What does globalisation 2.0 mean for the workplace?

Globalisation has been a reality for some time. Western multinational firms have gradually moved to operate from distant, low-cost bases. According to Vielmetter and Sell (2014), this pattern will generally continue, but at the same time, the way in which globalisation works is evolving.

It has been said that arguing against globalisation is like arguing against the laws of gravity.

The quote above is from Kofi Annan, former secretary-general of the United Nations, cited in Vielmetter and Sell (2014: 13).

Globalisation 2.0 is fundamentally characterised by a shift in power from west to east. For example, China has been the fastest-growing economy over the past 30 years.

The other defining feature of Globalisation 2.0 is the rapid expansion of the middle classes in emerging markets. Goldman Sachs in 2005 identified the next 11 emerging economies and seven of these are in Asia: Bangladesh, Indonesia, Iran, Pakistan, the Philippines, South Korea and Vietnam. In comparison, the list contains only one European country: Turkey. Also included are Mexico, Nigeria and Egypt (O’Neill et al. 2005).

Increasing cross-border collaborations

Unsurprisingly, over 70% of business executives expect their company’s international involvement to increase (Tuleja 2017). Globalisation 2.0 will inevitably require more cross-border team collaborations.

When more than 500 executives were asked about future challenges in meeting these demands as part of a survey by the Economist Intelligence Unit in 2012, it was clear that cultural issues regarding both communication and collaboration would be the most pressing:

• 50% of the respondents had experienced cross-cultural communication problems and claimed that such misunderstandings had impeded their business dealings, leading to financial loss for the company.
• Another 50% said that their biggest challenge was responding to differences in the cultural norms of their counterparts in cross-border interactions.
• Notably, 90% said that being able to deal with communication issues would improve their company’s profit and that it was imperative to do more to educate employees regarding cross-cultural differences.
• Only 47% said that their companies had an appropriate system in place for selecting and training people suitable for such interactions. However, regarding that 47%, it wasn’t clear what companies did to help prepare their workforce to meet the demands of a globalising society.

Leaders face many challenges in effectively managing globally diverse teams. For example, one issue is compensation, which can be seen in the case of Unilever.

The case of Unilever

Unilever is a global business with 168,000 employees working in 100 countries. Within this workforce, 1,600 employees are globally mobile (meaning that they relocate to work in different countries). Unilever acknowledges the complexity of designing a fair payment scheme (CIPD 2011).

Previously, they adopted a host-based payment policy so that employees’ pay was based on what was seen as normal in the country in which they were working. However, after some discontent and friction, they are now experimenting with a home-based payment policy. This is one example of how working within a global workforce introduces issues that impact how employees feel about their work.

The problem of communication

In summary, organisations are well aware of the fact that their teams are diversifying across cultural, national and language barriers, but many feel ill-equipped to manage this effectively. Communication appears to be a critical issue in this conundrum.

References

_{Chartered Institute for People Development (2011) Maximising the Value of Reward: Thinking Global, Acting Local CIPD Podcast 55 [online] available from https://www.cipd.co.uk/podcasts/maximising-value-of-reward-thinking-global-acting-local [02 April 2020]}

_{Hackman, J.R ., and Oldham, G. R. (1976) ‘Motivation Through the Design of Work: Test of a Theory’. Organizational Behavior and Human Performance 16 (2) 250-279}

_{O’Neill, J., Wilson, D., Parushothaman, R., and Stupnytska, A. (2005) ‘Global Economics Paper 134: How Solid are the BRICs?’. Goldman Sachs Global Research. New York: Goldman Sachs}

_{Tuleja, E. A. (2017) ‘Cultural Intelligence in a VUCA World’. Visionary Leadership in a Turbulent World: Thriving in the New VUCA Context. Bingley: Emerald, 195-227}

_{Vielmetter, G., and Sell, Y. (2014) Leadership 2030: The Six Megatrends You Need to Understand to Lead Your Company into the Future. New York: Amacom}