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Human Resource Development International,

Vol. 10, No. 1, 107 – 113, March 2007

Perspective on Practice

Future Trends of HRD in the Finnish


Pulp and Paper Industry
VILLE NURMI
Aamu Consulting Ltd, Finland

ABSTRACT The present article approaches the trends of HRD in the Finnish pulp and paper
industry. The recent two decades have introduced several major changes into this field of
industry. Technical breakthroughs have led to drastic changes in the competence requirements
of the personnel. On the other hand, the boom of mergers and acquisitions in this industry
segment has cut down the humber of corporations with world wide operations. Globalization
challenges the European labor market, social policy, vocational education as well as HRD
practices to develop high value jobs and competencies essential for survival in the labor cost
competition.

KEY WORDS: Pulp and paper industry, Finland

This article aims to describe HRD practices in a particular context and identify
future trends and challenges for human resource development (HRD) within the
Finnish pulp and paper industry. This is achieved by examining the changes in the
business environment, which are analysed in terms of organizational and job design,
and in terms of past, current and future trends in HRD. The article closes by
presenting challenges for future HRD research.
Even though the article focuses on HRD in pulp and paper industry, many of the
issues addressed here are as relevant in the other types of industry. In addition, this
particular industry is not limited to one nation, in this case Finland, as all the major
pulp and paper corporations are global.
The role of personnel is becoming more and more crucial for the success of the
companies in pulp and paper industry. That can be concluded especially in the
Western markets, where quality requirements are still on a considerably higher level
than in quantity-oriented low-cost continents. In Europe and North America, the

Correspondence Address: Dr. Ville Nurmi, Research Director, Aamu Consulting Ltd, Ketostenkatu 37,
FIN-33300 Tampere, Finland. Email: ville.nurmi@tamperelainen.org

ISSN 1367-8868 Print/1469-8374 Online/07/010107-07 Ó 2007 Taylor & Francis


DOI: 10.1080/13678860601170484
108 V. Nurmi

number of personnel has decreased simultaneously with increased production or net


sales. The competence needs are changing into a totally different area – from
mechanical controlling of a stable process line into mastering large-scale automation
systems. These changes create a growing need for a strategic human resources
function, in which HRD serves the major part (Bates and Phelan, 2002).

Changes in the Business Environment


The history of the Finnish pulp and paper industry as well as the history of entire
forest industry dates back to later half of the nineteenth century. Investors of
mainly foreign origin came to the sparsely inhabited country in order to start
sawmills, pulp mills and, finally, paper mills. Local captains of the industry did not
narrow their contribution to the business itself, but had a key role in formulating
the whole infrastructure of the neighbourhood. The industry owners funded
churches, schools, groceries and other basic services (Eerola, 1993a, 1993b;
Norrmén, 1928).
The progress towards larger global entities started in the 1980’s. First, the Finnish
paper companies formulated different types of alliances. When Finland became a
member of EU the common sales channels, such as FINPAP and FINBOARD were
not permitted anymore. After the national change from smaller family-owned
companies to continent-wide corporations was implemented, the same steps were
taken simultaneously in European and North American markets. United Paper
Mills-Kymmene and Stora-Enso represent those large-scale, worldwide companies,
which are among the top-five paper producers in the world and their top-
management is still Finnish. The intention in re-engineering larger entities was to
achieve higher effectiveness, productivity and cost-efficiency by centralized service
and administrative functions, better focused R&D, and improved competitiveness in
general. Larger size was not the only method in aiming to reach these targets. Other
actions included focusing on key businesses and competencies, and selling or
closing down marginal activities. In some cases, the mergers have aimed at
buying competitors out of the market, too. Globalization is not a trend realized only
in the pulp and paper industry. For example, in the twenty-first century there are
now only two major paper production process providers left in the engineering
business.
Even though the global forest corporations have operations on different
continents, they are in many cases national companies having operations abroad
rather than actual global firms. On the other hand, they respect the local culture and
do not transfer Finnish systems straightforwardly into totally different cultural
contexts.
Both current and especially future trends in the pulp and paper industry continue
focusing on the core businesses. The newer trend in the Finnish industry, and across
Europe, is the transfer of basic production and distant services (e.g. help desks) into
low-cost areas. However, this so-called China-phenomenon has not affected pulp
and paper as strongly as engineering or ship building industries. Overall, it is evident
that globalization will change societies worldwide. One solution would be to
combine local and global viewpoints and needs rather than just to resist the on-
going, evident change (Aarnio, 2004).
Trends in Finnish HRD 109

Changes in Organization and Job Design


Job design in the pulp and paper industry used to involve manual work, where the
operator had acquired the competencies mainly by rote learning. Actions in the
normal running situation were rather easily learned and finally even documented
into operational instructions, which were to become later elements of the quality
systems. More complex parts of the former paper production jobs were related to
those occupational areas where tacit knowledge was evidently required, such as
production shutdowns and quality control. In the traditional paper machine line,
there was a strict hierarchy in which several ladders of competency and number of
working years were required before it was possible to reach to the highest positions.
Workers had no formal vocational education due to the educational institutes’ lack
of machinery and knowledge of the specific industry. On-the-job-learning had a
crucial role in acquiring the professional skills and knowledge. Both experienced
workers and supervisors operated as internal trainers in the process. Paper
production processes are operated through automation systems in the modern
mills. Therefore, automation related skills have become a more remarkable part of
the process operators skill-set. Vocational institutes and automation system
providers have also gained a position in training paper mill employees.
In terms of personnel in the pulp and paper industry, there were three fragmentary
groups: workers, staff members such as shift supervisors, and senior staff/
management. Generally, these groups did not communicate any other way than
according to the line organization. Even today, there are strong differences between
different personnel groups. Shift supervisors particularly may have identification
problems (see Koivula et al., 2000); they tend to feel as if they belong to workers or
staff depending on which side is contextually the most beneficial for them.
Fragmented job design affected communication amongst employees. There was
hardly any endogenous co-operation within the production shift or between different
departments of the factory (Leppänen et al., 1996).
During the 1980s, the explosive increase of automation devices in the paper mills
started. Even though a number of analyses could be carried out with this new
technology in the production line, the need for human senses remained e.g. in the
visual quality control. Rote learning had ended as the main method of vocational
learning among the paper mill operators. The younger generation has not only
changed the learning of the occupations, but also the style of working in the
production line. They are familiar with various types of computer software, and are
able to learn new programs based on knowledge gained from the function of former
programs rather than learning every new system separately and repeatedly. Also
without the past experiences of orthodox hierarchy, the newcomers have been more
open to job circulation and team-based organization. In addition, jobs have been
redesigned in recent years with the introduction of preventive maintenance and the
combination of production and maintenance jobs (Leppänen et al., 1998; Leppänen
and Nurmi, 2002). However, not all the progress has been positive. For example,
there have been severe safety problems in the pulp and paper industry in the last few
years. One explanation for this is that most of the time operators monitor the
production in an air-conditioned control room. They do not have a routine to work
safely in extreme production room conditions, because they do not have experience
110 V. Nurmi

of that. In the past, the situation was different, as both monitoring and manual
operations were implemented in those extreme conditions (Norros and Leppänen,
2000).

HRD Trends
Until the 1980s, and in some companies even today, the HRD function equated to
traditional training. A company’s quality system required the counting and good
documentation of training days and mere measurement of reactions towards training
without further analysis of the data gathered. Further examples of a traditional
approach involved annual employee reviews among staff members and fragmentary
opinion surveys without further analysis or improvement actions. A more accurate
term for describing those activities would be ‘Training and Development’. Neither
the organizational perspective nor future orientation was involved (Gilley and
Eggland, 1989). Participation in external training was part of the unpublished
incentive plan rather than action based on careful career planning or individual and
organizational training needs analysis.
In several heavy industry companies, these practices are still the everyday reality of
personnel development. As a matter of course, some improvements have been
achieved. In the last few years, the focus of HRD has changed from external training
into on-the-job learning activities. In the process industry, it has been realized that in
most of the cases the best way to improve performance is to place the HRD actions
within the natural units e.g. work shifts. Developing some operators or supervisors
externally can improve their understanding and skills, but it cannot change the way
of operating and guarantee the performance improvement without the support of the
entire shift. Perhaps the strongest boom of team building has already passed. There
was a remarkable team-building boom in the 1990s in Finland. Almost all types of
companies intended to make improvements through team organization. Consultants
were eager to advise on these experiments and the media also made team building
its focus area. Gradually, there were more and more experiences with team-
organizations. Understanding that teams do not fit to every kind of purpose was
supported and discussed widely. Teams or working groups are appropriate models
for some but not all type of jobs (Leppänen et al., 1996).
The systemized learning of automation of the machines is evidently one of the key
focus areas of pulp and paper HRD (Nurmi, 2000). In many work places annual
employee reviews are extended from staff members to front-line workers. However,
there is only one area in which heavy industry companies have been able to realize
the aspiration of becoming a learning organization. The concept of learning
organization was the next booming development trend after team building. Peter
Senge’s fifth discipline (Senge, 1994) became well known among developers and
educators. As a matter of course, the concept lost its origin quite soon, and it was
applied with very different meanings than it was meant originally. The area where the
concept of learning organization has been applied fairly well is occupational health
and safety, particularly safety issues, where there has been much more investment
and experimentation in learning than in any other activity area. ‘Zero-accident’
programmes and practices to learn from others’ mistakes, i.e. close-out situations,
are widely known. This suggests that learning organizations may also be extended to
Trends in Finnish HRD 111

competence and organizational development. The law requires safety processes to


reach certain standards in Finland. A national governmental organization takes care
of its control. Perhaps individual and organizational development would need
similar recognition in the legislation in order to raise their importance. What if
companies with over 100 employees are required to have a learning manager, annual
learning plans and defined evaluation procedures? There has been quite serious
involvement towards improvement of safety issues in Finnish heavy industry
companies. First, companies made safety plans and followed them up because the
Finnish Law required it. Nowadays they have assimilated safety attitude profoundly
and its necessity is not questioned any more. The same may gradually happen to
HRD if it was legally required. First companies would fulfil the requirements
mechanically, but after a while, they would internalize the purpose and benefits of
such investment in personnel development. Even though it may first lead to quasi-
HRD in order to fulfil legal requirements, in the longer period of time both
companies and their personnel would gain from the legal intervention.
HRD has a challenge in convincing decision-makers to invest in personnel instead
of machinery. There are a few examples showing the evidence that fourth-level
educational evaluation (Kirkpatrick, 1986) is possible and can enhance HRD’s
situation in future prioritization of investment (e.g. Seppänen, 2003). The dilemma
in implementing versatile HRD programmes in quarterly oriented stock-rated
corporations is that they are relatively expensive, and their goals cannot be
discounted in the short run. It can be difficult to legitimate resource-consuming
HRD programmes in public companies if the expected impacts are not visible or
identifiable in the short period. In long-lasting programmes, the development
objectives could run out-of-date several times. In addition, the speed of change in
organizations makes it difficult to provide up-to-date useful and easily adaptable
results or learning outcomes.
In the near future, several issues require careful consideration in the pulp and
paper industry. Competitiveness will not be secured by outsourcing, lowering
personnel costs, transfer of production and other actions leading in the worst case to
the downsizing of the corporation. Personnel should be encouraged to take more
initiative. They need to acquire deeper understanding of the entire business and
supply chain including financial factors of their own work. The HRD function has a
fundamental role in formulating and facilitating these improvements.
HRD literature is often positive and encouraging without critical analysis of the
described models and methods. This problem may also be thought to concern HRD
practitioners. If HRD is not included within the other personnel function or it is not
given a strategic role, its prospects are not very encouraging. In some cases,
developers are seen as dreamers without any business understanding and without
real influence to the success of the company. Several challenges have to be addressed
before development can take place – and circumstances will probably never be
perfect for developmental work.

Future Challenges
The future challenges companies, government and the HRD research community.
The Nordic welfare society needs profit-making companies and their personnel to
112 V. Nurmi

maintain high tax income. Employers’ social costs of the work force cannot be
lowered significantly. However, if some action is not taken, the industry will continue
moving its operations elsewhere. Soon this will not only affect basic production. In
pulp and paper this progress is fortunately slower, because of the size of the
production units, i.e. transfer of a paper production line is complex and expensive.
Yet, if Europeans are not able to prove their superiority, e.g. in terms of innovations
and new production models, more operations will be transferred to Asian countries
with lower employee costs.
Better and continuous co-operation between industry members and educational
policy makers is needed for future success. Educational institutes, i.e. universities, are
rewarded by the amount of graduates. Polytechnics and other colleges should gather
more knowledge about the labour markets and consider the employment of their
students as the first priority. Companies and their unions also need to be active in this
mutual discussion. One example of insufficient co-operation was the decision to stop
technician/technical education in Finland. The industry still had a need to attract and
employ shift supervisors, but government officers decided to end educational
provision at the level between workers and engineers. As an example of a response
to this action, the Finnish steel company Rautaruukki has started its own supervisor
programme, which provides a formal vocational certification for participants. The
Finnish National Board of Education is the monitoring body of the programme.
Future research in HRD needs to give up its HRD-specialist viewpoint. The
multiple viewpoints of stakeholders are needed in order to acquire deeper under-
standing of the organizational practices, not only HRD actions taken (Nurmi et al.,
2000). In Finland, there is a rather strong tradition to study all members of the
company. This is an advantage in comparison to the American HRD tradition,
where experts and managers are generally the only empirical research target. This
assumption is based on several years of observations of conference proceedings and
journals in the HRD field. HRD research also needs to give up the black-and-white
struggle between positivism (see e.g. Ellinger et al., 2002) and naturalistic construc-
tivism. There are needs for different views and for multiple methodologies. Overall,
the HRD field needs to overcome its focus on single programmes or the effectiveness
of a specific development method. Its vision should rather be analyzing and
understanding ‘real’ life as it is. Some kind of on-the-job research, where actions,
programmes and personnel are studied in their natural entities, would be the focus of
a future research agenda. There have already been some efforts towards this
direction, but it will require much more focus in order to gain material for general
discussion and analysis. This also supports the idea that development is seen and
studied as a continuous life cycle, not as a snapshot event.

Conclusions
This paper has described and analysed changes in the paper and pulp industry in
Finland, and considered the implications for HRD. Given globalization, these
findings could also be transferred to other similar industries, such as heavy
manufacturing, and to other countries beyond Finland. There are challenges for
HRD to develop internal relationships with HR and other organizational members
to enhance its credibility and attract investment. Here are also challenges to develop
Trends in Finnish HRD 113

external relationships with national governments and providers of vocational


education to ensure formal learning and development programmes remain relevant
to indigenous, and increasingly multi-national, industries.

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