The Employment practices

Valeria Pulignano and Vickie D

ekocker THE EM

PLOYMENT PRACTICES IN M

ULTINATIONALS IN BELGIUM

This is the fi rst survey on employment practices within multinational fi rms (MNCs) in Belgium. It is based on a representative sample which covers both Belgian-owned and foreign-owned MNCs. The analysis is based on 194 face-to-face interviews with senior HR managers responsible for the Belgian operations of MNCs.

For HR managers this survey is a tool to benchmark the own HR policies with other MNCs. The survey reports on four HR domains: pay and performance, training and organisational learning, employee involvement and communication and employee representation. For each HR domain, HR managers can compare the presence of tools (i.e. variable pay, training programs, teams) and the discretion of Belgian subsidiaries.

Additionally, this book is of high interest for both academics and policy makers. It contains original and unique data concurring both to delineate the fi rm profi le (i.e. country of origin, size, sector, structure) and examining the factors shaping decisions-making within MNCs in Belgium. Overall this book remarkably addresses the knowledge defi cit around the study of the employment relations and human resource management within MNCs in Belgium to date.

VALERIA PULIGNANO is Professor of Labour Sociology and Industrial Relations at the Centre for

Sociological Research (CESO) at the University of Leuven. She is Associate Fellow at Warwick University and core researcher at the University of Montréal.

She is co-author of Flexibility at Work and of The Transformation of Employment Relations i n Europe. Institutions and Outcomes in the Age of Globalisation.

VICKIE DEKOCKERis a PhD candidate and teaching assistant at the Centre for Sociological Research

(CESO) at the University of Leuven. In her PhD, she focuses on employment practices within multinational companies in Belgium. Specifi cally, she studies the way the sub national level (regional government, joint committees and inter fi rm relations) shape

these employment practices.

9 7 8 9 0 3 3 4 9 5 5 6 4

THE EMPLOYMENT PRACTICES IN

MULTINATIONALS IN BELGIUM

Valeria Pulignano and Vickie Dekocker

In collaboration with Evelyne Léonard,

Marie Van den Broeck and Nadja Doerfl inger

The employment practices in multinationals in Belgium


In collaboration with Evelyne Léonard (UCL), Marie Van den Broeck (UCL) and Nadja Doerfl inger (KUL)

Acco Leuven / Den Haag

First print: 2014

Published by Uitgeverij Acco, Blijde Inkomststraat 22, 3000 Leuven, BelgiëE-mail: [email protected] – Website: www.uitgeverijacco.be

For The NetherlandsAcco Nederland, Westvlietweg 67 F, 2495 AA Den Haag, NederlandE-mail: [email protected] – Website: www.uitgeverijacco.nl

Cover design: www.frisco-ontwerpbureau.be

© 2014 by Acco (Academische Coöperatieve Vennootschap cvba), Leuven (België) No part of this book may be reproduced in any form, by mimeograph, fi lm or any other means wit-hout permission in writing from the publisher.

D/2014/0543/24 NUR 800 ISBN 978-90-334-9556-4

5

Content

List of fi gures and tables 9

Abbreviations and concepts 15

Acknowledgement 17

Summary in English 19

Samenvatting in het Nederlands 21

Résumé en français 23

Introduction 25

PART I

CHAPTER 1 – Belgium and multinational companies 311.1 Foreign direct investment and employment 31

CHAPTER 2 – Research question, research design and methodology 35Introduction 352.1 Phase I: Screening and compiling the population 352.2 Developing the questionnaire 382.3 Data collection 392.4 Data analysis 40

PART II

CHAPTER 3 – The characteristics of MNCs in Belgium 45Introduction 453.1 Key fi gures 453.2 International structure and strategy 49

6

Content

3.3 Business structures 523.4 Role of Belgian operations 543.5 Factors explaining new investments 55Conclusion 56Note 57

CHAPTER 4 – The HR function 59Introduction 594.1 The strategic role of HRM 604.2 Internationalization 614.3 Monitoring by higher organizational levels 644.4 HR philosophy 654.5 Reverse diff usion 67Conclusion 68

CHAPTER 5 – Pay and performance Management 71Introduction 715.1 Performance appraisal systems in MNCs 725.2 Methods of performance appraisal 755.3 Performance evaluation 775.4 Variable pay in MNCs: prevalence and criteria 815.5 Financial participation 865.6 Discretion over pay and performance management policy 87Conclusion 88

CHAPTER 6 – Training policies and organisational learning 91Introduction 916.1 Level of investment 926.2 Types of training and attitudes towards training 936.3 Succession planning 976.4 Management development programs 1006.5 Organisational learning 1026.6 Discretion on training and organizational learning 104Conclusion 105

CHAPTER 7 – Employee involvement and communication 107Introduction 1077.1 Employee involvement practices 1077.2 Forms of communication with the LOG 1097.3 Types of information provided to the LOG 1117.4 Level of discretion regarding employee involvement and communication 111Conclusion 113

7

Content

CHAPTER 8 – Employee representation and consultation 115Introduction 1158.1 Trade union recognition 1168.2 Management attitudes towards trade unions 1178.3 Policy on information and consultation and European works councils 119Conclusion 123

CHAPTER 9 – The sub-national level in Belgium 125

Introduction 1259.1 Regional governments 1269.2 Sectors 1289.3 Belonging to a cluster of companies 129Conclusion 131

CHAPTER 10 – Blue- and white-collar workers 133Introduction 13310.1 Pay and performance appraisal systems 13410.2 Training policies 13610.3 Employee communication and involvement 139Conclusion 139

CHAPTER 11 – Investments and the Belgian economy 141Introduction: Setting the context 14111.1 MNCs and factors infl uencing investment decisions in Belgium 142Conclusion 146

PART III

CHAPTER 12 – Concluding remarks and summary 14912.1 Belgium as an open economy 14912.2 Belgium as a heterogeneous host country 15012.3 Belgium as a country for SMEs 15012.4 The infl uence of the institutional context 15112.5 How much autonomy do Belgian operations have? 15212.6 MNCs as a driver of ‘convergence’? Bridging the gap between blue- and white-

collar workers 15212.7 Future research 153

References 157

9

List of fi gures and tables

PART I

CHAPTER 1 – Belgium and multinational companies

Table 1.1 – Overview of outward and inward FDI. 32

Figure 1.1 – FDI as a percentage of GDP. 34

Figure 1.2 – Trends in inward and outward FDI. 34

CHAPTER 2 – Research question, research design and methodology

Table 2.1 – Result of the screening phase. 37

Figure 2.1 – Respondent profi le. 39

Table 2.2 – Comparison between participating population and total identifi ed population on key characteristics. 41

PART II

CHAPTER 3 – The characteristics of MNCs in Belgium

Figure 3.1 – MNC country of ownership. 46

Figure 3.2 – MNC sector. 46

Table 3.1 – Headcount. 47

Table 3.2 – Number of managers and LOG. 48

Figure 3.3 – Length of internationalization. 49

Figure 3.4 – Level of diversifi cation. 50

Table 3.3 – Level of diversifi cation based on ownership. 50

Figure 3.5 – Standardisation or diff erentiation. 51

Table 3.4 – Product/service standardisation and diff erentiation based on ownership. 51

Table 3.5 – Product/service standardisation and diff erentiation based on headcount. 51

10


Figure 3.6 – Level of integration. 52

Figure 3.7 – Prevalence of international structures. 53

Table 3.6 – Prevalence of business structures by ownership. 54

Figure 3.8 – Organisational structure and size. 54

Figure 3.9 – Role of Belgian operations. 55

Figure 3.10 – Factors explaining new investments or ‘mandates’. 56

CHAPTER 4 – The HR function

Figure 4.1 – Number of HR managers. 60

Figure 4.2 – Internationalization of HRM instruments. 61

Figure 4.3 – HR instruments and headcount size. 62

Figure 4.4 – Existence of international networks. 63

Figure 4.5 – Frequency of international networking. 64

Figure 4.6 – Monitoring by higher organizational levels. 65

Figure 4.7 – Infl uence of HR policy. 66

Table 4.1 – Management philosophy based on ownership. 66

Table 4.2 – Management philosophy based on headcount. 67

Figure 4.8 – Reverse diff usion. 68

CHAPTER 5 – Pay and performance management

Figure 5.1 – Prevalence of performance appraisal. 73

Figure 5.2 – Prevalence of appraisal systems based on country of ownership. 73

Table 5.1 – Prevalence of appraisal systems based on sector. 74

Figure 5.3 – Prevalence of appraisal systems based on size. 74

Figure 5.4 – Prevalence of forced distribution and 360-degree feedback. 75

Figure 5.5 – Prevalence of forced distribution and 360-degreee feedback based on country of ownership. 76

Table 5.2 – Prevalence of forced distribution and feedback based on sector. 76

Figure 5.6 – Prevalence of forced distribution and feedback based on size. 77

Figure 5.7 – Evaluation criteria managers. 78

Figure 5.8 – Evaluation criteria used by managers: based on country of ownership. 78

Table 5.3 – Performance evaluation by sector. 79

Table 5.4 – Performance evaluation by headcount size. 80

11


Figure 5.9 – Prevalence of variable pay based on country of ownership. 82

Figure 5.10 – Prevalence of variable pay based on sector. 82

Figure 5.11 – Prevalence of variable pay based on headcount size. 83

Table 5.5 – Evaluation criteria for variable pay. 83

Table 5.6 – Evaluation criteria variable pay based on sector. 84

Table 5.7 – Evaluation criteria for variable pay based on headcount size. 85

Figure 5.12 – Financial participation based on country of ownership. 86

Table 5.8 – Financial participation based on HR structure. 87

Figure 5.13 – Discretion on pay and performance policies (foreign-owned companies). 88

Figure 5.14 – Discretion on pay and performance policies (home-based companies). 88

CHAPTER 6 – Training policies and organisational learning

Figure 6.1 – Level of expenditure on training. 93

Figure 6.2 – Prevalence of training based on country of ownership. 94

Figure 6.3 – Frequency of training. 95

Table 6.1 – Frequency of training based on country of ownership. 95

Table 6.2 – Prevalence of training programs in relation to headcount size. 96

Table 6.3 – Frequency of training programs in relation to headcount size. 96

Figure 6.4 – Attitudes towards training. 96

Figure 6.5 – Attitudes towards succession planning. 97

Table 6.4 – Attitudes towards succession planning in relation to country of ownership. 98

Figure 6.6 – Prevalence succession programs based on headcount size. 99

Table 6.5 – Attitudes towards succession planning in relation to headcount size (percentage ‘agree’ and ‘fully agree’). 99

Figure 6.7 – Prevalence of management development programs. 100

Figure 6.8 – Instruments used in management development programs. 101

Figure 6.9 – Prevalence of management development programs based on country of ownership. 101

Figure 6.10 – Prevalence of diff erent instruments for management development programs (mean values). 102

Figure 6.11 – Prevalence of systems of organizational learning. 103

Figure 6.12 – Instruments for organizational learning. 103

Figure 6.13 – Goals of organizational learning policies. 104

12


Figure 6.14 – Discretion on training and organizational learning. 105

Figure 6.15 – Discretion on training and organizational learning. 105

CHAPTER 7 – Employee involvement and communication

Figure 7.1 – Prevalence of employee involvement practices. 108

Table 7.1 – The use of diff erent employment involvement practices in relation to country of ownership. 108

Figure 7.2 – Forms of communication. 109

Table 7.2 – The use of communication practices based on country of ownership. 110

Table 7.3 – Employee communication based on country of ownership. 110

Table 7.4 – Employee communication by sector. 110

Figure 7.3 – Type of information reported. 111

Figure 7.4 – Level of discretion regarding employee involvement and communication (foreign-owned companies). 112

Figure 7.5 – Level of discretion regarding employee involvement and communication (home-based companies). 112

Table 7.5 – Level of discretion (‘quite a lot’ /‘full’ discretion) of Belgian operations by country of ownership. 113

Table 7.6 – Level of discretion (from a lot to full discretion) of Belgian operations by sector. 113

CHAPTER 8 – Employee representation and consultation

Figure 8.1 – Percentage of unionized employees. 116

Table 8.1 – Union density by country of ownership. 117

Table 8.2 – Union density by sector. 117

Table 8.3 – Attitudes towards management, percentages agreeing or fully agreeing. 118

Figure 8.2 – Union attitudes towards management. 118

Figure 8.3 – Management attitudes towards representation. 119

Table 8.4 – Diff erences in management attitudes towards employee representation by country of ownership. 119

Table 8.5 – Diff erences in management attitudes towards employee representation by sector. 119

Figure 8.4 – Policy on information and consultation. 120

Table 8.6 – Diff erences in information and consultation based on country of ownership. 120

Figure 8.5 – Discretion on trade union recognition and involvement. 121

13


Figure 8.6 – Prevalence of European works councils. 122

Figure 8.7 – Information policy vis-à-vis European works councils. 122

CHAPTER 9 – The sub-national level in Belgium

Figure 9.1 – Prevalence of training programs by regional government. 127

Table 9.1 – Frequency of training programs by regional government. 127

Figure 9.2 – Discretion on training polices based on the regional government. 128

Figure 9.3 – Prevalence of training programs by company cluster. 130

Figure 9.4 – Cluster-related discretion on training policies. 131

CHAPTER 10 – Blue- and white-collar workers

Figure 10.1 – Performance appraisal policies for white- and blue-collar workers. 134

Figure 10.2 – Prevalence of pay instruments for white- and blue-collar workers. 135

Figure 10.3 – Criteria used for variable pay for white- and blue-collar. 136

Figure 10.4 – Management attitudes towards training for white- and blue-collar workers. 137

Figure 10.5 – Prevalence of training programs for white- and blue-collar workers. 137

Figure 10.6 – Frequency of training programs for white- and blue-collar workers. 138

Figure 10.7 – Participation and involvement of white- and blue-collar workers. 138

Table 10.1 – Communication forms for blue and white-collar workers. 139

CHAPTER 11 – Investments and the Belgian economy

Figure 11.1 – Factors infl uencing new investments or ‘mandates‘ 142

Table 11.1 – Factors infl uencing new investments or ‘mandates‘ by country of ownership (mean values) 143

Figure 11.2 – MNC restructuring in Belgium. 144

Figure 11.3 – Factors important for investment decisions. 144

Table 11.2 – Factors important for investment decisions by country of ownership. 145

Figure 11.4 – Factors important for decisions to close down. 145

Table 11.3 – Factors important in decisions to closures based on ownership. 146

Table 11.4 – Factors important for investment decisions based on sector. 146

PART III

CHAPTER 12 – Concluding remarks and summary

Table 12.1 – Comparison with other countries. 155

15

Abbreviations and concepts

HRM Human resource managementIR Industrial relationsEWC European Works CouncilLOG Largest occupational group, the largest occupational

group within the workforce in the ‘headcount’ in Belgium. In Belgium the LOG will be blue-collar workers, white-col-lar workers or executives. Executives refer to white-collar workers with a special statute within the company. They have no managerial functions

Managers Workers who primarily manage the organisation, or a de-partment, (sub-)division, function of the organisation and whose main tasks consist of the direction and coordina-tion of the functioning of the organisation. In other words managers refer to those above the level of fi rst-line super-vision

Key group Those workers whom you might identify as critical to your fi rm’s organisational learning and core competence. These might be research staff , product designers, major account handlers, developers of new markets, drivers welders, etc.

MNC Multinational corporationSME Small and medium-sized enterpriseBelgian operations All of an MNC’s operations within BelgiumHome-based Corporations that are wholly or majority owned by

Belgian owners, and that have at least 500 employeesworldwide and 100 or more employees working outside of Belgium

Foreign-based MNC Corporations operating in Belgium that are wholly or ma-jority owned by foreign owners, and that have at least 500 employees worldwide and a minimum of 100 employees in Belgium

Ownership Company, funds or person owning more than 50.01% of the global company’ shares

17

Acknowledgement

The survey would not have been possible without the collaboration of 194 HR manag-ers within the Belgian operations who made at least one hour available to participate in the survey. We would like to thank all the participants of the main survey and the other managers which have assisted us in completing information on the population of multinational companies.

We also like to thank the research teams of the other countries. In particular, we acknowledge the superb work done by the pioneer teams, United Kingdom, Ireland, Spain and Canada which were part of the fi rst wave of the survey on human resource management in multinational companies. We do also highlight the exceptional dedica-tion of the second wave research teams, Denmark, Norway and Australia who have notably enriched the baggage of knowledge around the employment practices and poli-cies in multinational companies worldwide. The research teams have been a great help for us in learning from their experiences regarding data collection and how to over-come particular methodological questions. In addition, we could use their questionnaire and further adapt it to the Belgian specifi c context. Although the questionnaire should guarantee comparability, the questionnaire was adapted to Belgian labour markets and employment practices. For this adaptation, the research team of the University of Leu-ven (KUL) worked in collaboration with the University of Louvain (UCL). In this regard we would like to thank Evelyne Léonard (UCL), Marie Van den Broeck (UCL), Nadja Doerfl inger (KUL) and Jonathan Plamondon (UCL). We would also like to thank Koen Dewettinck of Vlerick Leuven Gent Management School in this respect. Special recogni-tion goes to Tony Edwards whom agreed to meet and email regularly to refl ect on the research process and helped with diff erent steps in the research project and during data analyses and to the two anonymous referees for their constructive comments.

19

Summary in English

This is the fi rst survey on employment practices in MNCs in Belgium based on a repre-sentative sample. It covers both Belgian-owned and foreign-owned fi rms. The analysis is based on 194 face-to-face interviews with senior HR managers responsible for the Belgian operations of MNCs. The study highlights the importance of MNCs to the Bel-gian economy by systematically reporting on data on employment policy and practice, and on how these are infl uenced by structural, institutional and organisational char-acteristics of the fi rm. Drawing on the most representative empirical survey-based in-vestigation of human resource management (HRM) and employment relations in MNCs in Belgium to date, we report key fi ndings on the profi le of MNCs in Belgium and on practices in regard to various aspects of employment and human resource manage-ment, specifi cally on issues such as the HR function, pay and performance, training and development, employment relations concerning information, consultation and commu-nication. We do also use the survey fi ndings to examine the extent to which specifi c contextual characteristics of Belgium infl uence MNCs decision making with particular regard to the role played by the sub-national (regional government; sector; inter-fi rm relations) dimension for MNCs policy development, factors shaping decisions on invest-ments within MNCs, the distinction between white- and blue-collar workers. All these aspects innovatively concur to address an important aspect, which is currently under scrutiny within the literature on MNCs, that is the role of MNCs as ‘political actor’ within a particular national economy. Are MNCs as transnational business able to infl u-ence the environment in which they operate by acting on existing forms of employment and labour market regulations? Are MNCs powerful actors capable of social innovation? Overall this book remarkably address the knowledge defi cit around the study of the em-ployment relations and human resource management within MNCs in Belgium to date.

21

Samenvatting in het Nederlands

In het boek worden de resultaten van onderzoek rond personeelsbeleid in multinatio-nale ondernemingen in België voorgesteld. Het is de eerste keer dat een representatief onderzoek gebeurd in België. De analyse is gebaseerd op 194 persoonlijk afgenomen vragenlijsten bij HR managers die verantwoordelijk zijn voor de Belgische vestigingen. De studie benadrukt het belang van multinationale ondernemingen voor de Belgische economie door te verwijzen naar verschillende elementen binnen hun personeelsbeleid en verschillen aan te duiden op basis van structurele, institutionele en organisatieken-merken van de ondernemingen. Op basis van de enige representatieve dataset die tot nu toe is opgezet voor Human resource management en personeelsbeleid in multina-tionals in België, is het boek in staat om te rapporteren over het profi el van de multi-nationals in België en verschillende onderdelen van HRM. Concreet worden vooreerst vier onderdelen van HRM besproken: pay en performance management, training en ontwikkeling, communicatie, informatie en consultatie en werknemersvertegenwoor-diging. Een volgend onderdeel focust op de specifi eke Belgische context. Drie aspecten die multinationale ondernemingen mogelijks beïnvloeden komen aan bod: het sub na-tionale karakter (regionale overheden, de sector en clusters van bedrijven rond econo-misch interessante locaties), factoren die investeringen van multinationale onderne-mingen verklaren en het onderscheid tussen arbeiders en bedienden. Die verschillende dimensies leveren een belangrijke innovatieve bijdrage voor onderzoek rond HRM in multinationals, namelijk de rol van multinationale ondernemingen als politieke acto-ren in een nationale economie. Zijn multinationale ondernemingen in staat om invloed uit te oefenen op bestaande vormen van HRM en tewerkstelling? Zijn multinationale ondernemingen machtige actoren die aanleiding geven tot sociale innovatie?. Kortom, dit boek komt tegemoet aan een gebrek aan kennis over personeelsbeleid en HRM in multinationale ondernemingen in België.

23

Résumé en français

Cette enquête, réalisée sur un échantillon représentatif, est la première à se pencher sur les pratiques d’emploi des multinationales en Belgique. Elle concerne les sociétés détenues tant par des Belges que par des étrangers. L’analyse se base sur 194 entretiens individuels avec des cadres supérieurs RH responsables des opérations de multinatio-nales sur le territoire belge. L’étude souligne l’importance de ces entreprises pour l’éco-nomie nationale: elle présente systématiquement des informations sur la politique et les pratiques en matière d’emploi et sur la manière dont ces dernières sont infl uencées par les caractéristiques structurelles, institutionnelles et organisationnelles de l’entre-prise. Cette étude empirique, réalisée à partir d’une enquête, est la plus représentative de la gestion des ressources humaines (GRH) et des relations propres à l’emploi dans les multinationales actives sur le sol belge. Si elle nous a permis de déterminer les traits principaux du profi l des multinationales en Belgique, elle expose aussi les pratiques liées à diff érents aspects de l’emploi et de la gestion des ressources humaines tels que la fonction RH, les salaires et la productivité, la formation et le développement ou encore les relations entre information, consultation, communication et emploi. Nous exploitons également les conclusions de l’enquête pour examiner dans quelle mesure certaines caractéristiques contextuelles de la Belgique infl uencent la prise de décision des multinationales: quel est en particulier le rôle joué par la dimension régionale (gou-vernement régional, comités mixtes, relations interentreprises) dans le développement des politiques des multinationales, dans les décisions d’investissement au sein de celles-ci et dans la distinction entre cols blancs et cols bleus? Tous ces aspects contribuent de manière innovante à répondre à la question fondamentale, traitée par ailleurs dans la littérature spécialisée, du rôle politique joué par les multinationales dans l’économie d’un pays donné. Les multinationales sont-elles en mesure, par les activités commer-ciales transnationales qu’elles exercent, d’infl uencer l’environnement dans lequel elles opèrent en agissant sur les formes d’emploi actuelles et la réglementation en vigueur sur le marché du travail? Représentent-elles des forces capables d’innovations sociales? Globalement, ce livre pointe de façon remarquable la méconnaissance actuelle observée en Belgique concernant l’étude des relations en matière d’emploi et la gestion des res-sources humaines au sein des multinationales.

25

Introduction

The importance of multinational companies (MNCs) in Belgium cannot be underesti-mated. Foreign direct investment (FDI), an important indicator used to evaluate the degree of internationalization, indicates that Belgium is particular in this respect. In the period 2005-2008, Belgium ranked fi rst among OECD countries in terms of FDI infl ows (15 per cent of GDP), refl ecting the country’s capacity to attract foreign investment. Though Belgium is a small country, it is also one of the most open economies among OECD countries, with a large proportion of foreign MNCs. Similar fi gures are found for the number of workers employed, with foreign-owned MNCs employing more than 500,000 employees in their Belgian operations in 2011.

The signifi cant infl uence on employment is illustrated when MNCs decide to close or restructure Belgian operations. Recent cases – Ford Genk, ArcelorMittal or Caterpillar – show that it is not just the employees working in the restructured Belgian operations who are aff ected by such decisions, but also suppliers, with these undergoing simulta-neous or subsequent restructuring. As such it is somehow surprising that only limited attention has been devoted so far to the way employment in MNCs is organized within the Belgian context. After all, key to MNCs is that they are able to transfer and dissemi-nate policies and practices within and across countries – including HR and employee relations practices. These refer to pay and performance, training and organisational learning, employee involvement and communication and employee representation. The prevalence of these practices and policies in subsidiaries is interlinked with such organ-isational characteristics as MNC headcount size, home country and shareholder struc-ture (Almond et al., 2005; Edwards, Marginson and Ferner., 2013), though up to now there have been no quantitative representative studies on this topic. In this respect, the INTREPID network has contributed signifi cantly to understanding employment prac-tices in MNCs. INTREPID is a network of international scholars involved in parallel large-scale surveys of employment practices in MNCs in diff erent national contexts. The principal objective is to ensure an accurate, representative depiction of MNC ac-tivities, especially in the areas of HRM and employee relations (ER). The data collected is the outcome of the most representative comparative surveys of employment prac-tices in MNCs located in the respective countries (Gunningle, Pulignano and Edwards (2014:10-11). The INTREPID network has already published extensive literature based on

26


its data in the fi eld of HRM and ER and its contribution is enhancing our understanding of HRM and employee relations in MNCs. So far surveys have been conducted in the UK, Ireland, Australia, Canada, Spain and Norway and Denmark. Therefore a representative survey of employment practices in Belgium was needed.

Attempts have already been made in Belgium to develop a cross-country dataset avail-able at international level, including the CRANET survey (Study on Comparative Human Resource Management). Though monitoring employment relations in diff erent coun-tries, the survey in its present format has certain drawbacks. Firstly, it provides no insight into the decision-making processes of the diff erent HR practices, into how these are transferred across borders to MNC subsidiaries and how these are monitored and enforced by corporate headquarters. In this respect it is very diffi cult to assess the extent to which employment relations developed at subsidiary level are infl uenced by the ‘country of origin’ MNC (‘centralization’ hypothesis) or developed at local subsidiary level in the ‘host-country’ (‘decentralization’ hypothesis). Secondly, the CRANET survey does not strictly defi ne its population as multinational companies. It focuses on com-paring HR policies in diff erent countries without taking the size or nature of a company into account, or whether it is public or private, meaning that multinational companies are part of the population but not the exclusive target. However, in the relevant litera-ture multinational companies are considered as a specifi c type of company in terms of their headcount and international orientation. Summa summarum, a survey on MNC employment practices in Belgium was needed to fi ll these gaps.

The goal of this research project is twofold. Its fi rst aim is to map the employment poli-cies and practices of MNCs operating in Belgium, while its second aim is to examine the diff erences between MNCs operating in Belgium with regard to their organisational and structural characteristics. In doing so, the research project adds to the understanding of how employment relations in regulated economies are organized. As yet, surveys have been carried out in Denmark, Norway, the UK, Ireland, Spain, Canada and Aus-tralia. Integrating Belgium will thus expand our knowledge of the infl uence of more regulated contexts on MNC employment practices, while at the same time adding rel-evant insights into the extent and nature of variation within regulated and coordinated economies. In doing so it takes up the Amable (2001) distinction between continental and social democratic clusters. Following a host country institutional argumentation, including Belgium in the international comparison allows us to further explore vari-ations in MNC behaviour and to test institutionalist theory. Another relevant aspect with regard to Belgium is that it allows us to further explore the extent to which a subsidiary’s HRM autonomy can vary depending on diff erent HR policy domains. This is because Belgium is the fi rst country surveyed which is characterized by both more pronounced centralization regarding certain issues (such as employment issues) and by decentralization and institutionalized autonomy (for example training). Moreover, until 2013 Belgium was characterized by a major regulatory distinction between blue- and white-collar workers. The survey looks at this aspect in greater detail, examining

27

Introduction

to what extent it impacts MNC behaviour. Generally speaking, Belgium has outstanding relevance, promoting an understanding of MNC behaviour in a country characterized by a highly regulated employment framework (with a strong SME dimension) and a relatively high level of decentralized HRM potential (more than for ER). It can also be argued that extending the analysis to Belgium boosts our conceptual and theoretical understanding of MNC behaviour from a comparative perspective, thereby enhancing HRM and ER debates.

The book is structured in 3 parts. Part 1 presents recent fi gures on FDI in Belgium and describes the methodology used. In particular, we set up a representative dataset on ownership and employment size. In addition, we describe the way the standard inter-national questionnaire was adapted to the context of the Belgian labour market. We also look at the diff erent steps accompanying the data cleaning process. Part 2 consists of nine chapters. It examines the characteristics of MNCs operating in Belgium as well as the way HRM is organized. It discusses HRM and ER practices in use within MNCs in Belgium, such as pay and performance management, training and organisational learn-ing, employee involvement and communication and employee representation. Each sec-tion provides an insight into the prevalence of these practices, outlining the main fea-tures and the degree of discretion accorded to an MNC’s Belgian subsidiary. Further, it embeds the MNC perspective when discussing three main institutional characteristics of the Belgian context: the sub-national institutional level for employment practices, the diff erences between blue- and white-collar workers and the factors impacting MNC decisions to invest in Belgium. Finally, Part 3 draws a number of conclusions and makes suggestions for future research.

PART I

31

CHAPTER 1

Belgium and multinational companies

1.1 Foreign direct investment and employment

Within the literature on MNCs, foreign direct investment (FDI) is often used to illustrate the extent of internationalisation of production and services between countries. Inward and outward fl ows from a particular country are indeed indicative of the linkages between national economies through which knowledge and technology will be transferred. On the basis of Table 1.1 and Figure 1.1 we conclude that Belgium is an open economy with a high level of FDI, particularly when we take into account the country’s size. Compared to Ger-many and France, Belgium reports the same level of inward direct investment. Similar Eu-ropean countries like Finland, Sweden, Norway and Denmark report much lower levels of inward and outward direct investment. A similar picture emerges when taking a long-term perspective. Between 1981 and 1990, Belgium was ranked 8th in the list of major recipients. In the following period (1991-2000) Belgium moved up to second place. More detailed fi g-ures on the long-term evolution of FDI in Belgium are shown in Figure 1.2. Since the early nineties, Belgium has recorded a constant increase in both inward and outward FDI, with a signifi cant increase from 2005 onwards as a result of the introduction of ‘notional interest deduction’, a measure treating a company’s profi ts in a much more tax-friendly manner when they are reinvested in the company rather than paid to shareholders.

Furthermore, if we take into account the literature explaining why countries are at-tractive for FDI, the high fi gures for Belgium come as no surprise. First of all, federal states like Belgium with regional governments responsible for particular employment domains and innovation are found to attract more FDI than non-federal states (Jensen, 2003), as regional government are in a position to diversify their policies in order to attract foreign FDI. In addition, federal states are considered as benefi cial to business as they have veto players able to contest particular policies. The more veto players present, the lower the risk that political decisions can harm business decisions. Sec-ondly, Belgium is known for its clusters of SMEs, often good niche companies able to expand internationally on account of the presence of MNCs. The sub-national resources fostering innovation and skills and competences are usually competitive sources for companies. Despite these two factors, federalism and the innovative character of SMEs, the Belgian system of collective bargaining could, according to the literature, be a po-tentially inhibiting factor for MNCs due to the high level of regulation (Jensen, 2003), as it leaves less room for MNCs to increase fl exibility (Hall and Soskice 2001).

32


Tabl

e 1.

1 –

Ove

rvie

w o

f ou

twar

d an

d in

war

d FD

I.

Out

war

d an

d in

war

d FD

I st

ocks

Mill

ion

US

dolla

rs

Out

war

d di

rect

inve

stm

ent

stoc

ksIn

war

d di

rect

inve

stm

ent

stoc

ks

1990

1995

2000

2010

2011

2012

1990

1995

2000

2010

2011

2012

Aus

tral

ia37

491

60 4

8495

978

4135

2537

8 67

142

4489

80 3

3311

1310

1188

5850

8 79

454

6 02

460

4 25

7A

ustr

ia47

4711

832

24 8

2017

6 51

018

9 54

621

2269

1109

821

363

3116

516

1144

153

060

164

380

Belg

ium

40 6

3680

690

1797

7387

3 86

494

3 20

191

1609

58 3

8811

2960

1816

5095

0 02

710

0271

796

8 33

8Ca

nada

84 8

1311

8106

2376

4763

6712

660

746

7150

5311

2 85

012

3182

212

723

591

873

5869

9963

6 97

2Ch

ile–

–11

154

54 7

7274

889

9184

7–

–45

753

154

646

168

338

2013

00Cz

ech

Repu

blic

–34

573

814

923

1321

415

176

–73

5021

647

128

505

1205

6913

6 44

3

Den

mar

k–

–73

117

222

242

231

081

248

890

––

73 5

8514

0 25

014

0 09

214

5 95

8Es

toni

a–

–25

656

984

729

5879

––

2611

1647

416

960

1934

9Fi

nlan

d11

227

14 9

9352

109

1376

6213

3 77

315

1374

5132

8465

24 2

7286

697

89 2

2796

636

Fran

ce11

0121

204

430

445

087

1482

281

1478

618

1540

087

84 9

3119

1433

259

773

955

138

953

938

997

854

Ger

man

y13

0 76

023

3107

4867

5013

65 6

4513

5602

114

6176

174

067

104

367

462

564

943

791

9274

5298

0687

Gre

ece

––

5852

42 6

2348

041

4496

0–

–14

113

35 0

2529

058

24 7

63H

unga

ry–

278

1279

2043

523

861

3407

956

911

304

22 8

5690

780

8454

110

2 51

2Ic

elan

d75

179

663

1146

611

521

1216

514

712

949

711

784

1265

610

065

Irel

and

––

2792

534

0110

330

793

379

982

––

127

088

285

572

290

479

339

727

Isra

el–

758

9091

6897

370

815

73 9

7836

557

4122

367

60 2

3765

014

74 4

03It

aly

6019

510

6319

1802

7448

9654

5199

7755

9132

60 0

0965

347

1211

6932

8 05

533

9250

3636

77Ja

pan

2014

4023

8 45

227

8 44

183

1110

955

854

1037

700

9 85

033

508

50 3

2221

4890

225

785

205

754

Kor

ea–

––

1431

6017

1530

196

410

––

–13

4 23

013

3660

1472

30Lu

xem

-bo

urg

––

–17

6 51

615

6 64

415

9322

––

–15

6 58

918

0 79

111

7 43

6

Mex

ico

––

–10

8 71

798

520

1310

3922

424

4113

097

170

3630

1035

0977

4029

49N

ethe

r-la

nds

105

085

172

348

305

458

9560

2598

1 28

398

8550

68 6

9911

5756

243

730

586

069

606

956

6112

31

New

Zea

-la

nd33

2076

7660

6516

101

18 8

4319

019

8 06

525

728

2807

067

706

73 6

4181

358

Nor

way

1088

922

521

2293

718

8002

207

342

236

524

12 4

0419

836

25 2

8217

4 56

918

2 58

121

1764

33

Belgium and multinational companies

Out

war

d an

d in

war

d FD

I st

ocks

Mill

ion

US

dolla

rs

Out

war

d di

rect

inve

stm

ent

stoc

ksIn

war

d di

rect

inve

stm

ent

stoc

ks

1990

1995

2000

2010

2011

2012

1990

1995

2000

2010

2011

2012

Pola

nd–

539

1018

44 4

4452

849

5736

710

97

843

34 2

3321

5 63

920

3111

2351

13Po

rtug

al–

–19

793

6673

272

225

7125

3–

18 9

7332

043

1116

8511

1822

1171

49Sl

ovak

Re

publ

ic–

139

373

3334

4209

4412

–12

974

761

50 2

8351

290

5581

0

Slov

enia

–72

787

081

797

821

7387

–26

1732

7814

598

1515

715

467

Spai

n15

652

3103

712

9192

653

228

656

690

6356

0565

916

1102

9115

6 34

762

8 33

361

7031

6276

61Sw

eden

50 7

2073

143

1232

6037

2 95

537

6 67

740

2 78

212

636

31 0

8993

998

3471

6334

4100

378

344

Swit

zerl

and

66 0

8714

2 48

123

2176

1032

802

1063

132

1129

376

34 2

4557

064

8681

061

7703

6449

1266

5 59

6Tu

rkey

––

3668

2250

927

681

29 6

68–

–18

812

186

980

134

665

183

736

Uni

ted

Kin

gdom

2361

1833

0 66

592

3366

1626

819

1696

243

1793

240

233

305

226

626

4631

341

162

649

1 18

4 54

713

4182

7

Uni

ted

Stat

es61

6655

885

506

1531

607

4273

559

4663

142

5 07

7 75

050

5 34

668

0066

1421

017

2 62

3 64

628

7953

130

57 3

26

Euro

are

a–

––

––

––

––

––

EU 2

8–

––

9099

676

9 29

7 42

597

0088

0–

––

7569

970

7643

400

8034

994

OEC

D17

86 0

3027

36 7

5654

1073

616

8812

8717

680

184

1886

0133

1 46

0 88

821

3477

345

0169

813

104

535

1346

6932

1432

3 07

1Br

azil

––

–19

1349

2061

8727

0864

––

–68

2 34

569

5103

718

870

Chin

a–

––

3172

1042

4 78

050

2750

––

–15

69 6

0419

06 9

0821

5955

1In

dia

––

2609

9691

110

9519

1181

67–

–20

278

205

603

206

454

2263

70In

done

sia

––

–66

726

204

1239

4–

––

160

735

185

804

2119

00Ru

ssia

n Fe

dera

tion

–2

420

2014

136

6301

361

452

3872

17–

345

3220

449

0 56

045

4949

497

820

Sout

h A

fric

a15

010

2330

132

325

89 4

5378

473

–91

9815

014

43 4

5115

3133

134

350

–

Sour

ce, O

ECD

(20

13)

34


Figure 1.1 – FDI as a percentage of GDP.

Source OECD (2013)

Figure 1.2 – Trends in inward and outward FDI.

Source UNCTAD, own illustration

Alongside the inhibiting and attracting factors for FDI in Belgium, the international inte-gration of production has major implications for how employment is organized because of the way it contributes to workforce developments. Greenfi eld investment directly creates employment, but mergers or take-overs lead to employees being relocated or dismissed. MNCs also have an indirect infl uence on employment, with their presence infl uencing employment within suppliers, clients and services companies (e.g. trans-port, construction or security). In addition technology can be aff ected by MNC presence, as is also the case with working conditions, wages and employee relations systems. As there is little knowledge on MNC employment practices in Belgium, a representative survey on this aspect will thus contribute to increasing our knowledge thereof.

250

200

150

100

50

0

IDN

TUR

SVK

CHN

IND

CZE

MEX

NZL

POL

BRA

SVN

KO

RJP

NG

RCRU

SZA

FES

TA

US

HU

NIT

AIS

RU

SA PRT

CHL

CAN

OEC

DD

EUN

OR

ESP

AU

TEU

28FR

AFI

NG

BRSW

ED

NK

NLDIS

L

CHE

BEL

IRL

LUX

FDI stocksAs a percentage of GDP, 2012 or latest available year

Outward FDI Inward FDI

0

200000

400000

600000

800000

1000000

1200000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Trends in inward and outward FDI in Belgium

Inward FDI Outward FDI

Valeria Pulignano and Vickie D

ekocker THE EM

PLOYMENT PRACTICES IN M

ULTINATIONALS IN BELGIUM

This is the fi rst survey on employment practices within multinational fi rms (MNCs) in Belgium. It is based on a representative sample which covers both Belgian-owned and foreign-owned MNCs. The analysis is based on 194 face-to-face interviews with senior HR managers responsible for the Belgian operations of MNCs.

For HR managers this survey is a tool to benchmark the own HR policies with other MNCs. The survey reports on four HR domains: pay and performance, training and organisational learning, employee involvement and communication and employee representation. For each HR domain, HR managers can compare the presence of tools (i.e. variable pay, training programs, teams) and the discretion of Belgian subsidiaries.

Additionally, this book is of high interest for both academics and policy makers. It contains original and unique data concurring both to delineate the fi rm profi le (i.e. country of origin, size, sector, structure) and examining the factors shaping decisions-making within MNCs in Belgium. Overall this book remarkably addresses the knowledge defi cit around the study of the employment relations and human resource management within MNCs in Belgium to date.

VALERIA PULIGNANO is Professor of Labour Sociology and Industrial Relations at the Centre for

Sociological Research (CESO) at the University of Leuven. She is Associate Fellow at Warwick University and core researcher at the University of Montréal.

She is co-author of Flexibility at Work and of The Transformation of Employment Relations i n Europe. Institutions and Outcomes in the Age of Globalisation.

VICKIE DEKOCKERis a PhD candidate and teaching assistant at the Centre for Sociological Research

(CESO) at the University of Leuven. In her PhD, she focuses on employment practices within multinational companies in Belgium. Specifi cally, she studies the way the sub national level (regional government, joint committees and inter fi rm relations) shape

these employment practices.

9 7 8 9 0 3 3 4 9 5 5 6 4

THE EMPLOYMENT PRACTICES IN

MULTINATIONALS IN BELGIUM


In collaboration with Evelyne Léonard,

Marie Van den Broeck and Nadja Doerfl inger

Documents

The Employment practices