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The challenge of implementing HR technology in multinationals

9th Jan 2014
Contributor HRZone
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Technology is changing the shape of the HR landscape, presenting business of all sizes with the potential to develop more efficient processes and create a more engaged workforce. Our HR Technology Toolkit, published just last month, looks at the theory and practice behind these opportunities. But what are the specific challenges to multinational corporations? Do the same principles apply or are these global businesses really a world apart from small or medium sized organisations when it comes to HR technology?

If multinational corporations wish to stay competitive then they cannot underestimate the attention they must give to strategic Human Resource Management (HRM). After all, HR Technology can improve cost reduction, boost service levels, aid strategic focus and potentially improve employee engagement (discussed in our previous post). When it comes to implementing and using HR technology across international borders however, it’s not possible (or at least it would be unwise) to adopt a standard approach.

Lets start by looking at smaller organisations (those of less than 500 employees) who, studies suggest, are less likely to implement HR Information Systems, and if they do will usually stick to basic functions with no customisation or additional modules such as training. For multinational corporations the potential reward is just too great to take such a limited approach. One of the most notable benefits of HR technology is that of greater control over intellectual capital, as identified by Dr Huub Ruël of Windesheim University Of Applied Sciences in his contribution to the Technology Toolkit. Dr Ruël suggests that, “providing employees with specific personalised applications through HRM portals means HR technology can be a key method in the creation of competitive advantage through intellectual capital.” There will of course be the threat of other companies following suit to minimise such an advantage, but this leads to even greater innovation in the use of HR technology.

In studies from as early as 2004 academics recognised that a gap exists between the available functionalities of HR technology and the reality of how it is actually used (see Toolkit for details). This, perhaps, raises the important challenge of implementation and adoption across multiple global sites.

A key concern for those implementing HR technology must be in the use of language across multiple nations. There are major differences in communication style between countries and, with regards to his study between the USA and Western Europe, Dr Ruël noted that, "a global economy doesn't mean language preferences can be standardised. Local preferences may prevail". When designing, implementing and evaluating HR systems, organisations must take a socio-technical approach – they must consider the technology needed, but also the effect this has on different people and the way they will respond.

When implementing HR technology in multinationals, the direct influence of the headquarters is one of the most important drivers and a highly top-down (headquarters-driven) approach will risk of failure due to the potential for alienating local users. While the standardisation of HR technology (whether in terms of language or any other aspect) may seem appealing from a cost perspective, this should possibly be seen as a potential false economy as such compromises may hinder full adoption by a global workforce.

Multinational corporations should also be aware of the differences in national legal systems and the complexities this can bring. Payroll in particular is recognised as presenting a difficult challenge for technology to overcome without the integration of local solutions.

Finally then, global organisations must accept that HR technology implementation on a worldwide scale will take time. Similarly, a long-term approach must be taken when looking at the results and outcomes of such implementation for an accurate assessment of its success. Implementing technology in multinational corporations comes with a number of challenges not experienced by the smaller business, challenges that cannot be taken lightly or hastily.

This post has delivered a virtual summary of the complexities of implementing HR technology in multinationals. For more detail and to read Dr Huub Ruël’s findings in full, download the HR Technology Toolkit now.

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