HR Tools Back Global Goals, Mercer Execs Say

December 17, 2007
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GRAND RAPIDS — Sorting out human resources issues is essential for companies seeking to maximize profits across the globe, two executives from consulting firm Mercer LLC said at a World Affairs Council meeting last week.

Mercer executives Patrick Hickey, principal and senior consultant in international consulting practice, and Gareth Williams, worldwide partner and global leader of total rewards and integrated solutions consulting services, kicked off the World Affairs Council’s new executive briefing series at the University Club last week. Several dozen human resources leaders from West Michigan heard the two Chicago-based Mercer experts discuss the forces at work in doing business across the world.

“You need to have a fundamentally strong framework and philosophy around how you want to treat your people,” Hickey said. “Part of the challenge is defining what is the right type of employee. Companies constantly struggle with that: ‘Should we send an expatriate or do we hire local?’”

Small- and medium-sized companies may find that navigating differing employment conditions, compensation traditions and legal requirements in various countries gets overwhelming, he added.

“I think sometimes people get a little too rigid about getting it perfectly right. They also get too academic around compensation and benefits in human resources when you’re only employing three to five or 10 people in a country. They need to also test it against what’s right for the business. Knowledge and data and information is critical,” Hickey said.

Aging populations are putting pressure on legacy benefits costs, not just in the U.S., but across the world, said Williams.

“In many developed countries in the rest of the world, health care, in particular, has been much more government-driven. So companies haven’t built up significant liabilities, but governments have,” Williams said. “Governments will not be able to afford those benefits in the long term, so they’re either going to have to increase taxes or they’re going to have to cut back on benefits, and they’re going to do so by pushing some of the costs of those benefits on employers.”

Another impact is finding workers to replace those who are leaving the work force. For example, Williams said, training for engineers to run nuclear energy plans has dwindled, so that fewer qualified young people are being produced to replace those who are leaving the work force. “It’s just a mismatch between skills and what’s needed,” he said.

For a mid-sized company, navigating the global marketplace can be a puzzle. Craig Meurlin, a lawyer with Warner Norcross and Judd and a World Affairs Council member, points out that to compete in today’s auto market, a local supplier needs to be able to nimbly respond to an OEM’s demands for supplies in countries scattered across the continents, often on short notice.

“The reality in the auto industry today is one of global platforms and global integration,” he said.

Providing that reach into other countries is the responsibility of human resources specialists.

“Now they have to understand how to attract, retain and employ people across all these geographies,” Hickey said.

At the same time, the paternalistic employer who kept employees for decades is giving way to employees who reject that model and seize control of their careers.

“There’s an increased need to understand what it’s going to take to keep employees engaged and motivated and connected to the organization,” Williams said. “So they need much more aggressive communication, much more seeking of information from employees in the respect of their perspective on the employment relationship, much more focused on opportunity. There’s much more of a free-agent mentality.”

For example, he said, one client thought its level of employee turnover was quite low. But once Mercer looked closer, it found that the company’s best-performing employees were leaving in droves, leaving behind their lower-producing counterparts. The company’s compensation package was structured to encourage the high-performers to leave for better packages and rewarded the lower-performing workers to stay with the company.

But appropriate pay and benefits packages just get a company onto the playing field, and other factors are more important to employees.

“Our studies would say it’s about the work that people do, it’s about leadership, it’s about colleagues, and it’s about the environment that they work in,” Williams said. “Just because the solution you developed in the U.S. worked well in the U.S., you can’t just take it and drop it in (elsewhere.) It could be destructive.”

Outsourcing and offshore service centers are definite trends, they said, although they can backfire if not well-executed. Communications technology is changing rapidly and can be harnessed to improve customer service and engage employees, especially younger workers, they said.

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