What is Truly Meant by “Global”?

Globalization is near the top of many organizations’ agendas and not without good reason. The growing populations and economies in China, India, Brazil and other fast-developing countries will likely continue to represent fertile ground for market growth. They also offer the sustained potential of reduced cost pressure thanks to labor and regulatory differences. As a result, organizations are finding it attractive to recast their structures along global lines. There are three principal reasons: It helps them manage risk, it can help reduce operating costs to generate a more effective return on investment and it can ease the way to a greater reward through market growth.

However, with all this talk of globalization, there still is not a clear definition of what “going global” means. Defined as everything from market expansion to end-to-end standardization, it is apparent that not only are there multiple paths to achieving the global vision, but determining which path an organization should take is the critical factor in reaching the globalization goal.

Globalization: Building the right infrastructure is critical

Globalization is not something that just applies at the business strategy level. The appeal of globalization and the pressure to get there fast has put an enormous amount of pressure on functions, such as HR, information technology (IT), finance, procurement and legal, as they are the key to building the global infrastructure and foundation required to achieve this business objective. And with the need for a globally diverse and highly mobile talent base on the top of most organizations’ global agendas, HR is often at the forefront of the globalization mandate.

Many HR organizations have responded to this call for action by aggressively looking to standardize across the relevant elements of the HR operating model — people, process and technology. The thinking has been that in order to support the organization’s objective to become global, there needs to be one system, one support structure and one set of processes when it comes to HR activities. But, when looking at their experiences, those organizations often come to find that taking global to the extreme may not be a cultural fit and may be unnecessary to achieve the required level of globalization. In many cases, HR leaders who push the global agenda too far find that what started as a seemingly effective foundation for their transformation yields a step backward in the evolution of the HR function and a giant leap backward toward achieving “global.”