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Sourcing Global–Local Continuum The global–local continuum is a continuum with three positions. On the one end of the continuum is the multi- domestic model. In this case, HR is a portfolio of country organisations. Within countries, there might even be standalone HR functions rather than one single entity. Accordingly there is very little interaction; countries and operating companies make their own decisions. On the other extreme is the global company. In such a model headquarters dictates a great deal, and the company is managed as a single entity. In between is the hybrid company. In this model some things are left to local discretion, while other things are determined and monitored from a global level. Additionally, various things might be organised on a regional level. The seven HR directors who were interviewed made it clear that the pendulum within HR is gradually swinging to the global end of the spectrum. Despite this trend, there are organisations that consciously make a different choice. For example, one of the participants of the session noted that they operate a multi-domestic organisation model because they believe that the countries and business are more capable of defining and fulfilling their needs. Besides, they pursue more diversity in culture between the different countries. As a result, it can be concluded that a one-size-fits-all model does not exist. Drivers In the interviews, several drivers behind this trend were revealed. The first is the perpetual search for lower costs whilst maintaining acceptable quality levels. When operations are pulled to a higher level, volume is created, providing leverage towards service and application providers. In addition, cost-effective locations can be used to deliver services. Simultaneously, consolidation accelerates process and policy rationalization and optimisation; and it can eradicate local maverick behavior. Another driver is the ever higher investments that are required to create state-of-the-art HR. This dynamic has a technology aspect and a knowledge aspect. After a rather long run- up, technology has established a strong position within HR. Single countries can often not afford the required investment. Concerning knowledge, we see it is quite hard to find and retain experts on functional areas such as compensation, learning, etc. When this is centralized, fewer experts are required and more interesting positions can be offered. Thirdly, safety, health, environment and quality (SHEQ becomes increasingly important. Many companies are afraid to become the next BP and/or are starting to see sustainability as a competitive edge. This was the case for the bulk liquid storage company that was interviewed. Consequently, they want to ensure everyone within the company follows SHEQ procedures and accordingly abides by some central steering. Furthermore, the need for information increases. The interviewee from the high-tech company indicated his company is often involved in corporate development (divestments, mergers, takeovers). Hence, management demands fast and accurate information—a demand that can only be met when there is a certain degree of global coherence. In the session, the need for accurate and up-to-date information was emphasised, the main reason being risk reduction. At the corporate level, transparency and reporting are required from the HR department to easily adjust, govern, and control the organisation. The final driver is talent scarcity. For the asset management and maintenance company, experts become assets who need to be moved around with great flexibility as specialist knowledge becomes scarce. Additionally, in order to retain talent and managers, many firms increasingly need to offer international challenges. For this reason, globally identical HR processes become more valuable, since this reduces the time required to get these people fully operational and productive. The Sweet Spot As soon as drivers are clearly defined, one can commence contemplating HR's sweet spot within the organisation. Since HR is still an entity with quite some variation, HR has been split into four objects of analysis in this article: HR products and services, customer interaction, information technology, and vendor management. Before we go into these entities, one general observation has to be made: Interviewees and session participants did not all have the same optimum in mind. It became clear that the move towards globalisation depends on the nature of the business and the company. Clarifying questions must be asked: Are there global customers to be serviced? According to which value discipline does the company operate (see Figure 2)? Which markets are being serviced (stable economies or developing economies)? Are the operations abroad long-term or temporary? "Best Product" Product Leadership Product Differentiation Operational Competence Operational Excellence "Best Total Cost" Figure 2: Value Disciplines For example, the interviewed industrial conglomerate operates in many developing economies, which have characteristics different from developed economies (e.g., twice a year salary adjustments vs. once a year). Additionally, they work on a project basis in which speed and agility are key. As a result, in some cases they have chosen optimal flexibility and limited global standardisation. Customer Responsive Customer Intimacy "Best Total Solution" [16] HRO TODAY GLOBAL | FALL 2011

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