ProSem was founded over 150 years ago and operates in 190 countries worldwide. It has over 400,000 employees – 41% in Germany (the parent country), 26% in the rest of Europe, 16% in the USA, 11% in Asia, 4% in South America, and 2% elsewhere. The company made a conscious shift from a home-country ethnocentric focus on corporate management to a more geocentric focus in 2000. There is therefore an attempt being made to change the relationship between the corporate center and subsidiaries.
The HR department in the global head office (Corporate Personnel – CP) today provides worldwide mandatory HRM standards which are implemented in the different business groups and geographic regions. Since 2000, CP has been collecting examples of best practice to disseminate from one central point. They have realized, however, that it is important to get the subsidiaries’ buy-in to this process as CP alone cannot dictate to other HR departments what they must do. Hence the global HRM policy is: “based on guiding beliefs which are common throughout the company yet allow some country specific localization in different markets.”
Global principles adopted so far include Recruiting, Remuneration, Benefits, Pension, Expatriation, Health & Safety, Diversity, Business Conduct Guidelines and Performance Management, and are being adopted worldwide. The guideline documents include a combination of mandatory standards and recommended principles for implementation, including a description of the roles of the HR and line functions at the different levels of the organization.
To date, ProSem has experienced difficulties in spreading HRM practices world-wide, including dealing with the complexities of a matrix organizational structure, the different levels of qualification and experience amongst HR and line managers in regions, and issues of power distance within and between countries.
ProSem is currently working on developing HR as a valued part of the business across its sites in the many different countries. Although most HR departments in European countries and the US are operating as business partners, in some locations steps still need to be taken to go beyond an administrative focus. It is however seen as important to be good at the administrative things in order to be accepted at the business partner level. Administrative excellence used to mean payroll excellence, however, it now means having e-processes in place for recruitment, for example, to match other business processes.
Delivery of HR is largely through employee and manager self-service systems. In the parent country, there is a very large amount of information (policies and practices) available on the intranet. These systems are also highly developed in other locations. Such systems fit the philosophy of ProSem because: they are cost-effective; the employee him or herself knows the reliability of the data best; there is directness of contact; they fit the culture of a technology related company.
The people based in CP are working with their counterparts across the globe in networks, such as the HR communities of practice. As ProSem has a multi-stakeholder structure combining business units and countries, it is not a question of hierarchy and reporting lines, but a need to treat people consistently within and across countries and businesses. There are a number of global communities of practice (CoP) based on business priorities: Recruitment (talent supply); Compensation and benefits; Learning and development; Employee relations; Diversity; Organization effectiveness; Labor relations.
The stated objectives of the CoPs are: to share and reapply knowledge within HRM, bringing together best practices across the company; to own the projects on the initiative calendar and work towards achieving the action plan set. The priorities of the various CoPs are discussed internally and approved by the HR Leadership team. Small task forces are then set up within a group to work on particular policy issues, researching a topic both internally and externally to the company. These teams report back to the CoP with suggestions, the CoP then decides direction, and the HR Leadership team approves the final policy document. In addition to the policy itself, the CoP also develops appropriate tools and deployment materials such as leaflets and videos.
The CoPs operate as international networks, with a broad range of countries involved. Contact is maintained through regular audio meetings, email and shared team spaces on database systems. Face-to-face meetings are held every 12-18 months to help set the vision and direction of the group, and to build relationships. Members also meet occasionally at ad hoc training sessions. People do not normally move between groups as there is a need to maintain continuity of membership to help make the relationships work. There is a combination of experienced and new people in the groups so the CoP also has a mentoring capability.
The work of the CoPs has resulted in more input from the different countries in HRM policy, creating more acceptance of a global policy although variety in application does still exist. Business units do not need to gather information for every country in which they are based, but can rely on the CoP to come up with a suitable baseline policy which can then be implemented with a local spin where necessary. Ownership of the policy has also been created through the multi-stakeholder nature of the CoP.
There are however issues with the CoPs as they are still in their infancy. People can find it hard to adopt policies developed centrally. Also, there is sometimes a feeling that the community of practice work is extra work, particularly amongst the HR generalists involved, rather than it being an enabler to achieve one’s own goals. It is meant to be seen as an opportunity to take ideas from others as well as sharing one’s own ideas. There is still an issue of the extent to which the activities of the CoP are recognized by local managers: “the CoPs are invisible outside HR, but inside they are critical to how we operate.” The global level Compensation and Benefits CoP was formally established in 2003. After an enthusiastic start, the issue now is how to keep the CoP alive. There have been a number of changes of people within the group, creating discontinuity in its functioning.
Despite all of this activity, knowledge sharing and jointly building knowledge are still areas which can be further improved within the company. There are still barriers and cultural inhibitors, which are difficult to overcome despite an abundance of IT tools to support initiatives. Although in the technical fields, people within the company are used to sharing knowledge, in other fields this is not yet common practice. There needs to be attention paid to how to get people to use the CoPs rather than more traditional sources of information and learning.
Using Bartlett & Ghoshal’s (1989) terminology, describe what type of multinational this company is striving to be and what its focus was previously? Give reasons for your answer.
In your own words, describe how the company goes about keeping an appropriate level of balance in HRM policy between what is prescribed at global level and what is needed to meet local demands?
List the three difficulties in spreading HRM practices worldwide stated in the case, and explain briefly why you think each one might be having a negative effect?
Seven priorities have been identified in previous research for international HR networks (refer to the commentary for this lesson). How well are these priorities being achieved by ProSem’s CoPs? Justify your answer for each priority based on the evidence in the case.
What forms of communication are used to run the CoPs? Which are best for transferring ‘sticky’ knowledge and why?
Explain how you believe the use of communities of practice can help develop the three components of intellectual capital across the firm’s HR community.
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