The Nordic Model Of Management
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The Nordic Model of management

Marketing Manager

Time to Look at Nordic model of management by countries

This global economic mess has left economists, politicians and industrialists clueless.

Everyone is hoping for miracle to get out of it. There are also frantic efforts to put some patches here and there and some knee jerk reactions. However, there is absolutely no conviction or certainty in these actions by various governments/ industries.

It’s important to understand the root cause for the long term benefit to humanity as a whole. There are various key indexes, by which one can judge the standard of living or whether the country is developed or not. For instance - education, healthcare facilities,

Infrastructure, egalitarian and extensive benefits to all and liberal use of expansionary fiscal policy.

Mere GDP of the country or per capita earnings can be misleading in many cases. i.e.

Some of the Middle Eastern or oil rich countries may report high GDP or per capita income. However, the human development index would show a different picture. The major wealth remains with dictators and their supporters. In developed countries, like USA, South Korea or some of the western European countries too, the top 1 % of the population has almost 70 % of the countries’ wealth. This unequal distribution of wealth coupled with full capitalist business enviournment prompts brave people to chase their dreams to join the riches list. The lack of proper financial risk management and greed of

the banks create situations, like the one which we are in today.

The socialist or communist thinking is other extreme, and has been proven time and again that it’s not the pragmatic way. Both the major countries following communism – USSR and China have either dumped the communist principles or modified them to suit their own economic growth. Then what could be the answer?

May be it’s the time to have a look at Nordic ( Sweden, Finland, Norway, Denmark and Iceland ) Model of management. This is socio-economic model, where there is mixed market economy combined with more generous welfare state. There are low trade barriers, strong property rights, contract enforcements, little financial, labor and product market regulations. Even pension funds and education is privatized in some of these countries. This enviournment is just like any capitalist country. However,

There are three major provisions in Nordic model - Free Education, Social security and health care. Health care and social security ensures the minimum living standard of all citizens regardless of their economic condition. The free education maximizes social mobility amongst students and fuels the drive to know more and start living without support of their families in future.

This has created egalitarian, healthy and free society in these countries. The crime rate is also very low compared to other western countries.

There are critics however for Nordic model, who argue that this system is not encouraging or giving enough scope for people to become wealthy. There are some economists, who say that this system can work only in the small countries. Also, the growth rate is steady and controlled.

However, surely it’s high time that policy makers across the globe look at creating some sort of model based on this, may be re-designed to suit their own country. Where, the growth shall be for all citizens and not only for the favored ones. This shall drive the humanity index up globally and we can live in much better world.

This model in no way diluted the hunger for innovation by its industry. Today some of the companies from these tiny nations are leaders in their respective fields. NOKIA, SKF, SANDVIK, VOLVO, A.P MOLLER, NOVO NORDIK, VESTAS, CARLSBERG, KONE and ATLAS COPCO are just few of the examples.

Nordic countries spend close to 4 % of their GDP on research, which is higher compared to many other developed countries in western hemisphere. In Sweden, more than 80 % employees go for training every year. This is twice than European average.

This model also believes to pay decent salaries ( read “decent “ and not “high” ) and encourages them to give enough time to their families. This helps in social stability of an individual and prevents stress related or burnout issues. The Fresh mind can be more innovative or productive.

Needless to say that these countries have high tax rate, as all the social welfare is funded from the tax generated from individuals and corporate.

Every rule has exception. In this case, Iceland is an exception, where the entire country went bankrupt in end 2008 in this meltdown. However, exceptions prove the rule J

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