Lessons from HR Overseas

We hear a lot these days about “thinking outside the box;” about searching in new places for new ways of solving our companies’ problems. It’s a useful concept. Our organizations aren’t the same as they were 20 years ago, so why should our management practices be?

But when you think of that box, that set of parameters that dictates conventional thinking, what does it look like? Is it your job? Your company? Your industry? To come up with truly innovative solutions, you probably have to search outside the boundaries of all three of these entities. However, there’s one more box you may want to consider peeking out of, and that’s the United States of America. As Michael Marquardt, professor of global human resources development at George Washington University in Washington, D.C., explains: “American companies think they’re the keepers of the best management practices. Consequently, they don’t try to learn as much as they can from other places.”

Whether U.S. business executives are arrogant or simply myopic is open to debate. What’s irrefutable, however, is that there’s a lot North American HR professionals can learn from their counterparts in companies overseas.

Granted, there’s a lot we do superbly in this country as well. “I think we’re considered the best country in the world in the practice of HR development,” says Marquardt. Adds Ron Kirchenbauer, vice president of HR for Ericsson, a Swedish tele-communications firm with a U.S. division in Richardson, Texas: “I think the pay-for-performance movement in this country is among the most progressive anywhere.” And HR consultants agree that management concepts we’ve pioneered, such as reengineering and the learning organization, put us on the cutting edge.

Our skill in these areas entice business people from around the world to visit our companies. In fact, many people attribute the success the Japanese have had since World War II to the fact that they came to the United States on study tours, looked at the best management practices American companies had to offer, and then adapted those practices to their own organizations. “They were under no illusion that the Japanese had all the answers,” Marquardt explains.

Unfortunately, American managers don’t appear quite so eager to learn from their foreign colleagues. “We tend to think U.S. companies are the most dynamic,” says Andy Craggs, international practice leader with The Wyatt Co. in San Francisco. “We’ve got the most research. Everybody has MBAs. We think we’ve got everything figured out. But in fact, things aren’t working very well in the states in a lot of areas, including health care, unemployment, homelessness and worker uncertainty. If something isn’t working with our system, let’s look outside and see what we can learn from others.”

Few international HR managers are naive enough to think that just because an HR practice works well in another country it will work just as well here. You can’t indiscriminately import a management practice into the states any more than you can casually export one—as many U.S.-based multinationals have discovered, albeit the hard way. You need to take a look at differences in cultural expectations, the legislative environment and labor-force economics when considering whether a practice that works in, say, Germany, would also work in the United States.

Furthermore, a management practice with tremendous upside potential probably also has a downside. Many European companies, for example, provide greater benefits and job security to their employees than we do in the states. But the cost of doing business is higher, the government bureaucracy is overwhelming and companies are slower to respond to marketplace opportunities. Simply put, there are two sides to every coin.

Given these caveats, what can we learn from HR practices in companies outside the United States? How are employees treated differently or better than here in the states? How are the HR functions managed? And are there HR programs in other countries that we have yet to consider?

To learn the answers to these questions, Personnel Journal asked international HR consultants, academics and practitioners what they considered to be the best—or at least better—HR practices in other countries. The wide array of responses indicate that American personnel professionals can indeed learn much from other countries.

Look around the world for ways to involve your work force.
So what are some of these better practices? For one, European and Japanese companies do a better job soliciting input on business decisions. “Even though in the United States we claim to be participative, I think we still tend to put all the power in the top executive levels,” says Craggs. “There’s such a focus on business results that we’re forced to make decisions that are tough on employees without looking at all the options. We can learn from companies in Europe, where employee input is sought on nearly every business issue.”

In many countries, such as Germany, worker input actually is mandated by law. Any company there with more than 100 employees has to set up a works council, which is made up of employees elected from various parts of the organization. German employers must gain the consent of the works council before they can appoint or dismiss employees, set working hours, introduce overtime or even change prices in the lunchroom. In addition, councils have the right to be consulted on a wide range of planning issues, such as decisions to open new plants or close existing ones. They also are entitled to information on company performance.

U.S. managers might see this as a real pain in the neck, but there’s little evidence that German managers feel constrained by the works councils. “In the end, you have to establish a good working relationship with the councils, and if you do, you have no problems,” says Thomas Ranft, personnel director of the London, England branch of Deutsche Bank AG.

Although worker input isn’t quite as rigidly mandated in Scandinavian companies, employees there do have a great deal to say about management decisions, particularly those related to compensation, safety and capital expenditures, explains Alex Hainey, president of Drake Beam Morin Canada, Inc., who has served on the boards of two Norwegian companies.

And the participative management style of Japanese companies is well documented. Within Asian manufacturing firms in particular, workers are more attuned to business results than they are here. U.S. firms are picking up on the bottom-up communications style engaged in these firms, but Craggs says, “we’re still a bit behind the times.”

Furthermore, human resources operations tend to be more entrepreneurial in Asian companies (with the exception of Japan) than they are here. The economies in countries such as Hong Kong, Malaysia, Singapore and Thailand are expanding so rapidly that HR managers have to constantly create and innovate just to keep up with their expanding work forces. They create new programs out of necessity. “In terms of compensation and benefits, these countries are assimilating new information and learning new ideas at a much faster pace than I’ve seen in the United States,” says Jacque Vilet, senior international compensation and benefits manager with National Semiconductor in Santa Clara, California. “I predict they may surpass us in terms of innovation in the next 10 years.”

Explains Vilet: “There are companies over there that are doing skill-based pay although they don’t call it that. They don’t know what skill-based pay is. What they’ve done is reconfigure their factories to improve the work flow. This has resulted in a team model where a group of employees handles a particular process from start to finish. As a result, managers are realizing they have to change the way they pay people because now employees are doing multiple tasks and they have to learn all these new skills. The key is that they have thought this through themselves.”

Human resources professionals in other countries also are more willing to informally share information with one another, whereas HR managers in American companies are often reluctant to ask colleagues about their companies’ HR practices, preferring instead to rely on formal market surveys. “We’re more close to the vest,” says Jack Fitzhenry, human resources director for Cupertino, California-based Apple Computer’s Pacific division. Why? Because we like to have lots of data, we’re concerned with confidentiality, and we’re fearful of violating U.S. antitrust laws, he explains.

“My staff members, whether they’re in Canada or Hong Kong, seek information from their colleagues on a regular basis,” Fitzhenry says. For example, Apple was looking to hire a general manager for a plant in Hong Kong. The top candidate wanted a car and housing allowance that matched what he was getting at his current position. Apple’s HR managers thought the allowances he requested were high, but instead of searching for market surveys to validate the amounts, they called the HR manager at the candidate’s existing company and asked about the standard car and housing allowances. Turns out, the candidate was telling the truth. “Just by making a couple of phone calls, we were able to put our minds at ease,” says Fitzhenry. “We couldn’t do that as easily here.”

Continuous learning is an established practice overseas.
According to Marquardt, the concept of continuous learning is much more enthusiastically received in companies in Asia and the Middle East than it is in North America. Why? Because in both regions of the world, teaching is considered the most important thing a person can do, much of which has to do with the cultural legacies left by Confucius and Mohammed. Because teaching and learning are regarded so highly, the role of managers is seen as being one of teaching or facilitating; of being someone who helps the people around him or her learn.

For instance, in many Asian corporations—specifically those in Japan—whenever one’s subordinates are being trained, the manager is there. “This indicates that I think the learning that’s occurring is important,” Marquardt says.

Because of this strong emphasis on learning, mentoring roles in companies such as Toyota are taken very seriously. In fact, for a year or two before retirement, managers make a great effort to pass along their experience and wisdom to new people. “They realize the past has some value that we can learn from,” he adds, “where-as in the United States we tend to look only toward the future.”

In Asian companies, the focus on learning also includes an emphasis on developing international management talent, as opposed to just developing local talent. Management training courses frequently include language training, international diplomacy and etiquette. In other words, it’s assumed managers will be working across borders. This is because companies there view the Asia-Pacific as one business region, explains Paul Morris, international consultant with The Wyatt Co. “Companies in the United States might have a regional manager who covers several states,” he says, “but there, they’re trying to develop managers who are able to do business in all of Southeast Asia or all of Greater China.”

The focus on learning in Scandinavian and Nordic companies begins when employees start new jobs. More specifically, Ericsson’s Ron Kirchenbauer believes these companies do a more thorough job in helping new employees integrate into the company culture. “In the United States,” he says, “we tend to let employees find their own way through the company.” In Scandinavia, however, companies help new employees understand their internal customers, their suppliers and where to go for certain kinds of information. “It’s more than simply passing out a contact list,” Kirchenbauer says. “New employees are taken around, introduced to people and given a thorough understanding of their role as it relates to everyone else’s.”

In many parts of the world, training incorporates a greater respect for and acknowledgement of the employees’ personal lives. Companies in Africa, the Middle East, Asia and Latin America, for example, regard their employees as whole people, who have needs and interests beyond professional and technical ones.

Take an organization like Hitachi. When Hitachi conducts management training courses, participants are given skills in management techniques just as you would expect. But, according to Marquardt, who co-authored the book, The Global Learning Organization, participants might also be taught to create haiku—the unrhymed three-line Japanese poems—to give them a sense of creativity and poetry. They might also review the rules of decorum for Japanese tea ceremonies, in which peaceful, simple living is encouraged. In addition, the courses could include book briefings, in which participants are exposed to a fairly diverse group of books in an effort to expand their knowledge of current literature. The point is that an effort is made to develop the whole person.

In many parts of the world, respect for the employee as an individual includes a high regard for the employee’s family. Latin American companies in particular are very concerned about family members. “When they hire a person, they’re also hiring that person’s family,” Marquardt says. At Carvajal Inversiones, a printing company located in Cali, Colombia, the family is so important that the company is in the process of developing a kindergarten where it plans to enroll employees’ children in an effort to detect talents and teach parents how to help develop those talents. Indirectly, the program is intended to help employees acquire the skills to build stable and solid families.

Sam Bernstein, international consultant with Hewitt Associates, L.L.C., in Lincolnshire, Illinois, confirms that respect for a person’s family life is greater outside the United States. “When a European goes on vacation, he or she isn’t reachable. There’s a clear dividing line between work and family. The same is true of Mexico. The Mexican executive on vacation is spending time with family and doesn’t want to be bothered by the office,” he says. When an American executive goes on vacation, however, everybody in the office usually has access to that person’s phone number. “American companies pay a lot of lip service to the importance of being family-friendly, but it just isn’t as natural to our culture,” Marquardt says.

How to learn from the practices of other countries.
What are HR professionals in the states supposed to make of all this? Primarily, it’s food for thought; a way to think outside of that proverbial box and look at ways to learn from the practices of companies in other regions of the world. When deciding how to integrate innovative or better HR practices into your own company, however, you need to start, well, inside your own company.

Applied Materials, Inc., in Santa Clara, California, for example, formed a series of global task forces that are charged with identifying the best HR practices in the company, regardless of where in the world they originate. There’s a global compensation task force, a global job-grading task force, and global mobility, benefits and training task forces. The goal, according to Carol Kaplan, manager of global compensation and benefits, is to look at which HR practices can be standardized across the 14 countries in which Applied Materials operates, and which practices need to managed on a local or regional level.

In coming up with recommendations, HR managers from each of the firm’s major divisions met for one week during each business quarter in 1994 to brainstorm and share information about successful country-specific practices. By the end of the year, members of the task forces presented their recommendations to company executives.

“By working together as a group, we’re able to come up with programs that meet all our needs,” she says. “In the United States, we’ve made a mistake in thinking that because we’re U.S.-based, what’s good for us is good for everybody around the world. What happens, then, is that we export programs that aren’t culturally sound and that ends up creating animosities toward corporate headquarters. It’s hard to restore those relationships once they’ve been broken. By coming together, we’re learning from each other, and finding better overall ways to do things.”

Apple Computer is also learning to listen to input from its HR professionals located outside U.S. borders, although the process has been slow. According to Fitzhenry, the first step has been for Apple’s American HR managers to be sensitive to their counterparts overseas and allow them to implement the kinds of programs that make sense for their cultures, as opposed to “cramming our programs down their throats.” Has the company begun to import any successful programs? “Not yet, and shame on us for not doing that,” Fitzhenry says. “Right now, we’re at the stage of sharing information about our programs; we haven’t taken the best of what they do and tried to make it work here. But as Asia, in particular, becomes more and more important to our business, we’ve got to wake up and understand that there’s a lot we can learn from the things they do extremely well.”

Of course, the truth of the matter is that HR practices are becoming more standardized, and differences, where they exist, just aren’t as great as they used to be. Look at the analogous trends under way in many parts of the world relative to flexible benefits, teamwork, flatter management structures, the decline of corporate paternalism and the increasing use of contingent workers. HR professionals are well on their way toward creating their own global village, and the village leaders are those who aren’t boxed in by their thinking.