Swedco - Distinct Traits - Case Study Example

Swedco Introduction Swedco is a highly institutionalized Swedish multinational company which produces high-tech manufactured goods and which employs tens of thousands of employees. It is organized principally around international divisions. It is diversified into related lines of business and it is highly integrated and has around 80% of its employees outside Sweden (Brock & Birkinshaw, 2004, p. 59; Swedco International, 2011; Hayden & Edwards, 2001, p. 125). The company has operated internationally for several decades and has grown through international divisions. Similar to other multinational companies based in Sweden, Swedco has for as long time incorporated home culture and practices in its operations in all of its subsidiaries (Hayden & Edwards, 2001, p. 125). However, according to Hayden and Edwards (2001, p. 126), over the last one decade or so, the company has been adopting new practices experienced in foreign countries, which the senior management deem to be desirable and has incorporated them throughout the organization. Consequently, the Swedish styles of management adopted by the firm have over time, been eroded by the influence from foreign nations, with practices from America and Britain exerting the greatest influence. This paper examines the distinct traits of this multinational organization which are associated with Swedish culture. Further, the paper examines the factors which steered the firm to depart from the traditional Swedish practices in some areas of management. Finally, the paper explains the reasons which led the senior management look into British and American subsidiaries for new practices. Things that are distinctly Swedish about Swedco According to Hayden and Edwards (2001, p. 126), one characteristic of Swedco that makes it distinctively Swedish is its management style, especially in relation to the firm’s hierarchical relations and nature of communication. In comparison with other multinational firms from other countries, Swedco employs a relatively more direct approach to supervision and it does not have the position of a supervisor. In a review of the findings of a study conducted among senior management staff across the firm, Hayden and Edwards (2001, p. 126) noted that employees work as a team and enjoy autonomy and have control over their job responsibilities. In the interview, one of the managers of international assignments for this company explained that the company employs this unique, democratic approach in all of its subsidiaries globally. He explained that the company management style allowed workers to make decisions ranging from offering suggestions to exercising veto power over decisions made by the management. Although the management correct and guide the workers on job related activities, they do so democratically and work as a team. This style is typical of Swedish companies and it contrasts the approaches found in other nations (Selmer, 1995, p. 128; Lawrence & Edwards, 2000, p. 144; Jönsson, 2005, p 36 & Sparrow, 2009, p. 227). Another characteristic of this firm which gives it a Swedish look is that it adopts a team-work approach whereby it is not unacceptable to boycott or ‘bypass the hierarchy’ (Hayden & Edwards, 2001, p. 127). In other words, the organizational actors do not get constrained by formal authority relationships and thus, workers do not see any need to jump to the hierarchy in order to put forward their ideas. One Swede manager in Britain explained during the interview that the company encourages openness in handling all matters of the firm at all levels, which is typical of Swedish firms in terms of culture (Selmer, 1995, p. 128; Lawrence & Edwards, 2000, p. 144; Jönsson, 2005, p. 36 & Sparrow, 2009, p. 227). He explained that some British counterparts find this trait to be strange since it is not common in the United Kingdom. The manager pointed out that he preferred the style since the subordinates would “not be intimidated by a formal chain of command” (Hayden & Edwards, 2001, p. 127). Another unique trait that was noticed in the study pertains to accountability of Swedish managers when it comes to decision making. According to Mulller (1998, p. 733), Swedish managers have a tendency to make decisions without effective fact gathering. According to their beliefs, it is better to make an incorrect decision than not to make one at all. This implies that a manager can make a wrong decision and still retain prestige. Mulller (1998, p. 733) also notes that a Swedish manager listens to subordinates but he/she bears the responsibility of making the final decision and expects full cooperation from the management team. However, as noted earlier, Swedes embrace the culture of openness and more so in communication. In organizations, this raises the probability of reaching a consensus. Disagreements are thus worked through in a calm and orderly manner. One of the Swedco managers from Belgium who was interviewed explained that these traits are exhibited by workers from Sweden and admitted that they are in contrast with their home approaches. Another trait of Swedco which is common among the Swedish companies relates to the stability of its ownership. According to Hayden and Edwards (2001, p. 127), around 50% of the company’s shares are held by individuals and institutions in foreign countries. 7% of the shareholding is held by three individuals who control almost 75% of the voting rights. Consequently, unlike many large Anglo-Saxon multinational companies, the growth of Swedco can has been largely driven by investments in new, “Greenfield” sites and through acquisitions and collaborative joint ventures, rather than through hostile takeovers. This specific trait has played a great role in supporting Swedish companies in areas requiring high levels of investment, (Kjellberg, A. 1998, p. 74). This has been a one of the incentives for success of Swedco in its highly competitive, high-tech industry. Why Swedco was keen to depart from the traditional Swedish practice in some areas of HR According to Hayden and Edwards (2001, p. 127), Swedco has a group of executive teams which operates in four offices, one of which is located in the parent country while the other three are in the United States and the United Kingdom. The teams work together with a management institute which is mandated with assessing and training of the managers of the company from all subsidiaries of the firm and to prepare them to fill senior positions. They then pinpoint individuals who are deemed to have high potential for competitively taking up the top positions, as part of succession plans. Further, according to one of the Swedish managers interviewed, a group of three or four individuals from the management planning department move around all subsidiaries of the firm once every year to evaluate the performance and leadership qualities of different individuals within the firm and use the information in establishing or evaluating their management planning system. Further, after gaining international experience, Swedco managers have recently been setting out policies which are based on development of a cadre of managers from across the organization, (Hayden & Edwards, 2001, p. 127; Sippola, 2011, p. 358). Workers from all subsidiaries are being encouraged to submit their suggestions for individuals whom they deem fit for promotion to positions in other firms. Hayden and Edwards (2001, p. 130) note that this trait is uncommon among the Swedish firms and emanates from the influence of Anglo-Saxon multinational companies in Britain and in the United States. The evidence from the above information indicates that the effect of the country of origin on Swedco is being eroded as the management have now tended to adopt Anglo-Saxon approaches to management. Originally, the firm did not encourage influences from operations adopted in other countries and only encouraged forward diffusion. However, the new style encourages influences from the practices that operate in other countries and thus, it encourages reverse diffusion of management practices. This indicates that the management is in the view that the foreign subsidiaries of the organization have gained enough experience and thus, they have the right cadre of managers who can run a subsidiary without assistance from other expatriates as would have been the case where a nation has just institutionalized. It is clear that though the parent country did have some control over its foreign subsidiaries, either in the way they carry out their jobs and functions or in staffing options, there has been a change in the way things are done, over time, as the various cultures are merging (Hayden & Edwards, 2001, p. 128). The above information indicates that the subsidiaries in foreign countries seem not to have a hand in making or establishing policies that affect the company. It happens that as the company gains more experience in the foreign nations, there is fusion of cultures of both the host and the parent country. This explains why Swedco decided to depart from traditional Swedish practice and encourage reverse diffusion of practices. Why the senior management looked to the British and American subsidiaries for new practices As noted earlier, Swedco management approaches, such as identification of individuals with high potentials to succeed the existing management team, have recently been influenced by operations in Anglo-Saxon multinational companies especially from Britain and the United States. Hayden and Edwards (2001, p. 128) notes that the British subsidiaries have been quite influential in the formulation of policies that enhance these new practices. One of the Swede managers from the Management Institute explained that she always gives the UK priority when she is developing training programs for managers. According to her, this helps in ensuring that the management team understands English – the language that is widely used, well (Hayden & Edwards, 2001, p. 129). Apart from that, the UK provides exceptional good training and ideas that are useful to management development and which are quite beneficial to the company (Hayden & Edwards 2001, p. 129; Harzing & Ruysseveldt, 2004, p. 399). In regard of this, the company has been developing links with Cranfield and the LSE Universities from the UK which are known to provide both good management training and methodology. As well, the company has been engaging in consultations with professors from the UK who shed more light about what is to be expected in the future. However, as Hayden and Edwards (2001, p. 128) explain, these new changes have not affected Swedco’s approaches to openness in personnel handling. One of the traits that are common of the Anglo-Saxon multinationals is that they have a culture of holding some information while handling individuals who are regarded as ‘high potentials,’ and are not advised of their status so as to prepare themselves (Hayden & Edwards 2001 p. 130; Furnham, 2004, p. 147). On the contrary, Swedco provides full information to the ‘high potentials’ in order to motivate them and for them to prepare and develop themselves for the new positions. Conclusion In conclusion, it is quite evident that Swedco has attempted to spread distinctive Swedish elements in all of its subsidiaries through both international management training and expatriate assignments. The management style adopted across the organization, which is typical of Swedish firms in terms of culture, encourages team working, creativity, openness to communication, sharing of information across borders, and sharing of ideas. As the company operates at the international level, this management style favorably exposes the company to learning about the practices and systems which are adopted in other countries. In other words, the new style adopted by the firm encourages influences from the practices that operate in other countries and thus, it encourages reverse diffusion of management practices. Accordingly, the company has recently been adopting new practices and systems that operate in the UK and the United States in the areas of management development and performance management which the senior management of the firm deems to be desirable. Consequently, the Swedish culture that has for a long time been adopted by Swedco in all of its subsidiaries has been eroded over the last one decade or so. References Brock, D M & Birkinshaw, J 2004, Contemporary Issues in Multinational Strategy and Structure, London, Gabler Verlag. 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