Managing a Global Integrated Workforce

4/30/2012

Expansion in a Globalised Economy

As companies stake their growth strategies on global expansion and the pursuit of new markets, their ability to forge a human capital strategy and HR capability that is both globally consistent and locally relevant will be critical to success.i Globalization and Workforce migration has created opportunities for individual and corporation, however it brought along new issues that challenge strategic frameworks developed in the past while forcing organizations at the same time examine their internal strategies to remain competitive and rejuvenate its global workforce to create a sustainable future.

To illustrate this, let us look at the case of Toyota struggling with organizational structure. Toyota Motor Corporation was referred to the gold standard of the

automotive industry and to customers they were known for quality and customer care. The driving force behind their success is the practise of Toyota Production System (TPS). TPS is built on the principles of just-in-time production. It means that raw materials and supplies are delivered to the assembly line exactly at the time they are to be used. It emphasizes on the importance of efficiency and minimizes wasted resources. TPS also empowered the employees at the front line to pull a cord and stop the manufacturing line when they see a problem. This process ensures cars were made and delivered Right First Time, enforcing the core values of quality and customer care. It led the company to overtake General Motors and Chrysler in terms of sales growth during the global financial crisis. However from 2009 2010, Toyota recalled over 8 million of vehicles due to defects. ii

Organizational Structure of Global Workforce

How could this happen to a company known for quality and customer care? Let us examine this further. Toyotas board of directors is composed of 29 Japanese men, all of whom are Toyota insiders. As a result of its centralized power structure, authority is not

generally delegated within the company; all U.S. executives are assigned a Japanese boss to mentor them, and no Toyota executive in the United States is authorized to issue a recall. Most information flow is one-way, back to Japan where decisions are made. iii

The organizational structure of Toyota resembles a Mechanistic structure which similar to a bureaucracy. These structures are highly formalized and centralized, often rigid and resist to changes. It is slow to react to market changes and does not encourage innovation.

The downside of a Mechanistic structure is that it inhibits entrepreneurial spirit and discourages individual initiative in doing whats right for the business. This type of structure leads to lower motivation of individuals and limits the organization to have a 360 view of its business and performance. However, the upside of Mechanistic structure is that it provides stability to organizations operating globally with HQ in its home country. Decision and Power within its HQ and communication flowing downwards will tend to maximize efficiency and minimize costs For example, McDonalds has a famously bureaucratic structure where employee jobs are highly formalized, with clear lines of communication and specific job descriptions. This structure is an advantage for them because it allows McDonalds to produce a uniform product around the world at minimum cost.iv Mechanistic

structures can also be advantageous when entering into new market, which lack structure, role ambiguity, and uncertainty. The presence of a mechanistic structure will provide a stable structure in new market and allow operations to start-up efficiently.

In contrast to mechanistic structures, organic structures are flexible and decentralized. Organic structure allows broader employee job description and encourages individual initiative to perform task beneficial to the organization. The communication lines in this structure are more fluid and flexible.

Organic structures tend to be contributing to higher levels of job satisfaction in employees. This structure is conducive to entrepreneurial behaviour and encourages innovativeness.

An example of a company that has an organic structure is the diversified technology company 3M. The company is strongly committed to decentralization. At 3M, there are close to 100 profit centres, with each division feeling like a small company. Each division manager acts autonomously and is accountable for his or her actions. As operations within each division get too big and a product created by a division becomes profitable, the operation is spun off to create a separate business unit. This is done to protect the agility of the company and the small-company atmosphere.v

Building a Global Integrated workforce with 7 key capabilities

To help Toyota transform its management and better manage its global workforce. We will need to look at the organizational structure in 7 key areas.

1. Understanding the demographics and capabilities of the workforce

We need to consider the various age group, gender, culture and social needs of the workforce. The average age of workforce will increase as baby boom generation nears retirement age and the numbers of younger workers are insufficient to fill the gap.vi Organizations need align job type, structure and benefits to address the aging workforce, while leveraging on valuable knowledge of these workforce.

Organizations need create flexible work hours and mentoring opportunities to the younger workforce achieving knowledge transfer and lowering attrition. The public recognition in the value of aging workforce will increase motivation and well being of the organization.

2. Predicting future labour supply and demand

To successfully predict future labour supply and demand, the organization must have clear vision and goals. Human resource function will need to increase its awareness

of global mortality trends, migration trends, multi-generational social trends and the proliferation of technologies and its impact to the global workforce to effectively integrate the organizations vision and goals into indentifying talent requirements and effectively deploying right resources responding to future labour supply and demand across the globe.

3. Utilizing social networks to increase the visibility and application of knowledge across the organization

Leveraging on Technology to integrate ideas, creating virtual teams, bridging communication gaps and increasing visibility of individual employees globally will facilitate knowledge sharing, foster stronger relationship and encourage cross-border collaboration to solve problems faster.

4. Enabling individuals to perform work regardless of location

Communication and Collaboration technologies have made it possible for certain type of job functions to work across locations, bridging communication gaps through audio & video conferencing lowering cost and developing stronger relationship. The increase use of these technologies will allow organizations to follow the sun in their global operations increasing sustainable productivity.

5. Facilitating collaboration across traditional organizational boundaries

Implementing hybrid structure of Matrix and Organic structure and the use of technologies will facilitate cross border communication and collaboration. However, cross cultural differences may impact the collaboration progress. Therefore, it is critical to orientate cross cultural differences in the integration of corporate culture and to some extent localize corporate culture catering to deep language and culture differences minimizing negative impact along the way.

6. Driving the rapid development of skills and capabilities to meet changing business conditions

Responding to market trends and competitors transformation, the organization has to review their talent pool, structure and development plans to ensure its relevancy to external forces. Developing the right skills and capabilities to meet future demands and changing business conditions. 7. Evaluating employee performance and providing appropriate feedback. vii

Develop specific balanced scorecard catering to different segment of the business and operations that integrates a variety of measures of organizational quality and performance. Break it down further to financial and non-financial measurements to ensure it is balanced to achieve the vision and goals of the organization.

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Insight
Organizational change is inevitable. Therefore the organization should take considerable steps to orient change in all levels to minimize resistance, integrating corporate into different cultures and ease the transformation process. Promoting change champions in different cultures, leveraging on technology, renewing processes will ease the change process and fostering closer bonds.

In short, change management is an important leadership skill that spans the entire range of P-O-L-C functions.

P-O-L-C framework (figure 1) ix

References
i

Accenture - The journal of high-performance business, 2011 No.2 issue of Outlook www.accenture.com
ii

Carpenter ISBN - 978-1-4533-0090-9. Carpenter, chapter.07 - principles of management Carpenter ISBN - 978-1-4533-0090-9. Carpenter, chapter.07 - principles of management Carpenter ISBN - 978-1-4533-0090-9. Carpenter, chapter.07 - principles of management Carpenter ISBN - 978-1-4533-0090-9. Carpenter, chapter.07 - principles of management

iii

iv

vi

Lerman, R. I., & Schmidt, S. R. (2006). Trends and challenges for work in the 21st century. Retrieved September 10, 2008, from U.S. Department of Labour Web site,http://www.dol.gov/oasam/programs/history/herman/reports/futurework/ conference/trends/trendsI.htm.
vii

Transforming the workforce Seven keys to succeeding in a globally integrated world, IBM Global Business Management, Human Capital Management
viii

Carpenter ISBN - 978-1-4533-0090-9. Carpenter, chapter.15 - principles of management

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Carpenter, M. A., & Sanders, W. G. (2009). Strategic management (p. 8). Upper Saddle River, NJ: Pearson/Prentice-Hall. Erdogan, Berrin., Bauer, Talya., and Carpenter, Mason., Principles of Management. Retrieved Apr 15, 2010 from http://www.flatworldknowledge.com/node/28982. Erdogan, Berrin, Bauer, Talya, , and Mason Carpenter. Principles of Management. 1969 . Flat World Knowledge. 15 Apr, 2010 Diagram is taken from http://www.web-books.com/eLibrary/NC/B0/B58/030MB58.html