Industry Newsletter. CIHRS Signs Memorandum of Understanding with University of Chile

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1 CIHRS Signs Memorandum of Understanding with University of Chile Susan Welch, Dean of the Penn State College of the Liberal Arts, recently finalized a memorandum of understanding with the University of Chile to collaborate through the Center for International Human Resource Studies and the School of Labor and Employment Relations. The memorandum will allow both Penn State and the University of Chile to work jointly on activities related to student experiences, faculty research, outreach and development opportunities. Center Director Elaine Farndale and Assistant Teaching Professor Maria Beamond visited the University of Chile in April to discuss collaboration opportunities. Both faculty members also presented a workshop to students and faculty at the University of Chile on academic publishing. Pictured: Dr. Elaine Farndale and Dr. Maria Beamond from Penn State's Center for International Human Resource Studies, together with Sebastián Conde, director of the Centre for Organizational Engineering at the University of Chile, after the signing of the memorandum by the Rector of the University of Chile. Industry Newsletter 2018 HRM Mining Conference The Center for International Human Resource Studies participated in the Human Resource Management Mining Conference, organized by Gecamin and held in Santiago, Chile, April 5-6, More than 200 representatives from major local and international mining companies attended the conference. On behalf of the Center, Dr. Maria Beamond presented on: Climate Change: Are the human resources from the mining industry ready to alleviate and recover from its impacts? Dr. Beamond presented a theoretical framework and at the end of the presentation invited interested organizations to participate in future research. As a result, a research team is being organized and Dr. Beamond is presenting her work in the coming weeks to a select group of companies/universities in order to discuss potential research activities. CIHRS, 501 Keller Building, University Park, PA 16802, USA, P: , Fax: , E: cihrs@psu.edu, W: ler.la.psu.edu/cihrs Facebook: 1

2 The Case of PanAust: A Conversation with Adrian Bell, Executive General Manager of Support Services PanAust is an extractive copper and gold producing multinational corporation, headquartered in Australia, owned by Guangdong Rising Assets Management Co. Ltd, a Chinese state-owned enterprise. PanAust operations, exploration and development activities are in developing countries outside of Australia, producing copper gold assets in Laos and either exploration or projects in various stages of development in Papua New Guinea, Myanmar and Chile. PanAust has over 3,400 employees spanning mining, processing, support and logistics operations and exploration and project construction, in remote locations within mountainous and high-rainfall areas. PanAust believes that its comparative advantage has been based on the development of well-funded sustainability credentials by not only establishing and maintaining good relationships with governments and communities, but also advancing the economic and social development of its communities closest to its operations and activities. This achievement involves a variety of community development fund (CDF) projects which, as of 2017, exceeded US$4.1 million, providing direct employment to people from local communities. For example, in Laos, in villages adjacent to the operations they have reduced poverty from 55 per cent to 18 per cent since 2008, according to socio-economic surveys that are regularly conducted. The government of Laos has previously awarded the company two Laos Labour Order medals, recognizing the company s contribution towards its sustainable development goals for reducing poverty and broader socio-economic development. Recognizing that employees make the most significant contribution to success in regions with very different cultural and institutional environments, the firm carefully develops strategies to attract, engage, develop and retain its employees and provides a meaningful and rewarding environment in which to work. These strategies are embedded in the company s strategic human resource management (SHRM) framework, covering six core elements with the objective of aligning employees to the vision, values, goals and objectives of the firm. These elements are: employee health and wellbeing, remuneration and benefits, recruitment, training and development, organizational development and human resource systems. The company measures its success through employee engagement surveys and undertakes focus groups to consider opportunities to continually improve levels of engagement with its employees. The following is a Q&A with Adrian Bell, PanAust s Executive General Manager of Support Services. Bell answered questions regarding PanAust s human resource policies and how those policies help PanAust stand out from its competitors. Why do you say people rather than human resources in the sustainability report? PanAust reports sustainability-related matters to the Global Reporting Initiative (GRI). For GRI, the standard GRI employee performance standard is called labor practices. We believe the word labor has a certain connotation that does not reflect our values. We decided that the section our people is a broader and more inclusive concept than labor, human resources or employees, as our expectations are that anybody visiting our sites behaves in accordance with our values irrespective of whether they are employees, visitors, contractors or suppliers. How does PanAust transfer its strategic HRM framework to subsidiaries with different cultural and institutional environments? PanAust s business spans a range of countries with differing levels of development and cultural, legal and regulatory environments. Our success has largely been governed by PanAust Group standards that reflect the company s values and are consistent with, or better than, international leading practices and legislated requirements. For example, we have a diversity policy and standard with measurable objectives. Often, we are told when entering a new environment (Laos, Papua New Guinea) that women, for a variety of reasons (legal, cultural, etc.) cannot work in certain roles within the mining industry and men won t take instructions from women. This is not in keeping with our values and we have at all times explained our position on such matters and educated both the community and workforce about our culture, expectations, policy, standards and facilities to encourage women to apply for non-traditional roles within the mining industry and ensure they are not discriminated against in the workplace. [continued] 2

3 A further example is that we have had, for a number of years, an outstanding safety record compared to our peers internationally. This has been achieved in a country like Laos where, compared to Australia, there is little regulation to guide you, yet our safety performance compared to a highly regulated environment like Australia is far superior. What guides us is our values of respect for our employees and what better way is there to show our respect than by ensuring employees go home safe each day. Another example is that we do not allow majority owned subsidiaries to have a different logo. The PanAust logo and name appears on all overseas subsidiaries signage. Our brand, in terms of who we are and what we do, is important to us and differentiates us from our competitors and it breaks down that site versus corporate mentality. What are the major differences between Laos, Papua New Guinea, China, Myanmar and Chile when implementing the strategic HRM framework? Wherever PanAust has a presence or prior to entering a new jurisdiction, PanAust has a detailed HRM strategy that is aligned to its corporate strategy. We will always strive to be true to our values and apply the highest standards irrespective of differences between countries. Our job is to break down those differences and ensure our company standards are applied. For example, places like Laos, Myanmar and Papua New Guinea rank poorly on the transparency index, including bribery and corruption. Environmental, social and government analysts often look in disbelief when we say we don t make corrupt payments, bribes or facilitation payments. They don t believe we can operate in these countries without making such payments. As a company however, through education, applying rigorous standards and auditing against those standards you can create your own reality that is different from the perception. PanAust s approach is informed by a risk-based approach to materiality on specific human resource issues. Materiality may change between these countries based on legal or cultural differences. Prior to implementing the various aspects of the strategy we will identify the risks and opportunities and implement mitigation strategies to minimize the risk and maximize the opportunity. Are HR and employment relations part of the same department? Yes, they are. We never need to focus on labor relations when developing our human resource strategy for key HRM pillars of organizational structure: recruitment, remuneration and conditions, training and development, and HRM systems and standards. In each of these areas, we ensure we have an integrated plan of continuous improvement and review that engages rather than alienates the workforce thereby avoiding a focus on labor relations and third-party interjection. Part of the review process is the employee engagement survey that achieved an overall employee satisfaction rating of 88 per cent, with 84 per cent of the workforce voluntarily completing the survey. This was an outstanding result compared to the natural resource and mining industry global norms. Is HR involved in community development fund projects or is this the function of another department? It is a function of another department, however, we have a peer review process for identifying risks and we have an integrated approach to developing strategy so they are linked in terms of outcomes. [continued] 3

4 What is the impact of community development fund projects on HR? In developing countries, you become the deliverer of services normally provided by government. We are actively involved in adult literacy programs, building schools and health clinics, offering apprenticeship scholarships to local village people and building infrastructure, among many other initiatives, which have all helped in terms of ensuring we have community support and a ready workforce from local subsistence communities. We also recognize that not everyone wants to or can work for our mines nor do we want certain groups being left out of opportunities that a mine in a remote community can bring. We have therefore implemented very successful village savings and credit funds, and small business development opportunities including support for diverse crops and increased yields for agriculture programs that take the village beyond subsidence farming. This has enabled people to earn income from the company by providing goods without being directly employed. Do you think corporate social responsibility, HR and employment relations should be integrated? If so, why? Yes, I do and in our organization that is how it is structured. In our organization we have created a culture that lives and breathes its values through sustainability and I think that this would have been more difficult to achieve if we had these functions under separate executives. We have been fortunate to have HR, risk, health and safety, environment, community relations and communications all under the one executive. Being a small enough organization that can cater for this approach ensures common oversight for all areas that are related to sustainability and human resources and allows for a holistic approach that enables us to bring all those individual functions together and to join the dots to develop a common strategy. All photos courtesy of PanAust 2018 Shared Value Summit What is shared value? Creating shared value is a concept coined by Michael E. Porter and Mark Kramer (2006, 2011). As the authors state, shared value is not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success. Although connected to philanthropy and corporate social responsibility (CSR), shared value focuses on leaders of organizations maximizing the competitive value of solving social problems for customers and markets, including cost savings and talent retention. In contrast, the focus of philanthropy and CSR is on giving back or minimizing the harm business has on society. A Shared Value Summit was held in New York City from April 30 to May 2, Although the event was largely intended for corporate leaders, Dr. Maria Beamond from the Center for International Human Resource Studies at Penn State attended. Her goal was to hear from leaders from several organizations on the way they are incorporating the shared value model into their core business strategy to tackle the most pressing social issues in the regions where they operate. Information gained from this event is assisting Dr. Beamond in finalizing an academic article on this topic. More than 300 leaders from companies, nonprofits and governments with a real interest in making a social difference through their organizational strategies attended this event. Case studies presented by representatives from the organizations were inspiring, with senior leaders explaining the way their organizations used shared value approaches. Participants tested models with other practitioners and networked with new partners to make social change. 4

5 Translating CIHRS Research to Practice Beamond, M., Farndale, E., & Härtel, C. (2016). MNE translation of corporate talent management strategies to subsidiaries in emerging economies. Journal of World Business, 51(4), ( S ) This conceptual research investigated the way multinational enterprises (MNEs) translate their corporate talent management strategies from headquarters in developed countries to subsidiaries in emerging economies. As MNEs are affected by the speed of globalization, including the way they manage their talent at the global level and the different cultural and institutional contexts they face when operating in emerging economies, this is noteworthy research for both industry leaders and academics. The article first analyses different talent management views to identify the key barriers MNEs are facing when operating in emerging economies. Second, the research analyzes the concept of emerging economies and the effects on MNEs managing global talent in these regions. Third, the article develops and proposes a model to understand the different cultural and institutional factors that may affect corporate strategy translation to emerging economies. The proposed model suggests different factors that affect the process of translation of talent management strategies through global, corporate and subsidiary levels. At the global level, these factors include corporate constraints, institutional pressures, local responsiveness, the need for urban and provincial talent management differentiation, context-specific investment and other factors. At the corporate level, these aspects include the need to develop local dynamic capabilities to confront skill shortages in the regions. At the subsidiary level, the importance of having strategies that are flexible to adapt to institutional and cultural differences, as well as legitimacy and humanism, are highlighted. Based on these findings, two of the most important factors involved in the translation process emerged: social legitimacy and community relations, as well as the importance of MNEs gaining legitimacy to invest in and develop local talent. Farndale, E., Ligthart, P., Poutsma, E., & Brewster, C. J. (2017). The effects of market economy type and foreign MNE subsidiaries on the convergence and divergence of HRM. Journal of International Business Studies, 48(9), ( link.springer.com/article/ /s ) Our research was based on data collected from nine countries at three points in time over a decade to establish whether HRM practices are becoming more alike as a result of globalization. Specifically, we explored what influences the adoption of HRM practices, recognizing the importance of the broader context in which firms (both MNEs and local firms) are embedded. We found that foreign-owned MNE subsidiaries have different practices in place compared to indigenous firms, but they still need to fit in locally, at least to some extent. When considering whether to adopt a strategy of globalization or localization for HRM (or a hybrid approach), MNEs need to assess the potential challenges they face based on the extent to which local institutional constraints around specific HRM practices might vary across the parent and host locations. By undertaking such an analysis to avoid understatement or overstatement of the effects of local constraints, implementation of the strategy might be both more efficient and yield higher returns. Specifically, our findings point to wage bargaining levels and compensation practices offering less leeway for local adaptation away from institutional norms, compared with contingent employment, direct information provision and training practices, which can be adapted to fit the local context more readily. The key takeaway is that institutions matter, but they matter for some HRM practices more than for others. For firms, this means that discretion is limited unless they are able to influence these institutions such as through business/employer associations to be part of the institutional context and to instigate favorable arrangements. If you are interested in discussing ways in which you or your organization might engage with CIHRS, please contact us at cihrs@psu.edu. This publication is available in alternative media on request. Penn State is an equal opportunity, affirmative action employer, and is committed to providing employment opportunities to all qualified applicants without regard to race, color, religion, age, sex, sexual orientation, gender identity, national origin, disability or protected veteran status. U.Ed. LBS