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«Cambridge University: Philip Stiles and Jonathan Trevor Erasmus / Tilburg University: Jaap Paauwe and Elaine Farndale Cornell University: Patrick Wright ...»

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Direct communication channels

Amongst the companies interviewed, there was evidence of the different direct methods of employee communication being used, particularly those facilitated by advanced information technologies. In particular, the following methods of

communication were most frequently mentioned:

widespread use of intranet/bulletin boards (Oracle, Infosys, Rolls Royce, • Siemens, TCL);

Collective agreements negotiated with trade unions in the Netherlands apply to all employees covered by the agreement irrespective of whether or not they are trade union members, hence there is little motivation for employees to become members.

–  –  –

A couple of particularly innovative approaches to employee communication were observed during company interviews and visits. In one division of Siemens, based in the home country of Germany, information is provided to and fed back from employees on a very regular basis: monthly through management meetings, weekly in group meetings, daily in problem-solving meetings and constantly via on-line systems. Information is displayed around the factory environment continuously monitoring the achievement of targets at any one point in time. There is also a global magazine distributed to all employees within the division to ensure cross-border information sharing.

In a P&G plant in the Netherlands, as well as putting information about targets and measures publicly visible around the factory, it has also been made clear that it is an individual’s responsibility to be proactive about finding information if they need it.

There is a culture being developed in which everyone is both a trainer and a trainee, and people are encouraged to share their learning. This was an initiative running at the sites in the US, now being adopted at the European plant. The culture within the plant is one of open sharing of information and continuous improvement. Ownership of processes by all employees is encouraged, providing people with the necessary information to be able to make decisions. For example, the cost of waste is made clearly visible in tangible terms as part of a programme to eliminate waste completely.

This encourages appropriate employee behaviour, explaining both the reasons for changes in policy and making clear the implications of not achieving the new waste targets.

Fit between employee relations policy and corporate goals

The discussion so far has focussed on how employee relations activities can be affected by home and host country effects. There are of course strategic choices to be made by companies themselves as to what particular approach they want to adopt.

The most effective employee relations practices will be seen as legitimate and accepted by employees, but will also be designed to support corporate strategy and structure, have the commitment of line management, and be flexible enough to adapt to constantly changing business environments.

In the online survey, companies were asked to what extent their ER policies and practices met these three requirements. Somewhat surprisingly, only around half or less of the companies surveyed, meet these requirements (see Table 8). 55% of companies see their ER policies as being highly aligned with corporate strategy and structure, but a third think this only somewhat being achieved. Line management commitment to ER policies is also high in only 46% of organisations, with a further 31 / 52 41% believing that line management are only partially committed. The flexibility of policies is also somewhat concerning: although 42% believe their policies are highly flexible, a further 44% believe they have less flexibility to changing business needs.

–  –  –

In summary, employee relations activities are a highly complex dimension of HRM practice which requires very careful consideration of both the complex country and company settings. Successful practice in the field varies from company to company, but those most satisfied with employee relations policies are the companies that find an appropriate fit between both home and host-country demands.

32 / 52

6. ORGANISATIONAL CULTURE AND HRM

The global corporations in our sample have adopted a variety of mechanisms and tools for developing a strong culture that is aligned with the strategic goals of the company. Most of these practices are in the domains of human resource management and leadership. We found that high-performing companies have integrated their core values into every HR-related process: how they attract, hire, and develop talent;

manage performance; compensate employees; and so on. The following methods for developing and maintaining a strong culture were systematically used across the excellent companies that we studied in North-America, Europe and Asia: focus on attitudes and cultural fit in the selection process; emphasis on secondary socialization and training; performance management and compensation & benefits systems built around company core values; symbolic and values-based leadership.

Emphasis on attitudes and cultural fit in the selection process

While companies have traditionally focused on applicants’ academic credentials and job-related skills in the selection process, many of the excellent companies within the sample have expanded their definition of “the right people in the right place” to include cultural fit as a key selection criterion. These companies try to assess applicants’ personality and values to determine the fit with the corporate culture, based on the assumption that formal qualification is not always an accurate predictor of job performance and that skills are easier to train or change than personality traits, attitudes and values.





Ikea, the world’s leading home furnishings retailer, is a case in point. Recruiting is done largely through tools which focus on values and cultural fit rather than skills and experience. A standard questionnaire, which explores a candidate’s values and beliefs, is used for selection interviewing and for training and development. When people apply internally for higher leadership positions, they are again assessed on their personal and shared values to ensure consistency. At the most senior leadership level, managers are encouraged to partake in ‘conscious leadership’, considering the implications of how they see the world on others. The goal of this value-driven recruitment and development system is to maintain and strengthen Ikea’s unique culture and to preserve its core values.

A strong emphasis on cultural fit in the recruitment and selection process is by no means unique to European companies. Oracle, for example, recruits managerial and leadership staff through a combination of internal promotion, direct application, and “head hunting”. Commercial awareness and good corporate governance are considered premium amongst corporate values, and constitute key selection and promotion criteria. Leading Japanese companies such as Sony and All Nippon Airways (ANA) now also look for qualities other than narrow academic success and will not, as in the past, let the level of university degree get in the way of hiring someone made of the right stuff. ANA, for example, selects university graduates through an extensive interview process. Out of about 8,000 candidates who applied in the 2005 graduate recruitment round, ANA’s recruitment team interviewed 3,300 in groups of five. The 500 of them who were judged sufficiently articulate about their career goals were subjected to another group interview aimed at discovering their commitment to ANA. The top 120 were invited to individual interviews that probed 33 / 52 their attitudes and values. The final 70 – from whom 40 were chosen – were each interviewed in depth by three ANA staff including a member of the board. This laborious process testifies to ANA’s desire to focus more on a candidate’s personality and values than on narrow academic achievement.

The Indian information technology and software giant Infosys, now the world’s leading IT outsourcing company, is another example of a company that illustrates this emerging trend. Infosys is willing to trade off some immediate skills necessary for the specific entry job for better cultural fit, the right attitudes, and the ability to learn.

Infosys does not look solely at software engineer graduates. Instead it defines “best” candidate as the one who has good problem solving skills and “learnability” and whose personality and values fit the Infosys culture. This broader definition allows Infosys to greatly expand the pool of talent they will be attempting to tap into beyond the limited boundaries of the available software engineers. Infosys believes that a candidate with learnability who believes in Infosys’ core values such as fairness, integrity, and responsiveness to customer needs has what it takes to be in the software profession and handle its amazing pace. Infosys selects applicants based on the consistency of their performance in college, through their analytical and aptitude entrance test, and – as the final hurdle – an extensive interview process that focuses on cultural fit and congruence with Infosys’ core values. An important part of the interview process is to provide the candidate with culturally relevant information and present a consistent picture of the values that are shared among “Infoscions”.

Although considered best practice by the companies in our sample, the findings of the web-based survey reveal that assessment of individuals’ attitudes and values to determine the fit with the company culture is a recruitment and selection strategy that is still underutilized among global corporations.

Secondary socialization and training

The excellent companies that we studied used a variety of socialization mechanisms to preserve their core values and organizational practices. The socialization process begins with recruitment in that the organization is likely to select new members who already have the “right” set of attitudes, beliefs, and values. Once the individual has joined the organization, induction programs, apprenticeships, individual coaching by the superior, training and development programs, and other socialization practices ensure that the newcomer learns the values, expected behaviours, and social knowledge that are necessary to become an effective and accepted member of the organization.

The use of standardized induction programs, often accompanied by individualized coaching or mentoring activities, was common practice among the companies within the sample. Although socialization was considered important in all companies, a wide variation in approaches and methods emerged, largely depending on the culture (both national and corporate) of the organization. Because of the importance attached to maintaining its distinctive corporate culture, at IKEA, for example, there is great emphasis placed on introducing new employees to a store. There is a mentoring system in place whereby every new employee is assigned a buddy to help them to get to know the store. This method of induction is crucial as what people need to learn is not clearly documented and is largely stored in people’s heads, so it is these people 34 / 52 who are needed to pass on their knowledge and experience of the corporate culture to newcomers. This culture-based training is repeated every three years to ensure reinforcement. At TCL, a leading producer of consumer electronics and one of the fastest growing companies in China, the induction program for new employees has three parts: orientation training, factory practices and on-the-job practices. Orientation training includes the study of the corporate culture, work ethics, and rules and regulations. In some divisions, military training (a practice widely used in Chinese companies to inject discipline and obedience in rank and file employees) is a required part of the orientation training. Each phase of the induction program contains an evaluation of the employee and leads to the next phase.

We found that leading companies around the world extensively use training and development not only as means of enhancing the skills and knowledge of their employees but to manage and reinforce the company culture. Training is often internal so as to socialize employees into the culture, and leadership development and training programs are built around the company core values and business principles.

Some companies such as Samsung, the world’s second-largest semiconductor company and fastest growing mobile phone maker, have specifically designed training programs for inculcating core values, e.g., the “Shared Value Program” consists of training on Samsung philosophy, values, management principles, and employee ethics. This training is for all Samsung employees, including foreign employees in Korea and overseas including expatriates. The objective of training programs focused on corporate culture and shared values is not always to ensure continuity of the culture but often to initiate culture change and transform the organization. Samsung is a case in point. Several years ago the Samsung top management came to realize that becoming a design-driven company would require Samsung to shed its traditional Confucian culture with its emphasis on hierarchy and seniority for a culture that promotes creativity, empowerment and open communication. Samsung began to encourage its young designers to challenge their superiors and share their creative ideas more freely. Also, Samsung hired top U.S.

design firms to teach its designers the skills and values of design innovation. It sent many designers overseas to live and work in Western design studios. It opened its own Innovative Design Lab of Samsung (IDS), an in-house school where designers could study under experts from the Art Center College of Design in Pasadena, California. It also created a new position, the chief design officer, allowing designers to go to the top with their new ideas.

Another trend that emerged from our best practice study is the prevalence of corporate universities, academies or “learning campuses”. During the 1990s leading companies such as Alcatel, Novartis, Procter & Gamble, and Lufthansa established corporate universities with the explicit purpose of reinforcing and perpetuating the corporate culture; driving the future strategy of the organization; and managing and implementing organizational change. One of the companies within our sample, EDF, a leading British energy company, established a corporate university particularly for organizational transformation goals, rather than individual development needs of its managers. The primary roles of EDF’s corporate university are to create opportunities for culture change; and to develop future leaders with the appropriate values to change the organization. Corporate university activities include discussion forums, dinners and e-learning rather than the more traditional training activities. Lufthansa, the German flag-carrier and Star Alliance partner, is another example. The Lufthansa 35 / 52 School of Business was established with the explicit goal of fostering and developing a high performance culture and achieving closer integration within the alliance.

According to Thomas Sattelberger, former Senior Vice President Executive Personnel and Human Resource Development of Lufthansa, the main role of the Lufthansa Business School is “to support inter-organisational learning of partner companies, to build a strong alliance glue and network culture but most of all to create a shared customer obsessed alliance spirit”. Thus, corporate universities do not only support the development needs of people at various levels of the organization; they also serve as a catalyst for organizational transformation and cultural change.

Rewarding employees for displaying shared values



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