Analyze and discuss what training and development initiatives Dane Furniture can develop and implement to better prepare expatriates from Head Office to adjust to local conditions and perform more effectively in subsidiaries in Japan and Argentina.

Case: DaneFurniture Ltd.

Dane Furniture is an old Danish luxury design and furniture company. Initially, the company made furniture for “the people” well designed and of high quality. Over a period of almost 100 years DaneFurniture kept on growing, thus delivering several generations of quality furniture for the Danes during the 20th century. The big breakthrough for Dane Furniture came in the 1950s and 1960s, when the company became internationally recognized and known for: its high quality wooden chairs and sofas, designed by a new group of designers, architects and wood carpenters, as well as its innovative steps regarding steel products and other new materials such as plastic and synthetic material. At that time, Dane Furniture started its internationalization through the establishment of sales offices around the globe, although it kept production within Denmark for many years.
Today, Dane Furniture has retail activities in most major cities across the globe. It has more than 65 years of successful international activities, and it has accumulated many experiences of how to manage an international workforce. A major lesson is that DaneFurniture needs to stay loyal to its basic values – high quality and good design – controlled from the centre, combined possibly with a local approach when it comes to HR-issues.

Initially, the strategy of DaneFurniture was to sell its products to private households, but gradually the company experienced an increasing demand from institutional customers such as public organizations, large companies and airports. Thereby they were dealing with larger production series and orders and this market of institutional customers was for a long time very profitable for the company. Today, the company has a foot in both camps: both high-end consumers and institutional customers. The senior management team believe that it is the safest strategy in the short to medium term. The majority of the DaneFurniture products are sold in some key, large markets abroad, mainly in the other Nordic countries, Germany, South Africa, China and Japan, and more recently Spain, Argentina, Russia, Mexico and UAE are newly established ‘high potential’ emerging markets. So far, the model used by DaneFurniture has been to keep production in Europe, combined with a group of so-called “local ambassadors” who own and manage “DaneFurniture shops” in various parts of the World in conjunction with an expatriate manager. There are only very few examples of designer chairs or tables, which can be bought in shops other than DaneFurniture’s, and shop owners have to go through a quality test in order to be able to sell DaneFurniture products. This way, the control over the global retail network is quite high.

The key organizational strategies of DaneFurniture are mainly developed by a core group of six senior executive-directors at the headquarters, including the IHRM-director. However, not all initiatives come from the top management; some ideas are born elsewhere in the organization, in particular amongst the large number of middle managers, approximately 40 people, who are located in different sections of the headquarters. All ideas and initiatives are discussed amongst the six executive-directors before they are adopted. Thus, the role of the IHRM-director varies from taking part in the discussions from the very beginning to being an “advisor” later on in the process. The IHRM-director, who has been recently appointed as a result of low numbers of women employees at all levels in the organization, can veto if she is opposed to a particular initiative. All policies on international employee aspects are formulated in and prescribed by the central HR-department in the Danish headquarter, whereas local practices may differ.

On this basis, DaneFurniture has spread its risks and produced a continuous growing revenues. However, recently the financial results have been under pressure from a very high cost level in Denmark and during the last year, it has been a major challenge to retain the existing level of revenues. As the company has a high level of wages for all categories of employees this has made it difficult for DaneFurniture to produce at competitive prices. As the result, the company has decided to accelerate the outsourcing and offshoring of production and sales activities and the CEO launched a major round of layoffs in late 2008 (mainly in the Danish production units) along with a new performance-based pay system.

With the global economic crisis starting in August 2008, the HR function in DaneFurniture experienced a very strong shift in focus, according to the IHRM-director: “Five years ago, we put a lot of effort into the attraction and development of international employees from local subsidiaries. First and foremost, acquiring of new employees and ‘ambassadors’ and integrating them into the company. And then over the last three years we have followed a strategy involving fewer head office employees while still maintaining a reduced cadre of international managers (expatriates) who are our key links into the local subsidiaries”.

Many of the HR tasks in DaneFurniture have been decentralized for a long time and it is the local managers, in concert with the IHRM-manager and the expatriate managers assigned to oversee the local subsidiary, who decide on recruitment and selection, retention, training, development and employee termination. This ensures that there is a transparency and common frameworks, guidelines and policies. Thus, Corporate HR works with overall policies and values and in conjoint with expatriate subsidiary managers and local managers, communicates these policies and values to the local shop employees. HR markets corporate values, e.g. by writing stories with a particular message (what market conditions are you facing, what is the position of DaneFurniture, what are the new initiatives and products) and convey these through an intranet and a monthly published magazine addressed to customers/employees. Importantly, the HR tasks have not been outsourced: expatriate and local managers and Corporate HR perform all tasks in cooperation.

Of new initiatives, HR-function has made a commitment to employ more female employees at head office and local level, a global performance-based pay system as well as an annual job satisfaction survey and a “support-measurement” system (how do the other departments experience the cooperation with the individual units – are they easy to work with?).

In the future, the company will focus on cooperation and the well-being among managers and employees globally, and the overall goal is to get a more competent and efficient workforce. With regard to education and competency development, this is also an area where DaneFurniture wishes to make some changes. Feedback from a recent staff survey suggests that expatriates believe they are not well prepared for assignments in many of the global subsidiaries. Corporate HR are concerned with the number of expatriates experiencing long term adjustment issues and underperforming in subsidiary roles. This has impacted on the expatriates effectiveness in working with local managers and staff generally, as well as developing and implementing new initiatives and relevant training.
Question 3:
Analyze and discuss what training and development initiatives Dane Furniture can develop and implement to better prepare expatriates from Head Office to adjust to local conditions and perform more effectively in subsidiaries in Japan and Argentina.
Question 4:
Looking at the future global performance based pay system, which cultural and institutional aspects should DaneFurniture take into consideration before implementation, in the following markets: Russia, South Africa and Mexico.

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