How the Globalization Cycle Could Impact HR and Your Organization

A train speeds ahead.

Firms may need to adjust their approach to HR due to potential changes to the global economic model.

Globalization has obliterated trade barriers, narrowed income gaps and bolstered economic cooperation among nations. It has advanced economies in disparate parts of the world as emerging markets found increased access to trade with world powers over the last three-quarters of a century. But despite this unprecedented shock to the world economic system, there's a strong belief we are witnessing the end of the globalization cycle. Some analysts believe several developments and trends — chief among them increased nationalistic sentiment in the U.S., the U.K. vote to leave the European Union, and the recent Catalonian referendum for independence — have started to turn back the clock to a time of economic nationalism.

Globalization Slowdown or Shutdown?

These nationalistic ripples in the global pond, coupled with the Great Recession, have prompted multinational firms, which own or control the supply chains that account for more than 50 percent of world trade, to slow their push for global business, according to The Economist. In addition, new technologies in manufacturing and services favor a focus on local production and have thus slowed global trade, according to the National Defense University.

The jury's still out on whether all these indicators truly spell the end of the globalization cycle as a market-shaping force. Political sentiment and economic trends could reverse, and globalization could make a fierce comeback. But while the fate of global trade comes into clearer focus, businesses need to start preparing for a different world order. HR leaders, particularly, can take actions to better prepare their organizations for a business world with more borders, not less.

Advanced Technology in a Bordered World

If the construct of a borderless world starts to crumble, then returning to the pre-globalized, federated approach to running a multinational organization may no longer be practical. Business has progressed so far and so fast because of globalization that redeploying old strategies to fit a siloed paradigm could disrupt HR, finance and production.

The Financial Times makes an important distinction between a decline in global trade of goods and the movement of data and people. "(T)rade in manufactured goods is only one form of globalisation. Cross-border movements in data and services will also be increasingly important, and the improvements in technology are pulling in the direction of more overseas commerce rather than less."

Regardless of what happens to the global economic model, organizations still need to provide user-friendly digital and mobile HCM services for payroll, benefits and employee training to satisfy employee needs. Today's multinational workers have high expectations for their employers; they want a consumer-grade HR experience that is personalized and makes a frictionless connection to their overall benefit programs. Many organizations recognize their employees want an enhanced and inspiring experience and are now offering apps that open access to feedback and engagement, health and wellness and performance management.

A Localized Approach

If economic and political winds continue to hint at the end of globalism, multinational firms will have to adjust to a more localized approach for multiple reasons.

First, HR at multinational firms will have to acquaint themselves with some of the new nuances of local workforce-related legislation. Labor laws and requirements vary from country to country, state to state and municipality to municipality, but the distinctions don't end there. Each municipality, state, country and perhaps even region, has different and complex workforce issues that are intertwined with local economic considerations. Navigating local laws, workforce organizations, such as labor unions, educational institutes and other stakeholders requires a clear understanding of the lay of the land.

Also, HR will have to continue to advance the abilities to effectively recruit and onboard employees remotely. Regardless of globalization, not every prospective employee lives nearby; your organization might recognize that a deep and talented workforce pool resides in a distant region. Intelligent recruiting and onboarding through virtual tools and applications will have to become a priority, if it isn't already.

HR has to make use of tools that further the development of employees across the globe. In the U.S. and many other countries, employees believe that their employers fail to properly help with career planning and talent management, according to the ADP Research Institute® (ADP RI) report, The Evolution of Work 2.0: The Me vs. We Mindset. ADP RI reports that fewer than one-third of French workers express confidence in their employers regarding talent management. Only one-third of U.S. employees give their employers high scores on career performance, compensation or learning management, onboarding and succession planning and recruitment strategies."Companies that can bridge this disconnect between management and employee expectations—and are able to understand and address the nuances of different attitudes by region/country—will be better positioned in an increasingly competitive era to recruit and retain global talent," notes ADP RI. Disconnected workers become disgruntled workers and eventually seek jobs elsewhere. While the cost of churn varies by organization, the Society for Human Resource Management posits that the average cost per hire in the U.S. is $4,129, and the average time to fill jobs is 42 days.

Global, Integrated HR Technology

A move away from globalization continues to place an emphasis on advanced people analytics to measure productivity and re-pivot business strategy; however, the concern for trusted, complete and accurate data is magnified due to disparate systems. Only with the ability to integrate these systems can people analytics pinpoint top performers, identifies steps for improvement and recognize the causes of attrition. With more boundaries in the global economy, effectively measuring the recruitment, onboarding, training, management and nurturing of employees has even greater significance.

Adjusting to a business world that's removed from globalization could be complicated, and it will take time and effort. But the mobile technology that pushed globalization forward can also ease the shift toward a more localized business model. The ability to integrate payroll, HR, Time, Talent and Benefits data fully in one place eases that transition. For one, local expertise is readily available for compliance issues, which can be accessed to serve HR leadership and employee needs. Also, easily-accessible analytics can help define recruitment and retention strategies that cater to the needs and stipulations of each municipality and region. A global HR system also supports digital mobility initiatives for employees such as payroll services, benefits, training and employee engagement. This type of system provides a complete view of a workforce, helping hone in on localized discrepancies in productivity so that people strategies can be adjusted.

Globalization Might Diminish, But the Demands of Mobility Won't

Even if globalization starts to wane as a business imperative, the power of global mobility for today's workforce will likely only continue to intensify. As Harvard Business Review notes, businesses don't go global — their people do. The market might shrink if globalization loses force, but it's still a considerably large business world within a country and even a region. Employees have to be mobile to, meet with clients and suppliers, sign deals, and form relationships. They'll continue to need support from HR, and HR will need mobility and agility to continue to serve as a bridge between workers and management.

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