|All the global HR data that's fit to capture|
This is the latest in my "Going Global" series of posts. In "Glocalization or the Five Pillars of a Localized Software" I discussed what it meant to have a "glocal" HR project. In "A Five-tier Approach to a Multi-Country Payroll Project" I touched on the always sensitive issue of payroll for an international company.
Today, I'd like to share my experience and thoughts on what, chronologically, should come first: how to organize a global workforce data.
First of all, why are we even bothering with this, some of you may wonder. I was recently talking to the HR director of a global life-sciences company and, when I asked how many employees they had, she replied, "14 or 15 thousand, maybe 16,000...unless it's gone up to 17,000 after the latest acquisitions." She eventually confessed, "Actually, we have no idea."
"You mean, you don't have a global tool where you centralize all your employee data?" I asked. She nodded her head.
Unfortunately this company, whose name compassion demands I keep secret, is far from being the only one in a similar situation. The sad truth is that way into the 21st century there are still many global companies, some quite large and with high name recognition, who still have no idea of their headcount worldwide. Somebody explain to me how you can manage a global workforce when you don't even know how many they are, let alone where they are, what they do and how much they cost you.
Dear HR Leader, you shouldn't feel proud of yourself for allowing such a situation to continue under your stewardship. Hopefully, this gentle prodding will jolt some of you into action.
There are basically two schools of thought about organizing your workforce data: one favors creating all your employee data, regardless of what country they are in, in a single repository called a global HR System of Record (SOR) or Information System (HRIS). Other companies prefer to keep different HR systems per country or regions and aggregate the data in a global HR hub (also known as global HR Master Data.) I will discuss the pros and cons of both with some best-practice tips before talking about a third type of data repository that has been gaining in popularity in the last few years: the Global Talent Profile.
1. GLOBAL HR SYSTEM OF RECORD (SOR)
This approach is the neater and tidier of the two as it tracks in the same system all relevant data pertaining to your employees be they in Afghanistan, Algeria, Austria, Argentina or Australia. The following are some advantages that I have witnessed.
- It allows for consistent reporting, as well as data and process streamlining, which is always important when trying to foster a common culture across subsidiaries belonging to different parts of the world. I am still amazed at the variance in organizational structure between different subsidiaries with similar size, business background and whose only justification is history. I always start telling my clients that History is a great discipline, but in the world of business if your only rationale for a process is history, you are soon going to be...history!
- A common user experience across different time zones: there are few things more frustrating for an HR user with global responsibilities than to have to toggle back and forth between radically different tools. Finding the required information, launching a particular process or producing a required report can be so time-consuming that sometimes you just forgo carrying out these tasks which is detrimental to the business. It is so much easier to create a reporting relationship between Employee A in China and their manager, Employee B, in South Africa, when both are part of the same data structure than when you have to struggle with different systems that have their own data model, architecture and access rights.
- Even more important, for the global VP of HR, or the CEO if s/he feels so inclined, is to see at a glance consolidated vital statistics about the workforce to support decision-making, and, added bonus, in real time. Another key advantage is that having a single system of truth makes it even easier to feed other systems that depend on HR to produce other processes, whether HR-related (such as payroll or benefits) or not (e.g. procurement.)
- Also,without the synchronization of a single version of the employee-data truth it is impossible to have a meaningful on/offboarding process. Many companies lose sizable amounts of money because they terminate employees and give them their last paycheck without having recovered expensive equipment (laptops, smartphones etc.) they were given. Maybe the employee understood that "given" as literally. And once the employee has left the company with his/her last payslip you can kiss goodbye to ever getting corporate property back.
Although an increasing number of companies are adopting this approach, it still accounts barely for one-third of all global companies. The reasons are manifold:
- There are not many vendors that can provide you with a truly "glocal" HR system (see my aforementioned post about the definition of a true "glocal" system) that match your country footprint.
- It is a complex task to reconcile in a single system data that is statutorily required in countries as varied as the US and France, to take just two examples. The American salaried/hourly distinction is unknown in France which relies on a manager/non manager (cadre/non cadre) category. It therefore becomes very tricky to arrive at a meaningful comparison of employees across different time zones. (FTE comparisons are another global HR headache since definitions vary across countries as to what is an employee, especially when contractors are used.)
- Ignorance and lack of interest from HR managers, especially at corporate level, means that no effort is made to remedy this situation until the CEO throws a fit because the company's latest annual report was too vague about global headcount. And one thing that shareholder and financial analysts do not like is vagueness about such possible liabilities. (After the CEO has been pacified by an explanation about the complexity of the problem, the global Head of HR often moves on to other issues and forgets about this "inconvenience" until some other crisis comes up and reignites the issue.)
For all these reasons, a majority of global companies still rely on multiple systems which can be consolidated into a global HR data master or hub
2. GLOBAL HR MASTER DATA (OR HUB)
In this approach, corporate policy is based on a "live and let live" approach whereby every subsidiary decides on what system they want as their local HR system of record and these are then consolidated through a master data system which in turn can feed into third-party systems and be used to produce reports. Some key points:
- Local systems and processes are not disrupted, which can be of value if there is no agreement on global processes. I have seen too many situations where subsidiaries are asked to jettison a system for a new one in which they have had little say in shaping it, or, even worse, where the features on offer were inferior to what they used to have.
- As the below graph shows, most local subsidiaries would use a local HR admin system, often based on a local vendor. Others use their payroll system as a proxy core HR system. Home-grown and outsourced systems make up the difference.
- Best practice dictates that interfaces be built between the Hub and the third-party systems. Unfortunately I still see some companies preferring the double-entry approach where data are entered twice: in the local system and in the Hub. This is pure madness as not only is it more expensive to do, but is prone to errors.
- It is also important to note that many companies use a Global HR Hub just to run reports off it as Phase 1 of the project. They then build interfaces to feed the data contained in the Hub to third-party systems. Whereas I feel the former makes sense as a stopgap tool, once you move to the latter, you might as well start considering seriously a Global HR System of Record: sure, this one will also require the creation of some complex interfaces, but they will always be by definition fewer than what a Master Data system will entail.
One of the big drawbacks is that some processes will break as you move from one system to another as workflow which initiated in one application does not span all others. The fact that other organizational structures will not be replicated "as is" is another issue, too.
It is worth mentioning that if over 60% of global companies use multiple HR systems of record, not all are consolidated into a Global Hub. There are probably not more than 10% that bother to create such a consolidated view via a master data system, the rest do not have any tool to consolidate one way or another. Yes, your calculation is right: a whopping 50% of global companies cannot report accurately and in real time about key workforce data, let alone ensure data streamlining and reduce duplication.
3. GLOBAL TALENT PROFILE
With the emergence of talent systems, many companies, regardless of whether they have a global HR SOR or Hub in place, have developed another global employee database which focuses on the non-administrative, non-regulatory aspects of the workforce. Such a data repository, usually known as Talent Profile, will focus on the most relevant employee data items in terms of talent processes: basic administrative information, skills, jobs, rating scales, courses etc. You build it by importing the basic admin data from the different source systems, and then are free to build the talent profile as fits your business.
The advantage of such a repository is that, unlike the previous two, it is much less complex to implement. Since they have little regulatory content it is much easier to adopt consistent talent processes across different countries. And for many heads of HR, and especially line managers, the value of a global talent profile may appear as more obvious than a global SOR or hub. There is a trend for companies to build a Talent Profile and then decide a Hub is sufficient, even if they already had a SOR: in that case they prefer to expand the Global HR Hub rather than the HR SOR and limit it to the country/ies where it was already available. Are we witnessing the beginning of the end of global HR Systems of Record as we know (knew) them?
While there is no denying the business value of a Global Talent Profile (just think how the business benefits from the ability to show and offer your high potentials a global career plan in a timely fashion,) relying on a Talent Profile at the exclusion of the other two misses a key point: the two categories (Global HR SOR/Hub and Global Talent) are not interchangeable. The former brings value to senior decision-makers (CEO, VP of HR), the latter to HR managers (recruiters, trainers etc.) and line managers. As such they are both part and parcel of a true HR management system. In some cases it may make sense to put in place a Talent Profile before a modern consolidated HR system; sometimes that would feel like putting the ox before the cart. In all cases, it is a grievous mistake to consider that with one, especially a Talent Profile, one can skip on the other. Do that and you look at your business the way a one-eyed person looks at the world.
Whatever approach you use, a single view of your workforce/talent data brings advantages which cannot be realized without a good data governance model in place. Always remember the GIGA principle: Garbage In, Garbage Out. Many of my clients call me for help complaining about their software vendor's shortcomings when the issue lies squarely with the users. For instance, you'll find users in different subsidiaries that are reluctant to use the system because the data is obsolete or doesn't reflect reality ("Oh dear, but we haven't used those job codes in years:") Well, whose fault is it? Have you communicated this information to the corporate HRIS team? Is there an HRIS manager/coordinator in the first place? Do they solicit feedback from local users? Have they involved them in the design of the global system?
All these questions will determine the success of a global HR system, whether it is a Talent Profile, a Data Hub or an HR System of Record. Those who have worked with me know that I have zero tolerance for, and am quite vocal about, vendors who over-promise, under-deliver and build crappy products. But that does not mean that HR leaders and users can hide behind that to shirk their responsibilities. After all, your HR system is YOUR tool, it is about YOUR people, YOUR company. It is therefore YOUR duty to do the required due diligence and ensure you have the best system to meet your company's requirements. It is nobody else's responsibility.
NOTE: In order not to overload the graphs I have simplified them. Thus, the interfaces are all shown as one-way to reflect the more important flow direction, even though some (for instance between Payroll and HR) is often a two-way flow (to update compensation data following payroll processes.) Also, interfaces can be much messier than what appears, with payroll interfaced with a third-party system (such as a Benefits provider.) And in the case of companies that do not use either a Hub or a SOR, point-to-point interfaces will make the graphs (and the reality behind them) even clunkier. But all these deviations do not detract from the best practice tips offered in the post.