As companies operate more frequently in different parts of the world, they are confronted with unfamiliar local rules and regulations. This is especially true for HR, as in most countries labor is subjected to a combination of legal and fiscal measures. This places demands on the HR organization when it comes to governance and compliance, compensation and benefits, and workforce mobility. It can be very costly if an organization does not comply with national standards: not only can companies be fined, but the fact itself usually damages the corporate reputation for a long time. As a result of the financial crisis, we expect that additional international regulations will be introduced in the financial industry.
It is not an easy undertaking to establish a unified HR governance model in an international environment. However, when HR governance is setup in a clear and concise way, it is far easier to ensure compliance. In an organization with high mobility, a multi-country, consistent HR service delivery model is a must, because employees increasingly expect similar, if not the same treatment, regardless of their current location. To meet this demand, many multinationals now organize HR in unctional centers of excellence and deliver HR through a worldwide shared services model. This way of working ensures that expertise is centrally available, that there is an agreed upon way of working and that local knowledge is involved when necessary.
HR Information Systems
If HR service delivery is organized at the global level, HRIT support must follow in order to deliver high-quality service. Systems must support a consistent information elivery, with lower maintenance and integration cost. HR Information Technology has matured in the past years and is better equipped to support global organizations. These developments have led to the introduction of global HR systems that enable multinational payroll and are updated frequently by suppliers. These updates include support for national legal and fiscal changes in order to guarantee that the system is in compliance with current local standards. In addition, vendors have developed templates and service delivery models to enhance and accelerate the rollout of these HR information systems. Last but not least, technical developments in the area of networking and security have made the physical placement of systems nearly irrelevant: they can be hosted anywhere in the world, provided data privacy legislation allows it.
The benefit of these developments is that an international HR Information System can be hosted, implemented and maintained at a central location, where it can be easily audited for compliance and data privacy. We also observe a trend towards OnDemand applications (also known as Saas or Software as a service) for HR, a model where the costs of a system are determined by its usage, and the vendor is responsible for availability, reliability and compliance. This not only leads to a cost reduction for HR IT support, but also enables HR to phase out the fragmented system landscape based on local HR systems. OnDemand makes it easier for companies of any size to implement software and benefit from using the latest developments.
To further support compliance, organizations are introducing digital personnel files. The digital personnel file offers a number of benefits compared to the paper version: it is easier to locate documents, it saves office space and it is easy to automate the periodical removal of expired information from the digital files. Legal documents can be coded with a validity date, and elapsed (work) permits and certificates are automatically reported. A digital file is readily available to anyone who is granted permission to view it, including the employee. This increases transparency and makes it easier to timely signal deviations.
By moving to an international HR delivery organization, supported by a worldwide HR database, multinational payroll and digital personnel files, organizations not only improve their HR service delivery and ensure compliance, but also have an accurate overview of the workforce at all times. This allows for more reliable decision-making based on relevant data, making it easier than before to anticipate to changes externally and/or internally.