Global HR risk management - How mature is your company?
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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