BUSINESS STRATEGY / GLOCALISATION

HUMAN RESOURCES DIRECTOR

not address the underlying drivers of behaviour and, eventually, people will simply revert to old and familiar ways. This is because the impetus to change does not reach the deeper layers of culture, which is comprised of the shared purpose and meaning within the group as well as individuals underlying values and beliefs (see g.2).

Acting locally,

THE CHALLENGE OF CULTURE CHANGE

Structures Management Systems and Symbols Organizational Behaviour and Norms

Glocalisation calls for HR executives to mix both global and local initiatives. When executed correctly, the benefits can flow evenly between local subsidiaries and the corporate headquarters based overseas. Andreas Raharso outlines how to make it work
In spite of the global recession following the 2008 nancial crisis, globalisation continues at a steady pace. Some would argue that the primary driver of globalisation today is multinational corporations (MNCs), and Australian rms are also aiming to compete on the global stage as indicated by the countrys increasing levels of outward foreign direct investments (see g.1).

thinking globally
As more Australian companies set up local or regional ofces in emerging and culturally diverse markets, HR professionals are being tasked with implementing sustainable human resource management (HRM) practices that are sensitive to local needs. HR departments traditionally rely on tools such as rewards or training to align employee behaviour with organisational goals. However, while these tools alone may be quite effective on home turf, there is also a need to align and glocalise a portmanteau that combines global and local these initiatives when it comes to foreign subsidiaries. Furthermore, simply targeting behavioural change, especially in a place with a vastly different culture, is not likely to produce lasting change even if it is succeeds initially.

Easily Observable Deep characteristics that lead to transformation and longer-term success

Underlying Beliefs and Values Shared Purpose and Meaning

Source: Culture Transformation Report: Sustaining Culture Change. Hay Group 2012

Figure 2 - The highly visible aspects of culture are only the tip of the iceberg; deeper drivers of change are not easily observable but have the power to change behaviour permanently.

AUSTRALIAN OUTWARD FOREIGN DIRECT INVESTMENTS (FDI) IN US DOLLARS

30 25 20 15 10 5 0

26 billion USD

11 billion USD
2004 2010

ORGANISATIONAL CULTURE AND GLOCALISATION

Implementing a new HR directive from HQ is essentially an exercise in changing behaviour. However, attempting to induce behavioural change directly is ineffective and does not have any long-lasting impact. Such an approach does

Figure 1 Australias Outward FDI jumped by 141% in just six years, an indication of Australian firms increasing expansion into overseas markets

The key to reaching these deeper layers of culture is to rst understand that culture goes beyond the most obvious facets of the day-to-day workings of organisations, and are instead embodied by structures, management systems and symbols, and organisational norms. According to Hay Groups model of organisational culture, culture is dened as the combination of organisational inspiration and purpose, motives and beliefs of individuals, and the norms and patterns of interaction of groups that drive both leaders and employees behaviours and results. In other words, culture is the fabric that provides meaning and, in the absence of clear directives, guidance for people in the course of their work. This means in the ideal multinational corporation, local and regional operations can be relied upon to act on their own initiative while still sharing a common fabric of meaning with the larger organisation. But how do you go about implementing HR directives that originate from HQ in a local or regional ofce that may have very different cultures and norms? A potential solution lies in the adaptive process of glocalisation, which as the portmanteau suggests, calls for HR executives to think both globally and locally.

To think globally, the question HR executives must as ask is, What is the personality of my organisation as a whole? Many senior executives struggle to answer this, but clearly dening this personality the set of values and beliefs that guide how employees think and act on the job will impact the way the organisation works. This personality of an organisation is central to the organisations global culture and is a key factor in not only achieving a companys goals, but also in attracting and retaining the best employees, creating a positive public persona, and strengthening relationships with stakeholders. Thinking locally, on the other hand, involves a commitment to understanding local cultural differences, especially those that underpin the business climate of the host country. Here, the question to ask is, What factors make this particular area unique when it comes to conducting business? An external subsidiary of the MNC, staffed with mostly local employees, cannot be assumed to reect the corporate culture of HQ in its entirety. Besides the socio-cultural differences that may exist, the lack of direct supervision from HQ means that the local or regional ofce may have developed their own routines and working styles. A locallysensitive approach to implementing HQs initiatives requires the HR team to recognise elements of local culture that are compelling enough to demand some level of accommodation. When recognising the need for an effective balance between the global and the local, there may be a temptation to see glocalisation as a continuum between a state of global consistency, under which universally-standardised policies are implemented as-is locally, and a state of local responsiveness, under which fully locally-tailored policies are developed. However, as we delve into the preplanning stage of the glocalisation process, we will see the two states should not be treated as part of a

Simply targeting behavioural change, especially in a place with a vastly different culture, is not likely to produce lasting change even if it is succeeds initially
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CASE STUDY: PHILIP-MORRIS

American tobacco company Philip-Morris mission, for example, is to develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products. After buying out Indonesian cigarette maker Sampoerna, Philip-Morris opted to accommodate its subsidiarys unique practices Sampoernas traditional belief in the power of the number nine was upheld and important meetings were held only on the ninth, 18th or 27th days of the month. Instead of mechanising the production process, Philip-Morris also maintained Sampoernas traditional method of hand-rolling cigarettes, which safeguarded the jobs of approximately 30,000 employees. Sampoernas practices must have been deemed compatible with Philip-Morris mission and thus approved, and this decision allowed Philip-Morris to break into the lucrative Indonesian market without compromising its own identity or risking crosscultural conflict and jeopardising local performance.

directives to local situations. However, the organisations overarching goals, as well as the purpose or intention behind any new initiative to be implemented, must also be considered. Near or at the beginning of the glocalisation process, HR executives must ask themselves: as long as an initiative stays faithful to its purpose or to the goals of the organisation as a whole, how can this initiative from HQ be tailored to t local norms? The key to effective glocalisation, therefore, is not to approach global consistency and local responsiveness as a simple continuum along which one is pursued at a cost to the other. Rather, there are certain issues that call for strict global consistency, namely the organisations meaning and purpose and the why behind any new initiative, while the how of implementation can be orientated towards local responsiveness.

COMING UP WITH THE PLAN

Having a proper understanding of how to start glocalising is more than half the battle won. Of course, in order to clinch victory one needs to move into the planning and execution stages. This is where we will not nd a one-size-ts-all solution; any in-depth discussion will need to be driven by the particulars of each case and host country, which will vary wildly. A framework comparing the global and local cultures can be useful to HR executives at this stage of the glocalisation process. Hofstedes cultural dimensions theory is one such systematic framework for assessing and differentiating national and organisational cultures. By describing the effects of a societys culture on the values of its members and how these values relate to behaviour, HR executives can classify a regions cultural values into scaled dimensions that facilitate comparisons with other cultures. The case of Finnish retail trade company Stockmann setting up its rst department store in Estonia is an example of how standardised HR policies can be strengthened by tailoring them around the local culture1. When the Estonian outt was rst established in 1993, performance management policies in the company were initially standardised across all geographical units. But within a few months of operations, HQ identied challenges arising from local cultural differences, especially in the area of personnel development. For the Finnish HQ, customer satisfaction was the central objective (ie the personality of the

organisation) in all its areas of business. One Finnish HR executive notes that as the company expanded into Russia four years earlier in 1989, the company had no issues with customer service as Russians are open and go more easily and naturally to customers. But in Estonia, the biggest challenge was to develop customer service skills. The same executive commented, Customer service isnt characteristic of Estonians. Estonians are a bit withdrawn, a bit passive, they dont start talking whatever with a stranger. To remedy this and ensure that HQs mandate of customer service was maintained, a local training rm was brought in to emphasise the training of customer service skills for Estonian employees. To further inculcate customer service in staff, competitions between departments were held and good sellers given bonuses. The inuence of Estonias reticent culture on the organisations personnel development program can be explained by Hofstedes cultural dimensions, specically the Uncertainty Avoidance Index (UAI). The UAI measures the way a society deals with the fact that the future is unknown ambiguity brings with it anxiety, and different cultures have learnt to deal with this anxiety in different ways. Estonias high UAI score of 602 means that locals have a high preference for avoiding uncertainty, and may also tend to be suspicious towards strangers. Therefore, from a socio-cultural perspective, Hofstedes framework allows us to understand why Estonian employees are passive and do not actively approach customers. In the end, the Finnish companys basic training and development practices for employees were the same in both the home and host countries, but staff

development programs in Estonia were localised to address the lack of customer service stemming from the reticent local culture present in the country. While the Finnish rms central objective of customer service was non-negotiable across all of its geographic units, the performance management and training systems in Estonia were negotiable, and were moulded to realise this central objective.

SUSTAINABLE GLOCALISED STRATEGIES

Once a modication to HR policy has been determined to be in the best interests of local employees, the plans for glocalisation must be communicated back to global HQ for approval. Although HR executives may introduce modications, it is ultimately crucial that HQ nds the glocalised form of the initiative compatible with the larger organisations aims. Otherwise, the global aspect of the effort would be nullied. Emphasising the win-win nature of the effort will go a long way in convincing HQ to give its approval to the plan and ensure that glocalisation efforts are supported over the long term.
1 Case adapted from: Ervasti Mia and Vesa Suutari Journal for East European Management Studies Vol. 9, No. 4 (2004), pp. 345-366 2 Esotnia Geert Hofstede: http://geert-hofstede.com/estonia.html

continuum.

GETTING STARTED
As a rst step, it is crucial to start thinking about what makes your company what it is the personality of the organisation mentioned earlier. This should be treated as a non-negiotable aspect of organisational culture. For example, a company that places a high value on individual merit in its management philosophy cannot, without creating an internal rift in its culture, start treating personal relationships as the primary determinant of career progression simply because it faces pressure to accommodate local customs. The organisations personality is an important consideration in the attempt to adapt global HR

The organisations personality is an important consideration in the attempt to adapt global HR directives to local situations.
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About the authors Dr Andreas Raharso is director, Global R&D Centre for Strategy Execution at Hay Group. Contributing author Senthil Sukumar, is a research and content strategist, and Moses Lemuel is an applied research analyst at Hay Group

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