Global Talent Management

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Global Talent Management: Fostering Global Workforce Practices That Are Scalable, Sustainable and Ethical
8 Principles & 7 Field Lessons for Success in Global Talent Management

“We are at a crossroads in Global Workforce Management – in particular as it relates to the developing world where, due to economic power shifts and global demographics, intense workforce management efforts must occur in the coming years. At this crossroads we find culture, localization, technology and leadership as the key challenges along the path to achieving the transformational objective of becoming an organization capable of true global talent management.”

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A Human Capital Institute Position Paper - June, 2004 By John Chaisson and Allan Schweyer Building and Managing an INTERNATIONAL WORKFORCE 1

Table of CONTENTS
Summary of Key Themes and Arguments Introduction: Back to the Future of a Global Workforce Preface: The Reality of Global Talent Management Prologue: A Tale of Two Workforces (a fictional case study)

Part I:

Getting Local for Global Success –
8 Principles for Building the Global Workforce Principle 1: Understand The “Real” Global Workforce Paradigm Principle 2: Reactive “People Costs” Approach is Not a Long-Term Solution to Global Talent Requirements

Principle 3: Principle 4: Principle 5: Principle 6: Principle 7: Principle 8:

People Are Not Fungible Find a Culturally Relevant, Strategically Broad Formula for Global Workforce Success Define a Specific Operational Formula for Global Workforce Advantage There is an Imperative to Adopt GTM at the Operations Level MNEs Must Utilize “State of the Art” Global Workforce Technology Solutions Global Workforce Success and GTM Hinge On Building Local Workforce Leadership

Part II:

Seven GTM Field Lessons
Lesson #1: Lesson #2: Lesson #3: Lesson #4: Lesson #5: Lesson #6: Lesson #7:
Get Local with the Global Workforce Focus on Long Term Global Talent Management & Global Workforce Advantage Rather than Short-Term Labor Costs Adopt a Balanced Approach to Global Outsourcing Build Talent Leadership Instead of Workforce Management Build a Global Workforce Brand Build Advantage By Working with Governments to Drive Down Talent Costs and Build Global Productivity Global Workforce Technology Matters

Conclusions and Summary Acknowledgements

Building and Managing an INTERNATIONAL WORKFORCE 2

Summary of Key Themes and Arguments
1. The use of “offshore” workforces is expanding significantly to include small and mid-sized organizations. It will continue to grow such that the “global workforce” will become more and more a reality; Much of the recent globalization of the labor force has been enabled by Internet technology and driven by a desire to cut costs. This is starting to balance with other objectives, such as continuous production and access to wider talent pools; The majority of multi-nationals and new international players operate under a “double standard” with respect to workforces in the developed and developing world. Workforces in the developing world are often treated as fungible, or as commodities. This is evidenced by the burgeoning practice of offshore outsourcing; Due to a rapidly changing economic and demographic global landscape, with labor force and consumer power steadily shifting to future powerhouses such as China and India, employers will need to adjust their practices and begin to apply the principles of long-term talent management across their global operations; Effective, long-term global talent management requires cultural sensitivity, localization, strong leadership and state of the art technology.

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Building and Managing an INTERNATIONAL WORKFORCE 3

Transnational commercial interests are as old as nations themselves and the use of offshore labor has been part of the world’s economic landscape just as long. Admittedly, we’ve made considerable (though far from complete) progress from the days when exploitation of global human resources included kidnapping, indentured servitude and forced labor. We’ve also moved past the era when wealthy industrial barons like Cornelius Vanderbilt and Cecil Rhodes, financed and fomented foreign wars to suppress workers’ rights movement and/or expand business interests abroad.

I. Introduction: Back to the Future of a Global Workforce
However, the power of the transnational corporation has
been on the rise since efforts to restrict its momentum came into place at the turn of the last century and continued through the New Deal of the 1930’s. As late as the 1950’s, for example, thousands of workers and their leaders were killed in Guatemala after a CIA backed coup to protect the interests of The United Fruit Company (of New York). Today, we witness the global dominance of corporations that, in many cases, are bigger and more powerful than most countries. To illustrate, consider these examples: Given the fact that corporations are assuming and exerting more power around the world, there is legitimate concern that they do so with the explicit “corporate social responsibility”1 for wielding it fairly and sustain-ably. Today, organizations with interests abroad, work within more circumscribed boundaries than they did a century ago and face greater local and international scrutiny. However, international brand considerations and more enlightened workforce practices often compete with profit motives, competitive concerns and shareholder pressure to constantly seek lower costs or at least gain competitive advantage.

General Motors has annual sales larger than Israel’s Gross Domestic Product; Exxon’s annual sales are larger than Poland’s GDP. One hundred sixty-one countries have smaller annual revenues than WalMart’s. General Electric has hundreds of subsidiaries, giant companies such as GE Capital, which are themselves bigger than most nations. Even the relative newcomer eBay controls a market larger than all but 72 of the world’s biggest economies (based on value of transactions). In 1996, the two hundred largest U.S. corporations had combined sales larger than the combined gross national product of all but the nine largest nations.

1 Much has been written lately of the need for expanded and enforceable corporate “social responsibility” for multi-nationals. This paper extensively explores definitions for workforce-related social responsibility. One of the most prominent standard builders for these responsibilities has been the ILO – International Labor Organization – which has promulgated standards and investigated infractions. In the future we would expect to see these standards enforced through formal self-auditing and even external procedures. 2 In this paper, we adopt the definition provided in Global Human Resource Metrics, John Boudreau and Helen De Cieri, published by the Center for Advanced Human Resource Studies- Cornell University page 26, for multi-national enterprise or MNE: “ We define multinational enterprise (MNE) as: any enterprise that carries out transactions in or between two sovereign entities, operating under a system of decision making that permits influence over resources and capabilities, where the transactions are subject to influence by factors exogenous to the

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At the same time, evolving options for offshoring white
collar work; growing middle class consumer bases in China, India and Eastern Europe; political considerations, and laws and regulations at home and abroad are creating a multi-layered, and constantly changing challenge for transnational organizations. Social considerations aside, the world is changing such that highly skilled and sophisticated workers, while in short supply, are found worldwide. The game has changed in that corporations can no longer look at the world as a two-sided global workforce coin – a developed side (where workers’ rights are reasonably entrenched) and a developing side (where the goal is to find the lowest cost of labor to perform routine tasks). The good news is that forward-thinking transnational organizations are already adhering to workforce standards in developing countries that more closely approximate those found in the developed world. This is due only in small part to laws, regulations and moral censure. The movement is sustained and will grow largely due to shifting economic power from the developed to the developing world , the narrowing of the skills and talent gap, and workforce demographics, all of which will make workforce management in developing regions, most urgently China and India, a continuing priority for multinational corporations, transnationals and even smaller companies making their first international forays. Given the social, political and economic consequences for people, nations and corporations, the time for true global talent management (GTM) has arrived. To remain competitive, organizations have to expand their search for the best talent globally and must nurture their brands and reputations in countries that were once viewed as cheap suppliers of labor. As the world shifts due to changes in population and power, corporations must evolve. It can be argued that a substantial part of that evolution depends on effective relationships with local talent and their communities. In this paper we emphasize the local, cultural components of globalization, not to ignore the need for organizations to develop unified corporate culture, vision and objectives, nor to suggest that centralized decision-making and standards aren’t appropriate in

many aspects of an operation. Rather, it is our finding, based on analysis of today’s Multi-National Enterprise (MNE) operating globally (particularly in the developing world) that the balance is far too skewed toward a centralized, “one size fits all” approach to the global workforce. And, that organizations positioned this way, will be at an increasing disadvantage both in the worldwide competition for talent, and in achieving the transformational competitive advantages possible with a global workforce.

This paper may, in ultimate summary, be a lengthy argument for applying the same talent management principles globally as are practiced (by enlightened organizations) locally.

home country environment of the enterprise (adapted from Sundaram & Black (1992, p. 733)). 3 Much of the work has centered on the development of Global workforce metrics and processes. Excellent work has been done in these areas – particularly on the topics of metrics. While metrics is not a focus of this paper, we recommend “Global Human Resource Metrics, by Helen De Cieri and John W. Boudreau, working paper 03-07 published by the Center for Advanced Human Resource Studies – Cornell University. In this work the authors aptly present both a model for Global HR Metrics and illustrative factors and measures for benchmarking the global workforce. Our focus in this paper is in establishing the catalysts and strategic foundation for GTM and principles for its adoption within the corporate structure of technology MNEs. 4 One of the major goals of this paper is to begin to set a foundation for long-term standards for developing “sustainable global workforces” – which are stable, cost-effective, competent, flexible and committed (loyal, satisfied, etc.). Many of the recent errors in global workforce development are tied to

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To illustrate this changing workforce world, we begin with tough reality and then a harsher tale. The tough reality is that there is a dearth of tangible GTM guidance to the global community of multi-national enterprises (MNEs)2on managing the accelerating expansion of the global workforce.3 Yet, the operational GTM pressures have been substantial.

Preface: The Reality of Global Talent Management
Under pressure by competitors to cut operating costs,
minimize labor costs by moving jobs offshore into emerging markets and to diversify and tap the workforce internationally, “Global Talent Management” (once merely a concept) has become an exceedingly real business problem for multi-nationals without the corollary benefit of established GTM best practices and better balanced approaches for development of a “sustainable”4 multi-national talent base. As global workforce challenges mount, there is a growing urgency for multinationals to leverage global talent more strategically and effectively balance issues of workforce flexibility, access to skills and operational and labor costs management – issues which have perennially dominated global workforce decision making. The relatively recent availability of technology options to facilitate GTM adds almost as much additional complexity to the task as it offers solutions to make it easier. Already we find strategic “cries in the economic wilderness” for improved regional workforce building and optimized global people management. Not surprisingly, there is significant agreement among governments, economists, global workforce managers and global talent experts that MNEs are generally ill-prepared to build the stable, flexible and committed global workforces these enterprises desperately need to remain productive and competitive. Building a “sustainable” global workforce requires significant local and regional savvy. Moreover, numerous regional factors exacerbate the workforce headaches for multi-national organizations – ranging from the mundane to the life-threatening. In Europe, for example, employers deal with local, national and supranational levels of laws and regulations on top of overt and subtle cultural nuances. In volatile regions such as the Middle East, security concerns overshadow everything else. At the same time, the stratified international playing field is being levelled by new technologies and networks. New strategic advantages are emerging, and the human attributes of intellectual curiosity, flexibility, creativity and action are becoming the new competitive levers of the knowledge age, not only in developed economies, but almost everywhere. The issue of the “global workforce” is more than high-economics – it is also highly politicized. Worldwide, geopolitical events are moving faster than ever, making it more difficult for organizations to make predictable assumptions about the future and plan workforces accordingly. In America, for example, politicians, unions and the media are already hammering at U.S. based organizations that are perceived to be “Exporting America” by

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employing overseas workers.
The Lou Dobbs program (CNN), for example, provides a list of about 1000 U.S. companies on its website, that are, according to Dobb’s inference, unpatriotic and worthy of our scorn: “Here is a list of companies we’ve confirmed are “Exporting America.” These are U.S. companies are either sending American jobs overseas, or choosing to employ cheap overseas labor, instead of American workers”.6 Often the political debate is one-sided and the debaters often fail to present the true complexity and pervasiveness of the issue – or admit the fact that almost all significant commercial enterprises are already global employers. There are currently more than 10 bills being pursued by Congress to “restrict workforce-deployment decisions”, according to Fay Hansen of Workforce Management Magazine and thirty-one states are considering legislation to restrict offshoring.6 This despite the fact that most U.S. workers are employed by organizations with global business interests (according to Hansen) and are therefore benefiting from the status quo. In trade meetings in Seattle (WTO, 1999) and Quebec City (Summit of the Americas, 2001) loud and violent anti-globalization protests diverted and held the media’s attention around the world – but failed to change the reality that transnational workforces are now a required part of doing business, and failed to acknowledge the benefits international trade in goods, services and labor have produced globally.

Meanwhile, even economic regions in which we take stability for granted may soon become more difficult places to do business in. Consider this remarkable statement by a senior U.S. government official made in February this year on the PBS show “Nova”: “We’re going to see the decline of Europe and Japan as economic and political powers. They will become cauldrons of permanent and economic fiscal crisis. This financial crisis will become more consequential for America as far into the future as we can project, because we know that our key trading partners, for all intents and purposes, are finished as economic and military powers. The locus of global growth and dynamism will shift to the emerging markets, like China and India. For the US, this creates a series of huge challenges. How do we bring along these countries, which by necessity must be our principal allies as we go forward, to create world stability? How do we transform them from the defensive mindset of the Third World to a more expansive role of taking responsibility for global events? Because we’re certainly going to need them …” ~ Paul Hewitt, deputy commissioner for policy at the Social Security Administration and former director of the Center for Strategic and International Studies. 7 Hewitt is speaking in the context of questions about demographics in Western Europe and Japan. Data suggests both regions will soon face debilitating worker shortages concurrent with potentially crippling transfer payments to retirees.8 His comments and those from many others, point out the need to bring countries with much brighter demographic prospects, such as India and China, into the “fold” for the sake of worldwide stability. This belief is echoed by Global HR guru, Row Henson: “I believe it is critical for those of us dealing with a global workforce to understand these demographics and their implications. In the knowledge economy of the 21st century it is our ability to attract and retain this human capital that keeps us in business and makes us competitive. If we aren’t already, in the future we will be looking for talent wherever we can find it. Global or not, it is the global workforce – populated by workers in various phases of a contingent relationship – that will supply this demand. Many critical questions will arise regarding boundary management, privacy, and the depth of long-term relationships. Our ability to understand the demographics and the cultural differences associated with where these resources live and how they work will be the differentiating factor between those global organizations that survive and those that fail”.9

ignoring issues of long-term sustainability – employers focused solely on shorter-term management objectives. 5 Workforce expert, global executive and software industry veteran Rudy Karsan of Kenexa summarizes the historical views of competing drivers of cost and quality of the workforce as follows: “The key current drivers of workforce globalization are cost, quality, expanded service hours, proximity to customers and access to talent pools. The historical driver for workforce globalization has been either cost or closeness

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Demographic predictions are often highly accurate
because the numbers demographers use are reasonably “locked in”. In other words, they have a very good knowledge of current population, ages, birth rates and trends, so their projections can be made more precisely. Despite this looming crisis in global talent management, much more of what we hear about globalization comes from those who rail against it – especially as it concerns workers and jobs. It is within this convoluted and contradictory landscape that MNEs must rewrite portions of the traditional global workforce management textbooks – and begin to develop a more regionally informed, more financially balanced, more people centric and more culturally aware Global Talent Management (GTM) approach. The urgency is heightened in some industries, such as the technology realm, where time is of the essence. To the chagrin of some market and financial analysts and CFOs who supported rapid techforce internationalization the past few years, GTM is proving to be far more complex than simply outsourcing and/or offshoring a few hundred workers or jobs. Local culture and workforce environment matter universally in building a productive and stable global workforce. Technology workforce managers are now called to do what only a short while ago seemed impractical and counterintuitive – manage people as valuable, culturally driven talent resources in diverse parts of the globe – and build a sustainable, decentralized, flexible yet predictable and low-risk global workforce and support system. So what does this global techforce reality look like from the inside? Ask Bob Profit.

been particularly proud of its “global” perspectives – being first in its industry to open international offices and develop “international” versions of its software. The company has also prided itself for its workforce and talent management practices – hiring a Chief Talent Officer and adopting best workforce practices faster than many of its competitors. In fact, the company’s U.S. operation had recently been singled out as an “Employer of Choice” by a major business magazine and had received multiple awards for worker satisfaction and employee development. GTPC was considered in the U.S. as a role model for employment and labor practices. Bob never thought the situation was any different on the global front. In 1991, four years after, successfully expanding domestic operations to include all of North Ameica, GTPC began its initial forays overseas. It began in a highly decentralized pattern with local leaders more or less running their own show with the temporary assistance of midlevel managers from headquarters. Gradually, GTPC’s global operations grew more sophisticated, and, with cost control taking center stage in about 1994, Bob sponsored a global standards initiative, which centralized most aspects of the operation, including HR. While some of these initiatives failed and the pendulum swung back in several areas, a balance seemed to have been

I. PROLOGUE: A TALE OF TWO WORKFORCES
Bob Profit is the CEO of GTPC, Global Technology Product Conglomeration Inc., a $2.2 billion per year multi-national technology giant headquartered in Denver, Colorado with sales and development operations in 32 countries. The company was founded in 1985 in Bob’s garage and launched by building some of the earliest computer and software products for financial businesses – and later for businesses in all key industry sectors. The company has always prided itself as forward thinking and cutting edge. It has

to customers. This wave probably began from the time Ford or GM built its first factory in Ontario, Canada in order to take advantage of the lower costs of the Canadian labor force and the ability to access the Canadian marketplace. The quality element has been more important in recent years, by that I mean the last two to three decades. This driver is here to stay.” Karsan also believes that cost and quality historically been of equivalent importance – and will continue to be the dominant drivers of workforce globalization. 6 See: http://www.cnn.com/CNN/Programs/lou.dobbs.tonight/ 7 See: http://www.pbs.org/wgbh/nova/worldbalance/voic-hewi.html 8 For facts and figures representing worldwide population and demographics, please see: United Nations Population Division http://www. popin.org/pop1998/8.htm

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reached and profits were strong. GTPC’s global HR
efforts, modeled after the success of its award winning U.S. people management practices, appeared to have been quite successful. That is why he was genuinely shocked to receive a letter from the (fictitious) Pan African Labor Union informing the company that it was being publicly singled out as a “Worst Global Employer” for its numerous violations of workforce responsibility rules, union collective bargaining and worker privacy issues (release of prior employment information to third parties etc.). Bob called the company’s General Counsel, Reggie Legs, to further inquire into the situation and was shocked to discover that the company had received similar international workforce citations, which had not yet reached litigation, for a slew of infractions. To make things worse, the company’s political affairs department was reporting that GTPC was being investigated by 10 international labor entities in 8 different countries for various local labor or business practice violations by its managers. Bob had only been told that “there was grumbling with some international labor groups who were making a big fuss over nothing.” He had no idea that it was this serious. The following week GTPC was mentioned in an article in The Wall Street Journal as a “global tech sweat shop” with the article quoting ex-employees and outsourced workers in Bangladesh and St. Petersburg, Russia as saying that the company was a good place for international workers to learn the ‘shortcomings’ of Western capitalism.” One worker was quoted in the article as saying, “They treat foreigner workers as cheap, expendable widgets.” Bob realized the global talent situation represented a strategic crisis –arguably a total breakdown in GTPC’s global people management program, which threatened the company’s integrity, brand, international relations and competitive advantage. He knew that the company’s future depended on loyal workers (and customers) in the U.S. and abroad – and he needed those workers (and customers) to commit, cooperate and support the company. He also knew that he couldn’t afford to lose those workers to competitors or lose the respect and trust of local foreign governments and communities whose support he had worked so hard to build. As far as Bob was

concerned, the situation threatened the very survival of the firm. As he assembled his Executive Team for an Emergency Global Workforce Summit, the situation only became more dire. Global Tech Products (facing pressure from Wall Street and its own institutional shareholders) had decided two years previously, to cut labor costs by rapidly shifting an additional 30% of its technology workforce overseas. 80 percent of the new overseas jobs were being “outsourced” to third parties in Northern Africa (one of the lowest tech worker cost centers in the world), the Philippines, India and Bangladesh. At the time of the shift, Bob and the Board had been assured by the CTO, the VP of HR and the outsourcing firms that the business risk was exceedingly low and that their competitors were gaining competitive ground by outsourcing faster than GTPC. The Chief Talent Officer had initially objected to the idea that strategic jobs could be successfully managed by third parties overseas – but eventually conceded to the idea that costs needed to be trimmed. Bob had been reluctant to contract out engineers in unfamiliar regions – he’d always said and meant that, “Our People are our No. 1 asset, IP is our No. 2 asset, and guess who makes the IP?” Despite his reservations, he eventually accepted the idea that these overseas jobs and the overseas workforce could be “contracted out” and that the “IP” risk was minimized by the pre-qualification of the outsourcing company (after all, the outsourcer had experienced immediate

9 Globalizing Your Human Resource System (John Wiley & Sons - projected publish date, summer 2004) by Row Henson 10 The case study is loosely modeled after Professor Nancy Adler’s (McGill University School of Management) “Four stages of corporate evolution from domestic to global orientation” (see: http://www.cic.sfu.ca/forum/adler.html ) 11 Many analysts rightly explain that “cost” is not the sole or in many cases primary driver of global workforce expansion – but rather access to markets and a flexible skilled labor force. David Creelman, for example, points out that “low labor costs are one competitive factor, but

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cost cutting success for dozens of other multi-national tech
firms over the last 3 years – with little identifiable human capital risk or quantifiable problems). As it turned out, GTPC’s Global Workforce restructuring had been problematic. In India, where the company had outsourced nearly 2000 highly skilled jobs, the short- term profitability goals of cutting labor costs by 30% had been only four-fifths achieved. Moreover, the teams were behind development cycle schedules by an average of 35% as compared to productivity before outsourcing had occurred. Worse, the company had experienced an alarming number of IP theft incidents – and as a result, had discovered as a corollary that while offshore IP protection laws seemed on the surface to be comparable to the U.S., in practice, courts and judges in some regions, rarely sided with U.S. companies and many other court systems were backlogged and chaotic in comparison to U.S. courts. These were issues that were never raised when the outsourcing decisions were being considered. The problems did not stop there. Globally, even among its core workforce, the company had experienced an alarming number of racially, politically and religiously charged worker-to-worker and worker-to-manager verbal and physical altercations. As a result, per worker litigation, sensitivity training and facility security costs were rising rapidly. Additionally, in these locations, worker morale and productivity had suffered greatly. Upon reflection, Bob realized that, while mainly profitable, GTPC’s subsidiaries were not gelling with each other and headquarters. He couldn’t think of the last time a new product idea or innovation came from outside North America. He also realized that few of his promising executives were located abroad and fewer still expressed any interest in overseas opportunities. Even the advanced Global e-HR solution GTPC had spent millions of dollars on and almost two years implementing was a failure. GTPC implemented their solution in the U.S. first. Only after it was being used successfully across the country did they roll it out globally. Bob agreed with his Chief Talent Officer that this was a sensible approach. However, having paid little regard local needs or to legacy processes in place throughout its regions, and having failed to stay abreast of local privacy laws, the new solution was being ignored or undermined in some locations and was exacerbating GTPC’s compliance problems in several others. Where it was being used, there appeared to be no consistency of data available on which corporate HR could identify trends, conduct global HR planning or base decisions.

As Bob listened to his executives recount the problems and challenges being faced by his business managers across the globe, it occurred to him how wrong the team’s assumption had been regarding the ease by which the company could “globalize” its workforce. He realized that intertwined issues like politics, race, religion, business practices, culture and language are central to workforce productivity and commitment and how clear it is that as these factors change from country to country, the workforce environment and paradigm shifts. How could the company have so callously made the mistake of assuming that what had worked so well in the U.S. would simply translate into a different business environment, culture and a different set of business rules?

Bob stopped his team and made the following declaration: “We have claimed to be globally minded – but we’ve treated our global workforce like a subsidiary to the U.S. workforce. We cannot afford to destroy our global business reputation by building the reputation in global markets of being a callous and abusive global business employer – while trying to maintain our position as a market leader. We need this entire team to make managing the global workforce a core competency of the organization – and we need to do it quickly. Our profitability depends on productivity – our productivity depends on our people – our people are defined by their local workforce culture. We will not make another global workforce strategic decision until we’ve invested the time to understand and assess our strategy, analyze the global workforce cultures we operate in and digest the global workforce lessons we’ve experienced to date based on our successes and failures in the field.”

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Part I: Getting Local for Global Success – 8 Principles for Building the Global Workforce

Global Tech Products is not a real company – but the global workforce issues explored in our hypothetical example are very real and very immediate for major technology firms and other organizations across the U.S. and around the globe (some of whom are profiled in this paper)10. Bob faces the same situation faced by many real CEOs (facing workforce restructures, reorganizations, mergers and layoffs) - having to prematurely tap into the global workforce on a large scale without adequate preparation or expertise. GTPC was at the stage in its worldwide operations in which it needed to be a truly “global” organization and Bob made the mistake of believing it was in every respect. In reality its workforce practices had not matured to that level in step with the rest of the organization.

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Like so many real CEOs, Bob paid the price of short
sighted workforce decision-making based on operating cost management, access to flexible skilled talent and pressures from Wall Street – without alignment with longer term GTM objectives of sustainable workforce development, managed productivity and strategic people management. A partial path to solving these Global Workforce dilemmas is in understanding GTM and establishing the proper balance between productivity, profit and people. That balancing act has been a particularly difficult one for the technology sector, in particular, in recent years. With recent economic conditions, financial market uncertainty, and occasionally flagrant profit-driven globalization, it is easy to understand how the traditionally balanced (even conservative) MNE perspective on managing and developing regional workforces (especially within technology enterprises where human capital management is so established) could be thrown out of balance. In recent years, multi-national technology companies have struggled in the face of a triad of unprecedented global business challenges – a combination of slow global economic growth, an unrelenting global stock market demanding higher profits, and increased global competition leading to shrinking margins. When asked what are the key drivers of workforce globalization and how dominant the issue of labor cost is in determining where to expand the global workforce, Professor Peter Cappelli, Director of the Center for Human Resources at the Wharton School of Business remarked: “… labor costs are the most important factor because you can easily document costs and not many other benefits. CEOs are saying that they have to start thinking about India and China because of the cost savings. Until we get hard value on some of the other benefits, this will be the main driver…” To reinforce the point, Louis Tetu, Chairman, CEO and President of Taleo (formerly Recruitsoft), a U.S. based human capital management software and services firm with operations globally, says: “The key driver for workforce globalization is ROW, or Return on Workforce; that is, increasing the value provided for the investment made in the workforce. According to the Bureau of Economic Analysis, the amount

spent on U.S. labor alone in 2003 was approximately $6.2 trillion, or 56 percent of total gross domestic product. With labor comprising a highly significant percentage of corporate cost structures, organizations are compelled to increase the return on this valuable asset”.
But another challenge, competition, has been particularly daunting. Global competition in all technology sectors is accelerating at unprecedented rates. U.S. and other developed economy leaders, long comfortable with traditional capital resource advantages (access to prior technology, expertise, education, knowledge, financial capital, etc.) are finding themselves facing greater sustained foreign competition (and tighter margins). Traditional leading economy advantages in technology innovation and manufacturing wane as strong market innovators and even stronger price competitors emerge offshore (in part due to labor and other operating cost advantages) in a slew of technology product categories (consumer electronic, semiconductors and niche business process software, for example). In an attempt to rebalance this unfavorable competitive equation, many companies in the last few years have scrambled to adopt a variety of aggressive measures to cut operating costs, reduce permanent workforces

(that) wouldn’t matter without skilled management” and that “development, immigration and acceptance” have become major factors. (Interview with Schweyer for HCI, May 2004). The depth of impact of cost as the predominant factor may be more pronounced however than is readily visible on the management surface. For many tech firms where permanent ranks have been dramatically reduced to create a more flexible project based workforce model, the need for “highly-skilled, flexible workforces” is cited as the catalyst. In fact, the catalyst for the flexibility was workforce cost cutting – again, putting the labor cost issue front and center. Building a flexible workforce is most assuredly a best practice, unless jobs and positions are better suited to permanent staff and flexibility becomes the excuse for cost-shifting.

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and create a global flexible workforce (including global
workforce offshoring, outsourcing and relocation).11 With the need to maintain flexible productivity, many firms have opted to aggressively offshore positions to low cost centers or aggressively “outsource” even high-level jobs through offshore third parties - firms who contract to hire and manage workers directly. The resulting tech force “global scramble” has pros and cons. The internationalization of the tech force, in particular, has not been without advantage and merit. Certainly, firms have trimmed labor costs and, as a result, buoyed profitability and reduced the cost of their goods to consumers - even while revenues have flattened. Moreover, this approach has led to workforce breakthroughs and renewed understanding of the strategic financial importance of maintaining access to flexible, highly-skilled, globalized talent pools of contract and permanent workers. While many firms may have entered the global workforce market initially as a short-term cost measure, the global workforce is now a permanent fixture of these companies. As thousands of small, midsized and large firms learn how to gain or increase their competitive advantage, they are simultaneously learning the importance of capturing “global workforce advantage” – increasing global workforce productivity (usually a combination of lowering workforce costs and increasing worker results) while minimizing global workforce risks. Row Henson of PeopleSoft has been assisting organizations with their global HR efforts for more than ten years: “A lot of organizations are going global for the first time due to economics and demographics. Lots are going global for reasons other than why Dow, HP or similar giants would have decades ago. The offshoring phenomena is a huge part of it and makes a big difference today. The big question with most of these firms is: What is the talent I need today and what do I have to pay? But eventually you need to look at talent as an entire workforce globally. This is a huge challenge even for the largest organizations who may have had offices throughout the world for decades”.

Performed correctly, global workforce advantage translates into a productive, stable and predictable global workforce, one capable of flexibly capturing regional labor cost and regional skills and innovation advantages. Performed poorly, a company like Global Tech Products experiences short term cost gains – but over the longer-term encounters workforce denigration, decline in the economic value of the workforce and the company’s brand, and in the worst cases, productivity losses and global worker crises. To manage this complex workforce scenario, MNEs, especially tech firms and others entering the global workforce markets for the first time, need a good compass for guidance.12 Below we provide basic principles of Global Talent Management which can aid firms that are early in the GTM adoption cycle, establish better global workforce practices.

12 Techforce globalization has impacted the entire technology business community and even some small tech enterprises are now required to build GTM capabilities. In an interview for this paper, Rudy Karsan notes: “I believe that the workforces of today’s technology firms are extremely global and by that I mean, a certain percentage of their people do not work in the country of primary operations….The size of companies that have global operations has been dropping year over year. It is not uncommon to find a company with less than $10M of annual sales having one or more offshore business locations.” 13 About 9th or 10th in the world according to U.S. Federal Government “Country Studies”. 14 For the full text of the speech, please see: http://www.number-10.gov.uk/output/Page5555.asp 15 The idea that a dynamic asset like a workforce can be managed like inventory should also be eradicated. Inventory cannot achieve the

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PRINCIPLE 1: UNDERSTAND THE “REAL” GLOBAL WORKFORCE PARADIGM
One would be tempted to describe the emerging complexities of contemporary global workforce management as a “new” or an evolving paradigm. In fact, there is little new about the people issues multi-nationals are struggling to manage. What is new is the growing MNE acceptance and understanding that the “global corporate culture” is not a ready substitute for that of the local workforce environment (labor expectations, social and business practices, and the local culture) on workforce productivity and behavior. In our case study, GTPC’s first and foundational error was to assume that what worked in North America would work overseas. It compounded that error by centralizing decision-making while failing to engage its subsidiaries in a meaningful way. What it thought was a “world class” HR environment was really an exemplary U.S. model superimposed on a global workforce without much regard to local differences. GTPC and organizations like it are learning another lesson at the same time. There is an emerging workforce assertiveness in much of the developing world. The individuals and groups of individuals that constitute the global workforce are discovering their leverage and importance, embracing their local workforce culture and receiving political and institutional support from multi-lateral groups like the UN and the ILO; and, in many cases, from their own governments and institutions. This is evidenced in the growing number of organizations that articulate “corporate social responsibilities” in public documents (ostensibly to build and protect their brand) and in covenants such as the United Nations Global Compact that already counts more than 1600 subscribing companies worldwide (see page 31). In a speech made to corporate leaders in London on March 22 this year, British Prime Minister Tony Blair said the following: “In the last two years, I have made reasonably extensive visits to India and China. Both made a profound impression on me. I remember sitting in a brand new state-of-the-art university complex in Bangalore in southern India, talking to leading biotech entrepreneurs, many

of them women academics that had branched out into business, confidently predicting they would beat Europe hands-down in the biotech business within a few years. And they weren’t alone. India, as a whole now turns out 220,000 science and IT graduates every single year13. When I returned home, people asked me about the poverty of the country, how shocking it was and so on. There is indeed still much poverty in a nation of 1 billion. But what had shocked me was how fast it was changing. Then last summer I visited China. I had the same experience. But I noticed something else. Whereas ten years before on a visit, I had also seen new buildings in Shanghai, the same determination to get into the western way of business, but had found it a little like people wanting to learn a new language but not quite sure how to do it; this time, there was an assertiveness, again, as in India, a confidence that showed they were now not just speaking the language but doing so with a fluency and comfort equal to any first world nation. More than that, a readiness to push it further, expand its possibilities, that stood in sharp contrast with what we see in parts of Europe.
Above all, in both countries I was acutely aware that if I returned this year, I would be surprised at the change from last year. What is happening is very clear. Globalization is transforming the world economy; not just because

objectives set for people – it is never loyal, dedicated, committed or innovative. 16 Please see: www.7d.culture.nl 17 The relevance and impact of culture on workforces in the global arena is an urgent and heated topic. There continues to be significant debate around the subject of the role and relative impact of local and national culture on workforces and its balance with corporate culture. Peter Cappelli explained in our interview for this paper a perspective that fully embraces the “global” enterprise culture as predominant and controlling and argues skillfully that “local cultural differences are so far not really a barrier, especially in multinational companies that build their own culture and emphasize it, as opposed to the national or local culture.” He further explains that unlike labor cost issues “culture is less a stumbling block – companies are not paying any attention to how they make use of cultural differences.” We, in fact, agree with

Building and Managing an INTERNATIONAL WORKFORCE 14

of changes in methods of production and technology but
because mass popular culture, communication, customer preferences mean a perpetual revolution in new business opportunities and challenges. It is not the scale of change alone that is remarkable; but its pace.”14 To better understand the cultural realities Mr. Blair speaks to, we might look more closely at the corporate culture versus local culture struggle that has played itself out in MNEs for decades – a twosided MNE workforce “cultural coin.” Despite rising workforce automation, standardization of workforce and business practices, and international workforce training – all part of the reasonable effort to establish a predictable “global corporate culture” (in many cases a proffered substitute or challenger to the local culture) – people simply do not adopt the corporate culture intact, or automatically abandon local culture, norms and values to behave like transnational inventory.15 Nor should they – for their sake, or the benefit of the MNE. Fons Trompenaars, a noted global workforce cultural expert states: “Foreign cultures have an integrity, which only some of its members will abandon. People who abandon their culture become weakened and corrupt. We need others to be themselves if partnership is to work. This is why we need to reconcile differences, that is, to be ourselves, but yet see and understand how the others’ perspectives can help our own.”16 Put differently, the cultural people factors (or regional workforce differences as influenced by the local workforce environment and culture) are precisely what make people the greatest corporate asset – the generators of loyalty, dedication, creativity, innovation and productivity. Blair witnessed this creative energy in his visits to India and China, the goal for global organizations is to harness, not obstruct it. Simultaneously, these variables make people the most difficult asset to manage. Workforce culture can be legitimately managed only through leadership and building personal (personnel) relationships. When we internationalize workforces, across cultural boundaries and national borders, the complexity of people management grows exponentially. The mistake has not been in the rapid globalization of the workforce

(the advantages of tapping the global labor markets are obvious), but rather, many MNEs have erred by ignoring, rather than understanding, the local workforce and the communities, attributes and cultures that define it. Local and corporate considerations must be properly balanced and factored into any planned adoption of corporate culture.17 To manage people globally, we must understand the intricacies of the local foreign workforce paradigm faced by the adventurous global employer.

We must also understand what motivates people and what inspires and concerns them.18 Gaining that local knowledge is arguably the first tangible step to gaining“sustainable” competitive workforce advantage offshore.

Mr. Cappelli that multinationals are “emphasizing corporate culture” and not “paying attention” to local workforce environment. The main question examined in this paper is whether this “informal” strategy has been effective in the past, and, moreover, whether it can be effective in the future. Cappelli alludes to another key theme in this paper – whether multinationals are “missing” a key opportunity to “make use of cultural differences” rather than ignore them. We will suggest that local culture attributes and differences are key strategic assets when managed effectively through effective leadership, and key inhibiters to workforce goals when ignored or mismanaged. The reluctance, as explained later in this paper, to attempt to “manage” culture is understandable, but the failure to use GTM and “workforce leadership” to bridge cultural differences and work environment disruptions is not. Moreover, the suggestion that because culture seems to be flexible or transplantable to some global workers it must be flexible to all global workers – or that cash compensation is the predominate interest of all

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Yet, despite growing acknowledgement that the
two-sided cultural coin is the real global workforce paradigm, MNEs seem to be moving backwards in their adoption of culturallyinformed GTM.19 Culturally-centered GTM adoption is a key step, as explained in more detail below, to ultimately leveraging the global talent base – not merely efficiently, but more effectively. Even where organizations outsource parts of the global workforce, cultural understanding is critical, a point driven home to us in our interview with Row Henson:“Even in offshoring you can’t ignore culture, it is the most important thing in the whole GTM environment. You have to develop for a global culture. I can’t just go and open a call center in India. If I am Harley Davidson with a great customer service reputation, for example, the customer service representatives had better understand my culture and I had better understand theirs. The smart companies are doing extensive training in this respect. If three Indian workers cost the same as one American, I should split the difference, take the cost of one and use that for cultural awareness and training – it’s that important.”

bandwagon for the same reasons. Cost cutting led the charge, exacerbated by a sense of urgency as competitors moved jobs overseas and cut costs. It was also lured by the promise of 24 hour production, access to new markets and talent, and the illusory convenience of managing a vendor/ service level agreement rather than a workforce. GTPC moved quickly – in this instance, without regard to long-term global workforce strategy. Offshoring and outsourcing options have proven particularly alluring, especially for tech firms whose centers of operations are based in the mostexpensive tech labor market – North America.20 Yet, this unexpected and urgent “global labor” shift is entirely understandable if not recommendable. In difficult times, companies must do (within reason) what is necessary to survive. Companies are or were facing unprecedented workforce management issues and global competition. In these circumstances, managing “people costs” often becomes a temporary panacea to immediate financial and competitive crisis. Moreover, according to Karsan, there may be additional pressures facing organizations and tech firms in particular: “Anecdotally, I know that various VC firms refuse to fund a new venture or an existing company unless they are aware that the development is taking place in either India, China or elsewhere in the Far East”.

PRINCIPLE 2: REACTIVE “PEOPLE COSTS” APPROACH IS NOT A LONG-TERM SOLUTION TO GLOBAL TALENT REQUIREMENTS
The year 2000 marked the beginning of a new millennium and, simultaneously, marked a quiet but profound workforce crisis, particularly in the United States. That year, the global tech economy screeched to a halt at the same time Wall Street began demanding higher returns (which translated into cutting operating costs). Since then, with workforce costs representing an aggregate 80+% of the operating costs of a large business, workforce managers have been scrambling to find solutions to “globalize” the workforce in part, to create a cost efficient, flexible and accessible workforce. The reaction has been an abrupt temporal shift in Global Workforce strategy for more than a few MNEs – from a focus on longerterm cyclical strategic talent development to shorter-term reactive objectives linked to cutting people costs, restructuring workforces and leveraging labor abroad. In our example, despite the gut level objections of Bob and his CIO, GTPC got on the offshoring

workers – is simply not reality. Even where workers are shown to be quickly adapting to the corporate culture, a similarly troubling question arises as to whether employers should be comfortable with hiring the workers who trade their culture so easily. 18 The quest to understand the people, their culture and the workforce environment is not “touchy, feely” – but bottom-line business. Productivity, work quality and intellectual property creation are all directly linked to workforce satisfaction and workforce satisfaction is directly tied to worker perceptions of employer support and respect. A negative employer image (negative brand, poor relationships and low leadership) can generate worker dissatisfaction leading to slow-downs, employee IP theft, software embezzlement, and even shut-downs and work stoppages.

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“Globalization” of the techforce continues to be driven by
the combination of factors – access to flexibility, skills, lower costs, (perhaps even capital) - already discussed. Yet, at a higher level, the trans-nationalization of these firms is primarily a result of the need to simply become more competitive overall. Globally, companies are facing higher competition with shrinking opportunities for entering new high growth, high profit markets – in other words, most wellestablished enterprises, particularly in high-tech, have successfully entered and penetrated the well-developed international sales markets already. As a result, the goal of higher margins and new emerging markets becomes a principal focus, and with the workforce being a primary cost center (a factor of cost versus productivity), management of “people costs” and global labor force restructuring has become a major multi-national initiative.

Even well-planned efforts to “globalize” the workforce do not address the equally critical need to internationalize in a balanced way in order to build strategic value and develop a stable, reliable and productive offshore workforce. Well into the globalization process, many multi-nationals are only now questioning the myopic, centralized approach and beginning to assess the importance of localizing people management and building manager sensitivity to the local workforce environment. David Creelman, a human capital management researcher with clients in North America, Europe and Asia notes that sensitive issues like local politics, racial issues and societal concerns exist, and that managers of “these sensitive issues need experienced people on-site who understand the subtleties of the situation; I don’t think it is possible to deal with these issues centrally.” In other words, simply addressing the issues from headquarters and without local sensitivity, is unlikely to produce the results sought by management.

19 Cappelli further explained that some MNEs may be moving backwards in GTM rather than forward: “Twenty years ago versus now, we are (arguably) making steps against GTM. Back then companies were teaching languages, moving people around to give them international skills etc. Now companies are reconsidering international management….pharmaceuticals, for example, have a big need for long term development and so do the oil companies. Overall, companies are starting to talk about doing the same things they did 20 years ago….but less.” 20 Although North American firms are referenced as an example of this phenomena –ethnocentrism it is not a North American phenomena. Indeed, the “globalization” of Japanese automakers into the United States in the 80’s evidenced many of the ethnocentric myths and monocultural workforce assumptions regarding workforce adaptation and environment explored in this paper. The Japanese giants like so many multi-nationals today wrongly presumed that the new workforce would simply bend to fit their “enforced” corporate culture. The strategy

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PRINCIPLE 3: PEOPLE ARE NOT FUNGIBLE
In some respects, multi-national techs may have accelerated the level of competitiveness in their own markets by buying into the common strategic assumption that “efficiency”, which is a cost measure, is more important than differentiation or competitive strength. We see this reflected in the aggressive adoption by many companies of systems, tools and software designed to “standardize” business processes within their industry – even in business functions where just a few years ago, companies sought differentiation and innovation (the best solutions maintain at least some level of business differentiation within the critical business functions). This trend has arguably infiltrated corporate thinking around people as well, perhaps reviving to some degree, the old idea of a “fungibility” of people and workforces – the idea that people are virtually the same everywhere and that the real business decision is a simple quantitative comparison of competing labor pools. Cost versus skills. A corollary and equally dangerous concept has been the notion that somehow a “global” mindset and a formalized corporate culture (a set of corporate practices and rules) erase people differences and local culture. Yet, that very idea of “people sameness” is antithetical to our understanding of the uniqueness of people as a source of competitive strength within any business enterprise – and ultimately the source of corporate wealth. It is ultimately (at the end of workforce analysis) the knowledge, core competencies, skills, know-how, ideas, innovations etc. – all born out of the individual and collective minds of our people – which define our corporate difference, our product concepts, our innovative processes, and our business relationships. It is in the difference, not the sameness, that business advantage is born – and those differences are defined by people. Put simply, the people are not fungible. Any global workforce management concept or restructuring plan that claims otherwise is prima facie flawed. Indeed, any outsourcing initiative constructed on the idea that people are fungible, giving little consideration to local workforce environment or culture (particularly within a technology enterprise), should be considered suspect, or at least risk laden, until proven otherwise.

THE CULTURAL CLUES It is, in fact, very difficult to decipher foreign culture correctly, but it is necessary to at least map the culture order to define the workforces multinationals seek to leverage. Understanding foreign cultures and idiosyncrasies will almost certainly bring strategic workforce advantage to the companies that undertake the effort successfully. Not surprisingly, however, given the highly regulated climate around workforce issues in the West, multi-nationals largely refuse to conduct any analysis of the impact of the “collective” local workforce environment beyond legal and regulatory environments, thereby ignoring the impact of local religious climate and the local social, political and business cultures on the predictable performance of workers and their resulting productivity.21 As a corollary, firms have also been slow to investigate the need to invest beyond the actual workforce and make investments in the local workforce community. Today, despite a market littered with examples (including ones covered in this paper) that understanding and investing in the local workforce environment is a key advantage to successful long term global workforce development, most multi-nationals continue to execute strategies that are almost devoid of local environment strategies, investments, knowledge or data – in other words, the global plans

failed (very publicly) forcing them to adapt their workforce cultures to North American realities. 21 This refusal to culturally assess the collective workforce environment is particularly odd given that it is a long-standing global workforce practice to perform “cultural assessments” of individuals – especially expatriate executives – for fit with new workforce regions. 22 This, in fact, presents a very suitable analogy. When one considers the most successful colonial power of the era, England, versus one of the least successful, Belgium, for example, the differences in approach and results are telling. Where one would build only the local infrastructure necessary to efficiently remove assets and value from a colony, the other tended to build lasting infrastructure to support local economic, institutional and workforce growth. Neither were altruistic and neither is a complete model (by any means) for today’s MNE, but the longerterm investments England made in its colonies formed the basis for benefits that last to this day – for England, but much more so for many of

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are non-cultural and non-local. This can be compared
to the behaviors of most colonial powers in the 1700’s-1900’s (the MNE’s forerunners in many respects) a form of plundering in which a region is valued only for its raw resources, including people.22 Cracking the local culture code is not a mystic exercise. For some it may be as simple as a commitment to actually use and fully leverage the assessment tools, tests and data already available to analyze cultural idiosyncrasies and then roll up the data to build a local profile, eventually applying the data to build a localized plan. The overall global workforce problem may be born of strategic resistance but it is also exacerbated by the tactical failure of MNEs to make use of complete cultural assessments23 for the entire workforce – executive and non-executive, employees and contract labor, onshore workers selected for offshore assignments and new hires (in-sourced and outsourced) selected in new foreign operations.

the employer, its corporate culture and the target workforce region beforehand.

Even where assessment tools have been used, the criteria selected for assessment purposes has been systematically limited – seeking to determine the cultural fit of a “worker” with the established corporate culture rather than collectively assessing the workforce environment and the local culture to determine the “fit” between
its former colonies. 23 Of note, Hoffman’s Cultural Adaptability Inventory 24 Global Talent Management can provide a strategic workforce foundation for all global workforce executives. For these purposes, “global workforce executive” should be defined more broadly to include not only the traditional Human Resource executive supporting the multinational workforce but also any executive whose primary responsibilities including the hiring and development of a portion of the enterprise’s global workforce. 25 In many respects the corporations are walled into this myopic approach through labor regulations, legal claims and business risk factors. In North America, in particular, the landmine of issues associated with workforce and employee management has led the corporate community

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PRINCIPLE 4: FIND A CULTURALLY RELEVANT, STRATEGICALLY BROAD FORMULA FOR GLOBAL WORKFORCE SUCCESS

critical assets to a third party tied to the enterprise through a service level agreement, and; (2) Offshoring: Moving low-level, midlevel and high-level jobs to foreign labor markets. While alluring and popular, companies are adopting these approaches without adequate consideration of the regulatory, legal, policy or cultural variables, and often without adequate preparation, investigation and investment in the local culture, workforce environment or business practice. For example, with offshoring, some companies are leaping in with ill-formed illusions of something akin to a global “free trading” zone in people. Many experts and commentators are supporting this view by encouraging the notion that any regulatory restrictions on offshoring will impair U.S. corporations’ ability to compete, and therefore weaken the economy. Other experts suggest moderation by pointing out the current realities of “free trade”. Cappelli reminds us: “We’ve sort of approached off-shoring with a view that policies and restrictions would be wrong, but the world of international trade is filled with them, trade barriers exist everywhere, there is no real free trade.” Of course, barriers to free trade in people are real – national borders, limits to work visas, etc., but where offshoring is concerned, few, if any appear to be in place.

The Financial Formula Needs to Be Balanced With Broad Corporate Objectives and People Factors
While most Global Workforce executives24 are fully cognizant of the strategic need to achieve “Global Workforce Success” - few have managed to fully define or execute global worker success at even a modest tangible operations level (measurable benefits on productivity, relations, loyalty, etc.). Unfortunately, the focus of the efforts has again largely been restricted – focused primarily on hot spot HR issues like labor cost reduction, workforce flexibility and skills access and management. In the tech sector for instance, many executives, CFOs and others charged with rapidly cutting labor costs and/or creating flexibility turned (smartly if too quickly) to more flexible, cost-efficient global labor options - offshoring and outsourcing. The initial catalyst for adoption of the options was to ameliorate the financial burdens. But solving the immediate labor cost issues was not necessarily a real panacea for the underlying competitive and labor factors or even the global workforce challenges created by globalization itself. Similarly, outsourcing as a management tool, masked for some companies, the sublimated intent to transfer the “global people” management burden on to the shoulders of a “reliable” third party outsourcer. As workforce executives are now quickly discovering, even when jobs are appropriately migrated across borders, global workforce success and GTM cannot be “outsourced” or “offshored” – these remain strategic internal issues. With that background, let’s examine the first GTM step – the operational imperative of defining “global workforce success” more broadly – to encompass the complete strategic people picture. That imperative forces corporations to look beyond short-term financial impacts and urgent skills needs, and to assess the long-term workforce effects of the two, now-common, global people practices: (1) Global Outsourcing: Outsourcing jobs (and the associated knowledge, skills and innovation resources) and entrusting those

to substantially abandon investigation or discussion into the workplace areas not “required” or mandated by law and associated with a “safe harbor.” This approach creates the dangerous illusion of business safety and good management through omission and avoidance. 26 Globalization and Human Resource Management: Strategic International Human Resource Development: Summary by Dr. Nancy Adler, McGill University Faculty of Management. Excerpt p.2 “Unfortunately, over 50 percent of expatriates sent by international firms find that their foreign experience hurts their career” 27 “Global human capitalists” is a term recently coined by the Human Capital Institute to describe a workforce executive or professional that manages a global or multi-national workforce, understanding that the people are unique, dynamic, strategic capital assets. This concept is a perfect compliment to GTM principles – and aids our understanding as managers of the strategic relevance of people management.

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Global workforce restructures (offshoring and outsourcing)
adopted by so many firms in such a carefree manner over the past 4 years, have revealed that, while the concept of building a “cultureblind,” flexible, global workforce in cheap labor markets is enticing, it is hardly an instantaneous business endeavor even for low-level technical positions. It would be foolhardy to suggest that a generic formula of any sort could address the complexities and idiosyncratic issues surrounding the recruitment, development and management of a multi-country, multi-culture, multi-region workforce – for even a modest global enterprise. Even so, to improve our approach to both offshoring and outsourcing, there are several basic GTM principles that can form the starting point for balancing a global workforce restructuring plan, and for anchoring the global workforce reinvention process. First and foremost, we must recognize that workforce management (domestic or global) is ultimately, despite well-articulated arguments to the contrary, also a relationship and culture management issue – and not strictly a resource capital, workforce policy and people cost business conundrum. Put another way, global workforce management is individually and collectively “personal.” It is entirely understandable that enterprises can lose sight of the personal nature of workforces – especially in the global context. In times of volatility and crisis, normally balanced workforce discussions can be sidetracked by financial and cost imperatives. Managers may be lulled into the belief that managing labor costs will address the myriad people and culture issues surrounding successful management of people in multiple cultures and countries. In reality, as illustrated in our case study, complex local and regional workforce environment issues remain and may emerge later to erode any competitive, productivity, cost and operational gains. Hence, to avoid the deceptive “corporate culture” or “culture-blind” views, GTM enterprises should consider adding to the foundational layer of their traditional business relocation and workforce evaluation models, broader culturally relevant “global people management” principles such as:

CULTURE = PEOPLE8 It is axiomatic that people are defined by their culture and, as workers, by their local business environment. Perhaps to reduce workforce management complexity and risk, many MNEs adopt the rather conservative workforce principle that culture is not an issue appropriately managed or even investigated as part of Global Workforce Management. This approach puts limits on their potential “adaptation” to language, currency, compensation scale, immigration laws and other more traditional and quantifiable workplace challenges.25 Part of the problem has been the proliferation of debilitating workforce myths associated with the “global economy.” While the global economy accurately references the “interconnectedness of regional economies,” the principle has given birth to the false notion that in “modern workforce globalization” businesses can ignore differences between regional workers, regional workforce cultures and regional workforce environments. This latter notion embraces the “multiethnocentric” myth that a “global business culture” exists which savvy workers and employers can simply adapt to – a baseline “world” or transnational corporate business culture for all global workers. Through this thinking, companies are led to believe that companies “manage” local workforce cultural differences by ignoring them – and by substituting a global corporate culture. While some MNEs have successfully built baseline business cultures in numerous diverse regions, lasting corporate cultures balance local and corporate culture to

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form a “localized” hybrid culture (which integrates
local and corporate values) and thereby build the loyalty and dedication necessary for a long-term sustainable workforce. This misleading “global” business culture theory has bred a corollary management belief that people are portable to various global regions without acclimation. In other words, enterprises are led to believe that workforces are transplantable without significant adjustment and sensitivity to the local regional culture, without adequate training for doing business in the local community and largely without regard to local culture at any level. In truth, organizations that wish to nurture truly global workforces must commit trained, senior managers from the domestic operation to the task. Doing so will not only communicate the organization’s commitment to globalization, it will also foster an understanding of local and cultural differences across the organization’s global operations among its most senior and influential people. This is especially true in situations where workers are sent to volatile and dangerous regions. In some cases, workers are motivated by the attractive and often tax-free salaries they can earn by volunteering for assignments in war-torn countries and regions. Organizations are wise to choose volunteers with past experience in similarconditions (even ex-military where possible) and to carefully examine motivations. The investment in personal security, life, kidnap, evacuation and other insurance, etc. can easily amount to 70% or more26 of the worker’s pay. Mistakes in hiring and deployment can be devastating for all involved. In the GTPC example, the CEO learned that very few of the company’s best prospects were in overseas offices. This was the result of two main problems. First, GTPC failed to circulate its top U.S. executives overseas in order to integrate and harmonize its global operations. Second, because it didn’t pursue this strategy, it left ambitious

managers with the impression that overseas assignments might be bad for their careers – which may be the case, in the real world, for more than half of all expatriate workers.27 Moreover, this de-emphasis on the regions, as far as executive involvement is concerned, perpetuated a situation in which not only ideas and innovation were stifled outside the U.S., but top talent was not nurtured globally – both distinct disadvantages for GTPC. In the real world, a plethora of woes (i.e., foreign workforce alienation, expatriate instability, re-integration difficulties leading to turnover or lost productivity when expatriates return, and a dearth of willing would be expatriates) are linked in large part to fallout from the adoption of the poor selection, preparation and deployment of expatriate workers. If we are to succeed in developing workforces on global basis, then we need to commit to being global cultural experts – and while ignoring cultural attributes like religious and legal paradigms, political climate and local business practices may fit the multinational desire for common ground – it does not fit reality. The failure to invest in not only understanding, but complementing the workforce environment and local culture, squanders the opportunity to build local allies and partnerships and reduce risk associated with the workforce.

28 While Workforce Advantage includes financial advantages like labor cost differentials or offshoring advantages – perhaps the main focuses of global workforce management the last few years – the real drivers of sustainable Global Workforce Advantage are the people-driven factors like innovation and productivity – which are themselves factors of workforce satisfaction, local community support etc. Our corporate ability to drive these advantages is directly linked to understanding the workforce as defined by workforce culture and the investments in building support in the local workforce community (EDOs, labor associations etc.) 29Arguably, and contrary to some traditional thinking, cultural assessment of the local workforce environment is at least partially a financial imperative – as the building of margins is dependent upon the building of competitive advantage which is defined in part by workforce advantage.

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PEOPLE = NOVELTY, INNOVATION & PRODUCTIVITY At some point in the past few years, the CEO of just about every major corporation has sincerely pronounced that “Our people are the No. 1 asset of our company” and rightly so. Global talent management requires more than pronouncements, however. The real workforce management issue is whether the employer understands how complex the people management issue is – especially on a global basis. Global human capitalists28 understand not only that people collectively are their No. 1 asset (which is basic) – but that they represent a novel and precious asset of the company which must be developed, maintained and nurtured – not simply managed. In other words, each person is a potential talent asset, which must be served and cared for within the reasonable confines of the corporate resources. If a company treats its people as “commodities” it reduces its workforce to a commodity and destroys the innovation and productivity that can be nurtured within the workforce. In effect, the business (and its value) conforms to its view of its people. It is certainly true that there are other contributors to productivity and innovation besides people, and that some workers are illmatched to the organization and should be moved out rather than invested in – ultimately, however, people are the source of all value. Still, the innovation and productivity borne out of the workforce must be distinguished from the innovation and productivity gained from technology. Technology has been a generator of “efficiency” within the enterprise, and while such advancements are important and strategic, they are always produced by people – even when that advancement is a technological one.

PEOPLE INNOVATION & PRODUCTIVITY = COMPETITIVE WORKFORCE ADVANTAGE Innovation and productivity are at the heart of building competitive strength and advantage. While financial assets and technology contribute mightily to competitiveness, the workforce remains the greatest contributor to these advantages (particularly in knowledge intensive industries). The workforce contribution to competitive advantage can be referenced as the “Workforce Advantage” or in a global context – the Global Workforce Advantage. The primary responsibility of the next generation of global human capitalists will not be the administrative or traditional process management of the global workforce, but the development of the global talent base into a realized source of dynamic Global Workforce Advantage based upon innovation and productivity.29

30 These advantages, or capabilities are borrowed from the work of Dave Ulrich and Norm Smallwood in their June 2004 article for the Harvard Business Review entitled “Capitalizing on Capabilities” pp. 2-4 31 Examples would include building strategic authority into the workforce decisions, giving workforce management strategic relevance, and determining the economic value of human capital of the company on a recurring basis. 32 For example, one of the perennial issues which multi-nationals face in global workforce management is setting an appropriate balance between allowing for decentralized local flexibility to adjust for local business practice and regulations, and the desire to control workforce practices centrally based upon the standards and models of the enterprise. Even when autonomy is the favored approach – some central baseline of common workforce practices and policies is necessary.

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COMPETITIVE ADVANTAGE = SUSTAINABLE MARGINS To the degree that American corporations (or at least their institutional shareholders) are focused today on short-term profits (returns) – the quest for profits can instigate short-sited global workforce decisions to drive immediate cost reductions and margin gains (and ultimately sought after profitability). Yet, it is sustainable margins – not short term gains or profits that actually build a company’s economic value and ultimately, its shareholder wealth. Profits are accounting phenomena – not necessarily wealth generators. A company’s competitive edge generates its market advantage. With that market advantage, companies are able to sustain margins and ultimately earn repeatable profits. Workforce advantage (innovation, productivity) is a major component of the competitive advantage multi-nationals need to sustain margin – and this advantage must be diligently managed and balanced through both formal and informal GTM processes. SUSTAINABLE MARGIN = STAKEHOLDER WEALTH Again, sustainable margins are the real builders of corporate wealth – not fast profits In sum, people are products of their local culture and the regional workforce culture defines the global workforce advantage realizable from a region. To leverage that workforce advantage (and the competitive advantage that leads to sustainable margins and ultimate wealth) multi-nationals must invest in understanding, then leveraging the local workforce culture and workforce community. Put differently, shareholder wealth is the ultimate outcome of human capital investment and those investments must be based in part on a deep cultural assessment of the global regional workforces and their local workforce environments.30

33 A good primer for understanding the foundational underpinnings of Talent Management can be found in the 2001 report by TMG, “Top Ten Challenges of Corporate Recruiting” – where the authors and TMG founders, John Chaisson and Connie Pascal, tracked the tangible challenges facing 100 leading and fast growth companies and introduced the concept of the Talent Management, the Talent Management Lifecycle and the Talent Management Organization. That market based study performed in 2001 revealed that 17% of organizations could be classified as TMOs. A study of the percentage of multi-nationals which qualify as TMOs has not been performed. One could reasonably assume that the percentages are higher for multi-nationals. 34 In recent years, HR BPOs, such as Exult and IBM, have entered into contracts with MNEs (i.e. BP/Amoco, The Prudential - Exult, Proctor & Gamble – IBM) to manage global workforce solutions on their customers’ behalf. This never represents a total abrogation of responsibility,

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PRINCIPLE 5: DEFINE A SPECIFIC OPERATIONAL FORMULA FOR GLOBAL WORKFORCE ADVANTAGE In a balanced GTM strategy, the overarching goal of managing workforces globally is to improve workforce advantage (including workforce productivity and cost efficiency) and thereby wealth and sustained profitability. For MNEs to operate effectively in the current global workforce paradigm, they must define a formula for Global Workforce Advantage for their enterprise – and that formula must be made operational and executable in workforce practices, procedures and policies. In this way, managing the Global Workforce can be simplified into a two-part strategic process. First, defining the company’s strategy for Global Workforce Advantage and then developing a Global Talent operating plan. The first step is to understand the general concept of Global Workforce Advantage and then adapt the concept to an enterprise’s specific workforce circumstances to make it operational.

The conceptual definition of Global Workforce Advantage is wrapped around a relatively simple principle: To maintain adequate global competitive advantage, an enterprise must develop strategic advantage through the effective management of workforces globally. For a global workforce to optimize it must be managed in a manner which breeds “competitive advantage” for the organization on a global basis and that approach must be: • Based on Global Talent Management principles – the idea that talent is a critical asset of the organization that is managed throughout a lifecycle and that the management of people is strategic (a “talent mindset”); • Identified with the specific global workforce capabilities and advantages that the organization seeks to maintain (i.e., leadership, innovation, speed, efficiency, etc.)31; • Tied to the higher level strategic goals of the company • Universally locally successful. – The idea that a company can operate worldwide but that success occurs locally within each workforce community.

however - arrangements of this size, duration, complexity and cost (often in the hundreds of millions over several years) require careful and active monitoring on the part of the customer. 35 At the risk of introducing yet another new concept, a “workforce value proposition” is simply the enterprise value statement and corporate values translated into an integrated value proposition useful for workforce guidance. And to communicate its values to the workforce, potential employees, and the broader community.” 36 Please see: http://www.publications.alcan.com/sustainability/2003/en/highlights/managing_03.html 37 “Articulating Corporate Values Through Human Resource Policies” T.M. Begley and D.P. Boyd, Business Horizons. July-August 2000. pp. 8-12

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PRINCIPLE 6: THERE IS IMPERATIVE TO ADOPT GTM AT THE OPERATIONS LEVEL Although there are several different baseline approaches to the definition, Talent Management is essentially a strategically-minded approach to the development of “people” or the talent assets of an organization. It fosters the management principle that talent should be developed strategically within the enterprise on the basis of a lifecycle that includes phases for the maturation of talent within the organization (e.g., attract, recruit, hire, develop and retain). As an extension to this principal, Global Talent Management is the adoption of these strategic minded talent management principles into the global workforce paradigm and applying these principles to produce specific Global Workforce Advantage goals. Thus, GLOBAL TALENT MANAGEMENT = DOMESTIC TALENT MANAGEMENT + LOCALIZATION Of course, this is a gross simplification, but it is correct at the highest levels and serves to pinpoint the main message. Part of the perennial adoption problem is that companies have a difficult time applying strategic GTM principles32 at an operational level – and even when there is a commitment, struggles emerge over “how” to operationalize the concepts.33 Remembering that global talent management differs from the principles of talent management at home in just one key respect might serve as a sanity check when complications arise. The first evidence of systemic “executable and operational” adoption (as opposed to conceptual adoption) of Global Talent Management would be integration of the basic underpinnings of GTM into the foundational layers of the Global Workforce system. In the earliest stages, companies seeking executable and operational GTM should examine at least these three critical components of systematic adoption: (1) process adoption; (2) strategic embracement (policies and goals) and operational introduction. •Process Adoption: Evidence of basic adoption and integration of GTM principles into organizational global workforce practices and processes, including the foundational concepts of Talent Management (e.g., adoption of a formal lifecycle process for talent, the idea that talent is a strategic asset, and that recruiting and retention are

interrelated).34 An informal audit or review for GTM would look for evidence of these GTM principles in the recruiting and hiring methods or in customizations of the company’s HRMS and automated recruiting solutions. One would find evidence of GTM adoption in a global staffing solution which accommodates candidate relationship management, or a corporate recruiting website that is trans-cultural, globally flexible (with regard to laws, workflow, etc.) and multi-lingual. Further evidence might appear in the existence of global corporate competencies and a means for the MNE to see the skills and competencies of its global workforce in a common database. Certainly, the company’s articulated decision process to determine when offshoring or outsourcing is appropriate and the steps for preparing foreign work locations would be critical flashpoints also. • Strategic Embracement: Strategic Embracement: One sign of Strategic GTM adoption would be formal identification of specific “Global Workforce Advantage” management goals. For example, in addition to setting productivity goals, the company might set strategic goals which support the local offshore workforce community – i.e., improving workforce training and development in conjunction with local government, perhaps through its economic development initiatives.

38 Valuing Human Capital, Education Business Systems (EBP), PBC Publishing, San Luis Obispo, CA. 2003, pp. 127. 39 Karen V. Beaman“The New Transnational HR Model” in “Heads Count” pp296-297. PeopleSoft Publishing, 2004 40 Please see: http://www.unglobalcompact.org/ 41 The lessons reviewed are applicable multi-nationals and other enterprises relocating or expanding into global offshore workforce regions. 42 Any number of relevant attributes could be used to define the “local workforce environment.” For GTM purposes, the workforce environment generally references the workforce culture, community and conditions. The relevant profile attributes are determined by the enterprise’s global workforce advantage goals and by which attributes are culturally important to bridge workforces and build support between the onshore or “home” workforce environment and the target regional workforce environment. For example, the political attributes of the

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• Operational Introduction: Operationally, GTM necessitates the ability to successfully drive the recruitment, development and retention of a multi-national workforce (direct employment and contract labor (i.e., through the talent lifecycle, retaining competitive workforce advantage, improving productivity and driving long-term profitability). Evidence of the operational introduction of GTM can be found in the training of managers on workforce and business practices of the local regions – more advanced companies would train their home country managers as well. Strategic operational GTM might be evidenced by the sponsorship of a local public school, a jobtraining center or a university within a global workforce expansion or relocation region. One might also look to the structure of the global compensation and incentives program for evidence that talent is being developed globally as a long-term asset and with cultural assessments of the local region. Of the execution components above, the operational introduction of GTM into the enterprise is the most difficult and expansive. Unfortunately, the scope of this paper does not allow us time to fully explore the operational adoption of GTM but it does afford a timely opportunity in Part II to explore 7 major field lessons which are driving multi-nationals and high growth tech companies like GTPC, to build better strategic approaches to global workforce success. Before we get there though, it is necessary to take a brief look at GTM technologies and the critical role they play in global workforce advantage, then lastly the role of global workforce leadership. PRINCIPLE 7: MNES MUST UTILIZE AN EFFECTIVE GLOBAL WORKFORCE TECHNOLOGY SOLUTION No MNE can expect to achieve a global workforce advantage without the effective use of technology. At a minimum, MNEs require sophisticated workforce acquisition solutions for all types of workers, and these systems must be integrated with reporting databases. Beyond this, MNEs can gain advantages through the use of global compensation and performance, incentive and learning management solutions as well as planning tools that facilitate global succession planning (at least for top employees). As much as possible, MNEs should empower employees and reduce the administrative burden on

HR staff through manager and employee self-service tools. Depending again on local culture and the savvy of the local workforce, self-service tools can bolster employee satisfaction, reduce turnover and save the MNE enormous HR administrative costs. In the GTPC example, HR technology was rolled our internationally in much the same manner as the company’s overall approach to global workforce management – from the center, with little regard for local needs. GTPC achieved success with its e-HR solution in North America and came to the reasonable conclusion that the solution should be implemented globally to replace the hodgepodge of disparate systems and databases in use by its subsidiaries While there is nothing wrong with this strategy, organizations cannot expect to implement a successful global eHR solution simply by transplanting a system configured for success in North America. In some cases, the home country solution may be the wrong technology altogether for a global rollout. Numerous e-HR solutions providers cater to North American customers only and have yet to develop a global capacity for their software. The first step, therefore, is to ensure that the home country solution is scalable to a multi-lingual, multi-cultural and transregulatory environment.

target region may be secondary or unimportant profiling factors for regions where the home region and offshore region are politically similar or compatible. 43 U.S. companies in particular tend to overemphasize the relative risk and strategic importance of litigation avoidance or risk management as opposed to people asset management. A highly dissatisfied and unproductive workforce deprived of a culturally fit workplace for the sake of risk avoidance is nevertheless unproductive and unmotivated – even if suits, claims and litigation fees are avoided by ignoring local workforce or cultural issues. The better GTM firms balance the strategic importance of worker satisfaction and motivation leveraging the profile of the workforce environment with any legal or other risk associated with analysis of the workforce behavior or idiosyncrasies. Indeed, one could argue that cultural insensitivity which can lead to a negative outcome – like political and economic blackballing by local business leaders or

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If it is not, the organization does not necessarily have to
abandon it, the following are viable options: 1. Maintain the solution in North America. Allow subsidiaries to keep the solutions they are using, if effective, while finding a suitable solution for the others. Deploy a central data warehouse that can receive/transfer data from all of the disparate systems. Agree to standard metrics (that make sense in all locales) and require all subsidiaries to transfer corresponding data to the central data warehouse. 2. Select one solution for global implementation. The solution is calibrated for each subsidiary and operated, more or less, on a stand-alone basis in each region. As in example 1, all relevant data is transferred to a central analytics and reporting database. 3. Select a global solution that can be rolled out internationally as one, unified system, configured for each region. While conventional wisdom would recommend option three to a mature, tech company like GTPC, each of the options is viable and has its pros and cons. Option one requires the least upfront effort and expense but is more restricted in pay off and will likely cost more to operate over the long term. Option two is an effective compromise achieving economies of scale and price discounts (by acquiring or leasing multiple licenses of the same solutions). It offers a common platform and even though it is only integrated at the analytics and reporting layer, it enables staff to move from region to region, understanding the e-HR solution throughout, and it makes transfer of employee information, beyond that that automatically goes to the central data warehouse, a straightforward exercise. Option three may require the most initial effort and expense and, because it is more centralized, it may pose the greatest risk to the regions in terms of autonomy and access to a highly customized solution. However, done correctly, with the right choice of software and with sensitivity to local needs, it offers the truest integration, the lowest total cost of ownership and the greatest opportunity to leverage HR intelligence worldwide.

Benoit Leclerc, Vice President of International Sales for Taleo (a global staffing solutions provider) and a veteran of dozens of international e-HR solution implementations, points out that to date, “with a few exceptions, global talent management is very decentralized. I think that tighter collaboration between stakeholders from the vision, direction, and execution perspectives will prevail in the future as organizations need to be more agile when it comes to talent management – wherever they decide to operate.”

workforce associations - can be more costly and damaging to the enterprise and its workforce productivity than any potentially avoided suit or risk. 44 Community involvement is a broad topic potentially covering philanthropic initiatives, employee volunteer programs, partnerships with local schools and universities, even membership in local chambers of commerce. In the Gap, 2003 corporate social responsibility report (http://65.162.110.78/ccbn/7/637/686/index.html) for example, the company highlights its “Community Corps” program, which among other things, involves its employees in building shelter for the homeless through Habitat for Humanity International.. 45 “Heads Count” p. 278. PeopleSoft Publishing, 2004 46 Please see: Dave Ulrich, A New Mandate for Human Resources, Harvard Business Review, Jan/Feb 1998, Vol. 76, No. 1, p. 124.

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Under each of the scenarios, there is the common
requirement for a centralized reporting database or data warehouse. Using talent deployment as an example, Gerard Broussard, VicePresident HR – Global Staffing & Workforce Management for Hewlett Packard underscores the baseline importance of capturing worldwide workforce data: “The key thing here is that you have to have some standardization around the way that you capture this information so that you can use it in a consistent way. It seems obvious, but it is hard to do on a global scale. You think of the consultant inventory component alone, for example, in a case like Price Waterhouse Coopers where it has a customer with specific needs. With a working global talent system, PWC can put the very best available consultant for the assignment on the job no matter where the client is or where the consultant is based – but you need clear visibility across your workforce to understand who is best for any given position and whether they are available. I think for some of the basics you have to have some consistency so that you can look at the work required and your talent in the same way, regardless of where they are located. In terms of job type, capabilities, skills, you name it. You need to have a foundation that is consistent over all your talent across the world to really use that information from an operational standpoint – more typically called Talent Management.”

Jon Walker, Director of Global HRIT for Dow Chemical illustrates the point with an example from Dow’s global workforce solution implementation: “When we implemented out worldwide HR solution at Dow, on a single platform globally, we were one of the first companies to do so. We replaced 23 systems in HR that were just core compensation, benefit and job data. I can’t tell you how many standalone databases we replaced - probably close to a thousand. We found that before the change, even to get our head count roll up, it took a full quarter with all these different systems, and by the time we had our count, the number had already changed!” “When we implemented out worldwide HR solution at Dow, on a single platform globally, we were one of the first companies to do so. We replaced 23 systems in HR that were just core compensation, benefit and job data. I can’t tell you how many stand-alone databases we replaced - probably close to a thousand. We found that before the change, even to get our head count roll up, it took a full quarter with all these different systems, and by the time we had our count, the number had already changed!”

“HP is in the process of doing a strategic plan for the next three to five years. For the first time the business leaders have this requirement, and they own it. That goes to an earlier point. Talent management needs to be owned by the organization, not by a chart. They have the ownership of coming up with a strategic workforce plan. In order to do that, they need to assess what their current talent is. In order to do that on a global basis, a system that is centralized, in terms of gathering information, allowing you to assess your current workforce on a global basis, is necessary. If you have many different systems in use, with tons of different information, gathered differently, stored differently, coded differently...how can you manage globally in an efficient manner?”

47 According to a recent Linkage Research Model published by Gantz-Wiley, top leadership of an organization should focus on practices and values that energize and motivate a committed workforce. Valuing Human Capital, Education Business Systems (EBP), PBC Publishing, San Luis, Obispo, CA. 2003, pp. 54-55. These leadership imperatives and principles are only exacerbated in the global arena. 48 “Human capital accounts for the largest percentage of resources expended by almost all major corporations”. Dave Ulrich, Human Resource Champions: The Next Agenda For Adding Value and Delivering Results, Harvard Business School Press, Boston, MA., 1997, pp. 144-149.

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Walker sums it up this way: “we have local as well as global
operating disciplines and the local supercedes the global on most occasions, otherwise we get into trouble”.
The HR technology should be seen as the foundation of the entire global workforce system. Think globally in terms of overall workforce advantage but implement it region by region with emphasis on the particular needs of subsidiaries. Leclerc believes that the key attributes to focus on in technology projects for global workforce management are (local) “legalities, culture, infrastructure, communications and language - in that order”. As such, the selection and implementation of a global e-HR solution can be seen as a microcosm of the entire global workforce management effort (in that you can expect many of the same complexities and considerations to appear). Depending on your configuration, i.e. HRIS with best of breed components for staffing, straight HRIS, or partnership with a HR Business Process Outsourcer (HR BPO)35 care must be taken in the selection of an appropriate technology provider and partner. A partner with experience and global success is clearly less risky than one just entering the global e-HR space. PRINCIPLE 8: GLOBAL WORKFORCE SUCCESS AND GTM HINGE ON BUILDING LOCAL WORKFORCE LEADERSHIP The lynchpin to building field based GTM is in establishing real workforce leadership in the workplace. Only through effective leadership can a corporation build the loyalty and commitment necessary to bind workforces into a team – especially where cultural differences are embedded. Contrary to some popular business principles, Workforce Leadership is distinct from and additive to general management leadership. Effective GTM-based workforce leadership is essentially “servant leadership” – leading the workforce and building loyalty through sustained service to workers and their community. Workforce (servant) leadership is exhibited and embedded in the field primarily through values, vision and visibility.

Values In the GTM organization, workforce leadership is defined first and foremost by the enterprise’s workforce value proposition.36 A strong workforce value proposition typically demonstrates strong leadership. Most companies have workforce value propositions – even if it is not formally recognized or reinforced. GTM organizations simply refine and formalize the proposition. The workforce value proposition is defined formally in numerous ways by enterprises but for GTM purposes it is defined by three components: (1) the value the enterprise places on its workers; (2) the values it promotes to the workforce; and (3) how the enterprise values workforce results. In building workforce leadership for the growing enterprise (especially for global development) it is vital to deliver a clear and formal “workforce value proposition” covering all three areas. In responding to queries about Dow’s global workforce value proposition, Jon Walker sent us the following information: “More than any other factor, the imagination, skills and dedication of Dow people around the world will determine our company’s ability to achieve its higher aspirations. To realize our mission -- to constantly

49 Steven Chaisson, Co-Founder, Global Workforce Solutions, Inc. (MBA program, Maryhurst University) in unpublished paper Leveraging Human Capital (2003), citing Valuing Human Capital, Education Business Systems (EBP), PBC Publishing, San Luis Obispo, CA. 2003, pp. 5570. 50 With the growing interest by EDOs, regional governments, and international and regional labor organizations (like the ILO and the UN) in monitoring the global employment track record of multi-nationals and the correspondent press interest in the global employment and labor practices of these organizations, it would not be surprising to see “GTM” self-administered audits or surveys emerge as a part of the “best practices” baseline for advanced GTM global tech firms (in a manner similar to the way best practices U.S. employers self-audit their diversity

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improve what is essential to human progress by
mastering science and technology -- and to fuel our drive to maximize long-term shareholder value, we must rely increasingly on ideas to differentiate Dow. As a result, more than ever, how we treat each other, and how we define and articulate our purpose, strategy and the values that unite us, are critical determinants of our ultimate success. Dow created a People Strategy to address key aspects of how we attract, retain, develop, recognize and lead Dow people. The key principles embodied by the People Strategy have been crafted to ensure we build a diverse team capable of meeting not only today’s needs, but the needs of Dow into the future as we accelerate our journey to become a better company. The objectives of the People Strategy are part of the balanced score card of measurements.”
Key Practices at Dow 1. Achieving recruiting and retention quality 2. Creating a total reward and accountability orientation 3. Establishing a collegial, flexible workplace 4. Opening up communication between management and employees 5. Implementing focused HR technologies

Dow has also articulated a “People Success Philosophy” as follows: “At Dow we believe that our people are the key to our success. Our values emphasize respect for people. Dow must leverage the ability of employees and engage the creativity and capabilities of all Dow people. With this, senior management adopted these people principles: • Diversity of thought, style, etc. continues to be important for future business success. Dow needs to hire for diversity, and also create an environment that promotes diversity rather than conformity. • Dow emphasizes Pay for Performance. We reward employees based upon their competency development, goal achievement and sustained job performance. • Dow also believes that employees having long-term careers, support business success. Given the complexities of the business. Dow must maintain consistency and capabilities that only long-term careers can provide. •Contributions of employees is also critical for future business success. Dow people are the Company's competitive advantage and will determine how Dow will be differentiated. It is imperative that Dow provides an environment where people are challenged and enthused about their careers.”

programs). 51 In a sense, the “product” being sold or promoted is the regional talent. In order to position the talent pool as competitive and capable of supporting expanding corporations, EDOs are learning that deep assessment of the workforce is required. Again, culture and workforce environment are playing a key role in how EDOs are able to leverage their regions’ talent as a strategic advantage in attracting direct foreign investment and businesses in the global expansion process. 52 Interviews with regional EDOs suggest that governments are already in the process of developing sophisticated survey and assessments of firms measuring their ability to operate effectively as a global employer. Our expectation is two-fold. First, we would expect to see workforce due diligence performed as part of the qualification process for economic incentives – essentially a scorecard process determining whether the

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While not every MNE has an employee value proposition
(EVP) so clearly defined as DOW’s, many, such as Royal Dutch Shell and Alcan make their EVPs public in formal corporate responsibility style documents. Alcan’s 2002 “Managing For Sustainability” report states the following: “Increasingly, a company’s value is measured externally by looking at its sustainability “vital signs”. In Alcan’s case, these include, among others, our corporate governance practices, our ability to minimize environmental impacts, our efforts at increasing recycling both within and outside our facilities, our cooperative efforts with the communities where we operate and our ability to provide a safe and rewarding work environment for our employees. It is also about maximizing the values that make up our corporate culture – our values of integrity, accountability, trust and transparency, and teamwork.”37 Valuing the Workforce The value proposition is defined first by the value placed on the workforce and how that value is measured, maintained and managed. In a GTM organization, workers are viewed as strategic and mission critical. As such, the organization places a high quantitative and qualitative value on people. This high people valuation manifests itself in different ways: qualitatively, this valuation might be evidenced in a strategic management focus on people issues, managing people through a lifecycle, linking recruiting and retention, building relationships with talent, including employees, alumni and potential candidates while profiling and surveying for cultural responsiveness and local community branding and support. Quantitatively, a company might demonstrate its value commitment through its investments in worker satisfaction, through its community development (or training) efforts, with its level and quality of compensation and rewards, and with investments in employee training and development.

Actions (services) rather than words are the true litmus test for how a company values people. Put another way, an enterprise builds its workforce leadership and demonstrates its value commitment to the workforce by the means through which it “serves the workforce.” Service to the workforce extends beyond salary, compensation and training measures, covering the entire management response to the comprehensive needs of the workforce – individually, collectively and communally. In order to understand the comprehensive needs of a workforce, an employer must assess and embrace the actual needs of the workforce as identified through assessment, evaluation, feedback and surveying. In the global context, this workforce evaluation should be localized to encompass the unique “local community” and local workforce environment, rather than simply reflecting non-local standardized corporate workforce programs, practices and policies. Though corporations demonstrate “service” to workers through a variety of measures, the predominant (and most effective) means by which an enterprise values and serves the workforce is

applicant enterprise seeking economic development incentives has demonstrated in the past, or is likely to demonstrate in the future, an ability to successfully develop and manage a foreign workforce. Second, once the migrant enterprise establishes itself in the host region, we would expect the enterprise to be subjected to various forms of “social responsibility” workforce audits and reviews – to measure the ongoing success of the enterprise in linking its business operations, goals and practices to the region’s long-term interest in supporting sustainable growth and well-being of the community. We expect these audits to produce enforcement mechanisms (including increasingly formal forms of public review and scrutiny) to further incentivize global organizations to treat their global people assets in appropriate ways – whether those workers are contract or direct labor, insourced, co-sourced or outsourced. Already, we witness a number of multi-nationals struggling to re-establish local workforce support and establishing branding as good global employers after breaching the trust of the local workforce community.

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through its compensation and rewards programs.
Typically, the compensation and rewards programs are based on longstanding compensation analysis, workforce needs assessments and incentives requirements. However, if the workforce needs profile is not culturally informed nor localized, neither is the compensation system. Multi-nationals, in many cases, have ignored the impact which local culture, workforce practices and demographics can have on the workforce needs profile – and as such have been remiss in building compensation, rewards and community programs that are truly responsive to the local workforce environment. For example, U.S. based compensation packages tend to focus on individual rewards and incentives with the emphasis on cash in base salary and at risk pay. Compensation packages in other parts of the world where local culture more tightly intertwines community with individual, may be better received if they are balanced between individual rewards, collective rewards and community rewards. In Europe, for example, multi-national enterprises might be more effective building a compensation program for the local workforce that balances these elements – perhaps including a higher proportion of non-cash, nonstock, individual rewards (e.g., tuition for dependents, vacations etc.) and including programs for community educational development. In some parts of the world, rewards for superior results might emphasize enhancement of the worker’s reputation and stature in the organization and in the community. Shared Values & Assessing Value The other two components of the workforce value proposition are the values promoted to the workforce and the valuation of workforce results. We’ll examine each briefly.. The adoption of shared workforce values is fundamental for effective workforce management and the need for shared values is only heightened in a cross-cultural, multi-national workforce. It is, therefore, imperative that GTM companies translate corporate values into workforce values that are both meaningful and culturally relevant. Without a specific localized translation of values, which integrates local workforce environment attributes (social values, local

business practices, culture, geo-political sensitivities, etc.), the foundation for rapidly building effective workforce unification, commitment, trust and loyalty is potentially compromised. Enterprises also establish the workforce value proposition through the methods adopted to evaluate and value workforce results. Productivity is the standard measure but GTM organizations typically seek higher forms of valuation such as measuring the economic value of human capital in an attempt to measure the true impact of the workforce on corporate wealth. Vision and Visibility GTM based workforce leadership does not end with the articulation of a workforce value proposition. A unifying vision for the global workforce must be identified and communicated. Moreover, managers must establish a common vision that unifies the workforce – even bridges the geographical and cultural disconnectedness inherent in workforces spread across diverse international regions. This unifying vision is critical to drive all workforce goals. Northeastern Human Resource Management professors, Thomas Begley and David Boyd, among others, believe that, in the GTM sense, employee engagement absolutely requires that local values and culture be integrated into the corporate vision and objectives38 – a unifying global vision, in other worlds.

53 Benoit LeClerc notes that “when you talk about global talent management, you have a local component to the word ‘global’. Global doesn’t mean that everything is exactly the same everywhere in the world. It might be a little bit truer in the case of manufacturing products, but in the case of talent management or workforce management, I think that when you think about and implement a global system the local component, the ‘legs and regs’ need to be a part of your definition of ‘global’. It’s key, otherwise, yes you are going to have standardized information, yes you are going to consistency, yes the variation is going to go away, but you are not going to be able to use that because you are going to miss that important component that is linked to your ‘legs and regs’. So, I think that it is important that ‘local’ is part of your definition of global, in terms of legislation and regulations, not just in terms of cultural practices.” (GTM Panel, HCI).

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To be committed to an organization, an individual needs
to understand the corporate vision, accept its meaning, and know how he or she fits into its success. Employees want to believe in the quality and value of a corporation’s product, image and service.39 The vision must be articulated to build this unity and commitment and to advance employee engagement The effectiveness of the vision is enhanced by the visibility of leadership in the organization – this is especially true for offshore operations where leader visibility is critical to reinforcing the vision and creating cross-cultural unity and connectedness. As above, GTPC erred in failing to develop the conditions under which senior executives would seek overseas assignments and leaders could be developed worldwide. In summary, global enterprises seeking to build a stable, productive, loyal and committed workforce in a new global region, must invest in establishing local workforce leadership, which is defined by the values, vision and visibility made operational in the field – and those 3 V’s should be adaptive to and reflective of the local offshore workforce environments. This is certainly true in typical, large MNEs but is applicable in small firms as well. Kurt Keilhacker, Managing Partner of investment firm Techfund Capital, and an experienced investor in rapid growth portfolio companies in Silicon Valley, with offshore workforces in several countries, including India and Vietnam (in an interview conducted for this paper) confirms the merits of these principles. He cites the same principles in building the recent offshore development success of one of his firm’s portfolio companies, personal digital entertainment firm, PortalPlayer. While companies like PortalPlayer do not practice highly formal GTM practices, Kurt suggested adherence to the GTM concepts – familiarity with the local business environment, workforce

leadership, value, vision and visibility – as key factors in building a sustainable and valuable talent for their 250+ person project in India:

“The secret of our success in building distant development resources is tapping professionals who have worked with us in Silicon Valley and then leveraging their home base experience offshore. The key to any such effort is to have full confidence in a locally-based executive - one who can flag issues before they become real problems.”

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While these principles may affect all types of firms,
their approach might differ through time. As Karen V. Beaman, Division V.P., ADP Global Services has described in a number of publications, global leaders might be needed to enforce centralized standards, understand and champion local differences, and facilitate the transfer of knowledge and ideas between their region and the rest of the organization40. Beaman recommends that organizations grow leaders (locally and through expatriate assignments) capable of the above and who, when they advance in their careers to senior executive ranks, become the organization’s most vital players in global workforce management – leaders who understand and appreciate the organization’s global workforce challenges at the highest levels and can therefore develop transformational competitive advantage. For this paper, the purpose of our examination of the human imperative is to simply acknowledge that there is a human side to global workforce decisions and to understand that these human factors are more pronounced in emerging economies where workforce cultures are less sterilized by standardization, regulation and law, and where issues of religion, society, family and politics are more prominent in the workplace. Workforce executives need to be trained and prepared for these pronounced human factors and in building loyalty and commitment through workforce leadership that is culturally sensitive, fitted to the local workforce environment and supportive of the local community. The failure to manage these human issues can lead not only to instability within the local workforce, but also to the creation of a negative global employment brand within the entire region, if not the world.

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Part II: Seven GTM Field Lessons

While GTM is still being defined, the United Nations, through its “Global Compact” initiative41 has articulated nine principles for globally active companies. Those impacting labor practices are as follows: • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; • Principle 4: the elimination of all forms of forced and compulsory labour; • Principle 5: the effective abolition of child labour; and • Principle 6: the elimination of discrimination in respect of employment and occupation. These principles are offered in this paper for two reasons. One, because over 1600 companies from around the world have signed on signaling a “transnational” direction for globally managed workforces; and conversely, to emphasize the as yet, nascent state of agreement we have reached thus far in global “talent” related matters

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It is against this backdrop that we introduce our own seven “field lessons” that are emerging through the myriad of compiled experiences of organizations (particularly MNEs) building global workforce advantage through an international workforce. These lessons augment the principles covered in Section I and illustrate the building blocks for establishing Global Workforce Advantage toward the foundation for better internal GTM.42
LESSON #1 Get Local with the Global Workforce The global workforce advantages corporations seek are borne first and foremost from understanding that effective global workforce management views the global worker marketplace as universally local. While there are similarities in all advanced economies, local workforce culture ultimately defines what the parameters are for building loyalty, satisfaction and ultimately, the productivity and innovation sought for competitive advantage. As Global Human Capitalists we must embrace the evolved but still intuitive notion that local culture should inform our methods and approaches to developing workers and building these strategic offshore human capital assets into well-developed, well-supported and well-managed people assets of the enterprise – whether those offshore workers are in-sourced (employees), co-sourced or outsourced. To do so may be antithetical to our traditional approach of the “culture-blind” workforce and workplace (no religion, race, politics, etc.), but it is arguably an absolute necessity in the quest to gain competitive workforce advantage in diverse workforce regions. It is no accident that we’ve chosen to cover “getting local” early in the recitation of field lessons on the globalization of the workforce. “Getting Local” with our analysis of offshore people assets – zeroing in on profiling the local workforce environment – is the most significant and oft ignored part of emerging GTM practices. It is difficult to adequately cover the process and approach to getting local in the confines of this paper, but a familiarity with typical localization steps is critical to building operational GTM within the enterprise. The three basic elements of getting local – understanding culture, community and environment – can be expanded into the following

localization steps: 1. Profiling the local workforce culture. 2. Understanding and leveraging the local workforce community. 3. Adapting to the local workforce environment. (a) Profiling the Local Workforce Culture The GTM practice of investigating (profiling) the local workforce culture of an offshore region for workforce restructure, relocation or expansion is hardly a radical concept – multinationals routinely invest resources into business environment profiling for expansion to a target region or for purposes of relocation analysis and business integration (and such reviews routinely include corporate cultural fit assessments examining social etiquettes, religious beliefs, racial and social mores, community requirements and legal and regulatory practices and infrastructure). It is, therefore, not a major leap in management thinking to apply GTM principles to expand the practice of building “business environment profiles” to build a profile of the local workforce culture and ultimately, the “local workforce environment.”43 Put more simply, multi-nationals already use profiling to reduce risk and to increase strategic business fit within targeted global business regions and they conduct these cultural investigations of a market region before investment and relocation. With GTM, we simply extend this profiling into the offshore and global workforce arenas.

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The distinction for global workforce related cultural
assessment and profiling is the focus, depth and breadth of the analysis. For the first time, many multi-nationals are building permanent operating workforces in remote regions of the world – without the benefit of prior workforce experience or comprehensive work environment data. Rather than conducting a cursory review of contemporaneous workforce demographical and administrative data (e.g., compensation packages, local worker privacy laws, collective labor practices and education standards for applicable job categories), Global Talent Management raises the bar and standards of environmental investigation, challenging the employer to gain a comprehensive profile of the workforce culture and integrating political, labor, business and social cultural data into the analysis (i.e., understanding the political and religious sensitivities and the racial complexities of the local workforce environment – mapping those attributes to the regulatory and legal requirements locally and within the central corporate standards, practices, policies and boundaries – and then building a baseline profile of the workforce culture that illustrates the workforce environment managed by the multi-national and used comparatively with the central corporate culture). Perhaps the most pronounced difference between traditional profiling and the GTM approach is that the assessment is more proactive, worker centric and regionally sensitive than typical regional profiling. The idea is to truly absorb a sense of the local workforce (rather than just elicit the traditional workforce demographics and requirements such as education, hiring trends, pay scales, benefits, etc.). The GTM company seeks to learn substantively about the local talent – e.g., how the people work, how the workforce will react to workforce conditions, how to develop the onshore and offshore managers as a team, etc. For the tech sector, MNEs acknowledge that engineering teams in different global workforce environments may react entirely differently to the exact same set of project conditions or variables (i.e., a sudden change to coding deadlines or functionality requirements for a major software program). Managers unaware of cultural differences may inadvertently degrade workforce morale or productivity simply by applying workforce management techniques that are accepted in one workforce culture and not another. While concerns about the potential of raising cultural bias or not properly

managing worker claims are valid, building polices and workforce practices that reinforce a locally sensitive workplace is one of the highest level objectives of GTM.44 (b) Understanding and Leveraging the Local Workforce Community (political, educational, economic development and business supporters) Beyond understanding local culture, it is imperative that enterprises tapping the global workforce develop better GTM practices, map the Local Workforce Community and devise a plan for leveraging that community for mutual sustained benefits. It is not possible to provide an exhaustive list of the participants in each Local Workforce Community - with dozens of categories of players including economic agencies, the political apparatus, labor organizations, universities and trade centers, etc. It is important for these purposes only that organizations building GTM recognize that a relevant map and plan for local community partners should be identified, investigated and managed as a required element of the long-term GTM plan for the target region.45

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LESSON # 2: Focus on Long Term Global Talent Management & Global Workforce Advantage Rather than Short-Term Labor Costs Lesson #2 is to embrace a long-term perspective in management of global workforces. This lesson is really a synthesis of the GTM principles covered so far in this paper and is born of the pragmatic realization that multi-nationals cannot conduct workforce management on a “business as usual” basis. The global workforce paradigm has shifted – both regions and employers have learned the downside of short-term thinking as applied to the global workforce. As a catalyst to the change, many EDOs (government development offices) now understand the folly of investing in organizations that seek short-term advantage by relocating into regions based on tax incentives, with promises of creating sustainable employment opportunities. The multi-nationals are also increasingly savvy, understanding that their global people assets are strategic keys to innovation and productivity and that workforce management practices and policies cannot simply replicate the onshore approach to workforce management, but must be localized to be effective. Adopting the long-term perspective really means embracing two GTM concepts: (2) Debunking the Commodity Market Perspective for Global Labor Despite all the diverse perspectives available on managing global workforces, at the most basic level there are really two divergent approaches to managing offshore workers globally – inside or outside the tech sector. Global Human Capital is either viewed as: (1) A Non-Strategic Commodity – where workers are viewed (and treated) as transitory or entirely fungible, and, given competing pools of workers in which skills meet the job requirements, the predominant determinants of workforce locale and investment are almost purely associated with risk and costs (we see this in far too many outsourcing contract discussions); or (2) A Strategic Asset - A Strategic Asset - where the employer carefully attracts, nurtures and develops the offshore workforce into a strategic productive, predictable, committed and loyal talent pool, which over time, and at a competitive labor cost, provides the innovation and productivity which build competitive workforce advantage into the

enterprise and ultimately competitive strength, wealth and sustained profitability. At the surface level, most workforce managers understand the importance and uniqueness of workers, but applying those concepts to daily business decisions, particularly where financial pressures are significant, is more difficult. This is precisely the conundrum that workforce managers have faced with respect to recent offshoring and outsourcing decisions – where little investment has been afforded to determine “strategic fit” and more focus has been on the financial impacts of the workforce decisions. Even “best practices” employers have been tempted by the illusive quick gains of the global commodity labor market. In the quest to gain short term cost advantages, many enterprises that treat workers as relatively strategic in the U.S. – building loyalty and commitment, and developing their people throughout a sustainable talent lifecycle – have abandoned those principles with their international workforce, often because local labor laws and regulations have been more lax than the U.S. requirements. Firms seeking to leverage strategic advantage through their global workforces are advised to adopt practices and policies that de-bunk any notion that there is a commodity market for workers. Especially if they wish to protect their products, services and company from being commoditized as well.

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(3) Building Real GTM and Regional Workforce Advantage into the Enterprise In addition to debunking the commoditization of the global workforce, global tech firms must also build upon the strategic perspective of workforce management in a pragmatic way – making GTM and Global Workforce Advantage credible within daily workforce decisions and structure. For example, MNEs seeking strategic Global Workforce Advantage should resist seeking short-term gain from the manipulation of competing workforce regions. Instead they should focus on long-term investments in local workforces and communities to build sustainable competitive workforce advantage for mutual gain. As we have seen from examples throughout the paper, this approach is not fantasy, nor even idealistic, rather it has proven to be the basis for global success for some of the best-known transnational companies in the world. Yet, the adoption of GTM in a complex enterprise stretches the team skills of almost any enterprise. Often, it is the first time that MNEs are challenged to tap the entire enterprise to meet a strategic human capital challenge. In a June 2004 roundtable of the Global Talent Management Panel hosted by the Human Capital Institute, Benoit Leclerc summarized the importance and challenges of real strategic GTM adoption this way: “For many organizations, these GTM initiatives represent the first global projects that connect all entities together around the world. It creates a precedent that adds inertia and complexity to the planning and execution of these endeavors”. Building a real global human capital team is typically the first step to initiating real GTM within the walls of the enterprise. LESSON #3: Adopt a Balanced Approach to Global Outsourcing After years of strategic outsourcing contracts transferring engineering and technical positions offshore, the tech multi-national community, in particular, is increasingly cognizant of the short-term pros and cons of global outsourcing. No doubt the development of reliable global third party outsourcing firms for technology workers has increased the ability of technology companies worldwide to cost-effectively and flexibly upsize and downsize technical teams to respond to a rapidly

changing competitive landscape. The longer-term impacts of relying on a non-integrated workforce, without the investment in leveraging the workforce (and its associated workforce community) as part of the company’s human capital portfolio of people assets, are just emerging. The failure to make these investments, arguably leads to a devaluation of the human capital position by: (a) increasing risk associated with Intellectual Property, innovation, knowledge and other people-generated competitive strengths; (b) degradation of the employer’s positioning with its own permanent workforce (breeding disloyalty, distrust, etc.) and (c) weakened leverage within the broader global human capital marketplace (dilution of the global employment brand, etc.). Dee W. Hock, Founder of VISA international has shared his management wisdom in numerous publications. Hock left VISA in 1997 to form a non profit called “Terra Civitas” whose mandate is to link individuals and organizations throughout the world in a concerted effort to develop, disseminate and implement more effective and equitable

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concepts of commercial, political and social organization.
Mr. Hock has stated, “An organization’s success has enormously more to do with clarity of a shared purpose, common principles and strength of belief in them than to assets, expertise, operating ability, or management competence, important as they may be”.46 In the context of outsourcing then, organizations should be extremely careful in the lengths they go to achieve global workforce cost savings. While certain functions and projects might lend themselves ideally to offshore outsourcing, others, particularly those core to the organization’s competencies, strategy and objectives, should be kept internal. It is hard to imagine how a company could adhere to Mr. Hock’s advice where its outsourced functions are concerned. It would be short-sited to suggest that global tech firms (or others) abandon outsourcing as a viable workforce model in all cases. It would be far more productive to encourage them to take a more balanced approach to outsourcing initiatives and workforce decisions, and provide measures that can improve the balance. One simple and arguably obvious method to create more balanced outsourcing perspectives in the decision process, is to take a comprehensive assessment of corporate objectives into the outsourcing discussion. For instance, if outsourcing 10% of the workforce is under consideration and the conversation is dominated by the assertion of a 30% savings in labor costs, a savvy GTM company will insist on an analysis of the possible decline in productivity due to cultural attributes or increased risk associated with the business climate and/or geopolitical factors . Moreover, the GTM company will examine and measure the impact of the decision on the human capital contribution to the wealth and competitive strength of the company. One way to approach such an assessment would be to determine the impact on economic value of the Human Capital and the impact of the decision on the competitiveness of the organization rather than focusing on pure cost/profit analysis.47

LESSON #4: Build Talent Leadership Instead of Workforce Management While concepts of workforce management and workforce leadership are commonly used interchangeably in our business culture, work leadership is a related but entirely unique component of global workforce development. Workforce management entails managing the productivity and costs of the labor force – whether operating in a single region or 50 regions spread across the globe. Talent Leadership involves building a unified vision and motivating practices within the workforce and reinforcing both the enterprise brand as a Global Talent leader and through the building of partnerships in the local regions.48 In this ever-evolving workforce landscape where political and economic volatility continue to erode crosscultural work environments, the need for reinforcing talent “leadership” has never been greater. The reason to advance workforce leadership throughout the organization is simple – it is, in fact the leadership attributes embedded in the organization and its workforce (particularly managers) which will help to maintain and sustain the workforce, especially when unexpected and grievous workforce disputes arise (i.e., cultural, political or economic conditions) that severely strain the work environment. As discussed before, it is also the leader, nurtured through exposure to different regions that becomes the most valuable GTM asset in the long term.

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ii) Provide the Unifying Vision to the Global Workforce The starting point for Talent Leadership is to provide the anchoring “vision” for the workforce. Typically, the vision can be drawn directly from the mission statement and vision statement for the enterprise – the “people” component of which “should” reflect the people values of the company. Building on those elements, and as part of the development of the GTM policies and practices, the multi-national should also develop a Global talent “vision” statement – which defines the strategic purposes and goals for developing talent on a global basis and managing its human capital. That global vision statement should set the plumb line for global workforce practices and reinforce the relevance of the local workforce environment. The vision should also set a foundation for the unique workforce objectives for each global region (how the company will integrate language, crossculture differences and local workforce community into the workforce management system). It should also embed the approach of the multi-national in developing the workforce throughout its lifecycle. While much has been written on the critical importance of developing a traditional “vision statement” to guide the strategic direction of the enterprise, surprisingly, very little has been written on the topic of developing a vision statement for global talent. Yet people and labor account for over 70 % of the average knowledge industry MNE’s annual expense budget (and perhaps even more of its overall value) and are a major focus of budgetary realignment.49 These financial imperatives drive the relative importance of providing all workers with a clear vision statement of the company’s approach to managing people across borders, boundaries and cultural barriers. It is critical that the leadership of the company communicate the “vision” continuously with the workforce and that the workforce be actively engaged in a vision discussion so that the importance of global talent to the company can be perceived by workers. The “vision”, linked directly to corporate objectives, should become part of the company’s day-to-day workforce dialog. Leaders should choose “a few key messages and continuously speak about these issues at every opportunity.” 50

The point of promoting a vision is to build the dedication and commitment of the workforce – locally and internationally – and to leverage the unifying vision as part of a “cultural” bridge to unify workforces separated (at least to some degree) by workforce environment, culture and even pay scale, projects and language. This bridge is strategically important and becomes a saving grace to the company and its people assets when sensitivity training, local cultural investigation and workforce planning fail to successfully predict, prevent or manage unpredictable or intractable global workforce issues

- like cultural dissonance, disruptive politics and miscommunication. It also facilitates a healthy sharing of ideas and innovations across the entire enterprise.

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LESSON #5: Build a Global Workforce Brand What’s in a brand? Some corporations, particularly those that invested heavily in the 1990s in employment branding, may feel that branding is not particularly relevant in the global employment arena, particularly if the workers are outsourced. Yet, branding may be even more imperative in new offshore regions, than in areas where the company has operated for decades. In the global arena, a multinational may be almost completely unknown to the local workforce community. Moreover, if the company seeks to build local business community support for its relocation or expansion of operations in the local economy, its brand as an employer may be the determining factor in its success. Economic Development Organizations (EDOs) and their incentives (as well as other local industrial, political and economic support mechanisms) often base support on both an objective and subjective “sense” of the multi-national’s verifiable commitment to talent development and job generation on a sustained basis. The employer’s comprehensive “reputation” with workers (in other words its brand) becomes a key factor in the economic support decision. For this additional reason (to say nothing of emergent consumer markets) it is critical that multi-nationals invest in building a history, reputation and track record as an employer that can “brand” itself as a best in class “GTM” organization.51 LESSON # 6: Build Global Leadership By Working with Governments to Drive Down Talent Costs and Build Global Productivity Major players in the U.S. and elsewhere, including Microsoft, Intel and others, have routinely included “economic incentives” in their location analysis for establishing international operations. This relocation analysis includes an assessment of the workforce - its skills and knowledge base. It also includes an assessment of the workforce training and workforce development programs sponsored by governments through instruments delivered by Economic Development Organizations and others. EDOs, like Invest Quebec in Montreal, and throughout the world,

are chartered with the mandate of jobs creation and attracting direct foreign investment. They play a lead role in profiling their regions and regional workers to companies interested in expanding into their jurisdictions. In the past, this profiling of the regional workforce environment was quite limited. In years to come, the analysis will be increasingly sophisticated for the benefit of both the expanding employer as well as the host region. The reasons are simple. Short-term job creation and temporal business growth are not the objectives of the regions. Long-term sustainable growth and job creation are. Moreover, as EDOs and others study the effects of investments in job creation, they like multi-nationals, are coming to the realization that

long-term human capital development is the real driver of sustainable economic development.51

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The impact regional awareness of the strategic
importance human capital development has had, has profound impacts for multi-nationals and other enterprises tapping into the global workforce. Regions are quickly learning that multi-nationals that seek economic support for expansion which is solely motivated by labor cost or business operating cost differentials, seldom provide the sustained job creation and economic benefits sought. Instead, as labor costs shift and markets dictate evolving product development demands, multi-nationals that have bought only into the cost factors (rather than the regional people factors) tend to pull stakes and migrate to the next “region of cost advantage.” While flexibility is a key factor to successful business management – particularly in the global tech arena – commitment to long-term economic development of the host region is an absolute requirement. As a result of lessons learned by regional governments and EDOs in the last wave of techforce development, for example (with new technology clusters and associated jobs now scattered in regions across the globe) both multinationals and EDOs have become more sophisticated in their assessment of workforce cultures, their environments, and “strategic fit” between the expanding employers and the regional workforce and workforce environment. This workforce “fit” analysis is a growing part of global relocation programs and is creating external pressures and incentives for firms globally to develop better GTM programs and practices. In the future, the economic support now conditioned on financial viability will be balanced with an assessment of GTM scorecards or assessments.53 Moreover, we will see a rise in “accountability” for organizations managing global workforces, with an increasing requirement by local communities (government, labor organizations, and EDOs) that global employers contribute to the long-term development and stability of the workforce – not simply create temporary jobs.

LESSON #7: Global Workforce Technology Matters Technology is at the heart of effective global workforce management. Technology represents a major part of the multi-national’s ability to capture global workforce advantages and to source, recruit, hire and develop the global workforce. Unfortunately, far too often, corporations attempt to apply technology as a panacea for human issues – such as the needs for global employers to treat people as individuals. Our focus now shifts to the role of technology in supporting the development of the global workforce and identification of the pre-requisite components of a state-of-the-art global workforce solution. This technology exploration will avoid traditional technology debates regarding the integration of solutions (ERP versus HRMS versus Best of Breed technologies) and instead focus on the more advanced functional requirements for software solutions supporting the global workforce (GWSs – global workforce solutions). Indeed, we begin this discussion of technology by noting that few, if any, currently marketed solutions actually constitute a complete GWS – a system capable of adaptively supporting the multi-national workforce. We limit our examination to best technology practices and a forward-view on the components that state-of-the-art GWS systems offer or will offer in the coming years.

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The field lesson for multi-nationals is simply that
technology matters and that global workforce challenges have numerous associated information technology challenges. Multinational GTM organizations require the ability to share workforce data dynamically across cultural boundaries, in multiple languages, subject to transitory local workforce and data privacy laws and regulations, and at an acceptable ease and speed – through flexible, re-configurable processes that make it relevant to a fast changing global business. This requires companies to leverage appropriate advanced information technology. In this section, we examine some of the more advanced and expected workforce technology horizons. (1) Localized Solutions, Data Warehouses and System Unification– The Next Horizon Enterprise Resource Planning solutions (ERPs) set the standard years ago on multi-language and multi-currency capabilities within workforce software. Today, most “best-of-breed” solutions support multiple languages and currencies as well. In addition, these solutions support “global” business processes – meaning that the systems are adaptive and integrate-able with non-compatible solutions – in the global talent management solutions arena. This adaptability becomes critical to the support of disparate workforce processes and systems across regional and national workforce boundaries. The next horizon for global workforce solutions is the ability for the solutions to support flexible profiling of the local workforce environment and then to drive business decisions, processes and policies based on the data. The development of solutions that build cultural understanding, register local regulations and legislative requirements and support localization of workforce systems will usher in an era of better global workforce support.54 Tetu agrees:

“The most important attribute for successful GTM is culture. Language barriers are easily broken, legal environments require compliance; however it is an understanding of and a sensitivity to a local workforce’s culture that ensures people—and that is what we are concerned with for the global workforce—feel valued. As all HR practitioners know, this is the first step in engaging the workforce

to contribute to the organization’s success. This is why, when, for example, staffing technology is deployed on a global basis, it is imperative to have it configured to do business the way the local region does business. Translation is easily accomplished for most enterprise software solutions, however the ability to change business processes and workflows according to local culture and regulatory environments requires considerable design forethought and rigor applied to ensure enterprise staffing technologies can serve widely varying cultures and yet continue to provide data for the corporation as a whole.” While it is not realistic to expect or depend upon software solely to expand the multi-national understanding of workforces regionally, it is within the bounds of technological possibility to imagine multi-nationals with databases of regional workforce metrics, benchmarks and cultural attributes. And business application software solutions that flexibly drive workforce decision analysis and workforce administration on the basis of these dynamic inputs. In the end, the result will be solutions that actually treat people as people – defined by local workforce environments, managed by software driven structures, processes and policies that are localized and culturally relevant.
The GTM technology challenge will also be a data challenge. The predicted GTM systems will require the development

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of more robust global talent databases, which process
the myriad of disintegrated and integrated data sources (internal and external) that will be accessed and leveraged by workforce executives to manage select regional workforces - using profiles, demographics, trends, benchmarks, metrics, productivity measures and a host of other data inputs not currently part of the integrated workforce data warehouse referred to in principle 7, page 27. 2) Universal, Centralized and Flexible Solutions – The Foundation for Workforce Advantage Whether a software system is focused on recruiting, sourcing, administration or development of workers, if used in managing the global techforce it must be adaptive locally and still centrally supported. With the advancement of web services and other tools applied to automated recruiting and sourcing in the past few years, many multi-nationals that have invested heavily in these solutions (including advanced recruitment web sites and candidate relationship tools) may be lulled into technological complacency. Yet, recruitment and sourcing is the foundation of any GTM system. Without effective recruiting (and redeployment of existing staff) and the ability to acquire and deploy the right candidates at the right time, corporations will expend much higher costs to train, manage and develop global workers. In the global arena, the recruiting solution becomes the “community outreach” program – tapping into unknown labor markets, building a brand with the local workforce community, and establishing the earliest reputation of the employer. Because of the crossing of national and cultural boundaries, even the content of the website and the wording of the job positions become critical. Relationship building with candidates and vendors takes on heightened complexity and urgency. For candidates, the recruiting solution may be the “only” contact or knowledge the potential hire ever has with the employer. A single bad impression might not only eliminate the chances of recruiting the candidate, but it might lay the foundation for a negative brand. Similarly complex, vendor management can become a quagmire as multi-nationals try to integrate the business practices for local staffing firms into their corporate systems. In the global context, normally decentralized staffing industry systems tend to be even more unpredictable and software systems even more diverse. The single best approach to preparing for this complex global recruiting challenge is to select global workforce solutions vendors who are GTM “experts” and have proven experience and a credible

track record supporting the global workforce solution challenges of their customers (the more complex, the better) and advancing the ideas, science and “thought leadership” of global talent management. While the quality and advancement of the actual technology solution always matters, the vendor expertise is required to bridge the software to the workforce realities encountered in the field. Whereas the software functionality is dynamic and evolving, the global workforce expertise of the supplier, and its commitment to being a global player (both evidenced in part by its multi-national customer base and global workforce project record) should be a constant asset,

producing lasting and continuous support to its multinational customers who are engaged in building new workforces globally.

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CONCLUSIONS AND SUMMARY Our examination of GTM principles and field lessons for building the global workforce is really only the beginning chapter of the next era of global labor and talent approaches. The next decade will define the tangible future of the global workforce and the operational corporate definition for global workforce success. If the last decade has taught us anything about workforces, it has taught us that culture matters (whether we acknowledge it or not), that compensation, however important, is only one motivator (which varies in impact from region to region) and that workforce leadership is borne of regional and local workforce understanding and sensitivity. With these GTM principles and lessons, the savvy multi-national enterprise can progressively build a GTM mindset and strategy which leverages people globally and develops, combines and links their skills and talents in a balanced manner using best global talent management practices and state of the art technology. Only in this balance can a global firm find the foundation for sustainable global growth, strategic global workforce advantage and the sought after long-term global benefits of competitive advantage – high worker productivity, loyalty, commitment and innovation. If this statement is true now, it will only become more so as workforce behemoths including China and India bring more balance to the world economy and begin to assert their inevitable dominance of the global labor market.

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ACKNOWLEDGEMENTS: The authors would like to acknowledge the support of HCI Global Talent Management Panel members: Gerard Broussard, Jon Walker, Benoit Leclerc and David Creelman for their review of our research outline and drafts and for their thoughts, ideas and first hand examples of global talent management. In addition, we would like to thank Louis Tetu, Peter Cappelli, Rudy Karsan and Row Hensen for their contributions as expert interviewees. The dozens of books, articles and white papers we relied on are listed in the footnotes along with their authors. The Human Capital Institute extends special thanks to Taleo (formerly Recruitsoft) for its principle sponsorship of this paper..

We also acknowledge the support of all our Founding Partners: • • • • • • • • • • • • • • • AIRS The Association of Executive Search Consultants BrassRing The Center for Talent Retention Eliyon Hrsmart Kenexa Monster Peopleclick Recruitmax Talentology Taleo TruStar Solutions Unicru Webhire

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About The Authors
JOHN CHAISSON – CEO, Global Workforce Solutions John Chaisson is the CEO of Global Workforce Solutions, Inc., located in San Francisco, CA. John has been a active innovator in defining and developing global workforce management solutions for over a decade, and is widely sought for his advice in areas of workforce optimization, business strategy and alliance development, John sits on the boards of multiple high-tech ventures in the San Francisco Bay Area. John also consults to governments on the effectiveness of their economic development initiatives as they relate to human capital.

ALLAN SCHWEYER - Executive Director, Human Capital Institute Allan is a noted recruitment analyst, speaker and author of the recently published Talent Management Technologies (John Wiley and Sons). Allan has been involved in HR Technologies since 1994, when he pioneered e-recruitment solutions for Human Resources Development Canada. Prior to being named Executive Director of the Human Capital Institute, he was a senior researcher, analyst and consultant with HR.com and the editor of the HR.com staffing vertical. Allan writes a weekly column on talent management for Inc.com

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About The Human Capital Institute

Recruiting, Hiring and Strategic Human Capital Management are the most powerful levers for innovation and growth in today’s knowledge economy. In fact, corporate market value is increasingly defined as the sum of human intangibles - ranging from the public perception of a company’s intellectual capacity, to it’s perceived ability to create new solutions, enter new markets and respond to change. In this new world, HR functions are rapidly fragmenting - and as companies outsource traditional HR administrative functions, a new internal leadership model is emerging. Talent acquisition, empowerment and metrics are moving to center stage, and a new business-driven HCM specialty is forming to drive performancebased strategies towards new growth, better bottom-line results and increased value. The Human Capital Institute is a membership organization, think tank and educational resource for professionals and executives in recruiting, HR and talent management who are at the forefront of this new movement.

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About Our Sponsor

TALEO CORPORATION Taleo Corporation (formerly known as Recruitsoft, Inc.), is a leading provider of enterprise staffing management solutions that enable organizations to establish, automate and manage worldwide staffing processes for professional, hourly and temporary staff. Taleo customers use the company’s solutions to enhance the quality, productivity and satisfaction of their workforces. Taleo solutions incorporate resource allocation principles similar to those employed successfully in supply chain management automation to more accurately match total labor demand and supply across complex organizations. Taleo customers include Dow Chemical, Honeywell, HP, Mercer Human Resource Consulting, P&G, Starbucks Corporation, SUEZ, UnitedHealth Group, Washington Mutual, Yellow Corporation, among many others. Taleo is headquartered in San Francisco, CA.

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