Types of Global Organizations

A growing number of organizations that operate within only one country are recognizing that they must change and develop a more international perspective. Organizations may pass through three stages as they broaden out into the world,IMPORTING AND EXPORTING The first phase of international interaction consists of importing and exporting. Here, an organization begins selling and buying goods and services with organizations in other countries. Most of the international contacts are made by the sales and marketing staff and a limited number of other executives who negotiate contracts. Generally, HR activities are not affected except for travel policies for those going abroad.MULTINATIONAL ENTERPRISES As firms develop and expand, they identify opportunities to begin operating in other countries. A multinational enterprise (MNE) is one in which organizational units are located in foreign countries. Typically these units provide goods and services for the geographic areas surrounding the countries where operations exist. Key management positions in the foreign operations are filled with employees from the home country of the corporation. As the MNE expands, it hires workers from the countries in which it has operations.HR practices for employees sent from corporate headquarters must be developed so that these employees and their dependents may continue their economic lifestyles while stationed outside the home country. Ways to link these individuals to the parent company are also critical, especially if the international job assignment is two to three years long. There are likely to be laws and regulations differing from those in the home country that must be considered. As a result, the HR professionals in the parent organization must become knowledgeable about each country in which the MNE operates and know how staffing, training, compensation, health and safety, and labor relations must be adapted.GLOBAL ORGANIZATION The MNE can be thought of as an international firm, in that it operates in various countries but each foreign business unit is operated separately. In contrast, a global organization has corporate units in a number of countries that are integrated to operate as one organization worldwide. An MNE may evolve into a global organization as operations in various countries become more integrated.

Another example of making the transition from MNE to global organization involves Ford Motor Co. in the early 1990s. Ford started shifting from having a separate, relatively autonomous unit on each continent to operating as a global firm. One facet of Ford’s approach illustrates the shift. Previously, Ford had its major design centers in the United States, and centers elsewhere adapted U.S.- designed vehicles to market needs in various countries. If separate Ford vehicles were developed, they often differed in model name and style. Under the global approach, Ford is merging design facilities and people from all over the world. In centers located in several countries, designers, engineers, and production specialists will work in teams to develop cars. Ford plans to develop a common “platform” and model for what it hopes will become a “world car” that can be produced and sold throughout the world. It will differ in different countries only in having the steering wheel and the instrumentation on the right for such countries as Great Britain and Australia.

HR management in truly global organizations moves people, especially key managers and professionals, throughout the world. Individuals who speak several languages fluently are highly valued, and they will move among divisions and countries as they assume more responsibilities and experience career growth. As much as possible, international HR management must be viewed strategically in these organizations. Global HR policies and activities are developed, but decentralization of decision making to subsidiary units and operations in other countries is necessary in order for country-specific adjustments to be made.