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MATT BOLCH OBSERVES THAT SMART GLOBAL COMPANIES ADAPT HR PRACTICES TO THE REGION, AND SEEK REGIONAL EXPERTISE IN WHAT THOSE PRACTICES SHOULD BE

IMAGINE BEING ASKED AS A NEW HIRE TO SIGN A THREE-YEAR CONTRACT OF EMPLOYMENT. IN EXCHANGE FOR JOB SECURITY, YOU WOULD HAVE NO MORE CHOICE TO LEAVE THE JOB THAN YOU WOULD HAVE FREEDOM TO LEAVE THE MILITARY.
IT IS NOT THE AMERICAN WAY, BUT IT IS THE CHINESE WAY, AND TSS TECHNOLOGIES WISELY ADAPTED TO IT WHEN THEY OPENED THEIR FIRST NON-US OPERATION IN XIAMEN, CHINA. AND, THEY SOUGHT CHINESE EXPERTISE IN BUILDING A CHINA-BASED WORKFORCE.

TSS OPENED A MANUFACTURING PLANT IN XIAMEN EARLIER THIS MONTH (FEBRUARY) WITH 12 EMPLOYEES, AND PLANS FOR 20 BY YEAR'S END. IT PLANS TO SERVE CURRENT CUSTOMERS WITH ASIAN OPERATIONS AND TO TAKE ADVANTAGE OF NEW OPPORTUNITIES IN THE REGION, SAYS ROB SMITH, TSS' DIRECTOR OF CHINA OPERATIONS. THE CINCINNATI-BASED MANUFACTURER PRODUCES EQUIPMENT FOR THE AEROSPACE, MEDICAL, AUTOMATION, AVIATION, POWER AND MARINE INDUSTRIES.

THAT A US FIRM OPENED A GLOBAL MANUFACTURING LOCATION IS NOT NEWS, BUT THE LESSONS THAT TSS TECHNOLOGIES OFFICIALS LEARNED IN THE NINE-MONTH PROCESS CAN BENEFIT OTHER MANUFACTURERS LOOKING TO EXPAND OVERSEAS.

" HR IS PROBABLY THE MOST IMPORTANT CHALLENGE," SAYS SMITH. "YOU HAVE TO LEARN THE CULTURE OF THE COUNTRY, WHAT'S ACCEPTABLE AND UNACCEPTABLE. THERE'S NO AT-WILL EMPLOYMENT [IN CHINA], SO YOU HAVE TO HAVE A CONTRACT FOR A PRE-DETERMINED AMOUNT OF TIME, AND THERE ARE PENALTIES FOR BREAKING IT."

SMITH SAYS THE COMPANY IS SIGNING EMPLOYEES IN CHINA TO THREE-YEAR CONTRACTS, NOT BECAUSE OF LOCAL CUSTOM, BUT TO BUILD A SOLID FOUNDATION AT TSS' ASIAN OPERATIONS BY LOCKING IN EMPLOYEES. IF AN EMPLOYEE LEFT AFTER ONE YEAR, THE COMPANY WOULD NOT HAVE RECOUPED THE INVESTMENT IT MADE IN HIRING AND TRAINING THE WORKER, SMITH SAYS.

" A COMPANY GOING (TO CHINA) WITHOUT A PARTNERSHIP AROUND HR AND BACK OFFICE FUNCTIONS IS GOING TO STRUGGLE," SMITH SAYS. TSS CONTRACTED WITH CHINA SOLUTIONS CO., LTD., A HONG KONG-BASED COMPANY WITH A CENTRAL OFFICE IN XIAMEN. CHINA SOLUTIONS IS A ONE-STOP CONSULTANCY FOR COMPANIES OPENING OPERATIONS IN CHINA, HANDLING FINANCIAL, GOVERNMENT AND REGULATORY AND HR MATTERS, AMONG OTHERS. "[CHINA SOLUTIONS] HELPED US SELECT CANDIDATES AND CONDUCT INTERVIEWS. THERE'S NO DIFFERENCE FROM THE US OVER WHETHER YOU HAVE A GOOD EMPLOYEE. YOU EVALUATE THEIR EXPERTISE AND WHAT YOU'RE LOOKING FOR, MAKE YOUR DECISION AND HOPE IT WORKS."

YEARLY CONTRACTS INCLUDE PAY FOR 13 MONTHS FOR 12 MONTHS OF WORK, AND GUARANTEED BONUSES, BOTH COMMON PRACTICES IN ASIA AND FOR WHICH A US COMPANY MUST BUDGET.

GLOBALIZATION MEANS THAT MORE US MANUFACTURERS ARE LOOKING TO EXPAND OFFSHORE, MAINLY TO REDUCE COSTS AND LOCATE NEAR KEY CUSTOMERS OR SUPPLIERS. HUMAN RESOURCES OUTSOURCING OR HRO MAKES SENSE IN MANY OF THESE DEPLOYMENTS BECAUSE MOST MANUFACTURERS DO NOT HAVE CORE COMPETENCIES IN HR, MUCH LESS INTERNATIONAL HR.

ACCORDING TO MACLEAN, VIRGINIA-BASED NELSONHALL, A GLOBAL INDEPENDENT RESEARCH ANALYST FIRM AROUND BUSINESS PROCESS OUTSOURCING, 2006 WILL BE A BANNER YEAR FOR HRO. NELSONHALL PREDICTS A 20 PERCENT INCREASE IN HRO EXPENDITURES WORLDWIDE, WITH A TOTAL OF $4.3 BILLION. BY 2009, WORLDWIDE EXPENDITURES ARE EXPECTED TO TOP $7.4 BILLION, A 100 PERCENT INCREASE IN JUST FOUR YEARS. PHIL FERSHT, AN EXECUTIVE VICE PRESIDENT AT NELSONHALL, SAW 2005 AS A TRANSITION YEAR AS COMPANIES OVERCAME COMPLIANCE, SECURITY AND COST CHALLENGES OF GLOBALIZATION. HE PREDICTS THAT "2006 WILL SEE A REALIZATION OF THE HARD WORK, EVALUATION AND INVESTMENT WITH A SUCCESSION OF GROUNDBREAKING MULTINATIONAL CONTRACTS."

HR CONTRACTS ARE GAINING IN SCOPE AND COMPLEXITY, ALTHOUGH THE MARKET AS A WHOLE REMAINS RELATIVELY UNTAPPED, WITH LESS THAN FIVE PERCENT OF THE FORTUNE 2000 AND ONE PERCENT OF MID-MARKET COMPANIES ENGAGING IN MULTI-PROCESS HR BPO CONTRACTS, ACCORDING TO THE STUDY RELEASED IN DECEMBER.

" THE MORE GLOBAL YOUR COMPANY, THE MORE CHALLENGING THE SUPPLY CHAIN IN TALENT, IF YOU WILL, BECOMES," SAYS SCOTT KINGDOM, GLOBAL MANAGING DIRECTOR OF INDUSTRIAL MARKETS AT KORN/FERRY INTERNATIONAL. BASED IN LOS ANGELES, KORN/FERRY IS THE WORLD'S LARGEST SEARCH FIRM, BEST KNOWN FOR ITS EXECUTIVE SEARCHES, BUT WITH A DIVISION THAT STAFFS ENTRY-LEVEL POSITIONS.

COMPANIES CONSIDERING GLOBAL LOCATIONS MUST FAMILIARIZE THEMSELVES WITH NOT ONLY THE EDUCATION AND AVAILABILITY OF THE LABOR POOL, BUT ALSO THE LABOR PRACTICES IN LOCAL MARKETS, KINGDOM ADVISES. FOR EXAMPLE, THERE IS GREAT EXCITEMENT ABOUT PARTS OF EASTERN EUROPE, WITH WELL-EDUCATED WORKFORCES, AND GOVERNMENTS EAGER TO DO BUSINESS. IN FRANCE AND BELGIUM, THE COST OF MAKING WORKFORCE CHANGES CAN BE THREE TIMES THE INITIAL HIRE EXPENSES. AND LABOR COSTS IN ASIA ARE INCREASING AS MORE COMPANIES MOVE OPERATIONS THERE AND ENVIRONMENTAL FACTORS TAKE ON GREATER IMPORTANCE, KINGDOM SAYS.

" I CAN SAFELY SAY THAT IT'S MORE DIFFICULT (TO RECRUIT) EVERYWHERE, REGARDLESS OF INDUSTRY OR SECTOR," KINGDOM SAYS. "GROWTH IN CERTAIN PARTS OF THE WORLD AND THE FUNDAMENTAL DEMOGRAPHICS IN EUROPE AND THE US BEG THE QUESTION: WHERE ARE THE NEXT FOLKS COMING FROM?

" THERE'S LOTS OF COMPETITION FOR GOOD PEOPLE," HE ADDS. "GLOBAL COMPANIES THAT ARE FINDING SUCCESS, EVEN BY TRIAL AND ERROR, ARE THE ONES SPENDING THE TIME AND ATTENTION ADDRESSING THIS ISSUE."

TSS TECHNOLOGIES SPENT NINE MONTHS SELECTING XIAMEN AS THE SITE WHERE IT WILL MANUFACTURE PET SCAN MACHINES, BUT THAT INCLUDED CONSIDERABLE RESEARCH AND THREE TRIPS TO CHINA THAT EARNED ROB SMITH MORE THAN 52,000 FREQUENT FLYER MILES. AFTER CONSIDERING SEVERAL SITES, TSS TECHNOLOGIES CHOSE THE ISLAND CITY OF XIAMEN BECAUSE OF ITS PROMINENCE AS A MANUFACTURING CITY, ITS CONVENIENT PORT, AND GOOD LABOR POOL. IT CERTAINLY DIDN'T HURT THAT DELL INC. IS LOCATED NEXT DOOR AND THAT ABB AND GE BOTH ARE LOCATED NEARBY, SMITH SAYS.

LOCAL KNOWLEDGE OF EMPLOYMENT PRACTICES AND POLICIES IS IMPORTANT, BUT BACK-END AND SUPPORT SYSTEMS CAN BE HANDLED FROM NEARLY ANYWHERE, SAYS ELLIOT CLARK, COO AT KENEXA, A LEADING PROVIDER OF SOFTWARE, SERVICES AND PROCESS OUTSOURCING SURROUNDING THE RECRUITMENT AND HIRING PROCESSES.

" A COMPANY HAS TO DETERMINE GLOBAL STRATEGY AND THEN SEE HOW THAT EQUATES TO THE LOCAL STRATEGY," SAYS CLARK. "SOMEBODY ON THE LOCAL TEAM HAS TO INTEGRATE THAT INTO THE OVERALL WORKFORCE PLAN."

ESPECIALLY AMONG MANUFACTURERS, SOMEONE HAS TO BE THE LOCAL EXPERT ON SUCH ISSUES AS THE EMPLOYMENT BASE OF SKILLED AND SEMI-SKILLED WORKERS, LOCAL INDUSTRY CLIMATE AND POTENTIAL COMPETITORS FOR AVAILABLE WORKERS.

IN AREAS WITH RICH LABOR POOLS, A COMPANY CAN USE AN AUTOMATED WAY TO SCREEN CANDIDATES, PRESENTING THE BEST FOR INTERVIEWS. "EVERY HR MANAGER WANTS THE BEST, THE TOP 10 PERCENT OF LABOR," CLARK SAYS. "THE KEY IS DETERMINING HOW THAT LOOKS IN EACH MARKET AND INCORPORATING THAT KNOWLEDGE INTO THE OPERATING PROCESS IN A MEANINGFUL WAY."

HR OFFICIALS ALSO SHOULD BE AWARE OF THE CULTURE CHANGES THAT MUST TAKE PLACE TO ACCOMMODATE GLOBAL LOCATIONS. REFERRING TO THEM AS "INTERNATIONAL" OR "NON-US" CAN DIMINISH THE MORALE OF OVERSEAS WORKERS, HE NOTES. "CULTURAL CHANGE MANAGEMENT SHOULD BE HIGH ON THE LIST OF COMPANIES GOING THROUGH GLOBALIZATION," CLARK SAYS. "THE HR DEPARTMENT HAS TO BE OUT AHEAD OF THAT."

WHILE A NEW FACILITY'S PROPOSED LOCATION AND AVAILABLE LABOR POOL CAN LOOK INVITING, AN ADVERSE POLITICAL CLIMATE OR CRIME CONCERNS COULD SINK THE PROJECT. THAT'S WHERE RISK MANAGEMENT COMPANIES SUCH AS UNITED RISK PARTNERS ENTER THE PICTURE. THESE RISK MANAGEMENT COMPANIES CAN HELP HR OFFICIALS WITH RELIABLE INFORMATION ON THE LAY OF THE LAND, POLITICAL LANDSCAPE, DIVERSITY ISSUES, DEMOGRAPHICS OF THE LOCAL WORKFORCE AND ANY CUSTOMS OR TRADITIONS THAT SHOULD BE CONSIDERED. IN HR SPECFICALLY, IT INCLUDES RECRUITMENT, HIRING, TERMINATION, BENEFITS MANAGEMENT, DRUG SCREENING AND PRE-EMPLOYMENT ANALYSIS. SOCIALLY AND POLITICALLY, IT CAN INCLUDE SIDESTEPPING ANY "LANDMINES." FOR EXAMPLE, "IN SOME CULTURES, BRIBERY IS THE NORM, AND COMPANIES SHOULD KNOW THE RISKS AROUND ALL THIS," EXPLAINS CRAIG LAWRENCE, DIRECTOR OF OPERATIONS AT UNITED RISK PARTNERS, BASED IN ELK GROVE VILLAGE, ILL.

THE ADVANTAGE OF A RISK MANAGEMENT COMPANY IS THE EXPERTISE THAT ITS CONSULTANTS CAN PROVIDE, ADDS MARCO CONFUORTO, SENIOR PARTNER. ESPECIALLY WHEN GLOBAL LOCATIONS ARE UNDER CONSIDERATION, THE AREA-SPECIFIC EXPERIENCE OF A MULTI-NATIONAL COMPANY CANNOT BE OVERLOOKED.

CONFUORTO'S SPECIALTY AREAS ARE BACKGROUND CHECKS AND EMPLOYEE INTERVIEWS, INCLUDING INTEGRITY INTERVIEWS DESIGNED TO JUDGE THE HONESTY OF POTENTIAL EMPLOYEES THROUGH VERIFICATION OF KNOWN FACTS AND THE GAUGING OF NONVERBAL CLUES AND BODY LANGUAGE THAT ARE APPARENT TO TRAINED INTERVIEWERS. BACKGROUND CHECKS SHOULD INCLUDE MORE THAN A PUBLIC RECORDS SEARCH, WHICH FAILS TO UNCOVER MANY POTENTIAL PROBLEMS, CONFUORTO SAYS.

THE HIRING OF SECURITY FOR PLANT LOCATIONS OR EMPLOYEES IN TROUBLED REGIONS ALSO TYPICALLY FALLS UNDER THE AUSPICES OF THE HR STAFF, AND THOSE DECISIONS CAN HAVE FAR-REACHING IMPLICATIONS. "IS THE LOCAL SECURITY OK, OR ARE THEY KNOWN TO TURN A BLIND EYE?" LAWRENCE SAYS.

GOING GLOBAL HAS GONE MAINSTREAM, NOTES KINGDOM FROM KORN/FERRY INTERNATIONAL, AND SMART MANUFACTURERS WOULD DO WELL TO STUDY THOSE WHO BLAZED THE TRAIL, RELYING ON CONSULTANTS AND GOVERNMENT AGENCIES THAT CAN BRING KNOWLEDGE TO THE TABLE. HE ADVISES STARTING SMALL, OPENING A BRANCH OFFICE OR SMALL PLANT TO GET A REAL-WORLD FEEL FOR THE LOCAL MARKET BEFORE LAUNCHING MORE AMBITIOUS PLANS.

TSS TECHNOLOGIES' OFFICIALS HOPE TO EXPAND ITS CHINA OPERATIONS TO INCLUDE SOME AVIATION BUSINESS IN THE FUTURE, BUT, FOR NOW, PLANS ARE TO INCREASE INITIAL EMPLOYMENT AT THE XIAMEN FACILITY TO 20 DURING THE FIRST YEAR. ALTHOUGH SMITH DOESN'T ANTICIPATE ANY PROBLEMS, HE FINDS COMFORT IN THE SUPPORT HE'S GOTTEN FROM THE CORPORATE OFFICE.

" EVEN THOUGH THAT PLANT IS 8,718 MILES AWAY, WE'RE NOT ALONE," SMITH SAYS. "IT'S NOT LIKE WE CAN'T DEVISE A FIX FOR ANY PROBLEM AND BRING AN INSERTION TEAM IN TO IMPLEMENT IT."

THE MANUFACTURER US
PUBLISHED : 08 FEB 2006