What you need to know before taking your company global

But what kinds of changes do Australian companies need to make to their HR practices if they want to open a successful subsidiary in Ghana? And what measures are needed to ensure that they continue to fulfil their social responsibilities as they expand across continents?

That’s what a key study led by Dr Desmond Ayentimi from the Tasmanian School of Business and Economics was designed to explore, and its findings are set to change the way multinational companies engage with the local economy in Ghana.

If managers or companies in Australia want to operate a successful business in Africa, they need to understand that the cultural diversity and institutional systems in Africa are different from what’s happening in Australia

As Dr Ayentimi explains, multinational companies have a corporate social responsibility to support local development, but transferring managerial and technical skills to local workers in Ghana requires a reworking of Australian human resource practices.

“For instance, if a multinational company with headquarters in Australia is launching a subsidiary in Ghana, they would want to replicate their existing recruitment practices, training, and development programs,” he said.

“I look at what kinds of constraints or opportunities are available within that context to make it much easier for the parent company to replicate some of those policies and strategies in their subsidiaries.”

Dr Ayentimi’s research looks at the cultural variation between developed and developing countries, and how those differences need to be addressed for companies to successfully engage with the local economy.

One major challenge he’s addressing is religious and political influence on recruitment in Ghana.

“In Australia, recruitment and selection are done transparently, but in Africa, because of cultural embeddedness in the recruitment systems, individuals are able to influence the recruitment process because of ethnic and cultural orientation,” he explains.

“I found that religious and political leaders in particular have a very powerful influence on recruitment and selection in most organisations, because in an African context, they are held in high social status. So they’re able to influence the management of an organisation to recruit employees from their congregation – irrespective of if they have the skills and knowledge to actually carry out the work.”

Multinational companies can overcome this influence by outsourcing their recruitment process to a private firm, said Dr Ayentimi, and in doing so, can hire local employees who have the right skills for the job.

This also addresses the social responsibility of the business to contribute to the local Ghanaian economy.

While Dr Ayentimi has identified several challenges in importing human resource management (HRM) practices to Ghana from a developed economy, he’s found that when multinational companies adjust their practices to better support local development, they can expect a great deal of additional benefits.

One advantage is that multinational companies will gain institutional and local legitimacy – the kind of recognition that can support their growth

“So any support multinational companies require, they can easily access it, because of the support they provide to local firms and employees.”

Dr Ayentimi’s insights are becoming increasingly important to firms in Australia and around the globe that are looking to expand, as Ghana’s government looks to strike a balance between attracting multinational companies and developing its local economy.

“Africa is one of the areas that multinational companies are attracted to because of the vast availability of natural resources,” said Dr Ayentimi.

“It’s very important to provide knowledge that multinational companies can depend on to inform their decisions, especially with regards to how they manage their human resources.”

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