Multinational Companies and HRM in & ‘after’ Recession: A Retrospective from a Highly Globalised Economy’

Professor Paddy Gunnigle, Kemmy Business School, University of Limerick,Ireland

Multinationals matter …especially in Ireland 82k MNCs - 810k subsidiaries - 77ml employees 69 of the top 100 economic entities are MNCs (Guardian, 2016)

Huge Economic (& Political) influence …

IRELAND one the world’s most FDI-intensive economies (2nd most

economically globalised) long standing ‘industrialisation by invitation’ policy key role in economic development (esp. US FDI) stock of American FDI (€52bn) in Ireland is greater than

BRIC countries combined 6bn)

HR’s Dilemma: a theoretical recap (crash course?!)

HR’s Dilemma - Bedevilled by ‘vicious circles’:Lacking in organisational power

→ limited to reactive role → reinforces negative image of HR → limits quality of entrants to HR profession

WHY?Contribution difficult to demonstrate

Lack of clear criteria to judge performance/success → compounding low status & limiting talent pipeline

2 ESCAPE ROUTES 1. 1. Deviant Innovation

2. 2. Conformist Innovation (Legge, 1978, 2005, Roche & Teague 2012)

Onset of GFC: Implications for FDI & MNCs

Irish boom - most expensive country in the Eurozone → many changes already afoot in MNC sector

Recession not all negative ….for some MNCs it can be a good time to grow:

Economic recession + high unemployment =buoyant labour market & lower labour costs

FDI remained strong through GFC….but impact of GFC immense in Ireland nevertheless

Summary impact of GFC in Ireland

• GDP (2007-2009): - 11% • volume of retail sales (2007-2010): -17% • company insolvencies: +80% (2008-2010) • debt/GDP ratio (2008-2011): 44.4% →→ 111% • unemployment (2007-2011): 4.6% →→ 14.7% • net emigration (2007-2010): - 67300 →→ + 34,500• €85bn loan (bailout)from IMF/EU/ECB• Effective nationalisation of financial system & state

capitalisation (€70bn)

& Equity Markets

IMPACT ON HRM: 1. Pay & Benefits

) Pay in the aftermath of the GFCPay freezes (70%) …widespread Pay cuts (20%)* …SMEs/service sector/non-union firmsPay increases (10%) unionised MNCs & larger indigenous firms

“We decided not to have pay cuts or pay freezes even though we could probably get away with it. We are looking at a 2.5% increase next year. We could give no pay increase but that’s a

short term tactic – we can pay and we need to be fair” Employers also reviewing rewards & benefits schemes:

bonus payments pensions performance management & profit-sharing schemes

*(NB Concurrent public sector pay cuts in region of 15% to 25%)*

IMPACT ON HRM: 2. Industrial Relations

Collapse of social partnership (after 2 decades)Decline in union power/influence Changed IR climate & increased worker malleability? management opportunism:

“ It’s an opportunity to cut deep & clear out poor performers..”

union demand/interest but difficult to meet expectations –

what can unions do?

IMPACT ON HRM: role of the HR function

Irish evidence on HR role during recession points to something of a conundrum……

… HR function has played a key role in delivering org. responses to GFC(re-structuring, downsizing, pay cuts/freezes, etc., etc.)

… but greater ‘hard metric’ evaluation of HR leading to rationalisation & reconfiguration of HR delivery

CONCLUSIONS

1. No broad evidence of diminution in HR’s role or status

2. Overarching focus on cost reduction

GFC has underscored HR’s alignment with management & managerialism

i.e. ‘CONFORMIST INNOVATION’ (Legge, 1978; 2005)

(See quotes re impact on HR Role)

HR TRENDS BEYOND THE GFC

3 BROAD TRENDS1. EVOLUTION & BROADENING of HR role

2. Greater focus on FORMAL EDUCATION

3. Greater HR alignment with management & managerialism …aided by GFC (‘conformist innovation’)

MANIFESTATIONS

1. 1. Bottom line is key

2. Feminisation but not at the top?

3. Use of IT rather than direct employees to deliver HR services (‘HR fragmentation’)

4. New & old skillsets required

- Negotiation/Engagement/Conflict Management

& IT/Operations Management/Finance

QUESTIONS & COMMENTS?

Multinational Companies and HRM in & ‘after’ Recession: A Retrospective from a Highly

Globalised Economy

On increased workload & rationalisation of HR delivery

As part of this cost agenda people in HQ have said ‘hang on a second we are not just squeezing production & engineering…we need to look at enabling functions like HR, finance, IT. We need to start squeezing you. They are moving to a centre of excellence model which is driving redundancies in HR. I had 8 people working for me when I started – now there’s me and one other.. there were [HR] redundancies, about 20%. If you have a HR issue, it’s gone to Shared Services ...it [HR] has been stripped down to the bare bones. It has thrown up a huge challenge & behind all this is cost - to drop the numbers, push more work back to the line, drive specialisation”

HR Director, Pharma

On rationalisation of HR delivery

We have recently moved from a decentralised regional/local (HR) structure to a more centralised ‘call centre’ model. For example, in [US city] I have one HR manager responsible for 1000 people and another 100 on the west coast plus a call centre – that’s 1 HR person plus a call centre for 1100 people & that call centre also caters for (larger numbers of) other US employees

HR Manager Med Devices (US based)

On greater focus on transactional & ‘Hard’ HRM?

…there is less focus on … the sunshine side of HR – your L&D, OD, being flathulach with comp & bens but a massive demand on the other side: for skills on negotiations, redundancies…& the administrative and logistical support needed to process large pools of people exiting the organisation

HR Director (Pharma)

On Strategic HRM

……(HR) is an increasingly strategic role as it involves working with other key managers (e.g. supply chain, engineering) in evaluating sites, deciding on investment/divestment, outsourcing, evaluating labour costs. For a company such as us, cash rich, the time have never been better for acquisition. HR plays a key role in acquisitions.

HR VP – US based

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