LEADING THOUGHTS

In industrialized countries, the burden of unemployment rests most heavily on the shoulders of low-skilled workers. Consider: In 2006, the unemployment rate in the OECD was 10 percent for workers with only basic education compared to five percent for workers with upper secondary education and four percent with tertiary education. What explains this gap?

Daniel Oesch (U Geneva) looked at data from 21 affluent countries over the period of 1991 and 2006. He tested out four possible explanations to explain why unemployment disproportionately affects low-skilled workers:

• high minimum wages and wage inequality;
• unemployment benefits, labour market policies, and employment protection legislation;
• international trade and labour migration; and
• monetary policies.

Oesch found no evidence that low-skilled unemployment is fostered by high minimum wages, strict employment protection, high wage inequality, or lower exposure to international trade. In short, there is simply no need to deregulate the labour market. This finding “throws serious doubt on the frequently echoed expectation that post-industrial economies can only achieve full employment if they open their wage structure downwards in order to create low-paid service jobs,” Oesch writes in the European Journal of Industrial Relations.

What did work? A combination of efficient job-placement services, adequate training programs, and strict job-search controls with a monetary policy that allows the economy to “exploit its growth potential” seems to lead to lower unemployment of the low-skilled.

“What explains high unemployment among low-skilled workers? Evidence from 21 OECD countries,” by Daniel Oesch; European Journal of Industrial Relations (16 (1) 39-55)

This week’s gold star goes to the McGill Institute for Health and Social Policy and the Harvard School of Public Health. Their newly launched site, Raising the Global Floor, is a superb online database of labour practices in 190 countries.

This is how the researchers explain their objectives: “We set out to examine a series of working conditions that affect workers’ ability to meet health and welfare needs, which could be analyzed in a comparable way across countries. We focused on the daily lives of working men and women, their ability to continue to earn a living when special needs arose, and their capacity to care for their families on a routine basis.”

The site is well executed, easy to navigate, and thorough. You can compare labour policies for up to five countries at a time, view global maps, or read country summaries.

These are the policy areas covered by Raising the Global Floor:

• Work schedules and hours
• Paid leave from work
• Sick leave
• Pregnancy, birth, or adoption
• Leave for children’s needs
• Care for elderly and disabled family members

This is a great resource for those needing to compare labour practices or for policy wonks who like to see how countries stack up. Beware: this is a sticky site. Once in, you may never get out.

LINK: Raising the Global Floor

As part of a larger project studying productivity differences between the U.S. and the UK, researcher Kieran Mannion (Dept. for Employment and Learning, Belfast) asked some 40 American HR practitioners and academics who had worked directly with Northern Ireland owner-managers for their thoughts on the main differences between the Irish manager and their American counterpart. This is what he was told:

• While Northern Ireland (NI) managers are just as highly intelligent, motivated, and hard working, their biggest limitation is that they “think too small.”
• With a lack of role models, NI managers tend to lower their own growth ambitions.
• While planning skills are generally excellent, the execution of those plans is generally poorer compared to other countries.
• NI managers do not sufficiently plan for success and future growth. Activity was often an end in itself.

“Leadership. . . for success”, by Kieran Mannion; Leadership and Organization Development Journal (Vol. 30 No. 7, 2009; pp. 639-648)

The UK suffers from a 30 percent productivity gap with the U.S., which translates into 85 working days per worker. Research has shown that up to half of that gap is due to how U.S. competitors deploy resources within their businesses, which in turn is traced to different management and leadership practices.

Kieran Mannion (Dept. for Employment and Learning, Belfast) wanted to figure out why U.S. managers seemed to be more productive than their British counterparts. He discounted the usual reasons trotted out, such as cultural differences or the fact that American managers work longer hours.

Instead, Mannion conducted interviews with 45 American HR managers and leadership development practitioners with first-hand experience working in both the U.S. and the British Isles. And what did he learn?

Higher instance of degree-level education among managers in the U.S.
Most respondents said business leaders in the U.S. were generally better qualified than their counterparts in the UK. “In the private sector, managers expressed surprise that so many of their UK colleagues had not been to university, pointing out that a degree, or even an MBA, was simply the starting point in the recruitment process in the U.S.”

More focus among students on business as a career
Again most interviewees said business management was more highly regarded as a mainstream profession in the U.S. “The perception was that European business was dominated by professional accountants rather thabn marketers or other generalist leaders. . . On the other hand, fewer people in the UK enter directly into management.”

Greater mobility among U.S. managers
Many of the managers interviewed from multinational corporations said American leaders were more mobile compared to colleagues in the UK and Ireland. “In the U.S, business leaders tend to take a much greater level of personal responsibility for the management of their own careers. This leads to much more proactive job searching and generally lower tenure in any one job.”

More flexible employment laws allow for non-performing managers to be weeded-out
While the HR specialists interviewed recognized that labour laws in the UK and Ireland were among the most flexible in Europe, the predominant view was that it was difficult to terminate the employment of a non-productive manager.

Greater use of leveraged compensation packages and stock options
Variable pay schemes, including bonuses and profit sharing, form a much larger proportion of the US managers’ overall compensation package than is the case in the UK.

Greater development and adoption of business strategy theories
“The sheer volume of research into business strategy and management techniques and practices in the U.S. had created a clear role for business process engineering that had given the U.S. a competitive advantage.” Factoid: As recently as the 1980s, UK universities had little involvement in the business world.

More prevalent geographically distributed management teams
American corporations could pioneer standardized management practices because the U.S. is a single large marketplace with no currency, language, or cultural barriers. This encouraged much higher growth levels and more widely distributed management teams. This, in turn, forced U.S. companies to find ways “to ensure consistency across widely geographically distributed managers to replicate the same standards of performance across different regions and markets. In turn, the development and adoption of standardized management practices helped these companies to achieve higher productivity, better returns on capital and even more robust growth.”

“Leadership. . . for success”, by Kieran Mannion; Leadership and Organization Development Journal (Vol. 30 No. 7, 2009; pp. 639-648)
photo credit: R4vi

Born in the U.S., the concept of corporate social responsibility (CSR) is now a global phenomenon, with identifiable practices such as certification schemes, reporting standards, and investment criteria. But even though CSR is global, writes Norwegian researcher Maria Gjølberg (U Oslo) in the Scandinavian Journal of Management, it is applied differently across different social, economic, cultural, legal, and political contexts.

Gjølberg set out to measure CSR activity on a national basis. She developed an index of CSR practices in 20 nations by identifying the nationality of the companies that adopted or qualified for major global CSR initiatives. She then weighed the results to correct for differences in the size of the nations’ economies.

The result: the leading CSR nations are Switzerland and the Nordic countries of Norway, Finland, Sweden, and Denmark. Mid-range performers are the UK, Netherlands, and Australia. Just on the positive side are Japan and Canada.

On the negative side of the index (in order from the worst performer) are Greece, Austria, the U.S., Italy, Ireland, Portugal, Belgium, Spain, Germany, and France.

Gjølberg offers two explanations for the high achievers:

“The first country cluster of CSR leaders comprises countries with comparatively strong globalised economies and large proportions of TNCs (transnational corporations), namely the UK, Switzerland, and the Netherlands. One possible mechanism linking TNCs to increased CSR efforts is the fact that these companies are more exposed to the spotlight of watchdogs from NGOs (non-government organizations) and the media.”

The other explanation is that Nordic countries all have strong corporatist traditions, more extensive social and environmental public policies, and strong political cultures that value participation.

What seems clear in Gjølberg’s research is that enthusiasm for CSR has less to do with ethics than with susceptibility to “naming and shaming” and the degree to which business is socially embedded in society.

This is a meaty and accessible article, so if CSR really rings your bell you will want to read the entire paper for excellent background on the topic.

“Measuring the immeasurable? Constructing an index of CSR practices and CSR performance in 20 countries”, by Maria Gjølberg; Scandinavian Journal of Management (2009, 25, 10—22)

If you cannot find this journal in your local library, email me for a copy of the paper: Alan [at] AlanMorantz.com

photo credit: dbersabe

With a population approaching 1.2 billion, half under the age of 25, India is one of the world’s human capital powerhouses. But is India making the most of its demographic edge? In Human Resource Development International, Rao and Varghese suggest that “conservative human resource development (HRD) policies” have not helped India’s skills base to keep pace with the country’s economic progress.

India’s organizations were among the earliest to separate HRD departments from personnel departments to focus on talent and organization development. Despite this, the authors contend, “there is little to show that the HRD function has added value. HRD’s impact on business is still not assessed. Data from HRD audits of 12 Indian organizations indicate that the HRD function is structured badly, differentiated inadequately, poorly staffed and fails to meet basic HRD framework requirements.”

The authors cite one recent study of line manager perceptions of the HRD function in 18 Indian organizations, which indicated a dramatic fall in the performance of the HRD function over the last decade. “While many organizations have been trying to reposition or reinvent their HRD,” they note, “the HRD function seems to be busier in HR maintenance activities than HR development activities.”

The HR environment in India is beset by a shortage of skilled labour at all levels of the spectrum and fierce competition for talent, resulting in poaching, rising wages and attrition, and the loss of intellectual capital.

Faced with such challenges, HR departments are running to stay in place. The authors offer a litany of shortcomings:

• HR departments spend little time or resources on the development of existing employees.
• What resources are available for training are almost exclusively devoted to building hard technical skills at the expenss of soft skills.
• Several management fads and styles are practiced across organizations, confusing employees.

“Large-scale professionalization of the HRD function in Indian industry through reliable and robust HRD systems and sub-systems is, at best, a distant dream,” Rao and Varghese write. “While many firms have taken encouraging steps to pursue HRD on a more systemic footing, at several others, systems serve a public relations function to be pointed out occasionally in chaste corporate speak to newspapers and magazines for employment branding purposes.”

Trends and challenges of developing human capital in India, by T.V. Rao and Sumeet Varghese; Human Resource Development International (12:1,15 — 34; 2009)

Email me for a copy of this paper: Alan [at] AlanMorantz.com