participation: an asset of corporate governance in mnc’s. does the se provide an advantage for...

Participation: an asset of Corporate Governance in MNC’s. Does the SE

provide an advantage for enterprises and investors?

Dr. Sigurt VitolsScience Center Berlin (WZB)

Presentation prepared for the SEEurope Network

Conference,

29-30 November 2004, Brussels

Key Questions for the Study

• Internationalization and company change

• Resulting challenges for HRM

• Workers’ Participation: The Management View

• EWC + SE

Study Design

• DJ Stoxx 600

• Postal survey of 165 Companies w/ EWC

• 63 Replies (38 % Response Rate)

• 13 In-depth Interviews

• Access to Lift.com Participants

Internationalization at Company Level

• Weakening of National HQ vis-a-vis Regional and/or Divisional HQ

• Regional Production + Sales Strategies

• Product + process standardization

• Regional/divisional HRM upgraded

• Increased Monitoring by Capital Markets + NGOs

• Uneven Process

Examples of Company Change

• Centralization at GM Europe HQ/Detroit

• BP European HQ in Paris

• Devolution of responsibility to divisions (e.g. Degussa, Zeneca)

• Centralization of risk management function in financial services

Challenges for European HRM• Understanding national cultural and legal

differences• Harmonization of HRM policy which respects

national differences• Create “real” corporate culture/identity• Encourage cross-border mobility of employees • Develop truly international management cadre• Implementing European legislation (e.g. timely

info for EWC)• “Think globally and act locally”• Increase local control/monitoring w/o increasing

bureaucracy• CSR/Sustainability/Code Implementation

European Employee Participation

• 2/3 managers see EWCs positively + have plans for improvement

• Better communication, acceptance, decisions

• Decrease in decision speed

• No “country of origin” effect

• However: significant minority negative

• Near-consensus: no negotiating rights, no strengthened Directive

Some Benefits of EWCs

• Upgrading of HR function

• Discussion of new topics: strategy, finances, health + safety, training

• From information to consultation

• Agreements/statements on:– Health and safety– Sustainable development– Social + ethical charters

Enlightened Managers: EWC future role

• More confident information conduit

• More informed consultative body able to act as a genuine interlocutor

• A serious and active partner

• A key role in European social dialogue

• A brainstorming group

• A platform for a constructive social dialogue and wide-ranging communication

Adoption of SE: Wait and See?

• 8 %: likely to adopt

• 12 %: “unthinkable”

• 80 %: “Might be considered but unlikely that it would be adopted”

• Key issues: taxation, simplification of corporate structure, financial reporting + transparency, employee representation

Participation + SE: Possible Advantages

• Upgrading of HRM function

• Improvement in employee communication + motivation, implementation of change

• Independent force monitoring management

• „New“ issues: CSR, transparency, pension funds

• Role for trade unions?