Scandinavian Management Model as Competitive Advantage in Attracting Qualified Foreign Labour Dr Maria Vrabcova Hardager, Norway 3 June 2010.

Scandinavian Management Model as Competitive Advantage in Attracting

Qualified Foreign Labour

Dr Maria Vrabcova

Hardager, Norway

3 June 2010

• Overview of Norway’s economic environment

• Population growth and net migration

• Theory of migration

• Overview of Scandinavian Management Model

• How does the Model compare with other countries?

• What can we learn from other countries?

• Conclusion

Agenda

Norway has performed better than most industrialised countries during the financial crisis and global recession …

GDP Growth - % Change on Previous Year

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

Norway Sweden Finland Denmark Euro (15Countries)

2008 2009 2010 2011

2.5%1.8% 1.8% 0.7%2.1%

-1.5%

Source: Eurostat

…and unemployment rate remains well below that of Europe and the rest of Scandinavia

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Apr-09 May-09

Jun-09

Jul-09 Aug-09

Sep-09

Oct-09 Nov-09

Dec-09

Jan-10

Feb-10

Mar-10

Euro Area Denmark Finland Sweden Norway

Source: Eurostat, Norway Statistics

Norway’s surpluses from oil & gas revenues will ensure that any protracted slow down will leave enough room for the government to increase stimulus measures…

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Norway

Sweden

Denm

ark

Finla

nd

France

Germ

any

UK

Austra

lia

Japan US

Singap

ore

Net Surplus (+) / Deficit (-) as a % of GDP 2010 forecast

Source: IMF

…which helps to ensure unemployment rate remains low compared to Scandinavia and other European economies

Forecast unemployment rate in 2010 - 2011

Source: IMF

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Norway Sweden Denmark Finland France Germany UK

2010 2011

Labour shortage in Norway myth, fact or not on the radar?

Overall Norway’s population is still growing compared to the rest of Scandinavia…

Greenland, Iceland and Faroe Island excluded due to small size of population relative to the main Nordic countries

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

Norway Sweden Denmark Finland Slovakia Germany USA World

2000-2015 2015-2025 2025-2050

… however growth is increasingly dependent on net migration in Norway…

-20%

0%

20%

40%

60%

80%

100%

1951-1958 1959-1968 1969-1978 1979-1988 1989-1998 1999-2008

Net Migration Net Births / Deaths

Source: Norway Statistics

…this growth has accelerated in recent years due to EU enlargement in 2004…


…and Norway has benefitted from a large influx of Polish immigrants

12

3

4


Norway has the highest fertility rate in Scandinavia, however it remains below World average

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Norway Sweden Denmark Finland World

2000-2005 2005-2010

Source: UN, http://en.wikipedia.org/wiki/List_of_countries_and_territories_by_fertility_rate

Fertility Rate – Births / Woman

In summary, population management is complex and requires well considered strategically long term policies

• Norway benefited from EU enlargement in 2004 (less skilled workers)

• Current high levels of unemployment in Northern Europe and neighbouring countries should make it easier to attract labour in the short term

• Longer term Norway may need to diversify its immigrant base to consider nationals outside of Europe

Key Points:

Norway is a great country - skilled migrants should find attractive:

Oslo, Top 20 Worldwide Quality of Living Survey,

2009

# 20 Globalization Index 2010, KOF Swiss Economic Institute

#1 Mother’s Index 2010, (well-being

of mothers), Save The Children

Norway- Highest

Standard of Living,

UN Human Development

Program, 2005

The reasons for migration are complex, broadly fall into the following categories: economic, security and family reasons

Reasons for Migration

Push factors / Sending County

Pull factors / Receiving Country

Economic reasons

Security/ Family

Security/ Family

Economic reasons

• Discrimination

• Poor medical care

• Natural disasters

• Lack of political or religious freedom

• More “relaxed” and less bureaucratic

• Political and/or religious freedom offered

• Family links encourage

Economic reasons

• Favourable labour market conditions

• Higher Wages

• Favourable exchange rates (£ v €)

• Job mobility and professional career development

• Higher standards of living

• Active presence of recruitment agents

• Education

• Industry

• Scandinavian Management Style

• Poor socio economic living conditions

• Unemployment

• Money

• Variety

• Acquiring new skills

• Interesting lifestyle / culture

• Career development

Push Factors Pull Factors

Everett S. Lee “A Theory of Migration” University of Pennsylvania

So what are the main forms of Management Styles? US style dominates and sets the global management agenda, however Scandinavia is growing in popularity

• Shareholder Capitalism – “Happy Customers Make Happy Owners”

US Management Style

Customers Shareholders Employees Society

Global Competiveness Report 2004, World Economic Forum, Monday Morning Dec 2009

Scandinavian Management Style

Employees Shareholders Customers Society

• Stakeholder Capitalism – “Happy Employees Create Products which Meet Customers Demand”

Culture determines how these functions of Management are implemented

Henri Fayol, Principles of Management

Controlling

Commanding

OrganisingPlanning

Coordinating

Staffing

Budgeting

Culture

Culture determines the approach to how each area of management is implemented

US Scandinavia

• Employers and employees divided • Mutual need between employers and employees

Planning

Controlling

Commanding

• Significant control from centre• Control is “expected”

• Empowered• Delegated authority• Decision making process collective and inclusive

• Management lead by example• Authoritarian

• Employees have influence and independence• Autonomous project groups• Low trust of authorities

Staffing • Pay decisions are set by management• Wide variation in pay scales

• Employers and Trade Unions work together to agree wage settlements – from a position of mutual respect and dialogue

Organising • Hierarchical • Flat

Source: Copenhagen Business School

Cultural underpinnings of the Scandinavian Management Model, influencing factors:

• Rooted in socialism

• Collectivism rather than Individualism

• Thriftiness

• Egalitarian

• Trust

In Norway even the bad guys are influenced by collectivism

”We tip toe very quietly

When we’re out to steel things

We only take what we must

And things that we really need….”

Labour productivity has been falling overall however it has fallen faster in Scandinavia

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Scandinavia UK US Japan Euro Area

Labour productivity annual growth rate

Source: OECD

Could it have been impacted by Scandinavia having one of the lowest average working hours within OECD?

-100

100

300

500

700

900

1100

1300

1500

1700

1900

Norway 6.14 Sweden 7.01 Denmark 6.95 Finland 7.46 OECDCountries 7.66

2000 2008

Average working hours per worker per day

Source: OECD

How some countries attract immigrants?

• Depends on high inflow of talents to fill vacancies

and / or

• High level of government participation in enterprise / wealth creation

Selected countries

• US

• UK

• UAE / Dubai

• Singapore

• Australia

• Japan

US Overview• Throughout much of America’s history, immigration has been a major source of

population growth and cultural change

• The American Dream is a belief that hard work and determination, any immigrant can achieve a better life

• US accepts more legal immigrants than all other countries in the world combined

• 20.6% of world’s total migrants and 12.8% of national population are migrants

• Positively encourage – Bill Clinton said:

"America has constantly drawn strength and spirit from wave after wave of immigrants...They have proved to be the most restless, the most adventurous, the most innovative, the most industrious of people”

• Since 911 public attitudes towards immigration have changed

• Global economic recession has augmented the negative aspects of immigration

US has a lot to offer

• Free (Political Rights – 1, Civil Liberties – 1)

• The American Dream

• Management Style• Straight talking and 'getting to the point'• Respect is earned through conspicuous

achievement rather than through age or background

• Self-deprecation is often misunderstood by Americans as a sign of weakness

• Time is money• Structure proposals to emphasize quick wins

rather than long-term objectives

• Career Development

• Education


US is facing one of the most severe unemployment rate since 1982

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

Source: http://www.miseryindex.us/urbymonth.asp?StartYear=2000-01&EndYear=2010-04&submit1=Create+Report

A large proportion of US population growth is achieved through migration

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000-2009 2008-2009

Natural Migration Not Classified

Source: http://www.census.gov/popest/states/NST-comp-chg.html

UK Overview

• Up until the global recession, UK has accepted the largest number of migrants from the EU enlargement in 2004

• Immigration is seen as beneficial to economy by some political parties not shared by majority of Britain

• Attracting too many low skilled means the tax they pay are unable to cover the social services they receive

• Moved to points based system, similar to Australia with emphasis on professions where there are skill shortages


• OECD Tax burden 36%

UK

• Free (Political Rights – 1, Civil Liberties – 1)

• Management Style•A manager is expected to have the interpersonal skillsmanagers to be 'generalists' rather than 'specialists‘• High job mobility• Flat management, Managers developing a close, friendly relationship with staff,but they make thedecisions• Respect is earned through experience rather thanqualification system


• Education


UK’s projected population growth is spread out fairly evenly between natural changes and net migration

0.0

0.5

1.0

1.5

2.0

2.5

2008-2013 2013-2018 2018-2023 2023-2028 2028-2033

Natural Change Net Migration

…however this

UK has taken in a large proportion of immigrants from accession countries

Source: ONS, DWP, National Insurance number allocations to adult overseas nationals

UAE/Dubai Overview

• Driven by need to populate with both highly skilled and unskilled labour due to transformation of state from oil producer to international hub for commerce and regional tourism

• Build and they will come / playground for the rich


• Sovereign State – all state enterprises and large corporations owned by the ruler of Dubai

• Negatives have not deterred skilled migrants

• Not allowed to take up citizenship / permanent residency ( work permits only)

• No unemployment benefits

• Closed culture

• Hot

UAE/Dubai including the rest of Middle East’s management practices are very different to Western styles and is not a model for attracting skilled migrants, however tax free status ensures there is no shortage of people wanting to work there

• Not Free (Political Rights – 5, Civil Liberties – 5)

• Dubai (including middle east) Undeveloped management practices built around state ruler

• Autocratic• Hierarchical• Nepotism• Very relationship-oriented, respectful, patient, • Managers reach decisions only after discussing the matter with the major stakeholders • Employees do not question the decisions that

managers have made

• Relaxed immigration policy for skilled/unskilled migrants• Only work permits offered• Permanent Residency not recognised• Tax Free

• Playground for the wealthy• English is used in business and government• Presence of recruitment agents

• No tax

• International hub – 3 hours to India, 6 hours to Europe

• Western Corporates sending employees there

• Short term attractiveness


Singapore Overview

• Driven by need to populate with highly skilled labour due to lack of resources

• Latterly driven by economic expansion of neighbours – financial centre of Asia

• Master plan looking to increase population from 4m+ currently to 6m+ in 2020


• Socialist democracy / Engineered Society


• High density

• Cost of living

• Hot and humid climate

Singapore has established itself as the business centre of Asia with shipping, tourism and financial services coupled with a flat tax regime of 15% and multicultural which attracts a lot of skilled talent

• Partly Free (Political Rights – 5, Civil Liberties – 4)•US model, heavily influenced by traditional Asian values

• Mix of solidly traditional Asian values and western business techniques

• Multiculturalism accepted• Age is respected and managers tend to be older.• Managers delegate decisions to their teams• Outside family ties, promotion will be based on

performance

• Relaxed immigration policy for skilled migrants• Permanent Residency offered after two years to

those who meet the country’s list of key skills • Extensive resource available to help potential

skilled workers• Job vacancies advertised and run by government

• English is used in business and government• Presence of recruitment agents


• Flat Tax system – 15%

• Income levels are significantly higher (x3-x5 timeshigher) than those around Asia

• International hub – 3 hours to India, 6 hours to Dubai,3 hours to HK/China

• Head Office or Regional Head Office for many westerncompanies


Singapore has very low unemployment rate and it has increasingly relied on the non-residents (immigrants) to take up jobs

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Residents Non-Residents

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Unemployment

Singapore Residents and Non-ResidentsSingapore Unemployment Rate

Singapore Residents include citizens and permanent residents

Source: Singapore Statistics Office

‘000s

Australia Overview

• Historically driven by need to populate smallest continent

• Latterly driven by economic expansion – mining / housing boom

• Master plan looking to increase population from 20m+ currently to 35m+ in 2030



• Recent backlash against immigrants

• Cost of living (Property is x9 average earnings)

• OECD Tax Burden 31%

• Remote – 24 hours to get to Europe

• Limited career advancement (compared to Singapore / Europe)

Australia follows the US management style which is heavily influenced by British culture. Unsurprisingly UK is Australia’s largest source of immigrants

• Free (Political Rights – 1, Civil Liberties – 2) compared tomany Asian countries•US model, heavily influenced by British culture

• Meritocratic – although some elements of “old boy network” remains

• Highly functional, “less” responsibilities• Work life balance emphasised • Sports unites – Aussie Football, Cricket, • Multiculturalism accepted

• Highly developed immigration policy (Points Based System)• Skilled Migration Programme – Permanent

Residency offered to those who meet the country’s list of key skills

• Extensive resource available to help potential skilled workers

• Language tuitions

• Presence of migration agents and recruitment agents in theUK and Australia• Deep historical links with UK – economic and family• Significant arrangements with UK (2 year working holiday VISA)

• Education – Australia’s 2nd largest export – attracts asignificant number of students from Asia

• Looking for a more “relaxed” lifestyle


In Australia, population increase has depended on the Net Migration, particularly in the last 10 years

0

20

40

60

80

100

120

140

Jun

-81

Jun

-82

Jun

-83

Jun

-84

Jun

-85

Jun

-86

Jun

-87

Jun

-88

Jun

-89

Jun

-90

Jun

-91

Jun

-92

Jun

-93

Jun

-94

Jun

-95

Jun

-96

Jun

-97

Jun

-98

Jun

-99

Jun

-00

Jun

-01

Jun

-02

Jun

-03

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Natural Increase Net Migration

Despite higher unemployment rate in comparison to Norway, Australia remains very attractive to immigrants

0

100

200

300

400

500

600

700

800

900

1000

Mar-06

Jun

-06

Sep

-06

Dec-06

Mar-07

Jun

-07

Sep

-07

Dec-07

Mar-08

Jun

-08

Sep

-08

Dec-08

Mar-09

Jun

-09

Sep

-09

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%Cummulative NetMigration

Unemployment Rate(%)

Japan Overview

• Immigration is very much discouraged - citizenship and permanent residency are extremely difficult to obtain


• Addresses the shortage of workers through industrial automation

Japan policies discourages immigration which is addressed by significantly investing in robotic technologies to automate significant parts of their manufacturing processes

Source: World Robotics Report 2008

Japan is an advanced economy, however it discourages migration even when demographics show a rapidly ageing population

• Partly Free (Political Rights – 3, Civil Liberties – 4)• Internationalisation• High earnings

• “Japan and American management are 95% the same, yetdiffer in all important aspects” -Takeo Fujisawa, Founder Honda Motor Company

• Hierarchical, high emphasis on job and seniority• Large supervisory• Unassuming, un ambitious managers• Polite and diplomatic

• For international companies-- opportunities for careerdevelopment (Sony, Nissan)

• Japan is not keen on immigration

• Asia’s financial centre

• Western Corporates with regional hubs


Industrial automation

From this To this

More radical solutions?

From this To this?

Even more controversial?

From this To this?

So what insights can we learn from these countries and what can we do?

Critical Success Factors

• Management that accepts multiculturalism

• Create awareness

• Proactive recruitment

• Appreciate limitations – regional

• Tax is a driver

• Automation

Conclusion

• Norway is not the natural choice for migrants, but faces a different challenge. Has to attract a small number of migrants with specific skills.

• Deciding where to move / live, particularly for people with families, is a profound psychological process, so Norway has to focus on push factors.

• Is immigration the answer?

– Women working

– Training?

• Norway has many attractions

– Great work ethics based on its management model, employers and employees have a very good relationship

– Equality

– Innovative

– Beautiful, unpolluted country

– Work / life balance

Recommendations

• Central database for key skills as in Australia

• Points based system for migration

• Use internet to make it easier for those who are considering Norway as a potential place to live through the provision of information

• Norway needs clear policies on which skills to attract, over what period of time and from where? = Targeted Marketing

• Language tuition for new arrivals

Compare…

Bondi Beach, Sydney, Australia

Norwegian Fjords

Q&A

Appendices

Tax Burden

48%47%44%43% 43%43%43%

0%

38%38% 37%37%36%36%36%35% 33%32%31%31%29%29% 28%28%27%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Denm

ark

Sw

eden

Belgium

Italy

France

Austria

Finland

Norw

ay

Luxembourg

Netherlands

Czech R

epublic

Portugal

Germ

any

Iceland

UK

Poland

Spain

Canada

Greece

Australia

Sw

itzerland

Slovakia

Japan

Ireland

US

Source: OECD

Structure of government

Public Sector

General Government

Public Corporations

Public financial corporations

Non-financial public corporations

Central Government Local Government

Fiscal account including National

Insurance Scheme

Fiscal account including National

Insurance Scheme

MunicipalitiesCounty

Municipalities

Non-financial corporations owned by the

central government

Norges Bank and lending institutions

Other financial

corporations

Non-financial corporations owned by the

local government

Storting Elections, Top 3 Parties

0

10

20

30

40

50

60

70

80

90

1936

1945

1949

1953

1957

1961

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

Labour Party Progress Party Conservative Party

Compared to Europe average (34 people/km2) Norway has only 14 allowing a significant room to increase its population

0

20

40

60

80

100

120

140

Norway Denmark Sweden Finland Europe Europe (exRussia)

NORWAY

Government Control

• Constitutional monarchy and parliamentary democracy, with King as Head of Stateand government power resides in Prime Minister and elected parliamentary ministers. •Unitary state with administrative subdivisions on two levels - counties and municipalities• Significant government control in key resource industries via Public Corporations

Migration Policy & Management

• Aligned to the model in Europe•Restrictive admissions but equal treatment• Positively encourage – "respect for immigrants' language and culture”• Language training, labor market integration, and initiatives to promote multi-culturist• Generous integration and social services for immigrant populations•Naturalisation – difficult (7 years as PR)•<0.5% of world’s total migrants and 7.4% of national population are migrant workers

Management Style

• Democratic, consensual , relation and result -oriented management• Exceptionalstrength in ethic, social responsibility, accountability, openness, transparency• Shareholder value, customer satisfaction, management truth worthiness• Motivating management, empowering employees, participative decision making• High level of information and direct communication• Managing with goals and values rather then control and command• Flat company structure, communication with the employees, delegating responsibility, care, trust,• Collegiality among the staff, employees happiness, efficiency, more risk taking, feeling of accomplishment, motivation, well-being, creativity, innovation

Tax • OECD Tax Burden - 42% • Gender pay gap 16% - Difference between earnings of female and male employees lowest in Scandinavia and average of EU27 17%

Awareness•http://www.migrationinformation.org/Feature/display.cfm?ID=307• http://www.nationsencyclopedia.com/Europe/Norway-MIGRATION.html•http://www.migrationinformation.org/Resources/norway.cfm

http://en.wikipedia.org/wiki/Constitutional_monarchy

http://en.wikipedia.org/wiki/Parliamentary_democracy

http://en.wikipedia.org/wiki/Head_of_State

http://en.wikipedia.org/wiki/Unitary_state

http://www.migrationinformation.org/Feature/display.cfm?ID=307

http://www.nationsencyclopedia.com/Europe/Norway-MIGRATION.html

http://www.migrationinformation.org/Resources/norway.cfm

However we have to be cognisant of the fact that women are increasingly spending more time in work which may have an impact on the overall natural population growth

-120 -100 -80 -60 -40 -20 0 20 40 60 80

Income

Household Work

Education

Personal Needs

Personal Needs

Leisure

LeisureWomen Men

Potential Implications:- Lower birth rate- Impact on labour availability

Change in time spent on various activities on an average day from 1971 to 2000, by sex and age 16-74 years. Minutes

minutes

So whilst population is projected to grow, the economically productive group is reducing, this is a trend that is wide spread across Europe indicating future competition for skilled labour

Norway statistics

80+

70-79

60-69

50-59

40-49

30-39

20-29

'10-19

0-9

Male

Female

20502009

80+

70-79

60-69

50-59

40-49

30-39

20-29

'10-19

0-9

Male

Female

So how do we measure management models effectiveness?

• Competitiveness?

• Labour Productivity?

Pillars of Competitiveness

Basic Requirements• Institutions• Infrastructure• Macroeconomic Stability• Health and Primary education

Key ForFactor - driven

Economies

Efficiency Enhancers• Higher Education and Training• Goods Market Efficiency• Labor Market Efficiency• Financial Market Sophistication• Technological Readiness• Market size

Innovation and Sophistication Factors• Business Sophistication• Innovation

Key ForEfficiency - driven

Economies

Key ForInnovation - driven

Economies

Scandinavian Management Model as Competitive Advantage in Attracting Qualified Foreign Labour Dr Maria Vrabcova Hardager, Norway 3 June 2010.

Documents

norway statistics slide

norway source

eurostat slide

imf slide

term norway

norway myth

conclusion agenda slide

family reasons reasons