Globalization of the HR Function: The Next Step in HR’s Transformation?
A study conﬁrms HR’s progress in moving from a transactional function to a strategic partner. The function now faces pressures to globalize by adopting service delivery models that better rationalize costs, leverage common technology and processes, and focus resources on global HR processes that can create competitivedifferentiation for the enterprise. The authors discuss ﬁve service delivery models along a continuum of commonality of business needs, and present four cases of global companies that found the best ﬁt for their needs. Key determinants include ﬁnancial considerations, HR service requirements, and cultural readiness. © 2008 Wiley Periodicals, Inc. In the ﬁrst wave of a transformation, launched in manycompanies about a decade ago, the human resources function began to reposition itself from a largely transactional function to a strategic partner that helps drive business results. Initiatives over the last several years have targeted greater efﬁciency and cost-effectiveness, utilization of new technology, and creation of a human capital strategy for the business or organization. According toMercer’s HR Transformation surveys, conducted ﬁrst in 2003 and again in 2006, there is no question that organizations worldwide are changing their perception of the HR function. Two-thirds of global respondents in 2006 said that HR leaders are now viewed as a strategic partner, participating in strategy discussions and decisions. And shifts in HR priorities reveal a growing strategic focus. However,the transformation of the HR function is far from ﬁnished, especially if the function hopes to drive business results in the increasingly global organizations it serves. The emerging challenge is to
KAREN PIERCY AND PHILIP VERNON
deliver value across an enterprise of a global scale, not with a siloed, multinational HR function that may differ in its efﬁciencies and competencies from country tocountry but in a strategically seamless manner that can be leveraged across geographies to address global as well as local workforce needs. To accomplish this, many HR organizations will need to transform themselves further through a new service delivery model, one that may involve some form of sharing services across business units and geographies. Choosing the right model at the right timeentails examining a number of factors. And the choices exist not as discrete options but as points along a continuum of global HR service delivery. That choice made, however, the HR function will still face some formidable barriers, as the 2006 Transformation survey revealed, to full strategic partnership. This article will delve further into how far the HR function’s transformation has progressed inthe last several years; look at the current pressures for globalizing the function; examine HR global service delivery models and their respective ﬁt with business and organizational needs; and share case studies of the decisions four global companies made for organizing HR for the future. We’ll also look at a few related barriers that HR will need to overcome as part of the next wave oftransformation.
The First Wave of the HR Transformation For at least a decade, organizations and management experts have posed a kind of Platonic ideal for the human resource function by requiring that HR transform itself into a genuine strategic partner to executive management and a measurable
c 2008 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com)Global Business and Organizational Excellence • DOI: 10.1002/joe.20193 • January/February 2008
contributor to business results. This ideal has certainly taken hold at virtually every global organization; nonetheless it is reasonable to ask whether this transformed version of HR is just notional or is real. Has HR succeeded in throwing off the shackles of transactional drudgery—along with its...
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