HR Without Borders

by Dennis Howlett

December 28, 2000 —

EVEN THE MOST RAPACIOUS GLOBAL PREDATORS eventually realize that having the right tools makes it easier to digest their prey. For the Socit Gnrale (SG) Group, the 10th largest bank in the world according to The Banker magazine, the return on revamping its human resources systems is justifying the investment.

A three-year worldwide mergers and acquisitions spree left the Paris-based SG with a host of human resources systems supporting 64,600 employees in 80 countries. Since 1995, SG's purchases "" have included the Cowen investment bank in the United States, the Romanian Development Bank, Expressbank of Bulgaria and the Yamaichi and Hambros asset management units in Tokyo and London, respectively. The bank has almost $400 billion in assets and amassed $1.8 billion in net income last year, at current exchange rates.

The obsolete and inflexible HR systems could not support a large number of new legislative mandates. They also precluded bank executives from executing their strategy of rationalizing the numerous purchases into a coherent whole comprising three divisions: retail, wholesale (corporate) and asset management.

"We had numerous systems, something like 70 in total," explains Olivier Farine, HR system project manager for the bank. "Nothing much had changed since 1952. In 1998 we rationalized our collective bargaining and compensation agreements in retail banking. The old systems would never have coped."

Consolidating the HR systems also became part of a major cost-cutting program designed to save more than $200 million a year by 2002, according to a February briefing by bank officials. The program includes centralizing purchasing and overhauling network systems and other support functions.

New HR Role

Another possible reason for renovating the HR system is the new role of HR technology in industries such as banking, where consolidation is the norm.

"The reality is that globally, companies are using HR strategies to reengineer and position themselves to create employee goodwill," notes Michael Boyd, program manager of HR strategies at Framingham, Mass.-based IDC, a sister company of CIO's publisher, CXO Media. "If you get into an unfriendly acquisition situation, the only protection you may have is employee goodwill. And you can't know how good that will be unless your HR systems are in place."

Robin Bloor, CEO of the Milton Keynes, England-based analyst group Bloor Research, adds that people on each side of the M&A equation become unsettled: "Dealing with that means you have to be very fleet of foot, and a solid HR system will assist in managing events."

In response to these pressures, SG created an information technology architecture to support its business goals. Call it the think-globally-but-compute-locally approach.

A central platform implemented in September 1999, based on the PeopleSoft HR modules, manages the French employee files and users. Regional HR centers being established in New York City, London and Hong Kong will support SG employees in the other major centers of activity. "The objective is to locally manage HR profiles in our international offices in a consistent manner," Farine says.

Incentive to Succeed

The next step in the HR project is the introduction of self-service applications. Empowering eligible employees to use a Web browser to checkk their profit-sharing accounts and other personnel-related functions will do more than improve the productivity of the HR staff. "When [employees] see how the bank's progress benefits them," Farine says, "they have an incentive to succeed. We think [access to] this information will be welcome."

Every SG employee will soon experience the value of the new systems. The French government has decreed that the standard workweek will be reduced by four hours. The new 35-hour workweek for SG is being negotiated among the bank, the government and the employee unions. Once a conclusion is reached, Farine says, the employee contracts and payroll will be quickly changed to reflect the new arrangements.

Another benefit of the new system may become important as the bank continues to rationalize its many acquisitions. Nigel Rayner, research director at Gartner UK, Engham, England, says that localized HR systems make it easier to sell off extraneous units. "Those that may divest will not necessarily want their systems to be on a global standard but may adopt a local solution," he explains. "If everything is managed centrally and a unit is sold, then that unit effectively has no systems. That's a potential negative on any deal."

With a failed bid for the Paribas investment bank last year, SG officials have been there and done that. They don't plan to return.

CIO