Implement Best Practices
The top multinational corporations are already applying a number of best practices, such as benchmarking their employees with international standards, developing an effective balance of local and expatriate talent, implementing systematic mentoring and coaching programs for local managers and defining appropriate succession programs for their central organizations. Moreover, they have begun to develop new approaches to overcome obstacles, such as “over-hiring” local talent — that is, purposely hiring a greater number of employees than needed to counter lower stick rates and other factors. The assumption is that, as the best of those individuals get promoted, the resulting improvement in the overall productivity of the organization will more than offset the extra cost of the additional new hires.
But recruitment remains a problem. When conducting a global study on senior talent, my colleagues and I found that, although CEOs were personally very involved in recruiting senior managers (as they should be), their approaches varied greatly. Specifically, they had striking differences in the number of candidates they would consider in a search, the assessment methods used, the number and types of participants in the assessment and decision processes, their biases for either external or internal candidates, the support for integration, the role of human resources and the use of outside professional help. We found that these individualistic approaches didn’t seem to be a function of company, sector, market or circumstantial needs but were rather the result of implicit personal preferences and organizational traditions that don’t seem to follow any model of best practices. This should not be surprising, given the widespread lack of formal education on the topic. Nevertheless, shouldn’t such a crucial practice as recruitment adhere to some basic set of empirically proven practices?
HISTORICALLY, THE PROCESS of making great people decisions achieved a major leap in progress around the time of World War I, when massive hiring led to the development of much better testing and interviewing techniques. Unfortunately, little has happened since then. Nevertheless, in the same way that Japan’s intense need to avoid waste and increase productivity turned that country into the source of numerous best practices in manufacturing and operations, the unprecedented challenges of hiring and retaining talent in emerging markets will eventually produce huge improvements in that area.
Already, a number of multinational corporations have begun to make the transition to competing for talent on a global basis. SAP Aktiengesellschaft, for example, had been struggling for years in the United States. Then the German software company changed its hiring practices, which had favored German expatriate executives, to attract the best local talent and has since become a major player not only in the United States but worldwide. Similarly, Nokia Corp. has made drastic changes to its compensation scheme, which used to follow traditional Finnish practices but is now more regionally based, in order to become a more powerful global competitor for talent.
Given the numerous challenges, the edge will go to those companies that are proactive in mastering their people decisions so they can hire, develop and deploy the best talent on a worldwide basis. In the future, such organizations will be able to adapt faster and not only survive but prosper in this new environment of increased globalization.
(Reprint #:49109)
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