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Common social capital practices

We also found a strong trend in how organizations develop their social networks and interactions among employees. One practice geared toward the use of social capital in sharing knowledge across borders was found in annual and semi-annual conferences of the top HR professionals. Most every company has this form of social capital going on where HR managers can get together on a regular basis and assess what is going on in terms of global HR. Such meetings are necessary but wholly insufficient.

In our interviews we found that while top-level HR meetings for sharing knowledge help push through a more standardized way of operating, they do not get at the hearts and minds of the people actually running the local HR units. In fact, much of the information exchanged at these meetings never gets down to the subordinate HR groups.

One response to this top-level knowledge sharing is found throughout the companies in our study as well. This is to hold monthly or quarterly regional and/or country meetings. Here is where much of the nitty-gritty details are discussed on what practices are best, what practices can help others, and what problems can be addressed by another subunit who has had a similar problem in the past. While these meetings are also useful for knowledge sharing, they both lack any strength in making sure the shared practices are actually applied and integrated.

46 / 52 Another common practice is found through participation in academic groups and HR societies. Such groups are primarily most helpful for networking and sharing ideas with other companies. However, there is also some element of knowledge creation that goes on where organizations can learn from the latest research of innovative and cutting edge practices that might then be applied to their own organizations.

However, the difficulty here lies in the application of these practices. Often the practices are transferred with different and difficult contexts, creating causal ambiguity and application complexity for the recipient firm.

Finally, communities of practice are gaining ground in HR functions. Many are still experimenting with the notion of communities of practice, while others have developed full-scale communities supported by IT systems and incentive structures.

For example, one firm has built communities of practices (CoP) with the following

objectives:

–  –  –

The priorities of the various CoPs are discussed internally and approved by the HR Leadership team. Small task forces are then set up within a group to work on particular policy issues, researching a topic both internally and externally to the company. These teams report back to the CoP with suggestions, the CoP then decides direction, and the HR Leadership team approves the final policy document. In addition to the policy itself, the CoP also develops appropriate tools and deployment materials such as leaflets and videos The work of the CoPs has resulted in less difference between countries in HRM policy, although variety in application does exist. Business units do not need to gather information for every country in which they are based, but can rely on the CoP to come up with a suitable baseline policy which can then be implemented with a local spin where necessary. Ownership of the policy has also been created through the multi-stakeholder nature of the CoP. There are also efficiency savings as previously every HR team was inventing their own policies resulting many different solutions and priorities. Equally, there is now a consistent employment experience for employees across the company.

In one division, communities of practice have been set up supported by a web-based tool which offers knowledge sharing topics. Individuals can enter information they want to share as well as read what others have posted. Contact information is also provided so that people can discuss things together further. People are rewarded for participating with small gifts or dinner as a motivational gesture. There is also another web-based system, which allows people to enter their own skills, so that people can then search when they need expertise in a particular area. International meetings and networking events also help to build a basis for contacts which can then be continued via less personal methods such as email.

47 / 52 Again, CoP’s can be effective if done right, but very expensive and time consuming if not done correctly. We would recommend that sufficient benchmarking topmanagement support is needed to spearhead such practices. If successful, however, CoP’s can help an organization create new practices, share practices across borders, and even integrate those practices to some extent.

Unique social capital practices

We found some rather unique practices related to social capital. Such practices proved to be more unique simply because they broke against what many companies tended to do of turning inward for knowledge sharing. These unique practices actually encouraged individuals to develop relationships with local and global clients, businesses, etc. to develop ideas for new and innovative HR practices. Though time consuming and potentially difficult with regards to information secrecy, such efforts might actually give HR groups a competitive advantage by understanding how their competitors, internal clients, and even non-related organizations operate. As stated by one manager in one of the companies, knowledge management should help the HR function connect the creators of knowledge with the consumers of knowledge who do not communicate due to geographical dispersion or functional partitions. The goal is to have virtual communities able to seamlessly exchange knowledge to aid various productive functions.





Common organizational capital practices

The commonalities in organizational capital practices tend to hover around IT systems. It was highly common for most organizations to have a centralized IS knowledge management tool that could align the activities and practices of all the HR sub-units. Within this global system, the complexity level ranged. Some companies had extremely elaborate systems and some had very simple—with a few data bases here and there. Some of the systems that were common included web space on the intranet to share ideas. For example, with one company the HR Intranet contains a ‘best-practice’ toolbox, covering areas such as performance management, change management, management audits and recruitment. A country can put its own best practice on to the system, not judged by head office. This tool is available to both HR and line managers.

Another tool is found in internal publications, newsletters, best practice manuals, and experience databases. All these tools are helpful to organizations in applying and capturing knowledge, but do little to promote the creation of ideas. Likewise, these tools do not mean that a company will share ideas either. A knowledge sharing culture has to be in place before any such systems can even be useful to the organization.

Another concern is that as organizations turn to standardized IT systems for the knowledge solutions, they add more complexity and hassle to the lives of the HR members. Research by McKinsey & Company has shown that organizations that have too complex of an information system are likely to perform more poorly than those with a more simple system.

48 / 52 Unique organizational capital practices Some of the more innovative practices we identified in companies consisted of creating expert knowledge maps and HR webcasts. Webcasts acted as a cost effective way to bring people together without having to have them in the same location. If done right, webcasts can be effective tools with interactive powerpoints and media that can make a meeting as personal as possible.

In reference to the expert knowledge map, one company decided that they wanted to share best practice, but that there must be a qualitative assessment of what is a ‘best’ practice, rather than an arithmetic metric such as ‘time to fill a vacant position’. The arithmetic metrics are considered less comparable as they do not express anything of the context in which the department is operating. Once the best practices were determined, departments were encouraged to contact those departments ranked highest if they are not there themselves. Departments with good practice in a certain area are also invited to present their ideas to others at Regional Council meetings.

Departments not scoring highly in an area are encouraged to improve performance before the next meeting of the Regional Council. Although the best practices are stored in a database, the most important information held is the contact details of the person who can tell more about it.

Geographic notes

We saw a swing across the paradox of local innovation and global standardization.

Most of the companies were pushing more toward standardization, as the globalization surge has left many local units unstable and inconsistent across the company. However, many organizations are also seeing greater benefit in local knowledge that will allow them to maintain a competitive advantage. Such thinking tends to be geared more toward the strong push for being closer to the customer. In the case of HR, this change has largely been facilitated by learning programs geared to develop more strategic thinking among HR leaders located in the various field locations.

In Asia, for instance, one geographical HR leader noted that management development in China is going to need to be quite different from the programs used in the U.S. She stated, “we have really had to operate in a really different mode than in a mature environment like in the U.S.”. What this means is that while many aspects of HR practices should be standardized, there are certain aspects that must be locally adapted.

Another benefit from being more locally oriented is the amount of information on HR practices that is shared across borders. For example, one HR manager reported that her HR community was very well linked. Much of this sharing can be attributed to the principles of being company and customer oriented no matter what central rules might be broken. Another manager explained the situation in this manner: “the US is not always the benchmark”. There are many new and innovative practices that come from emerging markets and there is an equal amount of sharing back and forth.

Regions are turning to other regions for ideas on HR practices. This will ultimately help companies maintain their global integration. Hence, we see a stronger tension than ever before within the global firm. One is the pull from globalization and the 49 / 52 chaos it can create as companies rapidly enter and expand markets. The other is in the need to constantly innovate in a dynamic environment where global competition is stronger than ever before.

50 / 52

9. CONCLUSION This research has sought to identify the ways in which multinational organizations manage people in structures that are diverse in terms of geography, cultures and in some cases, strategy. International expansion requires attention to both consistency of approach and flexibility of use and the constant balancing between the need for global standards on the one hand and local market sensitivity on the other was a feature of all our organizations. We have highlighted innovative HR practices, how HR functional excellence is sought, and how the knowledge and learning within HR are elicited and developed within a sample of global organisations. Using a variety of methods, the work overall has shed new light on how organisations manage people within and across borders.

The centrality, of good people management was repeatedly stressed, and not just among HR professionals, but at all levels of the organisation. In the area of HR practices, we saw similar HR architecture across the companies, which gives support to views on convergence. Rigorous recruitment and selection procedures; training and development at all levels, developmental appraisal and performance-linked pay,.

flexible job design, reduced organisational hierarchies; team working; empowerment and two way communications were common features. Considerable attention placed on values-based employment practices and socialization mechanisms within the organisations enabled prized outcomes of cultural fit of employees, commitment and retention to be increased. In the HR function, excellence revolved around a small core of strategically-enabled and talented managers supported by e-enabled HR provision and shared service centres to deal with the core administrative processes. With knowledge and learning, though knowledge capture and dissemination provokes a centralizing tendency, it was clear that organizations are trying to focus on local knowledge and ensuring there is not an HQ-centric view of the world.

The effectiveness of international HR is contingent upon the leveraging of human, social, organizational capitals at all levels and sections of the global business. These three capitals, which together come under the umbrella term `intellectual capital', are essential to deliver and support business goals. However, as a function of organization and as a corporate activity, intellectual capital effectiveness is dependent upon skills, resourcing, relationships, informal and formal structures and processes and, perhaps most significantly of all, the meaningful dissemination and capture of practice related knowledge throughout the organization.

The implications of the study are that is not simply enough to adopt 'best practice', or attempt to develop innovative practice in isolation, but organizations must ensure that practice formulation and execution is (a) aligned with the business need at all levels, corporately and locally, and (b) integrated not only with other HR / HC practices, but with the human, social, organizational elements of the organization upon which its effectiveness is dependent. The challenge for global HR functions is to develop the necessary competencies and skills to leverage and broker relationships with disparate line management to ensure that HR practices are aligned with the entire scope of the global business. In all of the case firms, human capital effectiveness is rarely achieved through corporate control or the mandating of practice adoption within the organization, but rather through persuasion and positioning and the education of the line of the value of human capital.

51 / 52 Increasingly, the trend within large decentralised multi-nationals is to centralise responsibility for the design of human capital practice and decentralise responsibility for implementation and long term management to line management. The most common division of responsibility felt best suited to promoting alignment through the organisation, globally and locally, is a multiple-stakeholder approach where senior management, functional specialist and generalist line managers consult and deliberate on a regular basis through formal networks dedicated to the formulation of best fit practices.

A crucial element of managing people effectively depends on the sustained engagement of line management. The management of human resources requires that line managers effectively execute the disseminated policy and ‘own’ the process and seek to ensure continuous improvement and alignment with the changing business need at the level of the local organisation. However, experience at the local level would suggest that often a lack of line engagement is responsible for the ineffectual implementation and subsequent operationalisation of high performance work systems.

From our survey, we saw evidence in some areas of a gap between the use made of an HR practice or process and its perceived effectiveness. This may indicate that a difference between rhetoric and reality is present, which may be due to either faulty operationalisation of the practice or a lack of expertise or the right attitude in delivering it. Either way, tightening up is essential. A highly salient and positive fact is that in none of the companies did we find a hint of complacency or the feeling that they had hit on a `perfect' system. Constant attention to improvements in efficiency and effectiveness marked the attitudes of all those we met.

More than any other factor, the challenges mentioned above and the ability of the firm to derive value from either leading or innovative HR practices are determined by the role, strength and quality of the organisation’s leadership. Leadership capability therefore, is central to the effective management of human capital, be it leadership in terms of policy determination at design or leadership in terms of the immediate relationship with employee in line functions. It is quality of leadership that is ultimately responsible for ensuring congruence between the various aspects of the organisation, its environment, strategy and structures, and tactically reconciling the inevitable but unforeseen tensions inherent within large complex organisations as they arise.

52 / 52



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