Managing the Multinational Enterprise

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International Journal of Human Resource Management

ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: https://www.tandfonline.com/loi/rijh20

Transfer of HRM practices across cultures: An American company in Scotland

Monir Tayeb

To cite this article: Monir Tayeb (1998) Transfer of HRM practices across cultures: An American company in Scotland, International Journal of Human Resource Management, 9:2, 332-358, DOI: 10.1080/095851998341125

To link to this article: https://doi.org/10.1080/095851998341125

Published online: 18 Feb 2011.

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Transfer of HRM practices across cultures: An American company in Scotland

Monir Tayeb

Abstract This paper reports the � ndings of a case study into human resource management (HRM) policies and practices of the Scottish subsidiary of an American multinational � rm. The study is discussed within the debate on transfer of HRM practices between nations, and on subsidiary – parent company relationships. The paper makes a distinction between HRM policy on the one hand, and HRM practice on the other. It will be argued that whereas companies might � nd it feasible to have company-wide policies, they might � nd it unavoidable to be responsive to local conditions when it comes to HRM practices. Further, it will be argued that some practices can be transferred across nations almost without any change from one country to another. Some must be modi� ed to become workable in another setting. And some are more deeply culture-speci� c and may not always be transferable. The � ndings of the study support the argument that multinational companies’ management practices are more prone to local cultural in� uences than are their overall policies and strategies. Moreover, some of the practices which the company had imported from abroad had to be modi� ed to make them workable, given its local cultural and non-cultural contexts. These local contexts had at the same time affected the relationship between the Scottish subsidiary and its parent company. The study found four clusters of factors which intervened in this relationship. A dynamic model of subsidiary–parent company is proposed to elaborate such an intervention. On the basis of the study it is argued that HRM in a foreign subsidiary is a complicated matter. The choice between one of three major options, polycentric, ethnocentric, and global, advocated by many scholars, is found to be too simplistic a model for understanding what actually goes on in a subsidiary and between it and its parent organization.

Keywords HRM, multinationals, subsidiaries, cross-cultural, culture

Introduction

This paper discusses the human resource management of NCR Dundee, one of the most successful companies in the international market. The company has achieved one of the best performance records both in commercial terms and in terms of the management of its employees. NCR Dundee is one of the major employers in the city of Dundee and its environs, and is viewed with affection in the community. You only need to take a taxi ride to NCR buildings, situated in the outskirts of the city, and to talk to the driver to sense this. In the company itself, the employees and management alike have the same sentiments. You only have to walk around the premises, and to talk to people, either casually or in formal interviews, to notice the sense of pride in belonging to such a company and in having been able to get it where it is collectively. A very low employee turnover over its � fty years of history is an indication of this.

The International Journal of Human Resource Management 9:2 April 1998

0985–5192 © Routledge 1998

The � ndings of the study are discussed in the context of the debate surrounding cross-cultural transfers of HRM policies and practices, and a model which is proposed for such transfers.

Background to the study

Transfer of HRM policies and practices

Multinational companies are a powerful vehicle for transfer of managerial and technical knowledge, as well as capital and other production functions across nations. The whole process is part of their overall strategy. Broadly speaking, multinational � rms have three HRM strategic options to choose from: Ethnocentric, polycentric, and global (Perlmutter, 1969).

An ethnocentric strategy is one in which the company chooses to implement similar HRM policies and practices in its foreign subsidiaries to those customary in its home country – an American � rm taking American management style with it wherever it sets up a unit, for instance.

A company can follow largely the practices prevalent in the host country, this would be a polycentric strategy. For example, the subsidiary in Thailand may be organized and managed as the majority of Thai companies are; the one in Germany follows German practices, and so forth.

In the global strategy, the company would devise and implement a universal company-wide policy, fostered through its organizational culture and philosophy – McDonald’s HRM strategy, no matter where in the world.

The freedom to choose between the above strategies, depends not only on the philosophy and preference of the company, but also on the local conditions. International � rms might in practice be inclined to opt for a hybrid strategy and adopt, for example, an ethnocentric approach with respect to some subsidiaries and a polycentric one for others.

For instance, it may be easier for a multinational to impose its home-grown HRM policies and practices on a subsidiary where the local workforce does not enjoy much power, or is unskilled and uneducated, or job opportunities are scarce. By contrast, in a country where there is a low rate of unemployment, people are highly educated, skilled, and are aware of their rights, and local rules and regulations also support them, the multinational � rm might � nd it dif� cult to ignore local customs and practices.

In a study of � ve manufacturing and � ve service subsidiaries of Japanese multinational companies, Beechler and his colleague found differences in the degree and nature of the practices that these companies had brought with them to their US subsidiaries (Beechler and Yang, 1994).

The service companies were based in New York City. Their environment was characterized, among other things, by a heterogeneous workforce in terms of culture, religion, race and gender; a � ercely competitive labour market; a high rate of labour turnover; and a need for a highly skilled specialized workforce. Under these circumstances, the Japanese � rms had to depart from a great number of their home- country practices, such as job � exibility, long-term training, group-based promotion and bene� t payment, seniority-based wage agreements, and concern for employees. Instead, after initial unsuccessful experiments with their home-grown practices, they adopted American-style human resource management practices. They opted for recruiting highly

Transfer of HRM practices across cultures 333

specialized employees, no on-the-job training and job rotation, and aimed at pro� t rather than concern for employees.

The � ve manufacturing � rms were located in Tennessee, with an environment characterized by low labour turnover, a relatively uncompetitive labour market, and a homogeneous and less individualistic workforce, compared to the New York City environment.

Here, although the unionized plants offered more resistance to the introduction of Japanese management practices than did the non-unionized ones, the managers were able to implement more successfully some of their home-based human resource management practices. They recruited the workforce after lengthy screening and pre- employment training procedures. They introduced quality circles, an emphasis on process-based control and quality, rather than quality inspection, � exible job rules, job rotation, workteams, and uniformity between blue-collar and white-collar workers.

On the basis of their study, Beechler and Yang (1994) argued that there are three sets of factors which in� uence whether or not a multinational wishes to and can transfer its home-country human resource management practices to its subsidiaries. These are, � rst, factors related to the home country of the multinational e.g. national culture and the extent to which it in� uences the company’s administrative heritage and philosophy. Second, factors related to the host country e.g. culture and its distance from the home- culture, the labour market conditions, and industrial relations rules and practices. Third, factors related to the company itself, such as the extent to which subsidiaries are an integral part of the strategic plans of the parent company and, the degree to which the parent company is dependent on the subsidiaries to provide its required resources.

The multinational companies’ choice of HRM strategy depends also on how the foreign subsidiary is set up. In a green � eld site, the expatriate managers have more room to exercise their choice. The Japanese multinational � rms operating green� eld plants in many parts of the United Kingdom have been able to bring in many of their HRM practices to their brand new subsidiaries. But if the subsidiary is created by taking over an already existing local company, the new � rm is more likely to resemble other fellow � rms in the country, initially at least until gradually the parent company organizational culture asserts itself (Tayeb, 1994).

It is also important to note that multinational companies more often than not function under opposing pressures which they have to reconcile. At the heart of this issue is the need to reconcile the inevitable differentiation within the company (culturally fragmented workforce) with the desirable integration of its parts (the wholeness of the company).

The concepts of differentiation and integration, originally a focus of debate among sociologists, were � rst discussed within the context of management and organization studies by Lawrence and Lorsch (1967). They argued that for an organization to perform effectively in diverse environments, it must be both appropriately differentiated and adequately integrated in order that the separate units and departments are co- ordinated and work towards a common goal.

In the context of internationalisation, Lawrence and Lorsch’s (1967) model has been developed in order to explain the dynamics of managing organizations operating across borders (Doz, 1976; Prahalad; 1976; Prahalad and Doz, 1987). The global organization is faced with a paradox: On the one hand it needs to develop control and co-ordination mechanisms consistent with effective and ef� cient global operations; on the other, it needs to be responsive to national interests which may impede world-wide activities. Applied to human resource management, a multinational � rm intending to maintain its

334 Monir Tayeb

overall identity and strategies, could bene� t from global, geocentric orientation in personnel policies and practices. But in order to remain at the same time responsive to local variations it should have a polycentric (locally speci� c) orientation (Welch, 1994).

Transferability of HRM policies and practices

The economic success of Japan has in recent years enticed academic researchers and practising managers to look to that country’s companies as a model and source of inspiration for management practices and techniques. Until a decade or so ago it used to be, and still is to some extent, the United States which would inspire managers around the world. But can organizations located in widely diverse countries learn from one another, given the culture-speci� c nature of much of management policies and practices? What does transfer of management practices mean for foreign subsidiaries of multinational companies? What factors could help or hinder such cross-cultural transfers?

Questions such as these have for a long time been a centre of debate among academics, and a focus of interest among managers.

From a purely culturalist point of view, organizations and management styles are, as Crozier (1964) puts it, ‘cultural solutions to social problems’. In which case, an Iranian organization has nothing to learn from an American company, because the two countries are poles apart culturally (see, for example, Meyer and Rowan, 1977; Hofstede, 1980; Lincoln et al., 1981; Laurent, 1983).

A proponent of the universalist approach would argue that business is business wherever you go. Managers have to deal with customers, competitors, unions, creditors, and so on, regardless of where they are located (Kerr et al., 1952; Cole, 1973; Hickson et al., 1974; Form, 1979; Negandhi, 1979 and 1985).

Then, there are those who argue that technology carries with it its own imperatives: For an assembly-line car manufacturing technology to be utilized properly a certain organizational design and management style must be adopted. An electronics company on the other hand would � nd a different design more appropriate (see, for instance, Woodward, 1958; Perrow, 1967; Blau et al., 1976).

The reality, what actually managers do, however, is too complicated to � t any one of the above or similar black and white prescriptions (Tayeb, 1988). Some practices can be transferred almost without any change from one country to another. Some must be modi� ed to become workable in another setting. Some are more deeply culture-speci� c and may not always be transferable. Some practices are part and parcel of a coherent overall strategy, a ‘package’, and cannot therefore be transferred successfully in isolation and without the rest of the package going with them as well.

Two points need to be emphasized in the context of cross-cultural transfers. First, as has been argued elsewhere (Tayeb, 1988), certain aspects of organizations are more likely to be universal, and there are areas which are more culture-speci� c. The same broad division applies to a large extent in the context of cross-cultural transfer. That is, those aspects of organizations and management practices which involve human interactions with one another, e.g. human resource management, are the areas where transfers are rather problematical, but not necessarily impossible.

Human resource management practices and policies are not entirely an internal organizational matter. There are various factors outside the formal boundary of an organization which in� uence HRM inside it. National culture, government policies,

Transfer of HRM practices across cultures 335

industrial relations rules and regulations, power of pressure groups, membership of regional and global agreements and institutions, are examples of external factors which have direct or indirect bearing on an organization’s HRM (Tayeb, 1996). To the extent that these outside factors, as well as of course internal factors, are different across cultural borders, the transfer of management practices and techniques are made more dif� cult. A Japanese or American management practice is a culmination of all the factors and forces within its home-base leading to the circumstances which created and nourished that practice. Strictly speaking, unless all those factors and circumstances are recreated in another country, that particular practice would be unworkable there. However, as was mentioned earlier, it is not impossible to import foreign practices and modify them to suit one’s particular circumstances (Oliver and Davies, 1990; Yang, 1992; Tayeb, 1994)

Second, there exists a qualitative difference between a company’s overall HRM philosophy and policies on the one hand, and its HRM practices on the other (Schuler et al., 1993). Whereas companies might � nd it feasible to have company-wide, philosophies and policies, i.e. adopt a global strategy, they might � nd it unavoidable to be responsive to local conditions when it comes to HRM practices, i.e. adopt a polycentric strategy.

The study whose � ndings are discussed below was conducted with the above arguments and debate as its theoretical background.

The study

The study was carried out in a manufacturing subsidiary of an American multinational corporation located in Scotland.

The main objectives of the research were to explore

c the extent to which the American � rm had brought its home-grown policies and practices to Scotland as a matter of its corporation-wide strategy;

c the extent to which local social, political and economic conditions had imposed constraints, and/or created opportunities which could have modi� ed parent com- pany’s approach to HRM in Scotland;

c the extent to which there might have been a difference between HRM ‘policies’ and ‘practices’;

c those aspects of HRM which could be said to be easily transferable across the two cultures, and those which would presuppose certain culture-speci� c conditions for their successful implementation in the subsidiary.

Using semi-structured interviews, the author collected information on the following HRM topics:

the management of NCR Dundee parent–subsidiary relationships management of human resources strategic role of HRM recruitment employee training and development compensation, bene� ts, and pension industrial relations teamwork � exible working patterns

336 Monir Tayeb

quality control the management of expatriates in Dundee and abroad

Altogether 13 employees participated in the interview programme. Their position in the organization ranged from the chief executive to senior directors and managers, down to middle managers , union convenor, and an assembly worker. The interviews lasted between 45 minutes and one and half hours and were tape-recorded and subsequently transcribed. Relevant company documents and literature were also consulted.

Research � ndings

The company and its history

NCR (Scotland) Ltd Dundee is a subsidiary of NCR, an American multinational company, whose headquarters is situated in Dayton, Ohio. NCR as a whole has about 38 000 employees worldwide. The Dundee company employs around 1500 people of whom about 100 are on temporary contracts.

The parent NCR was taken over by another American multinational company, AT&T, in September 1991, and the name of the company was changed to re� ect the new ownership. The union, however, did not work out quite as expected. In September 1995 AT&T announced that it was splitting off the company and it is now called NCR again. The two companies parted ways of� cially in 1997.

The parent company was set up in the last decade of the 19th century in Dayton. The Dundee plant was established in 1946. At the time, the Second World War had just � nished. In Europe, up until that stage most industries had been turned onto a war footing making armaments, so there was a huge need all over Europe to get Europe working again in a peaceful manner. In the United States, General George Marshall proposed that his country should try to revive Europe, and one of the ways he saw it could do so was through what became known as the Marshall Aid Plan, by providing money to allow industry to re-equip itself. At the same time, the Labour government, who had just taken power in the UK, decided that they had to make sure that the regional structures that existed prior to the war and had been pushed into the armament business were reconstructed. The move in the international scene was towards multinational companies, where most of the skill was and so the government offered incentives to attract inward investment. These incentives coupled with the aid from the Marshall Plan allowed them to set up various large companies within the central belt of Scotland and to start new industries. These companies, among whom were IBM, Honeywell, Singer, and NCR, created the infrastructure for a new era of work within central Scotland and also within the Midlands of England, and indeed in the south. They brought new techniques in mass manufacture, mass merchandising, and mass marketing into Europe.

There were several reasons why they chose the UK for their initial European location. First, English language and British culture in general. There were many similarities between the cultures of the two countries that made it easier for the American multinationals to come in. The second reason was the fact that UK was a victor in the war rather than a vanquished, and was in a better state, despite the fact it had major problems, compared to Germany or France or Italy. Another reason was that the multinationals found a skilled workforce here, people who had dexterity and knew how to work in a factory. In addition, they were willing and able to switch from the old industries, such as armament, mining, shipbuilding, heavy engineering and steel, to a

Transfer of HRM practices across cultures 337

new kind of skill and job that the Americans were bringing in. One major thing they did not do at that time, that with hindsight the UK authorities should have insisted on, was that the R&D did not follow the less creative jobs. As a result, the central region of Scotland, like other parts of the country which bene� ted from the Marshall Plan, ended up with most of the second-source manufacturing for American multinationals. However, this was not all bad in that people learned a lot from the incoming companies. In the case of NCR Dundee, as will be seen below, the company was later able to set up and develop a major R&D unit which now employs some 300 people.

NCR Dundee, whose main products originally were cash registers, thrived for some twenty years. But in the 1970s its fortunes started to ebb. The side of the business in which they were involved took a down-turn and the volumes went down in some of these products. NCR moved out of cash registers and its computer business became smaller and smaller. As a result, the amount of work that was available to Dundee went down signi� cantly and that was when there was a big reduction in the workforce. At one time some 7000 employees used to work for NCR Dundee, the numbers went down to around 800 in the early 1980s.

Dr Adamson, the current Vice-president, was appointed by the parent company to either turn the Dundee plant around or close it within six months. Since then, the company has gone from strength to strength. There were at least four reasons for this turn around.

First, they made it their business to know the customer’s business better than he did. Second, they spent a great deal of money on the research and development of the product that the customer wanted. So from the customer knowledge, they created the right product. In addition, having a number of universities around them, they were able to recruit some of the best graduates in the country. Also, the company had all the skills in-house for assembly, test, and manufacture. In a way, a combination of the employees who were able to develop the products desired by their customers, the company’s determination to develop and encourage the skills and core competencies required for the task ahead, and an understanding of the market, set the company on the right footing and separated it from others in the business. In the Vice-president’ words:

We’ve pulled people in here and then re-seeded the corporation. I’ve gone about training people to make them general managers of the business. We’ve looked at the business from a scenario point of view that nobody else even thought about. We created a quality organization that is now starting to � nd it’s way throughout the rest of the organization, nobody did the same thing. We created a customer contact programme that was second to none. People are trying to emulate it now but they haven’t grasped what it’s all about. Just take my own personal situation, I got myself on to a board of a bank. Why? Not just because I needed some more work, but I � gured I had to know their business better than they did and I had to be able to talk in their terms. There are many things that I got involved with because I consider if we’re going to be the top leaders, and that’s the key thing, if you’re going to be the top leader, you have to know the business and then use that knowledge.

NCR Dundee is now involved in 126 countries, but it does not have subsidiaries in all of them. In some countries they deal with local parties such as distributors or are engaged in joint ventures with local partners.

The company’s products are all called self-service systems and they split into two categories. ATMs (automated teller machines) which provide cash, among other things, and other � nancial automated machines which provide a variety of other services other than cash, such as bank statements, and marketing machines.

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Dundee NCR exports 90% of its products and competes globally with major international players in the � eld, such as IBM, Olivetti, Siemens, Fujitsu, Hitachi and Toshiba.

The company’s overall market share is very high and they are probably number 3 or 4 in the global � nancial machines market. But in some products they clearly hold the � rst position. In the self-service business, for instance, they hold a third of the market. Their nearest competitor in this business is INTERBOLD which have about 14–15% of the market share. Looking at the market share from a different angle, the company’s position is high too. In the total installed base, i.e. all the machines that are still working world-wide and were sold over 10 or 15 years, the company’s share of the market is about 42%. In terms of current annual sales, their share outside Japan is about 50%.

At the apex of the company there is a Vice-president to whom eight directors and senior managers report directly. NCR Dundee does not have its own independent board of directors, but the Vice-president sits on the UK Board of Directors situated in London. He also represents the company at Dayton. Figure 1 shows the company’s senior managers chart.

The management of NCR Dundee

Parent–subsidiary relationships

Managerial autonomy The trend in a vast majority of multinational companies is to exert certain amount of control over various managerial and operational activities of their subsidiaries. In the case of NCR Dundee this seems not to be always the case and the Vice-president enjoys a considerable amount of freedom in managing the company. This situation is to a great extent as a result of the purpose for which he was engaged: To save the company or close it down. In a way, the parent company had nothing to lose by giving the Vice-president all the freedom that he wanted.

Figure 1 NCR Dundee senior managers chart.

Transfer of HRM practices across cultures 339

Also, NCR Dundee has been in place for over � fty years and has developed its own ways of doing things, which have proved most of the time to be appropriate for their business and their location. When for a brief period, at the time of the take-over by AT&T, the present Vice-president had not been with the Dundee plant, the company went on to a real downward slope:

The whole emphasis was on central control and when you do things centrally you do things with a different model in mind, you get different results. We’d created a model here which was right for our business. When I say it was right for the business the proof of the pudding is in the eating, we were so successful with it.

On his return to the company, Dr Adamson felt the model that AT&T was working to was harming the business and causing them to go backwards, certainly judging by the results achieved. When in 1995 AT&T decided they were going to split the business up into four parts and they were going to re-create NCR, the new Chairman of the parent company was prepared, after some lengthy discussions, to give the Vice-president a chance to do the things that he thought were necessary.

NCR Dundee has gone against another trend in multinationals. In most cases, foreign subsidiaries are managed at senior levels by expatriates from the HQ, with the exception of perhaps personnel or human resources functions. But here in Dundee the situation is again different. The Vice-president is a Scotsman, he was the � rst chief executive of� cer of the company who was a non-American. Currently, with a few exceptions, other directors and senior managers are all local.

This situation now appears to be a matter of policy on the part of the parent company. The Chairman who hired Dr Adamson was half Scots and half Chinese. He, maybe from his own background, thought that the Scots had a certain temperament that probably suited the kind of business that he was in. He believed that a national organization had to be run by a local person. In France, for instance, the French sales organization was run by a Frenchman. At NCR in Hong Kong, there was a Chinese person who was at the helm of that organization.

Research and development (R & D) in Dundee Research and Development activities are normally situated in the home-country of the multinationals. A signi� cant feature of NCR Dundee is that the R&D department which serves the whole of the company world-wide for self-service products is part of the Dundee subsidiary, where some 300 professionals and highly skilled technical staff are engaged in innovative activities.

The task of bringing R&D to Dundee started out some time ago. As was mentioned earlier, initially Dundee was not an R & D plant, it was a second-source manufacturing plant, where they made a wide range of NCR’s products none of which were designed there. In the days of pre-decimalization of Sterling, there was a certain amount of what one might call ‘localization’ applied to the products. They designed, for instance, Sterling versions of decimal machines. They also did some software and hardware developments for the UK banks. Then came an opportunity identi� ed with Midland Bank for a special ATM to replace the Chubb machines that they had. These machines had been installed in a speci� c size of hole in the wall, and the Bank wanted a new machine that would go in that same hole. So Dundee plant got a specially funded development to develop a machine; it was a good business opportunity. It was for something like 500 machines, so it was a self-� nancing business. They produced that � rst batch of machines for Midland Bank as a special order. It caught on and as other

340 Monir Tayeb

UK banks started buying it the company started marketing it also in the US. It was not a particularly good machine, and there was a lot of problems with it, but it got them started in the development. At that time the product was not all their own, they were picking up pieces of technology from other areas within NCR. Let us hear the rest of the story form Mr Hutcheon, Engineering Director:

But slowly as the years have gone past, we’ve developed more and more and really made our own decisions. Those days we didn’t have the complete decision about, you know, what technology we’d use, it had to be in line with what Dayton were doing from the branch environment, but slowly we’ve become more autonomous, and we’ve made our own decisions. Of course the Dayton side of the business has sort of dwindled . . . We are probably the most successful sort of product line within NCR. It’s now gone the full circle, other areas of NCR are now starting to use our platforms. People in Atlanta are looking at using our ATM as part of something they’re doing and some of our software tools are being considered as a standard NCR tool for say retail and � nancial, whereas we were the users of these things before. So we’ve assumed, not assumed, but I think we’ve developed into a leadership position within NCR so that other people are now using our platforms as opposed to us being the user of theirs now.

Cultural ‘clash’ between Dundee and Dayton A few years ago, when NCR company was taken over by AT&T, the new parent company management introduced a programme of common bond. The idea was to create a common identity within each subsidiary and throughout the company world-wide, and to remove or at least reduce status differentiation among the workforce. But some of the means and the language used to convey such an idea met with resistance and challenge in Dundee.

For instance, according to the new management style, managers and employees were now to be ‘coaches’ and ‘associates’. At a conference in New York where the programme was launched, the objection to such terms by a representative from Dundee re� ects the cultural problems inherent in the use of such a language. He said: ‘Excuse me, this may seem strange to you but if you say coach to somebody in Scotland, they don’t think about the team coach or the football, they think of the bus that brings them to work.’

At a more serious level, the common bond programme also caused a certain offence to the workforce. As part of the programme, there was to be explicit emphasis on such concepts as respect for individuals, dedication to helping customers, highest standards of integrity, innovation, and teamwork. To bring the message home a one-day mass meeting was organized in a special venue and the programme was introduced to the workforce here. Posters were put up everywhere in the company premises to remind people of this new creed. The effect on the workforce, however, was negative. This was not because people did not agree with what such concepts signi� ed. But they had been offended that the new parent company had felt necessary to tell them such ideals should be aimed and pursued in the company. As one of those who was present in the event puts it:

A lot of people, and I include myself, said ‘I really am offended, in fact almost insulted, that they feel they’ve got to do this with us’. Because my � rm belief, being in this job and having been in it all the years I’ve been here, that unless we operated for example, with integrity, we wouldn’t have lasted. The company wouldn’t have lasted the 50 years that it’s been in Dundee. If we had not applied the principles of the common bond across the board during those 50 years, then we wouldn’t be celebrating the 50th anniversary this year. So that came over from the US and I don’t think it was well received. I think a lot of people said this is an absolute nonsense, I mean coming to teach us at this stage in the

Transfer of HRM practices across cultures 341

game is just crazy stuff, it’s quite offensive. I think they consider it in the US to be still alive and kicking, but as far as I’m concerned, we operate the way that we’ve always operated, and that probably incorporates what they call the common bond.

Most people do not call each other coaches and associates here in Dundee, and the posters on the walls are for all intents and purposes ignored. AT&T and NCR, as was mentioned earlier, have in any case parted ways.

Management of human resources

Strategic role of HRM NCR Dundee clearly distinguish personnel management, which is all the basic things that personnel people have always done, hiring people, training, and so forth, on the one hand, and HRM or HRM programmes which are about using rather more advanced human resources techniques, or bringing together a number of different approaches, to create a signi� cant improvement in company performance. Here in Dundee HRM is very much part of the company’s overall strategic plans, and its signi� cance is re� ected in the fact that a senior director heads the HRM department. HRM Director has been in fact the Vice-president’s right-hand man since the early stages when they turned around the company’s fortune in the 1980s. They used to, and still do, set their human resources strategy as part of the company’s overall strategies.

In many respects HRM here follows the parent company’s overall policies, and the UK Headquarters in London also has an impact on what they do. However, although there are various levels of control which are tougher in some subjects than others, to a fair extent senior managers in Dundee do things as they choose to do. In other words, in practice there are areas of HRM where local conditions and local traditions modify the parent company’s polices to create models which are more suitable to the day-to- day running of the company. Also, as the HRM Director points out, there are some things that they do differently from the parent company’s policies, not because they think they meet the local conditions, but because they think they are better for business, whether it is in America or here. They have a great deal of freedom in this respect.

In the 1980s, for instance, in contrast to the parent company’s policies, NCR Dundee adopted the so-called buffering policy, which aimed at maximizing job security. One of the companies that is best known for long-term buffering policies is IBM, who always believed that by giving employees the maximum feeling of security of employment one would get better results from them. NCR Dundee believed in the same philosophy, and in 1981 introduced a policy of buffering, called the non-redundancy policy, to minimize the risk of people losing their jobs. They ran it rigidly right through the 1980s and believed it was one of the reasons why they were successful. By contrast, the HQ pursued a hire and � re policy during a large part of the same period. In 1987, they had a complete reversion when they started adopting buffering policies and they used NCR Dundee as a role model. They went back to the old policies later in the 1990s.

Recruitment Recruitment policy is fairly centralized. The parent company has in recent years interfered enormously in this aspect of the HRM function, mainly because of � nancial problems. For instance, if there is a corporate-wide policy of freeze on hiring from outside, Dundee has to follow. This central interference has not been about NCR Dundee, but the company world-wide.

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For many years the company had a policy whereby they could only recruit new graduates, and not experienced people. This policy had been imposed by HQ at Dayton in the 1980s and was not welcome at all. It has now been abandoned.

The company incorporates its recruitment plan in its overall annual business plans, subject to changes in business conditions. Business plans are integrated from top to bottom, and side to side and they are actually pulled together by the � nancial function. The company might also get pushed down by the Headquarters and be asked, for instance, to keep the number of new recruits for the projected year down.

The actual recruitment itself, given that something is approved, is done entirely in Dundee and there is no outside interference. However, for a very senior job, say at director’s level, somebody in Dayton might want to interview the person.

The recruitment procedures are worked out locally and depend very much on the particular job. The practical means of selection, such as interviews, tests, assessment centres and so on, are more or less like those employed in Dayton, or indeed anywhere else in the world for that matter.

Currently, for high-level jobs and particularly for the indirect areas like human resources, the managers have to go to the very highest level in Dayton to get approval to recruit from outside. For low-level jobs they have more freedom, but they do not advertise very often externally for these positions. The company tend to � ll a lot of them by converting temporary employees into permanent ones. Because of a high degree of unemployment in Dundee, there is always a stock of people the company know, or who have worked here before, or are ‘temps’, who can � ll a lot of jobs.

The company recruit very few youngsters and do not tend to recruit directly from schools to any great extent. They do recruit new graduates, and that varies quite a bit from year to year. In this respect they are quite different from Japanese companies who prefer ‘unsoiled’ school leavers, whom they subsequently train to suit their own company’s requirements. This policy seems to be an easier option and because the Japanese companies are completely new they have the opportunity to do it. Some Japanese companies like Nissan invest very heavily in induction, and even take team leaders to Japan for a few months. But NCR Dundee is not a green� eld site. They are the most venerable high-tech company in the region, and have almost as many pensioners as they have employees. For an organization such as this, which has been in business since 1946, the corporate culture is strong enough to absorb the new recruits into its ways of doing things whether or not they have ‘undesirable’ employment experiences. As Mr Alan Murdoch, Director of Human Resources, points out:

With the rate of recruitment we’ve got, for [the policy of recruiting school leavers] to be meaningful here, we’ve got what, I don’t know, 850 people on the shop � oor alone, for that to be meaningful at all, it would probably take about 20 years before it made any impact, and it wouldn’t make an impact because the people trickling in would always be dominated by the existing culture. So I think our focus has been, we have got to make the most of the people we’ve got. It’s not a green� eld site, it’s not something new, but people and teams of people can change, they can change, so let’s work on those changes and develop them.

Employee training and development Training and development is one of the central planks of HRM here. There is a senior manager who oversees and facilitates the company’s training programme. The company maintains links with universities and colleges, for training as well as recruitment purposes. The manager in charge works with other managers and teams within the organization to identify training needs and to

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ensure that these needs are met. Training activities are evaluated for their worthwhile- ness and effectiveness to ensure that they are appropriate for and relevant to the company’s objectives.

The training programme takes several forms, depending on each case. For instance, new recruits would join a group and go through an induction process of understanding the different parts of the group, what the group did, and what its function was. They would also get the opportunity to meet with other new graduates from other functions to understand the role of the business. They are also encouraged to spend some time together as a group from different disciplines and go through the same development training. In addition, there are outdoor development-type activities to help them with focusing on team working, decision making, and problem solving within a team and in a group environment.

They would then go through working within the area for which they have been employed, learning the various parts of the job. There would be further induction training where they are brought together again for short sessions where senior managers come and talk about other functions. For example, Director of Human Resources would speak about human resources, the Vice-president would speak to them about the business in order to give them an overview and a taste for the business. At the same time, if there are any gaps in their technical skills they would get the necessary training.

As for the employees who already work for NCR Dundee, the company has an education for all policy which broadly states that if any employee wishes to take any course of study, leading to a nationally recognized quali� cation, the company will support them, and that applies to everyone. The only criterion is that the course must lead to a nationally recognized quali� cation and it must link in some way to the business, but not necessarily to the employee’s current job. For instance, an engineering, or computing or foreign language degree would be positively supported, but dressmaking or plumbing courses would not. At the time of data collection there were about 140 employees on degree courses, of whom 25 to 30 were reading for an MBA degree.

The company use other forms of training activities such as secondments and projects, as well. Some people, for instance, would as part of their development spend some time in Dayton (the location of the parent company’s headquarters) or somewhere else.

In general every employee on average gets 10 days of training annually, which could be both inside the company and outside. However, some people, for example in the software development side, will probably be doing more than the average and others in some other areas will not be doing so much. Also, in some years someone will do 10 days training, the next year he or she may do only one. This differentiation is because of the nature of the jobs concerned. If there is a particular need to train a group of people or one person it will be done.

The company make a distinction between training and education. Whereas training, which is job related and can be critical to it, is compulsory, education is not. Employees could come forward and they will get it.

Although there is a corporate programme which NCR Dundee follows, almost all, some 95%, of the education and training policies and speci� c programmes implemented in Dundee are de� ned here. For example, the company’s relationships with universities are their own, they put the programmes together with them. The Headquarters do not have any input into it at all. The whole process, from the identi� cation of the need for training, to its relevance to the business objectives, the kind of training and

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development to be provided and put in place, and to the person or institution which the company would want to use for the purpose, are all determined by Dundee.

A signi� cant point to note is that employee training and development, as an HRM function, plays a signi� cant part in the company’s overall strategy. As was mentioned earlier, it is strongly linked to the business objectives and its aims are to provide the company with the skills that it requires to compete successfully in the market. What Dr Adamson, Vice-president, says in this respect, re� ects the importance that is attached to this function in the company:

One of the most exciting things we developed was the education for all programme. Alan Murdoch [Director of Human Resources] and myself were looking at it. We were looking out towards the year 2000 and we said, what sort of workforce will we have, what will the company look like, what will the people look like? How can we make sure that this business will go on to re-create itself and be a permanent feature and continue to grow and prosper? As we were looking at the skills of the people and the nature of the people, an odd thing struck me. At least half of the people who were here now would be in that business in the year 2000. If that’s the case we’d better not just look at bringing in new people, we’d better look at these, this core of our being. When we looked at that we found that there were a lot of people who had, or would have, the wrong skill sets, and wouldn’t have the right education for where the business was moving to. We found over the period of 16 years that the skills were moving up, the un-skilled had disappeared completely, the semi-skilled were still there but were fast diminishing, to the point where the vast majority of our people would be degreed in one form or another. So we said if that’s the case how do we take the population we’ve got and make them � t that new model? So we said, well, we’ve got to get them back on to the education wheel.

It is worth mentioning that NCR Dundee has been awarded the ‘Investor in People’ award in recognition of the valuable contribution of their education for all programme to their human resource management.

Compensation, bene� ts, and pension To a large extent pay and bene� ts follow the parent company’s policies, and the system is fairly centralized with this respect. But there are also instances where these policies are translated into practices and procedures in a manner which are speci� c to NCR Dundee.

For salaries, the parent company has a policy by which market surveys are conducted in all the countries in which they have subsidiaries. The aim is to � nd out the pay levels of their main competitor for similar jobs in each country . Each subsidiary then set its pay lines as a median of that competitor.

The company also has management bonus plans and follows the Headquarters’ policy in this respect. Sometimes even the amount to be paid to the managers is determined by Dayton. There is also a share options scheme for high-level directors, which is again determined in the US.

For the non-managerial employees, there is a bonus plan which is tied to Dundee’s performance. Sometimes this leads to a great deal of negotiations and con� icts with Dayton. For instance, the HQ would want these bonuses to be related to external results and customer surveys, which are viewed in Dundee as being more appropriate for marketing and sales personnel. Dundee would want to focus instead on internal operational results, which are considered more suitable to their workforce. In many cases, the Dundee company would go ahead with their own preferred method of calculating bonuses.

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As for pensions, again the Dundee company’s practices are slightly different from those of the Headquarters. In the US, for social, cultural, and historical reasons, pensions are generally frozen in time. In other words, when you get a pension of $10 000 then it does not, in principle, increase over time. The individual does not have a right to have a pension increase and the company has no legal obligation to increase it. As a common practice, however, there may be an increase every decade or so. In the UK, by contrast, there is a general principle and practice of annual increases in pensions. NCR Dundee has always taken the view that the local practice here is actually to provide guaranteed increases on a twelve months basis. But the Headquarters are very uncomfortable about this because it does not re� ect their corporate pension policy.

As a result, Dundee has had to modify their policy, in that there would be no guarantee of an increase, and that the company can provide it only at their discretion. In practice, rather than increase the pensions every twelve months, they would change every year the number of months from the previous increase – one year it will be 15 months, next year it will be 12 months, the year after it will be some other � gure, and so on. This is a compromise solution which has taken into account both the corporate policy and the local practice.

Industrial relations Traditionally, the City of Dundee has had a heavily unionized workforce. This tradition exists in NCR Dundee as well. Around 1200 of employees are currently unionized and are represented by three unions.

The current trend among many companies, especially NCR Dundee’s competitors, is to have single union representation or even to derecognize trade unions in their organizations. Certain HRM tools are utilized as a substitute for traditional employee representation through trade unions. Dundee has not gone along with this trend because of a strong local feeling for their union tradition and heritage. Instead, the company has worked with the tradition.

The leadership of the company since the early 1980s has placed great emphasis on building trust between unions and management, and judging by the attitudes of the employees and the culture of the company it has succeeded in doing so.

The personal style of the management, which is re� ected in the ‘walk about’ and ‘open door’ company culture, has created an atmosphere in which people of all levels talk and listen to each other directly about the issues which concern them.

The management, in conjunction with the unions, has since the early 1980s made a conscious effort to break down traditional barriers between manual workers and staff, which had in part been a result of differentiated treatments of the two groups, especially with regard to working conditions. For instance, in the past if a clerk was off sick for two or three days she or he would get full pay, but a manual worker in the same circumstances would receive social security payment. If there was a heavy snow and people arrived late at work, members of staff would still get fully paid, but manual employees would be penalized. This sort of differentiation, along with the traditional staff employees – manual employees structure, have now disappeared.

The management is very good at communicating information to the employees, through such means as meetings, conferences, and internal-circuit television monitors placed in various locations in the company premises. The information given to employees is wide-ranging, from setting up a new plant overseas to new models to be produced, to assembly workers’ workload, and to the day’s visitors to the company. For example, when the company decided to set up a manufacturing subsidiary in China,

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they organized a meeting in a special venue and took all the employees there and put them in the picture. The meeting was also intended to allay fears that some employees might have had regarding the project. In mass meetings such as this employees are encouraged to question directors and other senior managers who introduce the new plans.

On their part, the workforce, both unionized and non-unionized sections, have contributed greatly to the good relationship between management and employees. They have learned to adapt to the changes that the management has had to introduce in their working patterns and other aspects of the company in response to the market and business environment. Through consultation processes and meetings, they have come to recognize the bene� ts that such changes might bring to them.

As a result, the fortunes of the company are perceived as those of the employees. The infamous ‘them and us’ attitude which seems to characterize industrial relations in many British companies does not exist in NCR Dundee. Here the image of the company, both inside and outside in the wider community, is that of a caring company. Many employees have been with the company for a very long time and labour turnover is very low relative to similar companies in the region.

Teamwork Most employees at various levels work in groups and workteams. As we saw above, the new recruits, as well as the existing workforce, undergo training in teamwork. The co-operative character of industrial relations and the culture of the company also foster such an approach to work. Teamwork is not seen here as something which has been imported from Japan or imposed by the parent company. Rather, in many respect there was a need to increase the teaming approach in operations in order to function more effectively.

In addition, teamwork appears to have helped bring people from different levels and status to work together. In the past if there were workteams, they tended to comprise of people who were working at the same level. But now members of a team are there not necessarily because of their status or which department they come from, but because of what they can bring to the group: The skills and experience that they possess and which are particularly suited to the task at hand.

Teamwork is not as pervasively developed in the company as senior managers would prefer it to be, but they are all working towards achieving it. One reason may be that there is a legacy of the history of the company, which started off in a very hierarchically oriented manufacturing environment, which was the way of the world at the time. The strings of that legacy are still in the ‘bricks of the building’, so to speak. Nevertheless, teamwork here certainly goes well beyond lip service and company slogan.

Another reason behind resistance to teamwork in the past was the industrial relations practices which used to characterize the company, and which took a great deal of effort to change. Mr Murdoch, Director of Human Resources, sums it all up thus:

Dundee is a place which I think has had quite an oppressive industrial tradition. I think working conditions were really quite bad for a long time, wages were low and I think there were a very strong concomitant trade union reaction. So compared with some countries the culture of us and them is particularly strong here and that’s extremely destructive of the kind of teamwork and involvement that creates the best business performance, so that’s something that we’ve had to � ght all the way and are still working on and trying to change. By the way I think we’ve come a long way but there’s a lot of change that still has to take place. One point of all of this, none of our major competitors world-wide are unionised and, in becoming number one in the world in ATM’s, we have

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had to handle all of this and not let it stop us doing the things that we’ve had to do to be competitive, and that’s still true.

So how did they do it? Well, . . .

Mainly hard work, blood, sweat and tears I would say. There are some basic principles of industrial relations that have to follow and there aren’t a lot of short-cuts. If you look at the early 1980’s when Jim Adamson came and I came here, in fact it came at the end of a long period of redundancies, reductions, and factory closures. That in a lot of ways gave us an opportunity, because Jim Adamson was able to give people hope for the future and people didn’t want to go back to the kind of insecurity that they’d had. But it was an environment where, unlike most computer and electronic businesses in Scotland, we were very highly unionised. At that point in time we’d four trade unions covering about 75% of the workforce, it was very important to people here, it was very much part of their history, they weren’t about to give it up. So instead of making it a major area for con� ict, our philosophy was that we ought to try and work very hard with the unions and to be seen to be a good employer, to communicate properly with them. It was a very basic thing, if you meet union of� cials or union committees, don’t treat them as the enemy, treat them as colleagues, ask for their advice, involve them.

In addition to selling new ideas such as teamwork to the workforce through consultation and involvement, managers began by implementing the new style in selective areas. For instance, when they wanted to start up a software business, they set it up with a young team. Although software development has been going on in the company for some time, it has not been part of the history of the company, and as such there were not many old traditions to hold the implementation of the new approach back. By focusing on the software business, they actually created arti� cial walls around it which made teaming possible, and worked exceptionally well. The team achieved its objectives and was later disbanded and absorbed back into a bigger unit. The model worked and was seen as a very rewarding experience in the careers of the majority if not all of the people involved.

One of the factors which help foster team approach is to link incentives and rewards to the performance of teams, that is, reward all members of a team for what they have achieved collectively. The usefulness of this approach is recognized in the company, but in practice it has not been very easy to implement.

The company’s appraisal system, at the best, assesses a person on both roles, but certainly there is not anyone who is assessed solely on the basis of a team role or a team success. There may be a certain percentage of their assessment, possibly some 30% or maybe 40%. Certainly no more than half of their assessment is based on the performance of the team of which they are a member. There is strong cultural resistance to go beyond this. The introduction of such an assessment procedure where an employee’s performance would be purely based on the performance of the team would have a negative effect, in the short term at least. The company are working their way towards probably increasing the amount of assessment that is related to the employees’ team effort, or success of their project, rather than the individual, but it is unlikely to ever be 100%, because there are always individual activities that a person has to perform and which are different from his team activities.

Flexible working patterns In the past, in NCR Dundee, like many other companies elsewhere in the world, there was a very hierarchical structure where a small number of senior people, managers and technologists, took most of the decisions. Also, there was a huge number of semi-skilled and un-skilled people both in of� ces and in manual jobs.

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This situation has now changed. Most people are now skilled workers, and indeed education-based workers, whether in of� ces, or on the shop � oor. People regularly operate PCs on the shop� oor, they tend to have more meetings together and are pushing for more decisions to be taken by a team rather than by the supervisor. The job of a manager or a supervisor is changing so that he or she is somebody who as a team leader supports a person and helps the team be successful, not somebody that forces the individual to do a job. Job � exibility is part of this new working pattern, which has proved more effective in business terms than traditional patterns. It also ties in with the education and training programme of the company. As people are educated, as their skills enlarge, as they become multi-skilled in their jobs, and as the company try to promote policies of giving people experience in different areas, people’s capacity for � exibility increases. When people come through educational courses they become more con� dent and better at learning new skills. As a result, people become mentally more prepared to be � exible. Partly because they are more self-con� dent and partly because they are more in tune with the company, and less inclined to see the company as an adversary.

Traditionally people had jobs which were clear cut, but now they are getting used to moveable teams and groups, and as Director of Human Resources puts it, ‘it’s like a kaleidoscope . . . the picture keeps changing, you have a particular task or goal in a period of time, and again there’s a change’.

One of the employees describes the situation thus:

We had the traditional assembler who was just asked to sit down and put two things together, you know, for example. They are now being asked to assemble, to verify, to inspect, to test, now the situation is: ‘there’s the product, get on and build it.’ How you do that, right, and if it means you instead of just doing assembly, and then somebody else inspecting it, now you just get it done, which creates more skills you know. It takes a long time in certain jobs to build up that skill and the same in what we call our main lines, where a person have different jobs, these people build the machines from A to Z, and some of them it takes up maybe one machine or two machines a day just because of the enormous bulk, different skills, and they acquired these skills on the job.

Job � exibility is not so much as a policy imported from Japan, or the US, or elsewhere, but as an essential tool to improve employee productivity and to improve the company’s ability to respond quickly and effectively to its market conditions. A vigorous training programme and other organizational devices such as teamwork accompany the policy to ensure its implementation.

Quality control Quality control, as was mentioned above, is now part of new skills that all NCR employees are required to possess. Moreover, quality is something that is designed in and built in at every stage of the process. In the distant past, for every person assembling a product there was probably another person who was doing the inspection. They were almost on a one-to-one relationship: Someone built it, someone checked it. That is not the way at all now. People are responsible for their own quality. There is of course a � nal check once the product is made. This has improved statistics on waste and rejects tremendously.

The company has tried out a number of different quality initiatives over the years. Among these initiatives were quality circles which had only limited success here. They implemented them for a time, but currently no quality circles are in existence. More recently the approach to quality, particularly in the production area, has been through teams. Teams of people who are assigned the responsibility for the root-cause analysis

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of problems within different areas. Down on the factory � oor, one � nds various teams, working in speci� c areas, who have the responsibility of identifying the problems that are causing them quality issues, and getting back to the root cause and � xing them. These teams are not quality circles, they are probably not what a lot of writers on such matters recommend, but they work for the company.

For such teams to work well employees must have a very high degree of commitment to such tasks. Mr Hutcheon, Engineering Director, admits that to get people committed to process improvement is not an easy job, particularly in engineering, where they are more interested in developing new things and putting up new ideas.

Expatriates in Dundee The � rst group of a signi� cant number of expatriates were posted to Dundee a few years ago to create a marketing function. These expatriates, about 35 of them, came from the US and some other subsidiaries of the parent company. The Dundee company had reached a stage where they had decided to have a marketing function alongside their manufacturing base. They needed the marketing expertise, which up until that time was not available in the plant, and they had to get it from other parts of the company that had that expertise. Since then the company has gone through a series of reorganizations and a lot of marketing positions have gone to other places like London Headquarters. As a result, the number of expatriates has been reduced, and currently there are only around 15 such employees in Dundee. About ten of these are on long-term contracts, of two to three years duration. They are almost all from marketing and sales backgrounds. The other � ve people are on short-term contracts and are generally technical people and come from different areas of the company. They not only bring in their expertise, but also learn more about the products manufactured here and then go back to their home countries and expand the local knowledge.

Expatriates do not receive any formal training for their foreign assignments before they leave their home country. But they do get help and support once they arrive in Dundee. There is for instance a half-day programme put together not to train the newcomers, but to familiarize them with the living conditions here, such as cultural and social issues, and what they need to be aware of. The company also put together an information pack, a little handbook, informing people how to drive here, what to do, where they can go to have fun, what the theatres are like, and so forth.

One of the expatriate managers, on the basis of his own experience, has taken additional initiatives in this respect:

I was trying to � nd the best way to provide support both for the families and for the expatriates. So what I actually did was, I hired an expatriate wife, so she works for me. She has already been through the experience and the problems of getting used to living here, transitioning from US life to here. It’s her job and her responsibility to help other expatriates settle into life and usually it’s the spouse. The spouse is usually at home etc., so she, for example, when they � rst come here, she actually gets them in a car and gives them an orientation of the area, drives them round shows them the area. She � nds houses for them rather than throwing them to the estate agents, she � nds the houses, she contacts the estate agents. She � nds out what kind of housing they are looking for and then I tell her the limits and she goes out and � nds the houses. She takes them round and shows them the houses, they decide, she helps them through the transition to local lifestyles. Plus a social network has been created of all the expatriates. The wives get together from time to time, they used to get together on a weekly basis, and so when a new ex-pat comes over they join the circle. It’s a support circle and they get together, have lunch once a week, they had a sewing circle at one point, everyone would try sewing and

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embroidery. I think we were pretty creative, we created something called ‘gourmet dinners’. We would pick a different country of the world and then we would take recipes and pass the recipes out and each family member would bring one and we’d have a pot- luck. So those are the kind of things we did and that was a real support network.

Most expatriates are in senior managerial positions, but naturally they mix profession- ally with people at all levels. Initially when the marketing expatriates arrived here, there was a great deal of tension, mainly for cultural reasons. NCR Dundee have a long history and, being far enough from the US, they have been left alone, so to speak, to get on with the business. They have been a very successful company, probably the most successful part of NCR, and they strongly believe that it is because they had the freedom to do their own thing, their own way. As a result, there was a real resistance here to change, such as the coming of a large number of expatriates almost overnight. In addition, some of the expatriates were not culturally sensitive, and brought with them their own ways of doing things, which were different from the culture of NCR Dundee. For instance, certain people in higher positions liked to be deferred to, whereas American expatriates treated everybody the same. Also, after the establishment of the marketing function by the expatriates, some rules and responsibilities changed. Marketing was actually dictating things to manufacturing and R & D and so forth. There was a real feeling that these ‘outsiders, these upstarts’, were telling the local employees what to do. This was not liked at all and created a great deal of resentment among the workforce.

Another cause of tension was pay and bene� t differentiation between home employees and the expatriates. The latter, for various reasons to do with deductions, the maintenance of expatriates’ US lifestyle in Scotland, and other contractual obligations, would receive a relatively generous salary and housing bene� ts and were provided with company cars. Most local managers did not have company cars, only directors did. Local managers were therefore resentful, because they were working alongside expatriates at the same level but they did not have any of these extra bene� ts. So there was de� nitely a lot of tension. This disappeared largely because many of the expatriates went back home and they were not as visible anymore. Also, the expatriates started communicating better with the workforce and informing them of the reasons they were here and their plans for the future. As one of the senior expatriates puts it:

Eventually that got healed over in that some of the folks started giving presentations and they would put out an announcement in the afternoon, you know, that on such and such an afternoon in the cafeteria they were going to have a presentation and explain what we are doing in this particular programme and anyone who is interested is invited. They actually would do the presentation a couple of times so they could meet shift changes and wouldn’t have a disruption on the � oor. They would start telling people what they were doing, and why they were doing it and what we hoped to achieve, you know. Yes we’re number 1 in the total unit shipped each year and the ATM self-service market, but our competitor is right behind us, there’s just about that much space between us, and if we stumble and fall they’re going to run right over the top of us. So this is the programme we got put in place and try to make work so that we could stay ahead of them. And then I think people began to understand a little bit better”.

The atmosphere is much calmer now. Expatriates and local employees at all levels get along very well.

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The company encourage exchange of expatriates to and from Dundee in order to develop a global mind set in the workforce, and to enable them to communicate easily with people from other parts of the world. Managers in particular are encouraged to participate in various international conferences and multicultural events.

As part of their job, a large number of people travel abroad on a regular basis, usually driven by a need to see or support a customer. There is also a whole team of people who organize and/or participate in international exhibitions. As a result these people are also exposed to socio-cultural aspects of individual countries. This helps them develop a global view of the company and its market, and an understanding of other cultures.

Setting up subsidiaries abroad NCR Dundee, at the time of writing, is in the process of negotiations with would-be Chinese partners to enter into a joint venture and set up a manufacturing plant in China. The venture is initially intended to be for a period of 30 years, with an option to extend it further or become wholly-owned.

The company recognize China as one of the major emerging markets, and in order to do business with China they must have a manufacturing presence. The Chinese Government has set up two initiatives, the Goldcard Project and the Greencard Project, and are keen to try to move forward with self-service. At the moment NCR Dundee is a preferred supplier. Also, there are a lot of incentives, especially � nancial ones, for NCR to manufacture locally: Import duty on ATM is about 30% at the moment and hampers their export to China, so the company is looking to set up a joint venture.

The Chinese like to have joint ventures for a certain line of product, they do not like one big company coming in saying they can manufacture anything. They like one line of product, and so that is what NCR are currently planning to do. The company which will be their partner is owned and managed by the government.

NCR Dundee’s negotiating team is made up of � ve people with expertise in marketing, manufacturing, product, law, and business development in China, among others. Two members of the team are � uent Mandarin speakers.

The negotiations are progressing at a very slow pace, a pace determined by the Chinese partners. When the team � rst went to China, the expatriates from the AT&T already posted there warned the team of what they might expect in this regard: ‘The Chinese will move at the speed they want to move at, they probably don’t have all that much in the way of concern for schedule. Time isn’t of the essence, it’s more the quality of the discussion or the quality of the exchange. And the faster that we tried to go the more it would cost us to do it. We would have to give up more and more and more until we’re probably losing money on the deal’.

They started in March 1995 on negotiations in Beijing and months later they have still a long way to go. Typically, when negotiators reach a certain position, the Chinese partners say they must now go back to the ministries that support them, and they will come back and say that, for instance, the deal was unacceptable, and the whole process starts all over again. Or they may change team members on their side because, for example, the government ministries do not feel they are doing as good a job as they might be. This means that the NCR negotiators have to get their side of the argument over to these new people.

In spite of the problems and frustrations involved in setting up joint ventures with China, the country cannot be ignored. It is in the luxurious position at the moment where almost everybody recognizes that it is going to be one of the biggest places of growth potential in the next 10–20 years. As a result there is no shortage of companies wanting to be there.

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The person who is destined to be the general manager of the joint venture was born in Shanghai, brought up in Taiwan and Hong Kong, and has worked for NCR for about 24 years, in the US and Canada.

The company intends to recruit about half a dozen honours graduates either from China, or graduates that were sponsored by the Chinese government to read for engineering degrees in the UK. They will then be trained in Dundee before being sent to China. The company intend to keep always a core of the workforce who would have the capability of speaking both Mandarin and English.

There will be two expatriates assigned for permanent jobs in China but there will also be a considerable number of 3–6 month contracts for people from Dundee. That is the plan at the moment, but if they face greater challenges than those envisaged they might send more expatriates.

The company’s view at the moment is that they would always like at least one Dundee person on the ground, not for spying on what is going on, but as a key contact. So that if there was any problem, and if the person from Dundee could not resolve it on the spot, he would know exactly who to go to in Dundee to sort it out.

Once the joint venture is up and running, the question of Chinese working practices versus those prevalent in NCR will arise. Chinese workers live and work within a Communist structure, which has been proven to be � awed in terms of ef� ciency. A standard joke is ‘How many Chinamen does it take to change a light bulb?’ As one of the NCR negotiators recalled the actual experience he had, the answer is four.

We needed a light bulb changing in the house and we had four people coming to change it, one to go up the ladder to put it in, one to hand the bulb up to him, one to hold the ladder and one to supervise, you know. So, they do employ everybody but not everybody is all that productive.

The challenge facing NCR Dundee is not to change the cultural attitudes and values of their Chinese workforce, but to help them unlearn unproductive working practices, and replace them with those which are more conducive to greater ef� ciency.

In addition, what the company is aiming for is to recruit young employees who are basically more adaptable, and who have not been subject to traditional working practices. They will then train these employees to work the NCR way. The belief is that the Chinese would not have any problem with this approach, because they need to be competitive in the world market, so they will be keen to learn the way their foreign partners do things and maybe within 20 or 30 years they will be doing it even better.

Discussion and conclusions

The relationship between Dundee NCR and its parent company is characterized by a complex processes of give and take. In the clash between parent and subsidiary the subsidiary has been able to assert its identity and character to a large extent onto the relationship. Sometimes it has rejected the policies issued from the centre; sometimes it has implemented them with rather � exible interpretations; sometimes it has argued with the HQ and has won their consent for having more freedom of action than the HQ had initially been prepared to concede.

In areas such as recruitment, training, pay, bene� ts and pension they have gone along with the parent company’s overall policies and principles but have adopted locally acceptable practices and availed themselves of local opportunities in ways in which

Transfer of HRM practices across cultures 353

they thought appropriate and pro� table. But certain aspects of central policies, such as common bond, have been rejected outright.

Some practices imported from HQ and Japan, such as quality circles, have been modi� ed to suit the local conditions. The company has shifted away from the traditional separation of production and quality inspection to a process of production with built-in quality control.

Teamwork and � exible working practices have been introduced in conjunction with extensive employee training and education programmes and open communication. The company culture which fosters a feeling of belonging has helped the process along.

With respect to industrial relations, the management has continued to work with trade unions and together have eliminated some of the causes of employee grievances which were entrenched in the company. Various rules and regulations which discriminated against blue-collar workers vis-à-vis staff and other white-collar employees have been removed. Open communication, information sharing and dialogue have helped increase understanding between managers and workers. Teamwork and training have helped workers to acquire skills and to have a say at least in decisions affecting their jobs.

The objectives of the company regarding the above issues have not by any means been fully achieved, and there is still strong resistance by employees to some of the new ideas, but they are working towards them.

One of the pictures which come through the account of NCR Dundee’s HRM is that certain imported foreign practices, whether from the American parent company or companies elsewhere, have been modi� ed to make them workable in the company. A second picture is that such modi� cations have affected the imported practices rather more than policies. The third picture is that the company’s HRM is in� uenced and indeed to a large extent determined by major factors inside and outside it. These in� uencing factors, shown in Figure 2, consist of: The socio-cultural characteristics of the location in which the plant is situated, the company’s organizational culture, business and technological imperatives, and the parent company’s HRM strategies.

Location

Scotland in general, and Dundee in particular, has a long history of strong unionism. Employees have traditionally voiced their views through their unions. A few years ago an American car manufacturing company changed its plans to set up a plant in Scotland because it could not get the local workforce to agree not to join unions. The would-be employees were prepared to let the opportunity slip through their � ngers rather than lose their right to unionization.

Moreover, industrial relations there, much like elsewhere in the United Kingdom, are characterized by a ‘them and us’ attitude. A few years ago a subsidiary of another multinational company located in Dundee provided a sad example of how things might go badly wrong in this respect.

Industrial relations apart, the Scots are a people with a distinctive cultural heritage, characterized by, among others, individualism yet caring for the community, austerity, hard work, integrity and honesty. They are moreover very proud of their Scottishness and wish to emphasize it vis-à-vis other nations, especially their neighbours, south of the border.

NCR Dundee managers, themselves Scots, are well aware of all this. They have devised their HRM policies and practices in such a way as to avoid con� icts with the culture of the country and to be compatible with it. To this end they have sometimes

354 Monir Tayeb

changed or even ignored some of the parent company’s strategies. It has paid off handsomely in terms of both employee satisfaction/commitment and overall � nancial performance of the company.

Organisational culture

The company enjoys a strong organizational culture which has evolved over a period of half a century. Since the change of leadership in the early 1980s, managers and employees alike have undergone an extraordinary shared experience of turning an ailing company to a hugely successful world class organization. They all have made sacri� ces to achieve this and are justly proud of it. Interwoven in this organizational culture is a leadership and HRM style which glues the various parts of the company into a coherent entity. This entity, although it is capable of absorbing change and accommodating new ways of doing things, resists overt imposition and interference from outside, be it a management fad or a directive from on high.

Business and technology imperatives

NCR is a high-tech company and as such is at the forefront of innovation and invention in its line of business. It also pursues strong competitive strategies to maintain its global lead in certain areas and to catch up and overtake its competitors in others. HRM

Figure 2 Major factors in� uencing a subsidiary’s HRM.

Transfer of HRM practices across cultures 355

strategies are fully incorporated in hard-nosed business strategies. Education and training programmes, team work, and job � exibility are examples of various HRM tools that the company has successfully employed to enable it to implement its overall plans and strategies. Given the company’s organizational culture, the required changes have been introduced and implemented not through coercion but through open and frank communications and information processes. Moreover, managers have been able to demonstrate a direct relation between the company’s fortune and that of its employees, and thereby to secure their cooperation and commitment.

Parent company

NCR Dundee is a subsidiary and as such it cannot go it alone, so to speak. The company is well integrated into NCR Inc. Its strategic policies, including the HRM ones, are those of the parent company’s to a large extent. What takes place in Dundee is in no way detrimental to the overall interests of the company as a whole. NCR Dundee is a successful example of a balance between differentiation and integration, sought after by so many multinational � rms with subsidiaries around the world. However, some of the parent company’s HRM policies have been interpreted in a locally acceptable manner and translated into practices which work better hundreds of miles away from where they were originated. This local interpretation has been one of the major reasons why differentiation and integration processes have gone hand in hand successfully in NCR Dundee.

A dynamic model of HRM in a foreign subsidiary

The � ndings of the study shows clearly that the management of a workforce in a foreign subsidiary is a complicated affair. The choice between one of three major options, polycentric, ethnocentric, and global, advocated by many scholars, is too simplistic a model for understanding what actually goes on in a subsidiary and between it and its parent organization. Moreover, the amount of in� uence that each of the four factors identi� ed above can exert on a company’s HRM is argued here to be a dynamic one. The con� guration of these in� uences could change over time and space. In other words one should look at HRM as an ever evolving and changing series of policies and events, rather like a television soap opera, instead of a static snap shot.

Figure 3 represents this dynamic model showing four hypothetical subsidiaries in each of which one of the above-mentioned clusters of factors dominates. The � gure also includes the model reconstructed on the basis of the study reported here. In NCR Dundee there is a great emphasis on both organizational culture and location (factors A and B), with the business and technology factor as a driving force which is in constant interaction with them. Parent company, factor D, is there but its in� uence is rather circumscribed.

In a multinational company like McDonald’s, with its global HRM strategy (see for instance Vikhanski and Puffer’s 1993 study of the Moscow branch), one would imagine that factor D covered a vast majority of HRM polices and practices in its Russian subsidiary in 1993. The evidence suggests that other factors, especially location, also had their own impacts, albeit to a lesser extent.

Monir Tayeb Heriot-Watt University

356 Monir Tayeb

Acknowledgements

The author would like to express her gratitude to IJHM reviewers for their helpful comments on an earlier draft of the paper.

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