Meeting the challenges of global resourcing
The Authors
Frances Wilson, International Manager, CIPD, London, UK.
Abstract
Purpose – The purpose of this paper is to provide human resources (HR) practitioners with a guide to international resourcing.
Design/methodology/approach – This paper uses research from The Future of HR in Europe: Key Challenges through 2015 report and the Chartered Institute of Personnel and Development's annual Recruitment, Retention and Turnover Survey 2007. It also uses case studies from the NHS and Standard Chartered Bank to demonstrate this research. This paper explores international resourcing, demographics and the role of HR in tackling skills shortages in Europe.
Findings – This paper finds that managing talent is the most challenging issue facing employers in Europe. As the world becomes increasingly joined up through globalization companies are looking to source and deploy talent on a global basis.
Research limitations/implications – The paper is not an exhaustive list of research and all of the publications apart from the research from the European Association for Personnel Management are from the UK, which perhaps limits its usefulness elsewhere.
Practical implications – The paper provides a useful resource for employers and HR departments who are using or are looking to use international resourcing.
Originality/value – This paper demonstrates the value of HR in attracting, retaining, and rewarding employees on a global basis.
Article Type:
Research paper
Keyword(s):
Recruitment; Demographics; Globalization.
Journal:
Strategic HR Review
Volume:
7
Number:
2
Year:
2008
pp:
5-10
Copyright ©
Emerald Group Publishing Limited
ISSN:
1475-4398
Managing talent is the most challenging issue facing employers in Europe going forward to 2015. This is according to HR professionals responding to a recent survey published by Boston Consulting Group (BCG) in cooperation with the European Association for Personnel Management (EAPM) (Strack et al., 2007). Managing demographics is also identified as a key issue and HR professionals in the UK place managing globalization and improving leadership development as issues high on their agenda over the coming years.
In our global world, there are many resourcing challenges currently facing employers. For some, this has blurred the boundaries between those responsible for international assignments and those dealing with domestic resourcing issues, because today companies are more likely to be sourcing and deploying talent on a global basis. It is also quite interesting to speculate about the drivers for international recruitment. Some of it undoubtedly is being fuelled by skills' shortages, but there is also the drive to make workplaces more diverse and to capitalize on the different skills, behaviors and competencies that this brings.
Many multi-national organizations are working hard to design a resourcing strategy that reflects the overarching international resourcing needs of the business and attracts a diverse workforce. But there are also many non-global organizations that are less concerned about mobility across nations and more concerned about the need to recruit good people. Recruitment and retention difficulties and talent shortages in domestic markets are forcing employers to consider a range of options. In the Chartered Institute of Personnel and Development (CIPD) Recruitment, Retention and Turnover Survey 2007, around four-fifths (84 percent) of employers report that they are experiencing recruitment difficulties and as a result they are developing a range of strategies to address these, including providing additional training to enable internal promotions, using the employer brand as a recruitment tool and targeting migrant workers from EU accession countries – see Table I (CIPD, 2007).
A strategic approach to cross-border skills movement
The increasing difficulties that employers face in recruiting people with the right skills and the dramatic increase in labor movement within the EU means it is only natural that international migration has an impact on recruitment in domestic markets. But it is not just about finding people with the necessary skills. A recent study by the Home Office in the UK on employers' use of migrant labor shows that migrant workers from Eastern Europe have in some instances become a preferred source of labor because of their work ethic and skills, particularly in the agricultural and hotel and catering industries, and for low-skilled-administrative, business and management jobs (Dench et al., 2006).
The CIPD estimates that at least 580,000 people from the eight central and eastern European countries that joined the enlarged EU in 2004 went to work in the UK in the first two and a half years following EU enlargement. Clearly, such figures show many people are moving across borders to work in destinations other than their home country. But what does this mean for employers? CIPD research shows that many UK employers are recruiting migrant workers primarily for their skills and experience and not for cost-cutting reasons, though cost is a more important consideration when recruiting less skilled migrants. The research also reveals that UK employers rate migrant workers relatively highly compared with other job seekers such as the long-term unemployed and people on incapacity benefit – in fact 75 percent of employers recruiting migrant labor say it has been a positive experience. But investment needs to be made and international resourcing needs to form part of the long-term strategy if the recruitment of migrant labor is to have a positive impact on the organization.
Demonstrating the complexities at NHS
Take the UK National Health Service (NHS) as an example. It is the largest single employer within the UK, employing over a million people – 5 percent of the working population – in numerous careers (over 70 professions). The NHS has a long history of welcoming staff from overseas to gain experience and education by working in the many different parts of the NHS in England. It is a huge organization that relies heavily on international recruitment – in 2002/2003 43 percent of new nurse residents were from abroad. The number of work permits issued to foreign nurses nearly doubled from 2000 to 2003 and the flow of skilled professionals has also become more internationalized. In each year from 1993 to 2002, nearly half of all new registrants to the General Medical Council, which registers doctors to practice medicine in the UK, were from abroad, increasing to nearly two-thirds by 2003.
Tackling international recruitment in order to overcome the problems the NHS faces in recruiting and retaining people with the right skills and qualifications, while making sure it does not strip other national health systems of talent, is a major challenge. While there is a clear business need for the NHS to recruit from abroad it is important to think about the long-term implications of such action. Using international recruitment to plug short-term skills gaps can cause problems in the long term and needs careful consideration. For example, as a consequence of an increase in the supply of UK graduates from medical schools and government changes to immigration policy that require preference to be given to EU doctors, five years after the launch of a range of international recruitment policies and practices demand for overseas doctors from outside the EU has fallen dramatically. The fear here is that recruiters might find a threshold-competent applicant from within the EU, so this person would be fast-tracked in preference to a more highly qualified non-EU doctor.
A solution to challenging demographics
International resourcing is not just about recruiting migrant workers or encouraging employees to be more mobile in order to create an agile workforce that can respond to business needs, but some employers are moving location to where the skilled employees are based. Michael Leicht, project leader of Boston Consultancy Group research, says:
Talent shortages loom, both in Europe and in new markets further afield and companies must take steps now if they hope to avert these shortages. Many companies have already planned key actions and our research indicates that the number of European companies that move to new locations such as India in order to gain access to burgeoning groups of talented workers will roughly triple during the next five to eight years. Companies will want to assess their needs for talent in the light of their strategic and business requirements. For example, a company that desires accelerated geographic expansion and business growth will require greater numbers of highly skilled new employees.
Managing demographics was consistently viewed as crucial by the European countries that took part in the research, and it was the top issue for HR professionals in Austria, Germany and Switzerland. This is not surprising, as these countries are among those facing the greatest demographic challenges, particularly with an ageing workforce. Philip Krinks, partner at Boston Consultancy Group, comments: “With the workforce of Europe graying, European companies must anticipate two different risks – the loss of capacity and knowledge as workers retire and the ageing of the workforce. This has implications for productivity.”
International mobility at Standard Chartered Bank
Speaking at a CIPD event on international mobility, Tanvir Haque of Standard Chartered Bank outlined what it is doing to manage international mobility. Explaining that the strategic intent of Standard Chartered Bank is to be the world's best international bank, Haque, head of international mobility, said that the bank's core values “create our unique culture and drive us in everything we do. They define and inspire us, influencing our evolution.” One of the bank's core values is to be international. One way this can be demonstrated is by simply walking around the London office where the “diversity is truly amazing.”
There are various reasons, however, for the bank to have an international mobility program, and mobility is currently being driven by its rate of growth. For example, Standard Chartered acquired Korea First Bank, the largest acquisition in the history of the bank, and needed global mobility to help with both skills transfer and culture transfer. An international assignment profile at the bank can be divided into three parts – needs, planned and strategic – driven by different business drivers. So, skills shortages and/or skills that do not exist in the local community may force an international assignment; assignments can be planned around providing knowledge transfer, or they can be the result of strategic talent management and career development planning.
Implementing a shared service center solution
All of these provide challenges for HR and steps have been taken to ensure the assignee hits the ground running and the bank gets knowledge payback and leverages the talent in which it invests. For example, cultural awareness training is now mandatory for all international assignments and the approach to talent management within the global mobility context has three distinct phases. First, talent management covers assignee selection, including defining the selection criteria and sourcing the candidates; performance management of international assignees, including setting out the assignment objectives; career management; mentoring; learning and development; and retention, including repatriation, reintegration and succession. The second phase is about reward, which is split into three areas – assignment remuneration, assignment benefits and variable compensation. The bank has group reward principles, assignment reward models and assignment benefit provisions, with international mobility policies that vary depending on organizational context and the mobility type. The third process is based around process, covering the risk aspects, such as legal, regulatory and tax compliance, and employment and assignment terms and conditions; and cost management, such as tax and social security planning, cost recharging and tax equalization.
In 2001, Standard Chartered Bank created SCOPE International, a wholly owned subsidiary based in India that acts as a shared service center. From February 2002, it has managed the international mobility program. It employs 300 people and the international mobility team of 18 staff manages the end-to-end assignment lifecycle for 600 expatriates across 46 countries. Haque warns that managing an international mobility program remotely, from a process perspective, does present challenges. He believes employers need to refine global policies and standardize processes, that there is a need to invest in technology and systems to deliver integrated solutions and service, and that the role of a shared service center and the roles of local HR teams must be clearly defined.
A rapidly changing world
With companies needing to respond rapidly to resourcing issues in different parts of the world, the selection process can be overridden by the urgent need to fill a post by line managers, sometimes to the exclusion of HR and the correct assignment procedures. This can have damaging consequences for organizations, especially when it comes to cultural issues and financial and legal matters such as tax compliance. When selection is carried out with more thought, there are lots of competencies based around adaptability, emotional stability, resilience, self motivation and orientation to change that are possessed by employees capable of working successfully across borders that can be used in the selection process.
As traditional expatriation changes from moving people from headquarters to other places, to employees relocating from and to a myriad of destinations, the mobility map becomes more like a kaleidoscope. With an increase in people with no obvious home country base comes a whole raft of other interesting issues and implications, such as what repatriation means to people with a truly international background and orientation. Increasingly companies feel the need to make good recruitment and selection decisions, not least so that the employees selected are those who will enhance the international effectiveness of the company, by being able to contribute effectively to multi-cultural teams and reinforce the strong corporate culture that then reinforces the employer brand and, in the way of the virtuous circle, makes for a high performing workplace.
The role of HR, branding and rewards
In other CIPD research, Paul Sparrow, professor of International Human Resource Management at Lancaster University Management School, looks at the enhanced capability that HR has brought to bear when sourcing employees from different parts of the world (Sparrow, 2006). He demonstrates that one of the impacts of the globalization of HR is the development of the relationship between HR and other parts of the corporate function, particularly marketing, corporate communications and IT. Concepts such as employer branding have taken on increasing significance as people try to manage the need to reflect corporate values and embed them locally to find a way of attracting and retaining talent in different parts of the world.
Brand is crucial in attracting the right employee for the particular type of organization. The company may have an excellent range of exemplary people practices that internal staff might be aware of, but if these are not being communicated to new and potential employees then there will be recruitment problems. How the brand is delivered and represented, both internally and externally, is critical. Given that the brand is one way of attracting people globally, if it is consistent throughout the world in terms of values and is adapted to local conditions it can be a useful tool in attracting employees who will be comfortable with being globally mobile.
Although the focus of this case study feature is not on reward issues, it will have an impact on the package that attracts and retains talented people and is therefore part of the resourcing puzzle. Often the big question is whether to seek global consistency, which can lead to internal equity but means that companies are paying above or below market rate, or to focus on local differentiation, which can mean internal disparities but enables adaptation to local market rates and cost control. The important thing about pay is the implication with regard to building international teams to respond to global mobility and resourcing issues and increase internal diversity within the global workforce. Alignment and harmonization of incentives, for example with shared incentives and global bands, can be used as an overall way to reward teams for team performance.
In general, HR can overcome some of the challenges associated with international resourcing by taking a proactive approach to gaining buy-in from key stakeholders. Steps to take include:
- Getting support of professional bodies. Where specific skills groups are targeted, it helps to establish relationships with professional bodies in order to overcome potential obstacles.
- Getting buy-in from more senior individuals/employees in the organization. This is essential because HR might rely on them to provide mentoring/coaching, and, on the more negative side, to manage discrimination.
- Communicating international resourcing strategy to existing employees so that they understand the need and the importance of its success.
- Understanding cultural differences in order to identify and deal effectively with any potential problems.
- Getting commitment from individual employees and their family to move abroad – retention relies on commitment.
Table IInitiatives undertaken by employers in the UK in response to recruitment difficulties
References
CIPD (2007), “Annual survey report 2007, recruitment, retention and turnover”, CIPD, London, available at: www.cipd.co.uk/NR/rdonlyres/746F1183-3941-4E6A-9EF6-135C29AE22C9/0/recruitretntsurv07.pdf, .
Dench, S., Hurstfield, J., Hill, D., Akroyd, K. (2006), Employer's Use of Migrant Labor: Summary Report, Home Office, London, available at: www.homeoffice.gov.uk/rds/pdfs06/rdsolr0306.pdf, .
Strack, R., Caye, J., Leicht, M., Villis, U., Böhm, H., McDonnell, M. (2007), The Future of HR in Europe: Key Challenges through 2015, Boston Consulting Group and European Association for Personnel Management, executive summary available at: www.bcg.com/publications/files/ES_Future_HR_Europe.pdf, .
Sparrow, P. (2006), International Recruitment, Selection and Assessment. Research Report, CIPD, London, .
About the author
Frances Wilson is Manager, International at CIPD. She is a key representative on regular forums concerned with international people management and development issues. She participates in the work of HR associations around the globe and has excellent contacts with the European Association for Personnel Management (EAPM). She also brings together people professionals from different countries in CIPD exchange meetings. Wilson has project-managed many pieces of work in key areas of international HR such as international reward and recognition, international recruitment and management development. She is currently looking at the impact of HR professionals in mergers and acquisitions and is leading a major project researching the business role of international people management professionals. Prior to joining CIPD, she was a personnel practitioner for ten years and has experienced life as an expatriate in the USA. Frances Wilson can be contacted at: f.wilson@cipd.co.uk