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First comprehensive survey of multinational companies (MNCs) in the UK

25.07.2007
The largest survey of employment practice of multinational companies (MNCs) in the UK yet undertaken has just been completed, and as well as key findings, provides a detailed profile of MNCs in the UK today. Funded by the Economic and Social Research Council, the survey was undertaken by a team based at King’s College London, De Montfort University's Leicester Business School, and Warwick Business School.

Some of the key findings of the UK survey:

• On Human Resource (HR) issues: Having an international HR management structure makes a key difference to employment practice among the ever-increasing number of MNCs with operations in the UK. The existence of structures such as an international HR policy committee, regular cross-border international networking amongst HR managers or international monitoring of a range of HR data has a strong and consistent link with many aspects of employment practice. The impact of such international HR structures is particularly felt in policies on pay systems and performance management, and in promoting organisational learning and the diffusion of innovative practices across national borders.

• On UK influence: In a significant proportion of firms the UK operations appear to play a significant strategic role in that they have international responsibility for products and services, and that they are responsible for significant expertise in R&D. In just over half (52%) of overseas-owned firms, UK operations have an international product or service responsibility. The development of a practice in a subsidiary of an MNC and its adoption elsewhere in the firm is extensive. 61% of UK subsidiaries of overseas-owned firms have provided new HR practices for the rest of the firm.

• On structure of firms: Relatively few MNCs are characterised by a straightforward hierarchical relationship between HQ and operating units. Instead, in most MNCs there are intermediate levels within complex, multi-layered corporate structures.

• On control over employment policy-making: UK operations have quite a high degree of freedom to manage their own employment policies and practices. However, their freedom is less for issues affecting managers and certain areas such as pay. In addition, the subsidiaries of US multinationals have less freedom than those of other nationalities.

• On pay: Almost all firms pay their employees at or above the median for their sector. UK operations where unions are recognised are more likely to pay above the median.

• On employee representation: Non union representative arrangements exist in one in three multinational operations in the UK, a proportion that has doubled in the past three years. This indicates significant innovation in UK employment relations by multinationals.

The survey is the first to be based on a representative sample of MNCs in Britain. It gathered responses from 302 firms covering both overseas-owned and UK-owned firms who have at least 500 employees worldwide. In addition, at least 100 employees had to be based in the UK for overseas-owned MNCs, and at least 100 employees in another country for UK-owned MNCs. Analysis is based on extensive face-to-face interviews with senior HR managers responsible for the UK operations.

Parallel surveys have already taken place in Canada and Ireland, and others are under way or planned in Spain, Mexico and Australia.

The survey examines three key aspects of MNCs in Britain:

•the strategy, structure and control mechanisms of companies;
•the structure and role of the HR function;
•four areas of employment practice:
-performance management and reward systems;
-learning, development and international diffusion of knowledge;
-employee involvement, including teamworking and communication;
-employee representation and consultation,
The survey asked about practice for three workforce groups:

1) managers;
2) the largest occupational group (LOG) among non-managerial employees; and
3) key group (KG) of employees critical to a firm’s core competence.
The authors state that 'this is the first comprehensive survey of employment practice ever undertaken in multinationals operating in the UK.'

Diana Holton | alfa
Further information:
http://www2.warwick.ac.uk/fac/soc/wbs/projects/mncemployment

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