Human Resource Management Issues and Challenges …people.eku.edu/englea/Proceedings IFSAM 2012...

Human Resource Management Issues and Challenges in Foreign Owned Companies:

Central and Eastern Europe (2 0 0 8 - 2 0 0 9 )

József Poór

Professor of Management, Szent István University Gödöllő, Hungary, e-mail: poorjf@t-

online.hu (corresponding author)

Zsuzsa Karoliny

Associate Professor, University of Pécs, Hungary, e-mail: [email protected]

Allen D. Engle

Professor of Management, Eastern Kentucky University, USA, e-mail:[email protected]

Ruth Alas

Professor of Management, Estonian Business School, Estonia, [email protected]

Katalin Dobrai

Associate Professor, University of Pécs, Hungary, e-mail: [email protected]

Ferenc Farkas

Professor of Management, University of Pécs, Hungary, e-mail: [email protected]

Agneš Slavić

Associate Professor, University of Novi Sad, Faculty of Economics, Subotica (Serbia) e-mail:

[email protected]

Key words: Multinational enterprises, Human Resource Management, CEE, survey

ABSTRACT

The majority of companies in the competitive sector of the Central and Eastern European

(CEE) region have largely completed those major legal, strategic and structural modifications

that followed privatization. They have essentially completed the reorientation of firm

functions and set up competitive business models and HR systems to support these models.

With the intensification of competition continuous renewal is being emphasized now.

In this situation, the role of human resources becomes particularly important in both the

private and public sectors of these countries.

There is a deficit in empirical Human Resource Management (HRM) literature when it

comes to identifying new patterns of Multinational Company (MNC) involvement in the

region and the impact of these ongoing MNC operations on the patterns of HRM behavior of

these firms. To decrease the lack of proper understanding on this field, this extensive regional

survey asked the HR executives and managers to describe the trends that have emerged in

their HR practices and the emergent roles of HR professionals in CEE region in response to

global and regional socio-economic changes as MNCs redeploy their primary business

activities and supporting HRM activities and infrastructure. In this contribution we summarize

the relevant findings in connection with the most important topics of the survey: strategy

influencing factors, critical HR issues, expatriates, localization, relationship between HQ and

local HR, critical HR executives’ competencies and use of external resources.

1. Introduction

In this research project we examine the HR functions and practical applications of

Multinational Company (MNC) subsidiaries in seven countries (Croatia, Estonia, Hungary,

Poland, Romania, Serbia and Slovakia) in the Central and Eastern European (CEE) Region.

The current research is part of a long-term cooperative research consortium – the Central and

Eastern European International Research Team (CEEIRT) – that is composed of researchers

from different universities from the CEE region and that is aimed at examining the changing

Human Resource (HR) practices and roles in MNC subsidiaries.

This particular paper focuses on issues related to 1) subsidiary locations and origins, 2)

HR effectiveness, results and characteristics, 3) patterns and trends in the use of expatriates

and inpatriates and 4) the role of MNC HR headquarters in supporting the HR work of local

subsidiaries. This report therefore focuses on the more macro contextual profiles compared

across the seven countries in the region.

2. Model building and background literature

2.1 Research model

Many authors believe that multinational companies design and implement their management

functions including HRM better than local companies do (Harzing and Ruysseveldt, 2005).

Furthermore these multinationals apply highly efficient methods in the majority of the HR

functions, namely performance management, communication, training of new entrants and

career management, whilst local companies tend to focus more on staffing or administrative

issues.

In undertaking a study of HR practices in the subsidiaries of MNCs in Central and Eastern

Europe, we begin by adopting a broad framework encompassing the major external and

internal factors that affect the operations of such firms (Figure 1) (Poór et al., 2010; Farkas et

al., 2007). While a discussion concerning each element in this model is beyond the scope of

this paper, this model provides a context for the discussion, consistent with recent

presentations highlighting the criticality of HR variables. (Brewster et al., 2006; Venaik et al.,

2005).

Insert Figure 1 here.

2.2 Global aims and local factors

MNCs enter foreign markets for traditional reasons (market acquisition, securing resources,

and diversification), but lately they are also seeking better economies of scale and a more

rational allocation of expenditures, via shifting processes and activities to lower cost nations

(Dowling, Festing and Engle, 2008). Morris et al. (2009) found that the level of people,

process and system alignment have a positive effect on a subsidiary’s replication capability -

the adaptation and usage of common practices. It is important to know that investing in formal

system alignment may not automatically lead to people alignment, but will increase the

subsidiary’s replication capability. To align people, an MNC must first align its processes –

those common templates, platforms and guidelines directing how HR should be done. In

addition, MNCs must not forget about integrated information systems and ongoing formal and

informal discussions that will facilitate more effective knowledge transfer. HR managers of

MNCs have to be aware of the fact that cultural distances and geographical location are

factors which can block effective replication.

Farndale and Paawe (2007) found that the most common universal human resource

management practices of MNCs to emerge at global level are: talent management for senior

managers, open job posting, expatriate management systems and succession planning tools.

Variations in global policies are characteristic in the following HR fields: reward policy,

diversity policy, performance management system for non-senior staff, employee relations

and training. At the global level similarities are largely driven by external competitive factors

resulting in the adoption of universal, ”best” practices and the availability of ICT systems and

tools. Similarities in approach to HRM at the national level appear to stem largely from

external institutional sources, such as legislation, national tradition and expectations.

Differences in approach between MNCs both at the global and national level are

predominantly led by internal competitive processes, such as corporate strategy, structure and

culture (Dowling, Festing and Engle, 2008).

2.3 Development of subsidiaries

Major stages of company development and HR implications in Central and Eastern Europe

between 1988 and 2010 can be classified into the following six categories:

• Stage One and Two – Privatization/ Firm Establishment: This period is characterized by

the transition from centralized state control and state socialism to private ownership of the

means of production in a wide range of industries. Legal and institutional infrastructures

(the formation of private capital markets, etc.) are altered to allow for numerous forms of

private ownership and resource allocation. Simultaneously, global multinational

corporations enter the Central and Eastern European economies via partnerships with state

sponsored firms, through direct purchase from the state, or indirectly through purchase or

creation via local or regional venture ownership transactions. Even during the end of the

Cold War, one of the first foreign joint venture was established by Siemens AG

(Germany) in CEE region in Hungary in 1973. Overwhelmingly a majority of foreign

subsidiaries in this region were established only after the more or less abrupt regime’s

changes of 1989-1993 (Piispanen-Krabbe, 1990).

• Stage Three and Four – Restructuring & Development: Later the new owners shift their

interest toward economic rationalization and the divestiture of unprofitable units and

functions. The key role of HR was to contribute to institutional changes and

transformation. Overall economic development in the region combined with the stronger

foreign capital inflow contributed to the strengthening of the newly privatized or

established enterprises. HR helped to acquire new competencies and capabilities for

people. Due Claessens and Djankov (2002: 313) “there is large difference in post-

privatization performance across ownership-type with the best owner (strategic foreign

investor) being associated eight times higher productivity growth the worth owner (diffuse

individual owner)”.

• Stage Five – Consolidation & Renewal: The majority of companies in the competitive

sector of CEE economies have finished the structure changing after privatization. They

have left the reconstruction of the different company functions behind – either for a longer

or a shorter period, depending on national conditions. With the intensification of regional

and global competition continuous renewal is being emphasized. In this situation the role

of human resources becomes particularly important. With the appearance of this new

economy the application of knowledge and a steady renewal have become the primary

motives for HR activities.

• Stage Six – Crisis and Recovery: The focus of this survey, this period encompasses the

global economic crisis that occurred in 2008 and the slow recovery since, particularly the

impact of this stage on HR practices and expectations for the future.

In several previous surveys, we analyzed the specific HR issues across the five historical

phases. The present paper is dealing only with the responses particular to phase six, the period

between 2008 and 2009.

2.4 Origins and orientation of corporate management

Companies of different origins choose various paths to internationalization, and it should also

be stressed that companies of American, Japanese or European origin have built up their

present organization structure and hierarchy in a variety of ways (Dowling, Festing and

Engle, 2008).

Americans went through their development phases rather quickly, Europeans used the

international division structure less frequently, whilst Japanese companies also underwent all

development phases, even if somewhat slowly. In this last case, however, the special role of

salesmen affected their organizational development significantly.

Companies of different origins, national traditions and different local market

backgrounds led to different approaches of managing foreign subsidiaries. American

companies coming from a large, homogenous market often still find foreign markets less

important than their local one. On the other hand domestic consumption is of marginal

importance for Nestlé, which comes from Switzerland with only 6.5 million inhabitants. The

culture followed by the parent company’s management is also a significant explanatory

variable and may also be worth repeating; specifically the - ethno-, poly-, regio- or geocentric

cultural typology (Perlmutter, 1969).

2.5 Market entrance

A company cannot turn into a multinational giant at a moment’s notice, and generally,

companies follow a longer evolutionary development pattern. Some firms however use

licensing, subcontracting or other methods, and those companies willing to risk everything

and step into the lion’s den follow the revolutionary development pattern. Markets in new

technologies, and non-product services (e.g. consulting, media, banking and finance) might

suit this approach. There is a special subgroup of firms following the latter pattern, who are

called “globally-born”. These can enter foreign markets without significant domestic sales,

skipping the aforementioned slow process of development.

2.6 The HR role of corporate headquarters

Briscoe, Schuler and Claus (2009) highlighted that HR practitioners working at MNC’s may

find themselves involved in IHRM issues in almost every job situation.

In the headquarters (HQ) of an MNC HR activities include a centralized coordination

directed to the subsidiaries, dictating and overseeing HR practice in all foreign operations and

administering the employee-movements between locations. In the past this control largely

involved the relocation of expatriates from headquarters to foreign subsidiaries and back.

Now it also involves the movement of international assignees across all borders and

development of more or less standardized HR policies and practices throughout the MNCs’

global operations. Typical headquarter IHRM responsibilities include selection and

preparation of employees for foreign assignments, determining and administering

compensation packages and establishment of HRM policies and practices for the foreign

subsidiary. Concurrently, in many cases IHR becomes a major strategic partner in the firm’s

global planning and talent management, while the international assignee responsibilities are

centralized or outsourced.

The HR manager in the home country subsidiary may be on the receiving end of

policy and practice pronouncements as sent from the HQ – particularly when the foreign firm

follows a centralized approach. It involves local HR staff working with HQ, applying parent

country policies and approaches and integrating the foreign philosophy and organizational

culture into the local operations.

Farndale et al. (2010) analyzed the relationship between corporate HR and

international corporate HR roles considering different levels of (inter)dependence between

HQ and subsidiaries. In more decentralized MNCs, where subsidiaries operate independently

from HQ and global process development is limited, HR is more focused on informal

mechanisms of corporate control. Where the interdependent HQ-subsidiary structure is

adopted, the complexity of the organization structure increases. This creates a new role for

corporate HQ, acting as the guardian of an overarching, world-wide corporate culture. More

independent local and regional IHRM structures result in smaller corporate HQ, limited

numbers of corporate HR executives with limited responsibility but the primary focus is on

top management and expatriates. Here HR needs to be an ”effective political influencer” to

manage the internal labor market for global markets. Within this interdependent approach HR

is a knowledge manager champion, while in a more dependent structure it is a champion of

processes. Their results are presented in Table 1.

Insert Table 1 here.

3 Overview of Research

Our broader research project covered the following areas:

Characteristics of the subsidiaries surveyed: the most important organizational

and economic characteristics (origin of the parent company, year of

establishment of the subsidiary, main area of operation of the company – sector –

, size of the organization);

Key indicators of the HR function: number and workload of the staff employed in

HR departments, the main indicators representing the importance, results,

efficiency characteristics of the HR activity (labor cost – total cost ratio, age

distribution of the employees, relative weight of the training budget, level and

rate of fluctuation and absenteeism.);

Most important HR characteristics of the period examined: importance of the HR

function, foreign and local expats, distribution of roles between central and local

HR;

Data of the respondents: data on the current HR department and its employees.

Most of our questions were related to the characteristics of the participating subsidiaries

observed in 2009. In some cases (number of staff, revenue and HR efficiency indicators) we

collected data from both 2008 and 2009.

The statements included in the report were based on the use of descriptive statistical

models (frequency, distribution, average).

In this study we examine the human resources management at CEE regional subsidiaries in

the light of 279 foreign owned firms’ practices in 7 CEE countries (consisting of Croatia,

Estonia, Hungary, Poland, Romania, Slovakia and Serbia) (Table 2). The survey data are from

2009.


4 Responding firms and respondents

4.1 Company size

The companies in the survey are split equally between large (51.9%) and small enterprises

(48.1%) based on the number of their employees (large enterprises employ over 250 persons)

in the total sample. In the individual samples, only in Serbia is there an equal split between

large and small enterprises. In the other samples the majority of the enterprises are small,

except in the Hungarian and Polish sample. In the Hungarian sample 70.3% of the enterprises

are large and in the Polish sample 58% of the enterprises are large. In this relationship it is

important to highlight that although a minority of the subsidiaries is SMEs, based on their size

(number of staff), all the regional companies analyzed are part of larger international

companies and should therefore be regarded as large enterprises from an operational and

management point of view.

With regard to the revenue we can state that Croatia, Estonia, Romania, and Slovakia had the

majority of companies in their samples with revenue below 50 million Euros while Hungary,

Poland and Serbia had the majority of companies in their samples with revenue above 100

million Euros.

4.2 Labor cost ratio

The labor cost – operating cost ratio is one of the frequently analyzed indicators on the

importance of the HR function in the company’s life. According to assumptions, the effects of

HRM have a stronger and more direct influence on the company’s performance if this ratio is

higher. About one third (34.9%) of the subsidiaries participating in the survey fell into this

category (where the labor cost ratio is higher than 30%). But the vast majority (65.1%) of the

companies operated with a relatively low (under 30%) labor cost ratio. In the Croatian sample

(87.5% of companies with less than 30% labor cost ratio) the influences of HRM are quite

low. The average labor cost ratio for the other six nations is between 27 and 29.

4.3 Origin of the responding firms

In the total sample, the subsidiaries participating in the survey came from more than thirty

different countries, although more than 74% of them came from four particular countries:

Germany and Austria (47.8%), and the USA and Canada (27%). The origins of the remaining

subsidiaries are in Western and Southern European EU (11.3%) as well as outside Europe

(13.9%).

4.4 Sector

In the total sample, more than 49% of the organizations examined were engaged in

manufacturing, 33% of organizations in services, and 17% of organizations in trade and other

industries. In the Hungarian sample 65.3% of the organizations were engaged in

manufacturing and the rest were equally divided between services and trade. Other details of

the industrial distribution are as follows:

Half to nearly half of the respondents in the Polish, Slovakian, and Serbian samples

operated in the manufacturing industries with a third of their respondents in the

services industries.

The majority of respondents in the Croatian and Estonian samples operated in the

services industries with nearly a third of their respondents in the manufacturing

industries.


4.5 Year and nature of establishment

In the Hungarian subsample, more than half (52.7%) of the MNE subsidiaries examined were

established before 1995. Almost one quarter of the companies settled in Hungary between

1996 and 2000 (24.3%) and the remaining ones (23.0%) in the new millennium. In the other

samples most of the respondents established subsidiaries after 2000, especially in Romania

and in Serbia where 75.0% and 81.8% of respondents, respectively, established organizations

after 2000.

In the total sample nearly a third of the subsidiaries were established before 1990

(31.7%) and almost a quarter (22.7%), between 1990 and 2000. While close to half (45.7%)

of subsidiaries were established after 2000.

About 44% of the foreign owners of the companies participating in the survey came to

Hungary realizing Greenfield investments and around 56% of them obtained majority control

in Hungarian companies during the privatization and the following acquisitions. In the

Croatian and Serbian samples (81.8% and 75% respectfully) the primary mode of entry was

through acquisition and to a lesser extent in Estonia (63.6%); while in the Polish, Romanian

and Slovakian samples more companies established subsidiaries via Greenfield investments

(Table 4).


4.6 Strategic development

The majority of the respondents (39.7%) in the total sample indicated that they were seeking

growth development during the period examined. Over 35% of the companies surveyed

characterized their strategy as aiming for stability. The fact that 23.2% - nearly a quarter - of

the respondents chose the option of redundancies; indicating a slow recovery from the crisis.

A high proportion of Polish and Croatian organizations indicated growth plans (51.9% and

50.0% respectively); while the other samples mainly indicated a focus toward seeking

stability - for example 45.1% of respondents in the Hungarian sample. In the Romanian

sample nearly a third (28.6%) of the organization chose the option of redundancies (Table 5).


4.7 Respondents

In the total sample, over half (60.3%) of the individuals participating in the survey are top HR

managers in their firm: e.g. HR Vice President, Director, Manager or Department Head (Table

6). The respondents (except the CEOs) work in the functional area of HR. In the case of the

Hungarian and Romanian samples more than half of the respondents are at the level of HR

Director or HR Manager. While in the Croatian sample a high proportion (70.0%) of the

respondents in the survey were HR professionals.


Over 40% of the respondents in the total sample have worked in their current positions for

less than three years. However, the majority have spent longer time in this position (3-5 years

- 26.3%, 5-10 years – 22.7% and more than 10 years – 10.8%). In the Slovakian sample over

65% of the respondents have held their current position for over 5 years. In the Polish sample

the majority of the responses indicated that they had held their position under 3 years

(50.0%). However in the Croatian sample the majority (45.5%) held their current position for

3-5 years.

5 HR effectiveness, results and characteristics

5.1 Number of HR staff

In the total sample, the average number of HR professionals was between one and five

position holders. In the Hungarian and Polish samples the average number of HR

professionals ranged between one and ten incumbents. Respondents in five countries

indicated that there was no HR staff in some organizations; ranging from 5% (Hungary) up to

10% of the subsidiaries (Croatia) (Table 7).


5.2 Productivity of HR staff

The distribution of one potential HR effectiveness indicator (the ratio of revenue to HR staff)

improved quite a bit from 2008 to 2009. While in 2008 this ratio in the total sample was

below 10 Million Euro/ HR person at the majority (57%) of subsidiaries, by 2009 the number

of respondents indicating this ratio decreased to the third of the respondents; while nearly half

of them (45.2%) indicated a ratio of higher than 100 Million Euro/ HR person (Table 8). The

distributions of the Estonian figures are much like the total sample, while these features of

Hungary and Slovakia are well above, and Serbia below the average.


5.3 HR effectiveness ratio

In the total sample the HR effectiveness ratio (average number of employees per HR

professional) is above 100 employees/HR people only at one quarter of the responding firms,

while almost the half of the respondents indicate the ratio below 50. After all in 2009 (Table

9) a slight rise occurred in the number of organizations with a ratio of fewer than 50 total staff

for every HR staff in the total sample (44.3%). The highest proportions of the lowest HR

effectiveness ratios (below 50) can be found at the Romanian (84,6%) and Estonian (70,3%)

samples, while the highest are indicated by the Hungarian and Slovakian respondents.


5.4 Training budget

Literature considers the relative weight of the training budget (compared to the entire annual

labor cost) as an important indicator of modern and effective HR activity. The average of the

total sample increased from 2008 and reached 3.08% in 2009. A little bit more, than half

(53%) of the companies examined (Table 10), spent less than 3% of their labor cost on

training, while another half of them more than 3%. The proportion of annual training budget

increased in four of the six countries that provided responses in 2008 and in 2009 – increasing

in Estonia, slightly increasing in Hungary, Romania and in Serbia. As a result of these, the

highest average (3.56%) ratio was reached in Serbia, followed by Poland (3.36%), Estonia

(3.22%) and Hungary (3.10%). The average ratios of training budget in the rest of the

countries of the survey fall well bellow the average.


5.5 Labor turnover

The level of fluctuation in employment amongst the sample firms was under 10% for more

than 60% of the subsidiaries participating in the total sample for 2009 with many companies

having barely measurable low values. On the other hand, nearly one quarter of the

respondents reported rather high values: between 10 and 20%. Moreover, we recognized that

15.9% of the companies were operating with levels of fluctuation higher than 20%. As a

result the average rate of labor turnover in 2009 was a little bit above 10%. The fluctuation

rate increased in the Croatian, Romanian, and Serbian samples from 2008 to 2009 while

decreased in the Estonian Hungarian and Slovakian samples. The lowest rate (8.89%) is

reached by the Estonian firms, while the Hungarian and Romanian figures are close to the

grand average. The worst results were indicated by the Slovakian (12.97%) and Serbian

(12.1%) firms (Table 11).


5.6 Foreign expatriates

Usually two types of long-term emissaries are distinguished – the ones arriving from abroad

from the parent company or from a third country who are also called expatriates and the ones

from the host subsidiary appointed for a long-term deputation abroad at the parent company

or subsidiaries operating in other countries. In the majority of the samples most foreign expats

are working in managerial positions (Table 12). An exception is found in the Estonian sample,

where foreign expats are more likely to be non-managers (58.6%). In the Romanian and

Slovakian samples we find an almost equal split between foreign expatriates in manager and

non-manager roles. It is important to indicate that companies appear to be sending an

increasing number of employees abroad for a short term “international assignments”

(Dowling, Festing and Engle, 2008), for a variety of limited projects, and therefore did not

meet the traditional definition of a long term assignment associated with the definition of an

expatriate. Our survey did not deal with this issue.


5.7 Local expatriates (inpatriates)

As Table 13 indicates more (221) respondents received than sent (155) employees abroad in

the region. Companies tended to send non-managers abroad, although in four countries

(Croatia, Hungary, Romania, and Serbia) the split was equal between the number of managers

and non-managers sent abroad.


5.8. The HR role of corporate headquarters

According to the obtained data we can conclude that in the sample countries headquarters

provide a moderate level of operational control on the HR activities of their foreign

subsidiaries (Table 14). In principle they provide general guidelines and framework for

actions (58.4%) or have auditor’s role (50.5%) as they solicit information and reports from

local HR departments.

At the subsidiary of MNC’s operating in Croatia and Estonia HQs have little bit different role,

as they not only provide guidelines and frameworks for local HR actions but they supply

them, to an equal degree, with resources and advice. The situation in Hungary and Romania is

similar to the seven countries’ average, as the HQs dominant roles are providing a HR

framework and playing the auditor’s role. In Serbia the majority of parent companies’ HQs

provides general guidelines, but also secondarily provides resources and advice, too. The

MNCs foreign subsidiaries have highest HR autonomy in Poland and Slovakia. In Poland

47.1% of respondents reported that HQs provide general guidelines, but in 43.7% of analyzed

subsidiaries HQs have hands off, they are only the source of last resort. In Slovakia 52.1% of

parent company headquarters provide resources and advice, while 47.8% of them have a

latent role, as they intervene in case of necessity.


6 Conclusions

This is a broad and initial presentation of what promises to be an interesting long term

research project. Further reports on other aspects of the instrument - describing specific HR

practices within the functions of recruitment, selection training and rewards, knowledge

transfer practices across subsidiaries, and the priorities and plans of HR executives for the

future - will be forthcoming. More packaged comparisons of combinations of practices and

executive perspectives, both across nations within the region and in comparison to other

regions (such as Western Europe and North America) are also potentially useful areas of

further analysis.

Additional ongoing research strands of potential interest include:

• Longer term assessment of entrance method and long term evolution.

• Mandates and the determinants and correlates of mandate transitions over time (see

Andersson and Holm, 2010, Balogun, Jarzabkowski and Vaara, 2011 and Morris and

Snell, 2011).

• Clarifying, expanding and updating respondent professional profiles.

• Regional similarities and differences in HR flows and profiles in an economic

recovery mode.

• Expatriation patterns and the use of TCNs in an economic recovery mode.

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Figure 1: The research model and HR variables

* Export-import* Franchise-licence* Local office* Joint Venture R&D Log. Oper. Sales* Wholly owned subsidiary

* Growth-expansion

* Other…

Strategy&ControllingMarketingIT&Telecom.HRM

Market Entrance Tools

* Cut-back* Outsourcing

Mandates (Ms)

* Competitive factors* Critical HR issues* Expatriates * Localisation* HQ & local HR* Different HR fields* HR Headcount* HR Executive Competences* External resources

M5, M4, M3, M2,M1

HR Variables (HRVs)* Stability

Objectives of the Firm

Development of Subsidiaries (DSSs)

Early movers

Late movers

I Privatization

IV Economic Slowdown

II MNC Entrance

III Transition & Learning

V Steady State

CLIENTS

Person,group &

companyperformance

VI Crisis and Recovery

Table 1: Configurations of the corporate HR function in MNCs

Source: Farndale - Paawe – Morris – Stahl - Stiles - Trevor – Wright, 2010, p. 62.

,

Table 2: Overview of respondents

No Countries Responses1 Croatia 112 Estonia 453 Hungary 754 Poland 885 Romania 176 Serbia 207 Slovakia 23

279Total

Table 3: Sectors (in %) (n=279)

Sectors Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

a. Manu-

facturing

industries

27.3% 34.8% 65.3% 53.0% 23.5% 43.5% 55.0% 49.8%

b. Services 63.6% 50.0% 17.3% 34.9% 35.3% 30.4% 30.0% 33.1%

c. Trade and

others 9.1% 15.2% 17.3% 12.0% 41.2% 26.1% 15.0% 17.1%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Comments: (a) Manufacturing – Industries (Chemical and Pharmaceutical Industry;

Consumer Goods (FMCG); Engineering; Heavy Industry and Light Industry), (b) Services

(including Financial services)

Table 4: Methods of establishment (in %) (n=279)

Method of

establishment Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

Acquisition 81.8% 63.6% 55.7% 40.5% 33.3% 43.5% 75.0% 51.9%

Greenfield 18.2% 36.4% 44.3% 59.5% 66.7% 56.5% 25.0% 48.1%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 5: Strategic development (in %) (n=279)

Strategic development Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

Growth 50.0% 33.3% 31.9% 51.9% 28.6% 36.7% 37.0% 39.7%

Stability 27.8% 40.7% 45.1% 21.2% 42.9% 43.3% 59.3% 37.1%

Redundancies 22.2% 25.9% 23.1% 26.9% 28.6% 20.0% 3.7% 23.2%

Table 6: Position of respondent (in %)

Position of respondent Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

CEO or other functional managers

10.0% 23.8% 17.7% 42.3% 11.1% 25.0% 13.3% 22.2%

HR director 20.0% 33.3% 54.8% 11.5% 66.7% 25.0% 33.3% 38.1%

HR professionals

70.0% 42.9% 27.4% 46.2% 22.2% 50.0% 53.3% 39.8%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 7: HR staff number (in %) (n=279)

HR staff Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

None 10.0% 8.1% 5.3% 6.4% 7.7% 0.0% 0.0% 5.5%

1-5 60.0% 45.9% 30.7% 34.6% 46.2% 68.2% 50.0% 40.8%

6-10 20.0% 13.5% 20.0% 33.3% 7.7% 13.6% 20.0% 22.0%

11-20 10.0% 16.2% 14.7% 11.5% 0.0% 13.6% 15.0% 12.9%

>20 0.0% 16.2% 29.3% 14.1% 38.5% 4.5% 15.0% 18.8%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 8: Revenue/HR staff number (in %)

Revenue / HR staff (Million Euro/HR person)

Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

<10 45.5% 34.8% 6.7% 50.6% 29.4% 8.7% 55.0% 31.5%

10-50 0.0% 10.9% 13.3% 3.4% 23.5% 17.4% 20.0% 10.8%

50-100 9.1% 13.0% 10.7% 13.8% 11.8% 26.1% 0.0% 12.5%

>100 45.5% 41.3% 69.3% 32.2% 35.3% 47.8% 25.0% 45.2%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 9: Total staff /HR staff (in %) (n=279)

Total

staff/HR

staff


<50 30.0% 70.3% 29.3% 44.9% 84.6% 36.4% 40.0% 44.3%

50-100 20.0% 24.3% 37.3% 26.9% 7.7% 54.5% 25.0% 30.6%

101-200 40.0% 2.7% 25.3% 19.2% 7.7% 9.1% 35.0% 19.2%

>200 10.0% 2.7% 8.0% 9.0% 0.0% 0.0% 0.0% 5.9%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 10: Training budget in % of the total labor cost (n=279)

Training budget % Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

<1 10.0% 11.1% 10.3% 6.1% 29.4% 4.8% 0.0% 9.3%

1-3 80.0% 38.9% 38.5% 34.8% 52.9% 66.7% 55.6% 43.9%

3-5 10.0% 33.3% 42.3% 47.0% 5.9% 28.6% 11.1% 35.0%

>5 0.0% 16.7% 9.0% 12.1% 11.8% 0.0% 33.3% 11.8%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Average + deviation

2.10 + 0.74 3.22 + 0.52 3.10 + 0.67 3.36 + 0.76 2.29 + 0.39 2.52 + 0.71 3.56 + 0.87 3.08 + 0.54

Table 11: Labor turnover (in %) (279)

Fluctuation Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

<5 12.5% 22.2% 16.7% 0.0% 21.4% 0.0% 20.0% 15.9%

5-10 62.5% 55.6% 46.3% 0.0% 42.9% 41.7% 30.0% 45.8%

10-20 12.5% 11.1% 24.1% 0.0% 21.4% 33.3% 20.0% 22.4%

>20 12.5% 11.1% 13.0% 0.0% 14.3% 25.0% 30.0% 15.9%

Total 100.0% 100.0% 100.0% 0.0% 100.0% 100.0% 100.0% 100.0%

Average + deviation

9.38 + 1.56

8.89 + 1.20

10.28 + 1.23

0.00 + 0.00

10.14 + 0.99

12.92 + 2.37

12.10 + 2.15

10.54 + 1.23

Table 12: Position of foreign expatriates (in %) (n=279)

Expat

positions Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

Manager 83.3% 41.4% 73.8% 62.5% 54.5% 55.6% 63.2% 62.4%

Non-

managers 16.7% 58.6% 26.2% 37.5% 45.5% 44.4% 36.8% 37.6%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 13: Position of local expatriates (in %) (n=279)

Local

Expat

positions


Manager 50.0% 38.5% 50.0% 41.2% 50.0% 46.7% 50.0% 45.8%

Non-

managers 50.0% 61.5% 50.0% 58.8% 50.0% 53.3% 50.0% 54.2%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 14: The HR role of corporate HQ (in %)

HQ’s HR role Croatia Estonia Hungary Poland Romania Slovakia Serbia Total

Hands off, source

of last resort 36,4 11,1 24 43,7 5,8 47,8 35 30,1

Provide resources

and advise 72,7 55,5 28 41,1 35,3 52,1 60 43,0

Provide general

guidelines 72,7 55,5 74,6 47,1 58,8 39,1 70 58,4

Auditor’s role 54,5 37,8 70,7 43,7 52,9 43,4 40 50,5

Provide detailed

HR models and

rules

27,2 40 42,7 21,8 41,2 39,1 25 33,3

Source of

significant HR

decisions

0 8,9 9,3 18,4 0 8,7 30 12,5

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

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