5.

2 Case 2 - Atlas Copco

5.2.1 Company Background
Atlas Copco Group is a world leading provider of industrial productivity solutions. In close
cooperation with its customers, Atlas Copco fulfils its mission to innovate for superior
productivity. Products and services offered include generators, industrial tools and assembly
systems, construction and mining equipment and compressed air and gas equipment as well as
related aftermarket service and equipment rental. The Atlas Copco Group was established in
1873 and is a global industrial group of companies headquartered in Stockholm, Sweden. In
2006 the company’s global reach spans more than 150 markets, with its own sales operations in
more than 70 countries. Products are sold and rented under different brands through a worldwide
sales and service network reaching 150 countries, half of which are served by wholly or partly
owned customer centers. Atlas Copco has more than 50 production facilities in 20 countries.
Manufacturing is mainly concentrated to Belgium, Sweden, the United States, Germany, France,
and China. In 2005 revenues totaled BSEK 53 and the company employed 27 000 employees.

The Atlas Copco Group operates through a number of divisions within three main business areas;
Compressor Technique, Construction & Mining Technique and Industrial Technique. The vision
of Atlas Copco is to be a leader in each one of those. Their vision is supported by the Group’s
values which are interaction, commitment, and innovation concluded in their company slogan
“First in mind – First in Choice™”. The Group has three overall strategic directions which are;
organic and acquired growth, innovation and continuous improvements and strengthened
aftermarket activities consisting of accessories, consumables, parts, services, maintenance, and
training. Atlas Copco has strong global market positions and is a market leading actor in most
segments where it offers products and solutions. Hence the company concentrates on
strengthening its position within segments where they are already strong and have core
competence. Within segments where they do not hold a market leading position and the possible
risks of getting there exceeds benefits the company chooses to withdraw their operations within
that area.

A telephone interview with Sara Fredin, Human Resource Professional at Atlas Copco
Construction Tools was held to achieve our research purpose.

5.2.2 Atlas Copco’s IHR Strategy

Atlas Copco works actively with Human Resource Management which they refer to as People
Management. The HRM department works heavily in cooperation with the communications
department in maintaining and developing Employee Brand. The company consider themselves
as an innovating MNC who meets and exceeds high expectations and sets standards. It is their
belief that there is always room for improvement and the innovative spirit is a vital part of Atlas
Copco Group’s identity and way of conducting business. Their vision of being First in Mind –
First in Choice™ should be reflected internally as well as externally.

Atlas Copco recognizes the major challenge of coordinating the economic, environmental, and
social dimensions of a multinational corporation. The economic challenges are to continue to
develop and distribute increasing and added value to key stakeholders. Environmental challenges
are to exceed the company’s own actions and within the social dimension the company’s faces
their greatest and most abstract challenge being that it deals with actual human resources rather
than technical issues. This part includes recruiting, developing, and retaining professional
employees. In order to reach their vision Atlas Copco believe that the core idea of getting there is
by attracting, developing, and keeping qualified and motivated people. As an actor on the global
market arena they believe in hard work with continuous competence development, knowledge
sharing, and implementation of core values. They expect each employee to contribute by
committing themselves to the Group’s objectives as well as their own individual goals. Atlas
Copco also relies on a leadership model which firstly emphasizes stability, followed by
profitability, and growth. The model is used by all operational businesses within the company.

Atlas Copco focuses its attention of selecting and recruiting expatriate employees internally and
all local and international assignments are advertised on the internal job-market. Secondly Atlas
Copco advertises externally using appropriate newspapers for the particular market. The intended
goal is that manager positions should be filled internally to a certain percentage (currently 50%).
The recruiting process is rather traditional and straight forward, yet detailed and comprehensive.
Apart from technical expertise personality traits are of great importance as well as the ability to
adapt to the new job situation. Other personal traits such as willingness to learn and being open-
minded are highly valued in the selection process. The expatriate must be sincerely committed to
the assignment and experience has shown that to be the most important aspect for successful
expatriation within the company. Standards are high, being employed by Atlas Copco in their
own opinion should be of great value to the employee and a company to be proud of. Only 10%
of Atlas Copco employees operate in Sweden. Atlas Copco believes in assigning the best person
suitable for the job and therefore nationality is ignored in favor of ability and where PCNs,
HCNs and TCNs can be found in key positions anywhere.

5.2.3 Atlas Copco’s Training Programs

The HRM department at Atlas Copco Sweden consists of three main processes: people
management, personal development and organizational development, and all employees are
continuously offered training and development possibilities in order to safeguard and to grow
with the company. The goal is an average of 40h of training per year for each employee. Atlas
Copco also offer their management level employees the opportunity to participate in what is
called UGL-programs which are external development programs designed to educate managers
in leadership and self-motivation and awareness. This is an opportunity for participants to grow
and emerge and the company believes that in order to be able to manage people successfully one
need to know oneself. In addition to 40h of training per year Atlas Copco employees receive
systematic evaluating and feedback from management and the HR department.

Additionally the company offers what they perceive as “High Potentials” within the company
continuous education through the Atlas Copco international development program. The program
gathers high potentials from different parts of the world joining together and receiving special
training in the particular division in which they operate. Training and development is highly
individual for each employee and Atlas Copco strives to accommodate their employees
accordingly. The reality of working in a global environment requires great understanding of
cultural differences and ability to adapt. Cross-cultural training is highly emphasized although
according to Sara Fredin, Human Resource Specialist at Atlas Copco Construction Tools in
Stockholm, Sweden “it is hard to prepare for what is to come”. CCT-training is individually
designed and may include preparatory training such as language and introduction of cultural of
the particular geographical area as well as actual going-abroad visits. More importantly the
expatriate receives individual support throughout the assignment in close relation to the HR
department in the home country as well as host-country. The company rarely uses external
sources of CCT trainers.

The company strongly believes that the organization has a role to play in ensuring that people are
given an adequate amount of knowledge and skills, strong support, and clearly communicated
goals prior to and throughout an international assignment. More importantly individuals must be
willing to face the new culture and look forward to meeting a diverse group of people, and it is
the company’s duty to prepare expatriates for the mental and social adjustments that waits.
Clearly communicated goals stem from mangers responsibility of informing expatriates what
their commitment really mean and what results are expected from them. They further offer their
expatriates more in-depth training, by assigning future expatriates with an internationally
experienced mentor in order to provide better preparation and hopefully a distinct mindset
change. Incorporating cross-cultural training into international training facilitates building
interpersonal relationships, understanding cross-cultural differences and provides guidelines and
techniques to help addressing and future issues underlying cultural roots of differences. Training
includes an introduction to the country, history and culture aiming to give the expatriate a better
understanding of the target culture’s values, customs, etiquette and possible impact on work and
social life. To better meet our future expatriates needs they we use one-to-one training sessions
or small groups, and sessions may include case-studies, workshops, sole plays and other
interactive methods in addition to watching videos or information in a lecture format.

For higher management positions communication skills, time management, assertiveness and
conflict resolutions for the appropriate culture are included. Language training is being offered
most often the person already has adequate language skills required for the job. To be effective,
training is being conducted one to two weeks prior to starting the new job. Expatriates are also
offered pre-visit to the designated location and are given assistance in living arrangements and
other accommodations for children and spouse. To Atlas Copco’s previous experience, culture
shock ultimate leading to premature repatriation may not only be associated with the expatriate
self but by with family or spouse. It is important to consider the amount of our organizations
resources available at the time, time-frame and length in training, quality of the trainers, various
types of training, and training costs in order for the business strategy to achieve the desired
outcome of acculturation. Sara Fredin concludes by saying “the need to train people is
unquestionable and adequate knowledge and competencies, people will develop a more stable
psychological sense of well being, and thus become better socialized to their new environment.”
Within-Case Analysis – Atlas Copco
As an actor on the global market arena Atlas Copco emphasizes hard work with continuous
competence development, knowledge sharing, and implementation of core values. Atlas Copco
IHRM strategy reads to assign the best person suitable for the job and therefore nationality is
ignored in favor of ability and PCNs, HCNs and TCNs can be found in key positions anywhere
which in line with the theory of Deresky (2003) stating that MNCs wish to have well-trained
managers with extensive international experience available to take charge in many intercultural
settings, whether at home or overseas.
According to Vance & Paik (2002) MNCs pay increased attention to the value of expatriate
personnel as a way to integrate their operating units appropriately and efficiently and similarly
Atlas Copco expect each employee to contribute by committing themselves to the Group’s
objectives as well as their own individual goals. Atlas Copco also relies on a leadership model
which firstly emphasizes stability, followed by profitability, and growth. The model is used by
all operational businesses within the company.

The selection and recruiting process at Atlas Copco is rather traditional and straight forward, yet
detailed and comprehensive. Apart from technical expertise personality traits are of great
importance as well as the ability to adapt to the new and job situation. Other personal traits such
as willingness to learn and being open-minded are highly valued in the selection process which is
in accordance to Garvey et al. (2004) stating that managers must adopt an optimistic posture,
expect the unexpected, listen, and appreciate differences, and increase sensitivity and tolerance
toward others. According to Sara Fredin, Human Resource Professional at Atlas Copco
Construction Tools in Stockholm, Sweden “the expatriate must be sincerely committed to the
assignment” and experience has shown that to be the most important ingredient for successful
expatriation within the company which is further in line with Garvey et al (2004) who stress the
importance of carefully selecting people based on their personalities and their ability to adapt to
foreign cultures in addition to their technical problem-solving skills and knowledge.

Atlas Copco wants to ensure that their employees are given an adequate amount of knowledge
and skills, strong support, and clearly communicated goals prior to and throughout an
international assignment. More importantly individuals must be willing to face the new culture
and look forward to meeting a diverse group of people, and it is the company’s duty to prepare
expatriates for the mental and social adjustments that waits. Clearly communicated goals stem
from mangers responsibility of informing expatriates what their commitment really mean and
what results are expected from them which is in accordance with Kraimer (2004) stating that the
expatriate must understand which behaviors are required for successful performance and within
the organization. Further, it is implicated that high levels of adjustment are indicative of
successful expatriate adaptation and adaptation results when the expatriate learns and maintains
behaviors appropriate to the new environment and the level of adaptation determines secondary
outcomes such as the individual’s performance (ibid).

Cross-cultural training offered to Atlas Copco employees includes an introduction to the country,
history and culture aiming at providing the expatriate with a better understanding of the target
culture’s values, customs, etiquette and possible impact on work and social life which is in
accordance to Deresky (2003) stating that the purpose of cross-cultural training is to if not to
eliminate but to reduce the “state of disorientation and anxiety about not knowing how to behave
in an unfamiliar culture” i.e. culture shock. The company has further recognized culture shock to
be reason for expatriate failure ultimately resulting in premature repatriation which is supported
by the theory of Soochan (2003) stating that symptoms of culture shock, anxiety, frustration and
disappointment can further complicate adaptation for the expatriate as well as his or her family
or spouse. Thus companies should offer formal training programs to prepare workers and
families for oversea assignments in order to minimize the risk of problems caused by culture
shock. It is further supported by Zakaria (2000) who states that CCT aid to improve coping with
unexpected events or culture shock in a new culture and can work as a means of reducing the
uncertainty of interactions with foreign nationals as well as enhancing expatriates' coping ability
to by reducing stress and disorientation.

Expatriate training at Atlas Copco is individually designed for each particular case and puts
emphasis on the particular geographical area and target culture which is related to the theory of
Varner & Palmer (2005) who claim that the further apart the concerned cultures are on the
Hofstede’s classification of cultural dimensions, the more extensive the adaptation to the new
culture will be. This reasoning is further supported by the fact that the insecurity of managing
subsidiaries in culturally distant locations can be decreased through cross-cultural training and
thus increased knowledge of the host culture (Triandis, 2000).

Training activities include case-studies, workshops, role plays and other interactive methods in
addition giving lectures in a classroom format which is in accordance to Black et al. (1999)
stating that it is for successful cross-cultural training to consider the appropriate level of mental
involvement and effort of the trainer as well as the trainee. For higher management positions
Atlas Copco include communication skills, time management, assertiveness and conflict
resolutions for the appropriate culture. Language training is being offered but most often the
person has adequate language skills required for the job.

To be effective, training is being conducted one to two weeks prior to starting the new job.
Further Atlas Copco assign future expatriates with an internationally experienced mentor in order
to provide better preparation and hopefully a distinct mindset change which is in accordance with
Garvey et al. (2004) stating that MNCs should to provide international employees with a
domestic mentor, who can serves as the chief liaison and a proponent during the employee’s
absence. According to Atlas Copco the mentor does not necessarily have to be domestic but
rather personal fit between the mentor and the trainee is more important. This contradicts the
theory of Chinese MNCs which focus largely on in-house training led by senior managers rather
than exploration visits prior to going abroad (Shen 2005).