Employment Practices of Multinational Companies. Result report. Fall

Transcription

1 Fall 11 Employment Practices of Multinational Companies Result report Copenhagen Business School Department of Strategic Management and Globalization (SMG) Copenhagen University Employment Relations Research Centre (FAOS)

2 Contents Contents Acknowledgements... 9 Abbreviations and concepts Summary in Danish Chapter 1: Introduction Study design The research population The questionnaire Data collection The research team Report structure PART 1 Chapter 2: Profile of Multinationals in Denmark Basic characteristics Country of origin Company size and composition Sector Age and first significant investment Indicators of strategy and structure Standardization The role of Danish operations in an international context Summary Chapter 3: The HR Function HR policy formation and coordination across borders HR philosophy and reverse diffusion Summary

3 Contents Chapter 4: Subsidiary Discretion Measuring discretion Pattern of discretion Summary PART 2 Chapter 5: Pay and Performance Performance appraisals Performance related pay systems Summary Chapter 6: Training and Talent Development Organizational learning Summary Chapter 7: Employee Involvement and Communication Involvement mechanisms Communication mechanisms Summary Chapter 8: Employee Representation and Consultation Employee representation Employee consultation European Works Council (EWC) Summary PART 3 Chapter 9: Company Performance Overall performance Product/market performance HR performance

4 Contents Summary PART 4 Chapter 10: Concluding Remarks and Summary Origins and characteristics of MNCs in Denmark Denmark a knowledge economy? The structure of HR policy systematic on a worldwide basis or ad hoc? The content of HR policy: performance appraisals Subsidiary discretion pay and country of origin matters Training and development more popular in foreign based MNCs Employee involvement adapted to local circumstances Employee representation and consultation an institutionally sensitive issue Company performance high self evaluations The institutional context decisive for HR policies Chapter 11: Future Research Communication Employee Representation Country of origin no relevance in a Danish context? Chapter 12: Appendix I: The Questionnaires Chapter 13: Appendix II: Frequencies List of Figures Figure 1 1: Report structure Figure 2 1: Country of origin Figure 2 2: Worldwide employment Figure 2 3: Number of employees in Denmark Figure 2 4: Number of managers/logs employed in Denmark Figure 2 5: Companies by sector (home based MNCs)

5 Contents Figure 2 6: Companies by sector (foreign based MNCs) Figure 2 7: Years in Denmark (foreign based MNCs) Figure 2 8: Years abroad (home based MNCs) Figure 2 9: Primary activity worldwide and Denmark Figure 2 10: Standardization vs. adaptation Figure 2 11: Role of Danish operations Figure 2 12: Number of employees by function (home based MNCs) Figure 2 13: Number of employees by function (foreign based MNCs) Figure 2 14: R&D in Danish operations (foreign based MNCs) Figure 3 1: Presence of global HR body Figure 3 2: Presence of international HR policy body Figure 3 3: Attempts to bring HR managers together Figure 3 4: MNC systemization of cross region HR manager meetings Figure 3 5: Mechanisms bringing HR managers together Figure 3 6: Approach to HR philosophy Figure 3 7: Reverse diffusion of HR practices Figure 4 1: Areas of discretion (foreign based) Figure 4 2: Areas of discretion (home based) Figure 4 3: Mean discretion scores for selected countries Figure 4 4: Level of Discretion and Globally Decided HR Policies Figure 5 1: Presence of appraisal systems Figure 5 2: Uses of the performance appraisal system Figure 5 3: Management performance evaluation Figure 5 4: Use of 360 degree feedback Figure 5 5: Variable pay (managers) Figure 5 6: Variable pay (LOG)

6 Contents Figure 5 7: Variable pay and HR approach for managers Figure 5 8 Variable pay and HR approach for LOG Figure 5 9: Types of performance related pay Figure 6 1: Training as a percentage of annual employee compensation Figure 6 2: HR approach and level of investment in training Figure 6 3: Succession planning for managers Figure 6 4: Management development programs Figure 6 5: Management development techniques Figure 6 6: Organizational learning Figure 6 7: Techniques used to facilitate international organizational learning Figure 7 1: Employee involvement Figure 7 2: Patterns of employee involvement I Figure 7 3: Patterns of employee involvement II Figure 7 4: Communication mechanisms Figure 7 5: Provision of information to the LOG Figure 8 1: Management policy towards union recognition Figure 8 2: Approaches adopted by trade union representatives Figure 8 3 Approach to trade unions Figure 8 4: Danish MNCs trade union policies Figure 8 5: Union involvement Figure 8 6: Employee consultation Figure 8 7 Experience with mandatory employee consultation structures Figure 8 8: Policy on local legal requirements Figure 8 9: Presence of EWCs or similar structures Figure 8 10: Impact of EU directive on information and consultation Figure 8 11: Information Concerning EWCs

7 Contents Figure 9 1: Overall financial performance Figure 9 2 Performance relative to competitors I Figure 9 3: Performance relative to competitors II Figure 9 4: HR performance I Figure 11 1: Communication: Meetings between Management and the Workforce LME/CME Figure 11 2: Types of information to LOGs in DK LME/CME Figure 11 3: Types of information to LOGs in the global company LME/CME Figure 11 4: Trade union recognition LME/CME Figure 11 5: Unilateral or bi lateral management decisions LME/CME (work organization) Figure 11 6: Unilateral or bi lateral management decisions LME/CME (Sub contracting and outsourcing) Figure 11 7: Unilateral or bi lateral management decisions LME/CME (variable pay schemes) Figure 11 8: Unilateral or bi lateral management decisions LME/CME (in work training/upgrading skills) Figure 11 9: Unilateral or bi lateral management decisions LME/CME (direct employee involvement schemes) Figure 11 10: Policy towards Local Legal Requirements List of Tables Table 1: Response rates Table 2: MNCs operating in Denmark according to market systems Table 3: When LMEs meet CMEs List of Textboxes Textbox 1: Reverse diffusion Textbox 2: High discretion versus low discretion Textbox 3: HR as a strategy implementer versus no HR at all Textbox 4: HR as a strategy implementer versus no HR at all Textbox 5: Information as control

8 Acknowledgements Textbox 6: HRM and Organizational Performance Textbox 7: CME versus LME Textbox 8: Foreign ownership changes HR policies and management employee relations

9 Acknowledgements Acknowledgements This report would not have been possible without the support of a wide range of organizations and individuals. The Danish Council for Independent Research/Social Sciences (FSE Forskningsrådet for Erhverv og Samfund) granted DKK 1.6 million to this project. Without this support, completion of the project would most likely have been impossible. We are very thankful for this generous grant. The Center for Strategic Management and Globalization at CBS and FAOS the Employment Relations Research Centre provided initial financial support for the grant application process. The seed money provided by these two organizations was invaluable. The EPMOC project was launched in 2005 when our partners in the United Kingdom, Ireland, Canada and Spain designed the original project and the questionnaire that was to become the blueprint for latecomers, including Denmark. Our partners in these countries have been a great help with regard to our methodological questions, and in the development and adjustment of the questionnaire to meet Danish conditions. In addition, while the UK, Ireland, Canada and Spain were part of the first wave of the EPMOC project, Denmark/Norway, Mexico, Argentina and Australia are part of the second wave. We have faced common challenges in trying to adapt our different labor market realities to a somewhat general questionnaire. It has been an enlightening experience to meet with our counterparts from these countries for two days every year to discuss these issues in an informal, positive and highly engaging setting. While the questionnaire is designed to be applicable in many countries around the world, it must be adapted to very different and unique national labor market and HR settings. The Danish and Norwegian teams have worked in close cooperation to develop the questionnaires and to clean data in order to develop the final common Nordic dataset for the EPMOC project. In this regard, we wish to extend a special word of thanks to the Norwegian team members: Christina Roe Steen, Karen M. Olsen and Paul Gooderham from Bergen Business School. Special recognition goes to Olga Tregaskis of the UK team, and to Patrick Gunnigle and Jonathan Lavalle of the Irish team, all of whom agreed to present the UK and Irish results at a workshop in Copenhagen on December 16, At the same workshop, we presented the preliminary results of the Danish survey. We would like to thank the workshop s 45+ very active participants. Their input was invaluable in the writing of the report. We are especially grateful to Carsten Skovbro from NmN Ledelsesrådgivning for thoroughly reading the report and commenting on our analysis

10 Acknowledgements Regardless of the number of people and organizations that support our work in terms of financing and research assistance, a project like this is not feasible without the most important actors the subjects of our study. A very big thank you goes to the 119 HR managers in Danish MNCs that took the time to answer our rather extensive questionnaire during a period when the economic crisis was knocking on the doors of nearly every enterprise in the world. A very special thank goes to the seven HR managers and CEOs who spent several hours in follow up, face to face interviews. Those interviews give the many tables and figure some interesting nuances and serve to remind us, as researchers, of the many details we miss when we focus solely on figures and percentages. Without the commitment of the respondents and the interviewees, we would have no research and no report and no inputs for further research. Finally, it should be emphasized that this report by no means represents the final results of the survey. In fact, this report should be seen as a first step towards many deeper analyses in the years to come. This report is a generally descriptive analysis of Danish MNCs alone. When the Danish and Norwegian datasets are merged with the international dataset (which includes data from the other seven countries), we will have new and interesting possibilities. First, as the database will be significantly bigger, we will be able to examine more specific issues without the risk of having too few observations. Second, we will be able to compare how MNCs from one country behave in two or more foreign institutional settings for example, how a US company behaves in terms of HR in the UK, Ireland, Spain and the Nordic countries. Third, it will be possible to analyze how Danish companies behave abroad on the basis of accounts provided by foreign subsidiaries rather than Danish headquarters and vice versa

11 Abbreviations and concepts Abbreviations and concepts HRM Human resource management IR Industrial relations EWC European Works Council LOG Largest occupational group MNC Multinational corporation SME Small and medium sized enterprise Danish operations All of an MNC s operations within Denmark Home based corporations Corporations that are wholly or majority owned by Danish interests, and that have at least 500 employees worldwide and 100 or more employees working outside of Denmark Foreign based corporations Corporations operating in Denmark that are wholly or majority owned by non Danish interests, and that have at least 500 employees worldwide and a minimum of 100 employees in Denmark NACE rev. 2 Statistical classification of economic activities in the European Community 1 Coordinated Market Economies (CMEs) Coordinated market economies rely on formal institutions to regulate the market and coordinate the interaction of firms and firm relations with suppliers, customers, employees, and financiers 2 Liberal Market Economies (LMEs) In liberal market economies, the problem of coordination between firms and between firms and their financiers, employees, suppliers, and customers is solved through market mechanisms. LMEs are free market economies 2 1 ec.europa.eu/eurostat 2 market economy (LME).html

12 Summary in Danish Summary in Danish Tilstedeværelsen af multinationale virksomheder (Multinational Companies MNC er) har stor betydning for den danske økonomi. En betydelig og stadig stigende andel af den danske arbejdsstyrke er beskæftiget i multinationale selskaber, og de personalepolitikker, som disse virksomheder implementerer, får derfor stadig større betydning for danske lønmodtagere og for det danske arbejdsmarked fordi personalepolitikker i de ofte store virksomheder indirekte kan påvirke samarbejds og forhandlingskulturen. I et internationalt forskningsprojekt Employment Practices of Multinational Companies in Organizational Context har forskere fra flere lande samlet nationale data omhandlende human ressource management (HRM) og arbejdsmarkedsrelationerne (Industrial relations IR). Den danske data base er indsamlet via et omfattende spørgeskema, som i 2009 blev sendt ud og besvaret af HR ledere i danske og udenlandske MNC er i Danmark. Den danske undersøgelse er ydermere suppleret med nogle interview med HR ledere i MNC er i Danmark. Det er de første resultater af de danske del af undersøgelsen, der afrapporteres her. Et overblik over MNC er i Danmark Den samlede population af MNC er i Danmark består af 304 udenlandsk ejede MNC er 3 hvoraf 88 MNC er indgår i projektets databesvarelse (svarprocent: 29 %) og 113 danskejede MNC er 4 hvoraf 31 indgår i databesvarelsen (svarprocent: 27 %). Flertallet af MNC er i den danske databesvarelse er ejet af et moderselskab i et europæisk land. De skandinaviske lande dominerer, idet en andel på 46 % af MNC er i Danmark kommer fra Skandinaviske lande. Uden for Europa dominerer MNC er med moderselskab i USA; de udgør 16 %. Alt i alt kommer mere end 9 ud af 10 af de MNC er, der opererer i Danmark, fra de vestlige økonomiske systemer. Det betyder, at størstedelen af udenlandske MNC er i Danmark er ejet af et moderselskab i et land med relativt store ligheder med det økonomiske og til en vis grad (arbejdsmarkeds)kulturelle system, som vi har i Danmark. De udenlandske MNC er er generelt større målt på antal medarbejdere end de danskejede MNC er i vores undersøgelse, med et gennemsnitligt antal medarbejdere i hele koncernen på i de udenlandske MNC er mod et gennemsnitligt antal medarbejdere i danskejede MNC er på mellem medarbejdere. 3 En udenlandsk ejet virksomhed, der opererer i Danmark, og som har mere end 500 medarbejdere på verdensplan, hvoraf minimum 100 af dem er ansat i Danmark. 4 En dansk ejet virksomhed, med mere end 500 medarbejdere på verdensplan og mindst 100 ansatte medarbejdere i Danmark

13 Summary in Danish Halvdelen af de MNC er, som indgår i vores databesvarelse, er fremstillingsvirksomheder. Det er interessant, taget i betragtning at den danske økonomi oftest beskrives som en vidensøkonomi. Man kunne forvente, at et væsentligt argument for, at MNC ere investerer og opkøber danske virksomheder kunne være det høje niveau for uddannelse og viden. For en nærmere analyse af dette resultat kæves yderligere mere kvalitative undersøgelser. HR politikken i MNC er systematisk eller ad hoc? Der er forskel på, i hvilken grad virksomhederne har systematiseret deres HR politik på tværs af moderselskabet og de enkelte datterselskaber. To tredjedele af HR lederne angiver, at deres virksomhed har en international HR enhed og at de systematisk samler HR ledere på tværs af landegrænser. De udenlandsk ejede MNC er benytter sig i højere grad af sådanne systematiserede HRpraksisser, og vi finder ydermere, at virksomhedens størrelse har betydning for, i hvor høj grad HRpraksisserne er systematiseret. Den tredjedel af MNC er i undersøgelsen, som ikke har systematiseret deres HR politik, risikerer at gå glip af vidensdeling på tværs af deres selskaber i de forskellige lande, ligesom talentudvikling med henblik på intern rekruttering til lederpositioner ofte er mangelfuld eller ikke eksisterende. Skønt spredningen af HR initiativer typisk finder sted top bottom altså fra virksomhedens hovedkvarter i moderselskabet til datterselskaberne så er der i undersøgelsens case studier eksempler på, hvordan nogle datterselskabers HR initiativer er blevet diffunderet op til hovedkvarteret og siden er blevet implementeret til resten af virksomhed et fænomen, som i forskningen kaldes reverse diffusion (af HR prakssiser). Datterselskabernes autonomi Når et selskab opkøbes eller et datterselskab etableres, kan der være betydelige forskelle på, i hvilket omfang, moderselskabet tildeler datterselskabet autonomi vedrørende beslutninger om økonomi og personale. Det engelske begreb discretion dækker begrebsmæssigt bedst den grad af selvstændighed og beslutningskompetence, som moderselskabet tildeler datterselskaberne. Analysen af data fra undersøgelsen viser et generelt højt niveau af autonomi blandt de undersøgte virksomheder indenfor områderne kommunikation, medarbejderinvolvering og medarbejderrepræsentation. Til gengæld er der et lavere niveau af beslutningsautonomi, når det gælder aflønning. Det er ikke så overraskende, da denne faktor har stor betydning for virksomhedens profit og konkurrenceevne, og da løn er et område, som klassisk og mest håndgribeligt kan regulere både de menneskelige ressourcers motivation og virksomhedens overordnede økonomi

14 Summary in Danish Virksomhedernes oprindelsesland har betydning for, i hvor høj grad de tildeler datterselskaberne selvstændighed til at træffe beslutninger indenfor de forskellige HR områder. Analysen viser, at amerikansk ejede virksomheder har en tendens til at tildele datterselskaber i Danmark mindre autonomi sammenlignet med fx de svenskejede virksomheder, hvor HR ledere i det danske selskab oplever en relativt høj grad af selvstændighed i beslutningerne. HR praksis Et formelt evalueringssystem (appraisal and reward systems) er et vigtige redskab indenfor HR, hvilket også afspejler sig i undersøgelsen: 75 % af MNC er har et system, der evaluerer og belønner ledere, og 68 % har et sådant system for alle andre medarbejdere i virksomheden. Analyserne viser, at udenlandsk ejede MNC er i højere grad benytter sig af disse redskaber end de danske MNC er. Især USbaserede virksomheder benytter disse redskaber. Evalueringerne bruges af mere end en fjerdedel som et formelt system til at træffe beslutninger om forflyttelser eller afskedigelser. Samtidig angiver mere end halvdelen af respondenterne, at systemerne bruges uformelt til at træffe sådanne beslutninger. Dermed er der stor risiko for, at baggrunden for disse betydningsfulde beslutninger ikke er gennemskuelige for medarbejderne ej heller for de ledere, der evalueres på en sådan baggrund. Når ledere skal evalueres, bruger virksomhederne en lang række af redskaber. Det mest anvendte er individuelle præstationer, tæt fulgt af gruppe præstationer, kompetencer samt loyalitet over for virksomhedens værdier. Ses nærmere på, om virksomhedernes nationale oprindelse spiller en rolle, ses det, at de svenske MNC er i signifikant mindre grad bruger individuelle præstationer og værdiloyalitet som udgangspunkt for leder evalueringer. Det antyder, at den skandinaviske tradition for gruppe arbejde og uddelegering af ansvar også slår igennem i mindre individuelt præget evalueringssystemer i de svensk ejede MNC er. 360 degree feedback er en HR praksis, som brug af to tredjedele af virksomhederne og det gælder for både menige medarbejdere og ledere. Lønsystemer med variabel løn bruges af 77 % af virksomhederne for ledere, mens 60 % bruger sådanne systemer for menige medarbejdere. Til gengæld viser analysen, at overskudsdeling og aktieoptioner til medarbejdere ikke anvendes så ofte i MNC erne; analysen viser, at disse redskaber kun er bruges i 20 % af virksomhederne for ledere og i 10 % for alle andre medarbejdere. Efteruddannelse og udvikling af medarbejdere Efteruddannelse og udvikling af medarbejdere drejer sig om, i hvor høj grad virksomheden investerer ressourcer i dens medarbejdere. Omkring halvdelen af de adspurgte virksomheder angiver, at 1 4 % af

15 Summary in Danish virksomhedens årlige udgifter til medarbejderne bliver anvendt til efteruddannelse og udvikling af medarbejdere, mens omkring to ud af fem bruger mindre end 1 %. Analysen viser, at udenlandske MNC er i Danmark har en tendens til at bruge flere ressourcer på efteruddannelse og udvikling sammenlignet med de danskejede MNC er det er således kun udenlandske virksomheder, som brugermere end 4 % på efteruddannelse. Virksomheder, som på andre områder har en systematisk HR politik fx de virksomheder, som har et globalt HR udvalg investerer typisk også markant mere i efteruddannelse og udvikling. Planer for generationsskifte er relativt udbredt. 43 % af de dansk ejede MNC er har sådanne planer på plads i alle eller nogen af deres organisationer, mens tallet er 50 % for de udenlandsk ejede virksomheder. Selv om der altså ikke er lavet generationsskifteplanerne på godt halvdelen af virksomhederne, betyder det ikke, at man ikke er opmærksom på talentudviklingen. Næsten 70 % har et lederudviklingsprogram, som retter sig mod medarbejdere med lederpotentiale. Den mest udbredte måde at udvikle ledere er via globale lederudviklingsprogrammer, typisk baseret på evaluering af præstationer i forhold til et defineret sæt af globale lederkompetencer. Ét er at udvikle den enkelte medarbejder. Noget andet er at sikre, at organisationen også stadig udvikles, selv hvis individer forsvinder. En lærende organisation sikrer, at den viden som er i virksomheden forbliver der, selv når medarbejdere med særlig viden rejser herfra. Samtidig formår den lærende organisation at transformere sig selv, så den konstant forbliver konkurrencedygtig. Omkring 40 % af virksomhederne i undersøgelsen har en formel politik omkring international organisatorisk læring som skal sikre, at viden bliver i organisation og at organisationen udvikler sig. De redskaber, som er mest udbredte for at sikre denne læring, er internationale projekter og arbejdsgrupper (anvendt af 80 % af de adspurgte virksomheder). Også internationale uformelle netværk og udsendelse af medarbejdere benyttes af mange virksomheder. Internationale projektgrupper og task forces er redskaber, som 60 % af virksomhederne angiver som vigtigst i den organisatoriske læring. Igen er der også her en klar sammenhæng: De virksomheder, der har en systematisk HR politik på andre områder, er også dem, der typisk arbejder med systematisk organisatorisk læring. Medarbejderinvolvering og kommunikation Medarbejderinvolvering og kommunikation er vigtige elementer af en virksomheds HR praksis. Medarbejderinvolvering kan have betydning for kvaliteten i det produkt eller den service, som virksomheden leverer, og som sådan kan det være en konkurrencefaktor. Kommunikation kan være afgørende for medarbejdernes tilfredshed og kan dermed også påvirke produktion, service og kvalitet. Et flertal af de undersøgte virksomheder angiver, at deres systemer for medarbejderinvolvering er

16 Summary in Danish forskellige fra den ene enhed til den anden. Det indikerer, at MNC er tilpasser deres involveringssystemer og kommunikationsstrategi til det enkelte datterselskab i det enkelte land I de udenlandsk ejede virksomheder er den mest anvendte strategi for involvering af medarbejderne problem løsningsgrupper og grupper der skal stå for kontinuerlige forbedringer i virksomheden. Disse grupper bruges i højere grad af udenlandsk ejede virksomheder end af dansk ejede virksomheder, og det kan overraske; man kunne forvente, at sådanne gruppedynamiske arbejdsorganiseringer var anvendt mere i en dansk sammenhæng, hvor man har relativt lange traditioner for gruppe baseret arbejdsorganiseringer. Når det gælder kommunikation i MNC er, bruges en bred vifte af kommunikationsmidler. Det mest udbredte i forbindelse med kommunikation til de menige medarbejdere er møder mellem ledere og mellemledere, nyhedsbreve eller e mails samt virksomhedens intranet. Analysen viser igen, at de virksomheder, som har en international HR enhed eller virksomheder som anvender andre systematiske HR praksisser, også i typisk arbejder mest systematisk med kommunikation. Når vi ser på, hvad indholdet i kommunikationen med medarbejderne er, peger HR lederne på følgende i prioriteret rækkefølge: Virksomhedens finansielle situation; information om investeringsplaner; og bemandingsplaner (ansættelser og afskedigelser). Det skal dog bemærkes, at undersøgelsens dataindsamling fandt sted i 2009, midt under den finansielle krise. Derfor giver det også mening, at mange virksomheder prioriterer at informere omkring den finansielle situation og at medarbejderne måske også efterspørger denne information. Det kan dog undre, at information om bemanding ikke ligger højere på listen, da det må formodes at ligge mange medarbejdere på sinde i en tid med krise. Man kunne forvente, at informationer om virksomhedens finansielle situation og om ansættelser og afskedigelser i højere grad blev formidlet i dansk ejede virksomheder end i udenlandskejede virksomheder, da der i Danmark er en lang tradition for informationsdeling i samarbejdsudvalg. Analyserne viser imidlertid, at det forholder sig modsat; de udenlandsk ejede virksomheder tenderer i højere grad at dele den form for information end de dansk ejede. Medarbejderrepræsentation og konsultation Graden af medarbejderrepræsentation og konsultation er traditionelt meget afhængig af det enkelte lands love og politik på området samt ikke mindst arbejdsmarkedssystemet (Industrial Relations IR). I Danmark er der en tradition for stærke fagforeninger og en høj overenskomstdækning, sammenlignet med andre lande i verden, og i det danske IR system spiller arbejdsmarkedets parter arbejdsgiver og fagforeninger en stor rolle i reguleringen af det danske arbejdsmarked via kollektive

17 Summary in Danish forhandlinger. Medarbejdernes rettigheder i forhold til repræsentation og konsultation er stipuleret i Samarbejdsaftalen, og lønmodtagerne uanset fagforeningsmedlemsskab har yderligere rettigheder som er stipuleret i EU direktiver, ikke mindst direktivet om European Works Councils (EWC). En central forskningsinteresse i dette projekt har været at belyse, hvorvidt udenlandsk ejede MNC er har tilpasset sig det danske arbejdsmarked med disse stærke traditioner for samarbejde og forhandling, eller om de forsøger at pådutte danske medarbejdere i datterselskaber andre traditioner. Analysen viser, at fagforeningerne er accepteret af et stort flertal af de undersøgte virksomheder; kun 5 % har svaret, at de ikke går ind for fagforeninger mens hele 53 % tager en tilgang hvor der samarbejdes med fagforeningerne. Når det gælder danske MNC er holdninger til fagforeninger i datterselskaber uden for Danmark, så overlader godt halvdelen det til datterselskabernes ledelse selv at tage beslutninger relateret til fagforeningen mens en tredjedel ikke har nogen politik på området. Denne analyse indikerer, at samarbejdet med fagforeninger i høj grad relaterer sig til de lokale forhold og derfor også overlades til den lokale ledelse, uanset om moderselskabet kommer fra et land med lange traditioner for samarbejde og konsultation eller det modsatte. Andre data indikerer også en relativt dyb respekt for arbejdsmarkedsreguleringen i Danmark. 30 % af virksomhederne lever op til de lovmæssige minimumskrav om information og konsultation, men hele 54 % angiver, at de overopfylder kravene i nogen eller betydelig grad. Også når det gælder emner, hvor ledelser ikke nødvendigvis skal involvere fagforeningsrepræsentanter, involverer mange dem alligevel. Det gælder således fleksible lønsystemer og direkte medarbejderinvolvering. Til gengæld konsulterer størstedelen af virksomhederne ikke fagforeningsrepræsentanter, når det gælder arbejdsorganisering og outsourcing til andre firmaer (subcontracting). Det kan undre noget, at fagforeningsrepræsentanter ikke er mere involveret i arbejdets organisering, taget i betragtning at mange emner i den kollektive overenskomst såvel som samarbejdsaftalerne netop handler om arbejdets tilrettelæggelse. Outsourcing påvirker indirekte medarbejderne, da de på sigt kan miste arbejdsopgaver, men det undrer måske mindre, at der ikke konsulteres om dette, da det formelt set er en del af ledelsesretten at træffe beslutninger om dette. Endelig viser analysen, at mere end fire ud af fem MNC er jævnlig holder møder mellem ledelse og medarbejderrepræsentanter med henblik på information og konsultation. I 70 % af virksomhederne dækker disse møder alle medarbejdere dog har møderne forskellig karakter for de forskellige grupper. Europæiske Samarbejdsudvalg (ESU) eller noget tilsvarende findes i 40 % af virksomhederne, mens 40 % ikke har det. Interessant nok angiver 20 % af de adspurgte HR ledere ikke at vide, om der er et sådant udvalg i organisationen, og 60 % angiver at få meget lidt eller ingen information om ESU s

18 Summary in Danish aktiviteter. Det indikerer, at medarbejderinformation og konsultation på internationalt plan fylder relativt lidt i en femtedel af HR ledernes prioriteringer og/eller kompetenceområde. Virksomhedernes præstationer I spørgeskemaundersøgelsen blev HR lederne bedt om en subjektiv evaluering af deres virksomheds præstationer sammenlignet med tilsvarende virksomheder i samme branche. Flertallet af HR lederne rapporterer, at deres virksomhed har præsteret særdeles godt faktisk angiver 84 % af respondenterne i de dansk ejede MNC er og 60 % af respondenterne i de udenlandsk ejede virksomheder, at virksomhedens generelle præstationer er outstanding. Her er produkt og markedsresultaterne højst vurderet, efterfulgt af resultaterne inden for HR og den generelle finansielle performance. Blandt de udenlandske MNC er viser analysen, at en større andel af amerikanske HRledere vurderer deres virksomheds præstationer som relativt dårlige, sammenlignet med andre ledere i udenlandsk ejede virksomheder. Den institutionelle kontekst arbejdsmarkedssystemerne og HR politikken Når et multinationalt selskaber investerer i eller etablerer en virksomhed i et fremmed land, møder de ofte et arbejdsmarkedssystem, som er anderledes end det, de kender. Hvor det er muligt at kontrollere en række virksomhedsinterne HR forhold det handler om ledelsesretten så er værtlandets traditioner for regulering af arbejdsmarkedsforhold i det store og hele uden for MNC ens kontrol. Den institutionelle kontekst skal forstås som de lokale forhold, hvorunder MNC erne opererer, inklusive arbejdsmarkedsrelationer, arbejdsmarkedslovgivning, det kollektive forhandlingssystem og traditioner for samarbejde mellem ledelse og medarbejdere. Disse forhold sætter nogle rammer for det multinationale selskabs HR politikker, og hvis et MNC ønsker at implementere den samme HR praksis på tværs af landegrænser, kan nogle tiltag komme i konflikt med lokale regelsæt og traditioner. Teoretisk kan analyser af disse forhold frugtbart tage udgangspunkt i Varities of Capitalismtilgangen, hvor lande kan katagoriseres som liberale markedsøkonomier eller som koordineret markedsøkonomier. En koordineret markedsøkonomi (CME) er karakteriseret ved, at formelle institutioner regulerer markedet og koordinerer interaktionen mellem virksomhederne og deres relationer til kunder, ansatte og investorer. I den liberale markedsøkonomi (LME) koordineres disse relationer gennem det frie marked. Virksomheder bærer i et vist omfang et institutionelt DNA med sig, når de investerer i andre lande, forstået således at arbejdsmarkedstraditioner fra MNC ens hjemland kan præge

19 Summary in Danish moderselskabet HR politik. Det betyder, at der kan opstå problemer med at forstå andre landes arbejdsmarkedstraditioner, når der investeres i på nye arbejdsmarkeder fx når en MNC fra en liberal markedsøkonomi med svage fagforeninger og en minimal regulering af arbejdsmarkedet skal investere i en virksomhed i en koordineret markedsøkonomi. Meget forenklet kan mulige kombinationer illustreres som nedenfor: Operating in LMEs Operating in CMEs Originating from LMEs No conflict Turbulence area Originating from CMEs Turbulence area No conflict Som allerede påpeget kommer langt størstedelen af MNC er i Danmark fra vestlige lande med økonomiske systemer og til en vis grad arbejdsmarkedssystemer, der har ligheder med det danske. Deler vi det op i forhold til LME er og CME er og hvad man kan kalde blandinger ser vi, at 30 virksomheder har moderselskaber, der kommer fra LME er og dermed er det 30 virksomheder, hvor der kunne være potentiale for konflikter mellem moderselskabets HRpolitik og de lokale arbejdsmarkedstraditioner i værtslandet Danmark, som er CME. På baggrund af denne undersøgelses data har vi analyseret, om der på udvalgte parametre, hvor der særligt kunne forventes forskelle, kan identificeres forskelle mellem virksomheder med moderselskab fra et LME hhv. et CME: Når det gælder kommunikation, kan der ikke identificeres forskelle mellem LMEvirksomheder og CME virksomheder i Danmark. Når det gælder medarbejderrepræsentation kan der konstateres forskelle mellem LME og CME virksomheder, er der heller ikke significante forskelle, fx i anderkendelse af fagforeninger. Faktisk konsulterer hele 84 % af LME virksomheder fagforeningsrepræsentanter, når der skal laves variable lønssystemer. Den foreløbige konklusion er altså, at der ikke er forskelle mellem LME virksomheder og CME virksomheder, der opererer i Danmark og at LME virksomheder altså i vid udstrækning synes at tilpasse sig de lokale arbejdsmarkedstraditioner i Danmark. Vi skal dog være opmærksomme på to ting. For det første er denne undersøgelse udelukkende baseret på lederes syn på spørgsmålene. Kvalitative undersøgelser, hvor også medarbejdersiden indgår, såvel som case studier i denne undersøgelse indikerer, at udenlandsk ejerskab på en række områder faktisk kan forandre relationerne

20 Summary in Danish For det andet er data materialet så lille, at det ikke er muligt at køre statistiske tests. Derfor vil der være en række meget stærkere resultater, når den danske data base bliver kørt sammen med data baserne fra de otte andre lande i den internationale undersøgelse, og da vil det være muligt at levere mere signifikante resultater og at gå dybere bag om tallene om LME versus CME

21 Introduction Chapter 1: Introduction The importance of multinational corporations (MNCs) activity in the Danish economy is evident and such activity plays a crucial role in shaping employment practices in Danish society. Over the last years, an increasing number of foreign MNCs have discovered Denmark as a profitable market with a sound labor market. At the same time, Danish companies have rapidly expanded internationally. Despite this increase in the prevalence of MNCs in the Danish economy, there is no definitive picture of the ways in which MNCs in Denmark organize and manage their employees. Furthermore, a general understanding of how employment practices are influenced by the organizational forms developed by international firms as they struggle to respond to the imperatives of globalization is lacking. Knowledge of how employment practices vary according to key variables, such as organizational structure, nationality of ownership, sector and size, is patchy at best. Our understanding of the patterns of transnational diffusion of employment practice among MNCs with different organizational characteristics is also limited. In an effort to respond to these gaps in the research, the comparative international project Employment Practices of Multinational Companies in Organizational Context 5 brought leading international researchers together on national teams. The project resulted in a rich data set useful for testing key propositions concerning MNC employment practices in the realm of human resource (HR) and industrial relations (IR) management. This report presents the key findings of this large scale survey of the employment practices carried out in Denmark in both Danish and foreign owned MNCs. We examine four central aspects of the MNCs organization and management in Denmark. First, the strategies, structures and control mechanisms characterizing the companies are presented with the purpose of creating a profile of MNCs operating in Denmark. Second, we consider the role of the HR function and its structure within MNCs, including the relationship between Danish based operations and management at international headquarters. Third, the survey focuses on four substantive areas of employment practices, each of which are analyzed and described in separate chapters: Performance management and reward systems, Training, development and organizational learning, Employee involvement and communication, and 5 This is part of the international network INTREPID: Investigation of Transnationals' Employment Practices International Database

22 Introduction Employee representation and consultation. Finally, we highlight some tendencies with regards to corporate performance as evaluated by HR managers. Overall, this report seeks to communicate the results of the survey in an easy to understand, accessible manner. We hope to increase the understanding of HRM in MNCs by characterizing their HRM practices, and analyzing how organizational factors affect their structure and performance. As we move through each part of the survey, we use descriptions and statistics to accentuate our key findings. Study design In this section, we briefly describe the process of gathering data for this project from the establishment of the population of MNCs to the development of the survey tool to the execution of the survey. The research population In developing the population, our aim was to construct two lists: one of foreign owned companies and another of Danish owned companies. The first step in this regard was to formulate our definition of an MNC. For this purpose, we used the definitions provided by the INTREPID project: Foreign owned MNC: All wholly or majority foreign owned corporation operating in Denmark, with at least 500 employees worldwide and a minimum of 100 employees in Denmark. Danish owned MNC: All wholly or majority Danish owned corporations, with at least 500 employees worldwide and 100 or more employees working outside of Denmark. The lists were created using two databases AMADEUS (Pan European) and CD Direct (Danish) in which searches could be undertaken on the basis of the above criteria. The company list produced from each database was cross checked and missing information (such as country of origin, ownership status and number of employees) was gathered using a number of general business interest websites and individual MNCs websites. The questionnaire The questionnaire consists of core questions from the international research project as well as questions specific to Denmark and the research group s special interests. The main additions to the core questions focus on employee representation and company performance. The questions on employee representation were added because of the tradition of high union involvement and high

23 Introduction union density in the Nordic countries. The questions on company performance were added to obtain data on the effectiveness of HR for the performance of the company. The survey was designed as a web based questionnaire using software from Inquisite. Two surveys were created, one for home based MNCs and one for foreign based MNCs. The questionnaires were offered in both Danish and English. The questionnaires are available on the project website: Data collection After establishing the study population and developing the survey, the next step was to contact the companies. As the questionnaire involves complicated, high level, HR related questions, we collected the contact information, name, and e mail address for the senior HR manager/head of HR in Denmark for each company/subsidiary. This data collection was undertaken by phone. On the basis of the contact information, a personalized invitation was sent through the Inquisite system. Each invitation was followed by a reminder and, finally, a reminder by phone. Table 2 shows the population, the number of responses, and the response rate for both Danish owned and foreign owned companies. Table 1: Response rates Type Foreign owned Danish owned Total Population Responses Response rate 28.9% 27.4% 28.5% For a more detailed description of the methods used to collect the data and the problems that were encountered during the process, please refer to the project website, where you will find various publications and method papers

24 Introduction The research team This research project was carried out through a cooperative partnership between the Department of Strategic Management and Globalization (SMG, Copenhagen Business School) and FAOS Employment Relations Research Centre (Department of Sociology, Copenhagen University). SMG undertakes research into the strategic behavior of companies in an increasingly globalized world. This research is carried out in the intersecting field of two disciplines strategic management and international business and builds upon the unique mix of ideas from organizational economics and strategic theory that the department s group of researchers has cultivated over the past six years. The project manager from SMG is: Dana Minbaeva, Associate Professor, PhD Department of Strategic Management and Globalization (SMG) Copenhagen Business School [email protected] FAOS undertakes research into industrial relations, employee involvement and employee employer relations. The international dimension of the organization s research focuses on the importance of international actors for national institutional employment systems. MNCs are important actors in the international division of labor, a fact highlighted by the regulation of employment relations on an international level, not least in the EU. The project manager from FAOS is: Steen E. Navrbjerg, Associate Professor, PhD Employment Relations Research Centre (FAOS) Copenhagen University [email protected] Other members of the project team are student/research assistants Aja Henderson, Helle Aasen, Kristine Svendsen, Lars Christian Lund Larsen, Mia Petring, Naomi Rosenthal, and Sarah Biel from SMG at Copenhagen Business School; and Anders Søberg and Ask Greve from FAOS, Copenhagen University. Language editing was done by Tina Pedersen

25 Introduction Report structure This report is structured around four main parts, each analyzing or describing an important aspect of the MNC and its employment practices (see Figure 1 1). Part 1 begins by profiling the main contours of the MNCs in terms of their countries of origin, sectors, employment levels, history in Denmark, business strategies and organizational structures (Chapter 2). The nature of the HR function, including the relationship between the Danish based operations and the international enterprise, is then examined (Chapter 3). In Chapter 4, the overall discretion given to the subsidiaries is described. Part 2 consists of four chapters (Chapters 5 8) that examine the four substantive aspects of employment practice on which the survey focuses. Each chapter provides an overview of the practice, examines the practice in relation to various company specific variables and ends with a summary of the key findings. In Part 3 (Chapter 9), the performance of the MNC is described. Results from Parts 1 and 2 are used to develop a picture of performance, and to associate it with employment practices and company specific variables. Part 4 (Chapter 10 11) presents the overall conclusions of the study and future research. Figure 1 1: Report structure Part 1 (Chapters 2 4) A general overview of the MNC Profile of Multinationals in Denmark The HR Function Subsidiary Discretion Part 2 (Chapters 5 8) Analysing employment practices Pay and Performance Training and Talent Development Employee Involvement and Communication Employee Representation and Consultation Part 3 (Chapter 9) Investigating MNC performance Company Performance Part 4 (Chapter 10 11) Conclusions Concluding Remarks and Summary Future Research

26 Introduction Part 1 A general overview of the MNC Profile of multinational Denmark The HR function Level of discretion

27 Profile of Multinationals in Denmark Chapter 2: Profile of Multinationals in Denmark This chapter provides a profile of the typical MNC in Denmark by looking at the three aspects. First, we describe a number of the MNCs basic characteristics, such as nationality, size and sector. Section 2 takes a deeper look into the strategies and structures adopted by MNCs. Finally, section 3 addresses the role that the Danish operations fulfill within the international context, e.g., whether the Danish sites perform low value added activities with little strategic content or whether they are important parts of MNCs with international responsibilities for product development or R&D. Basic characteristics Country of origin Country of origin is an important factor for MNCs in Denmark, as it can have a significant effect on the culture, behavior, performance and success of the MNC in Denmark. The distribution of country of origin is presented in Figure The presence of domestic companies in the Danish economy is evident, with 26% of the MNCs originating from Denmark. Throughout this report, these companies are referred to as home based. The importance of MNCs from the other Nordic countries is confirmed by the data, with 21% of all companies in the survey coming from Nordic Europe. The data also confirms a substantial presence of European MNCs, which represent 52% of the companies surveyed. German (10%), UK (6%) and Swiss (7%) MNCs account for the three largest non Nordic, European groups. US owned companies are also present in significant numbers and account for 16% of the MNCs participating in the survey. Overall, the dominance of Nordic Europe together with Denmark is clear, with 47% of the companies originating from Denmark, Norway, Sweden, Finland or Iceland. Meanwhile, only 6% of MNCs in the survey come from the Rest of the World and Asia Pacific. 6 The countries are grouped as follows: the US, Denmark, Nordic Europe (Finland, Sweden, Norway, and Iceland), Europe (the UK, France, Germany, Belgium, Switzerland, Spain, Italy, and the Netherlands), Asia Pacific (Japan, India, and Australia) and Rest of the World (South Africa and Others)

28 Profile of Multinationals in Denmark Figure 2 1: Country of origin In which country is the operational headquarters of your ultimate controlling company located? US DK Nordic Europe Europe Asia Pacific Rest of the World 3% 3% 16% 31% 26% 21% Base: Home and foreign based (n = 119) Company size and composition On average, foreign based MNCs employ more than 60,000 people worldwide. The Danish based MNCs are substantially smaller, with almost 50% employing between 1,000 and 4,999 people worldwide (see Figure 2 2). Figure 2 2: Worldwide employment 60% What is the total number of employees worldwide including Denmark by headcount? 50% 40% 30% 20% 10% Foreign based (n = 88) Home based (n =31) 0% In terms of national variations, US and German owned MNCs are considerably larger than other foreign owned companies, with nine US owned companies and four German owned companies

29 Profile of Multinationals in Denmark employing more than 60,000 people worldwide. Similar to the Danish owned MNCs, the Nordic owned MNCs most commonly employ between 1,000 and 4,900 people worldwide (see Figure 2 3). Foreign owned companies employ an average of employees in their Danish subsidiaries, while home based MNCs are generally bigger, employing between 1,000 and 4,999 employees on average in Denmark. Again, there is some national variation around this mean. German owned subsidiaries in Denmark are the largest, with four companies employing between 1,000 and 4,999 people and one company employing more than 5,000 people. Only two foreign owned MNCs employ more than 5,000 people in the Danish economy, originating from the UK and Germany. In a Danish context, these are viewed as relatively large enterprises, as the economy is dominated by small and medium sized enterprises (SMEs). Figure 2 3: Number of employees in Denmark What is the total number of employees by headcount in Denmark? 3% 9% 19% 19% 50% Up to Base: Home and foreign based (n = 117) To obtain more information on the size factor, we also look at the composition of the workforce. We distinguish between the following two groups: Managers: Employees who primarily manage the organization, a department, a subdivision, a function, or a component of the organization, and whose main tasks consist of the direction and coordination of that unit. In other words, managers include employees above the level of the firstline supervision. The largest occupational group (LOG): The largest non managerial occupational group among the employees in the headcount in Denmark. For example, the LOG in a manufacturing business might be semi skilled operators, while in an insurance company it might be underwriters, claims handlers or call center staff

30 Profile of Multinationals in Denmark 31% of the companies represented in the survey have between 10 and 24 managers employed in Denmark. Furthermore, 28% of the companies have between 100 and 299 LOG employees (see Figure 2 4). Figure 2 4: Number of managers/logs employed in Denmark 35% 30% 25% 20% 15% 10% 5% 0% Approximately how many managers/logs are there in the [company name] in Denmark? Managers (n =117) LOGs (n = 116) Base: Home and foreign based The results also show that the employee manager ratio for Danish owned MNCs is 10 to 1; that is, on average there is 1 manager per every 10 employees. In the case of foreign based MNCs, the employeemanager ratio spans from 10 to 1 to approximately 20 to 1; that is, on average, there is 1 manager per employees. Sector Sector data provides information on the industries in which the MNCs are primarily engaged. The sector data used in this study is extracted from the NACE rev. 2 code. As shown in Figure 2 5 (homebased MNCs) and Figure 2 6 (foreign based MNCs), home based companies are significantly more represented in the manufacturing sector than foreign owned MNCs. 7 More than half of the companies in our data sample are engaged in manufacturing and construction, while about one third are engaged in services or retail and wholesale. Given the Danish economy s status as a knowledge economy, the high percentage of manufacturing companies is somewhat surprising. 7 Chi square test: significant at the 5% level

31 Profile of Multinationals in Denmark Figure 2 5: Companies by sector (home based MNCs) Companies by sector Services 23% Retail and wholesale 13% Manufacturing and construction 64% Base: Home based (n = 31) Figure 2 6: Companies by sector (foreign based MNCs) Companies by sector Arigiculture and mining 2% Services 31% Manufacturing and construction 35% Retail and wholesale 32% Base: Foreign based (n = 87) Age and first significant investment Figure 2 7 depicts the number of years foreign owned MNCs have been present in Denmark. 37% of foreign owned MNCs have been present in Denmark for more than 25 years, while only 13% have been in Denmark for less than 5 years. Figure 2 8 shows the number of years that home based companies have been present in foreign countries, where the trend is similar. 35% have been operating on an international level for more than 25 years. However, none of these companies have operated internationally for less than five years

32 Profile of Multinationals in Denmark Figure 2 7: Years in Denmark (foreign based MNCs) How long ago did the worldwide company first establish in Denmark? 13% 20% 37% 25 years and more years 5 9 years 0 4 years 30% Base: Foreign based (n = 80) Figure 2 8: Years abroad (home based MNCs) How long ago did [COMPANY NAME] establish its first foreign operation? 10% 55% 35% 25 years or more years 5 9 years Base: Home based (n = 29) In terms of the modes of entry used by foreign owned MNCs to enter Denmark, 60% entered through a merger or acquisition, 24% through a Greenfield investment, and 16% through other types of investments. Other types of investments include formation of a subsidiary, own production in existing buildings, franchising and new establishments. Indicators of strategy and structure In this section, we examine three indicators of MNC strategy: the level of diversification, the degree of standardization versus the degree of diversification, and the role of the Danish operations within the global company

33 Profile of Multinationals in Denmark Level of diversification across sectors The level of diversification across sectors measures the extent to which MNC operations are focused on a specific activity, or the extent to which they have a wide range of products and services. The results for this variable are shown in Figure 2 9. Figure 2 9: Primary activity worldwide and Denmark Which of the following statements best describes [COMPANY NAME] in Denmark/worldwide? The company produces... Denmark Worldwide 64% 63% 16% 15% 8% 17% 6% 12% A single product or service that accounts for more than 90% of sales A number of products and services but one of these accounts for between 70% and 90% of sales A number of products and A range of unrelated products services but no single one of and services these accounts for more than 70% of sales Base: Home and Foreign based (n = ) Most MNC operations in Denmark have multiple products or services. 64% of the respondents indicate that the Danish operations produce a number of products or services but no single one accounts for more than 70% of sales. The multi product nature of these companies does not make them conglomerates, as only 6% of the respondents classify themselves as producing a range of unrelated products and services. The results are similar for worldwide operations: companies producing a range of unrelated products and services account for 12% of the worldwide operations compared to the 6% of the Danish operations. Furthermore, in the case of worldwide operations, 63% of companies offer a number of products or services but no single one accounts for more than 70% of sales. This figures is 64% for Danish operations. Standardization A second dimension that is highly relevant in the context of MNCs is the degree of international standardization of products and services. This dimension can provide information on whether MNCs in Denmark manage their operations differently across regions

34 Profile of Multinationals in Denmark The data related to this issue point to the importance of regional standardization. Respondents in more than one third of the companies (43% foreign owned and 31% homed based MNCs) said that they adapted to different regions but standardized within them, with another third (34% foreignowned and 48% home based MNCs) saying they standardized globally (see Figure 2 10). Figure 2 10: Standardization vs. adaptation Are the worldwide company's most important product, service (or group of products, services or brands)...? Foreign based (n = 80) Home based (n = 29) 43% 48% 31% 34% 24% 21% Adapted significantly to national markets Adapted to different regions of the world but standardised within them Standardised globally The role of Danish operations in an international context This section examines the role of the Danish operations within foreign based and home based MNCs. In particular, it aims to answer the following question: do the Danish operations have a strategically important role or do they simply serve as a service hub for the Danish market?

35 Profile of Multinationals in Denmark Figure 2 11: Role of Danish operations The company in Denmark has international responsibility for one or more products or services on behalf of the worldwide company. 29% 28% 16% 18% 9% Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree Base: Foreign based (n = 87) One measure of this factor is the extent to which the subsidiary in Denmark has international responsibility for one or more products. Almost half of the foreign owned companies (46%) indicate that they agree or strongly agree with this point. Furthermore, almost 59% of Danish owned MNCs indicate that they agree or strongly agree that international responsibility for one or more products or services resides outside of Denmark. This shows that a subsidiary outside of the country of origin holds international mandates approximately 50% of the time (see Figure 2 11). A second measure of the role of the Danish operations is whether they carry out R&D and to what degree. R&D is a strategically important function for many companies, as it is often the heart of an enterprise. In terms of the approximate number of employees employed in the R&D function in Denmark, the data show that approximately 85% of home based MNCs have employees in the R&D function in Denmark, whereas this is the case for only 62% of the foreign based MNCs. Graphical overviews of the distribution of different functions are provided in Figure 2 12 for home based MNCs and in Figure 2 13 for foreign based MNCs. The fact that the non R&D functions are distributed equally in both home based and foreign based companies indicate that R&D is such an important function that few enterprises dare to outsource it to subsidiaries

36 Profile of Multinationals in Denmark Figure 2 12: Number of employees by function (home based MNCs) Please estimate the approximate number of employees in [COMPANY NAME] in Denmark in each of the following core functions: R&D (n = 27) 7% 10% 7% Manufacturing (n = 26) 25% Sales & Marketing (n = 29) 32% Customer Service (n = 24) 19% Business Services (finance, IT, payroll etc.) (n = 29) Other (n = 15) Figure 2 13: Number of employees by function (foreign based MNCs) Please estimate the approximate number of employees in [COMPANY NAME] in Denmark in each of the following core functions: R&D (n = 76) 11% 7% 7% Manufacturing (n = 76) 10% 19% 46% Sales & Marketing (n = 85) Customer Service (n = 79) Business Services (finance, IT, payroll etc.) (n = 85) Other (n = 46) A final measure of the role of Danish subsidiaries is whether significant R&D is generated in the Danish operations relative to the companies worldwide R&D. Overall, 24% of the foreign based companies agree or strongly agree that expertise has originated from Denmark. This can be seen in Figure

37 Profile of Multinationals in Denmark Figure 2 14: R&D in Danish operations (foreign based MNCs) Significant expertise in R&D within the worldwide company is generated in the Danish operation. 37% 20% 20% 15% 9% Strongly disagree Disagree Neither agree nor disagree Agree Strongly Agree Base: Foreign based (n = 87) Summary This chapter has described the composition and strategy of a typical MNC operating in Denmark. The analysis shows that: The majority of the companies are from Europe, especially Nordic Europe, with only 22% originating from outside Europe. As such, MNCs operating in Denmark tend to come from countries that are similar to Denmark. Most prevalent are Nordic companies, which account for 47% of the sample. Of the non European countries, US based companies dominate with 16%. Only 6% of the MNCs are based in the rest of the world. In other words, a large proportion of MNCs operating in Denmark come from countries with similar business models. In discussions of Denmark s place in the international value chain, the emphasis has been on the knowledge economy as Denmark s strongest point. However, 50% of the MNCs in Denmark are in manufacturing, which indicates that Danish companies are not necessarily at the top of the value ladder. Further research is needed to explore why manufacturing in Denmark is widespread among MNCs. On average, foreign based MNCs in Denmark employ more than 60,000 people worldwide. Danish MNCs are significantly smaller, with Danish MNC employing between 1,000 and 4,999 people on average. However, the situation is reversed in the Danish operations, where Danish MNCs are bigger. In general, home based companies have been international for many years no home based MNCs has been international for less than four years

38 Profile of Multinationals in Denmark A relatively small number of companies adapt their most important products or services to the national market. The majority of companies in the sample adapt to different regions of the world or standardize globally. Home based companies, in particular, have a high degree of standardization. In terms of strategic position, the results show that about 50% of the subsidiaries hold international responsibility for some products and services, and 24% believe that significant R&D has been undertaken in the Danish operations. Home based MNCs tend to focus on one product, while foreign MNCs are relatively more likely to diversify. This could be connected to the home based MNCs small size relative to foreignbased MNCs

39 The HR Function Chapter 3: The HR Function In the previous chapter, we described some key features of the MNCs operating in Denmark by looking at their basic characteristics, as well as the strategies and structures that they have adopted for the relationship between headquarters (HQ) and subsidiaries. In this chapter, we elaborate on a number of important aspects of the human resource (HR) function. In particular, we look at the organization of the international HR function and its various aspects, such as the mechanisms the MNC has in place to facilitate a coordinated approach to HR across national borders, the nature of HR policy making bodies and the extent to which HR staff are brought together across borders. HR managers were also asked about the proportion of non HR managers that spend the majority of time on HR matters. We find that non HR managers in home based MNCs spend more time on average (15%) than non HR managers in foreign based MNCs. (7%). The chapter ends with an examination of the respondents views on the extent and nature of an international philosophy on the management of employees, and a brief summary of the findings. HR policy formation and coordination across borders One aspect of the international HR function that provides a measure of the degree of control over HR policy across borders is whether there is an international HR policy making body. Respondents were asked whether their companies have a body within the worldwide MNC, such as a committee of senior managers that develops HR policies that apply across countries (see Figure 3 1)

40 The HR Function Figure 3 1: Presence of global HR body Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? Home based (n = 30) Foreign based (n = 87) 60% 70% 40% 30% Yes No We see that such bodies are quite common in both home and foreign based companies, as 60% of home based companies and 70% of foreign based companies have such a unit in place. This leads to an assumption that HR is, at least to a certain extent, coordinated across borders. The prevalence of such units varies somewhat on the basis of HQ nationality across the different regions but this result is not statistically significant (see Figure 3 2). Figure 3 2: Presence of international HR policy body Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? 28% 40% 40% 31% 72% 60% 60% 69% No Yes US Denmark Nordic Europe Europe Base: Home and foreign based (n = 117) The respondents were also asked whether Denmark was represented on this body. This can be seen as an indicator that distinguishes Danish operations with a local HR implementer role from Danish

41 The HR Function Another important indicator is the degree to which the MNC makes a systematic attempt to bring managers together across countries. This factor might serve as an indicator for systematic knowledge sharing and organizational learning among subsidiaries. However, such systemization can also be used as a way of controlling the local HR functions by creating shared values. Figure 3 3: Attempts to bring HR managers together Are HR managers from different countries brought together in a systematic way? 58% 65% 42% 35% Home based (n=31) Foreign based (n=88) Yes No Just under two thirds (65%) of the foreign based companies and slightly more than half (58%) of the home based companies systematically bring HR managers from different countries together (see Figure 3 3). This provides further support for the notion that many MNCs are developing an integrated approach to HR policy making. Respondents were asked whether this activity takes place on the global or regional level. 40% indicated that they assemble HR managers on the regional level, whereas 25% do so on the global level. Once again, the nationality and size variables are important determinants. As Figure 3 4 shows, Danish companies and companies originating from Nordic Europe are those least likely to systematically bring managers together, while companies from Europe and the US are most likely to bring managers together

42 The HR Function Figure 3 4: MNC systemization of cross region HR manager meetings Are HR managers from different countries brought together in a systematic way? 26% 42% 48% 35% 74% 58% 52% 65% No Yes US (n=19) Denmark (n=31) Nordic Europe (n=25) Europe (n=37) Larger companies, in terms of both global and Danish employment, are more likely to encourage managerial contact on the global and regional levels. Specifically, 77% of the companies employing 5,000 employees or more worldwide bring HR managers together on both a regional and global basis, while the corresponding figure for companies with less than 5,000 employees worldwide is only 41%. Three of the four companies in our sample with more than 5,000 employees in Denmark bring HR mangers together on a global and regional basis, while only 62% of companies with less than 5,000 employees in Denmark do so. Respondents were also asked about the mechanisms used to facilitate international contact between HR managers regular meetings, international conferences, taskforces and virtual groups (see Figure 3 5) and how frequently those mechanisms were used. The results show that all mechanisms are widely used in the vast majority of companies, with only 21% of the responding companies not applying any of the four mechanisms. Regular meetings are the most common, while international conferences are the least, although the latter are still used by more than half of the companies

43 The HR Function Figure 3 5: Mechanisms bringing HR managers together Does contact between HR managers in different countries take place through the following mechanisms? Home based (n=27 29) Foreign based (n=83 86) 70% 74% 50% 61% 66% 70% 59% 65% Regular Meetings International Conferences Task Forces Virtual Groups HR philosophy and reverse diffusion Another way of examining the international dimension HRM activities is to consider the extent to which there is a uniform management style across borders. Respondents were presented with a series of statements related to the company s philosophy concerning its employee management style and asked the extent to which they agreed or disagreed with each statement on a scale of 1 to 5 8 (see Figure 3 6). The data show that a worldwide philosophy is widespread in 37% of the home based MNCs and in 46% of the foreign based MNCs. 8 In Figure 3 6 those companies answering: agree (4) and strongly agree (5) to each of the statements are displayed

44 The HR Function Figure 3 6: Approach to HR philosophy Approach to HR Philosophy Home based (n=29 30) Foreign based (n=86 87) 61% 59% 46% 37% 38% 27% 28% 47% 48% 43% 40% 40% There is a worldwide approach covering all global operations There is a regional approach covering all European operations The development of a specific approach is left to international product, service or brand based divisions The development of a specific approach is left to national operating companies The approach is really a mix of the traditions of the different national operating companies Traditions in the country of origin have an overriding influence on the approach to the management of employees In general, the analysis shows that only a minority of MNCs engage in reverse diffusion of HR practices from the subsidiaries to the worldwide organization. When asked whether some of their local HR practices have been used in the MNC worldwide, 30% stated that HR practices had been taken up in a few parts of the firm, while 60% indicated that none of their HR practices were in use across the MNC. Very few subsidiaries reported that their HR practices had been implemented globally. Notably, the area of employee involvement and communication seems to be the area in which local HR practices are most often diffused to other branches of the MNC (see Figure 3 7)

45 The HR Function Figure 3 7: Reverse diffusion of HR practices Has the company in Denmark provided any new practices in the following areas that have been implemented elsewhere in the MNC? Pay and performance management 36% Training, development and organisational learning Employee involvement and communication 23% 26% Employee representation and consultation 26% 10% 9% 11% 6% 1% 3% 0% 0% Yes, in few parts of the firm Yes, in major businesses Yes, taken up globally Base: Foreign based (n= 86 87) Summary This chapter has described the HR functions of MNCs by looking at HR policy development and coordination, systematic attempts to bring HR managers together, and mechanisms for doing so. We find that: About two thirds of MNCs in Denmark have an international HR body and a system for bringing managers together. These systems are somewhat more common in foreign based MNCs than in Danish based MNCs, partly due to the smaller size of the latter. In about one third of the foreign based MNCs, a Danish representative is part of the international HR policy making body. The most common way of bringing managers together is through regular meetings, but international conferences, task forces and virtual groups are also widely used. Companies adopt a variety of approaches to their HR philosophy, ranging from local adaptation to global standardization. A decision to not bring HR managers together or not introduce an international HR body could have consequences in terms of missed opportunities to encourage knowledge sharing in HR. Subsidiaries might have ideas or practices relevant to certain HR problems, but these cannot be spread throughout the organization if subsidiary HR managers do not meet. However, there are some examples of an HR initiative from a subsidiary being implemented in the wider organization (see Textbox 1)

46 The HR Function We were a playground Textbox 1: Reverse diffusion A Danish subsidiary of a German MNC was part of a merger of subsidiaries in the Nordic countries over 15 years ago. Of the more than 100,000 people employed by the MNC worldwide, the Danish subsidiary only accounts for around 150. It is, therefore, relatively small in size. The merged Nordic region became an inspiration for the German HQ, and was followed by formations of other regions of similar institutional contexts. The result of the progressive approach taken in the Nordic subsidiaries was a higher level of discretion. According to a Danish HR manager: Back then, we were allowed to do almost anything we wanted (in the Nordic subsidiaries), as we were viewed as the pioneering region. The Nordic subsidiary became a playground for organizational experimentation, and it therefore gradually gained the attention of HQ as top management began to recognize the potential benefits of the Nordic model. The result was that the organizational innovations initiated in the Nordic countries were replicated globally. Given the variety of institutional contexts in different national contexts, over the years the MNC has developed overall strategies with built in compliance rules. These rules make it possible to adjust the strategy to local conditions and are inspired by the subsidiaries experiences: On the implementation level, you have to interpret the decisions made on the strategy level. You might have a strategy, ( ) but then you might run into some legislation locally that makes it impossible to implement the strategy in that form. You have to relate to the local legislation. While there is strong reverse diffusion from subsidiaries to HQ, HQ also maintains strict central control of HR. Every fifth year, the performance of the subsidiary including HR is evaluated. The focus is the degree to which HQ s general strategy is followed. This is a mutual learning process, as HQ needs to understand the institutional limitations to which the subsidiary is subject: We can t say, Yeah, whatever We don t care what HQ does. You can t do that. ( ) But it is a learning process because we go back and tell them that this is not possible in this country or region, while this is possible. ( ) And they go back and change their policies. This has led HQ to adopt a softer approach to HR in subsidiaries: It is being softened up more and more. The topdown management that once was is slowly disappearing. By reconciling the inherent contradiction between centralization and decentralization, this German MNC is able to leverage the tension between local requests for more discretion and HQ s desire for control. It uses subsidiaries to develop HR policies, and to find and develop management talent. In other words, HQ s HR policies are not set in stone, but can be adjusted to the local context, and HR is diffused from subsidiaries to HQ

47 Subsidiary Discretion Chapter 4: Subsidiary Discretion Chapter 3 touched upon the HR related relationship between MNC HQs and subsidiaries, and we analyzed the level of discretion warded to subsidiaries with regards to HR. In this chapter, we elaborate on the relationship between HQ and subsidiaries by looking more thoroughly at subsidiary discretion with regards to a variety of issues, including pay schemes, succession programs and union recognition. The level of discretion is an important indicator of headquarters strategy with respect to subsidiaries and the way in which they manage their global operations. It reflects whether the MNCs focus on the benefits of standardization or give local operations the freedom to adapt to local challenges. In addition, this chapter offers an overview of the levels of discretion and a discussion of the general influence of discretion in the subsidiaries. Measuring discretion In this survey, discretion refers the extent to which a subsidiary has autonomy over the main areas of its employment practices. The survey measures discretion using 15 different items within the four main areas of HR policy: pay and performance, training and development, employee involvement and communication, and trade union policy. Respondents were asked to evaluate the level of discretion in their organization on a five point scale ranging from none to full discretion. Pattern of discretion Summaries of the proportions of companies with high levels of discretion for the various items are provided in Figures 4 1 and 4 2. Figure 4 1 illustrates the foreign based companies perceptions of their discretion levels. For this purpose, HR managers were asked: To what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following aspects of pay and performance policy? Figure 4 2 illustrates home based companies self perception of the discretion they give to their subsidiaries. Here, the HR managers were asked: To what extent do operating companies outside of Denmark have discretion over the determination of the following aspects of pay and performance policy?

48 Subsidiary Discretion Figure 4 1: Areas of discretion (foreign based) To what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following: Foreign owned 59% 48% 44% 54% 48% 73% 62% 57% 80% 60% 87% 87% 72% 69% 7%

49 Subsidiary Discretion Figure 4 2: Areas of discretion (home based) To what extent do operating companies outside of Denmark have discretion over the determination of the following aspects: Danish owned subsidiaries 77% 81% 78% 50% 60% 56% 52% 54% 60% 63% 25% 32% 26% 26% 11%

50 Subsidiary Discretion On the basis of Figure 4 1 and Figure 4 2, the following conclusions can be made: Overall, the foreign and home based MNCs are similar in their level of discretion, with between 60% and 80% of the companies having high discretion for most of the factors (with the exception of pay and performance ). Both home based and foreign based companies have the highest level of discretion in relation to provision of information to employees and suggestion schemes (81% and 87%, respectively). The lowest degree of discretion for both foreign and home based companies is found for employee share ownership scheme. A clear pattern can be seen in the two figures with respect to pay and performance, where the levels of discretion are much lower than for other employment practices. Influences on discretion for foreignbased companies This section discusses how selected company specific characteristics influence the level of discretion. For this purpose, an overall discretion index based on the average of the 15 individual items is formed. The relatively small number of home based companies means that the following statistics are limited to foreign based companies. 9 First, we look at the influence of the country of origin, the age of the subsidiary, and the size of the Danish operations. For this analysis, Swedish and US companies are compared because Swedishowned companies come from an institutional context similar to Denmark s, whereas US owned companies come from a different institutional context. These are the groups that we use for testing national differences throughout the report, as they represent different institutional systems and have a substantial amount of respondents in their group. Figure 4 3 provides the mean scores for all foreign based, US based and Swedish based companies. From this figure, we see that companies with US based headquarters have a lower degree of discretion than their Swedish based counterparts, and that Swedish owned subsidiaries have a higher average level of discretion than the sample of all foreign based companies. This finding could lead to a conclusion that US based companies prefer a higher level of control over their subsidiaries than Swedish based companies. However, these differences are not statistically significant. 9 This index forms a reliable scale with a Cronbach alpha value of This scale has a minimum of 1.47 (should be more than 1), a maximum of 4.93 (should be less than 5) and an average of

51 Subsidiary Discretion Figure 4 3: Mean discretion scores for selected countries Mean discretion scores for selected countries Base: Foreign based (n =44) All Sweden US The next element is the age of the subsidiary. Older subsidiaries can be expected to have more flexibility to make decisions, as they are integrated in their institutional context to a higher degree. It can also be argued that the MNC might wish for a higher level of control in the initial phase of subsidiary establishment due to a higher need for support as well as a desire to influence the subsidiary s culture in the direction of the MNC s values and procedures. However, statistical tests of the correlation between age and discretion show no significant results. In addition to the factual variables of the MNC, other variables might indicate the degree of discretion in MNCs. We therefore examine three different aspects: 1. Standardization or adaptation of products: This aspect is tested to determine whether there is an association between a focus on standardization of products and the level of discretion. The results show no significant association between these variables. 2. Globally decided HR policies: Companies with a global mindset with regards to creating and deciding upon HR practices might be expected to provide their subsidiaries with less discretion. Figure 4 4 shows the mean of the overall discretion index for companies answering yes or no to the following question: Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? The figure shows that MNCs that do not have such a body within the worldwide MNC provide more discretion on average to their subsidiaries than those companies that have a body within the worldwide MNC (although this tendency is not statistically significant)

52 Subsidiary Discretion Figure 4 4: Level of Discretion and Globally Decided HR Policies Level of discretion: Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? Base: Foreign based (n = 44) Yes No 3. Worldwide approach: The respondents in the survey were asked about the extent to which they agreed or disagreed with the following statement: There is a worldwide approach covering all global operations with the objective of testing whether a general worldwide approach has an influence on the level of discretion. This was not the case no significant correlation was found between the level of discretion and a worldwide approach covering all operations. Summary This chapter has briefly discussed subsidiary discretion in home based and foreign based MNCs. Discretion is defined as the extent to which the subsidiary has autonomy over different areas of HR policy. The results for home based and foreign based MNCs are presented separately, as they are not comparable. We find that: The subsidiaries enjoy a high level of discretion with regards to communication, employee involvement and employee representation. With the exception of the Danish owned operations of Danish companies, a low level of discretion is found in the areas of pay and performance. Country of origin matters for discretion. The analyses indicate a general tendency for US companies to grant less discretion to their subsidiaries than the study population in general. Subsidiaries with a Swedish headquarters enjoy higher discretion than the average. Whether the MNC has standardized products or a worldwide approach has no significant effect on discretion. The finding that, in general, discretion is lower on pay and performance is not surprising. Pay is a decisive factor in the relations between management and employees, and it is an important motivator. It is also decisive for the company profits

53 Subsidiary Discretion Likewise, employee share ownership schemes are a low discretion area. This element is also central to management s prerogative and it is also an important motivational factor in any company. As the study shows, the level of discretion awarded to, or obtained by, subsidiaries varies significantly. In this respect, two case studies reveal the diversity of attitudes toward the centralize decentralize question (see Textbox 2)

54 Subsidiary Discretion Textbox 2: High discretion versus low discretion America has the last word Accordingly, all HR decisions go through the HR division in Sweden and are approved in the US. HR The Danish subsidiary has no production and no R&D activities only sales. Over the last 10 years, policy is decided from the top down, and the Swedish and US HQ do not consult the subsidiaries: the company s size has been reduced by half and it There is a code of conduct on the Intranet. We no longer has a full time HR manager. The have to read it once a year. By looking at our company s HR policy is dictated by the US users profiles, they can check whether we have headquarters and implemented via the European done so. If not, they send us a reminder. ( ) You branch s HR department in Sweden. HR policy and can read it or you can watch the video. Then you HR managers do not meet across borders. Although have to pass a test afterwards. recruitment in the Danish branch is up to each subdepartment, it must comply with the rules of the Swedish HQ. Ultimately, all recruitment occurs under the supervision of the American HQ. Any hiring has to be approved by the Swedish HQ and the Swedish HQ s HR policy must be approved by the American HQ. Headcounts are the most important factor for HR in the American HQ: Once a month, we have to report how many employees we have and how many working hours they have. Two or three years ago, we had to lay off about 10 employees. The HQ in the US said: You have too many employees. ( ) We contacted the employers association but the unions were not involved. The US MNC basically has to approve any HR The Danish branch is not invited to HR meetings in other countries and, in general, the Danish branch feels inferior in the MNC: They are so far away [the US]. I believe they think: Denmark, that s a small one we don t want to waste time on them. When we write to them, we often feel they don t really care it doesn t matter to them. This American MNC clearly believes the benefits of centralization and standardization outweigh the benefits of local discretion. HR policy is determined centrally with little or no input from local subsidiaries, and the MNC seems hostile toward local innovation. We don t really cooperate with HQ decision. The consequences can be dire if such approvals are not obtained in advance: Recognizing the importance of adapting to local conditions, one German retailer completely A couple of years ago, the Swedish CEO tried to introduce a new scale for all of the European subsidiaries. He was almost fired because he decentralized the company s HR function. The freedom provided by this hands off approach means that local HR managers are responsible for didn t get it approved by the US HQ. You have to identifying and developing training and be careful you put your job on the line if you don t get a change approved in the US. development programs, as well as leadership programs, for the company s employees. The Danish

55 Subsidiary Discretion subsidiary is basically independent from the German HQ in HR terms: I don t report to the HR function in Germany. ( ) We do not really cooperate with HQ in Germany [on HR]. If they have some good ideas, we use them. Otherwise, we make our own strategy, our own priorities and do it our way. This discretion has allowed one local HR manager to develop an initiative designed to increase female participation in the labor market. The subsidiary has also established an academy for further training in Denmark, which is independent of HQ. The Danish branch aims to be the best in the business and has started the academy for further training of its employees. It is institutionalized and, as such, is part of the subsidiary s headcount there are always a certain number of employees involved in training. These measures were discussed only between the Danish HR manager and the Danish CEO, and the German HQ did not need to approve them: There are no demands from anybody the only thing is that things have to work out. HR managers from different subsidiaries do not meet across countries and there is generally no cooperation between HR departments in different countries. This high level of discretion is not a formulated policy from the German HQ, but is instead the result of the corporation s development. The parent company was established in Germany in Greenfield operations were established in Denmark in Case summary HR policies can be formed centrally or locally. The advantage of centrally decided HR policies is that they can be important pillars in the establishment of a common corporate culture and can serve as an organizational control tool useful for achieving the advantages of global scale and scope. The advantage of decentralized HR policy formation is the possibility of adjusting to the needs of local cultural, institutional and social environments including investment relations systems. Hence, they are more receptive to local trends and emerging needs. Regardless of where HR policies are formed, another important issue is whether they are shared across borders. If a subsidiary establishes a best practice, it can only be defined as such when compared to other practices within the MNC, when the practice is communicated throughout the MNC, and when the practice is adopted in other MNC units. In this respect, reverse diffusion allows a subsidiary to provide inspiration to HQ regarding an HR policy. In contrast, spillover occurs when a subsidiary s HR policies spill over to other subsidiaries. While the high level of discretion in case 2 is highly appreciated by the subsidiary s HR department, it is also obvious that there is no organizational learning in this setup. HR in the German headquarters does not pick up on ideas and innovations from its subsidiaries, and HR managers on the subsidiary level do not meet or share knowledge

56 Subsidiary Discretion Part 2 Analyzing employment practices Pay and performance Training, development and organizational learning Employee involvement and communication Employee representation and consultation

57 Pay and Performance Chapter 5: Pay and Performance After establishing the general picture of MNCs operating in Denmark in the previous three chapters, we now proceed to explore the specific areas of HR practice in MNCs. This chapter focuses on subsidiary pay and performance systems. It begins with an examination of the performance appraisal system, the methods are that used, and how those methods are employed for different groups of staff. Second, we look at various reward systems in the subsidiary and the underlying criteria used for performance evaluation. Throughout the chapter, we analyze the effects of various company specific variables on pay and performance practices. In this respect, we look at attributes from Chapters 2 and 3, such as nationality (home based or foreign based), size, sector, standardization and presence of global HR policies. Performance appraisals Performance appraisal systems are widespread among the companies in the survey. 75% of the companies report that they have a formal system of appraisal for managers, and 68% report that they have an appraisal system for the LOG (see Figure 5 1). This indicates that the majority of companies have developed an official, formal appraisal system for a large portion of their employees. Figure 5 1: Presence of appraisal systems Is there a system of regular, formal appraisal for each of the following groups of employees in the [COMPANY NAME] in Denmark? 68% Fo LOG (n = 117) For Managers (n = 115) 75% 32% 25% Yes No When looking into this result, we find several interesting tendencies: Country effect: There is a significant difference between home based and foreign based companies in their probability of having appraisal systems. Foreign based MNCs are more likely to have performance appraisal systems for the LOG. 10 A similar tendency is evident for 10 Chi square test: significant at the 5% level

58 Pay and Performance managers, although this is not statistically significant. US owned companies have the highest frequency of appraisal systems for both the LOG and managers. Global HR policies: Those MNCs with a body responsible for the development of global HR policies are significantly more likely to have performance appraisal systems for both the LOG and managers than companies with no such unit. 11 HR managers brought together in a systematic way: Companies that bring their managers together in a systematic way also have a significantly higher likelihood of having a formal appraisal system for both the LOG and managers than companies that do not have systematic meetings of managers. 12 One interesting aspect of appraisal systems is whether they use the results of the appraisal in decisions on redundancy or redeployment. Figure 5 2 shows that most companies use appraisal results as either formal or informal input into such decisions. In total, 71% engage in this practice for the LOG and 83% do so for managers. These figures, together with the above results, indicate that appraisal systems are used to evaluate and regulate managers more often than the LOG. Notably, 48% of the companies use appraisal systems as an informal input for decisions on redundancy and re deployment (for the LOG and/or managers). Figure 5 2: Uses of the performance appraisal system Are the outcomes of performance appraisal used as inputs in decisions on redundancy and re deployment in the [company name] in Denmark? For LOG (n = 82) For Managers (n = 84) 45% 52% 26% 31% 29% 17% Yes, as a formal input in decisions Yes, as an informal input in decisions No When testing for differences in the use of performance appraisal systems in relation to company characteristics, no significant differences are found in terms of sectors, global HR units, standardization or countries of origin. However, we find that companies that bring managers together in a systematic way use the outcomes of performance appraisals in decisions affecting both the LOG 11 Chi square test: significant at the 5% level. 12 Chi square test: significant at the 5% level

59 Pay and Performance and managers more often than companies that have no such regular meetings. Overall, however, we conclude that no specific features characterize companies that utilize appraisals to make decisions on redundancy and redeployment. Another aspect of performance appraisal is found in the criteria that are important for evaluating management performance. The respondents were asked to assess the importance of five criteria on a scale from not important to very important. As shown in Figure 5 3, all criteria were found to be mostly important or very important in assessing performance. Individual outputs, in particular, are perceived to be very important, while slightly less importance is attributed to competences or personal skills, group output targets and behavior in relation to corporate values. Figure 5 3: Management performance evaluation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Thinking about the MANAGERS in [COMPANY NAME] in Denmark, how important are the following kinds of performance evaluations on a scale of 1 5? Individual quantitative output targets (e.g., financial, numerical) Individual qualitative output targets (e.g., completion of a task) Group output targets (e.g., for site or business unit) Competences' or personal skills (e.g., leadership or innovation skills) Behaviour in relation to corporate "values" 5 = Very important = Not at all important Base: Home and Foreign based (n = 87) The only significant variation between the groups 13 is found when looking at Sweden. Swedish MNCs has a significantly lower perceived importance of individual quantitative output targets and behavior in relation to corporate values. The same tendency is true for individual qualitative output targets, although this is only close to statistically significant. This is interesting in a Scandinavian context, as the Nordic countries especially Sweden have a long tradition of self governing teamwork in the 13 To achieve an acceptable number in all groups, answers 1 and 2 were merged to not important, 3 was rated of medium importance, and 4 and 5 were merged to very important for the purpose of the statistical tests

60 Pay and Performance workplace. These data indicate that this tradition is also reflected in the appraisal systems of Swedish MNCs. We also see that companies that bring HR managers together in a systematic way place more emphasis on individual quantitative output targets. However, no significant differences were found for other characteristics. Another way of evaluating performance is by using multi rater reviews or 360 degree feedback. This practice is increasingly popular in MNCs and has the benefit of offering a more holistic view of individual performance by providing feedback from peers, subordinates and managers. The data show that this practice is widespread: 73% of the respondent companies use 360 degree feedback to evaluate the performance of managers, and 56% use the practice to evaluate the LOG (see Figure 5 4). Figure 5 4: Use of 360 degree feedback Is a formal system of "360 degree" feedback used in evaluating the performance of any of these groups of employees in [COMPANY NAME] in Denmark? For LOGs (n = 84) 56% For Managers (n = 85) 73% Base: Home and foreign based Performance related pay systems After looking at general performance appraisal systems, we now focus on performance related pay systems. First, we investigate the extent to which variable pay is used for managers and the LOG in MNCs

61 Pay and Performance Figure 5 5: Variable pay (managers) Is there variable pay for the managers in [COMPANY MANE] in Denmark? No 23% Yes 77% Base: Home and foreign based (n = 118) Figure 5 6: Variable pay (LOG) Is there variable pay for the LOG in [COMPANY NAME] in Denmark? No 40% Yes 60% Base: Home and foreign based (n = 116) Figures 5 5 and 5 6 show that variable pay is more widespread among managers. 77% of managers have some element of variable pay, while the corresponding figure for the LOG is 60%. Companies that systematically bring HR managers together tend to have a higher frequency of variable pay for managers (see Figure 5 7)

62 Pay and Performance Figure 5 7: Variable pay and HR approach for managers Manager variable pay in relation to "Are managers from different countries brought together in a systematic way?" 29 Variable pay No variable pay Yes on a global basis Yes on a regional basis No Base: Home and foreign based (n = 91) Figure 5 8 Variable pay and HR approach for LOG LOG variable pay in relation to "Are managers from different countries brought together in a systematic way?" Variable pay No variable pay Yes, on a global basis Yes, on a regional basis No Base: Home and foreign based (n = 70) Those companies using variable pay were also asked to indicate whether they offered the following kinds of pay to the LOG or managers: An approved employee share ownership scheme in which the organization establishes a trust that acquires shares on behalf of employees and provides employees with part ownership of the company through those shares. Profit sharing, which refers to rewards given to employees over and above their normal salaries and bonuses. These awards are directly dependent on the levels of profit in the business

63 Pay and Performance Share options, through which employees are given the option of buying company shares, often at a reduced rate. As shown in Figure 5 9, none of these types of pay are common (average occurrence of around 20%). Again, these pay related elements are slightly more widespread among managers than LOGs. Share options are the form of performance related pay offered most often to managers, closely followed by employee share ownership schemes. For the LOGs, the most popular type of pay is employee share ownership, followed by share options. The least common type of performance related pay for both managers and LOGs is profit sharing. Figure 5 9: Types of performance related pay 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Does the company offer the following types of performance related pay? For LOG (n = 107) For Managers (n = 109) For LOG (n = 102) For Managers (n = 101) For LOG (n = 105) Employee Share Ownership Profit Sharing Share Options For Managers (n = 107) Yes No Don't know In general, although none of the results are statistically significant, home based companies tend to have a higher frequency of all of the above types of performance related pay. Furthermore, companies that systematically bring HR managers together are more likely to offer employee share ownership and share options to their managers. 14 Summary This chapter has examined the structure and extent of performance appraisal and reward systems. We have seen that the existence of appraisal systems is widespread: 14 Chi square test: significant at the 5% level

64 Pay and Performance 75% and 68% of companies have appraisal systems for managers and LOGs, respectively. Hence, appraisal systems are used almost as often to motivate LOGs as to motivate managers. As such, they are an important HR tool for the majority of MNCs. Overall, foreign based companies in Denmark are more likely to have appraisal systems for the LOG and managers, although the latter finding is not statistically significant. US based companies are more likely to have appraisal systems for both the LOG and managers, as are companies that develop global HR policies through a worldwide body and those that systematically bring HR managers together. A high proportion of companies use appraisals as a basis for decisions on redundancy and redeployment. However, half of the companies use these results only as informal inputs for such decisions. Companies use a wide array of criteria to assess managerial performance. The most popular of these is individual output, but group output, competences and behavior in relation to corporate values are also important. Interestingly, MNCs originating from Sweden have a significantly lower perceived importance of individual quantitative output targets and behavior in relation to corporate values. The same tendency is evident for individual qualitative output targets, although this result is only close to significant. This is interesting in a Scandinavian context, as Nordic countries especially Sweden have an extensive tradition of self governing teamwork in the workplace. These data indicate that this tradition is reflected in the appraisal systems of Swedish MNCs. 360 degree feedback is used in about two thirds of companies for both managers and the LOG. Pay schemes with variable pay for managers are implemented in 77% of the companies, while 60% use some form of variable pay for the LOG. Employee share ownership, profit sharing and share options are not very popular, with only about 20% of companies using these performance based pay options for managers and even fewer using them for the LOG. Companies with an HR system that brings managers together and home based companies employ these kinds of incentives to a greater degree. Global HR policy can be used to implement a certain wage policy if the institutional setting allows it. However, such strategies may conflict with industrial relations traditions, especially in the Danish context, where there is a long tradition of collective bargaining and relatively equal pay (see Textbox 3)

65 Pay and Performance Textbox 3: HR as a strategy implementer versus no HR at all HR as a (wage) strategy implementer managers in the Nordic branches meet monthly. The main goal is to document HR practices in order When a Danish subsidiary was taken over in 1996, to support knowledge sharing and to spread HR high subsidiary discretion prevailed. However, as a practices: result of a trend towards consolidation on the various markets, headquarters became increasingly controlling. This trend had consequences for HR, as HR procedures had to be similar across borders. [Q] So, where is HR in this corporation? Is it primary here? [A] No, we are everywhere. One of the goals of HQ s policy was to implement HR is defined centrally and implemented individualized wages. In Denmark, the focus in this throughout the organization through respect was on giving more money to units with documentation and meetings. HQ defines the individual wage systems. This made a difference, especially among blue collar employees: management criteria, but the local units are highly involved in finding management potential: We strive to obtain this [individual wages]. When we had wage negotiations with the blue collar workers, at one plant they accepted individual regulation. Hence, they got a higher evaluation percentage. At another plant, the blue collar workers demanded an equal minimum wage for all. They got it, but at the absolute minimum. ( ) The policy is individual wages, but this is not the way that the legislation and agreements work. Also, it is really difficult to obtain individual wages in Denmark and Finland. Continuous documentation of HR processes in different countries has been introduced and HR The management criteria are not defined here [on the subsidiary level]. They are defined from the top, from the Group. But we are launching initiatives and we are finding high potentials. As such, the local branches are implementing HR strategies from above and are finding management potentials according to centrally defined criteria. From HQ s point of view, the global HR policy is built around a thorough documentation system. It is also viewed as an important tool in other respects, such as the implementation of certain wage systems. However, this also creates potential for conflict

66 Training and Talent Development Chapter 6: Training and Talent Development Training expenditure can reflect how companies prioritize investments in human resources and, indirectly, whether they view investment in their employees as central to the accomplishment of their goals. Figure 6 1 shows investment in training as a percentage of the companies annual employee pay bill. Over 50% of home and foreign based companies spend between 1% and 4% of their annual compensation expenses on training. None of the home based companies, but almost 10% of foreignbased companies, spend more than 4% on training. Overall, foreign based companies tend to invest more in training, although this difference is not a statistically significant. Figure 6 1: Training as a percentage of annual employee compensation What percentage of the annual employee compensation in [COMPANY NAME] in Denmark was spent on training and development for all employees over the past 12 months? Home based (n=25) Foreign based (n=75) 56% 55% 40% 35% 4% 1% 0% 9% 0% Up to 1% Over 1% and less than 4% Over 4% In terms of other differences, a clear pattern arises when looking at the HR system. As shown in Figure 6 2, companies with a global HR policy body and a systematic way of bringing managers together invest significantly more in training. 15 This might indicate that these companies prioritize HR to a greater extent. 15 Chi square test significant at the 5% level

67 Training and Talent Development Figure 6 2: HR approach and level of investment in training HR Approach and Level of Investment in Training Systematic way of bringing managers together: Yes Systematic way of bringing managers together: No 71% 56% 44% 29% 0% to 1% Over 1% The next step in describing the training and development policies of MNCs is to look at the extent of succession planning and management development programs. Succession planning is a process used to identify and develop management talent in the organization that will eventually succeed the current management. The data show that 43% of home based companies have succession planning in all (18%) or some of their operations (25%). For foreign based companies, this figure is slightly higher at 50% (see figure 6 3). 60% 50% Figure 6 3: Succession planning for managers Thinking of [COMPANY NAME] in Denmark, is there a formal system of succession planning for senior managers? 40% 30% 20% 10% 0% Yes, in all operations Yes, in some operations No Formal system for succesion planning, Home based (n = 28) Formal system for succesion planning, Foreign based (n = 84) No national differences are found with regards to succession planning, and the difference between home based and foreign based MNCs is not significant. However, one interesting difference is evident

68 Training and Talent Development Nearly two thirds of companies with an HR system that brings managers together in a systematic way have a system for succession planning, whereas only 21% of companies without this HR system have succession planning. No other company characteristics appear to have a significant impact on the prevalence of succession planning. Another aspect of training policy is the presence of management development programs. The data show that such programs are more widespread than succession planning programs, with almost 70% of home and foreign based companies indicating that they have such programs in place for some or all operations. With regard to the HR system, the same pattern is found as for succession planning. Companies that regularly bring managers together are more likely to have a management development program than companies that do not. 16 This pattern also applies for companies with a global HR policy body. Overall, these results indicate that companies with a systematic HR approach that brings managers together across borders and a global HR policy body place more emphasis on developing internal talent and managers. Figure 6 4: Management development programs 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Does [company name] in Denmark have a management development program specifically aimed at developing its "high potentials" or personnel with seniormanagement potential? Yes, in all operations Yes, in some operations No Management development program, Home based (n = 29) Management development program, Foreign based (n = 87) Different techniques can be used to develop management potential, as shown in Figure Chi square test significant at the 5% level

69 Training and Talent Development Figure 6 5: Management development techniques How extensively are each of the following techniques used for the development of high potentials in [COMPANY NAME] in Denmark? 3% 5% 13% 15% 14% 15% 3% 14% 22% 27% 20% 19% 30% 22% 18% 17% 12% 11% 16% 27% Used very extensively Used quite extensively Some use 32% 31% 25% 33% 19% A little use Not used at all Short term International assignments (12 months or less) Long term international assignments (more than 12 months) Formal global management training Assessment of performance against a set of global management competencies Qualifications program (e.g. MBA, professional qualifications) Base: Home and foreignbased (n = ) Overall, the distribution is similar across the various techniques. Formal global management training and assessment of performance against a set of global management competencies are the two most popular techniques, with almost 35% of MNCs using them quite extensively or very extensively. Short term international assignments are the least popular technique, with over 50% indicating little or no use. This is followed by long term international assignments, with 49% indicating little or no use of the technique. When testing for differences in company characteristics in relation to the use of these management development techniques, the variables are re coded to three groups: strongly disagree (1) + disagree (2), neither agree or disagree (3), agree (4) + strongly agree (5). We find several tendencies: Short term international assignments are more widespread in manufacturing companies and in companies with a non standardized product approach. Long term international assignments are used more often in companies with a global HR policy body and an HR system that brings managers together. Furthermore, this technique is used more in companies with a non standardized product approach

70 Training and Talent Development Formal global management training is more widespread among manufacturing companies, companies with global HR policies and companies that systematically bring managers together. Assessment of performance against a set of global management competencies is more prevalent in companies with a global HR policy body and a systematic way of bringing managers together. Furthermore, it is more common among companies with a nonstandardized product approach. Qualification programs are used more in companies with a global HR policy body and in companies with an HR system that brings managers together. In sum, two elements have a significant influence on the choice of technique used for developing managers: a global HR policy body and an HR system that brings managers together in a systematic way. If these are present, companies use the techniques more extensively. Furthermore, the prevalence of some of the techniques is affected by the presence of a non standardized product approach or activities in manufacturing. Organizational learning In this section, we briefly examine the extent to which the organizations have policies on organizational learning, as well as the techniques that are used to facilitate organizational learning. A learning organization can be characterized as one that facilitates learning throughout the organization, and that transforms itself and its resources in order to remain competitive. Organizational learning ensures that knowledge stays in the organization even when employees leave the organization, i.e., the knowledge is not dependent on individuals

71 Training and Talent Development Figure 6 6: Organizational learning Thinking of [COMPANY NAME] in Denmark, is there a formal policy on organizational learning? Home based (n=31) Foreign based (n=83) 61% 58% 39% 42% Yes in all or some operations No About 40% of both home based and foreign based companies have a formal policy for organizational learning. 58% of foreign based MNCs and 61% of home based MNCs have no such policy (see Figure 6 6). This means that organizational learning is less common than other development techniques. However, organizational learning policies might, in fact, be less explicit or integrated into other parts of the training system. In terms of differences in company characteristics, we find that companies with integrated HR systems that bring managers together are more likely to have a formal policy for organizational learning. The trend is similar for companies with a global HR policy, although this finding is only close to significant. Another interesting aspect is the techniques companies use to facilitate organizational learning with regards to managers in Denmark. In this regard, the most common technique is the implementation of international project groups or taskforces, which are used in about 80% of companies. This is followed by international informal networks, which are found in slightly more than 60% of both home and foreign based companies. Expatriate assignments are used more extensively in home based companies (about 70%) than in foreign based companies (45%). The least used technique is international secondments 17 to other organizations, which is used by approximately 15% of the companies. 17 Secondment: a temporary change of job roles for employees within the company or a transfer to another organization for an agreed period of time

72 Training and Talent Development Overall, a number of techniques are used to facilitate international organizational learning. In terms of differences between MNCs with certain characteristics and the prevalence of organizational learning, the following results can be accentuated: Expatriate assignments are used more in home based companies that have a nonstandardized product approach and Expatriate assignments are also more common in companies with an HR system for managers. International project groups are more prevalent in companies with global HR policy bodies and HR systems for managers. International formal committees are more common in companies with a global HR policy body and a systematic approach to bringing HR managers together. International informal committees are not affected by company characteristics, as size and sector do not make a difference. International secondments to other organizations more common among non US based companies, and among companies with a global HR policy body and a systematic way of bringing managers together. Overall, these patterns support the other results presented in this chapter. Companies with a global HR policy body and HR systems that bring managers together make more use of techniques to facilitate organizational learning. To complete this picture of organizational learning, Figure 6 7 shows those techniques respondents considered to be most important for organizational learning. Almost 60% of companies indicate that international project groups or taskforces are the most important technique. This is followed by expatriate assignments and international informal networks

73 Training and Talent Development Figure 6 7: Techniques used to facilitate international organizational learning Which of these is the most important international organisational learning mechanism used by MANAGERS within [COMPANY NAME] in Denmark? Expatriate assignments 15% 3% 6% 13% International project groups or taskforces International formal committees 6% International informal networks 57% Secondments to other organisations internationally Don't know Base: Home and foreign based (n = 106) Summary This chapter has examined MNC policies and practices with regards to employee training and development. We find that: Investments in training are common in MNCs. Almost 50% of MNCs spend 1 4% of their annual employee compensation expenses on training and development. Investments of more than 4% in training and development are only found in foreign based MNCs. 9% of foreign based MNCs spend more than 4% of their annual employee compensation on training and development. Companies with a global HR policy body and a systematic way of bringing managers together have a significantly higher level of investment in training and development. Less than 50% of MNCs have a system for succession planning but almost 70% have a management development program aimed at high potentials. In other words, more resources are invested in finding management potential than in planning for succession. The most popular ways of developing high potential employees are through formal global management training and the assessment of performance against a set of global management competencies, techniques that are used quite extensively or very extensively by about 35% of the companies. Overall, the use of these techniques increases when the MNC has a global HR policy body and a systematic approach to HR

74 Training and Talent Development Therefore, a clear tendency is that companies with a global HR body, a systematic HR policy of a system for bringing managers together spend more resources on training and development, on succession planning and on finding high management potential employees. Another aspect of training and development is organizational learning, for which we find that: About 40% of the companies have a formal policy. Companies with a global HR policy body and systematic HR approach are more likely to have a formal policy. International project groups and taskforces are the primary techniques used to facilitate organizational learning. These are used by about 80% of MNCs. International informal networks and expatriate assignments are also widely used. Expatriate assignments are the most widely used in home based companies and companies with a non standardized product approach. International project groups and international formal committees are more prevalent in companies with a global, systematic approach to HR. Overall, 60% of the companies indicate that international project groups and taskforces are the most important techniques used to facilitate organizational learning. While international project groups, taskforces and short term international assignments are concrete, hands on assignments might very well be part of an organizational learning process. Therefore, a more qualitative question is whether such techniques are seen as ad hoc solutions that would have been undertaken regardless of the organization s desire for organizational learning or whether they are part of a system directed towards organizational learning. Overall, there is a clear indication that companies that systematically bring managers together often have a coherent strategy for developing management potential, maintaining that potential and actively supporting organizational learning. Even though most MNCs have an HR function at headquarters, some corporations have no HR policies or HR managers in their subsidiaries. They therefore basically deny themselves the tools to keep and develop management talent within the organization. Two case studies serve to illustrate some of the consequences of not having consistent management potential or management development systems (see Textbox 4)

75 Training and Talent Development Textbox 4: HR as a strategy implementer versus no HR at all No HR function Neither HQ nor subsidiaries in this small MNC have HR managers, or any kind of national or global HR support. This is evident to the CEO of a small things differently come from the subsidiaries rather than from HQ: When we had open spaces in sales, the first thing I did was to go to my line management and say: Is subsidiary: there anyone who has English speaking capabilities and foreign sales capabilities that We don't have an HR function. We are too small. could come to our market and fill this vacancy?. I So all of the responsibility for the HR function lies did this rather than go to the local market outside either with me or my office manager. the company because, actually, across the much Even employee performance appraisals are up to bigger business, there must be some people with each branch manager. The subsidiary CEOs good sales skills that can come in and develop the themselves only receive performance appraisals if they take the initiative themselves: My line manager sits in Holland and, generally speaking, we try to sit down and have a formal market... and maybe relish the new environment, a younger company and a new country. That is what we did and we need to do more of the same. A focus on talent development conversation once a year. At that point, I always say, You need to formally, or as formally as you can, appraise my performance. I still need to know which direction I should be going next year. A Danish subsidiary of a German MNC was part of a merger of subsidiaries in the Nordic countries over 15 years ago. Although the German MNC has more than 100,000 employees worldwide, the Danish HR has a relatively low priority in the company and secondment moving from one part of the company subsidiary only accounts for around 150 employees. It is, therefore, relatively small in size. Each national to another as part of further training or branch has to find high potentials employees development of management skills is not common: There is an aspect in HR of getting the leadership across the countries to think about how to leverage the fact that it is a group structure on a global scale. But currently [the company] hasn t really invested a lot of value in its people dimension of leveraging that out of the businesses. For example, there is not a lot of movement of with management potential who are to be sent to HQ for management training. At HQ, the high potentials are assessed, but very few pass. For local management, this is a big responsibility, especially given the high rejection rate. We are careful about putting candidates on the list, especially if they have a big ego. If you have a good sales person and this person goes for the people around this company. To my know, this has assessment, is weighed against the other happened just once. The company does not generally transfer employees from one subsidiary to another. All initiatives to do candidates and found to be too light, then that person might be broken. Why not keep a good sales person rather than send him or her abroad to be broken? We send some employees, telling

76 Training and Talent Development them that the bar is really high at HQ and that they might not make it. Like many other MNCs, this corporation has an organization wide HR policy. Even then, the implementation of a new policy is challenging, as each country has different institutional setups: HR will always be local even within the Nordic context there are nuances. When you are on my level [HR implementation], then there is a free car policy. Even if you try to make a policy on free car use for the worldwide corporation, you will quickly meet some barriers in the form of tax legislation on the operational level. ( ) The same is true for wages. That said, the subsidiary HR consultant still feels it is important to have a common overall HR strategy not least for the branding of the company to the customers. Summary With no central or local HR functions, the first company denies itself the possibility of finding and developing talent in the corporation. Initiatives to hold performance appraisals must come from the employees rather than the managers. Employees generally stay at the local subsidiary and the movement of employees around the organization is extremely rare and happens only on the initiative of the employees themselves. Therefore, the company misses out on an opportunity for knowledge sharing and a possibility to develop talent within the organization. Furthermore, there is a risk that talented managers may choose to leave the organization. There is little doubt that size matters here. Even though the company was established in 1906, it now employs only 660 people worldwide. In contrast, the second company has more than 100,000 employees worldwide. Its HR policy is highly organized, and each subsidiary is responsible for finding management potentials and sending them for further training. While local legislation might demand some adaptation of the global HR policy, subsidiaries HR managers feel the global policy is crucial not least for the branding of the corporation and its services

77 Employee Involvement and Communication Chapter 7: Employee Involvement and Communication Employee involvement and communication is a key aspect of HR. MNCs can implement different forms of work organization and techniques of direct employee involvement in their services or production, and involvement can, in turn, become a competitive factor. Communication and information can be keys to employee satisfaction and, as such, they can make a difference for a company s output, and the quality of its products or services. This chapter begins with an examination of the types of employee involvement practices used by the MNCs in our sample, how they are affected by organizational characteristics and whether they are standardized across operations. Finally, this chapter reports on the internal communication mechanisms that are primarily used by the MNCs and the types of information that are provided to employees. Involvement mechanisms Figure 7 1 illustrates the prevalence of three different involvement mechanisms. The companies were asked: Could you tell me whether you use the following practices in relation to the LOG in your company in Denmark? The data show that problem solving and continuous improvement groups are the employeeinvolvement techniques most commonly used by foreign based MNCs (76% of foreign based companies; 58% of home based companies), and that formally designated teams are the most popular technique among home based MNCs (67% for foreign based companies; 71% for home based companies). Teamwork or other involvement in units operating outside Denmark is used by 61% of the foreign based companies and by 60% of the home based companies. All mechanisms are used by more than half of the companies. Interestingly, appraisal mechanisms (Chapter 4), development mechanisms (Chapter 5) and involvement mechanisms are all used to similar extents

78 Employee Involvement and Communication Figure 7 1: Employee involvement Could you tell me whether you use the following practices in relation to the LOG in [COMPANY NAME] in Denmark? Foreign based (n = 88) Home based (n = 30 31) 61% 68% 71% 76% 60% 58% Teamwork or other involvement practices in operating companies outside Denmark Formally designated teams Problem solving or continuous improvement groups When testing the prevalence of these techniques with respect to company characteristics, we find the following: Formally designated teams: US based companies tend to use formally designated teams less often than all other companies. However, this result is not statistically significant. A system for bringing managers together correlates with use of the teamwork involvement mechanism. 18 Teamwork or other involvement with units operating outside Denmark is used significantly more by companies with cross national HR systems than by companies that do not have such systems. As a majority of companies use involvement mechanisms, the next question is whether these systems are standardized across operations. Respondents were therefore asked about the degree to which employee involvement practices are similar across the global organization. Almost 75% of the companies state that their employee involvement practices are somewhat diverse or vary substantially, while less than 20% state that they have broadly similar or very similar practices (see Figure 7 2). 18 Chi square test significant at the 5% level

79 Employee Involvement and Communication Figure 7 2: Patterns of employee involvement I Would you say that practices in relation to employee involvement in the worldwide company are: Don't know Very diverse Fairly diverse Similar to some extent but with substantial Broadly similar but with some variations Very similar across all operations 0% 5% 10% 15% 20% 25% 30% 35% 40% Home based (n = 30) Foreign based (n = 87) In terms of organizational differences and the prevalence of employee involvement mechanisms, no significant results are found. We conclude that employee involvement practices are diverse and independent of our chosen organizational variables. For comparison, Figure 7 3, which demonstrates the pattern of employee involvement in Danish operations, shows that although the majority of sites have involvement systems, these systems differ from site to site. This indicates that involvement systems are, in general, locally based. Figure 7 3: Patterns of employee involvement II Which of the following most closely corresponds to the pattern of employee involvement in [COMPANY NAME] in Denmark? Foreign based (n = 80) Home based (n = 24) 38% 51% 46% 18% 20% 13% 11% 4% An identical or similar pattern exists across all or most sites All or most sites have involvement systems, but they differ from site to site Some sites have involvement systems while others do not Not applicable (1 site only in Denmark)

80 Employee Involvement and Communication Communication mechanisms The extent to which an organization communicates with its employees, and how it does so, can have a significant impact on employee satisfaction and retention. Further, these practices often reflect an MNC s overall HR strategy. In this regard, respondents were asked to indicate which communication mechanisms were regularly used for the LOG within the Danish operations. Multiple answers were allowed. Figure 7 4 illustrates the prevalence of each technique for both home based and foreign based companies. The results show that, with the exception of suggestion schemes, all mechanisms are used extensively by 60% to 90% of the companies. Meetings between senior managers and line managers and meetings between senior managers and the entire workforce are used in almost every MNC, indicating that face to face interaction is widespread. Newsletters and s, and company intranets are also popular ways of communicating with the LOG. Overall, home based companies use these mechanisms slightly less, but the patterns of home based and foreign based usage do not differ to a great extent and no statistical difference is found between them. Attitude or opinion surveys are an exception, with foreign based MNCs being more likely to use this technique (although this result is only close to significant)

81 Employee Involvement and Communication Figure 7 4: Communication mechanisms 100% Which of the following communication mechanisms are regularly used for the LOG within [COMPANY NAME] in Denmark? 90% 80% 70% 60% 50% 40% 30% 20% Foreignbased (n = 83 87) Homebased (n = 25 31) 10% 0% Meetings Meetings between between line senior managers or managers and supervisors the whole of and the workforce employees Attitude or opinion surveys Suggestion schemes Systematic use of management chain to cascade information Newsletters or s A company intranet providing information to employees The effect of organizational characteristics differs somewhat between the mechanisms: Attitude or opinion surveys are used significantly 19 more in companies that have a global HR developing body and systematized meetings among HR managers. Companies with a standardized product approach are less likely to have a company intranet. The next step is to move from techniques to context in terms of the types of information provided to employees. The respondents were asked to state which type of information was regularly provided to the LOG about the worldwide MNC and the Danish company. Overall, employees are most often informed about the financial position of the company. 94% are informed about this aspect of the Danish operations, while 83% are informed about the financial position of the global company. A little less than half of the companies inform their employees about investment plans for the Danish branch, while one third communicate about investments in relation to 19 Chi square test significant at the 5% level

82 Employee Involvement and Communication the worldwide company. Staffing in Denmark is an issue that employees are informed about in half of the MNCs, while just one in four regularly inform their employees about staffing plans for the worldwide operation (see Figure 7 5). Figure 7 5: Provision of information to the LOG Which of the following types of information are regularly provided to the LOG within [COMPANY NAME] in Denmark? 94% Financial position of the company Staffing plans for the company Investment plan for the company 86% Base: Home and Foreignbased 46% 50% 35% 28% About DK company About worldwide company Various interesting tendencies (although only close to being statistically significant) are evident in relation to the link between organizational characteristics and the communication of different types of information to employees: Financial position of the company in Denmark: This type of information is most frequently provided in manufacturing companies. All manufacturing companies in our data sample regularly provide information about their financial position to employees. Investment plan for the company in Denmark: Manufacturing companies tend to inform employees about investment plans, as do companies with a non standardized product approach. Staffing plans for the company in Denmark are more commonly communicated in foreign based companies than in home based companies. Financial position of the worldwide company is more frequently communicated in manufacturing companies. Investment plans for the worldwide company are communicated to the same extent in homeand foreign based companies. Staffing plans for the worldwide company are communicated more often in companies with global HR developing bodies and systematic meetings of HR managers

83 Employee Involvement and Communication Summary This chapter has examined the employee involvement and communication techniques used by the MNCs. It shows that: The most popular techniques for employee involvement among foreign owned MNCs are problem solving groups and continuous improvement groups, while formally designed teams are most common among home based MNCs. Teamwork or other involvement practices, and formally designated teams are used in more than 60% of foreign owned MNCs. Employee involvement techniques are seldom standardized worldwide and most companies state that their employee involvement practices are diverse or vary substantially. This indicates that MNCs adjust their local communication strategies to a high degree. Alternatively, they may allow local managers to determine the communication strategies. Foreign based MNCs employ problem solving groups and continuous improvement groups to a higher extent than Danish based MNCs. Although such groups might be expected to be more widespread in Danish based companies, as group based work units have a long tradition in Denmark, this is not the case. Furthermore, the fact that teamwork or other involvement with operating companies outside Denmark are used significantly more by companies with cross national HR systems than by companies that do not use such systems indicates that factors other than traditions related to a certain work design are at stake. Further research is needed in this regard. Various communication mechanisms are used by the vast majority of the MNCs: The most common mechanisms used to communicate with the LOG are meetings between managers and line managers, employee newsletters, s and intranet sites. Communication mechanisms are used more often in companies with global HR developing bodies and systematic meetings among HR managers Finally, the chapter examined the types of information regularly provided to the LOG about the Danish and the worldwide operations. We find that: The most common type of information shared with employees relates to the financial position of the company, with information on investment plans and staffing plans in second and third place, respectively. Manufacturing companies provide information to employees more often than companies in other industries

84 Employee Involvement and Communication In terms of the content of information, the results show that information about the financial position of the company is very common. However, the survey was carried out in 2009 at the height of the financial crisis. Accordingly both management and employees in any private enterprise could be expected to have been attentive to the company s economic development, which could explain the prevalence of this type of information in our data set. At the same time, however, surprisingly few companies share information on staffing plans. During a financial crisis, it would generally be expected that staffing plans and information on possible restructurings would be of great interest to employees. Why do manufacturing companies share information on investment plans and the financial position of the company with employees to a higher degree than other companies? One possible explanation is that union density is higher among blue collar workers in manufacturing companies. Unions tend to ensure that the awareness of employees rights to be informed and consulted is high, which may put pressure on managers to share this knowledge. The amount of information on companies financial positions and staffing plans might be expected to be higher in Danish based MNCs because of Denmark s long tradition of well functioning, cooperative committees in which such information is typically shared. However, this is not the case. Instead, foreign based companies seem to share such information with LOGs to a greater extent than Danishbased companies. Finally, it is important to note that information is not the same as co determination, co influence or even consultation. While information is normally found at the beginning of a continuum that extends to consultation, co influence and, ultimately, co determination, information and the surveillance of who is using it can also be used by HR to control employees (see Textbox 5). Textbox 5: Information as control One American based MNC regularly informs its HQ can check user profiles, which indicate which employees about management decisions and it has a employees read information on the intranet and code of conduct on its intranet. However, this when. However, HQ is basically not interested in intranet information system also functions as a subsidiary input: control mechanism: A couple of years ago, the Swedish CEO tried to There is a code of conduct it is on the intranet. introduce a new scale for all of the European We have to read it once a year. By looking at our subsidiaries. He was almost fired because he users profile, management can check whether we didn t get it approved by the US HQ. You have to have read through it. If not, they send us a be careful you put your job on the line if you reminder. ( ) You can read the code or you can don t get a change approved in the US. watch a video. Then you have to pass a test afterwards

85 Employee Representation and Consultation Chapter 8: Employee Representation and Consultation In this chapter, we seek to increase the understanding of employee representation and consultation in MNCs. Traditionally, this area has been highly dependent on national systems of legislation, politics, industrial relations (IR) and collective agreements, which differ widely between countries. Denmark has a long tradition of high union density and an IR system in which the social partners play a decisive role in regulating the labor market through collective bargaining. The level of employee representation and consultation involvement is stipulated in the Danish Cooperative Agreement (Samarbejdsaftalen), which is supported by EU directives on consultation and European Works Councils (EWC). One interesting question is whether foreign owned MNCs tend to adopt the Danish perspective, especially when they come from a different system of cooperation and consultation, or whether they try to impose their own traditions on their Danish subsidiaries. This chapter is separated into three sections. The first describes the companies approaches to union representation. The second discusses the nature of employee consultation in MNCs, and the final section investigates the presence and influence of European Works Councils. Employee representation Denmark is known for its high union density as well as the impact of unions on labor market regulations and on business activities. For foreign based MNCs, this might pose a challenge. Companies were asked: How would you describe the policy of management towards union recognition in Denmark?. Only 5% of the MNCs surveyed are not in favor of union recognition, with the rest being equally distributed between in favor of and neutral towards union recognition (see Figure 8 1). In terms of the link between organizational differences and company views on union recognition, no significant results are found. It is surprising that no major differences can be seen between home based and foreign based companies in this regard, as it might be expected that homebased MNCs would be more used to unions and, hence, more likely to have a positive perception of them

86 Employee Representation and Consultation Figure 8 1: Management policy towards union recognition How would you describe the policy of management towards union recognition within [COMPANY NAME] in Denmark? In favour of union recognition Neutral towards union recognition Not in favour of union recognition 48% 47% 5% Base: Home and Foreign based (n = 119) Figure 8 2: Approaches adopted by trade union representatives Thinking about trade unions in the [COMPANY NAME] in Denmark, what approach do the trade union representatives generally adopt? 16% A cooperative approach An adversarial approach 27% 53% It depends on the issue Don't Know 4% Base: Home and Foreign based (n = 116) The companies were also asked about the approach they felt that trade union representatives generally adopted. As shown in Figure 8 2, 53% of managers feel the trade union representatives have a cooperative approach, while only 4% feel their approach is adversarial. This variable is clearly affected by company characteristics, with industry and economy type having a strong influence. In particular, we find that:

87 Employee Representation and Consultation Market economy: US owned companies feel that union representatives are less cooperative than Swedish owned companies (see Figure 8 3). Swedish owned companies come from an institutional context that is similar to the Danish context, whereas US owned companies come from a different institutional context. Sector: Trade union representatives are considered more cooperative by HR managers in manufacturing companies than by HR managers in other sectors. Figure 8 3 Approach to trade unions Thinking about trade unions in [COMPANY NAME] in Denmark, what approach do the trade union representatives generally adopt? US based companies (n = 19) Swedish based companies (n = 14) 71% 26% 37% 29% 11% 0% A cooperative approach An adversarial approach It depends on the issue Another issue for analysis is the trade union policies found in the foreign operations of Danish based MNCs. Figure 8 4 shows that 17% of these companies have a general policy of bargaining with trade unions. Almost one third have no policy whatsoever, and about half of the companies leave the policy making to subsidiaries, which are expected to adapt to local standards. 20 This is a clear indication that this field, in particular, is highly context sensitive, which makes it necessary for MNCs to provide local managers with more discretion. 20 Unfortunately, the sample size for home based companies is too small to perform tests on organizational characteristics

88 Employee Representation and Consultation Figure 8 4: Danish MNCs trade union policies In terms of the company's operations outside Denmark, which of the following statements comes closest to capturing your policy towards trade unions? There is no policy 17% 6% 30% We expect local management to follow the local practice in the industry and/or locality It is general policy to bargain with trade unions, either directly or indirectly through an employers' association Don't know 47% Base: Home based (n=30) Overall, the above highlights the fact that trade unions are widely accepted. Most companies have a neutral or positive approach to working with unions, and there is a high degree of local adaptation to the local industrial relations system. However, in which areas do the companies include union representatives in decision making? In an effort to answer this question, the MNCs were asked to describe their policies for various matters related to the LOG. With regard to the variables work organization and sub contracting/ outsourcing, management typically makes decisions on its own. However, 43% of the companies involve unions or union representatives in the work organization, while 17% involve them when decisions are to be made on sub contracting and outsourcing. In terms of payment schemes, in work training and direct employee involvement schemes, about one third of the companies make decisions on their own, one third make decisions jointly with union representatives and one third consult union representatives (see Figure 8 5). In these areas, therefore, more than two thirds of the companies involve employee representatives

89 Employee Representation and Consultation 82% Figure 8 5: Union involvement Which best describes the policy towards working with in relating to the LOGs: 58% 27% 35% 35% 35% 36% 35% 30% 31% 34% 28% 15% 10% 8% Work organisation Sub contracting and outsourcing Variable payments schemes In work training/ upgrading skills Direct employee involvement schemes Management decides on its own Management consults union representative Management decides jointly with union representatives Base: Home and Foreign based (n=80 86) When testing for the organizational differences, only a few notable results appear. With regards to work organization, manufacturing companies frequently make decisions on their own and less often in joint cooperation with union representatives. This is interesting, as manufacturing companies are also significantly more cooperative in their approach and are typically more unionized. Employee consultation As with employee representation, employee consultation can provide an indication of the extent to which employees are involved in decision making. Figure 8 6 shows that 82% of the companies hold meetings on regular basis with the purpose of consulting their employees. No organizational or country characteristics affect this variable. Companies holding such meetings were also asked whether those meetings covered all employees or were limited to certain employee groups. Around 75% answered that the meetings covered all groups of employees, although in some companies, each group had different arrangements. Only around 20% of the MNCs stated that the meetings covered only some employee groups

90 Employee Representation and Consultation Figure 8 6: Employee consultation Are regular meetings held between management and employee representatives at this level in the [COMPANY NAME] in Denmark for the purpose of information provision and consultation? No 18% Yes 82% Base: Home and Foreign based (n = 118) 21 The companies were then asked whether they had experience in working with mandatory employee consultation structures. 57% confirmed that they had experience with such structures. A surprisingly high amount of the companies answered don t know, which indicates that the average HR manager might not be fully aware of the concept (see Figure 8 7). The data show that companies with HRdevelopment bodies and systematic ways of bringing managers together have more experience with these structures. 21 By this level it means that for example Danish HQ calls in meetings with employee representatives from all the units in Denmark

91 Employee Representation and Consultation Figure 8 7 Experience with mandatory employee consultation structures Does the worldwide company have experience in operating with mandatory employee consultation structures? 24% 19% 57% Yes No Don't know Base: Home and Foreign based (n = 118) As this area is somewhat affected by local legislation, collective agreements or (EU ) directives, the companies were also asked about their level of compliance with legal requirements. In this respect, 54% of the companies exceed the minimum legal requirements, while 30% of the companies focus on minimum compliance. 9% have no policy on this issue (see Figure 8 8). Figure 8 8: Policy on local legal requirements Which of the following statements comes closest to capturing the global company's policy on consultation and involvement? Don't know 7% To go considerably further than legal requirements 15% To go somewhat further than legal requirements 39% Minimum compliance with legal requirements on employee information and consultation 30% There is no policy 9% Base: Home and foreign based (n=67) European Works Council (EWC) One of the most important regulations on employee consultation and involvement in Europe is the European Works Council (EWC) requirement. As a part of the European Council Directive of

92 Employee Representation and Consultation September 22, 1994, companies of a certain size that are active beyond their national borders must have an EWC. 22 The companies were therefore asked about the presence of an EWC or similar structure that covered their Danish operations, and whether the companies prompted any changes in employee representation within the last three years. The data show that almost 40% of the companies have an EWC or a similar structure, and slightly more than 40% do not (see Figure 8 9). When asked whether the EU directive on Information and Consultation prompted any changes in arrangements for employee representation in Denmark, slightly more than 10% of the respondents answered yes. Again, the percentage of don t know answers is high, which indicates that this might not be an area familiar to HR managers. The results show that organizational characteristics have some impact on the prevalence of EWCs. Foreign based companies are more likely to be covered by an EWC or similar structure. This might be explained by the fact that these companies are generally larger in terms of the number of employees (see Chapter 3) and, as such, more likely to be covered by the EWC directive. There is also a significantly higher percentage of companies covered by the EWC among companies with global HR policy development units and a systematic way of bringing managers together. 23 Figure 8 9: Presence of EWCs or similar structures Is there a European Works Council (EWC) or similar European level structure which covers [COMPANY NAME] in Denmark? 21% 41% 38% Yes No Don't know Base: Home and foreign based (n=116) 22 More information on the councils, their purpose and relevant procedures can be found at: 23 Chi square test significant at the 5% level

93 Employee Representation and Consultation Figure 8 10: Impact of EU directive on information and consultation Over the past three years, has the EU Directive on Information and Consultation prompted any changes in arrangements for employee consultation in Denmark? 11% 37% 52% Yes No Don't know Base: Home and foreign based (n = 115) 58% of respondents stated that they received little or no information about the activity and meetings of the EWC. This supports the suggestion that HR managers may not be very familiar with the concept of the EWC (see Figure 8 11). Figure 8 11: Information Concerning EWCs Do you receive information about the activity and meetings of the EWC? 58% 29% 13% Systematically at the time of EWC meetings Periodically, on an "as necessary" basis Little or no information about the EWC received Base: Home and foreign based (n = 84) Summary This chapter has outlined results and tendencies with regards to employee representation and consultation in MNCs operating in Denmark. Unions are recognized or accepted by the vast majority of these MNCs, which is not surprising given the high union density and the country s tradition of cooperation. In addition, we find that:

94 Employee Representation and Consultation Only 5% of MNCs do not favor of union recognition and 53% adopt a cooperative approach. Approximately 50% of the Danish based companies leave decisions on trade union relations outside of Denmark up to local management and about one third have no policy. This indicates that cooperation with unions is a highly context sensitive area that local managers are considered best suited to handle. Although 30% of companies meet only the minimum legal requirements for employee information and consultation, 54% exceed the requirements. This indicates a rather deep respect for the rules. The companies consult or jointly decide with union representatives on issues such as variable payment schemes, in work training and direct employee involvement schemes in more than two thirds of the MNCs. The majority of the companies make their own decisions on work organization and subcontracting without consulting union representatives. In this regard, employee representatives might be expected to be more involved in work organization, as many aspects of collective agreements deal affect work organization and as this issue directly affects employees. In contrast, sub contracting affects employees only indirectly and could be considered a management prerogative (though subcontracting could also have serious consequences for company employees). With regards to work organization, manufacturing companies decide more on their own than in cooperation with union representatives. This is interesting, as manufacturing companies are also significantly more cooperative in their approach to unions and often are more unionized. For employee consultation, the data show that more than 80% of the companies hold regular meetings between management and employee representatives for the purposes of information provision and consultation. In 70% of the MNCs, these meetings cover all employees, although there might be different arrangements for certain employee groups. With regards to European Works Councils and their impact on employee consultation in Denmark, almost 40% of the companies have an EWC or a similar European level structure, while 40% do not. The former figure is surprisingly low given that most companies in the survey would be expected to meet the baseline criteria for being required to establish a European Works Council In a European context, of the estimated 2,264 companies covered by the legislation, some 828 (34%) have EWCs in operation, although the number of active EWCs is higher because some companies have set up more than one ( In the Danish case, about one third of the companies covered by the agreement have an EWC (639 out of 1865) (

95 Employee Representation and Consultation One interesting result is that many HR managers (20%) do not know whether their company has an EWC. In addition, almost 60% receive little or no information about the activities in the EWC. This indicates that employee consultation on the international level is not an important issue for HR managers

96 Part 3 Company performance

97 Company Performance Chapter 9: Company Performance The chapter is separated into three sections, each covering an aspect of performance measures. We start with a section on MNCs overall performance, then continue with a section on product/market performance, and finish with a discussion of HR performance. It should be noted that this section is unique to the Danish part of the international survey and has the purpose of evaluating various subjective performance indicators of the MNC. Note that all performance measures represent the subjective evaluations of the individual HR managers. 25 In addition, we share the results of several studies of the effect of specific HRM practices on objective performance measures, such as sales per employee (see Textbox 6). Overall performance The HR managers were asked to evaluate their organizations performance over the past three years relative to the performance of other companies in their sector. Figure 9 1 clearly shows that HR managers generally believe their company performs better than their competitors, with between 56% and 66% indicating relatively strong performance. Only a limited percentage of the respondents state that their company performed poorly. Given the fact that the survey was carried out at the height of the global financial crisis, this result is surprisingly positive for all measures of overall performance. Figure 9 1: Overall financial performance Subjective Performance Evaluation Relative to Competitors Poor Average Outstanding Overall performance 30% 66% Performance relative to competitors 33% 62% Turnover 30% 57% Profit Generation 25% 56% Base: Home and foreign based (n = ) 25 In the questionnaire, all performance measures were measured using a five point scale ranging from poor to outstanding. For statistical purposes, these scores are merged into three groups: poor (1 and 2), average (3) and outstanding (4 and 5)

98 Company Performance Textbox 6: HRM and Organizational Performance In a separate study entitled HRM and The study also examines the effect of strategic Organizational Performance Testing the effect of strategic moderators (Henderson, 2011), the relation between High Performance HR practices and organizational performance is examined for our data set (foreign based MNCs). The study s central hypothesis is that HR practices have positive effects on organizational performance (measured in terms of sales per employee). Four HRM practices are used to examine the moderators on the strength and direction of the relationship between HRM and organizational performance. In particular, the study investigates whether a high degree of integration moderates the relationship between HRM and MNC performance. The empirical tests show that performance based compensation is positively moderated by global integration, so that investments in performancebased compensation have a stronger effect on hypothesis: performance based compensation, productivity if global integration is high. This training, internal communication, and competence and performance appraisals. indicates that global integration is a significant moderator of the relationship between HRM and performance. The study finds that performance based compensation is the largest contributor to MNC productivity and that it has a positive effect on organizational performance. It is closely followed by training, which also makes a positive contribution. Internal communication and competence and The overall conclusion of the study is that MNCs wishing to maximize productivity (organizational performance) should have a high degree of global integration and focus their HRM investments on performance based compensation and training. performance appraisal, in contrast, are found to be negative for MNC productivity. In terms of the link between organizational characteristics and perspectives on financial performance, no trend is evident with respect to overall performance. However, for the individual components, a number of results should be noted: Turnover: Companies that systematically bring managers together are more likely to indicate poor performance than companies that do not have such regular meetings among managers. Performance relative to competitors: The data show that home based companies are more likely to indicate outstanding performance (84%). The corresponding figure for foreign based companies is far lower at 60%. This striking result might be a clear sign that companies operating in their own market will usually report better performance than foreign companies. Figure 9 2 illustrates this difference

99 Company Performance Figure 9 2 Performance relative to competitors I How is the performance of [COMPANY NAME] in Denmark relative to competitors? 84% 60% 0% 5% 16% 35% Home based (n=31) Foreign based (n=85) Poor Average Outstanding Product/market performance The product/market performance indicators include four items: customer/client satisfaction, market share, development of new products/services, and quality of products/services. Companies were asked to evaluate their organizations performance over the past three years relative to that of other companies in their sector. First, we find a high proportion of positive evaluations, with outstanding accounting for between 63% and 82% of all responses (see Figure 9 3). In particular, quality of products/services scores high, with less than 1% of HR managers indicating poor performance. Second, customer/client satisfaction scores high, with 71% of HR managers indicating outstanding performance

100 Company Performance Figure 9 3: Performance relative to competitors II How would you compare your company's performance in Denmark with that of your competitors with respect to the following (past three years)? Customer/client satisfaction 26% 71% Market share 23% 63% Poor Average Development of new products/services 29% 64% Outstanding Quality of products/services 17% 82% Base: Home and Foreign based (n= ) As with overall financial performance, company characteristics appear to have no general impact across the measures. However, there are some notable results for individual variables: Customer/client satisfaction: This variable is affected by the presence of a system for bringing managers together, which tends to lead to an evaluation of average performance. Companies without such a system tend to evaluate their performance as outstanding. Market share: This measure is affected by US ownership US based companies indicate poorer, more average performance than non US based companies. Again, HR managers in home based companies indicate outstanding performance on this measure to a much greater extent than HR managers in foreign based companies. HR performance This final section focuses on the perceived performance of HR relative to that of other companies in the same sector. These measures cover the abilities of the MNCs to recruit and retain employees, as well as their general relations with employees. The results show a similar pattern across the different measures, with outstanding indicated in 61% to 69% of the cases. All measures show a low frequency of poor performance (see Figure 9 4)

101 Company Performance Figure 9 4: HR performance I Subjective performance evaluation relative to competitors over the past three years General employee relations 26% 69% Manager employee relations 28% 69% Poor Average Ability to retain essential employees 32% 61% Outstanding Ability to recruit essential employees 26% 69% Base: Home and Foreign based (n=117) The respondents were also asked to assess the job satisfaction of their employees and their ability to retain essential employees (see Figure 9 5). Figure 9 5: HR Performance II Subjective evaluation of HR performance Ability to retain essential employees (n=118) 19% 72% Poor Average Outstanding Job satisfaction of employees in Denmark (n=117) 29% 65% The evaluation of HR performance is affected by various company and institutional characteristics. However, no pattern covers all of the variables. On the individual level, HR managers in non US based companies tend to evaluate job satisfaction in their companies higher than managers in US based companies. In addition, the presence of global HR policies leads to a higher score on this dimension

102 Company Performance Summary This chapter has summarized HR managers subjective evaluations of their companies financial performance in terms of overall performance, product/market performance and HR performance. The majority of the HR managers report that they believe their companies outperform competitors on most measures, with outstanding performance reported in the vast majority of cases. Product/market performance is rated highest, HR performance is rated second and overall financial performance is rated third. Across all variables, poor performance is seldom indicated. Company characteristics appear to have no clear impact on the performance scores. However, HR managers in the home based companies in our sample generally report better performance than HR managers in the foreign based companies, with HR managers in US based companies reporting the lowest scores. With regards to turnover and customer/client satisfaction, companies that have systemized interactions of HR managers evaluate their performance lower. Finally, HR performance is positively affected by the presence of a global HR development body

103 Part 4 Conclusion Future Research

104 Concluding Remarks and Summary Chapter 10: Concluding Remarks and Summary The last nine chapters have reported the main results from the survey of employment practices of MNCs in Denmark. In this chapter, the results are summed up and areas for future research are discussed. Origins and characteristics of MNCs in Denmark The majority of MNCs operating in Denmark are headquartered in Europe and 47% of the MNCs in the sample in this survey originate from the Scandinavian countries. Of the countries outside Europe, USbased companies dominate (16%). The rest of the world is only represented by 6% of the companies in our data set. In other words, an overwhelming majority of MNCs operating in Denmark come from countries with similar cultural and business environments. In terms of size, foreign based companies employ more than 60,000 people worldwide on average. Danish MNCs are significantly smaller with Danish MNC employing on average between 1,000 and 4,999 people. In general, the MNCs operating in Denmark have been international for many years. In fact, all home based companies have been international for at least four years. A relatively small number of companies adapt their most important products or services to the national market (the majority of companies in our sample adapt to different regions of the world or standardize globally ). Home based MNCs tend to focus on a single product, while foreign MNCs are relatively more likely to diversify. This finding could be connected to the relatively small size of homebased MNCs. In terms of strategic positioning, the results show that about 50% of the subsidiaries have international responsibility for some products and services, while 24% believe that significant R&D has been undertaken in the Danish operations. Denmark a knowledge economy? In discussions of Denmark s place in the international value chain, the emphasis has typically been on Denmark as a knowledge economy. However, 50% of the MNCs in Denmark are active in manufacturing, which indicates that Danish companies are not necessarily at the top of the value ladder. The limits of the present survey prevent us from further elaborating on this finding, but this result supplements qualitative studies showing that MNC takeovers in Denmark often result in a restructuring (i.e., downsizing) of R&D and sales activities, and the maintenance of activities handled by blue collar labor (Navrbjerg & Minbaeva, 2009). Further research is needed to explore why manufacturing is a common investment area for MNCs in Denmark

105 Concluding Remarks and Summary The structure of HR policy systematic on a worldwide basis or ad hoc? The systemization of HR policies among MNCs varies. HR managers were asked about the kinds of coordination techniques their companies employed. About two thirds of the companies have an international HR body and a system for bringing managers together. These techniques are somewhat more common among foreign based MNCs than among Danish based MNCs, and size is an important explanatory factor. The most common way of bringing managers together is through regular meetings, but international conferences, taskforces and virtual groups are also widely used (more than 50% of the companies). In about one third of the foreign based MNCs, a Danish representative is part of the international HR body. A decision to refrain from bringing HR managers together or introducing an international HR body could mean that the company will fail to exploit knowledge sharing possibilities in HR. Subsidiaries might have ideas about and practices for tackling certain HR problems, but these cannot be spread throughout the organization if HR managers from subsidiaries do not meet. Case studies in this report show that some subsidiary HR initiatives have been implemented in their respective worldwide organizations, a phenomenon known as reverse diffusion. The content of HR policy: performance appraisals Appraisal and rewards systems can be an important HR tool. The survey shows that appraisal systems are widespread: 75% of companies have appraisal systems for managers, while 68% haven them for the LOG. Therefore, appraisal systems are used almost as often to motivate LOGs as to motivate managers. Overall, foreign based companies are more likely to have appraisal systems for the LOGs than Danishbased companies. The same is true for appraisal systems for managers, although this finding is not statistically significant. In terms of other company characteristics, the analyses show that US based companies are more likely to have appraisal systems for both the LOG and managers than other companies, as are companies that develop global HR policies through a worldwide body and those that systematically bring HR managers together. More than 25% of MNCs rely on appraisal results as a formal basis for decisions on redundancy and redeployment. However, half of the companies use them only as an informal input for such decisions. This indicates that these important decisions about work life are quite opaque to managers and employees Companies use a wide array of criteria to assess managerial performance, with the most popular being individual output. Group output, competences and behavior in relation to corporate values are also

106 Concluding Remarks and Summary important. In terms of the characteristics of companies in relation to the various performance assessment approaches, MNCs originating from Sweden have a significantly lower perceived importance of individual quantitative output targets and behavior in relation to corporate values. The same tendency is evident for individual qualitative output targets, although this finding is only close to significant. This is interesting in a Scandinavian context, as Nordic countries, especially Sweden, have a long tradition of self governing teamwork in the workplace. These data indicate that this tradition is reflected in the appraisal systems of Swedish MNCs. Evaluation systems along the line of 360 degree feedback are used in about two thirds of the companies for both managers and the LOGs. Variable pay schemes for managers are in place in 77% of the companies, while 60% use such schemes for the LOG. Employee share ownership, profit sharing and share options are not very popular programs (average prevalence of 20% for managers; lower for LOGs (around 10%)) However, companies with an HR system that brings managers together and home based companies employ these kinds of incentives to a higher degree. Subsidiary discretion pay and country of origin matters Discretion is defined as the extent to which the subsidiary has autonomy over different areas of HR policy. In general, the subsidiaries enjoy a high level of discretion with regards to communication, employee involvement and employee representation. In one area, however, foreign owned subsidiaries show a below average level of discretion: pay and performance. The fact that discretion is lower with regard to pay and performance is not very surprising. Pay is a decisive factor in the relations between management and employees and, because it serves as an important motivator and is also decisive for the profit of the enterprise, it is also a typical area of conflict. This conflict can be addressed individually (through individual contracts) or collectively (through a collective agreement), and the typical national setup depends on institutional traditions. In general, country of origin matters for discretion. The data indicate that companies originating in the US generally grant less discretion to their subsidiaries when compared to the population in general. Subsidiaries with a Swedish HQ enjoy an above average level of discretion. Training and development more popular in foreign based MNCs Training expenditure can reflect how companies prioritize investments in human resources and, indirectly, whether they see investment in their employees as central to the accomplishment of their goals

107 Concluding Remarks and Summary Investments in training are common in MNCs. Almost 50% spend 1 4% of their annual employee compensation expenses on training and development. However, more foreign based MNCs spend more than 4% on training 9% of foreign based MNCs spend more than 4% of their annual pay bill on training and development, while the corresponding figure for Danish based subsidiaries is 0%. In terms of company characteristics, the analysis shows that companies with a global HR policy body and a systematic way of bringing managers together make significantly more investments in training and development. This is again an indication that a systematic HR policy in one area affects policies in other areas. Succession planning is a process used to identify and develop management talent in the organization to eventually succeed the current management. The data show that for 43% of home based companies have succession planning in place in all or some of their operations. More than 50% have no succession planning at all. For foreign based companies, this latter figure is slightly lower (49%), while the amount of foreign based companies with a formal succession planning system is a higher (50%). The development of talent within an organization can be worthwhile, as the transaction costs associated with buying management skills can be very high. While a relatively high number of MNCs do not have a succession plan, they are generally aware of management talent. Almost 70% of companies have a management development program aimed at high potential employees. These data indicate that more resources are invested in finding management potential than in making plans for succession. The most popular way of developing high potential employees is through formal global management training and assessments of performance relative to a set of global management competencies. These techniques are used quite extensively or very extensively by about 35% of the companies. Overall, the use of these techniques increases when the MNC has a global HR policy body or a systematic approach to HR. Another aspect of training and development is organizational learning. A learning organization can be characterized as one that facilitates learning as well as transforms itself and its resources with the purpose of remaining competitive. Organizational learning ensures that knowledge stays in the organization even if employees leave the organization, i.e., the knowledge is not dependent on individuals. The survey shows that approximately 40% of the companies have a formal policy on organizational learning. Again, companies with a global HR policy body and a systematic approach to HR are more likely to have a formal policy

108 Concluding Remarks and Summary International project groups or taskforces are the primary methods used to facilitate organizational learning. They are used in about 80% of companies. In addition, international informal networks and expatriate assignments are widely used. Expatriate assignments are most common in home based companies and in companies with a non standardized product approach. Overall, 60% of the companies surveyed indicate that international project groups and taskforces are the most important techniques used to facilitate organizational learning. Hands on assignments might also be part of an organizational learning process. A more qualitative question, therefore, is whether such techniques are seen as necessary ad hoc solutions and that also might lead to organizational learning, or whether they are part of a systematic learning system directed at organizational learning. Overall, there is a clear indication that companies that bring managers together often also have a coherent strategy for the development of managerial potential, for maintaining that potential and for actively working on organizational learning. Likewise, companies with a global HR body, a systematic HR policy or a system for bringing managers together typically use more resources on training and development, on succession planning, and on finding high potential employees. Employee involvement adapted to local circumstances Employee involvement and communication are key aspects of HR. MNCs can implement different work organizations and techniques of direct employee involvement in their services or production, and employee involvement can serve as a competitive factor in terms of product or service quality. Communication and information can be important in terms of employee satisfaction and, as such, might affect the output of a company, and the quality of its products or services. Employee involvement techniques are seldom standardized worldwide most companies state that their employee involvement practices are diverse or vary substantially. This indicates that MNCs tend to adjust their communication strategies locally and/or let local managers determine the communication strategies. This also highlights the necessity of adjusting the involvement policies to local circumstances, in that MNCs recognize that the same policy may not be relevant for all subsidiaries. The most popular technique for employee involvement among the foreign owned MNCs is the establishment of problem solving groups and continuous improvement groups. Formal teams are most common among the home based MNCs. However, teamwork or other involvement practices and formally designated teams are used in more than 60% of the foreign owned MNCs. Interestingly, foreign based MNCs employ problem solving groups and continuous improvement groups to a higher extent than Danish based MNCs. One might expect such groups to be more

109 Concluding Remarks and Summary widespread in Danish based companies, as this type of work organization has a long tradition in Denmark, but this is not the case. The fact that teamwork or other involvement practices in operating companies outside Denmark are used significantly more by companies with such cross national HR systems than by companies that do not use such system indicates that other factors than traditions for a certain work design are at stake. Further research into this result is therefore needed. Various communication mechanisms are used by the vast majority of MNCs. When communicating with LOGs, the most common mechanisms are meetings between managers and line managers, employee newsletters or s, and intranet. The communication mechanisms are generally used more in companies with global HR development bodies and those in which HR managers meet regularly. The analysis shows that the most common type of information given to an LOG relates to the company s financial position, while information on investment plans and staffing plans are in second and third place, respectively. However, we should bear in mind that the survey was carried out in 2009 at the height of the financial crisis. Accordingly, both management and employees in any private enterprise could be expected to have been attentive to the economic development of the company, which might explain this study s finding related to the distribution of information. However, it is more surprising that there relatively few companies share information on staffing plans. In the midst of a financial crisis, one might expect information on staffing plans and possible restructurings to be of great interest to employees. The level of information on finances and staffing plans might be expected to be higher in Danish based companies because the country has a long standing tradition of well functioning cooperative committees in which such information is typically shared. However, this is not the case, as foreignbased companies seem to share such information with LOGs to a greater extent than Danish based companies. Employee representation and consultation an institutionally sensitive issue Employee representation and consultation is traditionally an area highly dependent on national systems of legislation, politics, industrial relations (IR) and collective agreements, which differ widely between countries. Denmark has a long tradition of high union density and an IR system in which the social partners play a decisive role in regulating the labor market through collective bargaining. The level of employee representation and consultation involvement is stipulated in the Danish Cooperative Agreement (Samarbejdsaftalen), and this is further supported by EU directives on consultation and on European Works Councils (EWCs)

110 Concluding Remarks and Summary One interesting aspect is whether foreign owned MNCs are likely to adopt the Danish perspective, especially when they come from a different system for cooperation and consultation, or whether they try to impose their own traditions on the subsidiary. The analysis shows that unions are recognized or accepted by the vast majority of MNCs operating in Denmark. Only 5% of MNCs are not in favor of union recognition. 53% adopt a cooperative approach. In terms of policies for trade unions outside of Denmark, about half of the companies leave the decision up to local management and about one third have no policy. This indicates that cooperation with unions is a highly context sensitive area that local managers are considered best suited to handle. 30% of MNCs adhere to the minimum legal requirements on employee information and consultation, while 54% of the MNCs go somewhat or considerably further than the legal requirements. This might indicate a rather deep respect by MNCs in Denmark for labor related legislations and rules. On issues such as variable payment schemes, in work training and direct employee involvement schemes, companies consult or decide jointly with union representatives in more than two thirds of the time. However, with regards to work organization and sub contracting, the majority of companies make decisions without consulting union representatives. For work organization, employee representatives might be expected to be more involved, as many issues in collective agreements deal with work organization and as this issue directly affects employees. Sub contracting, in contrast, affects employees only indirectly and could be viewed as a management prerogative (although subcontracting can have serious consequences for the employment at the company). The results also show that more than 80% of the companies hold regular meetings between management and employee representatives for the purpose of information provision and consultation. In 70% of MNCs, these meetings cover all employees, although there may be different arrangements for different groups. With regards to European Works Councils and their impact on employee consultation in Denmark, the results show that almost 40% of the companies have an EWC or a similar European level structure, while 40% do not. The former figure is surprisingly low, as most companies in the survey would be expected to meet the legal criteria under which a European Works Council is required Of the estimated 2,264 companies covered by the legislation, some 828 (34%) have EWCs in operation, although the number of active EWCs is higher because some companies have more than one (

111 Concluding Remarks and Summary Interestingly, 20% of HR managers do not know if their enterprise has an EWC, and almost 60% received little or no information about the EWCs activities. This indicates that employee consultation on an international level is not an important issue for HR managers. Company performance high self evaluations The survey asked HR managers about their subjective evaluations of the company s financial performance. Questions were asked on the overall performance of the company, product/market performance and HR performance. The majority of the HR managers report that their companies perform very well, with outstanding performance reported in the vast majority of cases (84% of home based managers and 60% of foreign based managers). Product/market performance is ranked highest, while HR performance is second and overall financial performance is third. Across the variables, poor performance is only indicated in very few cases. HR managers in the home based companies in our sample generally report better performance than the HR managers in the foreign based companies, with HR managers in US based companies reporting the lowest score. With regards to the performance measures of turnover and customer/client satisfaction, the presence of a systematic way of bringing HR managers together leads to a lower evaluation of performance. Finally, HR performance is positively affected by the existence of a global HR development body. The institutional context decisive for HR policies Managers of MNCs will encounter different business systems as they invest in or establish subsidiaries in different countries. While a broad range of HR policies can be controlled within the MNC and while many of those issues are considered part of management s prerogative, the country s organizational context is, for the most part, beyond the MNC s control. Organizational context refers to the local conditions under which the MNC operates, including labor market relations, the labor market legislation, the collective bargaining system, and level of cooperation between management and employees. These institutional settings form a framework for the HR policy that an MNC can implement in a subsidiary. Throughout this report, several references have been made to the institutional context of the MNCs operating in Denmark. In the next chapter we offer some future research perspectives in this area

112 Future Research Chapter 11: Future Research CMEs and LMEs in Denmark An important and widely discussed approach to the analysis of the influence of institutional context on the coordination of the economy is the Varieties of Capitalism (VoC) approach (see Textbox 7). The critique of the VoC concept is overwhelming, as is the discussion of which countries are LMEs or CMEs. It is beyond the scope of this report to go into this discussion. However, in this chapter we indicate the possibilities for further research in this area. In categorizing country of origins in our sample, we use Hall and Gingerich (2004). However, we also create a group of cross over countries in order to derive cleaner archetypal data to with which to work. Within the sample, we find a mix of foreign based MNCs originated from LMEs and CMEs. As discussed in Chapter 2, the CMEs dominate. As such, our first conclusion is that the majority of MNCs operating in Denmark come from business systems similar to Danish one. This also means that the possibility of working in turbulent areas between MNCs HR units and local subsidiary HR units is limited. To be more precise, we would only expect some kind of turbulence in 30 of the cases studied here. Table 2: MNCs operating in Denmark according to market systems Coordinated Market Economies (CMEs) Liberal Market Economies (LMEs) Finland (2 27 ), Norway (6), Sweden (15), France (5), Germany (12), Belgium (1), Switzerland (8), Netherlands (2), Japan (2) US (19), India (1), Australia (1), South Africa (1), Israel (1), UK (7) Cross over Economies Spain (1), Italy (1), Iceland (2) Following the arguments of the VoC approach, we should experience some kind of differences in employment practices between foreign firms operating in Denmark, depepding on their origin (LMEs vs. CMEs). Basically, we expected: 1) MNCs originating from LMEs will have a harder HR policy with lower employee involvement, more individualized management employee relations and a lower level of union recognition. 2) When investing in subsidiaries in CMEs like Denmark, MNCs originating from LMEs will adhere to the labor market system in the host country and, as such, there will be no difference between the HR policies in LME based companies and CME based companies. 27 Numbers in parentheses indicate the number of companies originating from the country

113 Future Research According to the Varieties of Capitalism (VoC) approach, which was introduced by Hall and Soskise (2001), the methods firms use to resolve the coordination problems they face vary across economic contexts. In liberal market economies (LMEs), firms solve coordination problems via hierarchies ad competitive market arrangements (Hall and Soskice, 2001: 8). In coordinated market economies (CMEs), firms depend more on nonmarket relationships. Given these two approaches, what happens when enterprises from one market system invest in subsidiaries in another market system? In other words, what happens if an MNC from an LME wishes to operate in a CME or vice versa? When an MNC originating from an LME (e.g., the UK) moves into an LME institutional environment (e.g., the US), the situation entails relatively limited potential for conflict. In both countries, the MNC operates in an environment where there is a limited tradition for listening to employees as a collective and employee expectations are typically adjusted to this fact. Hence, clashes are few and limited. The same applies when an MNC from a CME (e.g., Norway) comes into contact with another CME institutional structure (e.g., Denmark). Actors in northern Europe expect a relatively high level of employee empowerment and employment practices often offer what the employees demand, e.g., a work design that emphasizes the importance of the employee. In both cases, the degree of convergence in terms of a common understanding of management employee relations is high and conflicts are limited (Hyman, 2004). Textbox 7: CME versus LME Originating from LMEs Originating from CMEs Table 3: When LMEs meet CMEs Operating in LMEs No conflict Turbulence area Operating in CMEs Turbulence area No conflict The situation can be quite different, however, when an MNC originating from an LME encounters, for example, a northern European IR systems (a typical example of a CME), or when an MNC originating from a CME move into an LME. In the former case, hard HRM policies (typical for LME firms) tend to meets an IR system with a tradition of employee involvement and high union penetration (Kristensen and Zeitlin, 2005). This creates a potential for conflict, as described by several authors analyzing American MNCs operating in Ireland (see, e.g., Edwards and Ferner, 2002; Collings et al., 2005; Gunnigle et al., 2005). Less analyzed are cases where an MNC from a CME comes into contact with an LME institutional structure, as would be the case when a northern European MNC establishes an American subsidiary. This situation does not necessarily lead to conflict or turbulence, at least not between management and employees. However, turbulence might arise between the management of the parent company and the management of the subsidiary, as the parent company might enforce soft HRM in a hard IR system. The former is likely to be an HRapproach that local management is unfamiliar with and might even feel is wrong

114 Future Research Using our data, we have tested these two hypotheses and compared the firms in our sample along a number of various dimensions, ranging from employee involvement to employee representation and discretion. Overall, although we find a number of differences in our tests of these hypotheses, none were statistically significant. 28 This is an interesting finding in light of both theory and recent work in the area. Below we will elaborate on our findings under three sub headings: communication, employee representation and country of origin. Communication MNCs operating from CMEs would traditionally take all stakeholders into account when making decisions. Hence, a higher level of information on the enterprise level would be expected in companies from CMEs than in those coming from LMEs. However, the results show that there is no difference in the use of various information sharing techniques, such as meetings with the entire workforce. This means that the proportion of managers that hold meetings with the entire workforce as a communication mechanism in companies originating from CME countries is not significantly different from the proportion of companies originating from LME countries. Figure 11 1: Communication: Meetings between Management and the Workforce LME/CME Which of the following communication mechanisms are regularly used for the LOG within [company name] in Denmark? Meetings between senior managers and the entirety of the workforce Total CME Total LME 81% 83% 19% 17% Yes No Base: Home and Foreign based (n = 81) For other communications techniques, like meetings between line managers or supervisors and employees; attitude and opinion surveys; suggestion schemes; and systematic use of management chains 28 Chi square test significant at the 5% level

115 Future Research to cascade information, the same pattern emerges. There is no significant difference between companies originating from LMEs and CMEs. In terms of information on more sensitive issues, like the financial position of the company, investment plans and staffing plans, Figures 10 2 and 10 3 show similar results. Figure 11 2: Types of information to LOGs in DK LME/CME Which of the following types of information are regularly provided to the LOG within [COMPANY NAME] in Denmark? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes No Yes No Yes No Financial position of the company Investment plan for the company Staffing plans for the company CME (n = 51 54) 94% 6% 51% 49% 58% 42% LME (n = 30) 90% 10% 37% 63% 47% 53% Figure 11 3: Types of information to LOGs in the global company LME/CME Which of the following types of information are regularly provided to the LOG within [COMPANY NAME] in the global company? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes No Yes No Yes No Financial position of the company Investment plan for the company Staffing plans for the company CME (n = 46 50) 88% 12% 41% 59% 36% 64% LME (n = 30) 77% 23% 23% 77% 17% 83% The expectation that foreign based MNCs originated from CMEs share information in general with employees to a higher degree is not supported by these data

116 Future Research Employee Representation An even more sensitive issue is employee representation. Union density and the strength of unions are often considerably higher in CMEs than in LMEs. Hence, the expectation is that companies originating from CMEs will be more likely to involve union representatives than companies from LMEs. The most decisive question here is union recognition. While Figure 10 4 shows differences between CMEs and LMEs, there are too few observations in our data set to run a statistical test. Figure 11 4: Trade union recognition LME/CME Thinking of the LOG in [COMPANY NAME] in Denmark, are trade unions recognised for the purposes of collective employee representation at? LME CME The company's single Danish site Some sites in the Danish operations Most sites in the Danish operations All sites in the Danish operations No sites in the Danish operations 22% 2% 15% 13% 15% 13% 30% 19% 24% Base: Foreign based (n = 81) 48% With regard to whether MNCs involve unions on different matters or make decisions on their own, we see very little differences between companies from LMEs and CMEs. Due to too few observations, answers from 1+2 (management decides on its own) and (management consults or decides jointly with union representatives) are merged. As shown in the figures below, though the results are not statistical significant

117 Future Research Figure 11 5: Unilateral or bi lateral management decisions LME/CME (work organization) Which best describes the policy towards working with unions on the following matters relating to the LOG: work organization CME (n = 39) LME (n = 19) 59% 63% 41% 37% Management decides on its own Management consults or decides jointly with union representatives Figure 11 6: Unilateral or bi lateral management decisions LME/CME (Sub contracting and outsourcing) Which best describes the policy towards working with unions on the following matters relating to the LOG: Sub contracting and outsourcing CME (n = 39) LME (n = 19) 85% 74% 15% 26% Management decides on its own Management consults or decides jointly with union representatives

118 Future Research Figure 11 7: Unilateral or bi lateral management decisions LME/CME (variable pay schemes) Which best describes the policy towards working with unions on the following matters relating to the LOG: Variable payment schemes CME (n = 39) LME (n = 19) 84% 41% 59% 16% Management decides on its own Management consults or decides jointly with union representatives Figure 11 8: Unilateral or bi lateral management decisions LME/CME (in work training/upgrading skills) Which best describes the policy towards working with unions on the following matters relating to the LOG: In work training/upgrading skills CME LME 70% 75% 30% 25% Management decides on its own Management consults or decides jointly with union representatives

119 Future Research Figure 11 9: Unilateral or bi lateral management decisions LME/CME (direct employee involvement schemes) Which best describes the policy towards working with unions on the following matters relating to the [LOG NAME]: Direct employee involvement schemes CME (n = 34) LME (n = 19) 62% 63% 38% 37% Management decides on its own Management consults or decides jointly with union representatives Although none of the results are statistically significant, some of the results point in directions that are contrary to expectations. For example, it might be expected that variable pay schemes would be more unilaterally used in MNCs originating from LMEs. However, the data indicate the opposite: while management decides on its own in 41% of the CME companies, it does so in only 16% of the LME companies. Furthermore, 84% of the LME based companies consult or decide jointly with union representatives. Country of origin no relevance in a Danish context? Overall, we might conclude that there are no statistically significant differences between MNCs originating from LMEs and CMEs with regards to their levels and kinds of employee involvement, communication and union recognition. This is a strong indication that MNCs adjust their overall HR policies to the local Danish conditions to a very high degree and that the Danish business model seems to be able to force MNCs to adhere to the general rules of the game on the Danish labor market. This is also confirmed by the fact that 58% of the companies have a policy to go considerably or somewhat further than the legal requirements of the host country

120 Future Research Figure 11 10: Policy towards Local Legal Requirements Which of the following statements comes closest to capturing the company s global policy? CME LME 58% 58% 30% 37% 12% 5% There is no policy Base: Home and Foreign based (n=62) Minimum compliance with legal requirements To go somewhat/or considerably further than legal requirements However, this is only the HR managers view of the situation. More comprehensive qualitative analyses, which encompass views from managers and employee representatives, indicate that foreign ownership changes HR policies and management employee relations, albeit in the softer areas (see Textbox 8). These partly contradictory data indicate a need for more detailed research on this issue. The comprehensive international database covering nine countries will undoubtedly be of great value for further research, not least because several of the results from the Danish survey are not statistically significant because there are too few observations. Given a bigger database, researchers will be able to run tests that might make border line results more concrete

121 Future Research Textbox 8: Foreign ownership changes HR policies and management employee relations In countries with CMEs, Industrial Relations systems are centered on high trust between the state, employer and employee organizations, which Danish context. Another parameter was that companies were big enough to employ an HRM manager. has been built and sustained over the years. Methodologically speaking, the two later However, by employing HQ originated work investigations were spin offs from the first one. At organization practices, foreign investors might undermine this trust, questioning the resilience of the IR systems. Yet, we know relatively little about how a particular company wide initiative is the time of the first investigation, all four companies were Danish owned, and at least two of them were on the verge of becoming MNCs, buying subsidiaries in other countries. When the companies were implemented and operationalized in highly revisited in 2001, three of the four had been bought regulated countries. The paper by Navrbjerg and Minbaeva published in International Journal of Human Resource Management contributes to this gap by analyzing whether and how a change in work organization practices following a takeover by a MNC affects the local IR system in CMEs. The authors analyzed four enterprises located in Denmark over a 10 year period to shed light on how the cooperation at the enterprise level and consequently, the Danish IR system, are affected by the foreign takeovers. The companies were visited three times: in 1995; 2001; and For the first investigation, the four companies were chosen because they had interesting HR relations and work organizations (teamwork, just in time, total quality management etc.) and not least, HRM, which at the time was a relatively new concept in Denmark. The purpose of the investigation was to explore how the Danish IR system matched these new management by foreign MNCs and the last one remained Danish. There were some interesting dynamics in the interplay between the HQ originated HR and the Danish IR system. This pushed the authors to refine the original goals of the study and focus on the consequences of managerial interventions following acquisitions (in the form of the imposed HRM) on the cooperation and IR system locally. All the companies were revisited in 2005 when the HR relations were expected to have stabilized after the turmoil of the takeovers. The authors kept the fourth company that did not experience changes in the ownership as a control since that allowed them to make sure that the observed changes were not caused by the general development in Danish economy or changes in the dynamics of the Danish labor market. The analysis in 1995 was the most comprehensive: 15 to 18 interviews were carried out within each concepts. All companies were industrial plants and enterprise, with top management, middle as such the classical arena for industrial relations. Moreover, the companies were chosen from a pool of companies that had presented themselves as vanguards of HRM issues at conferences, in the media, etc. As such, they were thought of as possible benchmarks for the development of HRM in a management, union representatives and rank and file employees. All in all, 73 interviews were made in the four enterprises in The interviews in 2000 and 2005 were less comprehensive. Then, three to five interviews with main actors like HR managers and shop stewards were carried out in

122 Future Research each enterprise. In 2000, 14 interviews were carried out in three enterprises, and in 2005, 16 interviews in four enterprises. In total 103 interviews were conducted over a 10 year period. It was found that none of the MNCs studied tried directly to interfere in the local IR. To a high degree, management seems to accept the Danish written and unwritten rules of the game. Neither local management nor employees could point out situations where the MNC HQ had tried to question the collective agreement reached. Still, a number of HQ initiatives that are within management prerogative indirectly affect relations between employees and local management. In the long run, they may affect the collective bargaining system as such. In particular, the results show that a shift from a stakeholder to shareholder management style and the increased degree of HQ control have an effect on the whole co operative atmosphere in each of the companies. To changes like these, employees first react with increased absenteeism and consequently turnover. If the employees' 'voice' is unheard and foreign management continues tightening up work organizational practices, employees pull back flexibility which was previously reached in local agreements between management and employees' representatives. That jeopardizes the fine tuned balance achieved between the centralized and decentralized agreements that are at the core of the Danish IR. So, by exercising their management prerogative, the MNC management disturbs the finely tuned balance between management and employees to such a degree that it undermines a long and strong tradition for cooperation, possibly giving rise to long term consequences for national IR systems. Source: Navrbjerg, S. and Minbaeva, D. (2009) HRM and IR in Multinational Corporations: Uneasy Bedfellows? International Journal of Human Resource Management, 20(8), pp

123 Appendix I: The Questionnaires Appendix I: The Questionnaires

124 Home-based questionnaire Denmark SURVEY OF EMPLOYMENT PRACTICES OF MULTINATIONAL COMPANIES OPERATING IN DENMARK Home-based English version Please select a language: SECTION A: INTRODUCTION English... 1 Danish... 2 First page: EMPLOYMENT PRACTICES OF MULTINATIONAL COMPANIES Welcome to the survey! The completion of the survey is expected to take about minutes. You can stop any time, save your entries and resume the completion of the survey later. You can navigate forward and backward by using the arrows at the top and the bottom of the page. We highly recommend saving the survey after completion of each page. Thank you very much for taking the time to participate in this study. A1. Can you confirm that the company is wholly or majority Danish-owned? By majority owned we mean at least 50% is owned by a Danish-based company Yes... 1 No... 2 IF NO REVERT TO PAGE ASKING FOR CONTACT INFO Page for contact info: To the previous question you replied that your company is not majority Danish owned (that at least 50% is owned by a overseas-based company). If this is correct, please write your name and below and we will invite you to the survey of overseas-owned firms operating in Denmark. If your company is majority Danish-owned please return to the previous page and correct your response to the previous question. [box name] [box ] If the ownership structure is more complicated please contact us by entering your message and below. Please click finish to submit your response. [box name] [box ] [box message] Thank you very much for taking the time to participate in this study. A2. What is the name of the ultimate controlling company you work for? [COMPANY NAME] A3. Are you located at? The global HQ of the worldwide company The HQ of the operating units in Denmark Other (please specify)... 3 Page 1

125 Home-based questionnaire Denmark A4. What is your job title? HR/Personnel Director HR/Personnel Senior Manager/ Manager... 2 HR/Personnel Senior Officer HR/Personnel Officer... 4 HR/Personnel Executive.. 5 HR/Personnel Assistant... 6 Other (please specify)... 7 A5. For which of the following policy levels do you have any HR responsibilities: Tick all that apply Global HR policy... 1 Regional HR policy... 2 HR policy in Denmark... Other (please specify) A6. How long have you worked for [COMPANY NAME] in Denmark? Please write number of years. In the rest of the questionnaire when we ask you questions about [COMPANY NAME] in Denmark, we would like you to think of all operation units in Denmark. A7. In how many foreign countries does the company have operating sites? 1 country countries or more countries... 3 A8. Does [company name] in Denmark have? 1 site sites or more sites... 3 A9. What is the total number of employees worldwide including Denmark by headcount? Up to 99 employees employees employees ,000 4,999 employees , employees employees A10. What is the total number of employees by headcount in the following geographical regions? Denmark Europe (excluding Denmark) North America Asia-Pacific Rest of the world Page 2

126 Home-based questionnaire Denmark Up to 99 employees employees employees ,000 4,999 employees ,000 + employees None Don t know A11. Please estimate the approximate number of employees in [COMPANY NAME] in Denmark in each of the following core functions Number Research & Development (R&D)... Manufacturing Operations... Sales and Marketing... Customer Service... Business Services (finance, IT, payroll, etc)... Other... A12. When was the company first established? Please write the year A13. What year did it establish its first foreign operation? Thinking of the first significant investment outside of Denmark ignoring minor sales presence. A14. How many of the top five management positions in [COMPANY NAME] in Denmark are filled by individuals from outside Denmark? None... 6 Don t know... 7 A15. To what degree (percentage) has the following changed in the worldwide company in the last 3 years? Can be both positive and negative. Only approximate numbers are necessary. Number of employees (%) Sales (%) A16. Approximately what percentage of revenues of [COMPANY NAME] comes from sales abroad? 0% % % % %... 5 Don t know... 6 Page 3

127 Home-based questionnaire Denmark A17. Is the worldwide company state or partly state owned? Yes... 1 No... 2 Don t Know... 3 A18. Is the worldwide company privately owned or are its shares publicly traded? Privately owned... 1 Publicly traded... 2 A19. Which of the following statements best describes [COMPANY NAME] in Denmark? The company produces 1 A single product or service that accounts for more than 90% of sales 2 A number of products and services but one of these accounts for between 70% and 90% of sales 3 A number of products and services but no single one of these accounts for more than 70% of sales 4 A range of unrelated products and services 5 Don t know A20. Which of the following statements best describes the worldwide operations? The worldwide company produces 1 A single product or service that accounts for more than 90% of sales 2 A number of products and services but one of these accounts for between 70% and 90% of sales 3 A number of products and services but no single one of these accounts for more than 70% of sales 4 A range of unrelated products and services 5 Don t know A21. Is the worldwide company s most important product, service or brand (or group of products, services or brands)? Help: With most important we want you to think of the product, service or brand that generates the most revenue. Adapted significantly to national markets... 1 Adapted to different regions of the world but standardised within them... 2 Standardised globally... 3 Don t know... 4 A22. Are any of the components, products and services of [company name] in Denmark produced for operations of the worldwide company based outside Denmark? Yes all... Yes some but not all No none... 3 Don t know... 4 A23. Do other parts of the worldwide company supply components, products or services to [company name] in Denmark? Yes... 1 No... 2 Don t know... 3 Page 4

128 Home-based questionnaire Denmark SECTION B: WORKFORCE COMPOSITION Throughout the questionnaire the focus will be on your policies and practices in relation to the following two main groups of staff. 1. Managers - employees who primarily manage the organisation, or a department, subdivision, function, or component of the organisation and whose main tasks consist of the direction and coordination of the functioning of the organisation. In other words managers refer to those above the level of first-line supervision. 2. The LOG (largest occupational group) the largest non-managerial occupational group among the employees in the headcount in Denmark. For example, in a manufacturing business it might be semi-skilled operators, and in an insurance company it might be call centre staff. B1. Approximately how many managers are there in [COMPANY NAME] in Denmark? Don t Know B2. Approximately, how many LOG are there in [company name] in Denmark? Help: This includes staff who work regularly, but excludes occasional staff. By regularly we mean there is a mutual expectation that the employee works on an ongoing basis for your company Don t Know Page 5

129 Home-based questionnaire Denmark SECTION C. THE HR FUNCTION C1. What percentage of the managers spends the majority of their time on HR matters in [COMPANY NAME] in Denmark? (%) C2. On which of the following issues is information on the operating units in Denmark monitored by management in a higher organizational level? Help: By "a higher organizatonal level" we mean e.g. senior management in Denmark, international business HQ, European HQ (in Denmark or elsewhere) or global HQ. Please tick all that apply Managerial pay packages Management career progression... 1 Overall labour costs Numbers employed (headcount)... 1 Staff turnover Absenteeism... 1 Labour productivity... 1 Workforce composition by diversity (e.g. gender, ethnicity, disability etc Employee attitude and satisfaction None of these... 1 Don t know... 1 Other (please specify)... 1 C3. On which of the following issues is information on the operating units outside Denmark monitored by management in a higher organizational level? Help: By "a higher organizatonal level" we mean e.g. senior management in Denmark, international business HQ, European HQ (in Denmark or elsewhere) or global HQ. Please tick all that apply Managerial pay packages Management career progression... 1 Overall labour costs Numbers employed (headcount)... 1 Staff turnover Absenteeism... 1 Labour productivity... 1 Workforce composition by diversity (e.g. gender, ethnicity, disability etc Employee attitude and satisfaction None of these... 1 Don t know... 1 Other (please specify)... 1 C4. Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? 1 Go to C5 2 Go to C6 3 Go to C6 Page 6

130 Home-based questionnaire Denmark C5. Is there someone from outside Denmark on this body/committee? Yes... 1 No... 2 Don t know 3 C6. Are HR managers from different countries brought together in a systematic way? Yes on a global basis 1 Yes on a regional basis 2 No 3 4 C7. How frequently does contact between HR managers in different countries take place through any of the following mechanisms: Weekly Monthly Quarterly Annually Other Ad hoc Never Regular meetings International Conferences Task Forces Virtual Groups e.g. conference calls Now think about your company s approach concerning its management of employees. C8. To what extent do you agree or disagree with the following statements. Strongly Disagree Neither Agree Strongly N/A Don t Disagree agree nor Agree know disagree There is a worldwide approach covering all global operations There is a regional approach covering all European operations The development of a specific approach is left to international product, service or brand based divisions The development of a specific approach is left to national operating companies The approach is really a mix of the traditions of the different national operating companies Traditions in the country of origin have an overriding influence on the approach to the management of employees C9. Have the operating companies outside Denmark provided any new practices in the following areas that have been taken up elsewhere in the worldwide company: No Yes, Yes, Yes, Don t in a few parts in major taken Know of the firm businesses up globally Pay and performance management Training, development and organisational learning Employee involvement and communication Employee representation and consultation Page 7

131 Home-based questionnaire Denmark SECTION D. PAY AND PERFORMANCE MANAGEMENT D1. Is there a system of regular formal appraisal for each of the following groups of employees in [COMPANY NAME] in Denmark? Yes No Don t know For LOG For MANAGERS IF NEITHER STAFF GROUP IS CODED YES IF ONLY ONE CODED YES IF BOTH STAFF GROUPS ARE CODED YES GO TO D7 GO TO D2 GO TO D2 D2. Is a forced distribution applied to the results of appraisals for the following employee groups in [COMPANY NAME] in Denmark? Help: By forced distribution we mean a certain % of employees have to be in a particular performance category or rating, e.g. 10% are poor performers, 70% are reasonable performers, and 20% are top performers Please include formal and informal policy. Yes No Don t know For LOG For MANAGERS IF NEITHER STAFF GROUP IS CODED YES IF ONLY ONE CODED YES IF BOTH STAFF GROUPS ARE CODED YES GO TO D4 GO TO D3 GO TO D3 D3. What is the top and bottom percentages of this forced distribution for each of the following employee groups in [COMPANY NAME] in Denmark? For LOG:... Top % Bottom % For MANAGERS:... Top % Bottom % Don t know (For managers Top)... 1 Don t know (For managers Bottom)... 1 Don t know (For LOG Top)... 1 Don t know (For LOG Bottom)... 1 D4. Is a formal system of 360-degree feedback used in evaluating performance of any of these groups of employees in [COMPANY NAME] in Denmark? Yes No Don t know For LOG For MANAGERS D5. Are the outcomes of performance appraisal used as inputs in decisions on redundancy and redeployment in [COMPANY NAME] in Denmark? Yes, Yes, No N/A Don t know as a formal input as an informal input in decisions in decisions For LOG For MANAGERS Page 8

132 Home-based questionnaire Denmark D6. Thinking about the MANAGERS in [COMPANY NAME] in Denmark, on a scale of 1-5 how important are the following kinds of performance evaluation? Not at all important Very important Don t know Individual quantitative output targets (e.g. financial, numerical) Individual qualitative output targets (e.g. completion of a task) Group output targets (e.g. for site or business unit) Competences or personal skills (e.g. leadership or innovation skills) Behaviour in relation to corporate values D7. Does [not answered] in Denmark offer employee share ownership, profit sharing or share options to any employees in each of these groups? Help: 1. Approved employee share ownership scheme is where the organisation establishes a trust which acquires shares on behalf of employees and provides employees with part ownership of the company. 2. Profit sharing refers to rewards given to employees in addition to normal salary and bonuses which are dependent on the levels of profit in the business. 3. Share options is where employees are given the option of buying company shares, often at a reduced rate Employee share ownership Profit Sharing Share Options Yes No Don t Yes No Don t Yes No Don t Know Know Know For LOG Name Employee share ownership Profit Sharing Share Options Yes No Don t Yes No Don t Yes No Don t Know Know Know For managers D8. Is there variable pay for the following groups in [COMPANY NAME] in Denmark? Help: By variable pay we mean merit pay, performance related pay, performance related bonuses or payment by results. Yes No Don t Know For LOG For MANAGERS IF YES FOR LOG AT D8, ASK D9, IF NO, GO TO D10 Page 9

133 Home-based questionnaire Denmark D9. For LOG receiving variable pay in [COMPANY NAME] in Denmark, how important are each of the following factors in determining variable pay? Not at all important Very important Don t know Individual performance Work group performance (e.g. team or departmental performance) Organizational performance (e.g. site, region, company) D10. Using the scale below, to what extent do operating companies outside of Denmark have discretion over the determination of the following aspects of pay and performance policy? The operating companies outside Denmark have... Relating pay levels in [COMPANY NAME] in Denmark Use codes 1-5 N/A Don t know to market comparators (e.g. aiming to be in top quartile Employee share ownership schemes in [COMPANY NAME] in Denmark Performance appraisal system: For managers For LOG Variable payments scheme: For managers For LOG The operating companies outside Denmark have no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). The operating companies outside Denmark have a little discretion. The operating companies outside Denmark have some discretion (can develop policy within the guidelines/framework set by a higher organisational level). The operating companies outside Denmark have quite a lot of discretion. The operating companies outside Denmark have full discretion (can set own policy). N/A: There is no typical situation: the level of discretion varies widely across different overseas operations Page 10

134 Home-based questionnaire Denmark D11. Using the scale below, to what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following aspects of pay and performance policy? The operating company in Denmark have... Use codes 1-5 N/A Don t know Relating pay levels in [COMPANY NAME] in Denmark to market comparators (e.g. aiming to be in top quartile Employee share ownership schemes in [COMPANY NAME] in Denmark Performance appraisal system: For MANAGERS For LOG Variable payments scheme: For MANAGERS For LOG The operating company The operating company in Denmark have a little in Denmark have quite a discretion. lot of discretion. The operating company in Denmark have no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The operating company in Denmark have some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The operating company in Denmark have full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 11

135 Home-based questionnaire Denmark E. TRAINING, DEVELOPMENT AND ORGANISATIONAL LEARNING E1. What percentage of the annual pay bill in [COMPANY NAME] in Denmark was spent on training and development for all employees over the past 12 months? 0%... 1 Up to 1%... 2 Over 1% and less than 4%... 3 Over 4%... 4 Don t Know 5 E2. Thinking of [COMPANY NAME] in Denmark is there a formal system of succession planning for senior managers? Yes in all operations... 1 Go to E3 Yes in some operations... 2 Go to E3 No... 3 Go to E4 Don t Know... 4 Go to E4 E3. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 E4. Does [COMPANY NAME] in Denmark have a management development programme specifically aimed at developing its high potentials or senior management potential? Yes in all operations... 1 Go to E5 Yes in some operations... 2 Go to E5 No... 3 Go to E6 Don t Know... 4 Go to E6 E5. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 E6. How extensively are each of the following techniques used for the development of these managers in [COMPANY NAME] in Denmark? Not used at all A little use Some use Used quite Used very extensively extensively Use codes 1-5 Don t know N/A Short term International assignments (12 months or less) Long term international assignments (more than 12 months) Formal global management training Assessment of performance against a set of global management competencies Qualifications programme (e.g. MBA, professional qualifications) Page 12

136 Home-based questionnaire Denmark E7. How many expatriates from the company s foreign operations are currently working on longterm assignments (i.e. more than 12 months) in Denmark? Please include all types of long-term assignments for any purpose. Type 0 if none. Help: Expatriates in this question refers to employees from operating companies outside Denmark who are currently working on assignment in Denmark. Number. 2 Don t know. 1 E8. How many expatriates from [COMPANY NAME] in Denmark are currently working on long-term (i.e. more than 12 months) assignments overseas? Please include all types of long-term assignments for any purpose. Type 0 if none. Help: Expatriates in this question refers to employees of the company s operations in Denmark who are currently on assignment in operations of the worldwide company abroad. Number. 2 Don t know. 1 E9. To what extent do you agree with each of the following statements for LOG in [COMPANY NAME] in Denmark: Strongly Disagree Neither Agree Strongly Don t Disagree agree nor Agree know disagree On-the-job learning (experience gained on the job) is more valuable than off-the-job classroom training and development Investment in training is critical to either developing or retaining key skills in this company E10. To what extent do you agree with each of the following statements for MANAGERS in [COMPANY NAME] in Denmark: Our company favours internal promotion over Strongly Disagree Neither Agree Strongly Don t Disagree agree nor Agree know disagree external management recruitment International experience is a key criterion for career progression at senior levels In this section you will be asked about the mechanisms you use for organisational learning on an international level. By this we mean mechanisms used to create new knowledge involving MANAGERS from different country operations or to transfer knowledge across the international organisation. E11. Thinking of [COMPANY NAME] in Denmark is there a formal policy on organisational learning? Yes in all operations... 1 Go to E12 Yes in some operations... 2 Go to E12 No... 3 Go to E13 Don t Know... 4 Go to E13 Page 13

137 Home-based questionnaire Denmark E12. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 IF ANSWERED YES TO E12: E13. To what extent is the organizational learning policy for the [COMPANY NAME] in Denmark and the worldwide company similar? Not at all similar Highly similar Don t know E14. Thinking about managers, do [COMPANY NAME] in Denmark use any of the following to facilitate international organisational learning? Yes No Don t Know Expatriate assignments International project groups or task forces International formal committees International informal networks Secondments to other organisations internationally (e.g. to suppliers, customers, universities, private R&D facilities) [ONLY ASK E15 IF MORE THAN ONE YES CODED IN E14. OTHERWISE GO TO E16] (E15. Which of these is the most important international organisational learning mechanism used by MANAGERS within [COMPANY NAME] in Denmark? Expatriate assignments International project groups or task forces... 2 International formal committees... 3 International informal networks... 4 Secondments to other organisations internationally (e.g. to suppliers, customers, universities, private R&D facilities)... 5 Don t know... 6 Page 14

138 Home-based questionnaire Denmark E16. Using the scale below, to what extent do operating companies outside of Denmark as a whole have discretion over the determination of the following training and development policies? The operating companies outside Denmark have Use codes 1-5 Don t N/A Know Training and development policy Policy on organisational learning Policy on succession planning for senior managers The operating companies outside Denmark have no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). The operating companies outside Denmark have a little discretion. The operating companies outside Denmark have some discretion (can develop policy within the guidelines/framework set by a higher organisational level). The operating companies outside Denmark have quite a lot of discretion. The operating companies outside Denmark have full discretion (can set own policy). N/A: There is no typical situation: the level of discretion varies widely across different overseas operations E17. Using the scale below, to what extent do [COMPANY NAME] in Denmark have discretion over determining the following training and development policies? The operating company in Denmark have Use codes 1-5 Don t N/A Know Training and development policy Policy on organisational learning Policy on succession planning for senior MANAGERS The operating company The operating company in Denmark have a little in Denmark have quite a discretion. lot of discretion. The operating company in Denmark have no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The operating company in Denmark have some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The operating company in Denmark have full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 15

139 Home-based questionnaire Denmark F. EMPLOYEE INVOLVEMENT AND COMMUNICATION This section is about policies on employee involvement and communication, starting with the involvement of employees in the work process. F1. Could you tell me whether you use the following practices in relation to the LOG in [COMPANY NAME] in Denmark? Yes No Don t Know Formally designated teams in which employees have responsibility for organising their work and carrying out a set of tasks Groups where employees discuss issues of quality, production or service delivery such as problem-solving or continuous improvement groups F2. Which of the following most closely corresponds to the pattern of employee involvement in [COMPANY NAME] in Denmark? An identical or similar pattern exists across all or most sites... 1 All or most sites have involvement systems, but they differ from site to site... 2 Some sites have involvement systems while others do not... 3 Not applicable (1 site only in Denmark]... 4 Don t Know... 5 F3. How important have each of the following been in providing examples of employee involvement that have been taken up in [COMPANY NAME] in Denmark? Specific practices elsewhere in the worldwide Not drawn on at all Source of very important examples company Formal model of good practice codified elsewhere in worldwide company Examples drawn from other firms F4. Does [COMPANY NAME] regularly use teamwork or other employee involvement practices in your operating companies outside Denmark? Yes... 1 No... 2 Don t Know... 3 F5. Would you say that practices in relation to employee involvement in the worldwide company are: Very similar across all operations Broadly similar but with some variations... 2 Similar to some extent but with substantial variations... 3 Fairly diverse Very diverse Don t know F6. Does [COMPANY NAME] regularly use project teams or task forces, embracing employees other than MANAGERS, that function across more than one operating unit in Denmark? Yes... 1 No... 2 N/A... 3 Don t Know... 4 IF F6 = YES ASK F7; IF NO, N/A OR DK GO TO F9 Page 16

140 Home-based questionnaire Denmark F7. Do these groups in Denmark also include employees from outside Denmark? Yes... 1 No... 2 NA... 3 Don t Know... 4 IF F7 = YES ASK F8; IF NO GO TO F9 F8. How common is the cross-national structure of these teams? Very rare Very common F9. Which of the following communication mechanisms are regularly used for the LOG within [COMPANY NAME] in Denmark? Meetings between senior MANAGERS Yes No Don t Know and the whole of the work force Meetings between line MANAGERS or supervisors and employees (sometimes called briefing groups) Attitude or opinion surveys Suggestion schemes Systematic use of management chain to cascade information Newsletters or s A company intranet providing information to employees F10. Which of the following types of information is regularly provided to the LOG within [COMPANY NAME] in Denmark? Yes No Don t Know Financial position of the company Investment plan for the company Staffing plans for the company F11. Which of the following types of information is regularly provided to the LOG within [COMPANY NAME] about the worldwide company? Yes No Don t Know Financial position of the company Investment plan for the company Staffing plans for the company F12. Are there project teams or task forces embracing employees other than MANAGERS that function across more than one operating unit, used in foreign operations? Yes... 1 No... 2 N/A... 3 Don t Know... 4 Page 17

141 Home-based questionnaire Denmark F13. Using the below scale, to what extent do the operating companies outside of Denmark have discretion over the determination of the following aspects of employee involvement and communication policy? The operating companies outside Denmark have Use codes 1-5 Don t N/A Know Involvement of employees in work process, e.g. team work or problem-solving groups Attitude or opinion surveys Suggestion schemes Provision of information to employees The operating companies outside Denmark have no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). The operating companies outside Denmark have a little discretion. The operating companies outside Denmark have some discretion (can develop policy within the guidelines/framework set by a higher organisational level). The operating companies outside Denmark have quite a lot of discretion. The operating companies outside Denmark have full discretion (can set own policy). N/A: There is no typical situation: the level of discretion varies widely across different overseas operations F14. Using the scale below, to what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following aspects of employee involvement and communication policy? The operating company in Denmark have Use codes 1-5 Don t N/A Know Involvement of employees in work process, e.g. team work or problem-solving groups Attitude or opinion surveys Suggestion schemes Provision of information to employees The operating company The operating company in Denmark have a little in Denmark have quite a discretion. lot of discretion. The operating company in Denmark have no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The operating company in Denmark have some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The operating company in Denmark have full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 18

142 Home-based questionnaire Denmark SECTION G. EMPLOYEE REPRESENTATION AND CONSULTATION The following questions are about employee representation, employee influence and unions. The questions aim to identify possible differences in cooperative culture in the countries in which your company is operating, and to elaborate if different kinds of cooperation influence HR-policies across borders. G1. How would you describe the policy of management towards union recognition within [COMPANY NAME] in Denmark? In favour of union recognition... 1 Not in favour of union recognition... 2 Neutral towards union recognition... 3 G2. Thinking of the company s operations outside Denmark, which of the following statements comes closest to capturing your policy towards trade unions? There is no policy... 1 It is general policy not to bargain with trade unions, either directly or indirectly through an employers association... We expect local management to follow the local practice in the industry 2 and/or locality... 3 It is general policy to bargain with trade unions, either directly or indirectly through an employers association... 4 Don t Know... 5 G3. Thinking of the LOG in [COMPANY NAME] in Denmark, are trade unions recognised for the purposes of collective employee representation at? No sites in the Danish operations... 1 All sites in the Danish operations... Most sites in the Danish operations Some sites in the Danish operations... 4 The company s single Danish site... 5 ASK G4 IF CODE 2,3, 4 OR 5 AT G3 IF CODE 1 AT G1 GO TO G5 G4. Are there any non-union based structure(s) of collective employee representation used? Tick all that apply Yes, at sites where there is no trade union recognition... 1 Yes, at sites where there is also trade union recognition... 1 No... 1 G5. Is there collective bargaining with trade unions over pay and major conditions (e.g. working time) at any of the following levels covering all or some of the [LOG NAME] within the [COMPANY NAME] in Denmark? Tick all that apply, multi-code only allowable for codes 2, 4, and 5 At Danish company level, covering all sites... 1 At the company s single Danish site... 1 Covering more than one, but not all Danish sites... 1 At individual site level... 1 At industry level, covering more than one employer... 1 There is no collective bargaining over pay... 1 Page 19

143 Home-based questionnaire Denmark G6. Thinking about trade unions in [COMPANY NAME] in Denmark, what approach do the trade union representatives generally adopt? A cooperative approach An adversarial approach It depends on the issue... 3 Don t Know ASK G7 IF CODED 2, 3, 4 OR 5 AT G3 (I.E. UNIONS RECOGNISED AT LEAST AT ONE SITE) G7. Using this rating scale, which best describes the policy towards working with unions on the following matters relating to the LOG: Management consults union representatives Management decides on its own Management decides jointly with union representatives Don t know Work organisation Sub-contracting and outsourcing Variable payments schemes In-work training/ upgrading skills Direct employee involvement schemes G8. Using the scale below, to what extent do operating companies outside Denmark have discretion over the setting of policy on relations with trade unions? The operating companies outside Denmark have Use codes 1-5 Don t N/A Know Union recognition Scope of union involvement in decision-making To what extent do operating companies outside Denmark have discretion over determining employee consultation policy The operating companies outside Denmark have no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). The operating companies outside Denmark have a little discretion. The operating companies outside Denmark have some discretion (can develop policy within the guidelines/framework set by a higher organisational level). The operating companies outside Denmark have quite a lot of discretion. The operating companies outside Denmark have full discretion (can set own policy). N/A: There is no typical situation: the level of discretion varies widely across different overseas operations Page 20

144 Home-based questionnaire Denmark G9. Using the scale below, to what extent does the [COMPANY NAME] in Denmark have discretion over setting the following elements of policy trade unions? The operating company in Denmark have... Use codes 1-5 Don t N/A Know Union recognition Scope of union involvement in decision-making To what extent do operating companies outside Denmark have discretion over determining employee consultation policy The operating company The operating company in Denmark have a little in Denmark have quite a discretion. lot of discretion. The operating company in Denmark have no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The operating company in Denmark have some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The operating company in Denmark have full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations G10. Are regular meetings held between management and representatives of employees at this level in [COMPANY NAME] in Denmark for the purpose of information provision and consultation? Help: By regular we mean: more than once a year. By this level we mean that for example Danish HQ calls in meetings with employee representatives from all the units in Denmark. Yes... 1 No... 2 Don t Know... 3 ASK G11 IF YES AT G10 [IF NO GO TO G12] G11. Do these meetings cover? All employees under a single arrangement... 1 All employees, but with different arrangements for different groups... Some groups of employees under a single arrangement Some groups of employees, but with different arrangements for different groups... 4 Other... 5 G12. Which of the following statements best describes management s relative emphasis in [COMPANY NAME] in Denmark on mechanisms for communicating and consulting with employees? Emphasis on direct communication and consultation... 1 Emphasis on indirect communication and consultation (e.g. through joint consultative committee or company council)... 2 Equivalent emphasis on direct and indirect communication and consultation... 3 G13. Does the worldwide company have experience of operating with mandatory employee consultation structures (e.g. works councils) that are required in some countries overseas? Yes 1 No 2 Don t Know 3 IF YES ASK G14, IF NO GO TO G15 Page 21

145 Home-based questionnaire Denmark G14. Which of the following statements comes closest to capturing the worldwide company s policy? There is no policy.. 1 Minimum compliance with legal requirements on employee information and consultation... 2 To go somewhat further than legal requirements... 3 To go considerably further than legal requirements... 4 Don t know... 5 G15. Over the past 3 years, has the EU Directive on Information and Consultation prompted any changes in arrangements for employee consultation in Denmark? Yes... 1 No... 2 Don t Know... 3 G16. Is there a European Works Council (EWC) or similar European-level structure which covers [COMPANY NAME] in Denmark? Yes... 1 Go to G17 No... 2 Go to H1 Don t Know 3 Go to H1 G17. Which of the following statements best describes the overall nature of the European Works Council in Denmark? Management provides minimal information required for compliance, there is little or no dialogue with employee representatives over issues; and no impact on decision outcomes... 1 Management provides information slightly beyond that required for compliance... 2 Management provides information somewhat beyond that required for compliance; there is a substantive dialogue with employee representatives on a limited range of issues; and a limited impact on decision outcomes... 3 Management provides information considerably beyond that required for compliance... 4 Management provides information far beyond that required for compliance; there is substantive dialogue with employee representatives over a wide range of issues; and an extensive impact on decision outcomes... 5 Don t Know... 6 G18. Do you receive information about the activity and meetings of the EWC? Systematically at the time of EWC meetings... 1 Periodically, on an as necessary basis... Little or no information about the EWC received Page 22

146 Home-based questionnaire Denmark This is the final section of the questionnaire. Section H: Company Performance H1. How would you compare performance of the [not answered] in Denmark over the past three years with that of other competitors in your sector? Poor Outstanding Quality of products/services Development of new products/services Profit generation Turnover Market share Ability to recruit essential employees Ability to retain essential employees Customer/client satisfaction Manager-employees relations General employee relations H2. Please rate the following series of statements about the role of the operations outside Denmark within the worldwide company. 1 = strongly disagree 2 = disagree 3 = neither agree nor disagree 4 = agree 5 = strongly agree The operations outside Denmark have international responsibility for one or more products or services on behalf of the worldwide company Significant expertise in R&D within the worldwide company is generated outside Denmark operations H3. How important is/are your overseas subsidiary/subsidiaries to the global performance of the parent company? Not at all important... 1 Of little importance... 2 Somewhat important... 3 Important... 4 Very important... 5 Don t know... 6 H4. Has this level of importance changed over the past five years? Significantly decreased... 1 Slightly decreased... 2 Stayed about the same... 3 Slightly increased... 4 Significantly increased... 5 Don t know... 6 Page 23

147 Home-based questionnaire Denmark H5. How would you assess? Poor Outstanding The job satisfaction of the employees at [COMPANY NAME] in Denmark? The ability of [COMPANY NAME] in Denmark to retain essential employees? The overall performance of the [COMPANY NAME] in Denmark? H6. How is the performance of the [COMPANY NAME] in Denmark relative to competitors? Poor Outstanding H7. Please rank the importance of the following factors in influencing decisions on new investments or new mandates for your [COMPANY NAME] in Denmark? 1 being the most important factor and 7 the least important factor. Rank Labour Availability... Labour costs... The industrial relations climate... Overall operating costs (NB should be: General infrastructure (e.g. transportation)... Overall operating costs... The capacity of the [COMPANY NAME] in Denmark to innovate development of goods, services and processes... Financial incentives (including taxes)... Thank you very much for taking the time to participate in this study. Please let us know if you are interested in Tick all that apply 1 Receiving a report benchmarking the employment practices of your company relative to the rest of the Danish sample 1 Participating in a seminar where in-depth results of the worldwide survey will be presented by leading researchers within International Human Resource Management. 1 Receiving the full result report Click "Finish" to submit the survey. Page 24

148 Foreign-based questionnaire Denmark SURVEY OF EMPLOYMENT PRACTICES OF MULTINATIONAL COMPANIES OPERATING IN DENMARK Foreign-based English version Please select a language: SECTION A: INTRODUCTION English... 1 Danish... 2 First page: EMPLOYMENT PRACTICES OF MULTINATIONAL COMPANIES Welcome to the survey! The completion of the survey is expected to take about minutes. You can stop any time, save your entries and resume the completion of the survey later. You can navigate forward and backward by using the arrows at the top and the bottom of the page. We highly recommend saving the survey after completion of each page. Thank you very much for taking the time to participate in this study. A1. Can you confirm that the company is wholly or majority foreign-owned? By majority owned we mean at least 50% is owned by a foreign-based company Yes... 1 No... 2 IF NO REVERT TO PAGE ASKING FOR CONTACT INFO Page for contact info: To the previous question you replied that your company is not majority Foreign owned (that at least 50% is owned by a Danish-based company). If this is correct, please write your below and we will invite you to the survey of Danish-owned firms. If your company is Foreign-owned please return to the previous page and correct your response to the previous question. [box name] [box ] If the ownership structure is more complicated please contact us by entering your message and below. Please click finish to submit your response. [box name] [box ] [box message] Thank you very much for taking the time to participate in this study. A2. What is the name of the Danish operations that you work for? By Danish operations we mean the operational units of the worldwide company located in Denmark. A3. What is the name of the ultimate controlling company you work for? [COMPANY NAME] Page 1

149 Foreign-based questionnaire Denmark A4. In which country is the operational head quarters of your ultimate controlling company located? A5. Are you located at? The global HQ of the worldwide company... 1 The HQ of the operating units in Denmark Other (please specify) A6. What is your job title? HR/Personnel Director HR/Personnel Senior Manager/ Manager... 2 HR/Personnel Senior Officer HR/Personnel Officer... HR/Personnel Executive HR/Personnel Assistant... 6 Other (please specify)... 7 A7. How long have you worked for the COMPANY IN DENMARK? Please write number of years A8. For which of the following policy levels do you have any HR responsibilities: Tick all that apply Global HR policy... 1 Regional HR policy... 1 HR policy in Denmark... 1 Other (please specify) 1 In the rest of the questionnaire when we ask you questions about [COMPANY NAME] in Denmark, we would like you to think of all operation units in Denmark. A9. In how many foreign countries does the company have operating sites? 1 country countries or more countries... 3 A10. Does [company name] in Denmark have? 1 site sites or more sites A11. What is the total number of employees worldwide including Denmark by headcount? Up to 99 employees employees employees ,000 4,999 employees , employees employees Page 2

150 Foreign-based questionnaire Denmark A12. What is the total number of employees by headcount in the following geographical regions? Denmark Europe (excluding Denmark) North America Asia-Pacific Rest of the world Up to 99 employees employees employees ,000 4,999 employees ,000 + employees None Don t know A13. Please estimate the approximate number of employees in [COMPANY NAME] in Denmark in each of the following core functions. Number Research & Development (R&D)... Manufacturing Operations... Sales and Marketing... Customer Service... Business Services (finance, IT, payroll, etc)... Other... A14. When was the worldwide company first established? Please write the year (year) A15. What year did it establish its first foreign operation? Thinking of the first significant investment outside of country of origin ignoring minor sales presence. (year) A16. What year did the worldwide company first establish in Denmark? Thinking of the first significant investment in Denmark - ignoring minor sales presence. A17. Was this through? (year) A Greenfield investment... 1 A merger or acquisition... 2 Other (please specify)... 3 A18. How many of the top five management positions in the [Company Name] in Denmark are filled by? Individuals who previously worked for the company in country of origin? None 1 Don t know 2 Number 3 Page 3

151 Foreign-based questionnaire Denmark Individuals from other parts of the world-wide company? i.e. outside Denmark but not the country of origin None 1 Don t know 2 Number 3 A19. To what degree (percentage) has the following changed in the worldwide company in the last 3 years? Can be both positive and negative. Only approximate numbers are necessary. Number of employees (%) Sales (%) A20. Approximately what percentage of revenues of [COMPANY NAME] comes from sales abroad? 0% % % % %... 5 Don t know... 6 A21. Is the worldwide company state or partly state owned? Yes... 1 No... 2 Don t Know... 3 A22. Is the worldwide company privately owned or are its shares publicly traded? Privately owned... 1 Publicly traded... 2 A23. Which of the following statements best describes the [COMPANY NAME] in Denmark? The company produces A single product or service that accounts for more than 90% of sales 1 A number of products and services but one of these accounts for between 70% and 90% of sales. 2 A number of products and services but no single one of these accounts for more than 70% of sales.. 3 A range of unrelated products and services.. 4 Don t know... 5 A24. Which of the following statements best describes the worldwide operations? The worldwide company produces A single product or service that accounts for more than 90% of sales 1 A number of products and services but one of these accounts for between 70% and 90% of sales. 2 A number of products and services but no single one of these accounts for more than 70% of sales.. 3 A range of unrelated products and services.. 4 A25. Is the worldwide company s most important product, service or brand (or group of products, services or brands)...? Help: With most important we want you to think of the product, service or brand that generates the most revenue. 5 Adapted significantly to national markets... 1 Adapted to different regions of the world but standardised within them... 2 Standardised globally... 3 Don t know Page 4

152 Foreign-based questionnaire Denmark A26. Are any of the components, products and services of [company name] in Denmark produced for operations of the worldwide company based outside Denmark? Yes all... 1 Yes some but not all... 2 No none... 3 Don t know... 4 A27. Do other parts of the worldwide company supply components, products or services to [company name] in Denmark? Yes... 1 No... 2 Don t know... 3 Page 5

153 Foreign-based questionnaire Denmark SECTION B: WORKFORCE COMPOSITION Throughout the questionnaire the focus will be on your policies and practices in relation to the following two main groups of staff: 1. Managers employees who primarily manage the organisation, or a department, subdivision, function, or component of the organisation and whose main tasks consist of the direction and coordination of the functioning of the organisation. In other words managers refer to those above the level of first-line supervision. 2. The LOG (largest occupational group) the largest non-managerial occupational group among the employees in the headcount in Denmark. For example, in a manufacturing business it might be semi-skilled operators, and in an insurance company it might be call centre staff. B1. Approximately how many managers are there in the [COMPANY NAME] in Denmark? Don t Know B2. Approximately, how many LOG are there in [company name] in Denmark? Help: This includes staff who works regularly, but excludes occasional staff. By regularly we mean there is a mutual expectation that the employee works on an ongoing basis for your company Don t Know Page 6

154 Foreign-based questionnaire Denmark SECTION C. THE HR FUNCTION C1. What percentage of the managers spend the majority of their time on HR matters in [COMPANY NAME] in Denmark? % C2. On which of the following issues is information on the operating units in Denmark monitored by management outside of Denmark? Help: BY A HIGHER ORGANIZATIONAL LEVEL WE MEAN E.G. SENIOR MANAGEMENT IN DENMARK, INTERNATIONAL BUSINESS HQ, EUROPEAN HQ (IN DENMARK OR ELSEWHERE) OR GLOBAL HQ. Please tick all that apply Managerial pay packages Management career progression... 1 Overall labour costs Numbers employed (headcount)... 1 Staff turnover Absenteeism... 1 Labour productivity... 1 Workforce composition by diversity (e.g. gender, ethnicity, disability etc.)... 1 Employee attitude and satisfaction None of these... 1 Don t know... 1 Other (please specify)... 1 C3. Is there a body within the worldwide company, such as a committee of senior managers, that develops HR policies that apply across countries? 1 Go to C4 2 Go to C5 3 Go to C5 C4. Is there someone from Denmark on this body/committee? Yes... 1 No C5. Are HR managers from different countries brought together in a systematic way? Yes on a global basis 1 Yes on a regional basis 2 No 3 4 C6. How frequently does contact between HR managers in different countries take place through any of the following mechanisms: Weekly Monthly Quarterly Annually Other Ad hoc Never Regular meetings International Conferences Task Forces Virtual Groups e.g. conference calls Page 7

155 Foreign-based questionnaire Denmark Now think about your company s approach concerning its management of employees. C7. To what extent do you agree or disagree with the following statements: Strongly Disagree Neither Agree Strongly N/A Don t Disagree agree nor Agree know disagree There is a worldwide approach covering all global operations There is a regional approach covering all European operations The development of a specific approach is left to international product, service or brand based divisions The development of a specific approach is left to national operating companies The approach is really a mix of the traditions of the different national operating companies Traditions in the country of origin have an overriding influence on the approach to the management of employees C8. Has [COMPANY NAME] in Denmark provided any new practices in the following areas that have been taken up elsewhere in the worldwide company: No Yes, in Yes, Yes, Don t few parts in major taken Know of the firm businesses up globally Pay and performance management Training, development and organisational learning Employee involvement and communication Employee representation and consultation Page 8

156 Foreign-based questionnaire Denmark SECTION D. PAY AND PERFORMANCE MANAGEMENT D1. Is there a system of regular formal appraisal for each of the following groups of employees in [COMPANY NAME] in Denmark? Yes No Don t know For LOG For managers IF NEITHER STAFF GROUP IS CODED YES IF ONLY ONE CODED YES IF BOTH STAFF GROUPS ARE CODED YES GO TO D7 GO TO D2 GO TO D2 D2. Is a forced distribution applied to the results of appraisals for the following employee groups in [COMPANY NAME] in Denmark? Help: By forced distribution we mean a certain % of employees have to be in a particular performance category or rating, e.g. 10% are poor performers, 70% are reasonable performers, and 20% are top performers Please include formal and informal policy. Yes No Don t know For LOG For managers IF NEITHER STAFF GROUP IS CODED YES IF ONLY ONE CODED YES IF BOTH STAFF GROUPS ARE CODED YES GO TO D4 GO TO D3 GO TO D3 D3. What is the top and bottom percentages of this forced distribution for each of the following employee groups in [COMPANY NAME] in Denmark? For LOG:... Top % Bottom % For managers:... Top % Bottom % Don t know (For managers Top)... 1 Don t know (For managers Bottom)... 1 Don t know (For LOG Top)... 1 Don t know (For LOG Bottom)... 1 D4. Is a formal system of 360-degree feedback used in evaluating performance of any of these groups of employees in [COMPANY NAME] in Denmark? [CODE ONE FOR EACH GROUP] Yes No Don t know For LOG For managers D5. Are the outcomes of performance appraisal used as inputs in decisions on redundancy and redeployment in the [COMPANY NAME] in Denmark? Yes, Yes, No N/A Don t know as a formal input as an informal input in decisions in decisions For LOG Name For managers Page 9

157 Foreign-based questionnaire Denmark D6. Thinking about the MANAGERS in [COMPANY NAME] in Denmark, on a scale of 1-5 how important are the following kinds of performance evaluation? Not at all important Very important Don t know Individual quantitative output targets (e.g. financial, numerical) Individual qualitative output targets (e.g. completion of a task) Group output targets (e.g. for site or business unit) Competences or personal skills (e.g. leadership or innovation skills) Behaviour in relation to corporate values D7. Does [Company Name] in Denmark offer employee share ownership, profit sharing or share options to any employees in each of these groups? Help: 1. Approved employee share ownership scheme is where the organisation establishes a trust which acquires shares on behalf of employees and provides employees with part ownership of the company. 2. Profit sharing refers to rewards given to employees in addition to normal salary and bonuses which are dependent on the levels of profit in the business. 3. Share options is where employees are given the option of buying company shares, often at a reduced rate Employee share ownership Profit Sharing Share Options Yes No Don t Yes No Don t Yes No Don t Know Know Know For LOG Employee share ownership Profit Sharing Share Options Yes No Don t Yes No Don t Yes No Don t Know Know Know For managers D8. Is there variable pay for the following groups in [COMPANY NAME] in Denmark? Help: By variable pay we mean merit pay, performance related pay, performance related bonuses or payment by results. Yes No Don t Know For [LOG Name] For managers IF YES FOR LOG AT D8, ASK D9, IF NO, GO TO D10 Page 10

158 Foreign-based questionnaire Denmark D9. For LOG receiving variable pay in [COMPANY NAME] in Denmark, how important are each of the following factors in determining variable pay? Not at all important Very important Don t know Individual performance Work group performance (e.g. team or departmental performance) Organizational performance (e.g. site, region, company) D10. To what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following aspects of pay and performance policy? Use codes 1-5 from Aspect of pay and performance policy Use codes 1-5 N/A Don t know Relating pay levels in [COMPANY NAME] in Denmark to market comparators (e.g. aiming to be in top quartile Employee share ownership schemes in [COMPANY NAME] in Denmark Performance appraisal system: For MANAGERS For LOG Variable payments scheme: For MANAGERS For LOG The [COMPANY NAME] in The [COMPANY NAME] in Denmark has a little Denmark has quite a lot discretion. of discretion. The [COMPANY NAME] in Denmark has no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The [COMPANY NAME] in Denmark has some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The [COMPANY NAME] in Denmark has full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 11

159 Foreign-based questionnaire Denmark E. TRAINING, DEVELOPMENT AND ORGANISATIONAL LEARNING E1. What percentage of the annual pay bill in [COMPANY NAME] in Denmark was spent on training and development for all employees over the past 12 months? 0%... 1 Up to 1%... 2 Over 1% and less than 4%... 3 Over 4%... 4 Don t Know 5 E2. Thinking of [COMPANY NAME] in Denmark is there a formal system of succession planning for senior managers? Yes in all operations... 1 Go to E3 Yes in some operations... 2 Go to E3 No... 3 Go to E4 Don t Know... 4 Go to E4 E3. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 E4. Does [COMPANY NAME] in Denmark have a management development programme specifically aimed at developing its high potentials or senior management potential? Yes in all operations... 1 Go to E5 Yes in some operations... 2 Go to E5 No... 3 Go to E6 Don t Know... 4 Go to E6 E5. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 E6. How extensively are each of the following techniques used for the development of these managers in [COMPANY NAME] in Denmark? Not used at all A little use Some use Used quite Used very extensively extensively Technique Use codes 1-5 Don t know Enter one code only N/A Short term International assignments (12 months or less) Long term international assignments (more than 12 months) Formal global management training Assessment of performance against a set of global management competencies Qualifications programme (e.g. MBA, professional qualifications) Page 12

160 Foreign-based questionnaire Denmark E7. How many expatriates from the company s foreign operations are currently working on long-term assignments (i.e. more than 12 months) in Denmark? Please include all types of long-term assignments for any purpose. Type 0 if none. Help: Expatriates in this question refers to employees from operating companies outside Denmark who are currently working on assignment in Denmark. Number. 2 Don t know. 1 E8. How many expatriates from [COMPANY NAME] in Denmark are currently working on long-term (i.e. more than 12 months) assignments overseas? Please include all types of long-term assignments for any purpose. Type 0 if none. Help: Expatriates in this question refers to employees of the company s operations in Denmark who are currently on assignment in operations of the worldwide company abroad. Number. 2 Don t know. 1 E9. To what extent do you agree with each of the following statements for LOG in [COMPANY NAME] in Denmark: Strongly Disagree Neither Agree Strongly Don t Disagree agree nor Agree know disagree On-the-job learning (experience gained on the job) is more valuable than off-the-job classroom training and development Investment in training is critical to either developing or retaining key skills in this company E10. To what extent do you agree with each of the following statements for MANAGERS in [COMPANY NAME] in Denmark: Our company favours internal promotion over Strongly Disagree Neither Agree Strongly Don t Disagree agree nor Agree know disagree external management recruitment International experience is a key criterion for career progression at senior levels Page 13

161 Foreign-based questionnaire Denmark In this section you will be asked about the mechanisms you use for organisational learning on an international level. By this we mean mechanisms used to create new knowledge involving MANAGERS from different country operations or to transfer knowledge across the international organisation. E11. Thinking of [COMPANY NAME] in Denmark is there a formal policy on organisational learning? Yes in all operations... 1 Go to E12 Yes in some operations... 2 Go to E12 No... 3 Go to E13 Don t Know... 4 Go to E13 E12. Is this system also used in other parts of the worldwide company? Yes in all operations... 1 Yes in some operations... 2 No... 3 Don t Know... 4 E13. To what extent is the organizational learning policy for the [COMPANY NAME] in Denmark and the worldwide company similar? Not at all similar Highly similar Don t know E14. Thinking about MANAGERS, do [COMPANY NAME] in Denmark use any of the following to facilitate international organisational learning? Yes No Don t Know Expatriate assignments International project groups or task forces International formal committees International informal networks Secondments to other organisations internationally (e.g. to suppliers, customers, universities, private R&D facilities) [ONLY ASK E15 IF MORE THAN ONE YES CODED IN E13. OTHERWISE GO TO E15] E15. Which of these is the most important international organisational learning mechanism used by managers within [COMPANY NAME] in Denmark? Expatriate assignments International project groups or task forces... 2 International formal committees... 3 International informal networks... 4 Secondments to other organisations internationally (e.g. to suppliers, customers, universities, private R&D facilities)... 5 Don t know... 6 Page 14

162 Foreign-based questionnaire Denmark E16. Using the scale below, to what extent do [company name] in Denmark have discretion over determining the following training and development policies? The operating company in Denmark have Use codes 1-5 Don t Know NA Training and development policy Policy on organisational learning Policy on succession planning for senior managers The [COMPANY NAME] in The [COMPANY NAME] in Denmark has a little Denmark has quite a lot discretion. of discretion. The [COMPANY NAME] in Denmark has no discretion (must implement policy set by a higher organizational level such as corporate or regional HQ). The [COMPANY NAME] in Denmark has some discretion (can develop policy within the guidelines/ framework set by a higher organisational level). The [COMPANY NAME] in Denmark has full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 15

163 Foreign-based questionnaire Denmark F. EMPLOYEE INVOLVEMENT AND COMMUNICATION This section is about policies on employee involvement and communication, starting with the involvement of employees in the work process. F1. Could you tell me whether you use the following practices in relation to the LOG in [COMPANY NAME] in Denmark? Formally designated teams in which employees have Yes No Don t Know responsibility for organising their work and carrying out a set of tasks Groups where employees discuss issues of quality, production or service delivery such as problem-solving or continuous improvement groups F2. Which of the following most closely corresponds to the pattern of employee involvement in [COMPANY NAME] in Denmark? An identical or similar pattern exists across all or most sites... 1 All or most sites have involvement systems, but they differ from site to site... 2 Some sites have involvement systems while others do not... 3 Not applicable (1 site only in Denmark]... 4 Don t Know F3. How important have each of the following been in providing examples of employee involvement that have been taken up in [COMPANY NAME] in Denmark? Not drawn Source of v. on at all important examples Specific practices elsewhere in the worldwide company Formal model of good practice codified elsewhere in worldwide company Examples drawn from other firms F4. Does the [COMPANY NAME] regularly use teamwork or other employee involvement practices in your operating companies outside Denmark? Yes... 1 No... 2 Don t Know... 3 F5. Would you say that practices in relation to employee involvement in the worldwide company are: Very similar across all operations Broadly similar but with some variations... 2 Similar to some extent but with substantial variations... Fairly diverse Very diverse Don t know F6. Does [company name] regularly use project teams or task forces, embracing employees other than managers, that function across more than one operating unit in Denmark? Yes... 1 No... 2 N/A... 3 Don t Know... 4 IF F6 = YES ASK F7; IF NO, N/A OR DK GO TO F9 Page 16

164 Foreign-based questionnaire Denmark F7. Do these groups in Denmark also include employees from outside Denmark? Yes... 1 No... 2 N/A... 3 Don t Know... 4 IF F7 = YES ASK F8; IF NO GO TO F9 F8. How common is the cross-national structure of these teams? Very rare Very common F9. Which of the following communication mechanisms are regularly used for the LOG within [COMPANY NAME] in Denmark? Meetings between senior MANAGERS and the whole of the Yes No Don t Know work force Meetings between line managers or supervisors and employees (sometimes called briefing groups) Attitude or opinion surveys Suggestion schemes Systematic use of management chain to cascade information Newsletters or s A company intranet providing information to employees F10. Which of the following types of information is regularly provided to the LOG within [COMPANY NAME] in Denmark? Yes No Don t Know Financial position of the company Investment plan for the company Staffing plans for the company F11. Which of the following types of information is regularly provided to the LOG within [COMPANY NAME] about the worldwide company? Yes No Don t Know Financial position of the company Investment plan for the company Staffing plans for the company F12. Are there project teams or task forces embracing employees other than managers that function across more than one operating unit, used in foreign operations? Yes... 1 No... 2 NA... 3 Don t Know... 4 Page 17

165 Foreign-based questionnaire Denmark F13. To what extent does [COMPANY NAME] in Denmark have discretion over the determination of the following aspects of employee involvement and communication policy.? The operating company in Denmark have Use codes 1-5 Don t Not Know Applicable Involvement of employees in work process, e.g. team work or problem-solving groups Attitude or opinion surveys Suggestion schemes Provision of information to employees [COMPANY NAME] in Denmark has no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). [COMPANY NAME] in Denmark has a little discretion. [COMPANY NAME] in Denmark has some discretion (can develop policy within the guidelines/framework set by a higher organisational level). [COMPANY NAME] in Denmark has quite a lot of discretion. [COMPANY NAME] in Denmark has full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. Page 18

166 Foreign-based questionnaire Denmark SECTION G. EMPLOYEE REPRESENTATION AND CONSULTATION The following questions are about employee representation, employee influence and unions. The questions aim to identify possible differences in cooperative culture in the countries in which your company is operating, and to elaborate if different kinds of cooperation influence HR-policies across borders. G1. How would you describe the policy of management towards union recognition within [COMPANY NAME] in Denmark? In favour of union recognition... 1 Not in favour of union recognition... 2 Neutral towards union recognition... 3 G2. Thinking of the LOG in [COMPANY NAME] in Denmark, are trade unions recognised for the purposes of collective employee representation at? No sites in the Danish operations... 1 All sites in the Danish operations... 2 Most sites in the Danish operations... 3 Some sites in the Danish operations... 4 The company s single Danish site... 5 ASK G3 IF CODED 2,3, 4 OR 5 AT G2, IF CODE 1 AT G2 GO TO G4 G3. Are there any non-union based structure(s) of collective employee representation used? Tick all that apply Yes, at sites where there is no trade union recognition... 1 Yes, at sites where there is also trade union recognition... No G4. Is there collective bargaining with trade unions over pay and major conditions (e.g. working time) at any of the following levels covering all or some of the [LOG NAME] within the [COMPANY NAME] in Denmark? Tick all that apply, multi-code only allowable for codes 2, 4, and 5 At Danish company level, covering all sites... 1 At the company s single Danish site... 1 Covering more than one, but not all Danish sites... 1 At individual site level... 1 At industry level, covering more than one employer... There is no collective bargaining over pay G5. Thinking about trade unions in the [COMPANY NAME] in Denmark, what approach do the trade union representatives generally adopt? A cooperative approach An adversarial approach It depends on the issue.... Don t Know ASK G6 IF CODED 2, 3, 4 OR 5 AT G2 (I.E. UNIONS RECOGNISED AT LEAST AT ONE SITE) Page 19

167 Foreign-based questionnaire Denmark G6. Using this rating scale, which best describes the policy towards working with unions on the following matters relating to the [LOG NAME]: Management consults union representatives Management decides on its own Management decides jointly with union representatives Don t know Work organisation Sub-contracting and outsourcing Variable payments schemes In-work training/ upgrading skills Direct employee involvement schemes G7. Using this rating scale, to what extent does the [COMPANY NAME] in Denmark have discretion over setting the following elements of policy trade unions? The operating company in Denmark have Use codes 1-5 Don t Not Know Applicable Union recognition Scope of union involvement in decision-making To what extent does [the [COMPANY NAME] outside Denmark have discretion over determining employee consultation policy? [COMPANY NAME] in Denmark has no discretion (must implement policy set by a higher organisational level such as corporate or regional HQ). [COMPANY NAME] in Denmark has a little discretion. [COMPANY NAME] in Denmark has some discretion (can develop policy within the guidelines/framework set by a higher organisational level). [COMPANY NAME] in Denmark has quite a lot of discretion. [COMPANY NAME] in Denmark has full discretion (can set own policy). N/A: There is no clear separation between higher levels of management (e.g. international business HQ, European HQ or global HQ) and management of the Danish operations. G8. Are regular meetings held between management and representatives of employees at this level in the [COMPANY NAME] in Denmark for the purpose of information provision and consultation? Help: By regular we mean: more than once a year By this level we mean that for example Danish HQ calls in meetings with employee representatives from all the units in Denmark Yes... 1 No... 2 Don t Know... 3 ASK G9 IF YES AT G8 [IF NO GO TO G10] Page 20

168 G9. Do these meetings cover? Foreign-based questionnaire Denmark All employees under a single arrangement... 1 All employees, but with different arrangements for different groups... 2 Some groups of employees under a single arrangement... 3 Some groups of employees, but with different arrangements for different groups... 4 Other G10. Which of the following statements best describes management s relative emphasis in the [COMPANY NAME] in Denmark on mechanisms for communicating and consulting with employees? Emphasis on direct communication and consultation... 1 Emphasis on indirect communication and consultation (e.g. through joint consultative committee or company council)... 2 Equivalent emphasis on direct and indirect communication and consultation... 3 G11. Does the worldwide company have experience of operating with mandatory employee consultation structures (e.g. works councils) that are required in some countries overseas? Yes 1 No 2 Don t Know 3 G12. Which of the following statements comes closest to capturing the worldwide company s policy? There is no policy.. 1 Minimum compliance with legal requirements on employee information and consultation... 2 To go somewhat further than legal requirements... 3 To go considerably further than legal requirements... Don t know G13. Over the past 3 years, has the EU Directive on Information and Consultation prompted any changes in arrangements for employee consultation in Denmark? Yes... 1 No... 2 Don t Know... 3 G14. Is there a European Works Council (EWC) or similar European-level structure which covers [COMPANY NAME] in Denmark? Yes... 1 Go to G19 No... 2 Go to H1 Don t Know 3 Go to H1 G15. Which of the following statements best describes the overall nature of the European Works Council in Denmark? Management provides minimal information required for compliance, there is little or no dialogue with employee representatives over issues; and no impact on decision outcomes... 1 Management provides information slightly beyond that required for compliance... 2 Management provides information somewhat beyond that required for compliance; there is a substantive dialogue with employee representatives on a limited range of issues; and a limited impact on decision outcomes... 3 Management provides information considerably beyond that required for compliance... 4 Management provides information far beyond that required for compliance; there is substantive dialogue with employee representatives over a wide range of issues; and an extensive impact on decision outcomes... 5 Don t Know... 6 Page 21

169 Foreign-based questionnaire Denmark G16. Do you receive information about the activity and meetings of the EWC? Systematically at the time of EWC meetings... 1 Periodically, on an as necessary basis... 2 Little or no information about the EWC received... 3 Page 22

170 Foreign-based questionnaire Denmark This is the final section of the questionnaire. Section H: Company Performance H1. How would you compare performance of the [not answered] in Denmark over the past three years with that of other competitors in your sector? Poor Outstanding Quality of products/services Development of new products/services Profit generation Turnover Market share Ability to recruit essential employees Ability to retain essential employees Customer/client satisfaction Manager-employees relations General employee relations H2. Please rate the following series of statements about the role of the [company name] in Denmark. 1 = strongly disagree 2 = disagree 3 = neither agree nor disagree 4 = agree 5 = strongly agree The [company name] in Denmark has international responsibility for one or more products or services on behalf of the worldwide company Significant expertise in R&D within the worldwide company is generated in the operations in [company name] in Denmark H3. How important is [company name] in Denmark to the global performance of the parent company? Not at all important... 1 Of little importance... 2 Somewhat important... 3 Important... 4 Very important... 5 Don t know... 6 H4. Has this level of importance changed over the past five years? Significantly decreased... 1 Slightly decreased... 2 Stayed about the same... 3 Slightly increased... 4 Significantly increased... 5 Don t know... 6 Page 23

171 Foreign-based questionnaire Denmark H5. How would you assess? Poor Outstanding The job satisfaction of the employees at [COMPANY NAME] in Denmark? The ability of [COMPANY NAME] in Denmark to retain essential employees? The overall performance of [COMPANY NAME] in Denmark? H6. How is the performance of [COMPANY NAME] in Denmark relative to competitors? Poor Outstanding H7. Please rank the importance of the following factors in influencing decisions on new investments or new mandates for your [COMPANY NAME] in Denmark? 1 being the most important factor and 7 the least important factor. Rank Labour Availability... Labour costs... The industrial relations climate... General infrastructure (e.g. transportation)... Overall operating costs... The capacity of the [COMPANY NAME] in Denmark to innovate in the development of goods, services and processes... Financial incentives (including taxes)... Thank you very much for taking the time to participate in this study. Please let us know if you are interested in Tick all that apply 1 Receiving a report benchmarking the employment practices of your company relative to the rest of the Danish sample 1 Participating in a seminar where in-depth results of the worldwide survey will be presented by leading researchers within International Human Resource Management. 1 Receiving the full result report Click "Finish" to submit the survey. Page 24

172 Appendix II: Frequencies Appendix II: Frequencies

173 Home based MNCs Here we include the total number of foreign based companies responded to our survey (31). Count Percent Please select a language: English 2 6,45 Danish 29 93,55 Can you confirm that the company is wholly or majority Danish owned? By "majority owned" we mean at least 5+% is owned by a Danish based company. Yes ,00 Are you located at? (Not Answered) 1 3,23 The global HQ of the worldwide company 25 80,65 The HQ of the opera ng units in Denmark 5 16,13 What is your job tle? (Not Answered) 2 6,45 HR/Personnel Director 15 48,39 HR/Personnel Senior MANAGER/ MANAGER 6 19,35 HR/Personnel Officer 2 6,45 HR/Personnel Execu ve 2 6,45 Other 4 12,90 For which of the following policy levels do you have any HR responsibili es Tick all that apply (Not Answered) 1 2,63 Global HR policy 18 47,37 Regional HR policy 3 7,89 HR policy in Denmark 14 36,84 Other 2 5,26 Total Responses ,00 % In how many foreign countries does the company have opera ng sites? 1 country 1 3, countries 7 22,58 6 or more countries 23 74,19 Does [NAME] in Denmark have? (Not Answered) 3 9,68 1 site 8 25, sites 9 29,03 6 or more sites 11 35,48 What is the total number of employees worldwide including Denmark by headcount? (Not Answered) 3 9, , , ,26 Denmark Up to , , , , ,45

174 Europe (excluding Denmark) (Not Answered) 1 3, , , , ,23 North America (Not Answered) 5 16,13 Up to , , , ,45 None 9 29,03 Dont know 1 3,23 Asia Pacific (Not Answered) 4 12,90 Up to , , , ,68 None 5 16,13 Dont know 1 3,23 Rest of the world (Not Answered) 7 22,58 Up to , , , ,45 None 7 22,58 Dont know 2 6,45 How many of the top five management posi ons in [NAME] in Denmark are filled by individuals from outside Denmark? (Not Answered) 1 3, , , ,23 None 21 67,74 Which of the following statements best describes [NAME] in Denmark? The company produces (Not Answered) 1 3,23 A single product or service that accounts for more than 90% of sales 3 9,68 A number of products and services but one of these accounts for between 70% and 90% of sales 3 9,68 A number of products and services but no single one of these 21 67,74 accounts for more than 70% of sales A range of unrelated products and services 2 6,45 Don't know 1 3,23

175 Which of the following statements best describes the worldwide opera ons? The worldwide company produces (Not Answered) 1 3,23 A single product or service that accounts for more than 90%of sales 2 6,45 A number of products and services but one of these accounts for between 70% and 90% of sales 5 16,13 A number of products and services but no single one of these accounts for more than 70% of sales 19 61,29 A range of unrelated products and services 2 6,45 Don't know 2 6,45 Is the worldwide company's most important product, service or brand (or group of products, services or brands)? (Not Answered) 1 3,23 Adapted significantly to na onal markets 6 19,35 Adapted to different regions of the world but standardisedwithin them 9 29,03 Standardised globally 14 45,16 Don't know 1 3,23 Are any of the components, products and services of [NAME] in Denmark produced for opera on of the worldwide company based outside Denmark? (Not Answered) 1 3,23 Yes all 2 6,45 Yes some but not all 24 77,42 No none 3 9,68 Don't know 1 3,23 Do other parts of the worldwide company supply components, products or services to [NAME] in Denmark? (Not Answered) 1 3,23 Yes 23 74,19 No 7 22,58 Approximately what percentage of revenues of [NAME] comes fromsales abroad? (Not Answered) 4 12, % 3 9, % 3 9, % 7 22, % 11 35,48 Don't know 3 9,68 Is the worldwide company state or partly state owned? (Not Answered) 1 3,23 Yes 1 3,23 No 29 93,55 Is the worldwide company privately owned or are its shares publicly traded? (Not Answered) 1 3,23 Privately owned 19 61,29 Publicly traded 11 35,48 Approximately, how many MANAGERS are there in [NAME] in Denmark? , , , , , ,68 1, ,45

176 Approximately, how many LOG are there in [NAME] in Denmark? (Not Answered) 1 3, , , , , , , ,68 1, ,26 5, ,23 Don't Know 1 3,23 On which of the following issues is informa on on the opera ng units in Denmark monitored by managment in a higher organizational level? Please tick all that apply Managerial pay packages 28 14,74 Management career progression 24 12,63 Overall labour costs 26 13,68 Numbers employed (headcount) 27 14,21 Staff turnover 18 9,47 Absenteeism 20 10,53 Labour produc vity 14 7,37 Workforce composi on by diversity (e.g. gender, ethnicity,disability etc.) 10 5,26 Employee a tude and sa sfac on 22 11,58 Don't know 1 0,53 Total Responses ,00 % On which of the following issues is informa on on the opera ng units outside Denmark monitored by managment in a higher organizational level? Please tick all that apply Managerial pay packages 26 16,99 Management career progression 22 14,38 Overall labour costs 24 15,69 Numbers employed (headcount) 23 15,03 Staff turnover 13 8,50 Absenteeism 9 5,88 Labour produc vity 10 6,54 Workforce composi on by diversity (e.g. gender, ethnicity,disability etc.) 6 3,92 Employee a tude and sa sfac on 17 11,11 None of these 1 0,65 Don't know 1 0,65 Other 1 0,65 Total Responses ,00 % Is there a body within the worldwide company, such as a commi ee of senior managers, that develops HR policies that apply across countries? (Not Answered) 1 3,23 Yes 18 58,06 No 12 38,71 Is there someone from outside Denmark on this body/commi ee? (Not Answered) 15 48,39 Yes 13 41,94 No 3 9,68 Are HR managers from different countries brought together in a systema c way? Yes on a global basis 15 48,39 Yes on a regional basis 3 9,68 No 13 41,94

177 Regular mee ngs (Not Answered) 4 12,90 Weekly 1 3,23 Monthly 6 19,35 Quarterly 5 16,13 Annually 3 9,68 Other 1 3,23 Ad hoc 3 9,68 Never 8 25,81 Interna onal Conferences (Not Answered) 3 9,68 Annually 7 22,58 Other 3 9,68 Ad hoc 4 12,90 Never 14 45,16 Task Forces (Not Answered) 2 6,45 Weekly 2 6,45 Monthly 1 3,23 Quarterly 3 9,68 Annually 1 3,23 Other 1 3,23 Ad hoc 11 35,48 Never 10 32,26 Virtual Groups e.g. conference calls (Not Answered) 2 6,45 Weekly 2 6,45 Monthly 4 12,90 Quarterly 5 16,13 Other 1 3,23 Ad hoc 5 16,13 Never 12 38,71 There is a worldwide approach covering all global opera ons (Not Answered) 1 3, , , , , ,58 N/A 3 9,68 Don't know 2 6,45 There is a regional approach covering all European opera ons (Not Answered) 1 3, , , , , ,90 N/A 5 16,13 Don't know 1 3,23

178 The development of a specific approach is le to interna onal product, service or brand based divisions (Not Answered) 2 6, , , , , ,13 N/A 3 9,68 Don't know 1 3,23 The development of a specific approach is le to na onal opera ng companies (Not Answered) 1 3, , , , , ,13 N/A 1 3,23 Don't know 1 3,23 The approach is really a mix of the tradi ons of the different na onal opera ng companies (Not Answered) 2 6, , , , , ,68 N/A 2 6,45 Don't know 1 3,23 Tradi ons in the country of origin have an overriding influence on the approach to the management of employees (Not Answered) 1 3, , , , , ,13 N/A 1 3,23 Don't know 2 6,45 Pay and performance management (Not Answered) 2 6,45 No 14 45,16 Yes, in few parts of the firm 7 22,58 Yes, in major businesses 2 6,45 Yes, taken up globally 2 6,45 Don't know 4 12,90 Training, development and organisa onal learning (Not Answered) 1 3,23 No 19 61,29 Yes, in few parts of the firm 7 22,58 Yes, taken up globally 2 6,45 Don't know 2 6,45

179 Employee involvement and communica on (Not Answered) 2 6,45 No 15 48,39 Yes, in few parts of the firm 8 25,81 Yes, in major businesses 1 3,23 Yes, taken up globally 3 9,68 Don't know 2 6,45 Employee representa on and consulta on (Not Answered) 3 9,68 No 18 58,06 Yes, in few parts of the firm 2 6,45 Yes, in major businesses 2 6,45 Yes, taken up globally 3 9,68 Don't know 3 9,68 For LOG Yes 15 48,39 No 15 48,39 Don't know 1 3,23 For MANAGERS (Not Answered) 1 3,23 Yes 19 61,29 No 11 35,48 For LOG (Not Answered) 12 38,71 Yes 6 19,35 No 9 29,03 Don't know 4 12,90 For MANAGERS (Not Answered) 14 45,16 Yes 6 19,35 No 7 22,58 Don't know 4 12,90 For LOG Don't know (Not Answered) 27 77,14 Top 4 11,43 Bo om 4 11,43 Total Responses ,00 % For MANAGERS Don't know (Not Answered) 28 82,35 Top 3 8,82 Bo om 3 8,82 Total Responses ,00 % For LOG (Not Answered) 12 38,71 Yes, as a formal input in decisions 4 12,90 Yes, as an informal input in decisions 11 35,48 No 4 12,90

180 For MANAGERS (Not Answered) 11 35,48 Yes, as a formal input in decisions 6 19,35 Yes, as an informal input in decisions 12 38,71 No 2 6,45 Individual quan ta ve output targets (e.g. financial, numerical) (Not Answered) 11 35, , , , ,26 Individual qualita ve output targets (e.g. comple on of a task) (Not Answered) 11 35, , , ,58 Group output targets (e.g. for site or business unit) (Not Answered) 11 35, , , , , ,03 Competences' or personal skills (e.g. leadership or innova on skills) (Not Answered) 12 38, , , , , ,45 Behaviour in rela on to corporate 'values' (Not Answered) 11 35, , , , , ,13 For LOG (Not Answered) 11 35,48 Yes 8 25,81 No 12 38,71 For MANAGERS (Not Answered) 11 35,48 Yes 12 38,71 No 8 25,81 For LOG Employee share ownership (Not Answered) 5 16,13 Yes 8 25,81 No 18 58,06

181 Profit Sharing (Not Answered) 6 19,35 Yes 3 9,68 No 21 67,74 Don't know 1 3,23 Share Op ons (Not Answered) 5 16,13 Yes 6 19,35 No 19 61,29 Don't know 1 3,23 For MANAGERS Employee share ownership (Not Answered) 5 16,13 Yes 8 25,81 No 17 54,84 Don't know 1 3,23 Profit Sharing (Not Answered) 6 19,35 Yes 7 22,58 No 15 48,39 Don't know 3 9,68 Share Op ons (Not Answered) 4 12,90 Yes 9 29,03 No 16 51,61 Don't know 2 6,45 For LOG Yes 15 48,39 No 16 51,61 For MANAGERS Yes 25 80,65 No 6 19,35 Individual performance (Not Answered) 16 51, , , ,03 Work group performance (e.g. team or departmental performance) (Not Answered) 16 51, , , , , ,58

182 Organiza onal performance (e.g. site, region, company) (Not Answered) 16 51, , , , , ,13 Rela ng pay levels in [NAME] in Denmark to market comparators (e.g. aiming to be in top quar le) (Not Answered) 2 6,45... no discre on 8 25,81... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 3 9,68... full discre on 2 6,45 Don't know 5 16,13 N/A 4 12,90 Employee share ownership schemes in [NAME] in Denmark (Not Answered) 2 6,45... no discre on 12 38,71... a li le discre on 2 6,45... some discre on 2 6,45... quite a lot of discre on 1 3,23... full discre on 1 3,23 Don't know 7 22,58 N/A 4 12,90 Performance appraisal system: For MANAGERS (Not Answered) 1 3,23... no discre on 8 25,81... a li le discre on 2 6,45... some discre on 6 19,35... full discre on 4 12,90 Don't know 5 16,13 N/A 5 16,13 Variable payments scheme: For MANAGERS (Not Answered) 2 6,45... no discre on 5 16,13... a li le discre on 1 3,23... some discre on 7 22,58... quite a lot of discre on 3 9,68... full discre on 3 9,68 Don't know 5 16,13 N/A 5 16,13 Performance appraisal system: For LOG (Not Answered) 2 6,45... no discre on 7 22,58... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 1 3,23... full discre on 4 12,90 Don't know 6 19,35 N/A 4 12,90

183 Variable payments scheme: For LOG (Not Answered) 1 3,23... no discre on 7 22,58... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 1 3,23... full discre on 4 12,90 Don't know 6 19,35 N/A 5 16,13 Rela ng pay levels in [NAME] in Denmark to market comparators(e.g. aiming to be in top quar le)... no discre on 1 3,23... a li le discre on 1 3,23... some discre on 3 9,68... quite a lot of discre on 9 29,03... full discre on 13 41,94 Don't know 3 9,68 N/A 1 3,23 Employee share ownership schemes in [NAME] in Denmark (Not Answered) 2 6,45... no discre on 7 22,58... a li le discre on 1 3,23... some discre on 1 3,23... quite a lot of discre on 2 6,45... full discre on 9 29,03 Don't know 3 9,68 N/A 6 19,35 Performance appraisal system: For MANAGERS... no discre on 2 6,45... some discre on 2 6,45... quite a lot of discre on 7 22,58... full discre on 15 48,39 Don't know 2 6,45 N/A 3 9,68 Variable payments scheme: For MANAGERS... no discre on 1 3,23... a li le discre on 1 3,23... some discre on 3 9,68... quite a lot of discre on 8 25,81... full discre on 12 38,71 Don't know 2 6,45 N/A 4 12,90 Performance appraisal system: For LOG... no discre on 3 9,68... some discre on 2 6,45... quite a lot of discre on 6 19,35... full discre on 14 45,16 Don't know 2 6,45 N/A 4 12,90

184 Variable payments scheme: For LOG... no discre on 4 12,90... a li le discre on 1 3,23... some discre on 3 9,68... quite a lot of discre on 5 16,13... full discre on 10 32,26 Don't know 2 6,45 N/A 6 19,35 What percentage of the annual pay bill in [NAME] in Denmark was spent on training and development for all employees over the past 12 months? (Not Answered) 2 6,45 0% 1 3,23 Up to 1% 10 32,26 Over 1% and less than 4% 14 45,16 Don't Know 4 12,90 Thinking of [NAME] in Denmark is there a formal system of succession planning for senior managers? Yes in all opera ons 5 16,13 Yes in some opera ons 7 22,58 No 16 51,61 Don't Know 3 9,68 Is this system also used in other parts of the worldwide company? (Not Answered) 19 61,29 Yes in all opera ons 3 9,68 Yes in some opera ons 8 25,81 Don't Know 1 3,23 Does [NAME] in Denmark have a management development programme specifically aimed at developing its high potentials' or senior management potential? Yes in all opera ons 12 38,71 Yes in some opera ons 8 25,81 No 9 29,03 Don't Know 2 6,45 Is this system also used in other parts of the worldwide company? (Not Answered) 12 38,71 Yes in all opera ons 7 22,58 Yes in some opera ons 10 32,26 No 2 6,45 Short term Interna onal assignments (12 months or less) (Not Answered) 1 3, , , , , ,45 Don't know 1 3,23

185 Long term interna onal assignments (more than 12 months) (Not Answered) 1 3, , , , , ,23 Don't know 1 3,23 Formal global management training , , , , ,13 Don't know 1 3,23 N/A 2 6,45 Assessment of performance against a set of global management competencies , , , , ,13 Don't know 1 3,23 N/A 3 9,68 Qualifica ons programme (e.g. MBA, professional qualifica ons) 1 3 9, , , , ,45 Don't know 1 3,23 How many expatriates from the company's foreign opera ons are currently working on longterm assignments (i.e. more than 12 months) in Denmark? Please include all types of long term assignments for any purpose. Type 0 if none (Not Answered) 4 12,90 Don't know 6 19,35 Number 21 67,74 How many expatriates from [NAME] in Denmark are currently working on long term overseas? (i.e. more than 12 months) assignments Please include all types of long term assignments for any purpose. Type 0 if none. (Not Answered) 7 22,58 Don't know 5 16,13 Number 19 61,29 Thinking of [NAME] in Denmark is there a formal policy on organisa onal learning? Yes in all opera ons 6 19,35 Yes in some opera ons 6 19,35 No 19 61,29

186 Is this system also used in other parts of the worldwide company? (Not Answered) 19 61,29 Yes in all opera ons 5 16,13 Yes in some opera ons 6 19,35 No 1 3,23 Our company favours internal promo on over external management recruitment 1 1 3, , , , ,35 Interna onal experience is a key criterion for career progression at senior levels 1 2 6, , , , ,35 On the job learning (experience gained on the job) is more valuable than off the job classroom training and development 1 1 3, , , ,26 Don't know 1 3,23 Investment in training is cri cal to either developing or retaining key skills in this company 1 1 3, , , , ,48 To what extent is the organiza onal learning policy for [NAME] in Denmark and the worldwide company similar? 1 = Not at all similar 5 = Highly similar (Not Answered) 6 19, , , , , ,90 Don't Know 12 38,71 Expatriate assignments Yes 22 70,97 No 9 29,03 Interna onal project groups or task forces Yes 25 80,65 No 5 16,13 Don't Know 1 3,23 Interna onal formal commi ees Yes 11 35,48 No 16 51,61 Don't Know 4 12,90

187 Interna onal informal networks Yes 21 67,74 No 9 29,03 Don't Know 1 3,23 Secondments to other organisations internationally (e.g. to suppliers, customers, universities, private R&D facilities) (Not Answered) 2 6,45 Yes 4 12,90 No 22 70,97 Don't Know 3 9,68 Which of these is the most important interna onal organisa onal learning mechanism used by MANAGERS within [NAME] in Denmark? (Not Answered) 3 9,68 Expatriate assignments 7 22,58 Interna onal project groups or task forces 17 54,84 Interna onal formal commi ees 1 3,23 Secondments to other organisa ons interna onally (e.g. tosuppliers, custom 1 3,23 Don't know 2 6,45 Training and development policy (Not Answered) 2 6,45... no discre on 1 3,23... a li le discre on 3 9,68... some discre on 6 19,35... quite a lot of discre on 9 29,03... full discre on 6 19,35 Don't know 1 3,23 N/A 3 9,68 Training and development policy Policy on organisa onal learning (Not Answered) 2 6,45... no discre on 2 6,45... a li le discre on 5 16,13... some discre on 4 12,90... quite a lot of discre on 7 22,58... full discre on 7 22,58 Don't know 1 3,23 N/A 3 9,68 Policy on succession planning for senior managers (Not Answered) 2 6,45... no discre on 2 6,45... a li le discre on 4 12,90... some discre on 4 12,90... quite a lot of discre on 5 16,13... full discre on 6 19,35 Don't know 3 9,68 N/A 5 16,13

188 Training and development policy (Not Answered) 1 3,23... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 9 29,03... full discre on 13 41,94 N/A 1 3,23 Policy on organisa onal learning (Not Answered) 1 3,23... no discre on 1 3,23... a li le discre on 3 9,68... some discre on 3 9,68... quite a lot of discre on 9 29,03... full discre on 13 41,94 N/A 1 3,23 Policy on succession planning for senior MANAGERS (Not Answered) 1 3,23... no discre on 1 3,23... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 8 25,81... full discre on 11 35,48 Don't know 1 3,23 N/A 2 6,45 Formally designated teams in which employees have responsibility for organising their work and carrying out a set of tasks Yes 22 70,97 No 7 22,58 Don t Know 2 6,45 Groups where employees discuss issues of quality, produc on or service delivery such as problem solving or continuous improvement groups Yes 18 58,06 No 8 25,81 Don t Know 5 16,13 Which of the following most closely corresponds to the pa ern of employee involvement in [NAME] in Denmark? An iden cal or similar pa ern exists across all or most sites 9 29,03 All or most sites have involvement systems, but they differfrom site to site 11 35,48 Some sites have involvement systems while others do not 3 9,68 Not applicable (1 site only in Denmark) 1 3,23 Don't Know 7 22,58 Specific prac ces elsewhere in the worldwide company (Not Answered) 4 12, , , , , ,23

189 Formal model of good prac ce codified elsewhere in worldwide company (Not Answered) 4 12, , , , , ,23 Examples drawn from other firms (Not Answered) 3 9, , , , , ,23 Does [NAME] regularly use teamwork or other employee involvement prac ces in your opera ng companies outside Denmark? (Not Answered) 1 3,23 Yes 18 58,06 No 7 22,58 Don't Know 5 16,13 Would you say that prac ces in rela on to employee involvement inthe worldwide company are: (Not Answered) 1 3,23 Very similar across all opera ons 2 6,45 Broadly similar but with some varia ons 6 19,35 Similar to some extent but with substan al varia ons 7 22,58 Fairly diverse 11 35,48 Very diverse 2 6,45 Don't Know 2 6,45 Does [NAME] regularly use project teams or task forces, embracing employees other than MANAGERS, that function across more than one operating unit in Denmark? Yes 22 70,97 No 3 9,68 N/A 2 6,45 Don't Know 4 12,90 Do these groups in Denmark also include employees from outsidedenmark? (Not Answered) 10 32,26 Yes 16 51,61 No 2 6,45 N/A 1 3,23 Don't Know 2 6,45 How common is the cross na onal structure of these teams?1=very rare... 5=Very common (Not Answered) 16 51, , , , ,68

190 Are there project teams or task forces embracing employees other than MANAGERS that func on across more than one operating unit, used in foreign operations? (Not Answered) 1 3,23 Yes 14 45,16 No 7 22,58 N/A 2 6,45 Don't Know 7 22,58 Mee ngs between senior MANAGERS and the whole of the workforce (Not Answered) 1 3,23 Yes 23 74,19 No 6 19,35 Don't know 1 3,23 Mee ngs between line MANAGERS or supervisors and employees (some mes called briefing groups) (Not Answered) 1 3,23 Yes 27 87,10 No 3 9,68 A tude or opinion surveys Yes 20 64,52 No 11 35,48 Sugges on schemes (Not Answered) 3 9,68 Yes 13 41,94 No 14 45,16 Don't know 1 3,23 Systema c use of management chain to cascade informa on (Not Answered) 2 6,45 Yes 20 64,52 No 5 16,13 Don't know 4 12,90 Newsle ers or s Yes 28 90,32 No 3 9,68 A company intranet providing informa on to employees' Yes 26 83,87 No 4 12,90 Don't know 1 3,23 Financial posi on of the company Yes 30 96,77 No 1 3,23 Investment plan for the company Yes 12 38,71 No 16 51,61 Don't know 3 9,68 Staffing plans for the company Yes 11 35,48 No 19 61,29 Don't know 1 3,23

191 Financial posi on of the company (Not Answered) 2 6,45 Yes 27 87,10 No 2 6,45 Investment plan for the company (Not Answered) 2 6,45 Yes 8 25,81 No 17 54,84 Don't know 4 12,90 Staffing plans for the company (Not Answered) 2 6,45 Yes 6 19,35 No 20 64,52 Don't know 3 9,68 Involvement of employees in work process, e.g. team work or problem solving groups (Not Answered) 1 3,23... no discre on 3 9,68... a li le discre on 1 3,23... some discre on 2 6,45... quite a lot of discre on 4 12,90... full discre on 16 51,61 Don't know 1 3,23 N/A 3 9,68 A tude or opinion surveys (Not Answered) 2 6,45... no discre on 5 16,13... a li le discre on 6 19,35... some discre on 1 3,23... quite a lot of discre on 4 12,90... full discre on 10 32,26 Don't know 1 3,23 N/A 2 6,45 Sugges on schemes (Not Answered) 1 3,23... no discre on 2 6,45... a li le discre on 2 6,45... some discre on 1 3,23... quite a lot of discre on 3 9,68... full discre on 18 58,06 Don't know 2 6,45 N/A 2 6,45 Provision of informa on to employees (Not Answered) 1 3,23... no discre on 3 9,68... a li le discre on 1 3,23... some discre on 2 6,45... quite a lot of discre on 6 19,35... full discre on 15 48,39 Don't know 1 3,23 N/A 2 6,45

192 Involvement of employees in work process, e.g. team work orproblem solving groups... no discre on 3 9,68... a li le discre on 2 6,45... some discre on 2 6,45... quite a lot of discre on 6 19,35... full discre on 17 54,84 N/A 1 3,23 A tude or opinion surveys... no discre on 4 12,90... a li le discre on 7 22,58... quite a lot of discre on 4 12,90... full discre on 13 41,94 N/A 3 9,68 Sugges on schemes (Not Answered) 1 3,23... no discre on 1 3,23... a li le discre on 4 12,90... quite a lot of discre on 4 12,90... full discre on 17 54,84 Don't know 1 3,23 N/A 3 9,68 Provision of informa on to employees (Not Answered) 1 3,23... no discre on 2 6,45... a li le discre on 2 6,45... some discre on 2 6,45... quite a lot of discre on 5 16,13... full discre on 17 54,84 N/A 2 6,45 Thinking of the LOG in [NAME] in Denmark, are trade unions recognised for the purposes of collec ve employee representationat? No sites in the Danish opera ons 4 12,90 All sites in the Danish opera ons 18 58,06 Most sites in the Danish opera ons 1 3,23 Some sites in the Danish opera ons 3 9,68 The company's single Danish site 5 16,13 Are there any non union based structure(s) of collec ve employeerepresenta on used Tick all that apply (Not Answered) 8 25,00 Yes, at sites where there is no trade union recogni on 1 3,13 Yes, at sites where there is also trade union recogni on 11 34,38 No 12 37,50 Total Responses ,00 % How would you describe the policy of management towards union recogni on within [NAME] in Denmark? In favour of union recogni on 16 51,61 Not in favour of union recogni on 2 6,45 Neutral towards union recogni on 13 41,94

193 Thinking of the company's opera ons outside Denmark, which of the following statements comes closest to capturing you policy towards trade unions? (Not Answered) 1 3,23 There is no policy 9 29,03 We expect local management to follow the local prac ce inthe industry and 14 45,16 It is general policy to bargain with trade unions, eitherdirectly or indirectly t 5 16,13 Don't Know 2 6,45 Is there collec ve bargaining with trade unions over pay and major condi ons (e.g. working me) at any of the following levels covering all or some of the LOG within [NAME] in Denmark? Tick all that apply (Not Answered) 2 6,06 At Danish company level, covering all sites 8 24,24 At the company's single Danish site 2 6,06 Covering more than one, but not all Danish sites 4 12,12 At individual site level 4 12,12 At industry level, covering more than one employer 1 3,03 There is no collec ve bargaining over pay 12 36,36 Total Responses ,00 % Thinking about trade unions in [NAME] in Denmark, what approach do the trade union representa ves generally adopt? A coopera ve approach 18 58,06 It depends on the issue 10 32,26 Don't Know 3 9,68 Work organisa on (Not Answered) 4 12, , , , , ,45 Don't know 3 9,68 Sub contrac ng and outsourcing (Not Answered) 4 12, , , , ,23 Don't know 5 16,13 Variable payments schemes (Not Answered) 4 12, , , , , ,58 Don't know 3 9,68 In work training/ upgrading skills (Not Answered) 5 16, , , , , ,68 Don't know 2 6,45

194 Direct employee involvement schemes (Not Answered) 4 12, , , , , ,45 Don't know 4 12,90 Union recogni on (Not Answered) 2 6,45... no discre on 3 9,68... a li le discre on 2 6,45... some discre on 5 16,13... quite a lot of discre on 2 6,45... full discre on 13 41,94 Don't know 2 6,45 N/A 2 6,45 Scope of union involvement in decision making (Not Answered) 2 6,45... no discre on 3 9,68... a li le discre on 2 6,45... some discre on 4 12,90... quite a lot of discre on 4 12,90... full discre on 11 35,48 Don't know 2 6,45 N/A 3 9,68 To what extent do opera ng companies outside Denmark have discre on over determining employee consultation policy? (Not Answered) 2 6,45... no discre on 2 6,45... a li le discre on 4 12,90... some discre on 4 12,90... quite a lot of discre on 4 12,90... full discre on 11 35,48 Don't know 2 6,45 N/A 2 6,45 Union recogni on (Not Answered) 1 3,23... no discre on 2 6,45... a li le discre on 1 3,23... some discre on 3 9,68... quite a lot of discre on 3 9,68... full discre on 18 58,06 Don't know 1 3,23 N/A 2 6,45 Scope of union involvement in decision making (Not Answered) 1 3,23... no discre on 2 6,45... a li le discre on 1 3,23... some discre on 3 9,68... quite a lot of discre on 3 9,68... full discre on 18 58,06 Don't know 1 3,23

195 N/A 2 6,45 To what extent do opera ng companies outside Denmark have discre on over determining employee consultation policy? (Not Answered) 2 6,45... no discre on 1 3,23... a li le discre on 3 9,68... some discre on 3 9,68... quite a lot of discre on 5 16,13... full discre on 14 45,16 Don't know 1 3,23 N/A 2 6,45 Do you receive informa on about the ac vity and mee ngs of theewc? (Not Answered) 27 87,10 Systema cally at the me of EWC mee ngs 2 6,45 Li le or no informa on about the EWC received 2 6,45 Which of the following statements best describes the overall nature of the European Works Council in Denmark? (Not Answered) 26 83,87 Management provides informa on somewhat beyond thatrequired for com 2 6,45 Management provides informa on considerably beyond thatrequired for co 2 6,45 Management provides informa on far beyond that requiredfor compliance 1 3,23 Is there a European Works Council (EWC) or similar European level structure which covers [NAME] in Denmark? (Not Answered) 2 6,45 Yes 5 16,13 No 18 58,06 Don't know 6 19,35 Over the past 3 years, has the EU Direc ve on Informa on and Consulta on prompted any changes in arrangements for employee consultation in Denmark? (Not Answered) 2 6,45 Yes 3 9,68 No 13 41,94 Don't know 13 41,94 Does the worldwide company have experience of opera ng with mandatory employee consulta on structures (e.g. works councils) that are required in some countries overseas? (Not Answered) 1 3,23 Yes 15 48,39 No 10 32,26 Don't know 5 16,13 Do these mee ngs cover...? (Not Answered) 7 22,58 All employees under a single arrangement 12 38,71 All employees, but with different arrangements for differentgroups 9 29,03 Some groups of employees under a single arrangement 2 6,45 Other 1 3,23 Which of the following statements best describes management's rela ve emphasis in [NAME] in Denmark on mechanisms for communicating and consulting with employees? Emphasis on direct communica on and consulta on 18 58,06 Emphasis on indirect communica on and consulta on (e.g.through joint co 4 12,90 Equivalent emphasis on direct and indirect communica onand consulta on 9 29,03

196 Which of the following statements comes closest to capturing the worldwide company's policy? (Not Answered) 16 51,61 There is no policy 3 9,68 Minimum compliance with legal requirements on employeeinforma on and 5 16,13 To go somewhat further than legal requirements 5 16,13 To go considerably further than legal requirements 2 6,45 Are regular mee ngs held between management and representa ves of employees at this level in [NAME] in Denmark for the purpose of information provision and consultation? Yes 24 77,42 No 6 19,35 Don't know 1 3,23 Quality of products/services (Not Answered) 1 3, , ,16 Outstanding 11 35,48 Development of new products/services (Not Answered) 1 3,23 Poor 1 3,23 1 3, , ,16 Outstanding 10 32,26 Profit genera on (Not Answered) 1 3, , , ,35 Outstanding 12 38,71 Turnover (Not Answered) 1 3,23 1 3, , ,71 Outstanding 9 29,03 Market share (Not Answered) 1 3,23 1 3, , ,39 Outstanding 9 29,03 Ability to recruit essen al employees (Not Answered) 1 3,23 2 6, , ,61 Outstanding 6 19,35

197 Ability to retain essen al employees (Not Answered) 1 3,23 1 3, , ,16 Outstanding 6 19,35 Customer/client sa sfac on (Not Answered) 1 3,23 1 3, , ,52 Outstanding 4 12,90 Manager employees rela ons (Not Answered) 1 3,23 1 3, , ,29 Outstanding 4 12,90 General employee rela ons (Not Answered) 1 3,23 Poor 1 3,23 1 3, , ,06 Outstanding 4 12,90 The job sa sfac on of the employees at [NAME] in Denmark? 1 3, , ,29 Outstanding 5 16,13 The ability of [NAME] in Denmark to retain essen al employees? 2 6, , ,52 Outstanding 4 12,90 The overall performance of the [NAME] in Denmark 9 29, ,06 Outstanding 4 12,90 The opera ons outside Denmark have interna onal responsibility for one or more products or services company on behalf of the worldwide (Not Answered) 2 6, , , , , ,58

198 Significant exper se in R&D within the worldwide company is generated outside Denmark opera ons (Not Answered) 3 9, , , , , ,23 How important is/are your overseas subsidiary/subsidiaries to the global performance of the parent (Not Answered) 2 6, , , ,06 Has this level of importance changed over the past five years? 1=Significantly decreased, 2=Slightly decreased, 3=Stayed about the same, 4=Slightly increased, 5=Significantly increased (Not Answered) 2 6, , , , ,26 Don't know 1 3,23 How is the performance of the [NAME] in Denmark rela ve to compe tors? 5 16, ,06 Outstanding 8 25,81 Please let us know if you are interested in Tick all that apply (Not Answered) 5 8,06 Receiving a report benchmarking the employment prac cesof your compan 24 38,71 Par cipa ng in a seminar where in depth results of theworldwide survey w 14 22,58 Receiving the full result report 19 30,65 Total Responses ,00 %

199 Foreign based MNCs Here we include the total number of foreign based companies responded to our survey (88). However, 2 number of responses were deleted from the sample used in the report and follow up anaylysis as they were incomplete or insufficient. Count Percent Please select a language: English 3 3,33 Danish 87 96,67 Can you confirm that the company is wholly or majority foreign owned? By "majority owned" we mean at least 50% is owned by a foreign based company. Yes ,00 Are you located at? The global HQ of the worldwide company 2 2,22 The HQ of the opera ng units in Denmark 74 82,22 Other (Please specify) 14 15,56 What is your job tle? (Not Answered) 4 4,44 HR/Personnel Director 32 35,56 HR/Personnel Senior Manager/Manager 38 42,22 HR/Personnel Officer 2 2,22 HR/Personnel Assistant 4 4,44 Other 10 11,11 For which of the following policy levels do you have any HR responsibili es Tick all that apply Global HR policy 8 7,02 Regional HR policy 31 27,19 HR policy in Denmark 67 58,77 Other 8 7,02 Total Responses ,00 % Count Percent In how many foreign countries does the company have opera ng sites? (Not Answered) 2 2,22 1 country 3 3, countries 13 14,44 6 or more countries 72 80,00 Does [NAME] in Denmark have? (Not Answered) 1 1,11 1 site 21 23, sites 45 50,00 6 or more sites 23 25,56 What is the total number of employees worldwide including Denmark by headcount? (Not Answered) 7 7, , , , , , ,56 Denmark (Not Answered) 2 2,22 Up to , , ,67

200 , ,22 Dont know 1 1,11 Europe (excluding Denmark) (Not Answered) 2 2,22 Up to , , , , ,67 Dont know 16 17,78 North America (Not Answered) 11 12,22 Up to , , , , ,56 None 15 16,67 Dont know 21 23,33 Asia Pacific (Not Answered) 13 14,44 Up to , , , , ,67 None 10 11,11 Dont know 23 25,56 Rest of the world (Not Answered) 12 13,33 Up to , , , , ,56 None 10 11,11 Dont know 25 27,78 Individuals who previously worked for the company in country oforigin? (Not Answered) 6 6,67 None 51 56,67 Don't know 5 5,56 Number 28 31,11 Was this through...? (Not Answered) 5 5,56 A greenfield investment 21 23,33 A merger or acquisi on 51 56,67 Other (please specify) 13 14,44 Individuals from other parts of the worldwide company? i.e. outside Denmark but not the country of origin. (Not Answered) 4 4,44 None 55 61,11 Don't know 9 10,00 Number 22 24,44

201 Which of the following statements best describes [NAME] indenmark? The company produces (Not Answered) 1 1,11 A single product or service that accounts for more than 90%of sales 16 17,78 A number of products and services but one of theseaccounts for between ,56 A number of products and services but no single one ofthese accounts for m 53 58,89 A range of unrelated products and services 6 6,67 Which of the following statements best describes the worldwide opera ons? The worldwide company produces (Not Answered) 2 2,22 A single product or service that accounts for more than 90%of sales 7 7,78 A number of products and services but one of theseaccounts for between ,56 A number of products and services but no single one ofthese accounts for m 54 60,00 A range of unrelated products and services 13 14,44 Is the worldwide company's most important product, service or brand (or group of products, services or brands)? (Not Answered) 2 2,22 Adapted significantly to na onal markets 19 21,11 Adapted to different regions of the world but standardisedwithin them 34 37,78 Standardised globally 27 30,00 Don't know 8 8,89 Are any of the components, products and services of [NAME] in Denmark produced for opera on of the worldwide company based outside Denmark? (Not Answered) 2 2,22 Yes all 6 6,67 Yes some but not all 45 50,00 No none 31 34,44 Don't know 6 6,67 Do other parts of the worldwide company supply components, products or services to [NAME] in Denmark? (Not Answered) 3 3,33 Yes 57 63,33 No 27 30,00 Don't know 3 3,33 Approximately what percentage of revenues of [NAME] comes from sales abroad? (Not Answered) 7 7,78 0% 7 7, % 10 11, % 7 7, % 15 16, % 22 24,44 Don't know 22 24,44 Is the worldwide company state or partly state owned? (Not Answered) 1 1,11 Yes 4 4,44 No 84 93,33 Don't know 1 1,11 Is the worldwide company privately owned or are its shares publicly traded? (Not Answered) 3 3,33 Privately owned 28 31,11 Publicly traded 59 65,56

202 Approximately, how many MANAGERS are there in [NAME] indenmark? (Not Answered) 3 3, , , , , , , ,11 Don t Know 2 2,22 Approximately, how many LOG are there in [NAME] in Denmark? (Not Answered) 3 3, , , , , , , , ,44 1, ,44 3,000 4, ,22 5, ,11 Don't Know 3 3,33 On which of the following issues is informa on on the opera ng units in Denmark monitored by management outside of Denmark? Please tick all that apply (Not Answered) 1 0,21 Managerial pay packages 74 15,61 Management career progression 64 13,50 Overall labour costs 65 13,71 Numbers employed (headcount) 74 15,61 Staff turnover 46 9,70 Absenteeism 30 6,33 Labour produc vity 41 8,65 Workforce composi on by diversity (e.g. gender, ethnicity,disability etc.) 25 5,27 Employee a tude and sa sfac on 48 10,13 None of these 3 0,63 Don't know 1 0,21 Other 2 0,42 Total Responses ,00 % Is there a body within the worldwide company, such as a commi ee of senior managers, that develops HR policies that apply across countries? (Not Answered) 2 2,22 Yes 61 67,78 No 26 28,89 Don't know 1 1,11 Is there someone from Denmark on this body/commi ee? (Not Answered) 31 34,44 Yes 22 24,44 No 36 40,00 Don't know 1 1,11

203 Are HR managers from different countries brought together in asystema c way? (Not Answered) 1 1,11 Yes on a global basis 21 23,33 Yes on a regional basis 36 40,00 No 32 35,56 Regular mee ngs (Not Answered) 3 3,33 Weekly 5 5,56 Monthly 10 11,11 Quarterly 19 21,11 Annually 13 14,44 Other 5 5,56 Ad hoc 13 14,44 Never 22 24,44 Interna onal Conferences (Not Answered) 6 6,67 Quarterly 2 2,22 Annually 23 25,56 Other 7 7,78 Ad hoc 20 22,22 Never 32 35,56 Task Forces (Not Answered) 5 5,56 Weekly 3 3,33 Monthly 7 7,78 Quarterly 9 10,00 Annually 1 1,11 Other 3 3,33 Ad hoc 37 41,11 Never 25 27,78 Virtual Groups e.g. conference calls (Not Answered) 3 3,33 Weekly 5 5,56 Monthly 24 26,67 Quarterly 7 7,78 Annually 1 1,11 Other 1 1,11 Ad hoc 19 21,11 Never 30 33,33 There is a worldwide approach covering all global opera ons (Not Answered) 2 2, , , , , ,78 N/A 3 3,33 Don't know 7 7,78

204 There is a regional approach covering all European opera ons (Not Answered) 2 2, , , , , ,89 N/A 2 2,22 Don't know 7 7,78 The development of a specific approach is le to interna onal product, service or brand based divisions (Not Answered) 3 3, , , , , ,00 N/A 4 4,44 Don't know 6 6,67 The development of a specific approach is le to na onal opera ng companies (Not Answered) 2 2, , , , , ,44 N/A 2 2,22 Don't know 3 3,33 The approach is really a mix of the tradi ons of the different na onal opera ng companies (Not Answered) 2 2, , , , , ,78 N/A 4 4,44 Don't know 5 5,56 Tradi ons in the country of origin have an overriding influence on the approach to the management of employees (Not Answered) 3 3, , , , , ,89 N/A 2 2,22 Don't know 3 3,33 Pay and performance management (Not Answered) 2 2,22 No 53 58,89 Yes, in few parts of the firm 20 22,22 Yes, in major businesses 9 10,00

205 Yes, taken up globally 1 1,11 Don't know 5 5,56 Training, development and organisa onal learning (Not Answered) 2 2,22 No 48 53,33 Yes, in few parts of the firm 24 26,67 Yes, in major businesses 8 8,89 Yes, taken up globally 3 3,33 Don't know 5 5,56 Employee involvement and communica on (Not Answered) 2 2,22 No 43 47,78 Yes, in few parts of the firm 31 34,44 Yes, in major businesses 10 11,11 Don't know 4 4,44 Employee representa on and consulta on (Not Answered) 3 3,33 No 52 57,78 Yes, in few parts of the firm 23 25,56 Yes, in major businesses 5 5,56 Don't know 7 7,78 For LOG (Not Answered) 1 1,11 Yes 65 72,22 No 23 25,56 Don't know 1 1,11 For MANAGERS (Not Answered) 3 3,33 Yes 68 75,56 No 18 20,00 Don't know 1 1,11 For LOG (Not Answered) 19 21,11 Yes 15 16,67 No 46 51,11 Don't know 10 11,11 For MANAGERS (Not Answered) 19 21,11 Yes 18 20,00 No 43 47,78 Don't know 10 11,11 For LOG Don't know (Not Answered) 83 87,37 Top 6 6,32 Bo om 6 6,32 Total Responses ,00 % For MANAGERS Don't know (Not Answered) 82 85,42 Top 7 7,29

206 Bo om 7 7,29 Total Responses ,00 % For LOG (Not Answered) 23 25,56 Yes, as a formal input in decisions 17 18,89 Yes, as an informal input in decisions 27 30,00 No 20 22,22 N/A 2 2,22 Don't know 1 1,11 For MANAGERS (Not Answered) 22 24,44 Yes, as a formal input in decisions 20 22,22 Yes, as an informal input in decisions 33 36,67 No 12 13,33 N/A 2 2,22 Don't know 1 1,11 Individual quan ta ve output targets (e.g. financial, numerical) (Not Answered) 22 24, , , , , ,00 Individual qualita ve output targets (e.g. comple on of a task) (Not Answered) 22 24, , , , , ,11 Group output targets (e.g. for site or business unit) (Not Answered) 22 24, , , , , ,78 Don't know 1 1,11 Competences' or personal skills (e.g. leadership or innova on skills) (Not Answered) 23 25, , , , ,89 Behaviour in rela on to corporate 'values' (Not Answered) 22 24, , , , , ,56

207 For LOG (Not Answered) 23 25,56 Yes 40 44,44 No 25 27,78 Don't know 2 2,22 For MANAGERS (Not Answered) 22 24,44 Yes 51 56,67 No 15 16,67 Don't know 2 2,22 For LOG Employee share ownership (Not Answered) 8 8,89 Yes 9 10,00 No 72 80,00 Don't know 1 1,11 Profit Sharing (Not Answered) 13 14,44 Yes 6 6,67 No 69 76,67 Don't know 2 2,22 Share Op ons (Not Answered) 11 12,22 Yes 9 10,00 No 67 74,44 Don't know 3 3,33 For MANAGERS Employee share ownership (Not Answered) 6 6,67 Yes 18 20,00 No 63 70,00 Don't know 3 3,33 For MANAGERS Profit Sharing (Not Answered) 14 15,56 Yes 10 11,11 No 62 68,89 Don't know 4 4,44 Share Op ons (Not Answered) 10 11,11 Yes 22 24,44 No 53 58,89 Don't know 5 5,56 For LOG (Not Answered) 3 3,33 Yes 56 62,22 No 30 33,33 Don't Know 1 1,11

208 For MANAGERS (Not Answered) 2 2,22 Yes 67 74,44 No 21 23,33 Individual performance (Not Answered) 34 37, , , , , ,11 Work group performance (e.g. team or departmental performance) (Not Answered) 35 38, , , , , ,78 Don't know 2 2,22 Organiza onal performance (e.g. site, region, company) (Not Answered) 34 37, , , , , ,78 Don't know 2 2,22 Rela ng pay levels in [NAME] in Denmark to market comparators (e.g. aiming to be in top quar le) (Not Answered) 2 2,22... no discre on 10 11,11... a li le discre on 7 7,78... some discre on 18 20,00... quite a lot of discre on 28 31,11... full discre on 20 22,22 Don't know 2 2,22 N/A 3 3,33 Employee share ownership schemes in [NAME] in Denmark (Not Answered) 2 2,22... no discre on 54 60,00... a li le discre on 12 13,33... some discre on 3 3,33... quite a lot of discre on 3 3,33... full discre on 2 2,22 Don't know 4 4,44 N/A 10 11,11

209 Performance appraisal system: For MANAGERS (Not Answered) 2 2,22... no discre on 15 16,67... a li le discre on 11 12,22... some discre on 17 18,89... quite a lot of discre on 23 25,56... full discre on 16 17,78 Don't know 3 3,33 N/A 3 3,33 Variable payments scheme: For MANAGERS (Not Answered) 2 2,22... no discre on 17 18,89... a li le discre on 7 7,78... some discre on 22 24,44... quite a lot of discre on 22 24,44... full discre on 14 15,56 Don't know 2 2,22 N/A 4 4,44 Performance appraisal system: For LOG (Not Answered) 2 2,22... no discre on 14 15,56... a li le discre on 8 8,89... some discre on 16 17,78... quite a lot of discre on 21 23,33... full discre on 23 25,56 Don't know 2 2,22 N/A 4 4,44 Variable payments scheme: For LOG (Not Answered) 4 4,44... no discre on 10 11,11... a li le discre on 8 8,89... some discre on 23 25,56... quite a lot of discre on 21 23,33... full discre on 18 20,00 Don't know 2 2,22 N/A 4 4,44 What percentage of the annual pay bill in [NAME] in Denmark was spent on training and development for all employees over the past 12 months? (Not Answered) 6 6,67 0% 1 1,11 Up to 1% 27 30,00 Over 1% and less than 4% 41 45,56 Over 4% 7 7,78 Don't Know 8 8,89 Thinking of [NAME] in Denmark is there a formal system of succession planning for senior managers? (Not Answered) 3 3,33 Yes in all opera ons 17 18,89 Yes in some opera ons 25 27,78 No 43 47,78 Don't Know 2 2,22

210 Is this system also used in other parts of the worldwide company? (Not Answered) 48 53,33 Yes in all opera ons 13 14,44 Yes in some opera ons 16 17,78 No 6 6,67 Don't Know 7 7,78 Does [NAME] in Denmark have a management development programme specifically aimed at developing its high potentials' or senior management potential? (Not Answered) 2 2,22 Yes in all opera ons 34 37,78 Yes in some opera ons 26 28,89 No 28 31,11 Is this system also used in other parts of the worldwide company? (Not Answered) 30 33,33 Yes in all opera ons 23 25,56 Yes in some opera ons 22 24,44 No 11 12,22 Don't Know 4 4,44 Short term Interna onal assignments (12 months or less) (Not Answered) 3 3, , , , , ,22 Don't know 2 2,22 N/A 6 6,67 Long term interna onal assignments (more than 12 months) (Not Answered) 3 3, , , , , ,56 Don't know 1 1,11 N/A 4 4,44 Formal global management training (Not Answered) 3 3, , , , , ,33 Don't know 3 3,33 N/A 2 2,22

211 Assessment of performance against a set of global management competencies (Not Answered) 3 3, , , , , ,44 Don't know 2 2,22 N/A 6 6,67 Qualifica ons programme (e.g. MBA, professional qualifica ons) (Not Answered) 3 3, , , , , ,22 Don't know 3 3,33 N/A 4 4,44 How many expatriates from the company's foreign opera ons are currently working on long term assignments (i.e. more than 12 months) in Denmark? Please include all types of long term assignments for any purpose. Type 0 if none (Not Answered) 16 17,78 Don't know 7 7,78 Number 67 74,44 How many expatriates from [NAME] in Denmark are currently working on long term (i.e. more than 12 months) assignment overseas? Please include all types of long term assigments for any pupose. Type 0 if none (Not Answered) 19 21,11 Don't know 8 8,89 Number 63 70,00 Thinking of [NAME] in Denmark is there a formal policy on organisa onal learning? (Not Answered) 2 2,22 Yes in all opera ons 13 14,44 Yes in some opera ons 22 24,44 No 50 55,56 Don't Know 3 3,33 Is this system also used in other parts of the worldwide company? (Not Answered) 56 62,22 Yes in all opera ons 7 7,78 Yes in some opera ons 17 18,89 No 8 8,89 Don't Know 2 2,22 Our company favours internal promo on over external management recruitment (Not Answered) 1 1, , , , , ,89 Don't know 1 1,11

212 Interna onal experience is a key criterion for career progression at senior levels (Not Answered) 1 1, , , , , ,56 Don't know 1 1,11 On the job learning (experience gained on the job) is more valuable than off the job classroom training and development (Not Answered) 2 2, , , , ,56 Don't know 2 2,22 Investment in training is cri cal to either developing or retaining key skills in this company (Not Answered) 2 2, , , , ,44 Don't know 1 1,11 To what extent is the organiza onal learning policy for [NAME] in Denmark and the worldwide company similar? 1 = Not at all similar.. 5 = Highly silimar (Not Answered) 9 10, , , , , ,78 Don't Know 28 31,11 Expatriate assignments (Not Answered) 4 4,44 Yes 40 44,44 No 45 50,00 Don't Know 1 1,11 Interna onal project groups or task forces (Not Answered) 2 2,22 Yes 70 77,78 No 18 20,00 Interna onal formal commi ees (Not Answered) 3 3,33 Yes 41 45,56 No 40 44,44 Don't Know 6 6,67 Interna onal informal networks (Not Answered) 2 2,22 Yes 55 61,11

213 No 26 28,89 Don't Know 7 7,78 Secondments to other organisa ons interna onally (e.g. tosuppliers, customers, universi es, private R&D facilities) (Not Answered) 4 4,44 Yes 13 14,44 No 63 70,00 Don't Know 10 11,11 Which of these is the most important interna onal organisa onal learning mechanism used by managers within [NAME] in Denmark? (Not Answered) 12 13,33 Expatriate assignments 7 7,78 Interna onal project groups or task forces 44 48,89 Interna onal formal commi ees 5 5,56 Interna onal informal networks 16 17,78 Secondments to other organisa ons interna onally (e.g. tosuppliers, custom 2 2,22 Don't know 4 4,44 Training and development policy (Not Answered) 4 4,44... no discre on 2 2,22... a li le discre on 6 6,67... some discre on 15 16,67... quite a lot of discre on 31 34,44... full discre on 32 35,56 Policy on organisa onal learning (Not Answered) 5 5,56... no discre on 3 3,33... a li le discre on 7 7,78... some discre on 21 23,33... quite a lot of discre on 30 33,33... full discre on 22 24,44 N/A 2 2,22 Policy on succession planning for senior managers (Not Answered) 4 4,44... no discre on 5 5,56... a li le discre on 6 6,67... some discre on 22 24,44... quite a lot of discre on 28 31,11... full discre on 21 23,33 Don't know 3 3,33 N/A 1 1,11 Formally designated teams in which employees have responsibilityfor organising their work and carrying out a set of tasks (Not Answered) 1 1,11 Yes 60 66,67 No 26 28,89 Don t Know 3 3,33 Groups where employees discuss issues of quality, produc on or service delivery such as problem solving or continuous improvement groups (Not Answered) 1 1,11 Yes 67 74,44 No 18 20,00

214 Don t Know 4 4,44 Which of the following most closely corresponds to the pa ern of employee involvement in [NAME] in Denmark? (Not Answered) 2 2,22 An iden cal or similar pa ern exists across all or most sites 14 15,56 All or most sites have involvement systems, but they differfrom site to site 41 45,56 Some sites have involvement systems while others do not 16 17,78 Not applicable (1 site only in Denmark) 9 10,00 Don't Know 8 8,89 Specific prac ces elsewhere in the worldwide company (Not Answered) 4 4, , , , , ,56 Formal model of good prac ce codified elsewhere in worldwidecompany (Not Answered) 5 5, , , , , ,44 Examples drawn from other firms (Not Answered) 4 4, , , , , ,44 Does [NAME] regularly use teamwork or other employee involvement prac ces in your opera ng companies outside Denmark? (Not Answered) 1 1,11 Yes 54 60,00 No 16 17,78 Don't Know 19 21,11 Would you say that prac ces in rela on to employee involvement inthe worldwide company are: (Not Answered) 2 2,22 Very similar across all opera ons 4 4,44 Broadly similar but with some varia ons 10 11,11 Similar to some extent but with substan al varia ons 30 33,33 Fairly diverse 28 31,11 Very diverse 12 13,33 Don't Know 4 4,44 Does [NAME] regularly use project teams or task forces, embracing employees other than managers, that function across more than one operating unit in Denmark? (Not Answered) 2 2,22 Yes 65 72,22 No 11 12,22 N/A 9 10,00 Don't Know 3 3,33

215 Do these groups in Denmark also include employees from outside Denmark? (Not Answered) 26 28,89 Yes 49 54,44 No 13 14,44 N/A 2 2,22 How common is the cross na onal structure of these teams? 1=Very rare... 5=Very common (Not Answered) 42 46, , , , , ,56 Are there project teams or task forces embracing employees other than managers that func on across more than one operating unit, used in foreign operations? (Not Answered) 1 1,11 Yes 39 43,33 No 18 20,00 N/A 9 10,00 Don't Know 23 25,56 Mee ngs between senior MANAGERS and the whole of the workforce (Not Answered) 2 2,22 Yes 70 77,78 No 16 17,78 Don't know 2 2,22 Mee ngs between line MANAGERS or supervisors and employees (some mes called briefing groups) (Not Answered) 1 1,11 Yes 81 90,00 No 7 7,78 Don't know 1 1,11 A tude or opinion surveys (Not Answered) 1 1,11 Yes 70 77,78 No 17 18,89 Don't know 2 2,22 Sugges on schemes (Not Answered) 4 4,44 Yes 52 57,78 No 33 36,67 Don't know 1 1,11 Systema c use of management chain to cascade informa on (Not Answered) 1 1,11 Yes 64 71,11 No 20 22,22 Don't know 5 5,56 Newsle ers or s (Not Answered) 1 1,11 Yes 83 92,22 No 5 5,56

216 Don't know 1 1,11 A company intranet providing informa on to employees' (Not Answered) 1 1,11 Yes 75 83,33 No 13 14,44 Don't know 1 1,11 Financial posi on of the company (Not Answered) 2 2,22 Yes 82 91,11 No 6 6,67 Investment plan for the company (Not Answered) 1 1,11 Yes 41 45,56 No 45 50,00 Don't know 3 3,33 Staffing plans for the company (Not Answered) 1 1,11 Yes 48 53,33 No 40 44,44 Don't know 1 1,11 Financial posi on of the company (Not Answered) 2 2,22 Yes 70 77,78 No 13 14,44 Don't know 5 5,56 Investment plan for the company (Not Answered) 2 2,22 Yes 29 32,22 No 50 55,56 Don't know 9 10,00 Staffing plans for the company (Not Answered) 1 1,11 Yes 24 26,67 No 56 62,22 Don't know 9 10,00 Involvement of employees in work process, e.g. team work orproblem solving groups (Not Answered) 2 2,22... no discre on 3 3,33... a li le discre on 4 4,44... some discre on 11 12,22... quite a lot of discre on 24 26,67... full discre on 46 51,11 A tude or opinion surveys (Not Answered) 2 2,22... no discre on 10 11,11... a li le discre on 9 10,00... some discre on 16 17,78... quite a lot of discre on 21 23,33... full discre on 31 34,44

217 N/A 1 1,11 Sugges on schemes (Not Answered) 3 3,33... no discre on 4 4,44... some discre on 6 6,67... quite a lot of discre on 13 14,44... full discre on 53 58,89 N/A 11 12,22 Provision of informa on to employees (Not Answered) 3 3,33... no discre on 3 3,33... a li le discre on 3 3,33... some discre on 5 5,56... quite a lot of discre on 32 35,56... full discre on 44 48,89 Thinking of the LOG in [NAME] in Denmark, are trade unions recognised for the purposes of collec ve employee representationat? (Not Answered) 4 4,44 No sites in the Danish opera ons 18 20,00 All sites in the Danish opera ons 38 42,22 Most sites in the Danish opera ons 11 12,22 Some sites in the Danish opera ons 11 12,22 The company's single Danish site 8 8,89 Are there any non union based structure(s) of collec ve employee representa on used Tick all that apply (Not Answered) 24 25,53 Yes, at sites where there is no trade union recogni on 13 13,83 Yes, at sites where there is also trade union recogni on 21 22,34 No 36 38,30 Total Responses ,00 % How would you describe the policy of management towards unionrecogni on within [NAME] in Denmark? (Not Answered) 1 1,11 In favour of union recogni on 41 45,56 Not in favour of union recogni on 4 4,44 Neutral towards union recogni on 44 48,89 Is there collec ve bargaining with trade unions over pay and major condi ons (e.g. working me) at any of the following levels covering all or some of the LOG within [NAME] in Denmark? Tick all that apply, multi code only allowable for codes 2, (Not Answered) 3 3,19 At Danish company level, covering all sites 14 14,89 At the company's single Danish site 8 8,51 Covering more than one, but not all Danish sites 18 19,15 At individual site level 15 15,96 At industry level, covering more than one employer 6 6,38 There is no collec ve bargaining over pay 30 31,91 Total Responses ,00 % Thinking about trade unions in [NAME] in Denmark, what approach do the trade union representa ves generally adopt? (Not Answered) 4 4,44 A coopera ve approach 44 48,89 An adversarial approach 4 4,44 It depends on the issue 22 24,44 Don't Know 16 17,78

218 Work organisa on (Not Answered) 23 25, , , , , ,56 Don't know 4 4,44 Sub contrac ng and outsourcing (Not Answered) 23 25, , , , , ,33 Don't know 4 4,44 Variable payments schemes (Not Answered) 22 24, , , , , ,00 Don't know 5 5,56 In work training/ upgrading skills (Not Answered) 22 24, , , , , ,44 Don't know 3 3,33 Direct employee involvement schemes (Not Answered) 24 26, , , , , ,89 Don't know 8 8,89 Union recogni on (Not Answered) 2 2,22... no discre on 5 5,56... a li le discre on 2 2,22... some discre on 4 4,44... quite a lot of discre on 11 12,22... full discre on 48 53,33 Don't know 13 14,44 N/A 5 5,56

219 Scope of union involvement in decision making (Not Answered) 2 2,22... no discre on 5 5,56... a li le discre on 2 2,22... some discre on 8 8,89... quite a lot of discre on 13 14,44... full discre on 44 48,89 Don't know 10 11,11 N/A 6 6,67 To what extent do opera ng companies outside Denmark have discre on over determining employee consultation policy? (Not Answered) 2 2,22... no discre on 7 7,78... a li le discre on 5 5,56... some discre on 13 14,44... quite a lot of discre on 10 11,11... full discre on 17 18,89 Don't know 23 25,56 N/A 13 14,44 Do you receive informa on about the ac vity and mee ngs of theewc? (Not Answered) 9 10,00 Systema cally at the me of EWC mee ngs 23 25,56 Periodically, on an 'as necessary' basis 11 12,22 Li le or no informa on about the EWC received 47 52,22 Which of the following statements best describes the overall nature of the European Works Council in Denmark? (Not Answered) 51 56,67 Management provides minimal informa on required forcompliance, there 3 3,33 Management provides informa on slightly beyond thatrequired for complia 4 4,44 Management provides informa on somewhat beyond thatrequired for com 15 16,67 Management provides informa on considerably beyond thatrequired for co 4 4,44 Management provides informa on far beyond that requiredfor compliance 3 3,33 Don't Know 10 11,11 Is there a European Works Council (EWC) or similar European level structure which covers [NAME] in Denmark? (Not Answered) 2 2,22 Yes 39 43,33 No 31 34,44 Don't know 18 20,00 Over the past 3 years, has the EU Direc ve on Informa on and Consulta on prompted any changes in arrangements for employee consultation in Denmark? (Not Answered) 3 3,33 Yes 10 11,11 No 47 52,22 Don't know 30 33,33 Does the worldwide company have experience of opera ng with mandatory employee consulta on structures (e.g. work counsils) that are required in some countries overseas? (Not Answered) 1 1,11 Yes 53 58,89 No 13 14,44

220 Don't know 23 25,56 Do these mee ngs cover...? (Not Answered) 20 22,22 All employees under a single arrangement 33 36,67 All employees, but with different arrangements for differentgroups 17 18,89 Some groups of employees under a single arrangement 13 14,44 Some groups of employees, but with different arrangementsfor different gr 6 6,67 Other 1 1,11 Which of the following statements best describes management'srela ve emphasis in [NAME] in Denmark on mechnanisms for communicating and consulting with employees? (Not Answered) 4 4,44 Emphasis on direct communica on and consulta on 35 38,89 Emphasis on indirect communica on and consulta on (e.g.through joint co 18 20,00 Equivalent emphasis on direct and indirect communica onand consulta on 33 36,67 Which of the following statements comes closest to capturing the worldwide company's policy? (Not Answered) 37 41,11 There is no policy 3 3,33 Minimum compliance with legal requirements on employeeinforma on and 16 17,78 To go somewhat further than legal requirements 21 23,33 To go considerably further than legal requirements 8 8,89 Don't know 5 5,56 Are regular mee ngs held between management and representa ves of employees at this level in [NAME] in Denmark for the purpose of informa on provision and consulta on? (Not Answered) 2 2,22 Yes 70 77,78 No 15 16,67 Don't know 3 3,33 Quality of products/services (Not Answered) 2 2,22 Poor 1 1, , ,78 Outstanding 20 22,22 Development of new products/services (Not Answered) 4 4,44 6 6, , ,44 Outstanding 11 12,22 Profit genera on (Not Answered) 3 3,33 Poor 7 7, , , ,44 Outstanding 16 17,78 Turnover (Not Answered) 3 3,33 Poor 1 1, ,44

221 28 31, ,56 Outstanding 13 14,44 Market share (Not Answered) 4 4,44 Poor 2 2, , , ,00 Outstanding 12 13,33 Ability to recruit essen al employees (Not Answered) 2 2,22 3 3, , ,22 Outstanding 13 14,44 Ability to retain essen al employees (Not Answered) 2 2,22 Poor 1 1,11 6 6, , ,22 Outstanding 14 15,56 Customer/client sa sfac on (Not Answered) 3 3,33 3 3, , ,78 Outstanding 6 6,67 Manager employees rela ons (Not Answered) 2 2,22 2 2, , ,67 Outstanding 7 7,78 Manager employees rela ons General employee rela ons (Not Answered) 2 2,22 3 3, , ,67 Outstanding 8 8,89 The job sa sfac on of the employees at [NAME] in Denmark? (Not Answered) 3 3,33 6 6, , ,11 Outstanding 7 7,78 The ability of [NAME] in Denmark to retain essen al employees? (Not Answered) 2 2,22 8 8, ,00

222 46 51,11 Outstanding 16 17,78 The overall performance of the [NAME] in Denmark (Not Answered) 3 3,33 Poor 2 2,22 3 3, , ,78 Outstanding 8 8,89 Do [NAME] in Denmark have interna onal responsibility for one or more products or services on behalf of the worldwide company (Not Answered) 2 2, , , , , ,78 Significant exper se in R&D within the worldwide company is generated in [NAME] in Denmark (Not Answered) 2 2, , , , , ,00 How important is [NAME] in Denmark to the global performance of the parent company? 1=Not at all important, 2 = Of little importance, 3 = somewhat important, 4 = important, 5 = very important (Not Answered) 2 2, , , , , ,56 Don't know 1 1,11 Has this level of importance changed over the past five years? 1=Significantly decreased, 2=Slightly decreased, 3 = stayed about the same, 4 = slightly increased, 5 = significantly increased (Not Answered) 2 2, , , , , ,78 Don't know 5 5,56 How is the performance of the [NAME] in Denmark rela ve to compe tors? (Not Answered) 4 4,44 Poor 1 1,11 3 3, , ,67 Outstanding 9 10,00 Please let us know if you are interested in Tick all that apply (Not Answered) 14 7,69 Receiving a report benchmarking the employment prac cesof your compan 67 36,81

223 Par cipa ng in a seminar where in depth results of theworldwide survey w 38 20,88 Receiving the full result report 63 34,62 Total Responses ,00 %