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HUMAN RESOURCE IMPLICATIONS OF FOREIGN CORPOROWNERSHIP

Case Study 1- Toivonen Paper in The U.S.A-

ByMuzaphar Noman

Zakarya Ameen

BFT507

LEADERSHIP & STRATEGIC HUMAN

RESOURCE

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Case Summary

How to Achieve organizational harmony in foreign corporate ownersh

Scott WilliamsTreelin HR Manager

Jim NewmanTreelin Plant Manager

U.S.A

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Case Summary

How to Achieve organizational harmony in foreign corporate ownersh

Marja KempainenSenior VP of HR

Finland

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Current Situation

Toivonen Treelin

Fortunes Global 500 organization.

High Quality Products: Publication and fine

paper, packaging board and wood products

Group-level outcomes

work group hiring

Avoid uncertainties.

caring for employees needs.

High fixed costs

Inconsistent demand

High volatility of raw materials prices.

Efficiency rates (lower than industry stan

Old facility paper machines.

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Toivonen V.S TreelinHuman Resource Policies

Toivonen Treelin

Long-Term Employment relationships.

Centralized compensation.

Employee Career Advancement.

work group hiring

Follow corporate Structure to give decision.

Complex Organization

Budget and Production Emphasis

Performance Appraisal.

Stagnant Employee Positional

Movement.

Selected and hired by supervising manag

Independent decision making.

Flat organization style

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Hofstede Cultural Dimensions

Hofstede cultural dimension is explain the following principles:

Power distance: Degree to which members accept an uneven distribution

Individualism / collectivism: See oneself as individual rather than part o

Uncertainty avoidance: Extent to which people seek to avoid, or feel thr

ambiguous or risky situations

Masculinity / femininity: Look to what motivates people, wanting to be t

(masculine) or liking what you do (feminine).

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Power Distance 40 33 7

(Smallest index difference)

Finish firms prefer flatter organizations and smaller wage d

American firms.

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Individualism 91 63 28

(High Difference)

Finish firms are more likely to focus on the collective than Am

work will tend to be organized by groups and bonuses deliv

performance

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Masculinity 62 26 36

(Highest Difference)

Finish firms (and leaders) will likely be more concerned w

wellbeing and social responsibility than their American

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Uncertainty

Avoidance

46 59 -13 The difference may lead to Finish firms to have HR polic

stability, security where rules are more clearly est

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Pragmatism 26 38 -12 The difference may lead to Finish firms to focus more on

results and have strong concern with establishing th

management rules to save for the future.

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Finnish VS. U.S CultureBased on Hofstede Cultural dimensions

Indexes U.S. Finland Diff (U-F) Observations

Indulgence 68 57 11

(Small index difference)

Finish firms have lesser willingness to realise their impulses

American firms.

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1:If you are the Group Human Resource Manager from Toivonen, Finland, howyou develop your HR action plan ?

Objective Action pla

To Introduce strong commitment to maintain long-term employment relationship . Substantial changes to H

To focus on group level outcomes than individual outcomes. Finnish culture strongly

To ensure good communication on the teams and between levels in mills. Work structure changed

directed teams

To implement a self-directed work teams. Therefore, most performance problems can be

handled at the team level.

Eliminated the performa

appraisals.

To Implement training and development programs that would provided all of a quality training

on topics of importance to the firm.

More focus on employe

To centralized compensation system to include global job evaluation system with salary ranges

determined by continent.

Narrower salary ranges

entirely adopted by Tre

To lower the absenteeism rates and sick time taken off by employees overall. Unlimited sick time

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2:What are potential problems and pitfalls you foresee occur when implemeToivonen' s corporate culture in Treelin? Develop your HR contingency pla

There are potential problems and pitfalls resulting from different HR policies in bothand 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.

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2:What are potential problems and pitfalls you foresee occur when implemeToivonen' s corporate culture in Treelin? Develop your HR contingency pla

There are potential problems and pitfalls resulting from different HR policies in bothand 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.

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:Evaluate the changes in human resource policies and practices William shanticipate coming from Toivonenspurchase of Treelin? If you are William, w

proactive measures would you take?

The changes in human resource policies and practices William should anticipate comToivonenspurchase of Treelin could be the following:

Substantial changes to HR Policy will be applied to befit with Toivonen working

Toivonensculture will be strongly applied as a corporate culture foreign companas a local subsidiary.

Work structure changed to self-directed teams to accompany Toivonenswork st

Performance appraisals will be eliminated since employees will be working in selteams.

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3: Evaluate the changes in human resource policies and practices William shanticipate coming from Toivonenspurchase of Treelin?If you are William, w

proactive measures would you take?

There will be more focus on employee needs as employees career advancement.

Flat organization structure will possibly remain.

Toivonenssalary policies (especially ratio between highest and lowest employeea competitive disadvantage for Treelin.

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

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:Evaluate the changes in human resource policies and practices William shanticipate coming from Toivonenspurchase of Treelin? If you are William, w

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 ToivonensHR.

Offer review history of Treelin (special emphasis on HR policies and how they fit

strategic plans of the previous owner & the key success factors of the paper indu

U.S.).

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:Evaluate the changes in human resource policies and practices William shanticipate coming from Toivonenspurchase of Treelin? If you are William, w

proactive measures would you take?

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

starts taking over the operations of Treelin (special emphasis on HR this should

starting point for a cultural fit study/assessment to be developed in the short-te

Prepare a potential preliminary HR action plan to be adjusted according to the n

changing polices.

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4:Lets change this case into another scenario (Finland VS. Indonesia). Will theimplications action plan and contingencies differ? Explain these factors in de

O If the scenario changed to the Finish Toivonen acquiring the Indonesian Aisa PuYes, the suggested action and contingencies plans will be differ. That is because tplans were designed to help Toivonen to suit to the dimensions of the American into the Indonesian culture.

O According to Hofstede cultural dimension theory there will differences on cultur

dimensions in both Toivonen as a corporate culture foreign company and Aisa Puas a local subsidiary as shown in the following table:

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Indexes Indonesia Finland

Power Distance 78

High

33

low

Individualism 14

collectivist

63

Individualist

Pragmatism

62

pragmatic

38

normative

Indulgence

38

Restraint

57

indulgent

Masculinity 46feminine

26feminine

Uncertainty

Avoidance

48

High preference for avoiding

uncertainty

59

High preference for

uncertainty

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O Four major issues should be taken into consideration when designing HR actiocontingency plans for Toivonen to disperse its corporate culture to local subsid

Indonesia , which are :

1. Toivonen should develop its plans to tune with characterises of the Indonpower distance style which totally contradicted to its low power distance

2. Toivonen should develop its plans to reduce the friction with characteriscollectivist Indonesian culture which totally contradicted to its Individua

3. Toivonen should develop its plans to be adjusted to the pragmatic Indonorientation which totally contradicted to its normative orientation.

4. Toivonen should develop its plans go along with the restrained Indonesiawhich is totally contracted to its Indulgence culture.

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Thank You

Any Question ?

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Questions for GE CaseO Develop and discuss a specific career

development plan to produce competent

CEOs in General Electric.

O As a group HR professional consultantsrecommend and illustrate HRM initiatives for

General Electric to ensure retention of

competent strategic leaders.