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HR Legal

Global HR risk management - How mature is your company?

Blog
calendar 1 March 2021
globus Denmark

Multinationals need to consider how mature they are when it comes to Global HR Compliance. Today, many multinationals focus too little on the different risks within HR, which is a risk for the entire company.

Generally, companies can be divided into three categories on the basis of their Global HR Compliance. Multinationals expanding or already having a presence around the globe often have a focus on commercial risk management, but when it comes to HR risks the focus varies from a full compliance program to virtually no risk management. 

The challenge with HR risk management is often that the financial exposure in each individual case is limited, but when considering the same individual case in the context of possible multiple similar cases within the company, the risk of product or employer brand exposure, employee dissatisfaction, and other non-financial risks for the company, HR risks are an area which HR departments and management need to address, if they do not already.

Many companies focus on cost, and for multinationals it has led to a process where the amount of vendors, including outside counsels, have been reduced, and if possible limited to one so-called global provider. However, even if dealing with so-called global law firms, it is important to communicate directly with local counsels in each jurisdiction, as this will be the only way for the company to ensure that they get up-to-date strategic advice on best practices and alerts on important local Developments.

There is no one size fits all, but from experience we are able to place companies on a maturity scale, which tells us which steps the company should consider to improve their risk management proactively:

Companies with no Global HR strategy

Companies who are either in the beginning of their global expansion, or who have taken a more one-size-fits-all approach for their global HR strategy, tends to have a very low focus on global HR compliance.

Companies with a Global HR strategy

Companies who have had operations around the world for some time, or who have implemented a global HR strategy, will tend to focus on some of the key elements linked to global HR risk management, but not all.

Companies with Global HR compliance

Companies who have a formed strategy, and proactive approach to HR compliance on a global scale, and with a network of local counsels, which assist with localization and advice on best practices on an ongoing basis.

3 categories

If we look at the different elements within Global HR compliance, we can divide the different company types into these three categories: 

Generally, companies can be divided into three categories on the basis of their Global HR Compliance. Multinationals expanding or already having a presence around the globe often have a focus on commercial risk management, but when it comes to HR risks the focus varies from a full compliance program to virtually no risk management. 

The challenge with HR risk management is often that the financial exposure in each individual case is limited, but when considering the same individual case in the context of possible multiple similar cases within the company, the risk of product or employer brand exposure, employee dissatisfaction, and other non-financial risks for the company, HR risks are an area which HR departments and management need to address, if they do not already.

Many companies focus on cost, and for multinationals it has led to a process where the amount of vendors, including outside counsels, have been reduced, and if possible limited to one so-called global provider. However, even if dealing with so-called global law firms, it is important to communicate directly with local counsels in each jurisdiction, as this will be the only way for the company to ensure that they get up-to-date strategic advice on best practices and alerts on important local Developments.

There is no one size fits all, but from experience we are able to place companies on a maturity scale, which tells us which steps the company should consider to improve their risk management proactively:

Companies with no Global HR strategy

Companies who are either in the beginning of their global expansion, or who have taken a more one-size-fits-all approach for their global HR strategy, tends to have a very low focus on global HR compliance.

Companies with a Global HR strategy

Companies who have had operations around the world for some time, or who have implemented a global HR strategy, will tend to focus on some of the key elements linked to global HR risk management, but not all.

Companies with Global HR compliance

Companies who have a formed strategy, and proactive approach to HR compliance on a global scale, and with a network of local counsels, which assist with localization and advice on best practices on an ongoing basis.

3 categories

If we look at the different elements within Global HR compliance, we can divide the different company types into these three categories: 

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Anders

Etgen Reitz

Partner
  Companies with no Global HR strategy Companies with a Global HR strategy Companies with Global HR compliance
Outside counsels

Low use of counsel

One global outside counsel

Direct with the local counsels around the world

HR templates

Global templates

Localized templates (only legal)

Localized templates (best practices and legal)

Global HR policies

Global policies

Global policies

Localized or local policies

HR information systems

No system

Global system

Global system, reviewed for compliance, employee consents and local data protection agency approvals in place

Ethics / compliance

No system

Global system

Global system, reviewed for compliance, employee consents and local data protection agency approvals in place

Labor relations

No strategy

Avoidance strategy

Stakeholders identified, CBAs in place or benchmarked and translated, employee rep organization in place

Mobility

Use of consultants or other alternatives to employment in countries without a legal entity

Global mobility policy, Expat agreement assessed for tax risks on a case-by-case basis, but not employment risks

Global mobility progam (policies and templates) localized both for employment, tax and immigration issues.

HR Taxation

Corporate taxation considered

Key tax issues considered

All tax issues considered, and compliance plan / policy for HR decisions with tax risk

Compensation and benefits

Global benefit plans

Global benefit plans, reviewed for local tax issues

Global benefit plans, localized for legal and tax issues

Health and safety

No strategy

Global procedures, no proactive measures

Global proedures, localized, proactive measures

Diversity and anti-discrimination

No strategy

Global policies, no training

Global procedures, localized, training

IP, property, confidentiality and data security

Global IP agreements, no policies

Global IP agreement localized, global policies

Global IP agreement localized, global policies localized, proactive measures

Performance management, grievances and disciplinary

Global policies

Global policies, case-by-case assistance

Global policies localized and proactive measures

Employee authorities and supervision

Global policies, no structure

Global policies, global matrix, no grandfather principle

Global policies localized, global matrix, grandfather principle

Operational

Global procedures, no strategy

Global procedures, global strategy

Global procedures localized, local strategy

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