Strategic human resource management for global business expansion
Understand the value that strategic human resource management brings to global business expansion.
What is strategic HRM when viewed in a global context?
Strategic human resource management, otherwise known as ‘people strategy,’ SHRM, or strategic HRM, relies on an understanding that the success of a business is dependent on its people. At its core, strategic HRM is a framework through which human resource strategies are developed and implemented – including the hiring, management, and development of staff – to support an organisation’s long-term goals. SHRM is a bridge which connects human resources to the goals of the company; goals such as entering a new international market.
Strategic human resource management can be of particularly great use to enterprises expanding abroad. With a nuanced strategic HRM framework in place, businesses can explore global expansion confident that their HR departments are equipped to facilitate the growth, whatever the end goal. Because people are responsible for almost every facet of a business’s operations, strategic HRM can target the improvement of a wide range of processes: firstly, by assessing the current human resource situation across all relevant departments and, secondly, by developing a range of intersectional strategies to address all the identified weak spots simultaneously.
For example, in the context of global business expansion, strategic human resource management might deploy strategies to:
- Increase productivity in an overseas office by relocating an employee with a proven track record of leadership, whilst simultaneously assessing and addressing the satisfaction, wellbeing, and additional needs of the workforce in question.
- Streamline the establishment of a business entity on foreign soil by creating a local compliance taskforce and hiring from within; at the same time engaging the services of an independent contractor with expertise in permanent establishment (PE) and its risks.
- Develop an updated, equitable promotional structure for international hires in a country with a distinctly different work culture, whilst addressing the challenges of implementing that structure remotely.
How strategic human resource management can benefit global companies
To be effective, both in the short and long-term, global expansion requires an HR strategy that puts the right people into the right jobs, for the right cost, at the right time and in the right place.
Effective expansion requires strategic HRM to attract, hire, retain, encourage, and promote the best talent from around the world, whilst ensuring that this international network of people is equipped to unilaterally push the company through clear objectives toward a final goal.
Currently, however, though international interdependency is entrenched in global business, it can be argued that most multinationals simply do not have the requisite leadership to perform effectively across all of their world markets.
This is where strategic human resource management for global business expansion comes in. The wide-ranging people strategies which SHRM can be used to develop may benefit expanding businesses in diverse ways , such as:
- Identifying the strengths and weaknesses of various departments in preparation for the expansion – with specific regards to the human resources available – so that HR strategies can be devised to address weak spots. This is akin to strategic workforce planning, and indeed SWP should be a part of effective strategic human resource management.
- Reframing the expansion within the context of short-term objectives and longer-term goals, thus helping to triage the expansion’s various steps and focus on the most pressing first.
- Permanently aligning business strategy and human resource strategy so that the two work symbiotically, informing each other in the pursuit of the same goals and objectives.
- Factoring key HR strategies for business expansion – such as global mobility and management of a remote workforce – into a wider, cohesive SHRM framework, thus aligning these strategies’ objectives and streamlining processes necessary to international success: such as global onboarding.
- Developing a culture of employee satisfaction, wellbeing, and continuous improvement, and in doing so foster higher employee retention rates, productivity rates, and upward mobility within the company.
- Creating an accessible and flexible framework for evaluating the effectiveness of HR strategies and policies, so that they can easily be altered, reinforced, or abandoned as necessary, depending on the status of a business’s international expansion goals.
Strategic HR examples
There are no universal strategic human resource management examples, which work for every business, in every situation, at every time. In fact, the best SHRM models are developed and adapted from the ground up, to suit the unique needs of individual businesses, the unique characteristics of their people, and per their current goals.
Having said that, there are some strategic HR examples which serve to illustrate the benefits of doing SHRM correctly. Take Anglo-Dutch multinational Unilever , for example. For decades, Unilever has given HR a seat on its board’s executive committee, with a focus on developing in-house talent. As a result, over 95% of Unilever’s international managers are ‘home grown', or in other words have been hired, trained, and raised to their positions using strategic human resource management.
Similarly, in 1995 IBM effectively reversed its internal and international HR strategy of cutting costs by cutting jobs abroad. The giant multinational revised its HR policies using strategic HRM with a global twist, and realised that it instead it could invest in the value of its people and so increase profits because, in the words of IBM’s director of international mobility, “We are a growing service business -- our people are what our customers are buying from us.”
Though there is no one-size-fits-all model for strategic HRM, there are three major types of strategy which can be effective additions to the overall SHRM framework in different situations. These are:
A type of strategy which seeks a new direction from an existing HR policy, without completely reinventing the wheel. Change strategies could be employed to aid global business expansion where weak areas can feasibly be strengthened. For example, changing the focus of hiring from favouring people living near the business’s HQ, to local people living in the overseas market.
A type of strategy which seeks to strengthen existing practices and policies identified through SHRM as already being strong. Such strategies could include strengthening the company’s ability to hire remote talent by partnering with a global payroll provider to ensure your remote workers are paid fairly and efficiently. This may free-up human resources in payroll and finance to refocus their efforts on making the global expansion as cost-effective as possible.
A type of strategy which demands the introduction of completely new ideas and original processes. Let’s say, for example, that your business is new to operating internationally and has no existing framework for facilitating overseas production and distribution of goods – with the goal of increasing annual revenue by 50%. Using strategic HRM, you could innovate with what you do have experience in – producing and distributing locally – to facilitate the same abroad.
How to implement global strategic human resource management: 5 steps
Having assessed the definitions of strategic HRM and its value to international business expansion, we’ll explore 5 of the key steps you may take when developing your own framework.
Step 1: Set your long-term goals and break these down into shorter-term objectives
The first and most important step in strategic human resource management is the evaluation of your company’s long-term goals. SHRM will revolve around and inform these goals, and so to develop that framework you must first have a clear understanding of what you want to use it to achieve. Doing so will also help you to better evaluate the effectiveness of your HR policies.
Step 2: Predict your future HR requirements
In order to meet the objectives, and ultimately the goal(s), outlined in the first step, how many employees, with what skills, and in what positions in what departments, will be required to meet those goals? You should make these estimations based on current operating levels, as well as operating levels desired in future. Knowing the difference between what resources you currently have and what resources you will need in future, will help you formulate SHRM strategies to acquire the right people at the right time.
Step 3: Determine the additional resources required to meet your goals and objectives
In addition to predicting the employee resources your business will require to successfully expand abroad, you’ll also need to determine the various other resources necessary to success. These include financial, material, and inter-departmental resources. Conduct an audit of your existing resources to identify areas in need of improvement, and then develop a range of SHRM policies to tackle these issues.
For example, in expanding abroad you may discover that your workforce does not yet have the inter-departmental communication channels necessary to work effectively and efficiently across time zones. Or perhaps you find you do not presently have the financial resources needed to launch a new product in your target country. Consider whether strategic HRM could help you to reposition key players in sales and marketing to help improve projected profit margins, thus solving your financial resource needs.
Step 4: Put your strategic human resource management plan into action
Following the all-important preparatory stages, you can begin to put your SHRM plan into action by staggering prepared policies according to which objectives much be met first, and in which order. Your first step may be to recruit new candidates into the right positions both at ‘home’ and abroad, for example, though this can easily change depending on your business’s specific needs.
Step 5: Review, evaluate, rework and repeat
Lastly, as with many important global business strategies, SHRM must remain flexible and open to adaptation. By setting clear objectives and goals within the context of your business’s strengths, weaknesses, and projected requirements, you should have fairly obvious markers by which to measure your strategy’s success. Assess how each facet of your overarching strategic HRM framework is performing, and adapt them as you go until satisfied with their performance – always remembering that the interplay between each strategy will be crucial to the overall achievement of your business expansion goals.
Recapping the importance of strategic human resource management for global business
The idea of HR as a department operating independently within a company must be consigned to the dark ages. Human resource management should be strategic, and intertwined with business strategy, following the understanding that a company’s people are fundamental to its success.
When strategic HRM is implemented effectively, its policies and practices can be utilised to achieve any number of goals and objectives, across any department: from improving productivity and employee retention, to profit margins, global compliance, and international leadership mobility. For assistance in building your strategic HRM framework, consider working with a dedicated business expansion solutions provider.
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