Irhr3540 : International Human Resource Assessment Answers

This section relates to the international HR issues raised in the “Solvay Group” case study that you will be given. As a team of HR Consultants, you are asked to answer the following three questions (but you have to work on first question only). Be sure to link your answer to key ideas and theories related to International HR. Each answer should be logical and well-supported, including both details from the case scenario and course-related concepts from readings, lectures, other business cases, or your previous learning materials.

Discuss Solvay’s international assignments strategy. What worked well? What did not? 

Introduction:

Ernest Solvay, a Belgian chemist invented an ammonia-soda process in 1861 used for producing sodium carbonate and it is later on in 1863 that he formed a Solvay group to conduct the whole process. It is after several attempts of going bankrupt that the company enters the stage of global expansion that saw the company establish processing facilities in countries such as France, Germany and England. The company went on furthering its growth and development through acquisition and product diversification.

Three sectors of Solvay

Solvay managed three of its industries namely the pharmaceuticals, chemicals and plastics.

The chemicals

The chemicals have been termed as the oldest as Solvay’s business divisions and were connected to the discovery of Soda ash by Ernest Solvay. The chemicals division began with alkalis that later evolved to peroxygens.In. In 2007, the chemicals business generated revenues of more than 3 billion in sales alone and saw more than 8000 people employed. The chemicals division operated on a motto such as delivering high-value specialties for sophisticated applications. The division also had 60 plants distributed around the world and recent investments had been made in Thailand. In 2008, the chemicals business operated on four strategic priorities such as focusing on its geographical expansion, advancing technological innovation and specializing in fluorinated and organic products making it competitive.

Plastics

The plastics business had become the largest Solvay’s business with regards to the sales made accounting for more than 4 billion euros focusing on two clusters the specialty products and the vinyl. The specialty products entailed specialty polymers and Inergy locomotive systems which led to Solvay having a joint venture with Plastic Omnium. The vinyl segment on the other hand involved the PVC and PVC compounds. Solvay went further and entered a joint venture with Wienerberger. It is the Solvay specialties in plastics that strengthened the product leadership. The Solvay plastics served global markets with manufacturing units in Europe, North and South America and Asia. In 2007, Solvay surveyed Russian with plans of establishing a new plant to increase their presence of vinyl in the region. The plastics gave priority to globalization, research and development, innovation in technology and competitiveness.

Pharmaceuticals

Solvay was first involved in life sciences in the 1950’s when it acquired Kali-Chemi and was part of the company’s plan to mitigate against the cyclical nature of fluctuating oil prices. It is in 1980 that Solvay established its health sector department that was channeled its resources to several therapeutic areas such as the neuroscience, influenza vaccines and cardiometabolic among many more. The pharmaceutical business as at 2007 had several research and development units and 14 manufacturing bases globally.

The emerging economies accounted for 20% of the sales. However, as of 2008, the business concentrated on increasing its presence in the market and establishing Solvay drugs for instance the pancreatic extract that treated cystic fibrosis was marketed in the U.S. market in 2008. Globalization remained the primary focus of the pharmaceutical division. The four divisions were important in increasing revenues for Solvay.

International business strategy

It is at the end of 2007 that Solvay’s sales recorded more than $ 14 billion. The group sales were spread in four primary markets, Europe accounted for 56%, America 32%, Asia-Pacific commanded 9%, and the rest of the world accounted for only 3% (Groysberg, Nohria, & Herman, Solvay Group:Internatioanal Mobility and Managing Expatriates, 2011). Solvay had two major priority areas in 2008, innovation and geographic expansion. Solvay group is of the view that innovation is crucial for the growth of all its businesses and also necessary for increasing Solvay’s competitiveness.

Every Solvay’s sectors have a unique operating model. For instance, the chemicals divisi required substantial initial investments, however, as time went by, optimization of the manufacturing activities determined profits (Groysberg, Nohria, & Herman, Solvay Group:Internatioanal Mobility and Managing Expatriates, 2011). In the plastics effective management and production relied on fast reaction times and flexibility to match the needs and wants of customers. In the plastics, for instance, the company is required to develop a new product for a customer in less than six weeks. However, in the chemicals, it would be impossible as asserted by Lorent. The pharmaceuticals, on the other hand, require more extended time frameworks and different research expertise.

Talent at Solvay

Solvay is accustomed to grow and develop its talent internally. However, the company sources people externally, particularly for pharmaceutical and marketing departments. However, the main problem with sourcing employees externally as per Lorent is that such people fail to fit Solvay’s culture. One of the reasons behind Solvay expat assignments was to ensure the acculturation of contemporary acquisitions to the company’s values.

It is the constant exchanges for engineers to and from new ventures that were responsible for expat paperwork. For instance, it is following the joint venture between Solvay and Sibur that saw Solvay hire 19 engineers of Russian origin that had just graduated from the university (Groysberg, Nohria, & Herman, Solvay Group:Internatioanal Mobility and Managing Expatriates, 2011). The engineers were placed on learning contracts for two years as they worked in factories situated in Belgium, France, and Germany. Concurrently, a team of 20 vinyl specialists belonging to Solvay factories from countries such as Belgium and Germany were joined by a group of French engineers and sent to Russia where they were tasked with building a plant. After two years they would go back to Russia where they would use their expertise.

However, in the past, the business heads of Solvay have had opposing views over talent. For instance, one had two bosses, the division head stationed at headquarters and a regional head close to home. Thus, a candidate was expected to converse with one boss leading to a discussion. If the candidate did not want to move, it is the boss that would be tasked with making a case for the candidate. Though it felt nice to be valued; the candidates had to be cautious enough to make sure that their bosses were not withholding them from advancing and gaining the significant experience needed in developing their career (Harzing & Pinnington, 2015).

Also, countries considered large and had Solvay businesses were reported to outweigh smaller countries that were new to the Solvay fold sophisticating development coordination, succession planning, and international strategies. This was because small states were insignificant to lobby for the needed talent (Zhu, De Cieri, Di Fan, & Zhang, 2017). Lorent reveals how at Solvay there is low turnover. The senior manager was tasked with ensuring that the company has a retention rate of 90%. Thus, this led to talent-management issues as there were not enough opportunities for young managers.

The robust consensus-driven, relation-oriented culture led to most of Solvay’s activities lacking transparency and looked somehow ad hoc (Groysberg, Nohria, & Herman, Solvay Group:Internatioanal Mobility and Managing Expatriates, 2011). However, since 2006, the management strived to be more consistent and transparent. Broens was to serve as the HR general manager aiming to strengthen such initiatives.

Managing talent

The HR head of each business was responsible for monitoring the group’s succession planning and identifying the next suitable candidate when a position became vacant. Also, the HR head put recommendations for promotion. The selection was thus determined by the performance and development appraisal (PDA) process, and each employee underwent the procedure annually. According to the PDA, the candidates that had ++ meant that they performed exemplary and were good for promotion.

 Any additional intel from employee’s PDA such as the desire to change the country, personal circumstances and interests were all stored in the Solvay’s HR database and would be made available during the talent roundtables (Fournet & Paula, 2015). Such data could be provided to other divisions and made open over the Solvay’s intranet. It is thus evident that the Solvay was focused on using in-career management (Groysberg, Nohria, & Herman, Solvay Group:Internatioanal Mobility and Managing Expatriates, 2011). The company sought to hire young people and very junior and would then develop them into the organization rather than recruiting in the middle of career ad hoc. The leadership of Solvay was involved in developing the company’s talent.

However, promotional and succession planning faced some hurdles (Tao, Lui, Gao, & Xia, 2017). The lack of a programmed recruiting system has made the company suffer from middle-management drought. The company recognizes the fact that it has not recruited for ages and has to hire at middle and senior management levels. However, the underlying assumption is that the company has to develop talent internally. The problem with this strategy is that it leads to having many senior managers considered eligible not corresponding to the number of suitable positions to move into.

Talent roundtables

The talent roundtables initiated in 2007 aimed at formalizing the discussion regarding talent, career progress and succession plans for strategic positions. The talent roundtable was conducted at both the vertical and transversal level or country or inter-sector levels (Meyer & Xin, 2017). The HR representatives and managers of concerned divisions participate in roundtables. The roundtables served the purpose of identifying a small group of successors for every central position and following their career progress.

The international human resource strategy

The survey by Lorent on his notes about the suitability of Ponte makes him think that Ponte is a good one as he possessed the tremendous ability to impact Solvay’s growth in China. Based on the company’s expat policies, it covered the relocation of direct family members with the inclusion of Ponte’s three children though Lorent seemed worried. As per Ponte, he had a mother considered elderly who lived with Ponte’s family in Italy and Ponte wanted to move her to China with him. Unfortunately, there were no provisions to cover her care in Brussels should he leave.

On the second folder, there was the case of Marion who according to the file had worked for Solvay in divisions such as automotive in places such as Detroit and Mexico among others. However, the division had been sold off to another company and with such divestment, it was expected that Marion would return home for him to continue working with his firm. Marion had spent more than a decade in North America and had been given several extensions before his engagements.

However as per Marion’s fear, he stated that coming back home was not easy for him. As per Marion’s perceptions, he asserted that the North American team would see him as a product of the European organization and was of the opinion that Europe was the perfect place to manage his career (Baumann, 2009). However, the Europeans, on the other hand, would see Marion as being part of the North American group and was thus considering North America as his next move.

Though Lorent had not been involved in Marion’s initial move, the conversations with Marion in the past few months made Lorent understand the Marion expected to be promoted once he returned.

Unfortunately, there were no positions that would match Marion’s competencies and Lorent, on the other hand, is unsure when relevant positions would be available. Also, due to time passing, most of the people at the headquarters were unfamiliar with Marion. This is indicated in his conversation where he said that he had been away for 13 years and the fact that he was far from Brussels he had lost touch.

The third file contains information about Ribeiro, an expat who originated from Brazil and had moved to Brussels with his two sons and wife (Groysberg, Nohria, & Herman, The Expat Dilemma, 2011). Ribeiro had immense years of experience in Solvay’s plants dealing with PVC in both South and Central America. The plastic division had sourced Ribeiro as an engineer to the headquarters to facilitate the use of his expertise as Solvay was considering expanding its PVC enterprises into Russia and Eastern Europe.

On the other hand, Ribeiro’s wife being a doctor was facing regulatory impositions barring her from practicing medicine in Europe without retraining, and this meant that she had to enroll for the program and start afresh. Ribeiro had made initiatives by talking to Lorent on the available options for her wife to get papers allowing her to work in Europe now that the company had strong ties with leaders in Europe. Ribeiro feared that his wife would take his two sons to Brazil and this would make him commute from Brussels to Brazil to visit his family after a couple of months.

Conclusion:

Solvay’s human resource team has to develop a framework to deal with expats issues as many seem to be complex requiring consultation to arrive at final decisions. The use of innate talents that are later developed to fill future positions that may arise is risky as the company produces many senior managers yet there are not enough positions to be filled by such managers.

References:

Baumann, C. (2009). Workforce Mobility using the example of the Solvay Group. Munich: GRIN Verlag.

Fournet, C., & Paula, M. (2015). How Human Resource Professionals Use Electronic Channels to Communicate CSR. Retrieved from diva-portal: https://www.diva-portal.org/smash/get/diva2:822637/FULLTEXT01.pdf

Groysberg, B., Nohria, N., & Herman, K. (2011). Solvay Group:Internatioanal Mobility and Managing Expatriates. Harvard Business School, 1(1), 1-42.

Groysberg, B., Nohria, N., & Herman, K. (2011). The Expat Dilemma. Harvard Business Review, 21(17), 1154-1157.

Harzing, A.-W., & Pinnington, A. H. (2015). International Human Resource Management. Los Angeles: SAGE .

Meyer, K. E., & Xin, K. R. (2017). Managing talent in emerging economy multinationals:Integrating Strategic management and huma resource management. The International Journal of Human Resource Management, 29(11), 1827-1855.

Tao, F., Lui, X., Gao, L., & Xia, E. (2017). Expatriates,Subsidiary autonomy and the Overseas subsidiary performance of MNEs from an emerging economy. Internal Journal of Human Resource Management, 29(9), 1799-1826.

Zhu, C. J., De Cieri, H., Di Fan, & Zhang, M. M. (2017). Expatriate management in emerging market multinational enterprises:Reflection and future research agenda. International Journal of Human Resource Management, 29(11), 1787-1798.