by Dr. Ian O. Williamson *)
The post global financial crisis (GFC) world has seen seismic changes in the economic wellbeing of countries across the world. Fast-rising economies such as Iceland and Ireland have melted. Traditionally strong economies, such as the United States, appear headed for long difficult recoveries. Alternatively, many economies in developing countries are experiencing major growth. In many respects, the only thing that appears certain in this post-GFC world is uncertainty. Against this background, there has perhaps never been a more difficult or opportunistic time to run a multi-national organisation.
Knowledge workers represent a critical resource for multinational organizations because their judgment and tacit knowledge are keys to organizations adapting and exploiting opportunities in different economic environments, while their social relationships with other knowledge workers often serve as critical intra-firm coordination mechanisms. Thus, the failure of a multinational company to properly motivate, develop and retain knowledge workers across their global operations can lead to a reduction in organizational innovation, poor coordination and an overall decline in organizational performance.
In a recent study my co-author Julie Cogin (Australian School of Business) and I examined the relationship between the human resource management (HRM) practices used by divisions of a multi-national company and division performance.
In particular, we were interested in understanding whether division performance is enhanced by allowing managers to customize their HR practices to local conditions, versus implementing standardized HRM practices globally across different division. The results of our study suggest that in the context of talent management allowing mangers to customize
their division’s HRM practices was associated with higher division profitability and higher levels of customer satisfaction. Furthermore, the benefits of customizing (as opposed to standardizing) division HRM practices were even more pronounced for divisions located in regions that experienced high levels of environmental uncertainty (e.g., changes in the economic, political, technological or competitive environment).
The results of this research suggests that in the post-GFC environment multi-national firms may benefit greatly by giving general managers greater discretion to tailor HRM approaches to fit local conditions. However, this approach also places greater importance on ensuring that general managers have the training and skills needed to identify and implement HRM strategies appropriately.
*) Dr. Ian O. Williamson
is a member of the Lorange Faculty. Raised in Chicago, he is a Professor of Management at the Melbourne Business School (Australia) and a Research Fellow of the Intellectual Property Research Institute of Australia. His expertise is in the recruitment, development, and retention of knowledge workers (e.g., executives, IT workers, consultants, and lawyers). He also examines recruitment and selection issues in the context of small businesses and how internet technologies can enhance firm recruitment outcomes. Drawing knowledge not just from his academic studies but also from a wealth of practical industry experience he has taught executives on every continent in over 10 countries.