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Scandinavian Management Model as Competitive Advantage in Attracting Qualified Foreign Labour. Dr Maria Vrabcova. Hardager, Norway 3 June 2010. Agenda. Overview of Norway’s economic environment Population growth and net migration Theory of migration

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scandinavian management model as competitive advantage in attracting qualified foreign labour

Scandinavian Management Model as Competitive Advantage in Attracting Qualified Foreign Labour

Dr Maria Vrabcova

Hardager, Norway

3 June 2010

agenda
Agenda
  • Overview of Norway’s economic environment
  • Population growth and net migration
  • Theory of migration
  • Overview of Scandinavian Management Model
  • How does the Model compare with other countries?
  • What can we learn from other countries?
  • Conclusion
slide3

1.8%

2.5%

2.1%

1.8%

0.7%

-1.5%

Norway has performed better than most industrialised countries during the financial crisis and global recession …

GDP Growth - % Change on Previous Year

Source: Eurostat

and unemployment rate remains well below that of europe and the rest of scandinavia
…and unemployment rate remains well below that of Europe and the rest of Scandinavia

Source: Eurostat, Norway Statistics

slide5

Norway’s surpluses from oil & gas revenues will ensure that any protracted slow down will leave enough room for the government to increase stimulus measures…

Net Surplus (+) / Deficit (-) as a % of GDP 2010 forecast

Source: IMF

slide6
…which helps to ensure unemployment rate remains low compared to Scandinavia and other European economies

Forecast unemployment rate in 2010 - 2011

Source: IMF

overall norway s population is still growing compared to the rest of scandinavia
Overall Norway’s population is still growing compared to the rest of Scandinavia…

Greenland, Iceland and Faroe Island excluded due to small size of population relative to the main Nordic countries

however growth is increasingly dependent on net migration in norway
… however growth is increasingly dependent on net migration in Norway…

Source: Norway Statistics

this growth has accelerated in recent years due to eu enlargement in 2004
…this growth has accelerated in recent years due to EU enlargement in 2004…

Source: Norway Statistics

norway has the highest fertility rate in scandinavia however it remains below world average
Norway has the highest fertility rate in Scandinavia, however it remains below World average

Fertility Rate – Births / Woman

Source: UN, http://en.wikipedia.org/wiki/List_of_countries_and_territories_by_fertility_rate

slide13
In summary, population management is complex and requires well considered strategically long term policies
  • Norway benefited from EU enlargement in 2004 (less skilled workers)
  • Current high levels of unemployment in Northern Europe and neighbouring countries should make it easier to attract labour in the short term
  • Longer term Norway may need to diversify its immigrant base to consider nationals outside of Europe

Key Points:

norway is a great country skilled migrants should find attractive
Norway is a great country - skilled migrants should find attractive:

Norway- Highest Standard of Living,

UN Human Development Program, 2005

Oslo, Top 20 Worldwide Quality of Living Survey, 2009

#1 Mother’s Index 2010, (well-being of mothers), Save The Children

# 20 Globalization Index 2010, KOF Swiss Economic Institute

slide15
The reasons for migration are complex, broadly fall into the following categories: economic, security and family reasons

Reasons for Migration

Push factors / Sending County

Pull factors / Receiving Country

Economic reasons

Security/ Family

Economic reasons

Security/ Family

  • More “relaxed” and less bureaucratic
  • Political and/or religious freedom offered
  • Family links encourage
  • Discrimination
  • Poor medical care
  • Natural disasters
  • Lack of political or religious freedom
economic reasons
Economic reasons

Pull Factors

Push Factors

  • Favourable labour market conditions
  • Higher Wages
  • Favourable exchange rates (£ v €)
  • Job mobility and professional career development
  • Higher standards of living
  • Active presence of recruitment agents
  • Education
  • Industry
  • Scandinavian Management Style
  • Poor socio economic living conditions
  • Unemployment
  • Money
  • Variety
  • Acquiring new skills
  • Interesting lifestyle / culture
  • Career development

Everett S. Lee “A Theory of Migration” University of Pennsylvania

slide17

Customers

Shareholders

Employees

Society

Employees

Shareholders

Customers

Society

So what are the main forms of Management Styles? US style dominates and sets the global management agenda, however Scandinavia is growing in popularity

US Management Style

  • Shareholder Capitalism – “Happy Customers Make Happy Owners”

Scandinavian Management Style

  • Stakeholder Capitalism – “Happy Employees Create Products which Meet Customers Demand”

Global Competiveness Report 2004, World Economic Forum, Monday Morning Dec 2009

culture determines how these functions of management are implemented
Culture determines how these functions of Management are implemented

Planning

Organising

Commanding

Staffing

Culture

Controlling

Budgeting

Coordinating

Henri Fayol, Principles of Management

culture determines the approach to how each area of management is implemented
Culture determines the approach to how each area of management is implemented

US

Scandinavia

Planning

  • Mutual need between employers and employees
  • Employers and employees divided
  • Significant control from centre
  • Control is “expected”
  • Empowered
  • Delegated authority
  • Decision making process collective and inclusive

Controlling

  • Management lead by example
  • Authoritarian
  • Employees have influence and independence
  • Autonomous project groups
  • Low trust of authorities

Commanding

  • Employers and Trade Unions work together to agree wage settlements – from a position of mutual respect and dialogue
  • Pay decisions are set by management
  • Wide variation in pay scales

Staffing

Organising

  • Hierarchical
  • Flat

Source: Copenhagen Business School

cultural underpinnings of the scandinavian management model influencing factors
Cultural underpinnings of the Scandinavian Management Model, influencing factors:
  • Rooted in socialism
  • Collectivism rather than Individualism
  • Thriftiness
  • Egalitarian
  • Trust
in norway even the bad guys are influenced by collectivism

In Norway even the bad guys are influenced by collectivism

”We tip toe very quietly

When we’re out to steel things

We only take what we must

And things that we really need….”

labour productivity has been falling overall however it has fallen faster in scandinavia
Labour productivity has been falling overall however it has fallen faster in Scandinavia

Labour productivity annual growth rate

Source: OECD

slide23
Could it have been impacted by Scandinavia having one of the lowest average working hours within OECD?

Average working hours per worker per day

Source: OECD

how some countries attract immigrants
How some countries attract immigrants?
  • Depends on high inflow of talents to fill vacancies

and / or

  • High level of government participation in enterprise / wealth creation
selected countries
Selected countries

US

UK

UAE / Dubai

Singapore

Australia

Japan

us overview
US Overview

Throughout much of America’s history, immigration has been a major source of population growth and cultural change

The American Dream is a belief that hard work and determination, any immigrant can achieve a better life

US accepts more legal immigrants than all other countries in the world combined

20.6% of world’s total migrants and 12.8% of national population are migrants

Positively encourage – Bill Clinton said:

"America has constantly drawn strength and spirit from wave after wave of immigrants...They have proved to be the most restless, the most adventurous, the most innovative, the most industrious of people”

Since 911 public attitudes towards immigration have changed

Global economic recession has augmented the negative aspects of immigration

us has a lot to offer
US has a lot to offer

Pull Factors

Push Factors

  • Career Development
  • Education
  • Free (Political Rights – 1, Civil Liberties – 1)
  • The American Dream
  • Management Style
    • Straight talking and 'getting to the point'
    • Respect is earned through conspicuous achievement rather than through age or background
    • Self-deprecation is often misunderstood by Americans as a sign of weakness
    • Time is money
    • Structure proposals to emphasize quick wins rather than long-term objectives
us is facing one of the most severe unemployment rate since 1982
US is facing one of the most severe unemployment rate since 1982

Source: http://www.miseryindex.us/urbymonth.asp?StartYear=2000-01&EndYear=2010-04&submit1=Create+Report

a large proportion of us population growth is achieved through migration
A large proportion of US population growth is achieved through migration

Source: http://www.census.gov/popest/states/NST-comp-chg.html

uk overview
UK Overview

Up until the global recession, UK has accepted the largest number of migrants from the EU enlargement in 2004

Immigration is seen as beneficial to economy by some political parties not shared by majority of Britain

Attracting too many low skilled means the tax they pay are unable to cover the social services they receive

Moved to points based system, similar to Australia with emphasis on professions where there are skill shortages

2.9% of world’s total migrants and 10.0% of national population are migrants

OECD Tax burden 36%

slide31
UK

Pull Factors

Push Factors

  • Free (Political Rights – 1, Civil Liberties – 1)
  • Management Style
    • A manager is expected to have the interpersonal skillsmanagers to be 'generalists' rather than 'specialists‘
    • High job mobility
    • Flat management, Managers developing a close, friendly relationship with staff,but they make thedecisions
    • Respect is earned through experience rather thanqualification system
  • Career Development
  • Education
slide32
UK’s projected population growth is spread out fairly evenly between natural changes and net migration
uk has taken in a large proportion of immigrants from accession countries
UK has taken in a large proportion of immigrants from accession countries

Source: ONS, DWP, National Insurance number allocations to adult overseas nationals

uae dubai overview
UAE/Dubai Overview
  • Driven by need to populate with both highly skilled and unskilled labour due to transformation of state from oil producer to international hub for commerce and regional tourism
  • Build and they will come / playground for the rich
  • 1.7% of world’s total migrants and 71.4% of national population are migrants
  • Sovereign State – all state enterprises and large corporations owned by the ruler of Dubai
  • Negatives have not deterred skilled migrants
    • Not allowed to take up citizenship / permanent residency ( work permits only)
    • No unemployment benefits
    • Closed culture
    • Hot
slide36

UAE/Dubai including the rest of Middle East’s management practices are very different to Western styles and is not a model for attracting skilled migrants, however tax free status ensures there is no shortage of people wanting to work there

Pull Factors

Push Factors

  • Not Free (Political Rights – 5, Civil Liberties – 5)
  • Dubai (including middle east) Undeveloped management practices built around state ruler
    • Autocratic
    • Hierarchical
    • Nepotism
    • Very relationship-oriented, respectful, patient,
    • Managers reach decisions only after discussing
    • the matter with the major stakeholders
    • Employees do not question the decisions that managers have made
  • Relaxed immigration policy for skilled/unskilled migrants
    • Only work permits offered
    • Permanent Residency not recognised
    • Tax Free
  • Playground for the wealthy
  • English is used in business and government
  • Presence of recruitment agents
  • No tax
  • International hub – 3 hours to India, 6 hours to Europe
  • Western Corporates sending employees there
  • Short term attractiveness
singapore overview
Singapore Overview
  • Driven by need to populate with highly skilled labour due to lack of resources
  • Latterly driven by economic expansion of neighbours – financial centre of Asia
  • Master plan looking to increase population from 4m+ currently to 6m+ in 2020
  • 1.0% of world’s total migrants and 42.6% of national population are migrants
  • Socialist democracy / Engineered Society
  • Negatives have not deterred skilled migrants
    • High density
    • Cost of living
    • Hot and humid climate
slide38

Singapore has established itself as the business centre of Asia with shipping, tourism and financial services coupled with a flat tax regime of 15% and multicultural which attracts a lot of skilled talent

Pull Factors

Push Factors

  • Partly Free (Political Rights – 5, Civil Liberties – 4)
  • US model, heavily influenced by traditional Asian values
    • Mix of solidly traditional Asian values and western business techniques
    • Multiculturalism accepted
    • Age is respected and managers tend to be older.
    • Managers delegate decisions to their teams
    • Outside family ties, promotion will be based on performance
  • Relaxed immigration policy for skilled migrants
    • Permanent Residency offered after two years to those who meet the country’s list of key skills
    • Extensive resource available to help potential skilled workers
    • Job vacancies advertised and run by government
  • English is used in business and government
  • Presence of recruitment agents
  • Career Development
  • Flat Tax system – 15%
  • Income levels are significantly higher (x3-x5 timeshigher) than those around Asia
  • International hub – 3 hours to India, 6 hours to Dubai,3 hours to HK/China
  • Head Office or Regional Head Office for many westerncompanies
slide39
Singapore has very low unemployment rate and it has increasingly relied on the non-residents (immigrants) to take up jobs

Singapore Residents and Non-Residents

Singapore Unemployment Rate

‘000s

Singapore Residents include citizens and permanent residents

Source: Singapore Statistics Office

australia overview
Australia Overview
  • Historically driven by need to populate smallest continent
  • Latterly driven by economic expansion – mining / housing boom
  • Master plan looking to increase population from 20m+ currently to 35m+ in 2030
  • 2.2% of world’s total migrants and 19.9% of national population are migrants
  • Negatives have not deterred skilled migrants
    • Recent backlash against immigrants
    • Cost of living (Property is x9 average earnings)
    • OECD Tax Burden 31%
    • Remote – 24 hours to get to Europe
    • Limited career advancement (compared to Singapore / Europe)
slide41

Australia follows the US management style which is heavily influenced by British culture. Unsurprisingly UK is Australia’s largest source of immigrants

Pull Factors

Push Factors

  • Free (Political Rights – 1, Civil Liberties – 2) compared tomany Asian countries
  • US model, heavily influenced by British culture
    • Meritocratic – although some elements of “old boy network” remains
    • Highly functional, “less” responsibilities
    • Work life balance emphasised
    • Sports unites – Aussie Football, Cricket,
    • Multiculturalism accepted
  • Highly developed immigration policy (Points Based System)
    • Skilled Migration Programme – Permanent Residency offered to those who meet the country’s list of key skills
    • Extensive resource available to help potential skilled workers
    • Language tuitions
  • Presence of migration agents and recruitment agents in theUK and Australia
  • Deep historical links with UK – economic and family
  • Significant arrangements with UK (2 year working holiday VISA)
  • Education – Australia’s 2nd largest export – attracts asignificant number of students from Asia
  • Looking for a more “relaxed” lifestyle
slide42
In Australia, population increase has depended on the Net Migration, particularly in the last 10 years
slide43
Despite higher unemployment rate in comparison to Norway, Australia remains very attractive to immigrants
japan overview
Japan Overview

Immigration is very much discouraged - citizenship and permanent residency are extremely difficult to obtain

1.1% of world’s total migrants and 1.6% of national population are migrants

Addresses the shortage of workers through industrial automation

slide45

Japan policies discourages immigration which is addressed by significantly investing in robotic technologies to automate significant parts of their manufacturing processes

Source: World Robotics Report 2008

slide46
Japan is an advanced economy, however it discourages migration even when demographics show a rapidly ageing population

Pull Factors

Push Factors

  • Partly Free (Political Rights – 3, Civil Liberties – 4)
  • Internationalisation
  • High earnings
  • “Japan and American management are 95% the same, yetdiffer in all important aspects” -Takeo Fujisawa, Founder Honda Motor Company
    • Hierarchical, high emphasis on job and seniority
    • Large supervisory
    • Unassuming, un ambitious managers
    • Polite and diplomatic
  • For international companies-- opportunities for careerdevelopment (Sony, Nissan)
  • Japan is not keen on immigration
  • Asia’s financial centre
  • Western Corporates with regional hubs
industrial automation
Industrial automation

From this

To this

more radical solutions
More radical solutions?

From this

To this?

even more controversial
Even more controversial?

To this?

From this

so what insights can we learn from these countries and what can we do
So what insights can we learn from these countries and what can we do?

Critical Success Factors

  • Management that accepts multiculturalism
  • Create awareness
  • Proactive recruitment
  • Appreciate limitations – regional
  • Tax is a driver
  • Automation
conclusion
Conclusion
  • Norway is not the natural choice for migrants, but faces a different challenge. Has to attract a small number of migrants with specific skills.
  • Deciding where to move / live, particularly for people with families, is a profound psychological process, so Norway has to focus on push factors.
  • Is immigration the answer?
    • Women working
    • Training?
  • Norway has many attractions
    • Great work ethics based on its management model, employers and employees have a very good relationship
    • Equality
    • Innovative
    • Beautiful, unpolluted country
    • Work / life balance
recommendations
Recommendations
  • Central database for key skills as in Australia
  • Points based system for migration
  • Use internet to make it easier for those who are considering Norway as a potential place to live through the provision of information
  • Norway needs clear policies on which skills to attract, over what period of time and from where? = Targeted Marketing
  • Language tuition for new arrivals
compare
Compare…

Norwegian Fjords

Bondi Beach, Sydney, Australia

tax burden
Tax Burden

Source: OECD

structure of government
Structure of government

Public Sector

General Government

Public Corporations

Local Government

Public financial corporations

Central Government

Non-financial public corporations

Fiscal account including National Insurance Scheme

Fiscal account including National Insurance Scheme

Municipalities

County Municipalities

Non-financial corporations owned by the central government

Non-financial corporations owned by the local government

Norges Bank and lending institutions

Other financial corporations

slide59
Compared to Europe average (34 people/km2) Norway has only 14 allowing a significant room to increase its population
norway
NORWAY
  • Constitutional monarchy and parliamentary democracy, with King as Head of Stateand government power resides in Prime Minister and elected parliamentary ministers.
  • Unitary state with administrative subdivisions on two levels - counties and municipalities
  • Significant government control in key resource industries via Public Corporations

Government Control

  • Aligned to the model in Europe
  • Restrictive admissions but equal treatment
  • Positively encourage – "respect for immigrants' language and culture”
  • Language training, labor market integration, and initiatives to promote multi-culturist
  • Generous integration and social services for immigrant populations
  • Naturalisation – difficult (7 years as PR)
  • <0.5% of world’s total migrants and 7.4% of national population are migrant workers

Migration Policy & Management

  • Democratic, consensual , relation and result -oriented management
  • Exceptionalstrength in ethic, social responsibility, accountability, openness, transparency
  • Shareholder value, customer satisfaction, management truth worthiness
  • Motivating management, empowering employees, participative decision making
  • High level of information and direct communication
  • Managing with goals and values rather then control and command
  • Flat company structure, communication with the employees, delegating responsibility, care, trust,
  • Collegiality among the staff, employees happiness, efficiency, more risk taking, feeling of accomplishment, motivation, well-being, creativity, innovation

Management Style

Tax

  • OECD Tax Burden - 42%
  • Gender pay gap 16% - Difference between earnings of female and male employees lowest in Scandinavia and average of EU27 17%

Awareness

  • http://www.migrationinformation.org/Feature/display.cfm?ID=307
  • http://www.nationsencyclopedia.com/Europe/Norway-MIGRATION.html
  • http://www.migrationinformation.org/Resources/norway.cfm
slide62

However we have to be cognisant of the fact that women are increasingly spending more time in work which may have an impact on the overall natural population growth

Change in time spent on various activities on an average day from 1971 to 2000, by sex and age 16-74 years. Minutes

minutes

  • Potential Implications:
  • Lower birth rate
  • Impact on labour availability
slide63

So whilst population is projected to grow, the economically productive group is reducing, this is a trend that is wide spread across Europe indicating future competition for skilled labour

2009

2050

Norway statistics

so how do we measure management models effectiveness
So how do we measure management models effectiveness?
  • Competitiveness?
  • Labour Productivity?
pillars of competitiveness
Pillars of Competitiveness
  • Basic Requirements
  • Institutions
  • Infrastructure
  • Macroeconomic Stability
  • Health and Primary education

Key For

Factor - driven

Economies

  • Efficiency Enhancers
  • Higher Education and Training
  • Goods Market Efficiency
  • Labor Market Efficiency
  • Financial Market Sophistication
  • Technological Readiness
  • Market size

Key For

Efficiency - driven

Economies

Key For

Innovation - driven

Economies

  • Innovation and Sophistication Factors
  • Business Sophistication
  • Innovation