Sunday, March 29, 2009

Did You Know …

Phillips Electronics has approximately 75% of its workforce outside of the
Coca Cola operates in nearly 200 countries.
Nine of the world’s 15 largest companies are based outside of the US.
General Electric's International growth rate is greater than its domestic rate.
More than half of Matsushita's employees are outside of Japan.
Nestle has more than 95% of sales and its employees located outside of
Small and medium sized businesses are rapidly becoming global in both
mindset and operations.
Many high tech companies were ‘born globally’ and became part of global
markets within the first year of operation.

Characteristics of Global Businesses

The Twenty First Century will see unprecedented expansion of business
opportunities across borders. While in the past, globalization was limited to the
largest companies, this is no longer true. Small and medium sized businesses
now tap global markets and receive supplies from all over the world. This
borderless and boundary-less growth has far-reaching implications for the
profession of human resources. This treatment of global business begins with
information about the global marketplace and reasons why companies want to
expand globally.

Global commerce and businesses have existed for centuries. Much of the early
cross-border activity was done for reasons of exploration, conquest, conversion
and colonization. Later in the industrial age, improvements in transportation
and technology such as railroads and the telegraph, and then later the
telephone, automobile and airplane did much to shrink borders and time
horizons. The result was increased traffic of people, resources and products
across borders and throughout the world.

This press for globalization accelerated and became a driving force for large
companies in the 1960s. These companies became the first modern multinational
corporations, and they had many reasons for expanding beyond their borders.
The reasons remain much the same today: to open new markets and sources of
customers, and to produce products more cost effectively.

In the late 1980s and 1990s, the geopolitical situation changed dramatically.
The Berlin wall came down and the Cold War ended. The information economy
started to predominate and technologies such as wireless communications and
the Internet further collapsed borders and time. Favorable international trade
agreements and the availability of global capital have strengthened the move to
free market economies around the world. Companies of all sizes now view
global business, not as a separate department or group of people, but as a key
source of competitive advantage for the entire enterprise. Globalization has
become a key tenet of the new economy and the way the world operates.

Global Human Resources

The rise in the importance of global human resources is directly linked to the
rise of global business enterprises. As businesses of all sizes expand their
targetted markets, there is a need for human capital to cross borders and to be
as productive as possible. Global human resource professionals are responsible
for developing strategies, systems and policies that ensure the effective and
efficient use of human talent (within and across borders) to accomplish these
organizational goals.

Thursday, March 26, 2009

Multinational Companies Will See More Immigration Enforcement

Multinational corporations can expect to see more workplace immigration enforcement as the world economy continues to falter and countries attempt to throw up barriers to illegal migration, an international immigration expert tells SHRM Online.
Companies, especially those in the European Union (EU), will probably see more stringent enforcement of existing laws that prohibit the employment of illegal migrants, said Georges Lemaitre, an international migration specialist for the Paris-based Organization for Economic Cooperation and Development (OECD), which has members from most of the world’s developed nations.
While border enforcement of anti-immigration laws is popular with some countries, workplace enforcement is an accepted policy in the EU, he said. However, because workplace penalties are so low, they don’t always act as a deterrent, he said.
“You have to look at the incentives for the employer to hire (illegal) migrants,” Lemaitre told SHRM Online. “Employers can hire skilled workers at lower costs.”Increasingly stringent enforcement is a product of these times, Lemaitre said. Companies can expect policymakers to become more concerned about the potential adverse effect of immigration on natives’ opportunities, Lemaitre said at a March 19, 2009, OECD presentation on the economy and migration held in Washington, D.C.
For example, Spain’s rising unemployment led to the launch of a voluntary program in late 2008 that pays jobless immigrants who are entitled to unemployment benefits to return to their countries of origin. People who acquiesce cannot return for three years. To date is has not been successful, Lemaitre said. Italy’s government statistics agency recently blamed immigrants for the country’s rising unemployment.OECD released global unemployment figures on March 9, 2009, that emphasize how much the world economy has soured.
The unemployment rate for European OECD members was 8.2 percent in January 2009, 0.1 percentage point higher than the previous month and 0.9 percentage point higher than a year earlier. For the United States, the unemployment rate for February 2009 was 8.1 percent, 0.5 percentage point higher than the previous month and 3.2 percentage points higher than a year earlier. For Japan, the rate was 4.1 percent in January 2009, 0.2 percentage point lower than the previous month but 0.3 percentage point higher than in January 2008.
However, the global recession does present some opportunities for multinational corporations, Lemaitre said. High unemployment rates mean large pools of workers—with a range of job skills—that can be hired for modest wages, he said. These worker pools form because unemployed immigrants will not automatically return to their native countries during a recession, Lemaitre said. Reasons vary. They might not want to return home, can’t finance the move or fear for their safety upon their return, Lemaitre said. “We’re not seeing an increase in return migration; people want to stay put,” he said.
Immigrants who lose their jobs might be forced to take “any” job, even at very low wages, Lemaitre said. Many recently arrived and unauthorized immigrants are not eligible for most benefits. For example, Spain does not allow access to unemployment or social security benefits for certain categories of migrants, and in the United Kingdom eligibility depends to an extent on the country of origin.
“You can hire highly skilled workers at low wages to fill highly skilled or low-skilled jobs,” Lemaitre said, “and generally they will work very hard for you. In a downturn, companies need fewer people, but when the recovery comes there is a large pool of (migrant) workers” that can be tapped.

Stricter Ethical Standards Called Key to Global Recovery

As the global economy sours, multinational corporations should adopt stringent ethical standards of openness, disclosure and transparency that will restore trust in the business world and get things moving again, says the head of an influential international organization.
Business ethics should be at the center of any new road map for the global economy, said Angel Gurria, secretary-general of the Paris-based Organization for Economic Cooperation and Development (OECD), which has members from most of the world’s developed nations.
“The cost of bailout and fiscal packages is going to linger on for generations,” Gurria said in a recent address to the European Business Ethics Forum. “Our societies are now so disgusted with business practices that there is a growing call for stronger-than-ever regulation. And we run the risk of returning to selfish nationalism or cumbersome overregulation.”
OECD released global unemployment figures on Feb. 9, 2009, that underscored Gurria’s call for a new effort at global ethical cooperation.
In Europe, the unemployment rate was 8.0 percent in December 2008, 0.1 percentage point higher than the previous month and 0.8 percentage point higher than a year earlier, OECD said. For the United States, the unemployment rate for January 2009 was 7.6 percent, 0.4 percentage point higher than the previous month and 2.6 percentage points higher than a year earlier. For Japan, the rate was 4.5 percent in December 2008, 0.5 percentage point higher than the previous month and 0.7 percentage point higher than in December 2007, OECD said.
Any reconfiguration of the international business system must guarantee transparent managerial incentive schemes, Gurria said.
“One of the main lessons of this crisis is that companies and markets can’t rule themselves. Financial innovation sacrificed business ethics for the sake of extraordinary profit,” Gurria said. “Trust is the basic element for the well-functioning of markets and societies. And we have either lost it or at least misplaced it.”
Business ethics is driven by transparency, objectivity, reliability, honesty and prudence, Gurria said. Multinational corporations can adopt some effective self-regulatory practices that can enhance their credibility, he said.
For example, safeguards to protect legitimate whistle-blowing activities are recommended, including protection of employees who, in the absence of timely remedial action or in the face of reasonable risk, report illegal or wasteful practices. OECD encourages, where practical, compatible principles of corporate responsibility among business partners, which will allow corporations to generate the key asset to conduct business and discharge its fiduciary responsibility: trust.
In addition, OECD recommends that multinational corporations:
Ensure that timely, regular, reliable and relevant information is disclosed regarding their activities. This should include the financial and operating results of the company.
Apply high-quality standards for disclosure, accounting and audit.
Respect the right of their employees to be represented by trade unions and other bona fide representatives of employees and engage in constructive negotiations.
Contribute to the abolition of child labor.
Contribute to the elimination of all forms of forced or compulsory labor.
“We have said that we advocate improvements in regulation, supervision and corporate governance as part of the overall strategy for getting the world economy growing again,”

China Eases Employment Residency Requirements

In late February 2009, the Chinese State Council announced plans to loosen household registration requirements as part of a job stimulus package aimed at mitigating the effects of the slowing economy. The Chinese government’s household registration system – commonly known as hukou in Chinese—restricts Chinese citizens from moving freely between cities for employment purposes. The system has been in effect since 1958 and has been enforced with varying levels of severity over the past five decades. In the 1990s, computerization of the registration system made it easier to manage, but government enforcement has been less strict in recent years. Many people recognize that restricting professionals from career relocation would be detrimental to the economy.
Although professional candidates have not experienced many problems with the hukou system, many recent university graduates who could not land jobs in their home cities were restricted from finding work elsewhere by hukou regulations. Thus, in its recent announcement, the State Council asked every city in China, with the exception of Beijing, Shanghai, Tianjin and Chongqing, to eliminate hukou restrictions for college graduates. These individuals are free to seek employment almost anywhere in China.
While many foreign-invested firms in China are now laying off blue-collar workers, the economic downturn might be an opportunity to hire and train talented local college graduates for leadership roles. According to China’s Ministry of Human Resources and Social Security, there are expected to be over six million graduates from institutes of higher learning in 2009. While many of these individuals will be seeking employment, analysts point out that more than 1.5 million of 2008’s graduates are still unemployed. This gives foreign companies the opportunity to hire and retain young local talent that might have been scarce in the days when the job market was hot.
In addition to loosened restrictions for college students, the central government has hinted at changes to hukou requirements for migrant workers. Government estimates show that close to 20 million migrant workers are without work. A large percentage of these are in the heavily industrialized Guangdong province, where many foreign manufacturing companies are cutting back production or closing plants because of the global drop in demand for manufactured goods.

Expats Still Essential, but Recession Changes Their Roles

In 2008, when GMAC Global Relocation Services released its Global Relocation Trends Survey, they found that 68 percent of corporations were ramping up their expatriate assignment efforts.
A lot has changed with the deepening of the recession, right? Wrong, says Scott Sullivan, senior vice president of Global Sales and Marketing for GMAC in their Woodridge, Ill., office. Even though the company has not completed its analysis of its 2009 survey, Sullivan says GMAC has not seen a change in the number of international assignment initiations it receives from clients. They have been watching it closely, too, because it is a contrast to what is happening domestically, where they are seeing clients forecasting a 10 to 20 percent decrease in relocations. Marci Pelzer, senior global communications professional with Manpower Inc. Worldwide, concurs, saying they have not seen a reduction either.
“I’ve been sort of surprised,” says Sullivan. “I can’t believe that ultimately there is not going to be some contraction and some pull-back initiating assignments.” He points to the fact when the United States went through a recession in the early 2000s, there was a reduction in the number of expats, though it quickly lifted back up and grew at a robust rate afterwards.
Signs of Hard Times for ExpatsThe signs are there for a contraction. The global economic recession has caused a number of countries to take a hard look at expats who might be taking jobs away from locals. The Economic Times in India reports that expats executives are being given pink slips because their expertise is not needed during the downturn. The article points to MetLife’s replacement of its CFO with an Indian hire, though Christine Tso, director international for the company’s Media Relations, tells SHRM Online that this was a one-time event and that they are not seeing these changes elsewhere.
Business Intelligence Middle East notes that in Saudi Arabia Muhammad Al-Hamdan, head of the Labour office in the Eastern providence of the country, is telling businesses that they cannot fire Saudi staff; instead, they must fire expatriate staff to provide positions for Saudis.
Cost-Cutting Measures “One of the things we are seeing is that while there are still expat jobs in the Middle East and elsewhere, these jobs are not paying as much as they used to,” says Jim Sillery, principal in the compensation practice at Buck Consultants, LLC, a global HR consulting group.
This change has been part of the aggressive cost containment programs U.S. companies have put in place during the past couple of years to fight off the effects of the economic recession, says Sillery.
The GMAC Relocation survey found that, even in 2007, 58 percent of companies surveyed reported that they were cutting backs on expenses for international assignments in response to economic conditions, and 29 percent of those cutting back – the highest since the survey began tracking this subject -- said they were reducing policy offerings and financial incentives for relocating employees.
In addition, companies are changing how they use expat assignments. While filling a skill gap has been the number one reason for international assignments during the 14 years GMAC has conducted its survey, in the past three to four years the focus has been shifting to using the assignments to build management experience for employees, says Sullivan. It is fast becoming the number one reason.
‘Global Executives’“What we are really seeing,” says Sillery, “is the idea of the traditional expat as sort of a prestigious position.” Those are the expats being repatriated, while a new breed of expats, who call themselves “global executives,” continues to expand.
These are the people who go out into the global market and compete with locals, Sillery explains. Their job market is the world, and they have to demonstrate their own value, which means that they have to be able to compete with the local workers and win.
Not only will they have to accept pay that puts them on par with locals, they might also receive only a one-way ticket there, says Sullivan. “There is no obligation for the company to return you home. If you want to, at some point, apply for a job back home or in Japan, so be it.” These trend setters might find that their assignment includes six months in Europe, six months in Asia and six months in Latin America to enable them to become familiar and accustomed to how business is done around the globe, he says. So, forget shipping household goods and taking their family along.
Are There Jobs at Home?
Some expats are heading home on their own to find better job and economic conditions. This is especially true for employees returning to India, some places in China such as Shenzhen, and much of Middle East where they are still seeing growth in their markets.
The same is not true for expats returning to countries facing significant economic recessions. “Having been an expatriate myself,” says Sullivan, “the last thing I would want to be expecting is my assignment coming to its natural close at this point and time and having to come back to the United States.” And some, like one of Sullivan’s acquaintances in the auto industry, are coming home to find they will be better off going elsewhere. Sullivan’s friend was repatriated back to the United States in 2008 only to be told by his company he should immediately head out to India, where he would have more opportunities.
Global Experience Still Important
The best companies should be taking a hard look at those employees who are coming home – even the traditional expats. One of the biggest mistakes companies made during the bubble burst, says Sillery, was making across-the-board, deep cuts to the point of being anorexic. Once the economy improved, they didn’t have the bench strength to take advantage of opportunities that came with the recovery. “Companies run the risk of corporate anorexia again,” he says. But the future is in the global market, and companies need to retain people who are going to help them make an impact in that global market. A lot of the people who are being repatriated have the unique advantage of having that global experience and perspective which will be invaluable on the upturn.