TITLE

Effectiveness of International HRM Practices at Nokia

INTRODUCTION
This proposed research is an effort to compare and contrast the practices of Fin
land based telecom giant, Nokia in the field of international human resource man
agement (IHRM).
The globalization of business is forcing managers to grapple with complex issues
as they seek to gain or sustain a competitive advantage. Faced with unprecedent
ed levels of foreign competition at home and abroad, firms are beginning to reco
gnize not only that international business is high on top management’s list of pri
orities but that findings and nurturing the human resources required to implemen
t an international or global strategy is of critical importance. Effective human
resource management is essential, especially for small and medium firms where i
nternational expansion places additional stress on limited resources, particular
ly people.
The research would focus the HR practice of Nokia in the fields of development o
f multicultural workforce, management of performance and rewards, and looks into
the ethical issues faced by the company in the context of international HRM. Th
e analysis will also be based on the comparison of theory with the company pract
ice in each topic.
Importance of the research
The rapid growth of internationalization and global competition has increased th
e number and significance of MNCs in recent years, resulting in the increased mo
bility of human resources (Black et al., 2000). The success of these global busi
ness companies depend most importantly on the quality of management in the MNC.
The effective management of human resources is increasingly being recognized as
a major determinant of success or failure in international business (Black et al
., 2000)
Shortages of international managers are becoming an increasing problem for inter
national firms (Scullion, 1994)
Importantly, IHRM issues are becoming increasingly important in a far wider rang
e of organizations partly due to the rapid growth of small and medium-sized ente
rprise internationalization and also the emergence of ‘micromultinationals’ in recen
t years (Dimitratos et al., 2002).
Recent researches suggests that growing number of cross-border mergers and acqui
sitions has further increased the strategic importance of IHRM ( Doz and Hamel,
1998; Schuler et al., 2004)
Last but not least, the problem of how to internationalize the HRM function itse
lf has been identified as a major issue facing international organizations, and
it is seen that same HR policies will not produce the same effects in different
country contexts.
The huge Finnish telecom company, Nokia is the world’s biggest cellular phone manu
facturer in the international electronic industry. Nokia was established in 1865
as a forest industry company, since then the company has climbed a long way, bu
t has still remained under private ownership. Mr. Jorma Ollila became the CEO in
1992, who then took the company’s current strategic direction. The company s prod
ucts are divided mainly between four divisions: mobile phones (wireless voice an
d data devices for personal and business uses), multimedia (home satellite syste
ms, and mobile gaming devices), networks (wireless switching and transmission eq
uipment used in carrier networks), and enterprise solutions (wireless systems fo
r businesses).
Currently Nokia has more than 50,000 employees, 16 factories in nine countries a
nd research and development facilities in 11 countries. These facts make Nokia a
truly global company.
The company has reached 40 percent share of the global handset market along with
the industry leading profit margins of 20 - 25 percent. The core reason behind
the company’s growth is Nokia’s people policy. Analysts like Pollitt (2004) have cla
imed that the company’s people policies stems from Nokia ‘Employee Value Proposition’,
which according to company’s Corporate Social Responsibility Report is described
as “a concrete employment offering for each employee from the very first Nokia day
onwards” (Nokia, 2004, 2003).
Nokia is one of the most successful multinational enterprises. It is the largest
cellular phone manufacturer in the world. Major business of Nokia is in the fie
ld of wireless and wired telecommunications. Nokia have 112,262 employees in mor
e than 120 countries, sales in more than 150 countries and global annual revenue
of 51.1 billion euros and operating profit of 8.0 billion as of 2007. (Annual R
eport, 2008). Nokia’s global device market share was about 39% in Q1 of 2008, up f
rom 36% in Q1 2007 and down from 40% in Q4 2007 (http://www.nokia.com/2008/Q1/in
dex.html). Major products of Nokia is mobile handsets for every major markets, i
ncluding GSM, CDMA, and W-CDMA (UMTS).
Nokia have good R&D department, Production and sales department in many countrie
s throughout the world. In March 2008, Nokia had R&D centers in 10 countries and
employed 30,415 people in research and development, representing approximately
27% of Nokia’s total workforce.
Nokia Market share

RESEARCH AIMS AND OBJECTIVES

It has been established that inductive approach to research is particularly conc
erned with the context in which the events are taking place (Cooper & Schindler,
2006). Therefore an inductive qualitative approach is considered appropriate. T
he inductive approach is more flexible and appropriate for the topic of this res
earch. Instead of hypothesizing, basic aim and research objectives has been set
out for this proposed research. The basic aim of the proposed research is to pro
vide a comparative analysis of the HRM practices adopted by the multinational mo
bile giant company, Nokia.
The research objectives for this proposed project are:
• To determine the strategy of Nokia on how to develop a multicultural workforce o
f its employees who are working in 45 different countries around the world.
• To estimate the degree of international human resource management practices and
processes used by the Nokia.
• To determine the strategy of Nokia on how to measure performance of its expatria
tes and thus rewarding them according to their results.
• To evaluate the strategy of Nokia for handling the various ethical issues it fac
es in different countries.