TOIVONEN PAPER IN THE USCROSS CULTURE AND HUMAN RESOURSE IMPLICATIONS OF FOREIGN

CORPORATE OWNERSHIP

Presentation by:Rishabh Tah

CASE BACKGROUND Mr. Scott Williams

HR Manager Treelin

Miss. Marja KempainenHR Manager Toivonen

• Treelin (Upimin), a US based paper mill, is sold to Toivonen a Finland based company.• Mr. Scott Williams is supposed to attend a meeting with Miss Marja Kempainen to ensure smooth

takeover. • He is making himself aware about the Finnish Culture so that he can decode what to expect from

the meeting.• He is worried about the culture difference and what if Finnish company imposed their national

culture• He is thinking about various ramifications of this take over on the human resource practices that

are followed currently.• He is understanding the different aspects of a new foreign ownership using published articles.• He is also making a note of HR practices that Toivonen follows and what practices of same can

display adverse effect.

FINDINGS OF MR. SCOTT WILLIAMS

• Not all the companies from same country follows same organisational culture.

• National culture and organisational culture are not identical but inextricable.

• Companies should pay attention towards the local culture and norms of the host country.

• Foreign owner of the companies do impose some, if not all, the HR practices that it follows in home country.

• National culture would shape human resource policies.

HOFSTEDE CONTRAST BETWEEN US AND FINLAND

Power Distanace Individualism Masculinity Uncertainty Avoidance Long Term Orientation Indulgence0

10

20

30

40

50

60

70

80

90

100

33

63

26

59

38

57

40

91

62

46

26

68

FINLAND US

CULTURAL CONTRAST OF THE U.S.A..……….(&)...……….FINLAND

The United States of America FinlandImportance to individual performance Importance to group level performance.Risk taking oriented Uncertainty avoidance oriented.Moderate emphasis on caring for the people in society.

High emphasis on caring for people in society.

More importance to power associated with different positions in society.

Less importance to the powers associated with the positions in the society.

Individualistic society. Collective society.

HR PRACTICES OF TREELINE AND TOIVONENTreelin Toivonen

Employees Hired by supervising managers.

Hiring was done by special work group and not by supervisors.

Selection was based on the basic skills for entry level jobs.

Selection based on willingness to learn and improve and social.

Salary determined based on the survey of the mills in region.

Centralised compensation system based on survey in continent.

Individual goals were given Group targets were given.Employees had liberty to make own decision.

Decision is taken by supervisor of the team.

Payment appraisals based on individual performance and quarterly bonus system.

No payment appraisals and had management bonus system instead of individual.

Pre-shift and post-shift meetings to give information and target.

All employees were suppose to use Emails and information posted on intranet page.

HR PRACTICES OF TREELINE AND TOIVONEN

Treelin ToivonenTwo levels of supervisors between workers and top management.

One layer of supervisors between workers and top management. Communication guru on the floor.

Employees not trained for promotions to executive council.

Online training course for every employee to cater their individual growth requirements within the company.

30-40% of payroll spent in benefits to the employees in different form like investment and heath care.

Unlimited sick times leaves. Team to council the employees in their personal issues when asked.

CASE ANALYSIS

Why companies should pay attention towards the local culture and norms of foreign subsidiary company? Culture of a region is formed based on the shared values and believes of the people living together in the

area. Different cultures have different acceptable and unacceptable values and norms

How are HR policies and practices made? Every country has different P.E.S.T.L.E conditions. Practices are made based on the day to day activities whose origin is rooted in the long following

traditions, that is the culture of the country.

Why do companies impose their HR policies on their foreign subsidiaries? To ensure that the foreign subsidiary is in alignment with the mission and vision of the company. To ensure that same corporate ethics and values are shared in the headquarters and the foreign subsidiary.

CONTENTIOUS POINTS OF TOIVONEN

Treelin’s practices are to ensure individuals are meeting their target. Toivonen’s has a collective approach. Designed to ensure entire group is meeting the

target. Hiring decisions were with the supervisors of the Treelin paper plant.

Hiring decisions were with the central work group of the Toivonen company and no hiring firing decisions with supervisors.

Under Upimin, Treelin had very low interference in day-to-day activities of the plant. Every activity in Toivonen is coordinated with headquarters.

Individual appraisals were given to the employees in Treelin if the targets set were met. There was no concept of individual appraisals in Toivonen. Because problems were solved

by management. Quarterly bonus were given to individual employees based on the quantity & quality

of performance. No quarterly bonus system in Toivonen. Instead had Management bonus system for

managers.

POSITIVE POINTS OF TOIVONEN PRACTICES Toivonen provides online training program to the employees.

No such program is available in Treelin. Training program gives opportunity to grow in the ranks within Toivonen.

Due to lack of skills for next level, growth within Treelin was very difficult. Toivonen had central mailing system where employees can enquire. Answer posted

on intranet page. Treelin had meeting system of flowing information and target, which was ineffective at

times. Toivonen had just one line of supervisors between top management and workers.

Treelin had two layers of supervisors between top management and workers. Toivonen had special position of communication guru to ensure proper

communication. Communication in treeline was a lengthy process due to multilayer supervisors plus lack

of communication system.

RECOMMENDATIONS Should not implement Finnish culture in U.S subsidiary Should implement its online skill development program As USA has individualistic culture, should implement individual appraisals. But to

ensure that Toivonen’s HR philosophy of group culture is embedded, they should blend the group culture with the individualistic culture. That is, should have team target, which is then further divided into individual target. The individual will get incentive and team culture will be in effect.

As Americans are already accustomed with individual bonus and appraisals, Toivonen should not implement its management bonus scheme. Should divide the bonus based on the level of hierarchy. Or give a fixed bonus in all the levels. Fatal parameter system can be introduced.

As Toivonen needs to ensure that their corporate culture is intact in subsidiary, they should implement their policy of keeping decision making with the central team.

SOLUTION While drafting amendments in current HR policies and practices of Treelin, Miss

Marja should understand that these are in place because of the culture that is prevailing in the country where they are attempting to expand.

She should be open for the cultural change and understand that Toivonen cannot operate in a foreign country in the way they operates in their home country, Finland.

Mr. Scott Williams should be open towards the policies of Toivonen but should act a true representative of American culture and raise the contentious points in Toivonen’s HR policies which may harm the new owners performance in USA.

He should try to keep the moral of existing employees high by assuring them positive ramifications of the takeover.

For the start, they should initiate implementing the non clashing and positive policies of Toivonen as it would create a goodwill among the existing employees.

For the contentious points, they should try to strike a balance between home and host country culture.

Questions are invited.

THANK YOU

TOIVONEN PAPER IN THE USCROSS CULTURE &HUMAN RESOURCE IMPLICATIONS OF FOREIGN

CORPORATE OWNERSHIP

Presentation by: Rishabh Tah