HR function structures for international businesses

   May 07, 2020

Harvard Business Review believe digital disruption is impacting three key areas where global human resources play a part

Enterprise: the huge volume of data we can now access and analyse is accelerating the pace of enterprise. Global HR has the opportunity to foster innovation and agility through employee development and encourage enterprise with a partnership ecosystem.

Workforce: career length is increasing but so is the need for continuous learning so employees can keep up with changing demands for their skills and talents. Many employees will end their careers performing roles that did not exist when they began, highlighting the essential role that training, and career development must play. 

Process: most industries do not fully understand how digital transformation is going to impact the way they get work done. Many, like the retail industry, are in a state of flux. Some retailers have embraced digital transformation and are offering seamless omnichannel shopping experiences whether online or instore while others lag behind. The reality is as,change happens in every industry how work gets done will change in ways we can only imagine. Global HR must have a model that enables workforce collaboration to anticipate the need for process change.  

The primary goal of an international HR department is to ensure your business is able to meet its strategic goals by finding, recruiting, developing and retaining suitable employees in multiple locations around the world. 

For an international business, one of the challenges you are likely to face is how to structure your HR department. A study by Mercer identified three primary ways multinationals structure people management departments:

Centralised: HR administration and decisions are all made in one location, often from the head office of the business in question. Policies and procedures do not vary much by region. Mercer identified this as the most common HR structure in global businesses today and for 70% of them it is proving successful. 

Decentralised: HR administration and decisions are made locally. They vary by region and there is no centralised support available. Mercer found 15% of businesses operated a decentralised model. 

Hybrid: a combination of the above where some HR administration and decisions are made locally while HR direction and support is also provided by head office. The Mercer study indicated 35% of companies operated a hybrid structure.

For many businesses, the best HR function structure will depend on a number of factors:

  • the business history
  • industry
  • levels of recruitment
  • compliance issues by market

If your business relies on expat employees to establish or grow your people department in new locations, ensure you protect their health and wellbeing while they are on assignment with international health insurance