How Globalisation In Human Resource Management Impacts Businesses In 2023

October 14, 2023
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While globalisation opens the door to global talent, it also invites unique challenges for HR managers. 

From remote employee engagement to retention and managing conflicts, managers struggle to manage large teams spread across the globe. Moreover, the need to be well-versed in the legal aspects of different countries complicates the payroll and compensation function. 

To tackle these challenges, global human resources managers require two things:

  • Clarity over the impact of globalisation on human resource management 
  • Strategies to succeed and navigate through the impacts of different types of globalisation

This blog post will discuss these requisites in-depth to give you a roadmap for leveraging the impact of globalisation in human resource management.

Impact Of Globalisation On Human Resource Management

With globalisation in human resource management, companies get access to a larger talent pool. Be it cost-effective labour from the Philippines or the best tech minds from India, they can onboard the best talent from across the globe. However, this opportunity set forth a major challenge when managing and scaling teams globally. 

Here are 8 types of impacts that you must understand for building and running high-efficiency teams:

  1. Competitive Talent Market 

Top talent is not even looking for a job; they are passive candidates. They are sitting at their desk getting cold emails from competitor companies' global human resources managers. Companies that build a cohesive package and prioritise employee satisfaction build an effective workforce. 

HR managers are resorting to new ways of tapping into desired candidates with outbound recruitment. Instead of waiting for vacancies, they keep talented candidates in the pipeline to build a competitive advantage. 

  1. Compliance Intricacies 

The labour laws in every country are different. 

For instance, while India has a minimum wage of ₹5340 (US $65) per month, in the USA, it is $7.25/hour, translating to $290 per month (keeping in mind a 40-hour work week). 

Similarly, in the US, employers determine leave policies and are not mandated. Whereas Indian labour laws necessitate employers to offer various types of leave, varying by state, such as earned leave, sick leave and public holidays.

This is just the tip of the iceberg. When you hire people from over 200+ countries, keeping track of each country's labour laws and ensuring compliance can become a hassle. Moreover, stepping over these compliance requirements can lead to costly legal affairs and a reputation at stake. 

  1. Wider Talent Pool 

Be it the USA, Germany, India or any other country, globalisation enables companies to hire people from across the globe. And the best part is you do not have to set up a legal entity or open offices. With the ability to build a workforce operating completely from remote locations, companies can go borderless. 

So, with access to such a wider talent pool, you can bring together the world's most innovative minds to build a competitive advantage. 

  1. Diverse Workforce  

For businesses, a diverse workforce means bringing people with unique backgrounds, cultures and expertise to the same table. This fosters innovation and helps them tap into different markets globally. 

For instance, a diverse sales team consisting of members with various language skills and cultural insights can better connect with a broader range of customers in international markets.

  1. Corporate And Cultural Differences 

How people work in one corner of the world is different from how people work in another. 

For instance, in the USA, decision-making is often individual. Whereas in Asia, collaborative decision-making involving team consensus is the norm. A similar distinction can be seen in European companies, where they adopt consensus-based decision-making that values input from multiple stakeholders. So, a US company expanding in Asia has to consider these differences, which take more work to grasp in one go.

Such differences make it difficult for teams to collaborate and become reasons for recurring conflicts. Moreover, these cultural shocks can create a sense of hostility amongst the teams, leading to decreased productivity. 

  1. Communication Challenges  

A company with a globally expanded team faces language barriers, time zone differences and cultural nuances that complicate effective communication. This results in misinterpretation of policies, delayed decision-making and decreased overall efficiency.

For example, a company with headquarters in the US collaborates with a software development team in India. They are likely to run into these challenges: 

  • Misunderstandings of project requirements due to language barriers
  • Delayed responses to critical queries due to time zone differences 

These communication and decision-making issues make it challenging to collaborate and keep everyone on the same page. 

  1. Privacy And Security Risk 

When managing a global workforce, handling sensitive employee data across borders can lead to data privacy breaches and security threats. Since companies with big teams can not rely on Excel sheets or physical records for managing data, they opt for third-party tools for storing information. This leads to high privacy and security risks.  

For instance, when a multinational company shares personnel information across international offices, it may encounter data breaches or regulatory compliance challenges, such as the European Union's GDPR (General Data Protection Regulation). This can result in legal and financial consequences if not managed carefully.

  1. Difficulty Scaling Up/Down  

Globalisation can present challenges in scaling up or down the workforce due to varying labour laws, cultures and market conditions across different regions. 

For example, a global company expanding into new countries finds it challenging to scale up its workforce while ensuring compliance with diverse labour regulations. Conversely, when downsizing during economic downturns, human resource management faces the complexities of managing layoffs, considering cultural sensitivities and legal requirements, which makes the process intricate and time-consuming.

5 Strategies to Capitalise on Impacts of Globalisation in Human Resource Management

For companies with global teams, getting legal experts or third-party services helps to manage compliance and HR requirements without burdening HR managers. So, instead of having to set up a subsidiary or a legal entity, companies can partner with employers of record platforms to expand teams without dealing with legal complications. 

We help you do precisely that–expand your team in India without worrying about compliance. Rapid manages the complex legal structure, payroll and other HR functions, so you focus on finding the right talent. Be it health insurance or background checks, we provide a best-in-class experience to your employees. All this without worrying about paying in local currency or labour laws. All you need is the right strategy, while Rapid helps you get away with all the other administrative tasks. 

Strategy #1 Consistent HR Policy 

Create a comprehensive global HR policy that sets clear standards and guidelines for your workforce worldwide. Ensure that this policy considers the specific cultural and legal differences in each country where you operate. For instance, if your company is headquartered in the United States but has branches in Europe and Asia, your global HR policy should respect labour laws, holidays and cultural norms in each region.

How does this help? 

  • A uniform organisational culture reduces confusion and promotes a sense of belonging among your employees.
  • Compliance with local regulations becomes more manageable, reducing the risk of legal issues and fines.
  • Save time and resources, allowing your team to focus on more strategic initiatives.

Strategy #2 Adopt Global Talent Management Practices  

Implement a holistic talent management strategy that covers various aspects such as expatriation, conflict resolution, performance management and employee engagement. For example, when dealing with expatriation, create a detailed onboarding process for employees relocating to foreign offices, including cultural sensitivity training.

How does this help? 

  • Retain your best employees, reducing turnover and its associated costs
  • Employees understand their roles and expectations, leading to improved productivity
  • Promotes a harmonious work environment, reducing disputes that could disrupt global operations
  • Foster a motivated and committed workforce, boosting overall productivity

Strategy #3 Focus On Diversity, Equity and Inclusion (DEI) Efforts

Offer training programs and workshops to raise awareness about the importance of diversity and encourage employees to embrace differences.

How does this help? 

  • Enhance your brand's reputation, making it an attractive employer for a diverse workforce.
  • Attract a wider pool of talented candidates

Strategy #4 Implement Agile Principles 

Apply agile principles to HR processes, allowing for flexible resource allocation and prioritisation. For example, you implement a flexible staffing approach to address workload fluctuations, by hiring independent contractors, gig workers and freelancers.

How does this help? 

  • Respond promptly to changing business dynamics, ensuring your team possesses the necessary skills and competencies.
  • Minimise costs, ensuring maximum efficiency and resource utilisation
  • Align talent with strategic priorities, improving overall organisational performance

Strategy #5 Enhance Employee Experience

Focus on enhancing the entire employee experience journey, from recruitment and onboarding to career development and well-being programs. For instance, invest in employee wellness initiatives, mental health support and opportunities for skill development.

How does this help? 

  • Attract prospective employees and build a competitive advantage 
  • Employees feel valued and supported, leading to reduced turnover
  • Build an adaptable workforce

Building Competitive Teams With Global Human Resource Management

While globalisation offers unlimited opportunities to expand the team globally and beyond the time zones, you can only capitalise on them with a strategic approach. 

To build a competitive, resilient and agile team, you have to approach talent management with a forward-thinking and broad-minded perspective. To achieve this, you must craft policies that transcend borders, uphold the values of inclusivity and adapt to the dynamic nature of global business.

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