The Big Debate: Will We Become More Global or More Local?

Jun 2, 2020  | Topic: Strategy

While globalization has been a consistent theme for businesses across the last few decades, recent political and social issues have fueled something of a ‘global vs local’ debate. Shrinking global capital and regional issues like Brexit have hinted at a possible downturn in international interdependence, but according to the DHL Global Connectedness Index 2019, such challenges are yet to bring about a broad reversal of globalization. Indeed, the report finds that the world remains “more connected than at almost any other point in history”. 

This was the world before Coronavirus though, and the outbreak that has already changed so much will undoubtedly further fan the flames of this particular debate. As nations scramble to support and provide for their own, will a more localized outlook prevail in the future? Or will the pandemic, which has united so much of the planet in enforced lockdown, bring countries and cultures closer together than ever?

Arguments are already appearing on both sides of the debate. In Foreign Policy magazine, Stephen Walt, Professor of International Relations at Harvard University, opines that, “The pandemic will strengthen the state and reinforce nationalism. We will see a further retreat from hyper-globalization, as citizens look to national governments to protect them and as states and firms seek to reduce future vulnerabilities. In short, Covid-19 will create a world that is less open, less prosperous and less free.”

This viewpoint brings the worlds of politics and business into direct conflict - with Walt’s notion rejected by leading HR influencer, Josh Bersin: “While politicians are becoming very nationalistic (to win votes and attract attention), I actually believe the business community is going in the opposite direction” wrote Bersin in a recent blog post. “Large and small companies are becoming highly integrated global enterprises, increasing talent mobility, driving new levels of diversity and inclusion, and gaining real-time data about employee and business issues around the world.”

He continues to argue that even as most countries are in lockdown, many of us have become more connected through the use of technology, and this will serve to drive even greater globalization in future. “If there’s one thing this virus is teaching us” he says, “it’s the fact that every person on the planet is connected to everyone else”.

The rise of glocalization?

The underlying suggestion from Bersin, and from many others, is that we may in fact become more global and more local at the same time. This theory in itself is nothing new - the term ‘Glocalization’ has been around for some years now - but the concept seems set to cross further into mainstream consciousness on the back of COVID-19.

Already, many large businesses blend global and local approaches with great success, centralizing their supply chain or marketing operations, while providing highly localized services or products to meet the unique needs of each local geography. Looking towards the post-pandemic world, this concept of “distributed control with central coordination” (as Bersin puts it) can grow yet further, with organizations now realising the potential to build a global community of highly distributed teams.

Theoretically, global remote working has now achieved its proof of concept, and as a result, it seems likely we will see multinational companies make significant changes to their workforces in terms of how and where they operate.

What does it all mean for payroll?

Rarely do we come so far in an article without discussing the impact for payroll, but clearly, a shift towards glocalization has numerous implications for our industry and its practitioners. While currently focused on immediate requirements, global payroll leaders must also cast one eye to the future, ready to support changes to international operations as the enterprise seeks to make itself both more open and more resilient.

Operational reorganization is a likely outcome for many businesses as the pandemic fades, leaving payroll leaders with the challenge of balancing resources, and building resiliency into the payroll supply chain itself. What’s more, as organizations seek to re-shape their global footprint, and wider distributed teams become a distinct possibility, payroll must also be prepared for payments to move across even more borders in future. Agile technology is key here, enabling payroll teams to continue to work effectively and efficiently as operations are scaled up or down in different locations.

Payroll potentially also holds the key to many of these resourcing decisions in the first place. Together with HR, payroll is the guardian of the organization’s most valuable people data - capable of delivering insight to the boardroom that informs plans for growth and expansion, or indeed any other decisions that relate to the workforce. Being in a position to provide and interpret that data could see payroll play a key role in the recovery.

A world opened up by lockdown?

Far from the retreat from globalization that has been predicted in certain quarters, the COVID-19 crisis has arguably galvanized interdependency around the globe - with the shared sufferance of lockdown ironically opening up communication and collaboration around the world. As organizations seek to bounce back following the pandemic, many will look to ride this momentum towards more distributed business models - and payroll, as ever, will have a central role to play.