Global Human Resource Management-

Case Study of Nokia Company

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 1. Abstract

Globalization has shifted the focus of multinational companies to expand their businesses in

foreign countries. It has been evident that globalization has narrowed the distances through

technology, ease of import export and convenient policies of states. However, the cultural

diversity, management issues, performance management and expatriates management are related

to global Human Resource Management which is the main challenge of international

organizations. This research study is based on qualitative approach that examines the global

human resource management with case study of Nokia Company that operates in several

countries.

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Table of Contents
1. Abstract ................................................................................................................................................. 2
2. Introduction .......................................................................................................................................... 4
3. Literature Review .................................................................................................................................. 5
4. Focus Area of Study .............................................................................................................................. 6
4.1. Innovation ..................................................................................................................................... 6
4.2. Talent Retention Strategy ............................................................................................................. 8
4.3. Case Study- Nokia Company ......................................................................................................... 9
5. Results/Findings .................................................................................................................................... 9
6. Recommendations .............................................................................................................................. 11
6.1. Change management in human resources ................................................................................. 11
6.2. Organizational culture................................................................................................................. 11
6.3. Performance management of employees .................................................................................. 11
6.4. Retention of employees .............................................................................................................. 12
7. Conclusions ......................................................................................................................................... 12
References .................................................................................................................................................. 14

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 2. Introduction

Developing international standards for policies and strategies is often a complex management

task because of many factors including cultural diversity, ethical values, societal standards and

difference in localities. Personal preferences of individuals also depend upon their thinking

which is developed through societal and ethical values which is different in each country.

Moreover, there is a difference of constitution in foreign countries; their legislation, education

system and working criteria is different which creates a challenging situation and companies

need to align their policies according to those laws. Thus these circumstances formulate

hindrances in effective management of human resources on global context. Issues of expatriate

management, recruitment, trade unions, state laws compensation, training, collective

communication, retention and performance management of employees are generated in global

human resource management specifically in changing situation. The challenges include the

hiring, management and retention of global workforce, issues of expatriates, policies and cultural

adaptation of different employees, training and development, cultural diversity, benefits and

compensations and compliance with the international employment laws to adhere the innovative

culture and adoption of transitional phase by Nokia is discussed.

This research attempts to examine the strategy of Nokia Company in managing and handling its

wide business with reference to global human resource management as the Company referred its

human resources to be the success factor for them. The human resource practices of performance

management and talent retention on international grounds are discussed in the paper which is

further linked with Nokia’s policy of creating the innovative culture by minimizing the global

HRM issues among its employees and its failure of talent retention in changing environment.

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 3. Literature Review

The concept of international human resource management has been introduced in past couple of

decades that aims to tackle the differences across national contexts of countries where the

organizations operate (Dickmann, Brewster, & Sparrow, 2008). Despite the differences in

culture, economies, societal values, ethics, laws and standardized policies, the central factor for

succession of organizations and their progress is dependent upon the humans therefore, their

development and enhancement in global context is pivotal for multinational organizations’

survival (Palthe, 2008). Many researchers have provided thorough studies to identify the

potential advantages of expatriate and inpatriate managers, according to Harvey, Speier, &

Novicevic, inpatriates are the managers hired in parent company from other social contexts

which are valuable assets if company utilizes these employees of multi-social knowledge to

operate in global market (Harvey, Speier, & Novicevic, 2000). Inpatriation can also create

competitive advantage if it is managed with planning and strategic approach.

Several issues are created in international human resource management because it is more

complex and risky than traditional HRM. Hiring the expatriates in organizations require to

prioritize the study of social adjustment and cultural preferences of recruits to proactively handle

future challenges of cultural diversity, ethnic origin, language or values that might differ from

their native countries (Rennie & McGee, 2012).

Cultural differences and performance management issues possibly arise in global enterprises,

however once the issues are handled in efficient manner, the creativity and innovation of

employees emerge. This notion is supported by Phillips who considers the innovation as directly

linked with the diversified humans of several social contexts that can share their experiences and

provide valuable input in innovation of organizational products and services (Phillips, 2014).

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This innovation and creative abilities of employees can be polished with managerial implications

through international human resource strategies which focus on standard policies, selection of

internationalization approach, expatriate management, diversification and performance

management (Hill & Requejo, 2011). Moreover, Schuler, Jackson, & Tarique explains that

skillful employees of companies are sent abroad for tackling the management issues, reporting,

setup of new offices and developing rules and regulation aligned with parent company (Schuler,

Jackson, & Tarique, 2011). It is notable that Pudelko & Harzing have exclaimed the significance

of training and development of multinational organizations’ staff that require focus on

developing bond of employees from different societal context to obtain maximum innovation

from them (Pudelko & Harzing, 2007).

In changing work environment, the retention of talent in a company is also a challenge because

talented workforce is limited and requires enough compensation to avoid working for

competitors (Daniels, Radebaugh, & Sullivan, 2011). Therefore, adaptive to changing work

environment is an essential quality in which the workforce should be given both intrinsic and

extrinsic motivation with sense of accomplishment to retain the talent and stop the employees to

join the competitors for more opportunities.

4. Focus Area of Study

This paper focuses on the two main areas of Nokia Company’s success and failure; innovation

and talent retention strategy.

4.1. Innovation

It has been identified that innovation does not depend on copying the methodology of other

companies neither does it depend upon the technological basis. Rather scholars have signified the

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importance of human capital of an organization and term them responsible for building the

innovative culture. The innovative strategies of an organization should be aligned with suppliers,

business partners and customers. Recruitment of capable employees, their engagement in

activities and compensating the talent for innovation, rewarding the risk taking employees and

promoting the innovative skills through training in accordance with changing environment are

essential to enhance the innovation among employees. The fundamental cause of formulating the

innovation is however the organizational culture that is created in global human resource

management with respect to parent company’s developed policies which the subsidiaries are

expected to incorporate. Management of subsidiaries becomes flexible once the organizational

culture is aligned with organizational objectives

that further enhance the opportunity of creativity

and innovation by rewarding the employees

(Bolton, 2013). Creating the link between

internal and external stakeholders is critical in

formulating the innovative culture. Moreover,

innovation is responsibility of every individual

and gaining the benefits from cultural diversity is

beneficial in this regard because it comprises the

individuals from different social and educational backgrounds that can contribute in creativity

and innovation which is the demand of changing work context (Wang & Zang, 2005). As the

figure indicates, corporate culture with strategic direction can generate ideas and these ideas with

planning can develop innovative portfolio in changing work dynamics.

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 4.2. Talent Retention Strategy

With globalization, many changes have occurred in global work environment as continuous

adaptability to change is pre requisite for multinational organizations. The factors which drive

the change in global context include demand for change, economy of countries, technology, and

innovation, strong competition among companies, gaining competitive advantage, career growth

and opportunities and compensation and incentives for employees. A company fails to retain its

talented workforce when they are failed to provide both intrinsic and extrinsic rewards for

motivation. Employee engagement in innovative processes and decision making can result in

high retention of employees however, effective strategies in change management is complex task

where global markets and decision making is critical and risky factor (Bhatnagar, 2007). Human

resource strategies should be aligned with the strategic objectives of the parent company to

efficiently manage the global subsidiaries of organization (Christensen Hughes & Rog, 2008).

Quality human resource retention can be ensured with

 Commitment of CEO

 Performance assessment

 HRM practices audit

 Investment in technology and growth

 Reducing expensive and wasteful talent through downsizing

 Recognizing the contribution of employees

 Compensation

 Career development

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 4.3. Case Study- Nokia Company

The global management of human resources and bring out innovative culture and outstanding

talent management is a necessity. Moreover, in times of drastic changes in global economies and

customer preferences, there is a need to manage the internal change in organization to retain the

talent with effective policies and opting between centralized or decentralized approach for

strategic decision making for the parent company and its subsidiaries.

Nokia Company had profound history of being market leader and managing its human resources

in effective manner. However, in last decade, the company failed to manage its global human

resources due to lack of change management skills and taking effective decisions on time

(Surowiecki, 2013). The lack of innovation in Nokia’s products is directly linked with ineffective

human resource management that was raised because of ineffective policy and direction less

strategy.

It has been identified that Nokia human resource data management was based on SAP software

for which effective training was not provided to the employees. Moreover, the decision of

centralized and decentralized policy adoption for global subsidiaries of company was taken quiet

late that further required training and change in human resource policy for next two years

(Goodwin, 2011). In this evolution of international HRM of company, the focus was diverted

from innovation and performance management that lose the market share of company.

Furthermore, the talent retention strategy was failed because of ineffective

5. Results/Findings

With examination of Nokia Company in innovation, performance management and talent

retention, the following key points have been discovered:

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 International human resource management is significantly different from traditional

human resource management, it comprises of more risks and complexity of decisions due

to involvement of several countries and cultural differences of individuals.

 In Nokia’s case, the innovation capability of employees was reduced due to inefficient

performance management of employees which was not possible because of non-strategic

planning of embracing the change (McCray, Gonzalez, & Darling, 2011).

 Data compilation of human resources in Nokia’s Company was also not up to the mark

and foreign managers were not given appropriate training for compiling data or use SAP

software.

 When Nokia confronted with challenges of reduced market share and incapability of

software development in mobile applications, the issues of retaining the potential

employees were elevated because they found more chances of career opportunities and

growth in other mobile companies. Hence, the employee retention strategy was not

addressed by Nokia managers in effective manner. Therefore, retention of employees is

important factor to make them loyal through trainings, commitment and career

opportunities so that the employees may show their skills in redesign of organizations.

 Job security is also an essential aspect in global human resource management and

expatriates and inpatriates management require keen consideration of policies that ensure

the commitment of organization for welfare of their employees.

 Centralized or decentralized approach for management of subsidiaries of organization in

foreign states should be cleared for all divisions, employees and their managers.

 Adaptive to change is necessary characteristic in global human resource management

because otherwise the company cannot survive in global context (Aspara, Lamberg,

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 Laukia, & Tikkanen, 2011). The demand of customers, current trends, economies,

technological changes are evident that require subsequent training of employees, their

retention, incentives, performance management and innovative culture.

 Finally, the organizational culture plays a critical role in managing the global businesses.

Therefore, despite of cultural diversity, the employees must be aligned with similar

policies that are developed by parent company in order to reduce cultural impact and

conflict of interests.

6. Recommendations

After studying the impact of global human resources on Nokia Company’s performance, the

recommendations that have been drawn are narrated below:

6.1. Change management in human resources

The company wide change cannot be executed without its implementation in human resources of

all subsidiaries of multinational organization. Responding t the current trends with innovative

organizational culture and combined decision making are rules to succeed in global context.

6.2. Organizational culture

It is necessary for organizations to become more competitive by implementing the similar

organizational culture on foreign units of company so that the impact of cultural diversification

can be minimized (Carral & Kajanto, 2008).

6.3. Performance management of employees

For proper innovative culture integration, the performances of employees can be enhanced

through motivation and training programs. Organizations operating in different countries can

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have decentralized approach of rewarding their extra ordinary employees on their performance

and they can be sent to foreign units for training or recognition programs. Moreover, the training

of employees to be adaptive and responsive to contemporary trends of global market and align

their ideas in similar manner can bring effective performance results.

6.4. Retention of employees

The retention of employees in global context can be made possible through communication,

coaching, career opportunities and growth, positive tangible rewards and feedback exchange and

to recognize the employees on international level are the sources of intrinsic and extrinsic

motivations that can contribute in retaining the employees (Bajic, 2013).

7. Conclusions

The innovation in a company can be executed merely with the proper management of human

resources and addressing their requirements. Highly talented individuals also require incentives,

career growth opportunities and job security which were not ensured by Nokia Company.

Moreover, the change management process was relatively slower in the company and they failed

to embrace the change of mobile phones revolution that decreased their revenues. When

company becomes financially unstable or begins to lose market shares, there is a complex

situation and they have to take critical decisions. Human resource were decided to downsize for

cost-cutting, however it created job security issues in employees. Moreover, for retaining the

capable employees, other employees were given up that consequently resulted in low level of

trust for management. Under so much pressure, expecting an innovative approach from

employees is nearly impossible specifically in globally operating multinational organization. The

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unwillingness for adapting the change ultimately resulted in losing potential employees, reduced

innovation in mobile phones and lower performance as compared to the competitors.

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