BFT507 LEADERSHIP & STRATEGIC HUMAN RESOURCE

HUMAN RESOURCE IMPLICATIONS OF FOREIGN CORPORATE OWNERSHIP

Case Study 1 - Toivonen Paper in The U.S.ABy Muzaphar Noman Zakarya Ameen

Case Summary
How to Achieve organizational harmony in foreign corporate ownership

Jim Newman
Treelin Plant Manager

Scott Williams
Treelin HR Manager

U.S.A

Case Summary
How to Achieve organizational harmony in foreign corporate ownership

Marja Kempainen
Senior VP of HR

Finland

Current Situation
Toivonen Treelin

Fortunes Global 500 organization.

High Quality Products: Publication and fine paper, packaging board and wood products Group-level outcomes

High fixed costs

Inconsistent demand High volatility of raw materials prices. Efficiency rates (lower than industry standards) .

work group hiring

Avoid uncertainties. caring for employees needs.

Old facility paper machines.

Toivonen V.S Treelin

Human Resource Policies
Toivonen Treelin

Long-Term Employment relationships.

Centralized compensation. Employee Career Advancement. work group hiring

Budget and Production Emphasis

Performance Appraisal. Stagnant Employee Positional Movement.

Follow corporate Structure to give decision.

Complex Organization

Selected and hired by supervising managers.

Independent decision making. Flat organization style

Hofstede Cultural Dimensions

Hofstede cultural dimension is explain the following principles:

Power distance: Degree to which members accept an uneven distribution of power. Individualism / collectivism: See oneself as individual rather than part of a group Uncertainty avoidance: Extent to which people seek to avoid, or feel threatened by, ambiguous or risky situations

Masculinity / femininity: Look to what motivates people, wanting to be the best (masculine) or liking what you do (feminine).

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Power Distance

U.S.
40

Finland
33

Diff (U-F)
7

Observations
(Smallest index difference) Finish firms prefer flatter organizations and smaller wage differentials than American firms.

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Individualism

U.S.
91

Finland
63

Diff (U-F)
28

Observations
(High Difference) Finish firms are more likely to focus on the collective than American firms. Thus, work will tend to be organized by groups and bonuses delivered on group performance

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Masculinity

U.S.
62

Finland
26

Diff (U-F)
36

Observations
(Highest Difference) Finish firms (and leaders) will likely be more concerned with employees wellbeing and social responsibility than their American counterparts

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Uncertainty Avoidance

U.S.
46

Finland
59

Diff (U-F)
-13

Observations
The difference may lead to Finish firms to have HR policies that seek stability, security where rules are more clearly established

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Pragmatism

U.S.
26

Finland
38

Diff (U-F)
-12

Observations
The difference may lead to Finish firms to focus more on achieving quick results and have strong concern with establishing the absolute management rules to save for the future.

Finnish VS. U.S Culture

Based on Hofstede Cultural dimensions

Indexes
Indulgence

U.S.
68

Finland
57

Diff (U-F)
11

Observations
(Small index difference) Finish firms have lesser willingness to realise their impulses and desires than American firms.

1: If you are the Group Human Resource Manager from Toivonen, Finland, how would
you develop your HR action plan ?
Objective To Introduce strong commitment to maintain long-term employment relationship . Action plan Substantial changes to HR Policy.

To focus on group level outcomes than individual outcomes. To ensure good communication on the teams and between levels in mills.

Finnish culture strongly applied Work structure changed to selfdirected teams

To implement a self-directed work teams. Therefore, most performance problems can be handled at the team level.

Eliminated the performance appraisals.

To Implement training and development programs that would provided all of a quality training More focus on employee needs.
on topics of importance to the firm. To centralized compensation system to include global job evaluation system with salary ranges Narrower salary ranges were not determined by continent. To lower the absenteeism rates and sick time taken off by employees overall. entirely adopted by Treelin. Unlimited sick time

2: What are potential problems and pitfalls you foresee occur when implementing
Toivonen' s corporate culture in Treelin? Develop your HR contingency plan? There are potential problems and pitfalls resulting from different HR policies in both Toivonen and Treelin which we can summarize them into:

Long-Term Employee Benefits vs. Budget and Production Emphasis. Centralized Compensation vs. Performance Appraisal Compensation. Employee Career Advancement vs. Stagnant Employee Positional Movement. Complex Organization vs. Flat Organization. Follow Corporate Structure vs. Need for Independent Decision-Making.

2: What are potential problems and pitfalls you foresee occur when implementing
Toivonen' s corporate culture in Treelin? Develop your HR contingency plan? There are potential problems and pitfalls resulting from different HR policies in both Toivonen and Treelin which we can summarize them into:

Long-Term Employee Benefits vs. Budget and Production Emphasis. Centralized Compensation vs. Performance Appraisal Compensation. Employee Career Advancement vs. Stagnant Employee Positional Movement. Complex Organization vs. Flat Organization. Follow Corporate Structure vs. Need for Independent Decision-Making.

3: Evaluate the changes in human resource policies and practices William should anticipate coming from Toivonens purchase of Treelin? If you are William, what proactive measures would you take? The changes in human resource policies and practices William should anticipate coming from Toivonens purchase of Treelin could be the following:

Substantial changes to HR Policy will be applied to befit with Toivonen working culture. Toivonens culture will be strongly applied as a corporate culture foreign company in Treelin as a local subsidiary.

Work structure changed to self-directed teams to accompany Toivonens work structure.

Performance appraisals will be eliminated since employees will be working in self directed teams.

3: Evaluate the changes in human resource policies and practices William should anticipate coming from Toivonens purchase of Treelin? If you are William, what proactive measures would you take?

There will be more focus on employee needs as employees career advancement. Flat organization structure will possibly remain. Toivonens salary policies (especially ratio between highest and lowest employees) might be a competitive disadvantage for Treelin.

Unlimited sick time will be applied, to lowered the absenteeism rates and sick time taken off by employees overall.

3: Evaluate the changes in human resource policies and practices William should anticipate coming from Toivonens purchase of Treelin? If you are William, what proactive measures would you take? Proactive measures that I would take if I were Scott William are as followed:

Offer preliminary analyses & (perhaps) recommendations to Toivonens HR.

Offer review history of Treelin (special emphasis on HR policies and how they fit with strategic plans of the previous owner & the key success factors of the paper industry in the U.S.).

3: Evaluate the changes in human resource policies and practices William should anticipate coming from Toivonens purchase of Treelin? If you are William, what proactive measures would you take?

Offer a preliminary assessment of the potential challenges that could emerge as Toivonen

starts taking over the operations of Treelin (special emphasis on HR this should be the
starting point for a cultural fit study/assessment to be developed in the short-term).

Prepare a potential preliminary HR action plan to be adjusted according to the new changing polices.

4: Lets change this case into another scenario (Finland VS. Indonesia). Will the above implications action plan and contingencies differ? Explain these factors in details.
O

If the scenario changed to the Finish Toivonen acquiring the Indonesian Aisa Pulp & Paper , Yes, the suggested action and contingencies plans will be differ. That is because the previous plans were designed to help Toivonen to suit to the dimensions of the American culture not into the Indonesian culture. According to Hofstede cultural dimension theory there will differences on cultural dimensions in both Toivonen as a corporate culture foreign company and Aisa Pulp & Paper as a local subsidiary as shown in the following table:

Indexes

Indonesia

Finland

Power Distance Individualism

78 High 14 collectivist 62 pragmatic 38 Restraint 46 feminine 48 High preference for avoiding uncertainty

33 low 63 Individualistic 38 normative 57 indulgent 26 feminine 59 High preference for avoiding uncertainty.

Pragmatism Indulgence Masculinity Uncertainty Avoidance

Four major issues should be taken into consideration when designing HR action and contingency plans for Toivonen to disperse its corporate culture to local subsidiaries in Indonesia , which are :

1. 2. 3.

4.

Toivonen should develop its plans to tune with characterises of the Indonesian high power distance style which totally contradicted to its low power distance style. Toivonen should develop its plans to reduce the friction with characterises of the collectivist Indonesian culture which totally contradicted to its Individualistic culture. Toivonen should develop its plans to be adjusted to the pragmatic Indonesian orientation which totally contradicted to its normative orientation. Toivonen should develop its plans go along with the restrained Indonesian culture which is totally contracted to its Indulgence culture.

Thank You

Any Question ?

Questions for GE Case

O Develop and discuss a specific career

development plan to produce competent CEOs in General Electric.

O As a group HR professional consultants

recommend and illustrate HRM initiatives for General Electric to ensure retention of competent strategic leaders.