The globalization of the temporary staffing industry

1
The globalization of the temporary staffing
industry
Neil M. Coe School of Environment and
Development The University of Manchester, U.K.

• Seminar to the Department of Public
  Administration
• Korea University, 3rd February 2009

2
Outline

• Introduction the industry and the wider project
• Theorising the embedded transnational
• Territorial embeddedness and the multinational
  model in temporary staffing
• Complexity and variability in firm strategies
• Transnational agencies and the production of
  national staffing markets
• Conclusions

3
Geographies of Temporary Staffing Unit (GOTSU)

• Five researchers, four themes
• The globalization of temporary staffing
• National varieties of temporary staffing markets
• Temporary staffing agencies as mediators of
  migration
• Profiling the UK temporary staffing market
• New website
• http//www.sed.manchester.ac.uk/geography/research
  /gotsu/index.htm

4
Why temporary staffing?

• Large, fast growing, under-researched industry
  exhibiting strong internationalisation dynamics
• Complex and spatially variable expansion
  strategies
• Example of a particular kind of service sector
  TNC
• Economy-wide implications, as vectors of a
  particular kind of labour market flexibility
• Active agents of labour market change and
  processes of neoliberalization

5
Researching the Globalization of Temporary
Staffing

• Two year academic project (Sept. 2004 to Nov.
  2006) funded by the ESRC
• Research methodology
• The horizontal dimension identifying and
  mapping the global temporary staffing industry
  (top 20 transnationals)
• The vertical dimension embedding the global
  temporary staffing industry (Sweden, Australia,
  Japan and Eastern Europe)
• Semi-structured interviews conducted
• 25 interviews with 14 of the top 20 firms
  (including all top 8) at headquarter level and
  more since
• 59 case study country interviews with
  transnational firms, domestic agencies,
  government, labour unions and trade bodies

6
Top 20 Transnational Agencies, 2007
7
Global presence of the top 20 in 2005
8
The TNC as a network form

• Dicken (1994 106) TNCs as highly embedded
  interacting networks involved in competitive
  struggles in which a diversity of competitive
  strategies is used. Such strategies are,
  themselves, the outcome of contested power
  relations both inside the firm and, externally,
  with the constellation of institutions (including
  the state) with which TNCs interact.
• More broadly our approach is informed by a Global
  Production Networks (GPN) perspective that
  explores the power, value and embeddedness
  characteristics of transnational economic systems

9
The embedded firm, version 1

• Subsidiary embeddedness in host contexts (e.g.
  the Scandinavian school, Birkinshaw, economic
  geographers)
• Focuses on depth and quality of relations
  between inward investors and local
  firms/organisations
• The quality FDI debate enclaves and/or
  upgrading potential
• Corporate HQs and the limits to subsidiary
  control
• Weaknesses tends to focus on inter-firm
  relations, and sees inward investors as driver of
  firm-territory interface

10
The embedded firm, version 2

• Societal embeddedness and home country effects
  (e.g. Jacoby, Doremus et al., Yeung etc.)
• Organisational forms and practices shaped by
  regulatory environment of home country
• Distinct national paths of internationalization
• Transfers of industrial models and processes of
  convergence/divergence?
• Weaknesses prioritises home country
  institutional effects, and national over sectoral
  variations

11
The embedded firm, version 3

• Market-seeking FDI in service sectors
• Nature of host market (e.g. regulatory
  conditions, local competitors etc.) drives
  internationalisation strategies and shapes nature
  of territorial embeddedness
• 1. need to look at the far side of
  international business (Hansen, 2008)
• 2. need to look at internationalisation as a
  relational rather than atomistic process
  (Glückler, 2006)
• 3. complexity and variability of
  internationalisation strategies and processes
  (Faulconbridge et al., 2008)

12
The general model the multinational corporation

• In general terms, temporary staffing firms are a
  relatively simple form of transnational
  corporation conforming to the notion of a
  multinational organizational model
• Most key assets, responsibilities and decisions
  are decentralised and HQ-subsidiary relationships
  are concerned primarily with financial control
  and reporting
• Transnational agencies tend to run as
  decentralised federations management hierarchies
  tend to be fairly flat, and HQ operations
  relatively small, with marketing, IT and HR the
  key functions organised at a global scale

13
Temporary staffing as highly territorially
embedded

• Shaped both by the inherent nature of the
  business, and its geographically variable
  regulation
• Extensive office networks (especially general
  staffing)
• Candidate lists and local labour markets
• National patterns of labour market regulation and
  welfare provision
• National patterns of staffing industry regulation
• Strength and nature of local competition
• Strength and nature of local lobbying/resistance
  activity

14
Global contracts mixed messages?

• Yes we do operate global contracts and theyre
  always a challengewhat you need to manage is
  that you have different legal frameworks,
  different cultures... and different cost
  structures so with the global agreement weve
  always got to be very careful in terms of
  delivering the service, theres no compromise
• Definitely it is growing global contract
  business in some countries you would find that
  the global agreements would account for more than
  60 of their business, so its quite a growth area
  and what were striving for is not to lose the
  focus on ad hoc business where invariably the
  margins are higher because ad hoc is when
  somebody needs something urgently and then they
  will pay a premium for that, whereas the global
  agreement could be over three years
• If youve got different employment laws in
  different countries I dont see how it global
  contracting works in practice

15
Technological change slow to react?

• I think its something that were going have to
  sort of look at quite seriously. Our business has
  a lot to do with social trends as people become
  more familiar with doing stuff online, with
  having remote transactions, I think it will force
  this industry tothere will be offices, but I
  think it will be different You can start to see
  that happening increasingly candidates are able
  to pre-screening for jobs online and stuff, so
  the productivity in the branches goes up because
  weve got pre-screened candidates coming along,
  so its beginning to change
• If youd come into this industry 25 years ago
  and were looking at it today and trying to spot
  the difference I think youd actually find it
  quite difficult. I think you would find that
  there is more use of technology, though I dont
  think thats as widespread as it potentially
  could be and I think as an industry as a whole it
  probably hasnt changed as much as the market
  around us has changed - so what you start to seen
  now is the emergence of different types of
  competitors and you find an industry thats not
  actually sure of what to do about it

16
International placements a missed opportunity?

• Yes, Slovaks are willing to move, so that is
  what we are now planning and looking into
  bringing Slovak people into the Czech Republic,
  even temps. That is only just starting. Other
  companies have been doing that for some time
  already. Slovaks are willing to come here, as
  are some Polish people near the borders
• Cross-border work always interferes with the
  local market and there is always a dilemma.we
  saw it in the past with other countriesa dilemma
  between doing the cross-border which means you
  lose on the internal business because there is a
  risk of cannibalism as they call it. But if we
  dont take it, the competition will
• Issues regulatory/cultural barriers,
  transferability of qualifications, variability by
  segment

17
Strategy dimension 1 scope
18
Variations in office networks
19
Strategy dimension 2 FDI policy

• Different modes of market entry and subsequent
  growth greenfield/organic, acquisition,
  franchise (e.g. CDI) and Internet-based (e.g.
  Monster)
• Shaped by both complex intersection of firm
  strategy and host market conditions
• Highly variable in both space and time (e.g.
  timing of entry relative to competitors)
• In some markets, firms are driving development
  of the industry (e.g. Eastern Europe)
• In others, same firms are responding to local
  regulatory, institutional and competitive
  conditions (e.g. Japan, Australia)

20
Strategy dimension 3 varying degrees of central
coordination

• Federal
• Our decentralised management structure is
  designed to enhance communication and minimise
  corporate overheads. Local management retains a
  high degree of autonomy in the day-to-day running
  of their business including hiring, prices,
  training and sales and marketing. This enables
  them to respond quickly to market changes. The
  organisational structure stimulates an
  entrepreneurial working environment
• vs more centralised models
• Its strategy at the top, execution driven down
  and localized strategy, localize as it goes down.
  And when you have global customers, were
  different. We have to be different than other
  companies because we have 100 client companies
  and we do 70 of our business with them, and they
  demand a consistency across our enterprise...

21
Dynamic not static terms

• Increased centralisation, e.g. Adecco 2005-06
• All businesses under one name and moved to six
  global professional business lines (e.g. human
  resource solutions, finance and legal) and four
  global functions (e.g. finance, HR)
• Increased decentralisation, e.g. Kelly Services
  2006
• Implemented a new business structure designed
  around three regions the Americas, Asia-Pacific,
  and EMEA. Business leadership, sales, and
  marketing teams realigned to support this new
  structure and accelerate worldwide expansion.

22
Strategy dimension 4 varying degrees of
standardization

• Particularly in terms of branding and
  sales/marketing strategies
• We have an advantage, or disadvantage, our size
  disadvantage is actually an advantage because I
  can still execute a global sales strategy in a
  very orchestrated manner, whereas my bigger
  competitors struggle with that we are now being
  frequently told that we appear far more global
  than some of our much bigger competitors
• The brand needs to be flexible enough so that it
  can be relevant locally and needs to be able to
  reflect whats important in the cultures of the
  local market. But you need to have some
  linkagea global brand

23
Modes of national staffing regulation

• Mode 1 liberal industry regulation, liberal
  labour market regulation (e.g. Ireland, UK, US)
• Mode 2 liberal industry regulation, lightly
  regulated labour market (e.g. Australia, Czech
  Republic, Poland)
• Mode 3 liberal industry regulation, highly
  regulated labour market (e.g. Germany, Japan,
  Sweden)
• Mode 4 strict industry regulation, lightly
  regulated labour market (e.g. Belgium, Italy)
• Mode 5 strict industry regulation, strict labour
  market regulation (e.g. France)

24
Producing national temporary staffing markets
25
Key parameters of five national markets
26
(No Transcript)
27
Modes of transnational activity in making of
markets

• Different types of transnational presence in
  different national markets
• Market-making involved in the opening up,
  creation and institutionalising of national
  staffing market
• Market-mediating involved with other labour
  market institutions in the expansion of market
  size and scope
• Market-responsive range of domestic labour
  market institutions lead on the creation of the
  market, with transnationals responding to
  legalization/liberalisation
• Transnational agencies role in market
  construction is variable same firm can lead in
  one market, respond in another

28
Conclusions

• TNCs as the nodal points of and interface
  between two realms that of internationalization
  in global structures, and that of embeddedness in
  the domestic structures of national/regional
  political economies (Sally, 1994 162)
• Extending notions of the embedded
  transnational to look at market-seeking FDI
  heavily shaped by host market extra-firm
  connections range of labour market institutions
• National staffing markets made through the
  interaction of a range of actors and institutions
• In different national staffing markets
  transnational temporary staffing agencies play
  different roles