A framework for multinationals to position themselves for sustained success in an ever-evolving economy
For an emerging or established multinational to succeed and be considered a top competitor in today’s economy, they must know how best to maneuver within the global marketplace. This includes making global growth a top priority despite limited resources of time, money or human capital. Based on a survey of HR and payroll leaders at 200 companies:
- 80% of HR and payroll leaders believe that the ability to operate in different countries is vital to their company’s success
- 75% of decision-makers agree that managing a global workforce can feel daunting, citing the adjustment of corporate culture, lack of employee skills and disparate data across countries as the most challenging aspects of operating internationally
How can these organizations—multinational companies or those considering multinational investments—analyze their global growth stability, readiness and proficiency to be competitive in the long term?
Safeguard Global, drawing from industry expertise and analyzing more than a decade of work with multinational organizations, has constructed a framework to evaluate and measure global growth activities. Additionally, we’ve interviewed HR and payroll leaders at 200 global organizations to benchmark the essential capabilities needed to engage in the global marketplace and sustain global success. Because this framework describes the overall proficiency, or fluency, of a global organization, we’ve named it Global Fluency.
What is Global Fluency?
Global Fluency is the measure of an organization’s ability to secure and hold a competitive advantage in the global market.
It is not enough for organizations to know there are benefits of a planned or existing expansion into a specific country and region, they also need insight—such as how to recruit, employ and manage workers in the region, or how to get the most return on their current international workforce investment. Today, organizations must be able to manage, analyze and make decisions about what their data, whether it’s regarding workforce spend or in-country legislative changes, is telling them about probable impacts on the business.
That’s where the three components of Global Fluency come in:
Organizations need intellect, which is data; acumen, the ability to bring their relevant information together to make strategic decisions; and agility, the ability to quickly respond to changes in the global market. Together, these three attributes translate to a highly fluent organization.
Among the human resource and finance leaders surveyed, there was near universal agreement that operating in different countries is beneficial for an organization, primarily due to the expected increase in revenue and access to a more diverse workforce. However, there is concern about a lack of resources and capabilities, as well as understanding of what is entailed in an expansion into another country.
Global Fluency is a vehicle to help organizations be proactive and prepare for coming changes in the industry, political or social climates, and to plan and manage a global workforce in order to gain a competitive edge. Without Global Fluency, emerging multinationals will fail to establish themselves as global players in their industry, and established multinationals will struggle to sustain success in the global marketplace.
Global intellect: What does this mean for an organization?
Intellect is the foundation of Global Fluency. A strong knowledge database, one that takes into account the nuances related to employing, managing and running a business in different parts of the world, is fundamental. In-country intellect is essential to thriving within a region.
Some of the country-specific information organizations need includes:
- Differences in languages and customs, and how to integrate them into the corporate culture
- Legislation related to employment laws, tax regulations and social costs and their impact upon business
- Changes impacting the social and political environment
Additionally, data related to an organization’s workforce, both in a specific country and globally, is vital:
- The specialized skills available in their talent pool, along with education levels and salary expectations that can affect employee recruitment
- The costs and benefits of a multigenerational workforce, one that today can span five generations, as well as its impact on the employee experience
- Payroll, overtime, expenses, taxes and other pay elements
Having this data, this in-country intellect, provides organizations with global options, such as the ability to expand without great risk to investment, time or first-mover advantages.
Lack of local knowledge is a common problem for multinationals. Nearly 40% of organizations report a deficiency of information about what expansion entails as their main impediment to investing in global growth. And as a result, they are not able to capitalize on the available workforce talent or entry into new markets.
Among the primary concerns HR and finance leaders have about global expansion is a knowledge gap related to the political risk, compliance laws, and employment and tax regulations of other countries. Lacking this intellect increases barriers to entry and reduces competitive advantage. Conversely, a high in-country intellect removes barriers and provides companies with greater global options.
Global acumen: Information alone is not enough
Country-specific information and data are important to have, but intellect alone will not move the needle for an organization. Leaders must have the acumen to collect the right data; normalize the data across languages, currencies and time zones; manage data to ensure compliance; and analyze data to inform strategic decisions across the whole organization, regardless of country or region.
Acumen requires an organizational structure that supports the processes and technology that bring global data together, in a single and consistent view, all while maintaining the integrity of that data. Without data consistency, a company will not have the acumen to support true Global Fluency. The ability to normalize, manage and manipulate information is critical to gaining global access and connectivity.
An organization enables acumen, and thus global access and connectivity, by having an array of systems in place, including:
- Tools to collect and manage data from across the business, regardless of where in the world it originates
- Proper translation and standardization of data, across currencies, languages and time zones
- Resources to support communication and collaboration across global teams
- A commitment to accurate data being shared, securely, across departments
- Access to subject-matter experts to provide analysis and interpretation of the data
For 80% of senior HR and finance leaders surveyed, the right technical tools and the ability to integrate data from across all countries are the most important factors to successfully expanding into new markets. However, nearly 40% stated that a lack of technological capabilities was the key barrier to their ability to successfully expand and operate internationally.
Having the technology and systems in place is only part of the acumen equation; it’s also important that the tools are integrated into the rest of the organization for maximum data efficiency and integrity, and for gaining a comprehensive view that can be analyzed.
For example, 63% of the HR and finance leaders surveyed about their payroll and workforce data say they consider their finance systems to be the source of truth for their workforce expense data. And to ensure there is no confusion, 74% of the organizations report that their finance, payroll and HR systems are either integrated or consolidated with a single provider. This would indicate those organizations have a higher acumen—and likely more trust—in regards to their workforce data.
However, this same survey asked senior HR and finance leaders about their organizations’ challenges with global payroll and their multinational workforce, including:
- A single system for processing payroll across multiple countries
- Integration of data from finance and human resources across countries into one platform or view
- Having tools and resources to communicate with a global workforce
By and large, the leaders report that these capabilities are important to their organization’s success, but they also raised doubts about their organization’s level of acumen around them.
For those leaders, the technical ability to process payroll for their global teams through a single system and gain comprehensive visibility into global workforce spend data, as well as the tools to communicate with their global workforce are clear opportunities to raise their acumen in support of greater Global Fluency.
Global agility: The ability to keep moving forward
The final piece in Global Fluency is agility, which makes use of both intellect and acumen to have an impact in the organization, regardless of the market dynamics in play. In the end, all the information and data analysis is meaningless if an organization can’t use it.
The ability to use data to forecast market shifts, changes in their industry and internal challenges requires that an organization also remain agile enough to pivot based on that data. Whether it be to mitigate a risk of loss, capitalize on an opportunity or adjust to correct for a change outside the organization’s control, rapid adaptability is a critical attribute of a globally fluent organization.
Agility is the result of trust in the in-country intellect and actionable technical acumen, which together allow the organization’s leadership team to be aware of important changes as they unfold and confidently adjust tactics within their strategic framework.
Survey respondents report they are using workforce data to identify and inform business needs:
- 32% say they use workforce data for strategic planning
- 45% say they engage in strategic analysis to model and proactively identify problems and solve for them
The key for organizations looking to become and remain agile is to filter this internal data through the lens of external forces, so they can adapt where needed.
An agile organization, informed by data, could predict a team’s need to proactively hire to support a growing workload and reduce employee burnout. It could adapt to a slowing market and decreased demand due to political or economic changes by altering the pace of production. Or it could set up processes and procedures within weeks to keep operations running in response to a global pandemic that forces employees to work remotely.
Adapting quickly and decisively, pivoting and changing tactics to support strategic goals, are criteria for an agile organization. That agility is how to build a sustainable business within a global ecosystem.
Global Fluency: A long-term competitive advantage
Global Fluency gives an organization the ability to secure and maintain a competitive advantage within the global marketplace. Each of the components, intellect, acumen and agility, is critical; however, only when they are present in an organization together, building upon each other, do they constitute true Global Fluency.
Every organization has some measure of intellect, acumen and agility; the key is understanding where there are strengths to build upon and deficiencies to improve. The ability to gain competence and proficiency within each component is the only way to capitalize on the opportunities in a global economy.
Intellect will create global options by providing the information needed to identify markets for greater investment—or where to proceed with caution or abandon plans for expansion altogether. Acumen, by turning information into knowledge, provides global access and connection: The acumen makes the intellect actionable. And the most important part of the Global Fluency equation is agility, the ability for an organization to adapt to whatever that knowledge forecasts, whether it be changes in the region, the workforce, the industry or the broader global market.
Overall, HR and finance decision-makers have seen their organizations widen their global presence in the past five years, and these leaders anticipate their organizations will have an even larger global footprint in the coming years. For example, 33% of survey respondents said that five years ago, they had employees in seven or more countries. When asked about where they see their workforce in the next five years, 54% of those surveyed said they expect to have employees in more than seven countries.
For many of the leaders surveyed, the top decision factors for entering new countries are to access a broader talent pool (38%) and to acquire another organization (35%). Whatever the reason, the continued global growth is not slowing down.
Intellect is information. Acumen makes that information actionable. Agility allows organizations to adapt and maintain their strategic objectives. For those seeking the competitive edge that will help them build and sustain multinational success, Global Fluency is no longer an option—it is a requirement.
If you are interested in gaining a better understanding of your organization’s Global Fluency, please submit a request to be among the first to participate in our Global Fluency assessment. Using the Global Fluency framework, we are able to have objective and highly consultative conversations with our clients about their organizations’ intellect, acumen and agility. As we examine each of the areas, we can help them identify both strengths and areas for opportunity and investment.
About the report
Safeguard Global conducted an online survey of 200 manager-level to C-suite stakeholders who oversee HR and payroll functions. Respondents came from midsize (fewer than 500 employees) and enterprise (more than 500 employees) organizations with an employee presence in at least two countries. The survey was fielded by CITE Research from March 20 to 30, 2020.