As we head into 2015, a growing number of large companies are focusing more than ever on a globally consistent Human Capital Management (HCM) experience. What’s driving this shift? It’s the increasing complexity of regulatory compliance. To keep pace with evolving payroll tax and labor laws across multiple states in the United States, and in countries around the world, many of our large clients now want to manage this critical function with a team of HCM and compliance experts that is focused globally, but that also recognizes a need for tactical execution locally.
The term “glocalization” is a good way to describe this emerging trend.
Under glocalization, a company’s employees within individual countries no longer make their own compliance decisions. Instead, the organization as a whole creates a strong foundation to help ensure compliance on a global scale. This approach enables a company to confidently manage compliance so it can focus on running its business – from addressing, say, anti-money laundering policies in Europe and China to the myriad Affordable Care Act requirements in the United States, to other country-specific requirements in payroll, talent management, taxes and more.
A key component of glocalization is concentrating responsibility for compliance in fewer areas of an organization – such as with the CHRO organization – along with decision-making support from other C-suite executives. For example, as CHROs at multinational employers implement global payroll systems to simplify compliance with diverse payroll tax laws, they must closely collaborate with their CIO on issues such as how to host that system and store payroll data, given mandates from certain countries to house employee data within national borders. The CHRO and CIO also need to jointly determine how to secure that information in compliance with data security and continuity laws within the European Union and other countries where the company operates.
In addition, CHROs who embrace glocalization for compliance issues are increasingly collaborating with their CEOs and CFOs on decisions regarding the cost and expected return on investment related to global payroll and HCM systems deployed to support compliance efforts. They are also working closely with these executives to determine system impacts on employees and the company’s overall workforce management strategies.
As CHROs assume greater responsibility for regulatory compliance, expect to see more large employers managing these decisions globally with support from local, integrated HCM systems. This will help them reduce both compliance risk and administrative burdens, freeing CHRO organizations to contribute even more strategic value to the businesses they support.