HUMAN RESOURCE MANAGEMENT IN INTERNATIONAL JOINT VENTURES FOR THE EXECUTION OF CONSTRUCTION PROJECTS

The most striking structural feature of a transnational company is its complexity. Also it is a central task of the management in transnational enterprises to steer this complexity, or, to put it in different words: to ensure the necessary co-ordination between the individual company units (Bartlett, Ghoshal 1990 pp 201-221). In principle there are three means available to the company to achieve this task. Centralization consists in the final concentration of the decision-making power at the head office. In formalization, monitoring is realised by means of a person-independent formalised system of instructions, reports and controls. Socialisation finally implies the mediation of a canon of aims, values and visions which commits all the company's management staff to the overall entrepreneurial goal, thus ensuring co-ordination. Although Bartlett and Ghoshal (1990 p 219) recommend a mixed form of centralisation, formalisation and socialisation, they make no secret of the fact that for coordination in a transnational enterprise they regard socialisation as the most appropriate way, even though it is linked to the highest cost. According to them it is the most expedient way to equip the company's decentralized units with those entrepreneurial and innovative capacities that they regard as necessary. For carrying out a construction project this significance of staffing holds true to an especially high degree. The term project is somewhat fuzzy (especially in the construction industry, where it is applied with various different meanings), and it is probably helpful to restate that in the construction context, the project is identical to the joint venture in an organisational sense, and that spatially it consists of the construction site including the offices for the technical and commercial staff. Therefore it is occasionally referred to as a mobile factory. As is well known, however, the execution of a construction project differs considerably from the production in a factory in three decisive points. The first of these points is the result of the fact that a construction project arises under the influence of geological, climatic, occasionally even hydromechanical conditions, which cannot be completely calculated in advance. Thus all planning is overshadowed by uncertainties, and the staff at the construction site has to be able to react to unforeseen changes in the framing conditions as quickly as possible. The same requirement results from the further fact that each construction project - and this is certainly true for big infrastructure projects - is unique. Its production can therefore not be based on established routines. Sudden problems can thus not be excluded, rather they are the rule. To this as well the staff has to be able to react quickly and reliably. The third point finally follows from the fact that a construction project - and again this is surely true for big infrastructure projects - is normally directly carried out by order of a client. Thus, in principle and depending on the construction progress, the client always has the possibility to demand certain changes in the execution. According to general experience he will do so, too, during a construction period of several years, and to these changes as well fast and competent reactions are necessary. To a considerable part construction is therefore the management of uncertainties (cf. Campinos-Dubernet 1988). Thus normally the success of a construction project is determined within the project itself, and this to almost a hundred per cent. Inevitably the company's distant head office and even the decentralised subsidiary in charge of the project have comparatively little insight into the parameters which govern the project. Neither can they perceive any ad hoc changes occurring quickly enough, nor can they react on them sufficiently fast and competently from a distance. The decision-making competence for steering the project must therefore lie unrestrictedly within the project itself, spatially with the site manager at the construction site and organisationally with the joint venture as a more or less decentralised company unit. The question then is how the companies involved in the project equip the joint venture with the appropriate personnel to reach this decision-making capability. The answer to this very closely fulfils the conditions formulated by Bartlett and Ghoshal for transnational companies. According to this, the decentralised company unit has to be provided with that kind of staff that leads the joint venture to success and that ensures the member company's contribution to this success. The importance of human resource management for the international orientation of a company and for the execution of joint ventures is undisputed. Under the term human resource management there are subsumed all staffing policies such as determining the labour demand, recruitment of personnel, staff development, personnel assignment, personnel maintenance, reward policies, regulation of dismissals, and cultivation of industrial relations (Bratton, Gould 1994 p 8; Kammel, Teichelmann 1994 pp 27-8). Socialisation as a means of co-ordination within a transnational enterprise (Bartlett and Ghoshal 1990) is of course completely linked to persons. Pinder (1990 p 76) points out that especially the Single Market integration will incite companies to increase their efforts with a view to new market chances. This demands an appropriate human resource management. In his opinion the availability of commercial and technical staff appropriate for a company's international engagement is decisive for the capability of a company to really take foothold on new markets (Pinder 1990 p 121). Goldenberg (1988) describes several examples underlining the importance of posting high ranking staff for a successful market entry by joint ventures. In connection with the formation of international joint ventures for the realisation of construction projects there is especially one argument which underscores the significance of human resources. This can be illustrated in connection to the concept of core competence developed by Prahalad and Hamel (1990). Core competence unlocks the door to as many markets as possible, enables the company to provide an unmistakable contribution to the advantage of the client who finally buys the product, and takes on a shape which makes it difficult for any competitor to emulate. In the market for big infrastructure projects for instance, a company with such a core competence might then be successful if for example it has a special technological procedure available or special experience in project management. This is related to the issues of technology management with are explored in Working Paper 4. Competence, however, (like socialisation) is also a term which is almost completely linked to the employment of an according staff. One arrives at the same result, if one regards the empirically determined success factors of international joint ventures from the point of view of the individual companies involved. As goals of such joint ventures they named - among other reasons - the reduction of uncertainty due to unknown and changeable framing conditions for the activity, and the transfer of insufficiently codifiable know-how which cannot just be acquired by the purchase of licences or rights (cf. Zielke 1992 pp 259-61). Neither can the ability to apply new technologies or to make use of the knowledge about new markets be acquired by single transactions - at least not as a rule - but only gradually in a process of gaining experience (ibid p 281). Again, experience gaining is, just like competence and socialisation, terminologically inseparable from employment. The task arising from this for the human resource management of a company that wants to become active on the international market or wants to enter an international joint venture is outlined by Pinder (1990 p 76) according to the well-known pattern of home-made or bought-in. According to him the company either has to recruit talented new managers, having the required international knowledge and skills to provide the company with a competitive advantage, or it has to develop these skills within its existing cadres of managing staff.