BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

The World Is Not Global, It's Local

This article is more than 10 years old.

The word "global" has now become the new buzzword of business.  What isn't global these days?

While we certainly live in a highly interconnected world, the business world is not as "flat" as Thomas Friedman once predicted. Quite the contrary in fact. There is no "global market" for goods and service, rather there are now a set of globally connected "local" businesses.

We are just completing a year long effort to study best-practices in the structure of Human Resources. What we found is that while companies want order and consistency around the world, the highest-performing companies don't standardize everything:  they localize.

An important piece of new research was launched last year:  the DHL global connectedness study. This research, pioneered by Pankaj Ghemawat, shows how that since 2007 the world has become "less connected" each  year. This is not because we don't have communications between countries - it's because local countries have their own economic conditions and each grows at its own pace.

He calls this "World 3.0," the title of his new book. He argues for "rooted cosmpolitanism" in our business leaders. That is, respecting and understanding each economy and each culture for its own strengths. China and India, which are both growing rapidly, each have unique labor markets, a younger workforce, and particular regulatory and cultural environments. If you want to do business in China, you have to adjust your product, channel, and marketing strategies. And, as our research shows, also  your leadership, recruiting, compensation, and career progression strategy.

This is the core of our new High-Impact HR research. Highly successful companies don't "globalize" their businesses, they "localize them."

Global Platform, Local Implementation

The key to business localization is to have global platforms with local implementations.

  • For HR software, this means implementing global systems for HR, recruiting, and learning which are designed to enable local customization.
  • For leadership, this means developing a small set of global competencies and cultural standards, but enabling local training, development, mobility, and local assessment.  Our research shows that the characteristics of high-performing leaders vary from culture to culture.  Leaders are now grown locally, reflecting local cultural and team dynamics.
  • For recruiting,  labor markets are all local. Recruiting in China and India, for example, is highly competitive.  (People will change jobs every 6-9 months.) Organizations need a local employment brand that attracts young professionals and appeals to their career needs. In recruiting, more than any other HR practice, we need global platforms and tool sets.  Unfortunately our research shows that 2/3 of all companies still do not have a global recruiting strategy in place.
  • For performance management, most companies are frustrated with their existing practices.  Our research shows that companies need a global set of cultural standards and philosophies, but must let performance plans and goals be adjusted (organizations that revisit goals quarterly show 31% higher results than companies that set goals annually, for example.).  Research shows that employees in China and India are often incented by individual goals. Similar research shows that employees in Nordic countries are more motivated by corporate and team goals.

Our research shows a need to decentralize many HR decision processes as well. While corporate "Centers of Excellence" should create frameworks, select common tools and vendors, and enforce standards - they should be "integrators" and "information sharing" teams, not just design teams. High-performing companies empower (and expect) local HR managers and executives to adjust core practices based on local needs.

When Amway , for example, opened its business in China, the company had to dramatically change its channel strategy. For the first time in its history, Amway sold through small retailers. While this was a radical departure from its established practices, the results were astounding. Today Amway does over $4 billion in business in China.  (Harvard Business Review Case Study.)

As Dr. Ghemawat puts it very eloquently, World 3.0 requires a new set of skills in cultural agility and flexibility. Look at the highest performing companies in your industry. They operate globally but in a local way. Success is driven by speed, agility, and optimizing your business for local markets.

The world is local. Is your business operation "global" or is it "globally local?"

Read our latest findings on High-Impact HR and learn how to localize your talent strategies around the world.

You can follow me to stay up to date on trends, research, and news in all areas of HR, leadership, and talent management on twitter at @josh_bersin. For more information on Bersin by Deloitte, please visit http://www.bersin.com .

-----

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

About Deloitte

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.