3 Case studies

CASE 2

QUALITY COMPLIANCE AT THE HAWTHORN ARMS

By Allen D. Engle, Sr.

Sitting in his room at the Hawthorn Arms Hotel in Shannon, Ireland, waiting for a morning flight to London and then on to Marseilles, Alistair Mackay reflects on how uninspiring hotel rooms are. He had just completed a series of meetings with Irish officials in Limerick, concluding with a debriefing session over a Guinness with his Irish colleagues to plan their next move. Negotiations over a potential contract were proceeding well but there would be labor implications that would require a formal response. Consequently, Alistair had missed the last evening flight out to London. ‘Another night away from the family. Thank goodness I am not missing our wedding anniversary tomorrow. I must remember to find something really special in the duty-free shop’.

Six months ago, Alistair was appointed Director of Personnel Development, European Division, for Trianon, an Anglo-French avionics firm. Trianon had begun as a subcontractor for the Concorde, and grad- ually had gained a reputation in the 1970s and 1980s as a high quality, if sometimes undependable subcon- tractor for major French and British aerospace defence contractors. Attempts to expand into civilian markets by gaining contracts for the original European Airbus were unsuccessful, though today nearly 30 per cent of Trianon’s sales are through civilian contracts. Now, under new executive management, Trianon is focused on major navigational display contracts for the next generation of Airbus production. Prior to joining Trianon, Alistair had worked in the legal department of a Scottish bank. European Union employment require- ments had become his speciality, and provided a springboard into his current position.

His cell phone rings, and he receives an unex- pected call from his colleague Henri Genadry, General Director of Joint Ventures, Mergers and Acquisitions, Display Division. Henri informs him that the expected outright purchase of a scanner-cathode ray tube production facility in Veceses, outside of Budapest, Hungary was not going ahead. Instead, the decision had been made at corporate headquarters in Marseilles

for a ten-year joint venture with a Hungarian govern- ment backed firm.

Henri goes on to explain that the Hungarian control and equity interests in this project are expected to make ministry officials in Budapest happy. Henri was hopeful the decision will make executives and adminis- trators at Malev, the state supported airline, friendly to Trianon in the long term. ‘We will now need a ‘‘Quality Compliance Manager’’ for a three-year assignment in Hungary. It is an important position as we will need to keep tight control on this joint venture operation. There will be some travel to France and Germany – at least in the first year – until we see how things are working out with these new partners.’

Alistair asks, ‘When do you expect this ‘‘Quality Compliance’’ manager to be available?’ There is a pause on the other end of the line after which Henri blandly responds, ‘Five or six weeks if we are to meet corporate timetables. We expect the person to be in on the ground so to speak. We will need a realistic assessment of current processes for a start. The per- son will need to be familiar with the joint venture’s objectives and targets. We have some details through the due diligence process but skills audits were some- what rushed.’ Alistair then asks that details, including a job description, be emailed to his intranet address.

‘Well’ Henry admits, ‘this is out first joint venture the firm has been involved in outside of the UK, Germany or France. The job description will be very precise on the technical – ‘‘quality’’ side, but vague on the administrative – ‘‘compliance’’ side. You may need to fill in the missing pieces as you see fit.’

After a few more minutes of general chatting, Henri finishes the phone call. Alistair plugs his laptop into the telephone port on his room’s desk, and after a few false starts, logs on to the secure corporate website and accesses three personnel files from a folder he had prepared some weeks ago in expectation that he would be asked for a decision. Of course, he had expected the position to be that of Project Engineer in an operation that the firm would have 100 per cent

CASE 2 QUALITY COMPLIANCE AT THE HAWTHORN ARMS 287

ownership. Now he was looking for a Quality Compli- ance Manager in a joint venture.

Alistair doesn’t like making these kinds of decisions when feeling so remote and ‘disconnected’ from the firm. He considers calling his friend and mentor, Gunther Heinrich in Frankfurt Germany and asking him about the Hungarian project, as the German based- divisions had more experience dealing with Hungarian issues. He looks at his watch. It was 22.30. ‘Not a civi- lized time to call anyone, let alone Gunther’. Alistair knew that Gunter’s wife Britt had presented them with a son three weeks ago, and they were having trouble getting the child to sleep through the night. ‘I will call him from the airport and set up a meeting. I will have the job description by then.’

He is also feeling uncomfortable with the process he was going through. Surely we can do better than react like this after the event. Why were we not part

of the decision-making process on the Hungarian venture?

* * * * * * *

1 Consider the three candidates in Exhibit A. If forced to make a decision tomorrow, which candidate should Alistair choose for the job? What major factors should determine his choice?

2 We are told nothing of the process that Trianon uses to recruit candidates for this level of final selection. Given what you know about the firm from the case, outline a general recruitment and selection process for Trianon. Describe how your proposed process fits with ‘best’ selection practices as well as the strategic needs of this company.

3 Should HR staff be involved in strategic decisions relating to international business operations such as finalising a joint venture agreement?

EXHIBIT A Alistair Mackay’s Short List of Possible Candidates

First Candidate: Marie Erten-Loiseau. Born in Prague, her family moved to Toulon when Marie was 12 years old. Brought up in France, she was educated as an aeronautical engineer in France and Germany. Marie worked for Trianon for 13 years, in two divisions within France and Germany with increasing levels of project responsibility. Her leadership of two projects over the last three years in Lodz, Poland, and two sites in Czechoslovakia has been marked by remarkable success. Married, her husband is semi-retired. They have one child in university.

Second Candidate: Janos Gabor. Born in Gyor, Hungary, Janos was educated at University of Pécs, Hungary. He has a good background in the production of cathode ray tube and display systems technologies, albeit from the central European perspective. He has worked at Trianon for nearly four years, and has just been transferred into the cathode ray tube division as a Senior Engineer. His family is reportedly very well connected with national government officials, particularly the old, ex-party members of multiple ministerial bureaucracies. Janos is single.

Third Candidate: Sinead Marrinan-McGuire, a production engineer on loan to Trianon’s London office for joint venture analyses and ‘due diligence’ reviews on technical and legal grounds. She has spent three years in the R&D development team in Dublin and London, working on the very technologies to be applied in this Hungarian joint venture project. Alistair met and talked with her today in Limerick and was very impressed with her understanding of corporate level concerns and strategic issues. Most of her career has been in Ireland and around London, with only short, tactical trips to France. Married, her husband is a solicitor in Dublin. They have three children, ages 7, 9 and 13.

288 CASE 2 QUALITY COMPLIANCE AT THE HAWTHORN ARMS

CASE 5

LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS1

By Maike Andresen2

Akiko Nishimura is upset and exhausted. She pre- pares a fresh juice and wants to relax a bit. It is three o’clock in the afternoon and she just came back to her apartment situated in a suburb of New Delhi. Today she had an appointment with her HR manager, Mrs Puja Malik, that lasted three hours. Akiko is more than upset about the offer the HR manager made and does not understand the world any more.

Akiko is 40 years old and was born in Tokyo. After her studies in management at the University of Tokyo and Wharton Business School in the USA she started her career with a German multinational manufacturing company in Tokyo in the controlling department. Two years ago her boss offered her to go on an expatriate assignment to New Delhi, India, in order to gain inter- national experience and develop her talent further. Her husband Hiroshi and two daughters, at that time 12 and 10 years old, immediately agreed to change loca- tions and followed her. Hiroshi interrupted his career as a broker in a multinational bank.

After two years in New Delhi, Hiroshi still could not find an adequate job. Although the whole family enjoyed living in India and Akiko liked her job, Hiroshi became impatient and could not stand his inactivity any more. Through a former client he got to know about a challenging job opportunity in Singapore and successfully applied for the position. Akiko shared Hiroshi’s happiness and felt that she wanted to follow him to Singapore. So she contacted her HR manager, Puja Malik, a few weeks ago and started to talk to vari- ous people within the organization in her personal net- work, to find out what the options would be and let people know that she is looking. Yesterday, Puja Malik called her and asked for an appointment. They met today in order to talk about several opportunities and the conditions. Whereas the positions were very appealing to Akiko, the conditions were absolutely unreasonable in her perspective. After two hours Akiko became angry, but her HR manager defended the

offer with the restructuring of the company and new policies that came up. ‘As you know, Akiko, the com- pany started up as a technology venture about 120 years ago with its production located in Germany. In order to be profitable their production and sales needed to increase. Due to limitations in the home market, they expanded internationally in the 1920s starting with France and quickly followed by several other countries in each of the five continents. In the 1970s the company employed 300000 people, with more than two-thirds of these outside Germany. Due to this extensive expansion worldwide as well as an increasingly diverse product line, the idea of controlling the entire organization from the German headquarters was seen as an impossible task. There was a need to organize into smaller, more flexible and more manage- able units. Hence, the decision was made to set up a ‘‘national organization’’ in every country where there were active enterprises. These national organizations were supported by the international organization at headquarters. In the course of the last 20 years these national organizations grew to be very independent. The executive board saw the need to start focusing on a more user-oriented policy of globalization. In this reorganization process the product divisions gained a more prominent role in the structure. Today, you still see a clear role of both the product divisions but also the country organizations in the corporate structure.’ Puja Malik points a finger at the annual report and out- lines the organizational chart. (see Figure 1.)

Puja Malik continues: ‘Although the company wants to act as one company, it always has to focus on the challenge to work with three quite independent sectors. Today, the company is situated in around 60 countries worldwide with more than 116000 employ- ees. The HR department is currently involved in a change process, moving toward offering more serv- ices from shared service centers. One reason for this is the request to be more effective and efficient in the

CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS 305

process especially with the vision to be ‘‘one com- pany’’.’

Up to current time, when people have been moving across countries through the company, the standard has been that people mostly moved on a home-based expatriate contract. This rule also applied to Akiko when she expatriated to New Delhi. However, her HR manager recently informed her that there are new rules and that according to this new policy her expatriate contract would not be renewed when going to Singapore. Puja Malik argues: ‘I think in terms of trans- fer, until a few years, we were quite generous with our expat policy. So when there was a need to, let’s say, shift talent – just like you, Akiko –, or people with scarce knowledge around the globe we just gave them an expat package. But I think people in general are more open for moving around the globe, instead of going a few years and then wanting to come back. I can see that more people are looking for a career across borders. And this may not be in the form of full expat packages in our company.’

Puja Malik obviously sees the need to give a further explanation. She adds that after a long upturn period, the company also has to face the problems of the cur- rent economic crisis. This tendency is now forcing the company to rethink their strategy in regards to what they are providing for their employees who are going

abroad in order to manage the costs involved. Until recently handling international assignments mostly with expatriates seemed the right way of doing things. But the company is facing a new population, those who stay abroad for a longer term or even perma- nently. ‘You need to know, Akiko’, Puja Malik goes on, ‘we have employees that have been in the same coun- try for eight years on an expat package. But they are not expats anymore! And then you have the globetrot- ter, those who have had three or four different expat assignments. So they have left their country for more than ten years and we don’t know when and if they are coming back. What do you do with them?’

Puja emphasizes that this change was placing the company in a position where they were forced to go through and analyze their current policies in regards to international mobility. The intention was to create a cost effective alternative for this new emerging population.

Akiko’s first expatriate assignment to New Delhi

Akiko thinks back to her first move from Tokyo to New Delhi. Things were dealt with differently two years ago. She was part of the talent pool (and still is) and

FIGURE 1

Country A

Executive board Product

Division 1 Product

Division 2 Product

Division 3 Corporate

Departments

Business Unit

Business Unit

Business Unit

Corporate HR

Country B Business

Unit Business

Unit Business

Unit IT

Country C Business Unit

Business Unit

Business Unit

Global Purchasing

••• ••• ••• ••• Design

306 CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS

received special treatment. Today this expatriate pop- ulation comprises about 750 people.

The company uses expatriation for two main rea- sons: First, as a career assignment for talent to gain international experience and, second, as a job assign- ment to transfer knowledge across borders. Whereas the company wishes to have 70 per cent of expatriates in a career assignment and 30 per cent on a job assignment, it is now evenly distributed. Moreover, to be able to give an international assignment to as many employees as possible, the company has implemented a policy saying that assignments should be a maximum of three years, and that one employee should not cumulate too many different assignments. Although originally Akiko asked for an assignment of five years in order to facilitate the change of jobs for her husband, this request was turned down. She remembers that she has been told ‘If you stay longer in a country, then you block the career of someone else’. Akiko agreed and signed a contract for three years.

Her expatriate package is home based. This means that she was meant to return home to Tokyo after the assignment, Akiko was kept under her home social se- curity, health insurance and pension plan. The expatri- ate package comprises all the usual expatriate facilities and services. Akiko got to know that this expatriate package has additional cost for the company of about three times the base salary. That is also why the com- pany wants to limit the extent of these expensive expa- triate assignments only to critical positions.

‘Akiko’, Puja Malik argues, ‘the company has created different types of packages for different types of international work. When you move to Singapore, the balance between the business and the employee

interest leans more in the direction of you. Hence, we offer a different contract and package to you that is called local international contract.’ Akiko knows what all this is about and she gets upset. She feels that the company wants to minimize a number of costs by making some of them optional. She thinks that this is not fair as she is still growing in her career and inves- ting a lot into the company in terms of energy and working hours while giving up her easy life in Tokyo. It was the firm’s idea to send her to New Delhi! More- over, her husband risked his career and her two daughters had to change school and lost contact with their grandparents back in Tokyo.

What is this new Local International Policy about?

Puja Malik expands on the new policy: ‘The local inter- national policy came about last year as a response to an emerging need especially in Asia. We saw that owing to globalization there were many foreigners coming here on an expatriate assignment, and many of these foreigners also had a wish to stay. This resulted in a need for using a locally based contract, but that would still attract foreigners to travel. As a pure local contract would not be able to attract these employees, we decided to provide some extra benefits to these local international hires. The local international contract fits between an expatriate and a local pack- age. Even though these transfers are partly employee initiated, we provide a slow landing into the new coun- try. This means that the host country provides some kind of support.’ (see Figure 2.)

FIGURE 2 The Local International Policy

Costs to be covered by the company:

l Individual host country based salary and incentives according to local scheme.

l Settling-in allowance (to cover the incidental miscellaneous expenses of a move, e.g. temporary accommodation and meals on arrival, school uniforms and books for school-age children).

l Medical check up.

l Visa and permits (based on country standards).

l Travel costs (outward journey; one home trip during first year).

l Optional: Allowance for housing and school (!50% after year 1, 0% after year 2). l Optional: Retention bonus.

l Optional: Allowances according to local needs.

CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS 307

Akiko understands that the thought behind the local international package is to provide an alternative to the expatriate package for those cases where it is a permanent relocation of an international manager. As the local international package is really a locally based package, the salary is also based on the local salary system in the host country. Puja Malik adds: ‘For the expat package, you know from your own experience, Akiko, that we have a balance sheet approach, where we want to ensure that the purchasing power from the home country is maintained in the host country . . . But for the local international contract, we do not want to link to the home country.’ Akiko sees a major problem in that and immediately asks what would happen if an international hire moves from a high income country to a low income country and Puja Malik confirms that this would lead to a lowering of the salary although the company is aware of the fact that under these condi- tions it might be difficult to attract foreigners on a purely local salary.

Akiko is irritated and concludes that she would not accept a decrease in her income when going to Singapore. Still she wants to understand why all this

happens. ‘Puja, apart from the salary level, what do you mean by the ‘‘slow landing’’ that you mentioned before?’ Puja replies, ‘This means that in addition to your salary, the company will give you some extra ben- efits such as relocation support, settling-in allowance and one home trip during the first year.’ Puja points to her computer screen and shows Akiko what she can expect when moving to Singapore:

Akiko becomes aware that in contrast to her cur- rent expatriate contract no pre-assignment visit is paid for, she needs to arrange the house hunting, negotiation, school search, etc. by herself and all ‘nor- mal’ costs of living, such as housing or schooling, are to be handled by herself; any financial support ends after two years when she will be on a normal local contract. ‘But, Puja, why does this new rule apply to me? I am currently on an expatriate contract – why should I opt out of it now?’ Akiko interjects. ‘This is’, replies Puja, ‘due to our rules. The following elements justify a local international contract: The person in question is an internal employee who is relocated. And the person is not what the company considers a talent or a top potential employee. Your case, Akiko,

FIGURE 3

Talent

Local contract

Local international

contract Duration

Expatriate contract

Career or job

assignment

Employment status

Internal

Permanent

3– 12

m on

th s

Up to 3 years

Newly hired

No Yes

Yes No

308 CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS

is exceptional as you are a talent or top potential but’, Puja Malik emphasizes, ‘your relocation to Singapore is not a career or job assignment. You know, Akiko, your position in Singapore could just as well be filled by a local employee. In addition, we expect these employees to localize.’ Akiko intervenes resolutely: ‘But things can change fast and I might want to make another move after three to five years if a great oppor- tunity comes up!’ Puja Malik reacts: ‘Yes, but for the time being we treat it like a permanent relocation. And, finally, it is based more on your own initiative and decision to move. Look and see – this is our de- cision tree.’ (see Figure 3.) Once again, Puja Malik points to her computer screen where she uploads the decision-making tree on assignment type.

Puja Malik stresses that these decisions are not easy to make. She illustrates that first of all, in a constantly changing environment it is of key importance for the company to keep their employees mobile. Akiko under- stands that in a localization process it is therefore of great importance to think ahead whether the person that is to be put on a local contract is likely to get a new assignment in another country later on in his or her career. If first a person is localized, the bonds to the new country may often be stronger as some might buy a house or send the children to local school.

‘So, you see, we have our idea and rules. However’, Puja Malik adds, ‘I have to admit that I and some of my colleagues in other countries alter the content of the package, and thereby also the applicability, according to where one is coming from. We say that we have a local international contract, but it might not be applica- ble for Chinese or Indians to Singapore because these are lower salary countries. I mean, the high salary in Singapore should be able to take care of your cost of living without having to compensate it . . . The business unit in Singapore may just pay for the one way ticket and the shipment to get you there, but they will not be giving you support for the housing and education.’

It seems Puja Malik is in her element as she contin- ues without drawing a breath: ‘By the way, a major challenge with the local international contract appears to be its applicability in China! China has a lower income rate and a lower social security system than other countries. A current solution to this issue is to provide some extra support for those on a local inter- national contract in China, like extension of education support and housing. Nevertheless, there are still some issues regarding social security which needs to be addressed. With China having much lower social

security, the risk is that we might lose possible employees as they feel they are sacrificing too much of their own security. This is also the case for pension. In some countries, foreigners are not obliged to con- tribute to state pension, and in others they are not allowed. Local international employees are therefore given a cash equivalent to the state pension and are encouraged to invest in a private fund. But this is a different story. In principle, we need for a more standardized practice when it comes to pension in the future . . .’

Do these new rules make sense?

Akiko zones out at this point in the extensive conver- sation and does not follow Puja Malik’s explanations as attentively as she should do. She realizes that some of the challenges of her local international package will only be apparent after the first year when the scaling down starts and the package becomes more like a local package. At that time she will truly start to notice the difference. Before this point, the package is very similar to her current expatriate package. ‘I will practi- cally be ‘‘poorer’’ after the scale down of the benefits’, Akiko reflects silently. ‘The only way out would be to start looking for another local international assignment elsewhere to start on a full local international package again or to go on an expatriate assignment. But Hiroshi and the two girls will not like it.’

She starts to think about her family: ‘The two girls will perceive the language barrier to be very scary when going to Singapore. They will need to attend the international school – at least in a transition period. The company needs to realize that it’s not just about moving an employee, it’s about moving a whole fam- ily!’ Akiko sees the relocation of the family as the big- gest hurdle for her. ‘We need to feel safe, and know that we are covered if anything happens.’ Akiko remembers her relocation to New Delhi two years ago. Just the practical things that needed to be taken care of when they moved seemed endless: where to live, schooling, visa, etc., all the paperwork they needed to fill out. Meanwhile they had to deal with a new lan- guage and new customs.

Akiko summarizes in her mind: ‘These are very practical things that will not be organized for me when going to Singapore. I will have to do everything on my own. So that will be a big challenge and it is very time consuming, keeping me from doing my actual job!’

CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS 309

She realizes the difference between moving as an ex- patriate and moving on a local contract. Moving on ex- patriate conditions means that more or less everything is taken care of by the company, whereas going on a local contract you need to take care of most things yourself.

Akiko is startled out of her thoughts. ‘Akiko?’ Puja Malik looks directly into her eyes. ‘Just let me be very honest. Of course, corporate has made it very clear that the number of people put on expat contracts has to be reduced. The background for this is to cut down the costs for these very expensive expatriates. But it is also about creating more equity with the local employ- ees. Put yourself into the shoes of the local employees. Would you, as a local person, accept that you cease- lessly earn less than a foreigner although you do the same job?’ Akiko murmurs: ‘No, of course not’. She thinks that this is an interesting and important aspect.

She asks herself which contract her husband would get according to this system when going to Singapore. Akiko gazes at the decision tree on the computer screen. She realizes that as Hiroshi is changing employers and would therefore enter the company as a new employee, he would automatically get a local contract without any extras. The family’s situation would be even worse! She asks herself whether this new further distinction of different types of assignments is really fair or whether it is about creat- ing a second and third class of expatriates.

Akiko feels that she is not concentrated any more and is overloaded with information. And somehow she is also overtaxed by these implications. She does not really know what to do. She wants to finish the conver- sation but Puja Malik already continues. ‘I think that in these localization processes it is important that the pros and cons are explained carefully to people because things are difficult to compare. You need to understand that you will maybe have to give up some- thing, but in return get something else. For example you might face a decrease in salary in return for a more favorable pension model, social security system or lower cost of living. It takes a lot of time and needs to be explained by someone who has a deep under- standing of all the aspects that are part of a package.’ For a second Akiko wonders whether Puja Malik is fishing for compliments and is expecting her to admire her competence. Akiko decides not to react at all.

Puja Malik continues to lecture about the policies: ‘For some it might be an attractive opportunity to organize themselves, but for others this will definitely

be something they expect the company to take care of. And of course we need to be self-critical: Even if this approach seems more simple it is unclear whether such a policy corresponds with the present culture of the company where it is an aim to take care and sup- port people in a moving process. We need to explain to people what the consequences might be’, Puja Malik repeats herself.

Akiko takes the chance to end the appointment and stresses that the most important factor with regards to the conversion in contracts has to do with communication. She feels that the loss of the benefits she will receive on a local international contract will not affect her much if she receives adequate information about what a change in contract will involve before the move. Akiko stresses that, ‘It is more important to be clear on managing expectations, from both sides since the very beginning, than the actual amount in the end’. She stands up, says goodbye to her HR manager Puja Malik and leaves the office silently. She is confused and feels that she is not in the mood to continue her daily work today. Akiko decides to go back home to her apartment situated in a suburb of New Delhi and to talk to her husband Hiroshi tonight about the situa- tion in order to get an additional perspective.

Assignments

1 Describe the content of a ‘traditional’ expatriate package, and the reasons of the company to provide such benefits! What limitations do you see in this contract when it comes to handling the company’s emerging needs?

2 Make a SWOT analysis of the Local International policy using information from the case study.

3 Compare the employers’ and employees’ needs regarding international mobility on a local international contract. What elements would have to be included in a package if they were to answer to these needs?

4 To what extent do you believe the distinction between the three groups of assignment packages (expatriate contract for expatriates, local international contract for local international hires and local contract for external international new- recruits) to be fair? To this end (a) refer to equity theory and determine the referent person in each of the three cases and (b) discuss the role of procedural justice! What can the company do to

310 CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS

provoke positive behavioral intentions in reaction to the packages?

5 What does the company need to take into consideration in order to make the Local

International policy for this new international employee population be applicable on a global basis? Formalize your arguments and propose a suggestion of a policy framework.

NOTES AND REFERENCES 1. Copyright Maike Andresen 2011. 2. The case study is inspired by a project done by an

international group of four students – Camille Devautour, Tobias Falck, Christina Lindner, and Jenny Karine

Sundsbø – within the framework of the, ‘Master Programme in European Human Resource Management’ (www.ehrm.de).

CASE 5 LOCAL AND INTERNATIONAL? MANAGING COMPLEX EMPLOYMENT EXPECTATIONS 311

CASE 7

BALANCING VALUES – AN INDIAN PERSPECTIVE ON CORPORATE VALUES FROM SCANDINAVIA

By Martine Cardel Gertsen and Mette Zølner

ACT 1

Bangalore, October 17th 2012, 8.45 AM

Amrita Chopra, a senior financial manager in Pharmaz India, is sitting in the back seat of one of the company cars while the driver slowly but skilfully manoeuvres the car forward through Bangalore’s dense traffic jam, using the horn diligently. This morning, Amrita is on her way to a meeting with her new immediate superior, a recently arrived expatriate, Niels Nielsen. He has told her that he wants them to discuss the alignment of local work procedures with Pharmaz’ cor- porate values.

Pharmaz India

Pharmaz India in Bangalore is a subsidiary of multina- tional pharmaceutical company headquartered in Denmark. Pharmaz employs around 6000 people, 2500 work in Denmark, the rest in subsidiaries in more than 30 countries around the world. Pharmaz’ top management, and the CEO in particular, like to characterize the company as ‘value-driven’. At Pharmaz the corporate culture is taken very seriously, not least at the headquarters. It has developed slowly as the company has grown over the years, for the first many years primarily within the borders of Denmark. But now, as the company finds itself in a process of rapid globalization, the headquarters is making very conscious efforts to disseminate the corporate culture across borders.

Pharmaz is strongly focused on research, and this is reflected in its corporate culture and values. The company attempts to create a learning environment for all employees, not just those working in R&D. Pharmaz’ website and latest annual report state: ‘New ideas are our business and what we live from. Therefore our corporate culture strongly encourages all

our employees, regardless of their position, to learn continuously and to work together creatively’. In ac- cordance with this ideal, three corporate core values have been formulated:

l Empowerment, implying that all employees should be able to make independent decisions within their respective areas of responsibility.

l Equal opportunities for all employees to develop their competences and advance in their careers.

l Openness in communication between employees at all levels in order to further free exchange of knowledge and ideas.

Pharmaz India has been in existence since 1983, but until 2005 it was a local sales office with 10–15 employees. The local management was allowed con- siderable latitude since the subsidiary’s strategic im- portance to the company was limited. In 2005 this situation changed when Pharmaz established an off- shore financial services center in Bangalore. This loca- tion, known as the ‘Silicon Valley of India’, offers low costs and qualified, English-speaking professionals in the relevant fields. The process was initiated with two local employees, and gradually, more employees were recruited to form teams responsible for registration of invoices and various accounting and controlling tasks. At first, the center only performed tasks for the head- quarters in Denmark. After a couple of years, the cen- ter began expanding more rapidly, and tasks requiring collaboration with employees in other subsidiaries were gradually introduced. Today, the center employs 50 people and this number is expected to grow to more than 130 employees in the course of the next two years as more financial activities will be transferred from other parts of Pharmaz to India.

In 2007 Pharmaz acquired a part of a locally owned Indian company in order to be able to establish its own production facilities, including some R&D activities, in

CASE 7 BALANCING VALUES – AN INDIAN PERSPECTIVE ON CORPORATE VALUES FROM SCANDINAVIA 319

Bangalore. The acquisition added more than 100 employees to Pharmaz India’s workforce. So today Pharmaz India comprises, in addition to various staff functions such as HR, a production unit, a R&D department, a sales department and a financial serv- ices center. The subsidiary employs more than 200 and according to Pharmaz’ plans, a considerable number of new people will be recruited in the years to come, not just in the services center. Thus, Pharmaz India has achieved crucial strategic importance and has become a center for growth. This increased focus on Pharmaz India means that the management at headquarters is very keen that the corporate values of empowerment, equal opportunities and openness are fully implemented, or ‘lived’ as the top managers like to put it, in the subsidiary.

The senior financial manager and the challenges she is facing

Amrita Chopra is 45 years old and she has worked for Pharmaz for three years. One of the company drivers takes her to the office in the morning around 8 am and picks her up in the evening around 6 pm. Although she lives only 20 km away the journey takes about an hour. She prefers not driving herself on the bumpy and chaotic roads where holes in the asphalt, motorbikes, bikes, dogs, cows and pedestrians abound. Amrita also appreciates the opportunity to arrive home with- out being too stressed, especially because she has a family to take care of; she is married and has two sons who are 12 and 15 years old.

The financial services center where Amrita works is divided in two sections: one providing financial serv- ices to the headquarters and subsidiaries in Europe, and one providing services to the Pharmaz’ subsidia- ries Asia, the US and Latin America. Amrita heads the first section where currently 20 people work; they are divided into 4 teams. As for Amrita’s background, she has a master’s degree in finance from a reputable Indian University and is a chartered accountant. She was born in Delhi where she lived until she got married. Her husband is in the hi-tech business, and Bangalore seemed to be the best place for him to be in terms of enhanced chances for career progress, so the couple decided to move there.

Until Amrita got the job as a senior financial manager with Pharmaz, she worked in the finance department of a locally owned IT company. She

achieved good results in her former job, but she often felt that she had to struggle to obtain respect in the company that was very male dominated and managed in a way she thinks of as ‘traditionally Indian’. She was the first employee ever in the company to take mater- nity leave and some of her male colleagues seemed genuinely surprised when she came back to work after her leave. She did not receive any training, the pay was average, and her working hours were long. Still, she was not unhappy in her former job. Her work was interesting and she always felt that she had the sup- port of the CEO who did his best to help her when problems occurred. By comparison, Pharmaz offers more advantageous working conditions. The salary is better, though admittedly not quite as good as in some other international companies in the area. Amrita has been on various types of training in Denmark and she appreciates that the company invests in her pro- fessional development in this way. At Pharmaz there is a lot of talk about work–life balance, especially from the headquarters. The idea is that employees should be able to have shorter working days and more flexibil- ity in their schedules because of more efficient organi- zation of work. As a manager Amrita is rarely able to leave very early, but her working days are still shorter than they used to be, which makes is possible for her to spend more time with her family.

Although Amrita likes her job, her family is her first priority. Her husband earns enough for all of them to live comfortably, and she has at times been tempted to stay at home and be a full-time housewife. But it seems to her that it would somehow be a waste, considering her education. Also, since they live with her in-laws, there is always someone at home to look after the children and the house. And they have a live-in maid who does most of the housework. Like her own family, Amrita’s in-laws are quite liberal in their attitudes to women’s role. When they moved in, they told Amrita: ‘You just go ahead and look for a job; we will take care of the children’. Amrita is glad that they have given her this opportunity to continue her career.

Still, life in Pharmaz is not uncomplicated. Amrita finds that the corporate values are in line with her own ideas of what management ought to be, at least ideally, but she finds them difficult to implement in an Indian context. As a middle manager she often feels squeezed between the headquarters’ wishes and the expectations of her employees. Visiting managers from headquarters have voiced that they find her

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management style a little too authoritarian and have encouraged her to ‘act more like a coach, delegate more and give fewer orders’. Amrita argued that as the senior financial manager, the results of the section are her responsibility. Therefore, she sees it as her job to tell her subordinates what is good and what is not good enough so that they can improve their perform- ance. The managers from headquarters answered that of course she should intervene if someone kept making mistakes, but in general, they believed the employees would learn more from being empowered to work independently. Amrita was – and remains – unconvinced, but as a manager in a subsidiary she feels compelled to follow directions from the head- quarters. So she delegates more and gives fewer orders. Yet, her employees complain that she expects too much of them when she tries to adjust her behav- ior to the headquarters’ suggestions in this way. If she leaves it up to them how carry out their tasks and how to organize their work, some of them just keep coming back to her and ask for directions anyway. Others appear to interpret this approach as an indication that she does not find their work important and conse- quently, they get very little done. There are exceptions, of course – a few of the most competent financial ana- lysts seem to thrive without managerial interference.

Instilling and maintaining a collaborative spirit in the teams can be quite a challenge, too. At the moment three of the teams function well, but the situation has become quite tense in the fourth team. Recently, the team has made a few regrettable mistakes that appeared to be due to internal misunderstandings and lack of communication. Amrita has been told that this resulted in open quarrels between the team members, but she did not witness this herself. So far, no one has been willing to tell her exactly what the problem is and the team leader, Balvinder Singh, is evading her ques- tions. It is clear to her, though, that communication has not flown easily between the team members since the arrival of her section’s newest employee, Shankar Savarkar, a competent chartered accountant. Shankar comes from a Brahmin family and thus belongs to the highest ranking caste according to the traditional Indian view. Amrita is concerned that he tends to act in a rather standoffish manner with Balvinder and two other members of his team, and she has noticed that he never eats lunch with them. She thinks that the team members’ different backgrounds may be at the root of the team’s problems, even though she feels that this ought not to be so in a professional working

environment. It is a delicate issue. According to Indian legislation, the higher castes are not to enjoy any spe- cial privileges in the workplace, and caste is never openly discussed in Pharmaz. Amrita is at a loss what to do to address the team’s difficulties.

The car arrives at Bangalore’s largest technology park and stops at the entrance to wait while the secu- rity guards check the vehicles in front. Next to the line of cars employees queue up and move slowly through the gates as the guards finish checking their entrance cards. As a senior manager and a familiar face, Amrita simply nods to the security guards and her car enters the technology park which offers quite a change of scenery compared to the buzzing, dusty road, lined with the shacks of the poor in front of the larger houses. In the park, all the buildings are tall and sleek, constructed in glass and steel, and between them the green lawns are dotted with well-kept flower beds.

The company car lets Amrita off in front of the building where Pharmaz India is located, now occupy- ing three full floors. Amrita gets out of the car, habitu- ally taking care not to disarrange her clothes in the process. She almost always dresses in a traditional Indian sari, and today she has chosen one of her best, a bright pink one, to feel as confident as possible dur- ing the important meeting. She wears a bindi (a dot of color, usually red, applied in the center of the forehead) of a matching shade. Her hair style is the same as always: a long black plait. Generally, the employees in Pharmaz dress smartly, but relatively informally. A few women wear jeans and Western-style shirts or blouses, but the majority are dressed traditionally in ei- ther a salwar kameez (loose trousers and a long tunic) or a sari. The men wear shirts with long sleeves and dark trousers, but normally, jackets and ties are only worn for the occasions of important external meetings. Amrita takes the lift to go to the 9th floor where the fi- nancial services center is located.

On her way to the meeting she stops by to say hello to the regional manager, Ganesh Karanth. The regional manager has been in Pharmaz India since the subsidi- ary was founded and has worked his way to the top. His long career in Pharmaz has given him a lot of insight into the company and Amrita likes talking things through with him before important meetings such as the one she has today. She would like to get an idea of what the rest of the management in Pharmaz India thinks of Niels’ approach and plans. Also, she would like to ask the regional manager for advice on how to solve the problems in Balvinder’s team. Although

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Ganesh has of course never said so, she knows that he is a Brahmin because of his name, his food prefer- ences and his social network of other Brahmins. Amrita would not want to raise the topic of caste explicitly with Ganesh. But she thinks that he will understand without her having to spell it out. And she has seen him chatting with Shankar several times, so he may already be familiar with the situation in the team. But unfortunately, Ganesh is not in his office this morning.

Niels texts her that he is delayed. Stuck in a traffic jam. Amrita asks the new ‘chai wallah’ to bring her a tea. He is a thin, quiet man of middle age, and as she expects him to speak poor English she addresses him in Hindi. She is still not comfortable with the local language, Kannada, since she is not from Bangalore originally. Not that it matters very much in her daily life; otherwise, she would probably have learned it by now. But most people in the fast-growing city of Bangalore seem to be from somewhere else, especially the pro- fessionals. English is Pharmaz’ official corporate lan- guage and here, everybody, except the ‘chai wallahs’ and the janitors, speaks it fluently and use it for all work-related purposes. Amrita gets her hot tea, and as she sips at her cup absentmindedly she is getting increasingly impatient and nervous.

The expatriate finance director and his plans

Amrita is always apprehensive before meeting with Niels, and she knows that today’s discussion will be difficult. His direct and demanding way of communi- cating was initially a bit of a shock to Amrita and sev- eral of her colleagues, and she still finds it a challenge. Niels urges and expects a free exchange of ideas, and Amrita finds that discussions with him can be quite inspirational. He is good at showing his appreciation when he likes the viewpoints and ideas presented. Sometimes, however, he can be difficult to convince. This, in Amrita’s experience, is especially the case when your arguments refer to the particularities of the Indian context and the need to bend Pharmaz’ corpo- rate values in order to put them into practice in a realis- tic manner.

Niels took up his position as finance director in Pharmaz India three months ago. He is Danish, 40 years old, and he already has many years of experi- ence in Pharmaz, not only from headquarters, but also

from the subsidiaries in Mexico, China, and Spain. He insists that everybody should use his first name and dislikes it when subordinates address him ‘Sir’. Amrita remembers when he first corrected her in this regard with the explanation that ‘what counts and deserves respect is not a person’s title, but his or her skills and competences’. Niels’ management style is strongly embedded in the company’s ideas about empower- ment, equal opportunities and openness. And, in line with Pharmaz headquarters’ aspirations, he never misses a chance to practice these values conspicu- ously within the Indian organization. Though Niels’ knowledge of the organizational context is limited after just three months in Bangalore, he has strong opinions about what to do and what not to do. He believes in implementing the corporate culture by managing explicitly through the values, for instance with a view to speeding up decision-making processes by minimiz- ing control and bureaucracy. As far as practically possible, he believes that decisions are to be made by the people who will carry them out and live with them in their daily work. Now, he finds that the time has come to reorganize the work processes in the financial services teams so that they reflect Pharmaz’ business model and values better. And he has decided to start with the four teams in Amrita’s section.

Amrita is not against changes being made in her teams, but she hopes to be able to make Niels realize that you cannot go all the way with Pharmaz’ manage- ment style and values right away. Moreover, she would also like to use the opportunity to suggest that a way of motivating employees to accept more responsibility in their daily work would be promotions and prices. She has already mentioned this idea briefly to Niels, but she is not sure what he thought about it. He seemed to find it a bit amusing, somehow, so maybe he just did not get the point. So this time, per- haps, she should also emphasize that promotions and prices can be important instruments for Pharmaz to use in order to retain their qualified employees in the competitive and dynamic Bangalorian labor market for financial experts.

Question:

l Identify the main issues raised and discuss how they may be explained in terms of the cultural and institutional contexts of Pharmaz in general and Pharmaz India in particular.

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ACT 2

Pharmaz India’s office in Bangalore, October 17th 2012, 9.30 AM

Amrita and Niels meet to discuss challenges and possible courses of action

Niels arrives 30 minutes late. He is dressed in jeans, a short-sleeved blue shirt and sandals. Amrita reflects that with his laidback attire, one could almost mistake him for one of the American tourists she saw in Goa last month when she spent a long weekend there with her family. He apologizes so profusely for having kept her waiting that it almost makes Amrita feel as if he is the subordinate and she the superior. Although it makes her slightly uncomfortable, it also makes her feel that he respects her as a person. So she is a little more at ease when Niels comes straight to the point and addresses the issues he would like to see solved.

Niels begins by showing her a long e-mail sent to him by Sebastian Skram, the corporate finance direc- tor. It is in Danish (and Amrita is tempted to remind him that the corporate language is English, but she checks herself), so Niels translates for her. The mail reads:

Dear Niels, [Some initial small talk about the bleak weather in Copenhagen and inquiries about the well- being of Niels’ family; he leaves this part out when translating to Amrita.] As you no doubt remember, we took some measures last year here in the corporate finance department at headquarters to make sure that our corporate values of empowerment and open knowledge sharing are implemented as fully as possible. Among other things we redefined the team lead- ers’ job descriptions so that they now spend less time on supervision and more time on de- velopment of new services and procedures in dialogue with our colleagues from the depart- ments involved. They do, of course, still involve themselves in the teams’ task, especially the more complex ones, but they spend less time following up and checking the team members’ work. Although this means that an occasional minor error slips through from time to time, we have found that it has freed a lot of resources for more creative purposes. In addition, we have

also introduced a team bonus to promote the collaborative spirit. It is a very minor part of the employees’ pay, so the psychological aspect of the incentive has probably been more important than the money in itself. The team leaders as well as the team members find that the changes have made their jobs more interesting – as clearly reflected in our latest employee satisfac- tion survey. I mentioned this to Emil [Emil Bistrup, the corporate CEO of Pharmaz] when we had lunch together yesterday, and he was very enthusiastic about it – you know how much weight he attaches to our corporate values. He suggested that similar efforts are made in the financial services center in Bangalore; with the plans for its growth it will soon be more impor- tant to the company that our corporate finance department here. I promised to take it up with you, but I realize that other measures may be more appropriate in Bangalore, so I leave that up to your judgement entirely. What matters is the result: the best possible implementation of our corporate values. If you believe it will be helpful I’m sure we can find the means in the budget to put the center’s employees through a more elaborate course in our corporate values. Anyway, think about it and let me know what you plan to do and how I can assist you. Best regards, Sebastian

The mail makes it clear to Amrita that the financial services center has the attention of the top manage- ment, and although this may be an advantage in her future career, she cannot help feeling a little apprehen- sive about it. Also, she finds it puzzling that the corpo- rate finance director appears to say in his mail that he does not see an occasional error as a problem. She thinks that is a risky attitude in a finance department, but she decides not to mention this to Niels as she does not wish to appear overly critical of her superiors. She asks Niels what he intends to do, and he says that the mail only underlines the need for changes that would be necessary anyway. He elaborates: The growth plans for the financial services center mean that the future and present employees need to be empow- ered to work out more solutions independently – or together in their teams, but without constant managerial input and follow-up. As long as the center’s tasks pri- marily consisted in invoicing for the headquarters and

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other relatively routine oriented tasks, this was less im- portant. But now the center is expected to carry out more and more complicated tasks, not just for the headquarters, but also for many different subsidiaries.

Colleagues from all over the world call the center when they need help to solve a wide variety of financial issues. And Niels has received some complaints that although everybody is very friendly on the phone, it sometimes takes several days to get an answer to a fairly straightforward question. Niels knows that the center’s employees have all been very carefully selected and as he sees it, their technical qualifications as financial experts cannot be questioned. So the problem, he says, is not that they are unable to respond, but rather that their work procedures are too bureaucratic and that the employees do not feel empowered to do much without the explicit approval of their team leader. In many cases they will also wait for the approval of their senior financial manager, Amrita. He would like her to spend less of her time exercising micromanagement and more time on actively empowering her subordinates.

In addition, Niels goes on, it has been mentioned by several of the center’s users that the team mem- bers do not seem to know very much about each other’s work, so when the person they have talked to previously is off or at a meeting, no one else on the team seems to be able to help them or to know any- thing about the issue. He concludes that more knowl- edge sharing is called for – in line with Pharmaz corporate principles.

As always, Niels Nielsen asks Amrita for her opinion and feedback on his thoughts. The question is how he and Amrita can ensure that the employees get the cor- porate values under their skin and act accordingly, ideally without even thinking about it? Amrita feels embarrassed because her management style has been criticised, and she finds it difficult to come up with solutions right away. She tells him that in principle, she agrees, the values are not implemented fully, and some changes may be called for. She does not, how- ever, believe that another course in the corporate val- ues – which the employees have been told about so often that they know the exact wordings from the an- nual report by heart – will change very much. Niels agrees; something else is needed to teach the employees how to ‘live’ the values.

Amrita tells Niels that she has actually done her best to put the corporate values, especially the value of empowerment, into practice in her dealings with her

subordinates. She has left a lot up to them and given fewer orders. But so far, it has not been a success. Indeed, the latest anonymous employee satisfaction survey in her section showed, as Niels already knows, that she was rated poorly as a manager. Naturally, this worries and frustrates Amrita. Previously, she was rated much better, and she thinks that her low score can be attributed to the attempts she has made to empower her subordinates. With some exceptions, Amrita does not believe that the employees in her sec- tion share Pharmaz’ ideas of what a boss should be like. She suspects that they expect a good boss to know all the answers and not wait for the employees to come up with good ideas. He or she should take on the responsibility for everything, give explicit orders and follow them up. When Amrita thinks back of her own experiences in the Indian educational system, she tells Niels, she does not find their attitude very surpris- ing. She believes it may be different in some educa- tional institutions today, but the way she remembers it, she was not rewarded for being critical or coming up with new approaches when doing her assignments, on the contrary. The easiest way to get good grades was to stick as closely as possible to the teachers’ or professors’ exact instructions, maybe even repeating their wordings where appropriate. Amrita is not con- vinced that all her subordinates are eager to take on more responsibility in daily work.

Niels reflects on this. Her interpretation of her low score surprises him. He finds it strange that employ- ees should complain about a boss who gives them too much freedom, but on the other hand, what she says may make sense here in India. He thinks to him- self that he has probably been too optimistic – the implementation of Pharmaz’ corporate culture will take time and hard work. Niels says to Amrita that he appreciates that she has taken headquarters’ wish to practice empowerment seriously and that she should not be discouraged; they must expect the process to take some time. And maybe she went about it too abruptly so that her subordinates felt suddenly left to their own devices? Amrita nods, this could well have been the case. Niels specifies that empowerment does not imply that the employees are expected right away to be able to figure everything out entirely on their own, but he would like her to coach the employ- ees so that they understand why things are done in certain ways. The idea is to explain the background and the reasoning behind Pharmaz’ business model, financial guidelines and principles for collaboration so

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that they will, eventually, be able to reason in the same way themselves and make more independent deci- sions. Amrita is still hesitant, but says that maybe, after a phase of very close managerial monitoring to help employees understand how to adapt to the new demands, Niels’ ideas might work, eventually.

Amrita has given less thought to the value of open communication and knowledge sharing, but she tells Niels that sometimes it is a little difficult to motivate team members to share what they know. All her subordinates have good credentials and experiences from other off-shore centers. As she and Niels both know, the labor market for professionals in Bangalore is highly competitive, and generally, her employees are eager to advance their individual careers. This may lead some of them to view knowl- edge as a strictly personal resource that can be depleted if it is shared with colleagues. Amrita realizes that this is not the way Pharmaz would see it, but in a sense, she understands her employees’ concerns in this respect. After all, colleagues are competitors, too, since not everyone is likely to get promoted to head a team, for instance.

Another problem, as Amrita sees it, is that the orga- nization is very flat compared to most Indian compa- nies. There, it is clear who refers to whom in the hierarchy, and when you make progress in your work, you are promoted to the next level on the career lad- der. At Pharmaz, her employees are all officially ‘finan- cial analysts’, even the team leaders, although their wages are higher. Amrita believes that it would have a motivating effect to introduce more titles. It would give people something to work towards and it would make them feel appreciated, in a manner visible to all, also to their family and friends outside the company, when they reach a goal. Why should the team leaders not be called ‘financial managers’, for instance? And the best of the team members ‘senior financial ana- lysts’? She has suggested this to headquarters before, but was told that her idea did not fit into Pharmaz’ title structure.

Amrita also suggests that they could nominate an ‘employee of the quarter’ in the services center and give him or her a small symbolic prize, maybe a small amount of money, as well as a certificate to frame and hang on the wall in his or her cubicle. She believes that her employees would appreciate such a gesture, and she also knows that they would probably like to be able to attach such a certificate to their CVs to docu- ment that they have done well.

Niels ventures a remark there is no tradition for prices at Pharmaz’ headquarters and that there, most people would find it presumptuous or even slightly ridiculous to flaunt such a certificate on their wall. Otherwise, he listens carefully without interrupting. Finally, he says that he finds her ideas interesting, also considering that a couple of the center’s most qualified and ambitious financial analysts have recently handed in their resignations and accepted positions with major US-owned companies. Then Niels asks Amrita to come back the following week with a proposal for integrating Pharmaz’ values, especially empowerment and knowledge sharing, in a more explicit manner in her section. Also, he asks her to elaborate on her ideas about how to motivate and retain employees.

Question:

l Imagine yourself in Amrita’s position. Which proposal would you make to Niels Nielsen and how would you argue in order to convince him?

ACT 3

Pharmaz India’s office in Bangalore, January 17th 2013, 2.00 PM

Amrita and Niels meet to evaluate the process so far

Amrita and Niels are seated at the meeting table in Niels’ office. They have been told to expect a visit from Sebastian, the corporate finance director, next week. In preparation, he has asked them to evaluate the last three months’ developments in the center so that they can discuss the progress made, especially as to the implementation of the corporate values, and decide what else needs to be done.

Amrita has worked very hard to change the way in which her section works. She suggested in her pro- posal that new job descriptions would have to be writ- ten for everyone, specifying exactly their areas of responsibility and explaining the types of decisions they would be expected to make on their own. Also, each team is to hold a short meeting every morning to inform each other of what they are doing, and every- one is expected to contribute. Other than that, Amrita suggested that as a first step, most of the focus should be concentrated on the team leaders to make sure that they understand what empowerment and

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knowledge sharing means and that they practice it in their teams. They have all read about the values and attended several presentations of them, so the chal- lenge is the daily practice, not the theory. Therefore, Amrita suggested in her proposal that she should ded- icate some days each week to follow a team leader, observe his or her work, and afterwards discuss with him or her how the corporate values can be promoted more. Niels accepted Amrita’s suggestions in these respects and told her to go ahead.

This afternoon Amrita tells Niels that she is satisfied with the results. The employees appear to be much happier now that it has been made clearer to them what Pharmaz expects from them. Some still ask their team leaders or Amrita for approval before they make decisions or send their reports to the center’s users, but most do it less frequently now. And all the team leaders try hard to follow Amrita’s new directions. Niels replies that Amrita has done a good job, but adds that when he saw the many pages with job descriptions she has produced he could not help worrying that they are creating more bureaucracy instead of reducing it.

Amrita argues that they are necessary: if empower- ment is to make sense to her subordinates, they must know exactly what they are empowered to do. Other- wise, it is just an abstract notion. Also, when Niels comes to visit Amrita’s section he has noted that she monitors the team leaders very closely indeed and gives them detailed instructions on how to plan their days and how to delegate tasks to different team members, for instance. To Niels, this close monitoring does not seem like empowerment, and he knows that Sebastian would probably agree. But after six months in Bangalore, Niels begins to feel that it may not be worthwhile insisting on implementing the corporate values in completely the same manner as at headquar- ters. Maybe different versions of empowerment, equal opportunities and knowledge sharing are possible – and even necessary? He shares these thoughts with Amrita who is clearly pleased that he finally under- stands this. Niels is not so sure that Sebastian will agree, though. It may not fit his vision of Pharmaz as a global, value-driven company – they will have to dis- cuss it next week.

In accordance with Amrita’s suggestion, Niels intro- duced a more differentiated title structure for the cen- ter in late October. He is not personally enthusiastic about it, and he finds that in principle, people ought to pay more attention to the content of their job than to the title it entails. This is also an opinion he has

frequently heard expressed by his colleagues at head- quarters. But he decided to be pragmatic in this matter. After some months in the center he was already well aware of the local employees’ impatience to advance visibly in the company hierarchy, so he did not doubt that Amrita was right in assuming that new titles would have a motivational effect and probably result in more willingness to take on responsibility. But at the same time, he was wary of creating titles that would be incompatible with the company’s overall global title structure and create misunderstandings in other parts of the organization. Now, the team leaders have been promoted to ‘financial managers’, and the best of the team members have been encouraged to apply for positions as ‘senior financial analysts’. Sev- eral local employees, including all the team leaders, have expressed their satisfaction with this decision, and although it is too early to judge the effect for sure, Amrita tells Niels that the team leaders are eager to prove that they have earned their promotions. So Niels believes it was the right thing to do, although some of his colleagues at headquarters have been joking a bit about the apparent inflation in titles in Pharmaz India.

Niels was very surprised, however, when he was approached the other day by Pavan Surin, one of the team leaders in Amrita’s section, who suggested that the title structure should be expanded further. He felt that he needed an additional category between ‘finan- cial analyst’ and ‘senior financial analyst’ in order to be able to reward a team member who was very good, but not quite at the ‘senior financial analyst’ level. Frankly, Niels found this slightly ludicrous – how many hierarchical levels are necessary in a team of five peo- ple? One for each individual? But since he knows Pavan to be competent and respected by his col- leagues, he would like to discuss it with Amrita before dismissing it altogether. And since he has consistently told all his subordinates to feel free to approach him any time with any ideas they might come up with as to how the center’s work can be improved, he thanked Pavan for his suggestion and promised him that he would give it some thought.

Amrita is not very pleased that Pavan chose to dis- cuss this directly with Niels instead of taking it up with her first. She knows better than to mention this to Niels, however. She knows that he sets great store by the corporate value of ‘openness in communication between employees at all levels’, and she does not feel like being lectured about it. She hesitates to take a very firm stand regarding Pavan’s suggestion, but as

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she says to Niels, he is probably right that the intro- duction of an additional step on the career would moti- vate some team members.

In her proposal to Niels, Amrita suggested the introduction of a reward system where employees are rated for their performance by their immediate superi- ors in order give a bonus prize to the employee with the highest score each quarter. In this matter, Niels did not quite follow her suggestion. He felt that a reward system would indeed be appreciated by the local employees, and he had been told that it is customary in most companies in Bangalore. He worried, how- ever, that Amrita idea would not be conducive to team work. Therefore, he has devised a system where people are not only rated by their superiors for their individual performance, but also by their colleagues for their ability to share knowledge and collaborate. In this way the reward system can serve not just to motivate hard work, but to promote Pharmaz’ values of open- ness and knowledge sharing, too. The system was introduced recently so no one has received a bonus prize yet. When it was presented he felt it was well received, but Niels is eager to hear Amrita’s opinion on whether or not it has had any impact yet.

Amrita tells him that she believes the employees are genuinely happy with the introduction of a bonus prize, something which they had long found to be missing in Pharmaz. But she proceeds to tell him of a problematic recent episode: Balvinder’s team has been given a special assignment by headquarters. It consists in a thorough, critical financial analysis of a business unit in Germany that is experiencing some severe difficulties. The financial report will form part of the basis of the strategic decision as to whether or not to close the unit down. Because of his excellent qualifications, Shankar has been asked to take on the main responsibility for this task, and he has very happily accepted. The problem is that he has become very possessive of this task and discloses next to nothing about it at the team’s daily morning meetings.

Balvinder finds – and Amrita agrees – that everyone on the team could learn something about Pharmaz’ busi- ness from this important, strategic assignment. There- fore, he asked Shankar last week to involve his colleagues and delegate some of the less complicated tasks involved. This, however, did not happen. When the team leader took it up with Shankar again after some days, he seemed rather annoyed. Amrita, who overheard their conversation as she passed Shankar’s cubicle, was shocked to hear Shankar tell Balvinder that he intends to rate him as poorly as possible – and tell Shivesh [one of his colleagues on the team] to do the same – if he keeps nagging him. Balvinder has not brought the issue up with Amrita, but she would like to do something about it. When she raised the issue dur- ing an informal chat with Ganesh this morning, he defended Shankar. He pointed out that he has excep- tional qualifications and is very hardworking, so he will be able to do the job better and faster on his own with- out spending time on involving the others. Amrita had to agree, this is probably true, but somehow she finds it beside the point.

Niels says that they have to find a way to deal with the problems in Balvinder’s team, but he needs some time to think about it. Right now, they have to decide what to tell Sebastian about their progress, the issues that remain to be solved and their suggestions for future action.

Questions:

Step out of Amrita’s role and answer the following:

1 Do you feel that the measures taken to implement the corporate values and reorganize work in the financial services center have been appropriate?

2 Would you have done anything differently?

3 How should one proceed now to achieve the best possible result for Pharmaz India’s financial services center?

CASE 7 BALANCING VALUES – AN INDIAN PERSPECTIVE ON CORPORATE VALUES FROM SCANDINAVIA 327