Freedom vs. Frame

How can international companies make a success of their HR transformation? To what extent is a centralized framework called for and what degree of local freedom do the individual sites require? It’s all about finding a balance between centralization and autonomy.
September 15, 2022
2 min

Disclaimer: The unabridged original German article was published on May 23, 2022 in HR Today (https://www.hrtoday.ch/de/article/rahmen-geben-ohne-einzuschraenken)

What do you need for a successful digital transformation in HR? One key challenge is realigning and reorganizing company-wide structures and processes. Supported by intelligent IT systems and depending on responsibilities, these structures and processes can be specified centrally or managed locally – a difficult balance to strike.

Three points to consider when reaching your decisions:

1. As centralized as necessary, but as free as possible

The first question you should ask yourself is when it makes sense to specify processes and decisions centrally via the umbrella organization, and when it should be possible for the individual sites to decide independently. Responsibilities that typically extend across the organization as a whole include centralized talent management and rolling out a job architecture. Issues such as recruitment, labor law and payroll accounting, on the other hand, are more dependent on local legislation and should therefore also preferably be dealt with on a decentralized basis.

2. Transparent communication

Effective communication is absolutely vital if the digital transformation is to be a lasting success. After all, whether it’s a new IT system, new processes or new governance guidelines that are being introduced, open dialog between the various parties involved, including global and local units, often determines whether or not the initiative succeeds. For example, transparent communication gives the project the necessary priority, improves the credibility of the change process as a whole and avoids isolated solutions that result from a sense of dissatisfaction.

3. Focusing on the future: Continuous enablement

Digitalization is an open process. Besides the technical implementation of a specific project, it is therefore all the more important to also consider how to embed the new processes and IT systems in day-to-day business operations on a long-term basis. Staff have a key role to play here. After all, true added value is only created if they understand and are confident about handling the new structures and tasks.

The different perspectives provide an initial picture of how complex and case-specific the answers can be. There is no one single success factor for HR transformation. An external perspective can be helpful here. The same goes for a holistic approach that, on the one hand, incorporates both the technical and the organizational dimensions and, on the other hand, provides for local freedom and a centralized framework wherever these make sense.

Authors: Stefanie Mathis and Stephan Schmid

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