Workforce Mobility using the example of the Solvay Group

Human Resource Management


Term Paper, 2009
13 Pages, Grade: 1,5

Excerpt

Index of contents

Table of figures

1. Introduction

2. Types of labor mobility and overview of its determinants

3. Flexible workforce mobility – one Tool to increase company productivity plus retain “high potential”

4. The Solvay Group
4.1. Talent management
4.2. Workforce mobility – overview
4.3. The workforce mobility process and its improvements
4.4. Challenges

5. Conclusion

6. List of literature

Table of figures

Illustration 1: Workforce mobility index for key countries

Illustration 2: GNP for all surveyed countries

Illustration 3: Solvay HR directorate

Illustration 4: Changes in length of international assignments

1. Introduction

Today’s business world is in many ways different as it used to be 40-60 years ago. One of such dissimilarity concerns the staff turnover. Whereas in the 1950’s, 60’s and 70’s many employees used to work their entire life in only one or two companies the employment culture changed drastically to this day in this regard. Nowadays enterprises have to deal with (early) retirement issues form the so called baby boomer generation and beyond this it is much more common to change workplaces every few years too. Present figures underline that the annual 2005/06 voluntary turnover rate for the US was circa 23.4% which was an increase by 0.7% from the previous year.1 Although this high value might be specific to the US, another survey identified this rate for the UK in “old Europe” still to be 17.3% in 2007.2 These numbers are especially for companies worrying because each job change also means a loss of money.

Including the direct costs (e.g. recruitment, selection and training) as well as the indirect ones (e.g. loss of expertise, increased workloads for colleagues plus morale effects on employees) researchers estimate costs between 30% of yearly salary of entry-level staff and up to 400% for high-level employees.3 Since the impact for firms seems to be significant it has to be their goal to minimize the potential turnover causes. Regarding the UK survey the key ones are change of career (55%), promotion outside of organization (45%), level of payment (41%) and lack of career opportunities (33%).4 The good thing is that based on a US study the majority of asked business executives, namely over 80% in 2008 against 41% in 2007, realized the top priority of employee retention and its effect on the company overall performance.5

One firm that was always not as strongly affected as others from high staff turnover but still suffered from it is the Solvay Group. Due to its growing international strategic orientation, the enterprise underwent a restructuring process until 2007 and managed in this course to improve one of the key retention aspects, namely its workforce mobility program. In line with the homonymous human resource issue, the author will initially state the different mobility types including their determinants. After emphasizing the close link between the retention tool of talent management and international mobility including current survey data it will be analyzed how successful Solvay uses its expatriate program to gain a competitive advantage.

2. Types of labor mobility and overview of its determinants

When talking about mobility in a human resource context the author refers to labor mobility. What exactly does this term mean? According to a definition found online it stands for:

“Extent to which the workers are able or willing to move between different jobs, occupations, and geographical areas.”6

From this specification three types of mobility can be deduced. The employees might want to change their job, meaning to work for a different company, switch occupation which relates to a change of job title or finally move to another country. On top of that it is possible to distinguish between horizontal (no status change) and vertical (status adjustment) movements. The classification described closely matches the one learned in class except for the terminology. The professor differentiated between external (leaving the company) and internal movements with the sub category options of “job evolution”, “job scope restriction”, “lateral move”, and “international expatriation”.

After looking at the different categories of voluntary mobility it is also interesting to get a brief overview of its major determinants. Reasons why people chose to go for change can be diverse and include structural factors like more job alternatives, higher wages, gender compositions, employment related policies, legislation periods or industry growth. Furthermore, personal related factors like extraversion, the desire to experience new cultures, conscientiousness against oneself or third parties as well as the will to move up the career ladder to reach certain status and success play an essential role.

For the purpose of this paper the focus will lie on international mobility brought on by the personal motivation and the goal to advance within an organization.

3. Flexible workforce mobility – one Tool to increase company productivity plus retain “high potential”

As already mentioned the attraction but more importantly the motivation and retention of talents is challenging for many firms, especially nowadays with the different employment culture as well as the very dynamic high potential landscape that is increasingly globally competitive and expensive. With reference to a survey more than 60% of 725 asked Human Resource professionals stated that the “war” for talents increased to a high or very high degree in 2006 and 2/3 of the interviewees also underlined that the costs of finding plus keeping these very valuable employees rose radically.7 This development also contributed to a general rise in labor costs in many key economies. For instance, the annual percentage changes of labor costs in Germany, France plus the US were +2%, +3.2% and +3.3% for 2006 and +2.5%, +2.9% and +2.6% in 2007.8 Due to the rise of such workforce expenses as well as the fact that organizations are facing plenty of global rivalry in their field of activity it is vital for them to operate very efficiently and to increase productivity. No matter how they cope with the issue under no circumstances can they afford to lose top performers. Managing flexible workforce mobility is one key to acquire or strengthen a competitive advantage. Why?

As a brand new study disclosed there are signs of a positive correlation between the willingness of companies from different countries to foster and support flexible (inter)national labor mobility and the countries overall workers productivity level. On the basis of seven questions dealing with the relocation of employees to other offices a mobility index could be calculated to compare some countries in that respect.9

Illustration 1: Workforce mobility index for key countries

illustration not visible in this excerpt

Source: Jones, Ross; Berggren, Erik (2009): Workforce mobility drives productivity and more agile cost structures – an international perspectives, SuccessFactors Research, p. 6: found on http://www.hci.org/hci/hci.home, accessed 11.04.2009.

Illustration 1 clarifies that many of the 788 interviewees from different companies in those countries emphasize to receive adequate support with workforce mobility issues. Two countries stick out, firstly Sweden as firms there seem to provide extensively more help in this regard and France with companies lacking in (especially national)10 mobility assistance. Having this measure is good but only when linking it to the countries (hence its companies) productivity performance within the Gross National Product (GNP) measurement the connection between labor mobility efforts and a productivity increase will become clearer.

Illustration 2: GNP for all surveyed countries

illustration not visible in this excerpt

The numbers are scaled to the average of all 27 EU countries (EU = 100)

Source: Jones, Ross; Berggren, Erik (2009): Workforce mobility drives productivity and more agile cost structures – an international perspectives, SuccessFactors Research, p. 17: found on http://www.hci.org/hci/hci.home, accessed 11.04.2009.

Although six out of the eight countries signal a decrease in individual productivity it can be noted that besides other factors too, workforce mobility seems to have an impact on workers’ productivity. Sweden, which had a high mobility index, also has a significantly higher GNP rate than France in 2008 whereas France with the lowest mobility rate scores lowest with the GNP value too.

When companies use flexible workforce mobility the firms’ productivity level rises because in the ideal case it ensures that the best people for a specific job can work wherever they are globally needed. This in turn gives mainly talented people the recognition and freedom they are nowadays looking for. It as well improves the talent recruitment and guarantees a high level of productivity of high potentials. Both parties benefit and even when taking the higher cost for expatriates into account they are by far lower than the expenses needed to recruit new highly skilled people. In the end mobility support being it on a national or international level pays off and gives a competitive advantage over rivals in the world. In the next section the author will describe how the Solvay group deals with this affair and how it affects the organization.

[...]


1 http://www.nobscot.com/survey/index.cfm, accessed 10.04.2009.

2 Chartered Institute of Personnel and Development (2007): Annual survey report 2008, Recruitment, retention and turnover, p. 3, London: found on http://www.cipd.co.uk/NR/rdonlyres/BE3C57BF-91FF-4AD0-9656-FAC27E5398AA/0/recruitmentretentionturnover2008.pdf, accessed 10.04.2009.

3 http://www.webpronews.com/expertarticles/2006/07/24/employee-retention-what-employee-turnover-really-costs-your-company, accessed 10.04.2009.

4 Chartered Institute of Personnel and Development (2007): Annual survey report 2008, Recruitment, retention and turnover, p. 25, London: found on http://www.cipd.co.uk/NR/rdonlyres/BE3C57BF-91FF-4AD0-9656-FAC27E5398AA/0/recruitmentretentionturnover2008.pdf, accessed 10.04.2009.

5 http://www.recruitingtrends.com/online/news/871-1.html, accessed on 10.04.2009.

6 http://www.businessdictionary.com/definition/mobility-of-labor.html, accessed 10.04.2009.

7 SuccessFactors Research, BPM Forum, and the Human Capital Institute (2007): Performance & Talent Management Trend Survey – 2007: found on http://www.successfactors.com/docs/2007-TM-Trends.pdf, accessed 11.04.2009.

8 Jones, Ross; Berggren, Erik (2009): Workforce mobility drives productivity and more agile cost structures – an international perspectives, SuccessFactors Research, p.8: found on http://www.hci.org/hci/hci.home, accessed 11.04.2009.

9 Supporting relocation to other offices within country; Supporting relocation to other offices in other countries; Supporting work from home; Frequency of required (and unwanted) relocation of workers; Frequency of loss of high performers due to not being allowed to relocate; Frequency of inability to hire top recruits because of undesirability of office Location; Importance of worker willingness to relocate for career development

10 The study reveals that especially companies in France do not support the idea to let staff work from home. This is the main (but not the only) reason why the mobility index score was lower than the one from other countries.

Excerpt out of 13 pages

Details

Title
Workforce Mobility using the example of the Solvay Group
Subtitle
Human Resource Management
Grade
1,5
Author
Year
2009
Pages
13
Catalog Number
V134005
ISBN (eBook)
9783640405985
ISBN (Book)
9783640775071
File size
588 KB
Language
English
Tags
HRM, Solvay, Workforce Mobility, Personalwesen, Human Resource, Talent Management, Mitarbeiterführung
Quote paper
Christian Baumann (Author), 2009, Workforce Mobility using the example of the Solvay Group , Munich, GRIN Verlag, https://www.grin.com/document/134005

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