan-guages in different countries.

Single integrated systems are quitecommon in some fields — airlines typi-cally use them for flight operations — butthey are still rare in the HR world. Globaland Transnational HRIS models will mostcommonly have a single integrated HRIS.

In summary, the most advanced HRISarchitectural model strikes a balance be-tween the two extremes of being locallydiverse and centrally controlled. As thatbalancing act suggests, the most en-lightened approach to worldwide HRISmanagement is not necessarily to glob-alize all HRIS functions. Some functionsare better handled locally, some interna-tionally, and some in between. Part ofthe evolution of the worldwide HRIS in-volves finding the right balance.

THE HR SERVICE DELIVERY MODELAs has been said, all international or-

ganizations exist on four broad levels:local (Frankfurt), national (Germany), re-gional (Europe), and global (headquar-

Figure 7. Standalone System Model.


FEATURE

Region:North America

Region:Latin America

Region:Europe

Region:Asia/Pacific

Global Data Warehouse

Extracts of Reported Data

service activities should be performedon which levels — which should beglobal, which should be regional, and

service) and lines of business (by prod-uct or industry). In the design of a globalHRIS, it is important to decide which HR

ters). Within local sites further subdivi-sions might include employees andmanagers (for use in establishing self-

Figure 8. Data Warehouse Model.



Region:Europe

Region:Asia/Pacific


FEATURE

Local Payroll Systemsand Vendor Interfaces


Figure 9. Single Integrated System Model.



Region:Europe

Region:Asia/Pacific

Local Payroll Systemsand Vendor Interfaces



which should be done locally. What ismost important is to find the right bal-ance. Figure 10 depicts this stratificationbetween global, regional, and local ac-tivities. Using such a hierarchy, activitiesto be performed globally are assigned tothe uppermost level — headquarters.Activities to be carried out regionally areassigned to the regional business units.And, activities to be done locally are as-signed to the individual country busi-ness units.◆ HR Activities that are Typically Per-formed Globally. Some HR activitiesclearly work best when managed at theglobal level. One example is executivemanagement — the management of thetop 50 to 100 people in the organization,including succession planning and com-pensation management. Obviously, anorganization has only one group of suchpeople. Another example of data bestadministered globally is stock allocation(both purchases and grants), since acompany generally has only one set ofstock, controlled by the governing body.Global management is also suitable forexpatriate strategy and administration,since some expatriate employees prefer(for tax reasons) to be compensated inthe local currency of whichever countrythey are working in.

◆ HR Activities that are Typically Per-formed Regionally. Other functions,however, are harder to manage on apurely global basis and so may be bestdistributed regionally. Among these areleadership development, managementdevelopment training, workforce com-munication, incentive compensation,and records management. Another pos-sibility is policy definition and adminis-tration: it is difficult to develop a usefulglobal policy on anything, except for verygeneral principles such as fair labortreatment. Some compensation activi-ties should also be handled regionally, ifthere is a need to maintain parity be-tween workforces in related countries, asis becoming more and more the case inthe European Union. Regional handlingmight also be effective for recruiting andfor some compliance activities, if thesame laws apply across the region.◆ HR Activities that are Typically Per-formed Locally. Local handling is essen-tial for activities that involve “face time”— activities that need to done in thepresence of the employee or manager. Ifan employee has a personal problem —perhaps a conflict with a supervisor or adeath in the family — handling by un-known parties at headquarters thou-sands of miles away is inappropriate. Inaddition to performance management,other activities best handled locally in-clude hiring, staffing, team building, em-ployee relations, works councils, laborrelations, employee development, andlocal compliance activities. Local admin-istration is also required for health andwelfare benefits, since countries varygreatly in terms of which benefits areprovided by the company and which by

the government. Headcount is also oftenbetter suited to local management,partly due to the rise in contract andpart-time workers, rehired pensioners,temporary workers, and so forth. Thechallenge is to define what an employeeis, even within one country.

Thus, some functions inherently suitone level of management better than an-other. Nonetheless, in deciding the rightlevel for managing the functions in yourown company, a good deal of choice andjudgment is required. There is a lot ofvariety, even within one organization,depending on the culture, managementstyle, and priorities of the company. Indesigning the global HR organization,input should be sought from all levels,and, in many cases, the ultimate deci-sion should be left to local discretion.◆ Alignment to the Business Model.One critical factor in deciding what typeof HRIS model to adopt is the nature ofthe overall business model that the com-pany already has in place. For example,certain types of businesses offer a highlystandardized product, e.g., Coca-Cola,and are clearly candidates for the GlobalHRIS (while the amount of sugar and car-bonation in Coke may be adapted fromcountry to country, the basic product re-mains the same). In contrast, other com-panies seek to differentiate their prod-ucts depending on the customs andtastes in the markets in which they oper-ate (e.g., Mars Candy), and thus may bebetter to suited to the MultinationalHRIS (Mars offers different candies underdifferent brand names to suit local pref-erences). You cannot force a companyinto a model that is inherently opposedto its overall philosophy and culture. The

FEATURE

The Hypotheses

◆ In HRIS architecture, we would expect:➤ Global companies to be using thesame system➤ Multinational companies to be usingdifferent systems➤ Transnationals and Internationals tobe balanced between the two

◆ In sharing of best practices, we would ex-pect:➤ Global companies to be “enforcing”standards and low cost➤ Multinationals to have little or nocontrol over practices➤ Transnationals and Internationals tobe balanced between the two

◆ In HR operations, we would expect:➤ Global companies to be controlled bythe home office➤ Multinationals to be skewed towardlocal control➤ Transnationals and Internationals tobe balanced between the two

Figure 10. HR Service Delivery Model.

GlobalServices

RegionalServices

LocalServices

HQ

Country Country

Region

Site Site Site Site Site Site

Country Country

Region

Site Site Site Site Site Site

Country Country

Region

Site Site Site Site Site

LOB/Product Alignment


ideal is to fit the HR system into the day-to-day operations of the company.◆ Alignment to the Enterprise. An-other ideal is that enterprise businessissues should drive HR, and HR in turnshould drive the HRIS. If HR is fully

aligned with the needs of the business,the HRIS applications and data will au-tomatically serve both HR and the enter-prise. And for many organizations theydo. In practice, however, sometimes con-flicts arise. In such cases, we suggest

that the HRIS must at least serve theneeds of the HR function, especially incompliance and plan administration ar-eas. The HRIS is delivering services tothe employees, their agencies, line man-agers, and HR, whether they utilize ser-

FEATURE

ABOUT YOUR COMPANY:1. What type of Company do you consider yourself to be?

❑ Holding company with many independent and separate lines of busi-ness❑ Conglomerate with some synergies among businesses under com-mon leadership❑ Similar business with good interaction among business units

2. Where is your Company’s worldwide headquarters based?

3. How many countries do you have a presence in (more than a sales office)?

4. List the major ones.

5. How many total employees are there in your Company (approximately)?

6. How many in the Home Country (approximately)?

7. How many ex-patriots and/or third country nationals do you have (ap-proximately)?

ABOUT YOUR HR SYSTEMS ENVIRONMENT:8. How would you characterize your HR/Payroll systems environment? (Select only one)

❑ Multinational — focused on “flexibility” — highly decentralized, withmuliple, independent locations, united primarly through financial report-ing to Corporate❑ Global — focused on “efficiency” — highly centralized/standarized,with major decisions made at Corporate and then rolled out to local op-erations❑ International — focused on “learning” — moderately centralized,leveraging competencies and sharing learning from both Corporate andlocal operations❑ Transnational — focused on “the paradox” — a combination of all ofthe above, leveraging efficiencies, maintaining flexibilities, and sharinglearnings and innovations worldwide.

9. Where are the following HR Plans primarily administered and controlled(Although more than one answer may be valid, please check only one foreach function. Check the one where the work is predominately done).

Home Country/HQ Regionally Locallya. Base Salary/Compensation ❑ ❑ ❑

b. Incentives/Bonus ❑ ❑ ❑

c. Stock ❑ ❑ ❑

d. Pension Plans ❑ ❑ ❑

e. Succession Planning ❑ ❑ ❑

f. Executive Hiring ❑ ❑ ❑

g. Management Development ❑ ❑ ❑

h. Technical/Professional Recruiting ❑ ❑ ❑

i. Technical/Professional Training ❑ ❑ ❑

j. Payroll ❑ ❑ ❑

10. Do you use the same, common HR system throughout your Company,i.e. do all countries and subsidiaries use SAP or PeopleSoft or some otherglobal HR system?

11. If so, is there one instance of the HR database?

12. Do you use the same HR database for administration, reporting andanalysis?

13. If not, do you have a single data mart/data warehouse that all countriessupply HR data to, and report into, with a set of standard data elements?

14. If so, how many data elements are reported by the regions to headquarters?

15. On what frequency?

16. If you have no common HR system, or data mart, how do you administerand/or report on global HR populations and HR plans?

17. Do you have a global HR web site?

18. If so, are there local web pages maintained separately by the individual lo-cal entities?

19. Are you supplying HR services through your web site to all employeeson a worldwide basis?

20. If so, which ones?

21. If not, do you plan to in the future? If not, why not?

ABOUT YOUR HR ORGANIZATION:22. Do you provide an international clearinghouse and/or help referral ser-vice to your international HR staff on matters such as new technologies andinnovative solutions?

23. Do you incorporate best practices from your regional/local operationsinto the company’s overall policies and processes? I.e., Is it likely that an in-novation created in São Paulo, Brazil would be embraced by the CorporateHeadquarters and implemented throughout the organization worldwide?

24. Do you have regular, face-to-face meetings of your internationalHR/HRIS staff?

25. If so,how many people attend (from the Home Country and internationally)?

26. How often are such meetings held?

27. Where are they held?

28. What topics are generally presented/discussed?

29. Do you regularly use cross-functional, cross-national teams to work onspecial projects?

30. If so, how are team members picked and managed?

31. What methods/processes exist to support the team’s ability to work to-gether across large geographic distances?

32. What types of projects do they work on?

33. Do all team members have the same compensation plan and objectives?

34. Are the teams members specifically compensated on the results of theirteamwork? E.g., a team bonus.

Figure 11. The Survey Questionnaire.


vice centers, databases, or anything else.Therefore, how HR runs itself should bea primary determinant of how the HRISis run. After satisfying the implicit man-date to support HR plan delivery, thenalignment with the business prioritiescan be addressed. In doing so, HRISmanagement can then build the applica-tions that are more focused on businesspriorities, such as recruiting, perfor-mance management, succession plan-ning and others.

THE SURVEY:TESTING THE FOUR-STAGE MODEL EMPIRICALLY◆ The Hypotheses. Intuitively convinc-ing though we found the above models,we wanted to test our assumptions em-pirically to find out if current so-calledglobal companies were like the models.Thus, we formulated several hypotheses(see sidebar) and developed a survey totest them (see Figure 11).◆ The Survey. Our survey uses a self-report questionnaire sent by email tothe IHRIM Global Special Interest GroupListserv, which is made up of globalAmerican and European companies. Wehad 50 responses, but had to eliminate15 because the companies weren’t trulyinternational in operations or becausetheir surveys weren’t completely filledout. We recognize the limitations of self-report data and small sample sizes, butwe felt it important to begin the re-

search, and we believe that our prelimi-nary results are sufficiently interestingto justify reporting the results.

Following is some background on thedemographics of the companies sur-veyed (see Figure 12): • Of the 35 companies in the final survey,over half (18) were large corporations, i.e.,companies with more than 29,000 employ-ees. About a quarter (9) were medium-sized, and another quarter (8) were small— fewer than 10,000 employees. • For 63 percent of the respondents, allbusiness units in the company con-ducted the same kind of business. About23 percent of the respondents were con-glomerates of different businesses, and14 percent were holding companies fordifferent businesses. ◆ Categorizing the Respondents. Totest our hypotheses we began by catego-rizing each organization according to thefour-stage model. To classify a company,we developed a flow chart based on thequestions in the survey (see Figure 13).The first questions dealt with whetherthe company ran their worldwide opera-tions on a single system, with one in-stance of the database. If not, and if theorganization didn’t leverage learning,sharing best practices worldwide, ourmodel classified the company as beingat our first stage — “Multinational.”

If the company lacked a single systembut did share best practices and leverage

learnings, we classified it as “Interna-tional” — the third model in our typology.If the company had a single integratedsystem with one instance of the data-base, and if it did not share and leveragelearnings, we classified it as “Global.”

If, however, the organization did haveways to share best practices and lever-age learning, we asked another set ofquestions concerned with whether theyhad a global Web site and allowed localvariations on that site. If the answer was“no”, we classified the company as “In-ternational.” But if they did have aglobal, localizable Web site, as well asmet all the criteria above (a single sys-tem, one instance of the database, etc.),then our model classified the companyin the fourth category — the “Transna-tional.” The Transnational model satis-fies all three imperatives of local respon-siveness, global efficiency, and leverageof worldwide learnings.

We wanted to compare this classifi-cation of the companies in our sampleto their own categorization of them-selves to see if the results were similaror different. The differences turned outto be systematic. Interestingly, compa-nies tended to classify themselves as be-ing at a more advanced stage than ourmodel suggested (see Figure 14). About40 percent of the companies classifiedthemselves as Transnational, while ourmodel put only 17 percent in this cate-

FEATURE

Figure 13. Testing the Hypothesis.Figure 12.Types and Size of the Sample.

INTERNATIONAL MULTINATIONAL

GLOBAL

NO

NO

NO

NO

YES

YES

YESYES

TRANSNATIONAL

Global System?(10, 11, 12, 13)*

Leverage Learnings?(23, 24)

Global/Local Web?(17, 18, 19)

Leverage Learnings?(23, 24)

Similar63%

Large 51%

Small 21%

Holding14%

Conglomerate23%

Medium28%

*Numbers refer to questions in the survey (see Figure 11).


gory. Our model put the majority of theself-described Transnationals into theInternational category. Undoubtedly,some of this bias towards transnational-ism was influenced by the actual word-ing of the question in the survey, whichclearly showed the superiority of thetransnational approach.

We want to emphasize that the use ofone model or another appears to haveno relationship with the profitability ormanagement quality of the company.There are many strong companies in allstages. Our conclusion has to do notwith business results, but with self-per-ceptions: companies tend to perceivethemselves as more “advanced” in glob-alizing HRIS than objective measuresbased on actual practices suggest. Fig-ure 15 plots the number and percent ofcompanies from our sample on the de-velopment curve from Multinational toTransnational. As the figure shows, 37percent of the companies in our sampleare in the Multinational stage, followednext by 25 percent in the Global stage.We found the remaining companies to

be split between the International andTransnational HRIS models.◆ The Findings. By definition, the com-panies our model classified as Globaland Transnational all use the same HRsystem worldwide (see Figure 16). As ex-pected, only 20 percent of the companieswe classified as Multinational did. Inter-estingly, however, International compa-nies were more likely than not to use thesame system worldwide.

The majority of companies across allfour categories had a global HR Website. Once again, as expected, this trendwas much more pronounced among theTransnational and Global companies.

By definition, all the Transnationaland International companies focus onsharing best practices (see Figure 18).Less predictably, a third of the Multina-tionals did. More predictably, only 20

percent of the Global companies did. Asthe model states, a Global company isless concerned about what its units aredoing locally; efficiency is what mattersin these centralized organizations.

The same findings emerge with re-spect to regular global HR meetings(see Figure 19). Global organizationsrarely bother to hold them. Such meet-ings allow headquarters to listen to theneeds and concerns of local staff, butsuch responsiveness is not a concern forGlobal companies.◆ Global versus Local Handling of HRFunctions. Our next area of inquiry con-sidered the question of whether certainHR functions are inherently better han-dled globally or locally. We asked organi-zations about ten common areas of HR.Our model suggested that certain func-tions would best be handled locally and

FEATURE

Figure 14. Types of HRIS Environments.Self-Reported Data

Model-Determined Data

*Caveats:◆ Self-reported Data◆ Not- audited◆ Small sample size

Figure 15. Companies on the Development Curve.

Deg

ree

of G

loba

lizat

ion

Time

Multinationals 37.2% (13)

Globals 25.7% (9)

Internationals20.0% (7)

Transnationals17.1% (6)

Figure 16. How many companies use the same HR system worldwide?

100

90

80

70

60

50

40

30

20

10

0Transnational International Global Multinational

■ Yes ■ No

Transnational40%

Transnational17%

Multinational29%

Multinational37%

Global23%

No37%

Yes63%

Global25%

International8%

International20%


others centrally. At the same time, how-ever, the hypotheses predicted that mostGlobal company functions would becontrolled by the home office, mostMultinationals would be skewed towardlocal operations, and Transnationalsand Internationals would be balanced.

The results fit our hypotheses onlypartially (see Figure 20). Although ourmodel led us to expect that Multination-

als would handle most functions locally,our expectations were only partially veri-fied. These organizations turn out to be“bi-polar” (see Figure 21). They handlemore functions in the central office thanwe expected, no doubt because thosefunctions — stock options, executivehiring, succession planning — are bestdone centrally by almost any company,regardless of category.

Our model also predicted a stronghome-office bias among Globals; how-ever, the survey suggests that they areonly slightly biased in that direction.Globals do handle five of the ten func-tions we examined from the home office,but tend to leave four of them to local orregional units (base salary, payroll, andtechnical/professional hiring were likelyhandled by local units, and bonuses bythe regions). Again, stock options, suc-cession planning, executive hiring, man-agement development, and pensionsare all handled centrally — but that isequally true of the less centralizedMultinational companies.

IMPLICATIONS AND CONCLUSIONSThe basic conclusion from our re-

search is that companies are not as faralong the development curve as we hadthought they would be or as they them-selves imagined. This is not necessarilynegative: presumably companies areusing a model that best fits their busi-ness needs.

Another finding was that most func-tions are performed on the level thatsuits them best. For example, succes-sion planning and executive hiring aredone by the home office; hiring, training,and payroll are performed locally; “face-to- face HR” and “HR as the businesspartner” functions are being done lo-cally. We believe that these “high touch”activities should be close to the client.The companies we surveyed agree.

Because certain functions inherentlycall for local or international handling,the four organizational models were notas differentiated as we expected in theirapportionment of local and interna-tional control. Future work should focuson more detailed questioning in thisarea to ascertain the differences.◆ Areas for Future Growth. One sur-prise for us was that very few functionsare performed regionally. Regional con-trol may represent an area for futuregrowth, as greater efficiencies and in-creased responsiveness may be madepossible by regional control of somefunctions. A lack of sufficient regionalstaff may be one reason why companieshave not taken advantage of what re-gional control might offer.

Current levels of technological so-phistication may also be holding back

FEATURE

Figure 18. How many companies share and implement global HR best practices?

100

90

80

70

60

50

40

30

20

10


Figure 19. How many companies have regular global HR meetings?

100

90

80

70

60

50

40

30

20

10


Figure 17. How many companies have a global website for HR?90

80

70

60

50

40

30

20

10

0 Transnational International Global Multinational

■ Yes ■ No

No32%

Yes68%

■ Yes ■ No

No43% Yes

57%

■ Yes ■ No

No43% Yes

57%


the globalization of some functions. Forexample, few global payroll products areyet available on the market. Perhaps newversions of PeopleSoft, SAP and otherproducts will allow more functions to behandled on regional or global levels.

With the increase in globalization, webelieve that more and more companieswill adopt the Transnational model. Thisnew model strikes an effective balancebetween the conflicting demands facingworldwide organizations, such as thecomplexity of inter-organizational rela-tionships, the dissolving of corporateboundaries, and the growth in the use ofthe Internet. For addressing thesetrends, the Transnational model, with itsbalance between central and local con-trol, is especially effective.

KEYS FOR SUCCESSSo how do you go about globalizing

your HRIS? We recommend that youconsider the following points:◆ Decide function-by-function andtask-by-task where each activity shouldbe performed. Activities should be dis-tributed across all three levels: global,regional, and local. This is not an all-or-nothing activity.◆ Push those functions toward globalimplementation that demand efficien-cies and not face-time. When a functiondemands face-to-face responsiveness,push it toward local implementation.And when neither approach is clear,look to knowledge sharing and seek outbest practices.◆ Put yourself in the shoes of those onthe other side — those receiving in-structions about the HRIS. If you askfront-line staff whether HR adds valueto their activity, the local HR person re-ceives strong support, the regional of-fice minimal value, and home head-quarters none whatsoever. Data on suchreports hasn’t changed in 25 years. Intrying to win local support, then, bear inmind that units are unlikely to view cor-porate HR as a friend. Winning buy-in isalways crucial.◆ Make decision-making part of themainstream of the organization and ob-tain buy-in by getting input and involve-ment from those who will be implement-ing the decisions. Instead of making alldecisions at headquarters, involve peo-ple from across the organization by set-

FEATURE

Figure 20. Analysis of HR Service Areas in Surveyed Corporations.

Base Salary Home Region LocalMultinational 23% 23% 54%International 14% 43% 43%Global 11% 33% 56%Transnational 17% 33% 50%

Bonus Home Region LocalMultinational 47% 38% 15%International 72% 14% 14%Global 11% 78% 11%Transnational 66% 17% 17%

Stock Home Region LocalMultinational 77% 15% 8%International 100% 0% 0%Global 100% 0% 0%Transnational 83% 17% 0%

Pension Home Region LocalMultinational 31% 23% 46%International 43% 14% 43%Global 78% 22% 0%Transnational 17% 17% 66%

Succession Planning Home Region LocalMultinational 70% 15% 15%International 86% 14% 0%Global 56% 22% 22%Transnational 50% 17% 33%

Executive Hiring Home Region LocalMultinational 62% 38% 0%International 72% 14% 14%Global 78% 22% 0%Transnational 66% 34% 0%

Mgmt Development Home Region LocalMultinational 46% 39% 15%International 0% 57% 43%Global 44% 22% 34%Transnational 66% 34% 0%

Tech/Prof Hiring Home Region LocalMultinational 0% 39% 61%International 0% 43% 57%Global 34% 11% 55%Transnational 0% 50% 50%

Tech/Prof Training Home Region LocalMultinational 8% 39% 53%International 33% 33% 44%Global 11% 0% 89%Transnational 0% 83% 17%

Payroll Home Region LocalMultinational 0% 15% 85%International 14% 14% 72%Global 22% 0% 78%Transnational 0% 34% 66%


ting up annual strategic conferences,quarterly theme meetings, ad hoc devel-opment committees, Internet chatrooms, etc.

◆ Make sure that your technology isfirst-rate and not holding you back. Mostof the companies we surveyed wouldagree that technology is a restrainingfactor today. Technology is not a be-alland end-all: it is an enabler, and we needto make sure it is not getting in our wayor pursued for its own sake.◆ Preserve cultural differences andvalue diversity. International diversity isone of the main values brought by glob-alization. Letting such diversity flourishproduces the best results for the entireorganization. ◆ Develop global thinking and relation-ships. Get out of the office and travel.You won’t really be able to appreciatebest practices and bring them into theorganization unless you experiencethem directly. Even a short internationalassignment can be an eye-opener.◆ Get and stay connected to the busi-ness, as well as to the HR and IT func-tions — at multiple levels in the organi-zation. We recommend that youestablish “three-by-three relationships”

in your organization: that is, develop atleast three relationships horizontallyacross the organization (in, say, HR, Pay-roll, and Finance) and also three rela-

tionships vertically, from analysts tomanagers to executive management.Unless you have a broad cross-section ofsupport, your focus will be too narrowand your influence on the organizationwill be limited. ◆ Develop standards and consistency.Given the communication barriers thatexist between national cultures, the po-tential for miscommunication is enor-mous. You need to define terms so thatthey mean the same thing to everyone inyour organization. ◆ Remember: “one size does not fit all”!There’s never just one solution to aproblem. To find the best solution foryour situation, you have to look at whereyou are on the development curve andwhat type of systems your people arewilling to accept. You can’t force changeon people.8

◆ Finally, provide the connectivity andbe the “glue” in your organization. As HRprofessionals, we must assume the lead-ership role.

ENDNOTES1 See Karen Beaman. “‘Europeanisa-tion’ and the New European BusinessEnvironment.” IHRIM Journal. September1999. Volume III. Number 3. pp. 44-50.2 Sturm und Drang [or storm and stress]refers to a late 18th century German ro-mantic literary movement whose mem-bers depicted in their work highly emo-tional individuals struggling againstconventional society and generally ac-cepted standards.3 Stan Davis and Christopher Meyer.Blur: The Speed of Change in the ConnectedEconomy. Little Brown and Company.1999.4 Christopher Bartlett and SumantraGhoshal. Managing Across Borders: TheTransnational Solution. Second Edition.Harvard Business School Press. 1998.5 See Karen Beaman. “On GlobalizingHRIS: Moving to a Transnational Solu-tion.” IHRIM.link. December/January2000. pp. 32-36. 6 See Alfred J. Walker. “The Future ofthe Human Resource Function.”IHRIM.link. December 1999/January2000. pp.14-19.7 See Alfred J. Walker. “Transforming theGlobal Human Resources Function: ATechnology Driven Model.” IHRIM Journal,Volume 2, Issue 2. June 1998. pp. 11-17,and Alfred J. Walker, Handbook of HumanResource Information Systems: Reshaping theHuman Resource Function With Technology.McGraw-Hill. 1992.8 Obviously, these trends will require agood deal of change management. Thetraditional change model starts with theformal structure and responsibilities of

FEATURE

Figure 21. Comparison of HR Service Areas in Surveyed Corporations.

HR Service Area Multinational Global International Transnational Overall (majority) (majority) (majority) (majority) Percentages

Base Salary Local Local Local Local Local 54%Bonus Home office Regional Home office Home officeStock Home office Home office Home office Home office Home 89%Pension Local Home office Local LocalSuccession Planning Home office Home office Home office Home office Home 65%Executive Hiring Home office Home office Home office Home office Home 57%Management Development Home office Home office Regional Home officeTechnical/Prof Hiring Local Local Local Local Local 60%Technical/Prof Training Local Local Local Regional Local 51%Payroll Local Local Local Local Local 77%SUMMARY 5 home, 5 local 5 home, 4 local, 4 home, 4 local, 5 home, 4 local,

1 regional 2 regional 1 regionalBi-polar Slightly skewed Balanced Slightly skewed

Home Home

To find the best solution for your situation,you have to look at where you are

on the development curve and what type of systems your people are willing to accept.

You can’t force change on people.


the organization. The interpersonalprocesses and relationships in the orga-nizational are supposed to change as aninevitable result. These changes, in turn,are supposed to lead to change in the in-dividual attitudes in the organization.But we think that a better approach tochange models is the reverse. First, youchange individual attitudes and mentali-ties in the organization. When thesechange, the interpersonal processes andrelationships change as a result. On that

basis, it becomes easier to change theformal structures and responsibilities.Why do we prefer this approach? Be-cause if you install a new formal struc-ture when the culture isn’t ready you willencounter a lot of resistance and littleacceptance. Also, it’s very importantwhen you look at implementing any kindof change that you ask what the need is.If the need — the pain — isn’t there,then you won’t have the support to goforward. Is the capacity there? Do people

have the resources and cycles they needto change? And then, do they have theknowledge and tools they need to adapt?Addressing all these questions will leadto more effective change management.

For authors’ biographies, see pages 112 and 115.

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