Nowadays is common to hear that the trend of business world is located in Emerging Markets, therefore most of the biggest and important companies in the world are startin to enter to those undeveloped economies that have a great potential. Develop assertive HRM practices in those new markets are key issues in order to achieve the expected success. The international human resource management models developed in the last decade pursues a contextual analysis of the standardization (global integration) of multinational parent companies’ human resource management policies and practices and localization (local differentiation) of host countries practices.(Stevens, 2012)
In order to have effective results within the Human Resources in the new market, the design and development of the HRM strategies (of local units) must incorporate some aspects of local practices. The main challenge for the companies (and the ideal context) is to find a balance between the practices of the business culture in the host country and with the one of the home country. Novo Nordisk a Danish practices which started operations in Mexico in 2004, it is an interesting case that provides a clear example about how to get that ideal equilibrium between standardization and localization.
ii.Questions and anwers
1.Given the Mexican and Danish business cultures, what are the most important HRM challenges faced by Novo Nordisk Mexico? What does the company need to do to succeed? Novo Nordisk faces a pretty different cultural context between the Mexico and the Company´s philosophy (influenced by the Danish culture), the big dilemma is how to balance those several differences and find out the way to design HRM practice and policies that are efficient and effective. Regarding the HRM practices in Mexico, “despite the implementation of “modern” HRM policies, Mexico present particularities in the HRM practices deeply rooted in the Mexican law, which reflects consequences of an historical unfair system to the workers. After the time of the “hacendados” Mexican law were focused to protect both rights from employees and employers but it was most aimed to pursue and ensure the dignity and well sake of the workers, in order to avoid abuses from the “bosses”.
Despite this historical background, nowadays there are still some contradictions in the law, that enhamce some discrimination. In order to describe briefly the main differences between the two cultures, its necessary to take into account two of the five cultural dimensions of Hofstede: Power Distance and Individualism vs collectivism provide a clear framework to understand the discrepancies. Mexican culture has a Strong hierarchy and high power distance which is reflected in a paternalistic/Autocratic management style. Employees are used to demonstrate “loyalty, submission and respect” and they practice boss workship “culto al jefe”. In contrast the Danish company has a flat structure in the organization and they expect an open communications creativity and high participation in the decision making process. Source image: (Hofstede, 2012)
In the other hand, Mexican culture is collectivist and it is reflected in the fact that they see the company as an extension of their family, “Employer / employee relationships are perceived in moral terms (like a family link)”, they respect the boss as it would be the paternal figure and therefore, they expect to receive protection, and that the company cover their basic needs, (they pay back with obedience loyalty and submission) Novo Nordisk is a company that looks for employees with a high level of commitment in order to apply their own slogan ““Changing the world of diabetes: Employees make a difference for people with diabetes worldwide”, then is hard to reach this objective in Mexico, where there are some many differences in the culture that doesn’t enhance high communication, participation and creativity.
They need happy employees that have enough self confidence to contribute and that are motivated to give their best. In other words, the main challenge of Novo Nordisk in order to succeed is combine the “modern-value-based management with traditional control” (Ramirez & Zapata Cantú, 2009). They need to find a way to operate company respecting and following the Novo Nordisk’s core corporate values, but at the same time they must recognize they key cultural differences between Mexico and Denmark. Meaning that, they need to change the way of thinking of Mexicans workers, they have to enhance the participation, create self-confidence in their decisions (with training) and make them to get used to openness and freedom, while at the same time they keep rules to achieve goals and provide the economic security and rewards that keep the employees motivated and loya to the company as they are used to.
2.What is the ‘right’ HR strategy for Novo Nordisk Mexico – hybrid or centralized? Why? Evaluate the different options (pros and cons). As we have mentioned before, due to the important differences between both cultures and all the factors around them, it would be more assertive if the company design a unique strategy that balances the main features of both cultures, taking into account the circumstances of the environment. “Best HRM practices” may not always transfer across countries due to cultural and institutional differences Regarding MNC subsidiaries, argued that organizations try to balance the need to standardize best HRM practice across national boundaries with the need to adapt to local practices and customs”. (Zhang, 2003). In other words and clearly speaking, that means that an hybrid strategy would work better, because it would combine and balance the best aspects of both cultures. Also the hybrid system would allow to both cultures learn from each other and increase the expertise for Novo Nordisk. The cons ad pros for each option are explained below.
Better reaction to the local environment Could be more expensive. The company can attract the best talent available.Hard to accomplish internal consistency. Novo Nordisk can gain a good reputation between Mexicans.Is not that easy, find the ideal balance. Combining the best aspects (according with the circumtances), Novo Nordik could get the best performance of their employees, because they would get what is coerced by law and also they will be treated as they are not used to (having better conditions, enhacing communication, trustability and wellness)The process to get used to, and make work the company, would be slow and complex A unique system, specially designed for this conditions, could provide competitive advantages over the competence (even when they are famous already) Centralized strategy
Easy and fast to applyMexicans could abuse from the “nice conditions” (could be hard to control them because they are not used to , to freedom), and in the other hand if they apply the traditional system totally they would break with their own philosophy and they also could get negative outcomes. It won´t need high investment Would be hard to attract best talent It would match perfect with the company philosophyIt wouldn’t provide competitive advantages.
3.What are the key strengths of Novo Nordisk in implementing its NNWoM in Mexico? How did the firm leverage these advantages given the history and current state of HRM in Mexico? As it is explained in the case, historically , everything about HRM in Mexico, is about being fired or hired, in the last years it has changed a bit, but this is still the common condition in the Mexican business environment.
Thus, due to the hard labor conditions (law, lack of insurance and other basic benefits), employees are used to just receive a decent wage that allow them to live and to keep their work. Meaning that, Novo Nordisk has several strengths in its NNWoM, since it offers much more than Mexicans are used to receive from a company in terms of training, compensation, appraisal and rewards, communication systems etc. In that way, the company is higly attractive to the Mexican workforce and it gets a strong positive reputation that becomes in a core competence of it.
4.You are an external consultant to Novo Nordisk Mexico. What area(s) within the HR department must be developed to enhance its visibility in Mexico? Novo Nordisk is doing great designing an effective HRM strategy for the Mexican environment, the only area that they could work on more would be, promoting their philosophy of a healthy life style and routine within their employees, extending the messages and practices to the families of their employees, participating as sponsorships of sports events or challenges to reach the ideal weight or design the best diet etc. Novo Nordisk could also use this kind of events and practices as an important marketing tool, since the best spokesmen and messengers of their slogans are their emloyees with a high commitment with the company and with its objectives.
Novo Nordisk is a clear example of how a company, in order to succeed with efficient and effective HRM practices, when managing subsidiaries, should analyze deeply and carefully the internal and external factors and based on that design the HRM system that can fit the need of the new market. It is evident that cultures are extremely different in all around, so it cannot be expected that what works in one place work in everywhere, then it is better to adapt and being flexible in order to get positive results. Novo Nordisk Novo Nordisk is doing a good job in implementing good HRM practices through their hybrid strategy: “Novo Way of Management is a system that combines modern-value-based management with traditional control”
Hofstede. (2012). Hofstede centre. Retrieved from http://geert-hofstede.com/national-culture.html Ramirez, J., & Zapata Cantú, L. (2009). Mexican Experiences from a Danish Firm:”Changing” Mexican Cuture. 368-381. Stevens. (2012). Standardization and localization of HRM practices. Obtenido de http://www.transtutors.com/homework-help/human-resource-management/international-hrm/hrm-practices-standardization-localization/ Zhang, M. (2003). Transferring human resource management across national boundaries: The case of Chinese multinational companies in the UK. . 613–627.