It is widely evident that the period since the mid-1980s has been marked by changes in the world economy that have led to profound developments in the international operations, strategies and structures of MNCs and many other organizations worldwide. Among other things, such changes consisted of the liberalization of financial markets, deregulation and privatization of state enterprises, globalization and intensification of international competition.

In the face of these changes MNCs have adopted fast track expansionary strategies, such as cross-border mergers and acquisitions, and a variety of non-equity arrangements such as management contracts and licensing agreements. They have also increasingly expanded their growth into developing countries of which many were embarking on economic structural adjustment reforms and privatization programmes under the directive of the World Bank (WB) and International Monetary Fund (IMF), which led to the sale of their state-owned enterprises, and in many cases, to MNCs.

The Hashemite Kingdom of Jordan was one of the countries in the Arab world in the Middle East region that had to undertake structural adjustment programmes under the auspices of the WB and the IMF and, as a result, a number of state enterprises were privatized and sold to Western MNCs to improve their efficiency and competitiveness. The first state enterprise that was privatized was Jordan Cement Factories that was acquired by a French MNC through the purchase of equity shares. Jordan Cement Factories is a public shareholding company that was incorporated in Jordan in 1951. The main activities of the company are the manufacturing, production and trading of cement and its by-products and until 2002 it had a monopoly over the supply of cement in Jordan. The Jordanian government and its institutions had long owned around 58 per cent of the company’s share capital. In November 1998, it sold 33 per cent of these shares to Lafarge, a French MNC, that subsequently increased its stake to 50.27 per cent controlling share.

The process of change

Jordan Cement became the subsidiary of Lafarge that had strategic importance to the MNC because, according to the General Manager of Jordan Cement, it was ‘the first operation in the Middle East and therefore could be the basis for market access and further operations and developments in the area’. The parent company has adopted a management style known as the ‘Lafarge way’. Under this the organization seeks to encourage personal initiatives and involvement of everyone in the implementation of group strategy. At the same time, the MNC was moving towards operating along global lines and as a result was attaching great importance to the issue of integration. In terms of HR, this is reflected in the implementation of company-wide HR policies in respect of a number of issues. Thus, in relations to this, the Middle East director for HR-related issues noted that:

‘We apply the same HR policies on everything – on all HR related issues and on all other activities such as training and development, etc. There are company-wide policies that will apply as much as the local culture and the law allow us... we apply the same policies because the parent company has its own internal culture and we aim to achieve integration. This means doing the same everywhere in the world. It is part of our culture. Each function should have the same methods of doing things, same understanding, and same efficiency.’

Accordingly, after the acquisition, the French MNC adopted a gradual approach to change whereby it was envisaged that the change process would occur over a period of between two and three years. In this process, a ‘methodological guide’ is used to integrate new subsidiaries, under which teams from different functional areas are sent to the subsidiary to identify priority actions that have to be undertaken within the first 100 days. This action programme is, in turn, accompanied by the development of a longer-term, two- to threeyear, programme of actions aimed at making the changes needed to integrate the new subsidiary fully. The MNC adopted a gradual approach to change due to three main considerations. First, there was a desire only to introduce the changes after an appropriate management infrastructure had been developed. Secondly, there was a recognition that cultural change is a slow process, and thirdly, there was a felt need to prepare employees adequately for change.

In addition, the company used participative change processes that encompassed the use of task groups and working parties, and a bottom-up orientation to problem solving. Consequently, and following the change project known as the JCF Horizon 2001 that was created and the HR audit that was conducted by staff at the parent company, a range of new HR policies and procedures were proposed. These policies included the establishment of a new system for career management and succession planning, the implementation of revised job descriptions and a new job evaluation scheme, and the development of improved policies in relation to performance appraisal, recruitment and selection, and training and development. This was in parallel with the implementation of a new organizational structure under which a new HR division was created. Under this new structure, the HR function gained greater strategic importance, became part of the company’s overall strategic planning process and was directly linked with the operating committee that was in charge of the daily operations of the company, while previously the role of the personnel function was mainly administrative, HR had no representation at board level and its participation in planning was very weak.

Furthermore, decision-making style, which was very centralized before privatization, had to be changed after privatization. Decentralization and delegation were seen as important changes that needed to be introduced in order to create a management style that was in line with the parent company’s best practice. Thus many positions were merged to reduce the number of layers of management and senior managers were encouraged to devolve greater authority to line managers. Line managers were also given more HR responsibilities in such areas as communication with employees; pay rises and promotion of subordinates; the use of performance appraisal to determine the level of bonus pay and the objectives of subordinates; recruitment and selection; training of subordinates; planning manpower requirements; communication with subordinates; paying attention to the budget and control of costs; and the dismissal and discipline of subordinates. Overall, line managers participated in making such decisions contrary to the situation in the period before the acquisition where decisions were made centrally.

Discussion questions

● Explain the MNC’s approach to change. To what extent do you agree with it and why?

● Discuss the different factors that need to be taken into consideration to implement change successfully, particularly when operating across borders.

● What are the sources of resistance to change? To what extent do you think that the MNC was successful in dealing with resistance to change, and why?

● What are the limitations of the planned perspective on change?

● Discuss the factors that may support the argument that change is shaped by the interplay of action and context.