LEADERSHIP MATTERS

BY Antoinette Blunt, MPA, CHRP, SHRP

 

FOREIGN OWNERSHIP: HR’S ROLE

Company ownership and management is in transition in many companies across Canada. Increasingly, foreign companies are buying Canadian firms and this is not likely to change— especially when the federal government is actively encouraging foreign investment.

The most recent numbers from Statistics Canada show that between 1999 and 2006, the number of foreign-owned enterprises in Canada jumped to 8,321 from 7,310. During the same seven-year period, assets under foreign control have increased to $1.2 trillion from $728 billion.

Foreign owners—even Americans, who represent most foreign ownership in Canada—come to Canada with an understanding of the legalities of owning a business here, and bring their own culture, work ethic, workplace values and management style. But what they may not bring is a solid understanding of Canadian culture and work ethic.

With this change on Canada’s working horizon, and the potential chasm of understanding and clash of values, human resources can play a critical role in ensuring that both sides can work together. As HR professionals, we can become the bridge between foreign owners and Canadian employees.

Building bridges

Though recent studies, including one from Industry Canada, have shown that multinational companies are often productive and high-paying relative to their competitors, there are many pitfalls. Even organizations that understand the host culture can become dysfunctional due to ineffective communication and relationship management. Language is one consideration, but more important is mutual understanding. New managers from another country must teach Canadian HR professionals about their work ethic and workplace values. And HR must educate new management on the Canadian side of that coin.

The issue of how work is valued is a big one because it varies from country to country. In North America, the value of work and what we pay for it is significantly higher than in many other countries. That can be challenging for Ontario companies with foreign owners who have businesses in other countries where labour costs may be significantly less. As Dr. Greg Baiden, a professor of robotics and mining at Sudbury, Ont.’s Laurentian University, points out, productivity in these countries may also be considerably higher.

Labour relations

In terms of labour relations, companies are taking a tougher stand in contract negotiations. The Ministry of Labour’s dispute resolution services reported in 2008 that wage increases were at two per cent, down from 2.9 per cent in 2007. In some companies, foreign owners are looking for concessions with unions because of high labour costs and economic slowdown. The union response has not been positive. But both sides must understand the impact of that decision. If the Canadian workers draw a line in the sand, will these companies leave? If so, where does that leave us?

On that front, Dr. Baiden thinks HR must learn to manage expectations on both sides because the way things are going, in many fields, there will be wage drops or freezes. He agrees that HR has to be aware of the cultural differences between Canada and the countries that are investing here.

For some time now, our focus has been on integrating foreign workers into Ontario workplaces. HR can play a strategic role in the future if we understand the differences in foreign ownership and make ourselves a conduit for smooth operations.

 

This article first appeared in the October/November 2009 issue of HR Professional magazine.

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