As multinational companies competing in Australia battle to beat their competitors by taking up world best practice, human resources approaches have edged closer across the leading firms.
But a study from five Australian universities including interviewing the most senior HR representative from 211 multinational businesses has revealed that often the defining line is where the country is headquartered and what sector the business plays in. 40 were Australian owned.
HRM online highlights the report: A Profile of Human Resource Management in Multinational Enterprises Operating in Australia.
The HR practices of Australian-owned multinational companies are very similar to their overseas-headquartered competitors besides two differences: Australian-born multinationals tend to use more shared services and also invest more in holding onto their key people, says Professor Pauline Stanton, a co-author of the study. More than 70 per cent of Australian multinationals used HR shared services centers with on 37 per cent of foreign owned businesses.
To understand more about how companies approach staff development, Stanton’s team divided employees into three groups: managers; the largest occupational group or LOG; and the “key group” or the “people you think really add value to your company”.
Australian businesses have a particular focus on developmental programs for their key groups — much more so than their foreign counterparts, researchers learnt.
But why are Australian companies are working harder to retain their key employees? Stanton can only surmise that Australian companies may feel at risk of having their key staff poached by bigger overseas-based rivals. Australian companies also have to work harder to attract key staff initially because they can not tap into the overseas talent pool as can competitors.
More than half of foreign companies employ expatriates from their corporate headquarters. This practice is most common among Japanese multinationals. Further, 43 per cent of the multinationals surveyed said they employed people from “third countries” — from abroad but not from the nation where their company is based. Among the Australian companies, 70 per cent said they either sent their own staff to subsidiaries, or employed workers from a third country.
Sector and country difference
Overall, the report didn’t pinpoint a “peculiarly Australian approach to international human resources management”, says Stanton.
Minor differences emerged on a country-to-country basis in the study. “Country of origin is an issue in some areas,” says Stanton. For example, Australian-owned businesses were particularly prominent in their use of employee share schemes whereas no Japanese multinational surveyed offered such a scheme or share options to any of its employees in Australia.
But when it came to salaries, Asian companies stood out offering more. And they noticed the same trend in the services sector. “That tends to stand out as being a little bit different from manufacturing and other [industries],” says Stanton.
The primary focus of talent management in multinational businesses is on developing broad competencies that allow individuals to fill a range of positions rather than only specialist roles. However, Japanese companies were considerably less likely to have talent management programs.
Despite union membership having fallen significantly in Australia in the past 20 years, the research team found collective employment arrangements were still an important feature of multinational companies operating in Australia.
About 29 per cent of companies had union collective bargaining for their largest occupational group, 10 per cent had non-union collective bargaining for the largest occupational group and about 60 per cent had union recognition at some of their sites. “Considering that union representation has fallen they are still pretty significant players in multinational companies,” notes Stanton.
Having previously worked in senior HR roles in several Australian organisations, including the Australian Rugby Union and Green’s General Foods, says Gregor who is also responsible for SAS’s Southeast Asia HR function. The main difference between a local and a multinational organisation is the distance to the head office.
“With Green’s and the ARU, your owners are on the ground with you, you drive the direction from where you are and you have sole focus on what you are trying to achieve for the business.”
AHRI national president Peter Wilson formally launched this five-universities report on MNEs this August.
“It’s great to see an academic study not only produce such high-quality results for the profession, but also to be driven so strongly by two such young blood professionals in academia. The more studies we have of this calibre in future, the better off the profession, business and academia will be in their co-operative research partnerships.”