Progoulaki, 2011 Integrated MHRM

In: Human Capital and Resources: Developments, Management and Strategies
Series: Economic Issues, Problems and Perspectives. Global Economic Studies.

ISBN 978-1-61470-898-8
Editors: Michael F. Rizzo and Andrea Gallo © 2011 Nova Science Publishers, Inc.
Chapter 1
MANAGING MULTICULTURAL MARITIME HUMAN

RESOURCES: INTEGRATED MANAGEMENT
PRACTICES AND STRATEGIES
FOR COMPETITIVE ADVANTAGE
Maria Progoulaki
Dr., Research Associate, Re-SHIPS Laboratory, Dept. of Shipping,
Trade and Transport, University of the Aegean, Chios, Greece
ABSTRACT
The basic goal for companies operating in the shipping industry –and even more for
those of the bulk shipping sector- has always been the ability to produce low-cost
services. The highly competitive business environment of the shipping industry, along
with the international regulations and other institutional arrangements, keep affecting till
today the companies’ strategies to operational cost reduction. Especially nowadays that
the global maritime labor market offers a variety of officers and ratings, the quest for
cheap labor seems to be easy- in terms of quantity, but also risky- in terms of quality. The
last few years a great body of research focused on the problems observed in the field of
multiculturalism in the shipping industry. Cultural diversity involves not only the
culturally diverse crew, but also single nationality crew that is managed by the foreign
shore-based personnel.
This chapter seeks to examine the issue from the managerial viewpoint, and will
focus specifically in the applied human resource management strategies and the shipping
companies’ philosophy regarding cultural diversity of the crew. Basic aim of this chapter
is also to elevate the value of human resources in shipping, and to underline the potentials
that unified human resource management and cultural diversity management systems can
have as a shipping company’s core competency.
Quantitative and qualitative data were collected from a representative sample of
shipping companies with the use of a structured questionnaire and personal interviews. In

E-mail: m.progoulaki@aegean.gr.
2 Maria Progoulaki
a triangulated theoretical framework, the combination of Resource-Based View, Human

Resource Management and Cultural Diversity Management leads to a framework of
choices which include strategies for the management of maritime human resources’
cultural diversity. This framework is based on three generic cultural assumptions, i.e. the
avoidance of culture, the limitation or elimination of cultural effects, and the exploitation
of culture. The chapter discusses the fulfilment of the criteria required (according to the
Resource-Based View) for turning crew management to a core competency and gaining
sustainable competitive advantage from human resources.
1. INTRODUCTION
Shipping is the industry that can be characterized as the largely international and most
globalized one. The maritime labor market is also a globalized, multi-ethnic arena, where ship
owners search for the best candidates. The choice of mixing different nationalities of seafarers
is rooted to the strategies applied during a period of low freight market, as a ‘defensive’ way
to face the market’s conditions. This strategy has been widely adopted by a large number of
ship owners who have turned it to a common practice, along with the de-flagging, as part of
their companies’ cost leadership strategies. Since most ship owners perceive the manning cost
as a crucial and probably, the only flexible element of their operational expenses (Downard
1996, 1997; Leggate and McConville 2002), the employment of low-cost foreign seafarers
contributed to the decrease of extremely high running expenses. One should also consider to
this strategic approach, the attempts of Greek and other ship owners to face the lack of
national seafarers (Sambracos and Tsiaparikou 2001; Thanopoulou 2002). The strategy of
employing low-cost foreign seafarers turned to be, from a ‘defensive’ measure to a trend and
then, to a common practice. In this way, the last twenty-five or more years, nearly 80% of the
world fleet is manned with multicultural and multilingual crew (Trenkner 2000). Nowadays,
countries in the Far East, the Indian sub-continent and Eastern Europe are the maritime
manpower’s main sources. Among the top maritime labor supplying countries one can find
the Philippines, China, Indonesia, India, Russia, Turkey, Ukraine, Greece and Egypt
(BIMCO/ISF 2005).
In order to utilize the advantages of multiculturalism in the shipping industry, and to turn
maritime human resources’ (MHR) cultural diversity to a core competency, one needs first to
examine the models and theories that have been developed for the utilization of cultural
diversity. Among various theories (Adler 1983; 1986, Cox 1994; Hoecklin 1996), Schneider
and Barsoux (1997) developed three basic organizational strategies for managing cultural
differences: i) ignore, ii) minimize and iii) utilize. These strategies are based on the nature of
relationships between headquarters and subsidiaries, and were further used as different
strategies for managing cultural differences. Embedded in these strategies are “assumptions of
culture as irrelevant, as a problem or threat, or as an opportunity for learning and innovation,
and as a source of competitive advantage” (Schneider and Barsoux 1997: 210). In the
organizations that ignore cultural differences, usually there is one dominant culture; that of
the parent company. This occurs because it is believed that there is only one right way to
manage the organization, and that should be followed by all members. The strategy of
minimizing cultural differences requires creating a global corporate culture. In the last
strategy, top management perceives the effects of cultural diversity as either positive or
negative, and thus, focuses on the control and management of the cultural diversity’s effects,
Managing Multicultural Maritime Human Resources 3
and not on the cultural diversity itself. According to this approach, the advantages of diversity
can be maximized, since these companies train their members in order to recognize,
acknowledge and utilize the cultural differences, and finally to achieve innovation. Further,
Fine (1995: 134) suggested that “diversity initiatives comprise three components: education,
support groups and human resource policies”. The goal of the proposed education and
training is to help people who are different, to understand each other and to get along
together. The purpose of the support groups is to provide support and mentoring for their
members. Creating human resource policies or making existing policies more flexible is the
most important, but the least developed and implemented component of diversity initiatives.
In order to exploit the human resources’ cultural diversity, it is important to acknowledge
the value of people. Human resources create value by contributing either to the decrease of
the cost or to the increase of the firm’s income. As Gerstenberger (2002) pointed, human
resources in shipping represent a cost element, but with a soul. This characteristic diversifies
human resources from the rest tangible and intangible resources of a firm. In relation to this,
strategic human resource management (SHRM) literature underlines the importance and
contribution of human resources to the creation of sustainable competitive advantage (Wright
et al. 1994; Barney 1997; Boxall 1998). Many aspects of Human Resource Management
(HRM) are affected by differences in national culture. The extent to which HRM activities are
successful across cultures will largely depend on “managers’ abilities to understand and
balance other cultures’ values and practices as regards such things as the importance of work,
its relationship to the whole person and to the group, how power and status is conferred, the
desirability of change, the perceived value of experience versus formal classroom and other
fundamental differences in how people from different cultures view the world” (Hoecklin
1996: 113). Cultural advantages can arise from differing values and ways of seeing the world.
“To realize competitive advantage from them, it is first necessary to try to understand them”
(Hoeklin 1996: 15). The combination of diversity and strategic human resource management
shows that cultural diversity creates an additional value to the organizations, and, under
certain conditions, can contribute to the company’s competitive advantage (McMahan et al.
1998; Richard 2000). A truly multicultural organization can be defined as one wherein
diversity is valued and utilized rather than contained (Cox 1991). The strategy of utilizing
cultural differences can create competitive advantage. Thus, rather than one culture
overriding another, or compromising to find ‘safe’ solutions that will compete neither, the
challenge is to discover solutions that capture the differences in creative ways, so that the sum
of the parts is greater than the whole (Adler 1980).
The Resource-Based View (RBV), initially introduced by Wernerfelt (1984), realizes the
firm as a bundle of resources and capabilities that are combined to develop competencies.
Resources and capabilities constitute the base for the formation of sustainable competitive
advantage. Barney and Wright (Barney and Wright 1998; Barney 2001; Wright et al. 2001)
introduced the ‘VRIO’ model, which is based on four basic criteria: value, rareness,
inimitability and organizational support. Value of the resources is created by either reducing
production cost or increasing the product/ service price and concurrently, the profits. This
criterion is used in order to define and acknowledge the valuable resources, and examines the
availability of a specific resource in the market. Value is an important element for the
organization, however it is not enough for the creation of competitive advantage. In order to
achieve competitive parity it is important to define the rare characteristics of the resources; if
such do not exist, then it is vital to develop rare characteristics. Given that the previous two
4 Maria Progoulaki
criterions are satisfied, the resource is able to offer to the firm a competitive advantage, but
only in the short-run. Eventually competitors will imitate the rare and high-valued
characteristics of the resources, and the period of competitiveness will end. The criterion of
imitability describes the possibility and difficulty to copy the resource, along with the time
and cost that competitors will need to imitate the resource. So, rareness and high value should
be constantly enriched, in order to avoid imitation. The final criterion describes the relation
between the resource and the organization, and is indicated by the level of cooperation
between the resource and the rest parts of the company. The criterion of ‘organizational
support’ enhances the avoidance of imitability by competitors. The development of
organizational schemes and sets, based on the organization’s philosophy and overall strategy,
will support and replenish the resources. In this vein, the resources’ high value, rareness and
inimitability will be internally retained. Organizational support through integrated systems is
extremely important, since single practices are often incomplete, and are easy to imitate by
the organization’s competitors. RBV could contribute to the confrontation of the difficulties
that shipping companies face in the management of their human resources, considering
though the special characteristics of the shipping industry (Progoulaki and Theotokas 2010).
The theoretical foundation and the methodology used are presented in section 2. Findings
on the three examined areas, i.e. culturally diverse maritime human resources, applied HRM
practices in shipping and examination of the VRIO criteria, follow in section 3. Section 4
proposes an integrated framework for managing multicultural human resources in the
shipping industry, in a way that could lead to the formation of sustainable competitive
advantage. Finally, conclusion follows in section 5.
2. METHODOLOGY
The combination of the theories and tools of Resource- Based View, Strategic Human
Resource Management and Cultural Diversity Management created a theoretical base,
according to which a field survey was conducted. The research was based on personal
interviews with the use of a structured questionnaire. Both quantitative and qualitative data
were selected and processed. The field survey took place in Athens and Piraeus, Greece
during the first half of 20071.
The sample consisted of 91 Greek-owned and Greek-operated/managed shipping
companies, managing a total number of 1,076 vessels. The representativeness of sample was
analyzed and categorized using data provided by Petrofin (2006) for the number of
companies, and Lloyd’s-Fairplay (2007) for the number of ships (see table 1). The sample
was representative in terms of number of companies 13.1% and, in terms of number of
vessels 29.1%; therefore sample was appropriate for statistical analysis. The majority of the
vessels flew the Greek flag (35%), while the rest flew seventeen foreign flags, such as Malta
(19%), Panama (13%), Bahamas (10%), Liberia (6%) and Cyprus (5%). The vast majority of
vessels included bulk carriers (45.3%), tankers (33.3%), and containers (9.7%).
1
Field survey was initially conducted for the needs of the PhD Thesis titled “The Management of Multicultural
Human Resources as a core competency of a shipping company” (Progoulaki 2008). Selected results were
further analyzed for the needs of this chapter.
Table 1. Size of companies and representative sample
Total No. Small- sized Medium- sized Large- sized

of Greek- companies companies companies
owned No. of 1-2 3-4 5-8 9-15 16-24 25 +
companies vessels vessels vessels vessels vessels vessels vessels
Field survey
2007 91 1076 16 18 15 13 14 15
Petrofin 2006 693 288 146 137 64 30 28
Representative
sample (%) 13.1% 6% 12% 11% 20% 47% 54%
Lloyds-
Fairplay 2007 3,699
Representative
sample (%) 29.1%
For the needs of the analysis, companies were grouped in three main categories,
according to the size of the fleet (in terms of number of vessels): (a) Large-sized companies,
i.e. those that owned/managed/operated more than 16 vessels, (b) Medium- sized included
those with a fleet of 5 to 15 vessels, and (c) Small- sized included companies with 1 to 4
vessels. Moreover, one should note that foreigners (non-Greeks) were grouped together,
because the analysis showed that despite their nationality, they received the same answers
from the respondents.
3. FINDINGS
3.1. Culturally Diverse Human Resources
3.1.1. Manning Strategies and Employed Nationalities of Seafarers

For the needs of the research, it was important to examine the range of culturally diverse
human resources in this industry. The survey showed that among 34 different nationalities,
Greeks, Filipinos, Russians, Polish, Romanians and Ukrainians were the most common
employed in Greek-owned shipping. It is important to note that Greeks (68%) and Filipinos
(64%), along with Ukrainians (54%) and Romanians (26%) were usually employed as
officers, while Filipinos (75%)2 dominated as ratings (followed by the Greeks 35% and
Ukrainians 28%). Further, the survey revealed that Greek officers were also employed by
companies who operated vessels that flew foreign flag, regardless the absence of any legal
restriction regarding the nationalities of the crew, as in the case of the Greek flag3. In these
cases, Greeks were employed as senior officers (Master and Chief Engineer), as officers B’,
C’, as cadets, and rarely as cooks. This feature underlines the companies’ perception towards
2
Percentages refer to multiple responses- cases.
3
One should note that the structure of the questionnaire did not allow for in depth analysis of crew nationality per
vessel. The given statistics refer to strictly companies who operated only foreign-flagged vessels, and excluded
those that operated both Greek- and foreign- flagged vessels.
6 Maria Progoulaki
the value of these human resources, especially because Greeks were clearly chosen due to
their skills, despite the fact that they cost more and there is no legal obligation from the
registry of the vessel4.
Regarding the implemented crew syntheses, the survey examined the mix of Greeks with
other nationalities, and the nationality of foreign crew (see table 2). The most popular crew
synthesis was the one that mixes Greeks with foreigners of many nationalities, even on
foreign-flagged vessels.
Table 2. Implemented crew syntheses (per national group)
*
Crew mix GRF1 GRF F1 F F2
35.2% 46.2% 44.0% 8.8% 25.3%
*
GRF1: mix of Greeks and one foreign nationality, GRF: mix of Greeks and many foreign
nationalities, F1: single foreign nationality crew, F: mix of many foreign nationalities, F2: mix of
two foreign nationalities.
**
A further analysis showed that the following nationalities were mixed in crew syntheses
(see table 3).
Table 3. Implemented crew syntheses (per nationality)
Crew
synthesis* Mix of nationalities on board**
GRF1 60.4% Greeks and Filipinos
8.3% Greeks and Polish
8.3% Greeks and Ukrainians
GRF 29.7% Greeks, Filipinos and Ukrainians
15.6% Greeks, Filipinos and Romanians
6.3% Greeks, Filipinos and Russians
F1 32.8% Ukrainian
29.7% Filipino
17.2% Russian
F2 15.2% Ukrainians (officers) and Filipinos (ratings)
9.1% Russian (officers) and Filipinos (ratings)
F Asian (mainly Filipinos) and
East-Europeans (Russians, Romanians, Ukrainians, Polish, Latvians, etc.)
*
GRF1: mix of Greeks and one foreign nationality, GRF: mix of Greeks and many foreign
nationalities, F1: single foreign nationality crew, F: mix of many foreign nationalities, F2: mix of
two foreign nationalities.
**
4
The flag of the vessel is related to the safe manning of the ship, which defines the number of seafarers to be
employed on board and in some cases (as in the Greek flag), nationality of the whole or part of the crew.
Certain registries, known as ‘flags of convenience’ or ‘open registries’ offer flexibility in regard to the
nationalities employed on board (Metaxas 1985).
3.1.2. Cross-Cultural Training

In section 1, cultural diversity was analyzed as one of the hindrances for the application
of RBV to shipping companies’ human resource management. To explore this point, shipping
companies’ representatives were asked whether there were any practices applied, aiming to
eliminate the disadvantages that multiculturalism could bring to the crew. It was considered
that such a practice would be the training of seafarers to the topics of cultural awareness and
cultural diversity management. Respondents’ answers revealed the different approach that
shipping companies adopt on the issue and the different value they ascribed to their
employees. Although possession of skills related to cultural diversity management is a
precondition for the improvement of the working conditions and the effectiveness of crew,
training of seafarers for the development of cross-cultural skills was offered by only a small
percentage of the companies (18.7%). More importantly, this training was not offered to all
seafarers, but mainly to Greek officers (25.8% of the multiple responses- cases, compared to
3.5% to foreign officers, 0% to Greek ratings, 2.2% to foreign ratings and 1.1% to the shore-
based personnel). Further analysis showed that the offered training on this topic was usually
an informal briefing and discussion between the national senior officers and the crew
managers or other ex-seafarers who were employed at shore-based positions in the company.
There were only two cases where shipping companies provided course material on the
subject, which addressed the leadership of Filipino seafarers on board5.
Almost half of the respondents (49% of the companies’ sample) believed that no training
or other measure is required for this matter, since it was believed that “experience is
enough”, and the “cross-cultural management skill is inherent; cannot be taught”6. The need
for cross-cultural training was acknowledged most by large-sized shipping companies, who
were more willing and able, due to economies of scale, to invest in such seminars/ courses.
Further, the companies that were less interested in offering cross-cultural training were those
that mostly applied a single foreign nationality crew synthesis on board (58.1% of the
multiple responses). This characterizes those companies’ attitude towards cultural diversity
on board; they try to avoid the possible problems that a cultural mix may create (such as
communicational, etc.7), by using one nationality of crew, which is also non-national, in order
to minimize manning expenses.
3.2. Applied HRM Practices in Shipping
An analysis of the applied HRM practices follows, which illustrates shipping companies’
implemented HRM systems. It is important to examine how shipping companies manage their
human resources, if and how the HRM activities differ due to the culturally diverse personnel
and, if and how the HRM activities are used separately or in the frames of a unified system.
5
Course material included two books by Andres (1991, 2000).
6
Quotations represent original expressions of the respondents (qualitative data collected during the personal
interviews).
7
Suggested literature in this area: MARCOM Project 1998; Kahveci and Sampson 2001; Sampson and Zhao 2003;
Seng Kong 2003; Knudsen 2004; Froholdt and Knudsen 2007; Theotokas and Progoulaki 2007.
8 Maria Progoulaki
3.2.1. Human Resource Planning

HR planning is “a process that anticipates and maps out the consequences of business
strategy on an organization’s human resource requirements. This is reflected in planning of
skill and competency needs, as well as total headcounts” (Price 2004: 352). This function is
considered a unifying ring in the Strategic HRM chain. Research showed that almost 70% of
the companies were taking into consideration the available numbers and skills of the seagoing
personnel when strategic decisions were taken. These strategic decisions may involve fleet
expansion (purchase of ships/new buildings), sales or scraping of vessels, technological
advancement of the fleet, flag choice, changes in legislative framework, entrance to
international stock market, etc. Table 4 below shows that over 70% of the companies
conducted maritime HR planning, and mainly large and medium- sized companies.
Table 4. Conduct MHR Planning (per company size)
Company size* Large Medium Small

Yes, conduct MHR planning 71.4% wherein, 96.4% 79% 44.1%
No 28.6%
*
Large-sized >16 vessels, Medium- sized 5-15 vessels, Small- sized 1-4 vessels.
Personal interviews with the respondents revealed that MHR planning is perceived by a
share of the shipping companies as an activity of the short-run crew operations, and not as
part of both the short and long-run operations. More specifically, while there were crew
managers who considered rotation, creation of pool, retention, search for recruitment sources,
line up system and cooperation with a manning agency (sub-contractor) as essential
components of the MHR planning activity, in very few cases was there a cooperation among
the operations, technical and crew departments. Moreover, statistical analysis of past data
from employment, contract duration, or even case studies analysis did not take place. The
only statistical analysis observed was retention rates (per rank of crew), which is a
prerequisite from Tanker Management Self- Assessment Guidance (TMSA) for all companies
managing/ operating tanker vessels 8. Finally, the creation and retention of a pool of seafarers 9
was the most common measure to control the supply of seagoing personnel and cover the
demand in the long-run. Table 5 shows that the vast majority of the shipping companies who
kept a pool of seafarers was companies that own/manage/operate more than sixteen vessels;
this is strongly related to the economies of scale and the ability to retain a dedicated seagoing
personnel, considering the special characteristics of the mariner’s occupation and the strong
competition among shipping companies.
Table 5. Keeping a pool of seafarers (per company size, national group and rank)
8
Tanker Management Self Assessment (TMSA) is a best-practice guide established by Oil Companies International
Marine Forum (OCIMF 2008). The application of TMSA Guidance is a tool to separate the most quality
operators of tanker vessels. In this way, encourages the development of cross-cultural competency for the
seagoing personnel.
9
A “pool” of seafarers is usually established for each company’s crew requirements. Seafarers are offered certain
incentives, in order to become the company’s pool, i.e. dedicated seagoing personnel. It is a common practice
in the maritime industry for shipping, ship management and crew management companies.
Large Medium Small

Yes 73.6% Wherein*, 96.4%% 79% 44.1%
No 26.4%
Sum 100%
Officers Ratings
Greeks Foreigners Greeks Foreigners
Yes 85.5% 61.6% 69.7% 53.9%
Wherein**, No 14.5% 38.4% 30.3% 46.1%
100% 100% 100% 100%
*
**
The practice of keeping a pool of seafarers was observed among the medium and large
sized companies, mainly because of the financial burden that it entails. In this way, MHR
planning was somehow linked to the reward activity of HRM, which will be discussed later
on. Other factors that influence the ability of a company to retain a dedicated seagoing
personnel, is the fleet size and the type of vessels. A company that operates many ships is
able to rotate its seagoing personnel, while same ship types or “sister vessels” 10 can be used
also for rotation. Younger, technologically advanced ships - compared to old ships- are more
attractive to the seafarers, because of the lower work load for repairs and maintenance. Based
on the above, although HR planning is one of the HRM functions that one assumes to be
applied by companies implementing unifying and coherent systems that support their strategic
directions, it was found to be an organized activity only in some large- sized companies.
3.2.2. Recruitment
Attraction and recruitment of seafarers is an essential part of HR management in
shipping, especially considering the globalized and international character of the maritime
labor market. The analysis showed that certain internal and external sources were most
preferred for the two main national groups (see table 6). According to the data, shipping
companies used mainly internal sources for the Greek seafarers, and specifically the
company’s crew department, ex-crew which seeks to be re-employed, database of
applications and Curriculum Vitae (CV), as well as recommendations from already employed
seafarers. Moreover, young nationals to be employed as cadets were directly recruited by the
national marine academies. Regarding the foreign crew, the vast majority was found by sub-
contracting this activity to an independent manning agency/ crewing company. This decision
is affected by the difficulty to access a maritime labor market that is geographically distant
and/or regulatory protected. However, shipping companies took advantage of some internal
sources in an attempt to attract seagoing personnel, such as internal promotions of crew,
database of CV, and recommendations from already employed seafarers (that usually
involved relatives). The choice to establish an affiliated/ branch manning office abroad was
supported by some companies, however various factors affect this strategic decision, which
will be discussed in section 3.2.6.
10
“Sister” vessel is a term used in shipping, to describe a pair or more ships that are designed and built identically
the same.
10 Maria Progoulaki
Table 6. Internal and external sources of attraction/ recruitment of seafarers
Officers Ratings
sources Greeks Foreigners Greeks Foreigners Average
Crew department 1 81% 5% 88% 4% 44%
Ex-crew 68% 9% 69% 8% 38%
Data base with CV and 48% 23% 47% 19% 34%
INTERNAL
applications
Internal promotions 47% 29% 28% 21% 31%
Recommendations from 36% 14% 38% 10% 24%
crew
Affiliated/ Branch manning 2% 16% 3% 18% 10%
office
Company’s website 3% 4% 0% 2% 2%
Independent manning 8% 91% 9% 84% 48%
agents/ crew management
EXTERNAL
companies (sub-contractors)
Marine/Maritime 27% 7% 6% 6% 12%
Academies/ Universities
Advertisements in 0% 6% 0% 4% 3%
newspapers
Others2 5% 2% 0% 2% 2%
*
1
Company’s crew department can receive directly applications and CV from seafarers.
2
“Others” may include: Ship-owners’ Association, Seafarers’ Union, Maritime Training Centers, and
media (radio, TV).
3.2.3. Selection
Although manning cost plays a crucial role in the profitable operation of a ship, the
problems that the world maritime industry encounters with regard to the available quantity
and quality of seafarers strongly affect the selection criteria. Besides the requirements in
terms of certificates, medical condition, experience and age of the seafarers, companies seek
to explore other characteristics that attribute to the perceived quality of the candidate human
resources. These characteristics involve technical knowledge, know-how, and personality.
According to the analysis, in order to examine the various selection criteria, 82.4% of the
companies mentioned that they interview their candidates. The other companies were totally
outsourcing this activity to independent sub-contractors, by implement a “crew management”
scheme (more about sub-contractor’s role follow in section 3.2.6). A further analysis among
the companies that conducted interviews showed that interview was actually taking place for
certain national groups of seafarers. The reason for this is the geographical distance between
the shipping company and the seafarers, and the high travel and visa expenses that a visit to
the company’s premises would entail. So, interviews mainly focused on Greek officers
(97%). With regard to foreign officers, 66% of the companies interviewed their candidates
either by visits of a company’s representative (port captains, superintendents, crew managers,
etc.) to the cooperating manning office or marine academy abroad, or with the use of a web-
camera. Percentages are a bit lower for the foreign ratings (51%), while Greek candidate
ratings were interviewed in 66% of the cases. Interviews also took place on board, after the
recruitment, in order to examine the re-employability and potentials for promotion for the
national and foreign seafarers. Such interviews were conducted during the short visits of the
vessels (lasting from a few days till several weeks) from assigned company’s managers with
sea experience (crew manager, superintendent and/or port captain). It is important to note that
interviews concerning senior officers, i.e. positions of master and chief engineer on board,
usually were conducted by a group of interviewers, comprising usually crew manager,
technical and/or operations manager, and –if possible- the assigned manning agent.
Besides interview, almost half of the companies’ sample (48.2%) used tests during the
selection of the candidate seafarers. The most popular tests were on English language skills,
computer skills, medical-psychological profile and technical maritime knowledge (see table
7).
Table 7. Tests for the selection of seafarers (per rank and national group*)
Officers Ratings
Tests for: Greeks Foreigners Greeks Foreigners Average**
English language competency 55.8% 34.0% 13.6% 28.6% 33.0%
Computer skills 46.5% 29.8% 9.1% 20.4% 26.5%
Medical- psychological profile 15.9% 39.6% 8.7% 30.0% 23.6%
General and specific technical
shipping knowledge (e.g.
navigation, engine operations,
cargo handling etc.) 30.2% 19.1% 9.1% 10.2% 17.2%
Crisis Management 7.0% 4.3% 4.5% 2.0% 4.5%
Personality 4.7% 4.3% 4.5% 2.0% 3.9%
*
**
Percentages in this column refer to average of percentage of multiple responses- cases.
According to the above, apart from the required by international regulations11 and
national laws of the seafarer’s country of origin and flag of vessel, companies proceeded to
these additional tests, in order to distinguish the most appropriate candidates. One shall take
into account that some skills, such as computer are most important for officers who conduct
administrative work. Most of the tests applied to officers, because of the high rank and
leading role they have on board. Psychological tests were an extra requirement for foreigners
(regardless their rank), mainly because shipping companies seek to have an official evidence
from approved and accredited medical clinics 12 about the psychological condition of the
seafarer. This concerns foreigners, because the respondents had less flexibility, due to
geographical distance, to examine the candidates’ mental condition via an interview.
Computer-based tests were additional tools to examine the know-how of the seafarer –mainly
the officers in charge- in strictly job-specific matters, such as ship navigation, engine
operation, cargo storage and handling, etc.
11
Referring mainly to the Standards for Training and Certification of Watchkeepers (STCW) Convention and Code,
established by the International Maritime Organization (IMO 2010).
12
Medical clinics and hospitals receive official accreditation by national bodies (such as DOH- Department of
Health in the Philippines), and/or Protection and Insurance (P&I) Clubs. The last operate as a mixture of an
insurance company, a law firm and a loss adjuster. The P&I Club exists in order to help the ship owner and
pay his liability claims (Seward 2002).
12 Maria Progoulaki
3.2.4. Performance Evaluation

“Performance management is important because it plays a pivotal role in any
organization’s human resource framework” (Price 2004: 495). In the performance evaluation
of the seafarers, standard appraisal forms are used.
Table 8. Sub-groups of evaluation criteria (for officers and ratings)
Officers
Factor label Related factors (evaluation criteria)
1. Professional ambitions Communication and cooperation skills, teamwork, medical fitness,
initiative, easiness in implementation of company’s policies, safety
(representative factor: awareness, leadership skills, level of training and knowledge,
willingness to learn and willingness for self-development and self-motivation, ability to learn,
personal progress) stress tolerance, English language competency, environmental
awareness, loyalty, confidence, character, personality
2. Know-how Navigation, cargo handling skills, incident investigation analysis and
crisis management, accounting and financial management, computer
(representative factor: skills, administrative skills, seamanship
seamanship13)
3. Sense of responsibility Dignity and integrity, responsibility and maturity, sobriety, discipline
and self- control, ability to manage multi-nationalism on board, sea
(representative factor: experience, promptness and time performance, diligence, willingness
Responsibility and maturity)
4. Professionalism Judgment, comprehension and common sense, international
regulations awareness, quality of work, attitude, behavior, providence,
(representative factor: personal performance at work, sense of order, house keeping, watch
Quality of work) keeping, relations with subordinates, colleagues and third parties
Ratings
Factor label Related factors (evaluation criteria)
1. Professional Medical fitness, teamwork, communication and cooperation ability,
consciousness initiative, self-development and self-motivation, ability to learn,
easiness in implementing company’s policies, environmental
(representative factor: awareness, stress tolerance, loyalty, safety awareness, English
teamwork) language competency, training and knowledge, seamanship, sense of
order, house keeping, ability to co operate with multinational crew
2. Contribution to Navigation and cargo handling skills, appearance (uniform),
maintenance of vessel contribution to ship’s safe and effective operation, sea experience,
(representative factor: diligence and willingness, promptness and time performance,
Diligence and eagerness) judgment, comprehension and common sense
3. Personality Character and personality, watch keeping and other assigned duties,
(representative factor: discipline, self- control, ability to solve problems, confidence, attitude,
Character and personality) behavior
4. Sense of responsibility Responsibility and maturity, dignity and integrity, sobriety, relations
(representative factor: towards superiors, colleagues and third parties, personal performance
sobriety) of work, management ability
The survey showed that in 68% companies the appraisal form is the same for both
officers and ratings, despite the fact that they hold different duties on board. In these cases
13
Seamanship has to do with the mariner’s physical strength, diligence, sense of responsibility and know-how
(Østreng 2001).
selection criteria remain the same, while there was no differentiation based on the nationality
or cultural background of the appraisee. A factor analysis among more than forty evaluation
criteria showed that there are certain groups of criteria (factors) that are acknowledged by the
companies (see table 8). Appraisal forms were filled in by the superiors on board, i.e. master,
chief officer, chief engineer and engineer B’. Senior officers (master and chief engineer) were
evaluated by the company’s shore-based assigned managers, i.e. for Greeks the crew manager
and/or superintendents, while for foreigners the assigned manning agent.
More specifically, with regard to the officers’ rank, what seemed to matter most were
professional ambition, know-how, responsibility and professionalism. Professional ambition
is related to the potentials for an officer to follow the mariner’s career, and consequently, to
possible long-lasting cooperation and dedication to the company. Moreover, know-how is
vital for an officer of high quality. Sense of responsibility and maturity is related to the pre-
requisite of long sea experience which is considered vital for a practice-oriented job as the
mariner’s one.
On the other hand, professional consciousness, contribution to maintenance of ship,
personality and responsibility seemed to value more for the ratings. Professional
consciousness is depicted in the awareness of safety measures, international regulations and
company’s policies, along with the level of training and technical knowledge. Contribution to
the condition of the ship (maintenance) is very much appreciated, and related to eagerness,
teamwork and diligence. Personality and responsibility are reflected in the levels of diligence
and obedience.
3.2.5. Rewards
A reward system consists of a pay and other benefits (Price 2004). Pay scales in this
research were found different not only among the shipping companies, but also among
different vessel types on which the seafarers served, rank and nationality of seafarers. Due to
intense competition among the shipping companies, exact pay details were not provided. The
analysis was based on given pay scales per rank and nationality of seafarers, for the basic
vessel types (tankers, bulk carriers, container vessels, specialized, other). Greeks were found
to receive the highest salaries compared to all the other nationalities, in all ranks, and
regardless the vessel type. It was clear that national officers receive at least double wages,
while national ratings’ salaries can reach up to three times over a foreigner’s one. The
observed difference can be explained by the shortage of national seafarers, and mainly
officers, and the intense competition among Greek-owned shipping companies to retain their
–perceived as- most valuable human resource, and to attract the best candidates. Further,
shipping companies consider when they design a reward package the different living cost in
the seafarers’ countries of origin, and the currency that the last are getting paid. Shipping
companies also consider the profile and fame of their company, the age of the fleet and
definitely what their competitors offer.
Intense competition in the market and the encountered shortage of –mainly officers- led
the companies to the implementation of an extended reward system that includes, besides the
monthly salary, a variety of incentives and benefits. A percentage of 66.3% of the sample
answered that they offer benefits and incentives (mainly large and medium sized companies,
with 70% and 75% respectively, and less small-sized companies, with 54%). As Table 9
depicts, companies offered different benefits and incentives to the seafarers, with nationality
and rank to be the main factors that reasoned this differentiation. The analysis revealed that
14 Maria Progoulaki
large- sized companies focus more on their national officers, while medium- and small- sized
companies focus on their officers in general, regardless nationality. In general, one can say
that national officers enjoy more benefits, compared to their foreign colleagues. However,
this is not the case for the national ratings, who are continually substituted by low-paid
foreigners. It seems that shipping companies were trying to keep their most valuable resource,
which they considered to be their officers (mostly Greeks, but also foreigners). Concurrently,
companies aimed to retain a pool of qualitative foreign ratings, in an attempt to substitute
their expensive nationals. This seems to be an ample evidence of the different value that
shipping companies ascribe to seafarers of different nationality.
Table 9. Offered benefits and incentives (per national group and rank)
Officers Ratings Average*

1. Performance bonus 43% 38% 7% 19% 27%
2. Seniority bonus 45% 26% 7% 17% 24%
3. Pension plan 7% 3% 3% 1% 4%
4. Free-of-charge or subsidized 27% 14% 0% 4% 11%
training
5. Stand-by wage 43% 14% 0% 7% 16%
6. Support to seafarers’ families (e.g. 43% 10% 14% 10% 19%
gifts)
7. Re-joining bonus 55% 57% 0% 30% 36%
8. Extra bonuses (e.g. hull cleaning, 0% 0% 3% 13% 4%
paintings)
9. Others** 21% 15% 3% 12% 13%
*
Percentages in this column refer to average of percentage of multiple responses- cases.
**
‘Others’ include: offering interest-free loans, bonus for successful audits, loyalty bonus, internal
promotions, provident fund, prizes and various training awards and honours bonuses.
3.2.6. Training
“Competitive advantage comes from the development of an organization’s human capital:
a learning experience for employees and the organization as a whole” (Price 2004: 585). In
this vein, and considering the constantly changing environment of the shipping industry,
training of the maritime human resources is vital. Analysis showed that there were shipping
companies which -over the obligatory training and certification that seafarers need in order to
be employed- offered additional training to their seagoing personnel. Additional training
varied from a simple briefing regarding safety and security matters and/or company’s
policies, to cargo handling, crisis management, incident investigation analysis, or even
training in simulators (for engine and deck officers). A 65.9% of the companies’ sample
offered such training that mainly targeted the officers, due to the leading position they hold on
board. Greek officers were found to receive such training at most (78.7%), compared to the
foreigners (39.5%). Additional training was rarely offered to ratings.
Moreover, due to the character of the mariner’s profession, sessions for the
familiarization of crew prior joining the vessel are a common practice. Shipping companies
offer such sessions basically to their officers (80% for both Greeks and foreigners), and less
to the ratings (see table 10). Duration of familiarization varies, depending on the experience
of the seafarer, and whether he/she is an ex-crew of the company and on the joining vessel.
Familiarization sessions can take place at shore, prior the embarkation, and on board,
however it was not clarified during the interviews, to which type the companies referred.
Table 10. Additional training and familiarization of seafarers

(per national group and rank) *
Officers Ratings
Offer additional training 78.7% 39.5% 9.6% 18%
Offer familiarization sessions 80.3% 77.9% 25.8% 40.4%
*
Percentages refer to multiple responses cases.
3.2.7. Outsourcing HR Activities

Finally, a special insight to the role of the sub-contracting manning agencies/ crew
management companies showed that all the companies of the sample used some type or a
combination of subcontractors for outsourcing manning or crew management activities. In the
majority of the cases (71.1%), independent manning agencies or crewing companies placed at
maritime labor supplying countries, such as the Philippines, Ukraine, Romania, Russia,
Indonesia, etc. were used to outsource all or certain HRM activities (see table 11). These
agencies may be assigned the manning or crew management of one or more vessels. Manning
involves search, selection, recruitment and payments’ settlement of the whole crew or certain
seafarers, while full crew management involves recruitment and management of crew, on
behalf of the owners. The establishment of an affiliated/ branch manning office, especially
abroad, is a strategic choice that seemed to be taken by operators of large fleets. The reason
for this is the increased demand for seagoing personnel which leads those companies who
operate many vessels, in the direct access to core maritime labor markets (such as in the
Philippines, East Europe, and elsewhere). The cost of operating such an office abroad, and the
regulatory framework of some countries, are a hindrance to small or even medium sized
shipping companies. The basic reason for the selection of a subcontractor is the access to
certain maritime labor supplying markets (78.2% of multiple responses-cases). Other
selection criteria included the long-lasting cooperation and trust (51.7%), manning costs
(36.8%), management fees (23%) and others.
Table 11. Subcontractors for manning/ crew management
*
Type of subcontractor
In Greece 4.4%
Affiliated/ Branch office
Abroad 17.8%
Independent manning agent/ crewing In Greece 34.4%
company Abroad 71.1%
Other** Abroad 12.2%
*
**
Other: manning/ crewing companies that operate via internet.
16 Maria Progoulaki
3.3. Examining the VRIO Criteria for Achieving Competitive Advantage
Human resources, compared to financial, physical, organizational and intangible

resources were ranked, with respect to their importance and their contribution to companies’
competitiveness, as the most important by shipping companies of the sample. However, if one
focuses to the size of the companies, one can see that opinions differed. Human resources
were considered as the most vital resources for large- and medium sized shipping companies,
while for companies of small size, financial resources preceded. This is understandable, since
small-sized companies have limited access to financial resources, compared to others. As
table 12 shows, the way the companies assess the importance of their financial (operation,
sale and purchase, chartering policy, etc.), physical (fleet size, type, age and technology of
vessels, etc.), human (skills and qualifications, number of employees, etc.), organizational
(corporate culture, networks, planning and control systems, etc.) and other intangible
resources (such as fame, social profile, quality of offered services), also varied according to
their size. The identification of the importance of human resources and their contribution to
companies’ competitiveness underline the need for a more detailed examination of the way
they manage these resources. In the following analysis results that are related to the four basic
tenets of RBV, i.e. value, rareness, imitability and organization, are presented and discussed.
Table 12. Importance and contribution of resources to the shipping companies’

competitiveness, according to size of company* (mean and hierarchical order)
Rank from 1: most crucial to 4:

less crucial factor Sum of sample
(mean) Large Medium Small
1. Financial resources 2nd (2.66) 3rd (3.26) 2nd (2.67) 1st (2.10)
th th
2. Physical resources 4 (3.34) 5 (3.67) 4th (3.00) 4th (3.33)
st st
3. Human resources 1 (2.13) 1 (2.00) 1st (2.26) 2nd (2.13)
4. Organizational resources 3rd (2.79) 2nd (2.67) 3rd (2.77) 3rd (2.96)
th th
5. Intangible resources (such as 5 (3.69) 4 (3.41) 5th (4.99) 5th (3.70)
fame, brand name, etc.)
*
Large-sized >16 vessels, Medium- sized 5-15; vessels, Small- sized 1-4 vessels.
3.3.1. Criterion of Value

Previous studies concerning the Greek-owned shipping (Theotokas and Progoulaki 2007)
have shown that in the multicultural working environment of shipping industry, seafarer’s
nationality may affect the perception of the companies’ management, with regard to his/her
value. In order to examine the satisfaction of the first criterion of VRIO model, perceived
value ascribed to the employed human resources was tested. In order to find out nationality’s
role in the evaluation of seafarers, companies’ representatives were asked to grade the
different nationalities of the seafarers employed by their companies. Certain characteristics
that are considered as crucial for the efficiency and productivity of seafarers were used for the
evaluation. The survey revealed that shipping companies’ representatives do not ascribe the
same value to their seafarers, as different nationalities score differently. According to data in
tables 13 and 14, seafarers of almost all nationalities scored above average, which means that
companies acknowledge their valuable characteristics.
Table 13. Evaluation of officers’ characteristics (per nationality*)
Score from Officers

0: not existent to 4: excellent
(mean) GR FIL RUS POL ROM UKR
1 Work performance 3.8 3.4 3.4 3.3 3.4 3.5
2 Teamwork 3.5 3.5 3.1 3.0 3.1 3.4
3 Communication skills 3.8 3.4 3.2 3.1 3.3 3.4
4 Initiative 3.9 2.9 3.0 2.6 3.1 3.4
5 Training skills 3.9 3.1 3.5 3.3 3.5 3.5
6 Leadership 3.9 2.9 3.2 2.9 3.3 3.5
7 Trust 3.6 3.3 2.7 2.6 2.4 2.9
Manage multiculturalism
8 onboard 3.7 3.2 2.6 2.7 2.9 3.2
Obedience to company’s
policies and international
9 regulations 3.7 3.5 3.0 3.0 3.0 3.3
Total Mean scores 3.8 3.2 3.1 2.9 3.1 3.3
*
GR: Greeks, FIL: Filipinos, RUS: Russians, POL: Polish, UKR: Ukrainians.
Table 14. Evaluation of ratings’ characteristics (per nationality*)
Score from Ratings

0: not existent to 4: excellent
(mean) GR FIL RUS POL ROM UKR
1 Work performance 3.8 3.5 3.3 4.0 3.1 3.3
2 Teamwork 3.6 3.5 3.1 4.0 3.1 3.1
3 Communication skills 3.8 3.5 3.0 4.0 3.1 3.2
4 Initiative 3.8 2.6 3.0 4.0 3.1 3.1
5 Training skills 3.8 3.1 3.3 4.0 3.1 3.2
6 Leadership 3.7 2.6 3.1 4.0 3.0 3.1
7 Trust 3.6 3.3 2.9 3.5 2.3 2.6
8 Manage multiculturalism onboard 3.7 3.1 2.7 4.0 2.6 2.8
Obedience to company’s policies and
9 international regulations 3.8 3.5 2.9 4.0 2.7 2.9
Total Mean scores 3.7 3.2 3.0 3.9 2.9 3.0
*
GR: Greeks, FIL: Filipinos, RUS: Russians, POL: Polish, UKR: Ukrainians.
Results showed that Greeks, Ukrainians and Filipino officers were considered as officers
of highest value, compared to the rest nations, while in the case of ratings, Polish, Greek and
Filipinos hold the highest scores. One should note that for both officers and ratings positions,
Greek seafarers are valued higher, although they cost more to the companies. This is an
evidence of the fact that shipping companies perceive that Greek seafarers contribute to the
competitiveness of the companies more than their foreign colleagues, and explains why they
continue to be chosen by the companies. Moreover, as presented in section 3.2, it is obvious
that national employees were considered of higher value, since they also received higher
salaries and benefits.
18 Maria Progoulaki
3.3.2. Criterion of Rareness

The second tenet of RBV is rareness of the resource. Rareness is a characteristic that can
be realized through comparisons and benchmarking. To find out whether shipping companies
are aware of the rare characteristics of their employees, the interviewed managers were asked
if their companies seek to find and compare relevant data regarding their competitors’
employees. These comparisons are perceived as an informal type of benchmarking, for the
needs of this survey. Table 15 shows that almost 50% of the companies did not make such
comparisons. This implies that these companies have not identified what could be the rare
characteristics of their human resources which may differentiate them from those of their
competitors. This lack of knowledge means that companies are not able to build on these
characteristics and to manage human resources in a way that will lead to an increase of the
seafarers’ performance and to the ships’ competitiveness. Results show that the companies’
fleet size played a vital role in their effort to compare their seafarers’ characteristics with
those of their competitors. The companies that followed such a policy, in order to ascertain
rareness of their human resources, were mainly large- sized companies. Medium- sized
companies also conducted this type of benchmarking, while very few small- sized were
interested or able to do such. This is attributed to their limited resources, not only financial,
but also in terms of specialized human resources that could undertake the task.
Table 15. Conduct benchmarking, in order to examine the quality

and quantity of seagoing personnel (per company size)
Company’s size* In Total Large Medium Small

Yes, conduct HR benchmarking 52.7% wherein, 50.0% 35.4% 14.6%
No 47.3%
*
Table 16. Conduct benchmarking, in order to examine the best HRM

and crew management practices (per company size)
Company’s size* In Total Large Medium Small

Yes, conduct best HRM 51.6% 53.2% 31.9% 14.9%
practices benchmarking wherein,
No 48.4%
*
Barney and Wright (1998) propose that one of the major implications for companies
realizing that human resources possess the potential for being a source of sustainable
competitive advantage is to understand how the HR and HR practices of their companies are
compared to those of their competitors. Benchmarking of best HRM and crew management
practices helps them to make such comparisons. Research showed that only 51.6% of the
companies conducted this kind of comparisons (see table 16). This concerned mainly
companies of large- size (53.2%). The fact that almost half of the respondents conduct this
type of benchmarking (or comparison) is evidence that part of the companies’ sample did not
systematically try to exploit the potential contribution of their seafarers for the creation of
sustainable competitive advantage.
3.3.3. Criterion of Inimitability

Shipping companies’ representatives were asked to identify whether they have realized
that competitors have tried to imitate the HRM practices they applied. The majority of
respondents (74.7%) claimed that there is no imitation among shipping companies (see table
17 below). Respondents stated that imitation is difficult to take place, due to the task
environment of the shipping industry and the high spatial complexity of shipping companies.
Table 17. Imitation of HRM practices by competitors (per company size)
Company size* Large Medium Small Total

Yes, imitation observed among competitors 15.4% 7.7% 2.2% 25.3%
No 74.7%
*
However, respondents admitted that in the cases that imitation is observed, it mainly
concerns large- sized companies who are competing. One should note that networking is
playing an important role in the fields of Greek shipping companies, and that it is considered
as one of the factors that contribute to the competitiveness of the Greek-owned shipping
companies in international shipping markets (Theotokas 2007). This finding was further
supported and corroborated by a part of the respondents, who clearly said during the personal
interviews that many crew managers of the Piraeus and Athens- based companies keep
personal amicable relations. This network is a common practice to arrange informal meetings,
where issues related to crew management were discussed. So, although aggressive imitation
was not observed by the respondents; imitation not only exists, but is actually promoted by
the companies and their managers.
With regard to the fields of imitation, it was revealed that large- sized companies observe
that imitation concerned almost all their HRM practices, and mainly of rewards system,
relations between employer- employees, training and recruitment (see table 18). Large- sized
companies are able to offer higher salaries and a variety of other benefits, while they are able
to create and sustain stronger relations with their personnel, based on trust. Moreover, large-
sized companies have the ability to undertake the cost of training (even in-house), or the cost
of establishing affiliated companies (Papademetriou et al. 2005) that give them direct access
to global maritime labor market. It is expected that these companies have the resources that
allow them to seek for the continuous improvement of their practices. In medium- sized
companies, imitation concerned mainly their rewards practices, while in very few small- sized
companies it concerned recruitment, rewards, selection, and relations with the employees.
One should note that the group of small- sized companies included firms belonging to
traditional ship owning families that are well-known for the personal and long lasting
relationships with their seafarers, and for implementing practices that lead to the creation of
personnel’s trust and dedication. This intangible asset they possess is considered as one of the
main strengths they have (Thanopoulou and Theotokas 2007; Theotokas 2007). In this
context, it is expected that these companies are considered as a benchmark, with regard to
specific HRM practices.
20 Maria Progoulaki
Table 18. Observed imitation in HRM practices, referring to seagoing

personnel (per company size)*
Company size**/ Large Medium Small

HRM practices
1. HR Planning 19.6% 0% 0%
2. Attraction/ Recruitment 27.7% 0% 5.8%
3. Selection 21.9% 0% 3.5%
4. Training 27.7% 2.4% 0%
5. Appraisal 13.8% 0% 0%
6. Rewards 32.5% 20.9% 5.7%
7. Relations between employer- 30.2% 0% 2.4%
employee
*
**
3.3.4. Criterion of Organization Support

According to RBV, support of the human resources by the organization is the fourth tenet
in the companies’ effort to build a sustainable competitive advantage by utilizing the
potentials of their HR. Shipping companies employ two distinct groups of employees; those
working in the offices ashore and those working onboard the ships. The task environment of
these two groups differs substantially. One could assume that different task environments
require different HRM practices. This explains the fact that different departments perform
managerial tasks of these two groups in the shipping companies. However, seeing from a
resource-based view, the implemented practices by different departments should be part of a
unified and coherent HRM system. The level of cooperation between the two departments
(considering both are operated) is an evidence of the organizational support and the existence
of common, unified HRM systems for both seagoing and shore- based personnel. Data
revealed that this does not seem to be the case for the vast majority of the examined
companies. While almost all of them (89%) operated a crew department, only 20.9% of the
sample, mainly large companies, operated a separate department for the offices’ personnel.
However, out of this share, only three companies stated that they shared activities
(specifically related to the training of employees).
The lack of unified HRM systems was evident from the fact that the majority of the
shipping companies did not implement the same practices even in the case of seafarers.
Different HRM practices apply to different nationalities of seafarers. While this is
understandable up to one point, due to the geographical distance between the shipping
company and the foreign seagoing personnel, the detailed analysis showed that it is strongly
related to the perceived value of certain groups of their human resources (see section 3.2).
Results from the field survey also revealed that a set of separate and unlike crew management
practices was implemented for the other sub-group of seagoing personnel, comprising of
officers and ratings.
All the above reveal the perception that shipping companies have, regarding their
seafarers and the different value they ascribe to them. While officers are perceived as the
most valuable human resource, companies do not manage issues related to their employment
applying the same practices. Absence of unified MHRM systems can be explained by the
intense competition for the attraction and retention of the perceived as the most valuable
human resource- the nationals, and mostly, Greek officers. Further, the problem of attraction
and retention of the most qualified foreign seafarers was also observed. However, different
MHRM practices were applied in a different way among the two main sub-groups of
seafarers; national groups and groups per rank. The analysis showed that the last criterion of
VRIO, i.e. organizational support, remains a challenge. Finally, it became apparent that a
large portion of the shipping companies have a limited understanding and focus on the
potential contribution of their HR. This may be an evidence of the limited value that many
shipping companies ascribe to the seafarers, and one of the reasons behind the limited ability
of the industry to retain its HR and to recruit young qualified employees willing to have a
career at sea. Adoption of the RBV for the management of HR offers an alternative that may
contribute to confront these problems at company level.
4. PROPOSED FRAMEWORK
Results of this survey led to the creation of a framework of choices which includes
strategies for the management of maritime human resources’ cultural diversity. This
framework (see figure 1) is developed on three generic cultural assumptions-choices, which
are (i) the avoidance of culture, (ii) the limitation or elimination of cultural effects, and (iii)
the exploitation of culture (inspired by the assumptions of ‘ignore-minimize-utilize’, by
Schneider and Barsoux 1997).
Figure 1. Framework for the Strategic Management of Human Resources’ Cultural Diversity in the
Shipping Company.
According to these attitudes, four strategies of managing crew’s cultural diversity are
formulated. The four strategic approaches are based on Fine’s (1995) suggestions about
22 Maria Progoulaki
education, support groups and human resource policies, as well as Moreby’s (1990) liaison
manager 14 for managing multicultural crew. The four strategies of the model include: (a) ‘Do
nothing’, (b) Intervene onboard and/or ashore, (c) Develop skills, and (d) Integrate actions.
Each strategy of managing cultural diversity is evaluated according to the VRIO criterions
(Barney 1997), and discussed by using the results from field survey.
4.1. Ignoring Cultural Diversity
The first strategy of ignoring or avoiding cultural diversity was adopted by a number of
shipping companies whose main motive for the employment of foreign crew is the reduction
of manning cost. The value of human resources here is twofold: (i) in the case of single-
nationality crew; decreased manning expenses and limitation of intercultural problems on
board create value (ii) in the second case, national officers are recognized as resources of
higher value due to their expertise and know-how, while the low-cost crew members add
value because of the contribution they have in the reduction of running expenses. In the case
of mixing nationals and foreigners, the master and senior officers are assigned leadership
roles and the role of managing cultural diversity on board, without ever having been training
on that. Managing cultural diversity in the dynamic working environment of a vessel is a huge
responsibility, and experience alone is not a sufficient qualification. In this strategy, the value
of human resources is recognized, but in different terms.
Qualified foreign seafarers are rarely perceived as valuable, due to extreme competition
in the supply of maritime human resources, the stereotypical thinking of national crew
managers, the intermediate’s role of manning agents, and other reasons. The criterion of value
is not completely fulfilled in this strategy, while rare characteristics of the human resources
are not examined. In this case, imitability by competitors takes easily place, since there is no
organizational support of the HRM system, and most HRM practices are outsourced to
independent manning agents. The strategic approach of ‘doing nothing’ in order to control
and actually avoid cultural diversity is a measure of dealing current problems and conditions
of the market with obsolete practices. This approach may create some profit in the short-term,
but leads to a competitive disadvantage, since such strategies do not assure long-term
effectiveness and do not prepare the organization to face the threats or seize on the future
opportunities in the market. The strategy of ‘doing nothing’ by avoiding cultural diversity can
lead to competitive advantages for the shipping companies that either seek short-term profit
or focus on other resources which they perceive as most valuable (such as sale and purchase
of ships, known as ‘asset play’, etc.).
4.2. The Role of the Mediators and/or Support Groups
The strategy of mediators or support groups can be adopted by shipping companies who
try to minimize the negative cultural effects by employing either single-nationality foreign
14
Moreby (1990: 203) suggested that, “one possible scenario for the future may be ships manned totally by foreign
seafarers plus a ‘super-cargo/ commercial manager’ drawn from the ship owner’s own country”.
crew, or multicultural with national and foreign seafarers (mixed crew where officers are
drawn from the ship owner’s country and rest seafarers come from other countries). This
strategic approach includes two types of mediators and/or the use of a support group (see
figure 2). If one considers that there is ‘region 1’, representing the company headquarters’
country (eg. Greece), ‘region 2’ a country that regularly supplies the company with foreign
seafarers (eg. the Philippines), and ‘region i’ standing for all the other maritime labor
supplying countries, then the strategic solutions can be:
A. Foreign Mediator, at Shore (Mediator of Nationality 2)

This proposal is similar to the suggestion that Moreby (1990) made for the management
of multicultural crew, and Hoecklin’s (1996: 151) ‘cultural interpreter’ role. The mediator’s
role here is to be in the middle of the communication and cultural interpretation between
seafarers (found in single- or multi-nationality crew) and the shore-based personnel. The
mediator’s nationality who is placed at company’s headquarters has to be the one of the
foreign employed seagoing personnel, in order to translate and interpret the cultural meanings
of the foreigners’ messages and attitudes. This scenario is already in practice, and was found
in several shipping companies of the sample, which employed e.g. Russians and Filipinos in
the technical and operations department at shore.
B. National Mediator, Regularly on Board (Mediator of Nationality 1)

In this case, mediator is drawn from the country of the ship owner/manager/ operator
(nationality 1 from region 1) and regularly placed on the vessels that are manned with
multicultural (mix of nationals and/or many foreigners) or foreign single-nationality crew.
The mediator has a different role than that of the master; however, due to the high cost of this
venture, the master may be additionally assigned this role. It is important though to draw a
line between the master’s normal duties and the responsibilities of mediating. Alternatively, a
chief officer can be assigned this role. The basic assumption of this strategy is that the
mediator is an expertise in cultural diversity management, or the alternative person (e.g.
master) receives the appropriate training. Otherwise, the person that plays this role will
reproduce and extend the stereotypes and biases that currently exist among seafarers. While
this measure was found in a number of Greek-owned shipping companies, one should note
that the regular visits of the responsible manager did not clearly focus on the mediation
between conflicting cultures of seafarers or the management of cultural diversity. This
strategic solution involves a medium financial investment that can be adopted by even small-
sized shipping companies. The mediator can be an employee from the shore-based (e.g. crew
manager, port captain, etc.) or seagoing personnel of the company (e.g. master or chief
officer); in all cases training on managing cultural differences is a requirement.
C. Support Groups (Culturally Diverse)

Fine (1995) proposed the culturally mixed support groups as a way for the members to
understand, be familiar with diversity and exchange experience, opinions, and discuss the
difficulties they encounter in their working place. Fine’s suggestion is based on the
psychological and emotional support that the members of the groups need. In shipping
companies though, support groups can take a different form, and comprise members of
different nationality, age and occupational background. Members of these groups can be
seafarers, experts in managing cultural diversity, sociologists, psychologists, crew managers,
24 Maria Progoulaki
etc. These groups will aim to support the seafarers individually and the mixed crew as a
whole, and to face the negative effects of cultural differences. At present, the master of each
vessel is responsible to solve any cross-cultural problems on board, while crew managers at
shore can sometimes help. However, neither of them is trained on how to deal with cultural
diversity; ergo, a group of experts can support not only the master, but also the crew manager
and shore-based personnel. Large- sized shipping companies and even independent manning
agencies/ crewing companies can adopt this strategy, while small-sized shipping companies
can cooperate with each other in this field. Investment in support groups may be high,
because of the new recruits that are required, however it can work well enough if current
employees and managers are trained in cultural diversity management and work in groups.
Figure 2. Strategy of Mediators or Support Groups.
Strategies of mediators or support groups can be adopted individually or in combination,

and can work effectively not only in multicultural crew, but also in foreign single-nationality
crew. Although it is believed that single nationality crew is less vulnerable to conflict,
friction, difficulties in the communication and understanding of the language and cultural
behaviors between the foreign crew and the national shore-based personnel may arise. In any
case, this strategic approach recognizes the value of human resources, since seafarers are
selected individually and according to the skills and ‘fit’ to the company, without the fear or
prejudice towards cultural diversity. Moreover, the employees’ rare characteristics are
acknowledged and utilized. However, this strategy does not fulfil the criterion of
inimitability, because competitors can either copy these measures, or even obtain the
mediators or members of the support groups. It is also very important for the group members
and mediators to be trained in cross-cultural management in order to work effectively as
cultural interpretators. The strategy of minimizing the negative cultural effects through
mediators and/or support groups has a mid-term perspective that can offer competitive parity
to shipping companies.
4.3. Cross-Cultural Training
The importance of cross-cultural training (Perkins 1993; Ferraro 1998) became apparent,
and can work as a strategy of minimizing the negative effects of cultural diversity. Cultural
diversity training programs have been widely used in various business sectors (Romanski-
Livingston 1998) and are also found as multicultural training (Sue 1997). The basic goal of
these training programs, which can be canned or individualized, is employees’ personal
awareness, business awareness and development of diversity skills (Loden 1996). In the
shipping industry, and according to results from the field survey, very few shipping
companies offer cross-cultural training. Usually these training sessions are informal and have
an informational and consulting character, rather than an educational one. So, shipping
companies that adopt this strategy have to carefully design the training program in order to
cover the company’s and the employees’ needs on the issue of managing cultural diversity.
Furthermore, training should focus not only on transfer of knowledge, but also on skills
development. Cultural awareness and cross-cultural training should be strongly related to the
working environment of the participants, so that they can effectively deal with real cases in
the future. Retaining the nationalities of seagoing personnel and the stability of crew
syntheses is important, because this assures cultural stability. Even if there are changes in this
field, the basic structure of cross-cultural training program remains the same, and only minor
alterations and adjustments in the content would be needed.
This strategy recognizes and develops further the value and rareness of the culturally
diverse human resources. Moreover, every training program (unless it is a ‘canned’ one) is
designed according to each company’s needs, so imitability is avoided by rivals. The strategic
approach of cross-cultural training has a mid-term orientation, because examining cultural
differences often gives rise to serious and deep cultural and personal conflicts, which must be
voiced, acknowledged and explored. This exploration is often painful for those who share
their stories about past and present injustices, and can be hurtful for those who feel
implicated, rightly or wrongly, in these stories. Further, people who participate in this training
expect from the company to take into consideration the feedback information and proceed to
organizational changes in order to support and utilize cultural diversity. It is important that
employees who participate in diversity training feel safe to actively express their thoughts15.
So, training is not sufficient on its own, unless the company supports the basic goal of the
training. This requires changes in the organization’s philosophy, culture, systems and
strategies, otherwise only a temporary competitive advantage can be achieved. Sustainable
competitive advantage from managing crew’s cultural diversity can be achieved if the last
criterion of VRIO model is fulfilled; i.e. organizational support.
4.4. Utilizing Diversity to Develop Core Competency
The last strategy of the proposed model represents a complete solution for the
competitive management of cultural diversity in the shipping company. In order for a
shipping company to utilize cultural diversity it has to develop:
15
“Everyone, regardless of cultural background or organizational status, must feel safe to speak” (Fine 1995: 153).
26 Maria Progoulaki
(a) A multicultural corporate culture, and

(b) An integrated system of strategic human resource management.
Organizations should emphasize on the need for integrating to their corporate culture,
those values and practices that will enable people from a different cultural background to
show their skills and capabilities through similar and different characteristics of their culture
(Fernandez 1991; Cox 1993; Cox 1994; Loden 1996). “Policies and practices intended to
support a multicultural workforce cannot fully succeed unless they are grounded in an
organizational culture that embraces multiculturalism” (Fine 1995: 163). Such a culture
should be open to new ideas and ways of doing things, supportive of differences among
employees and flexible in responding to employee needs and concerns. Communication is
central to creating and maintaining this kind of organizational culture: employees and
managers shall communicate with each other. One way to begin creating an enriched
multicultural corporate culture is by continuously monitoring employee needs and concerns.
Companies can take a proactive stance by evaluating employees (through written
questionnaires, interviews, discussion groups, etc.). Assessment is a critical first step, because
in this way companies can understand what their employees’ personal ambitions, what their
special (or rare) characteristics are, and which skills they need or want to develop.
Equally important is the company’s commitment to a code of conduct that will guarantee
each individual’s right to work in an environment that is respectful, supportive and free from
harassment and unfair treatment (Fine 1995: 167). The code of conduct is a guarantee for
employees of their right to be treated with respect and their responsibility to treat others with
respect, and an enforceable document that holds the organization and its employees
accountable for their behavior. A multicultural corporate culture that is open, supportive and
flexible should give rise to organizational policies and practices that are also open, supportive
and flexible. Policies and practices towards cultural diversity must be open to the people and
their cultures, supportive to all employees and sufficiently flexible to accommodate the needs
of all employees, regardless of their nationality. Multicultural policies and practices should
pervade all aspects of the organization, from HR to operations management. Human resource
management can be the starting point for the development of multicultural organizational
policies and practices.
The strategic approach of developing a core competency on the management of human
resources’ cultural diversity also requires the formation of a strategic human resource
management system. Crucial for this attempt is: (a) human resource policies and practices to
be consistent with overall business strategy, and (b) individual components of a human
resource management package to reinforce each other (Mabey and Salaman 1997: 45).
According to these assumptions, relations between HRM activities are dynamic (see figure 3).
There is a flow of information and results from one to another, inputs and outputs, while
several of the activities interact with internal organizational structures and the external
environment of the company.
Figure 3. Interaction, cooperation and information flow between HRM activities.
At the same time, according to the SHRM system, all HRM activities that refer to the
shore-based personnel, the various nationalities and rank of seafarers are interrelated. All
HRM activities are consolidated in an integrated framework, where even the outsourced
HRM activities are controlled and strategically supported. Concurrently, HRM system is
united with the corporate strategy, connected to the multicultural corporate culture and
organizationally supported by all the other systems of the company (see figure 4). In this way
a frame is created, which protects the competitors’ attempts for imitation and contributes to
the retention of the seagoing and the shore-based personnel to the company. Finally, one
should also note that it is important to have a cultural diversity coordinator of the system 16.
Coordinators are vital for the control, evaluation, planning and development of related
strategies, policies or projects. This role is also enriched with the cultivation of multicultural
literacy to the employees and of cross-cultural training to the company.
The last and most complete strategy is the one that fulfils all VRIO criteria and leads to
the creation of a core competency in the management of culturally diverse human resources in
the shipping company. According to this strategy, valuable human resources are recognized,
their rare characteristics are acknowledged, a frame of HRM systems is created in order to
protect from the competitors’ imitability, and organizational support binds all parts together.
This strategy requires time, effort and definitely cost, because it is a long-term approach that
can contribute to the achievement of sustainable competitive advantage.
16
Directors of diversity or diversity co ordinators are found to work permanently to large multinational companies
(Cox 1994).
28 Maria Progoulaki
Figure 4. Integrated Strategic International Maritime Human Resources Management (SIMHRM)

System.
CONCLUSION
Analysis in this chapter showed that maritime human resources are a valuable intangible
resource that can contribute to the creation of sustainable competitive advantage, if managed
properly. Seafarers are often treated as cost elements and not as a strategic resource. In this
way, diversified HRM practices may lead to unfair treatment and loss of a valuable resource.
A company’s implemented HRM strategy has a crucial role, both in the short and the long-
run. On the one hand, in the short-term approach, selection and employment of maritime
labor can be based on the control of wage expenses. This possibly will lead the company to
gaining instant benefits in regard to the overall operational costs of the vessels. However a
low-cost strategy that may jeopardize the vessel’s safe operation, and concurrently, raising the
risk for a safe, productive and profitable long-run performance. On the other hand, in the
long-term approach, employment can be based not only on manning expenses, but also in the
personnel’s long-term performance, with the goal to create conditions for long-lasting
relations of employer-employee and a dedicated seafarers’ pool.
The field survey revealed an absence of unified HRM systems in the majority of the
companies. Shore-based personnel and the national and hierarchic sub-groups of the seagoing
personnel were managed with separate and unlike HRM and crew management practices.
Besides the weak organizational support, imitability is encouraged in the shipping market,
rareness of human resources characteristics is not fully defined, neither universally
acknowledged, while seafarers are considered valuable in two different terms; cost and
perceived quality. In this way, VRIO criteria are partially satisfied only in minor cases of –
mainly large-sized - shipping companies.
This chapter aimed at integrating theories and tools, and adjusting them to the task
environment of the shipping industry. Further, proposed a framework for the management of
cultural diversity in shipping companies. The proposed framework offers a set of strategic
approaches that appeal to all types of shipping companies, regardless of their fleet size. Of
course, creating HRM systems, enriching or changing the already applied systems in order to
utilize cultural diversity requires more effort and higher cost in the short run, compared to
single practices. However, it is crucial for a shipping company to change or evolve the
corporate culture and employees’ philosophy, if it is to develop a core competency based in

the utilization of cultural diversity’s advantages, and achieve sustainable competitive
advantage. The basic advantage of an integrated strategic management of multicultural human
resources system is that it satisfies various needs that a culturally diverse personnel may have,
and concurrently, it satisfies the organization’s goals. So, the shipping company that has an
integrated HRM system which exploits cultural differences is able to employ any nationality
of seafarers and to manage effectively all crew syntheses. This company can also adjust to the
changes of the market and remain competitive in a long-term basis. This means that it is
necessary for the shipping companies to approach the relevant cost and benefit issues from a
long-term perspective. Shipping companies should not perceive the adoption of a
multicultural corporate culture as a distortion of the organization’s character or unique
culture. It should be considered as an evolution and an innovative and pro-active step that can
keep the company competitive for the future. “The more an organization insists on
homogeneity, the more likely it is to eliminate any of the constructive tension between
cultures which can lead to important and innovative advantages” (Hoecklin 1996: 62).
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In: Human Capital and Resources: Developments, Management and Strategies

Series: Economic Issues, Problems and Perspectives. Global Economic Studies.

MANAGING MULTICULTURAL MARITIME HUMAN

a triangulated theoretical framework, the combination of Resource-Based View, Human

Table 1. Size of companies and representative sample

Total No. Small- sized Medium- sized Large- sized

3.1.1. Manning Strategies and Employed Nationalities of Seafarers

Table 2. Implemented crew syntheses (per national group)

Table 3. Implemented crew syntheses (per nationality)

3.1.2. Cross-Cultural Training

3.2. Applied HRM Practices in Shipping

3.2.1. Human Resource Planning

Table 4. Conduct MHR Planning (per company size)

Company size* Large Medium Small

Large Medium Small

Table 6. Internal and external sources of attraction/ recruitment of seafarers

3.2.4. Performance Evaluation

Table 8. Sub-groups of evaluation criteria (for officers and ratings)

Officers Ratings Average*

Table 10. Additional training and familiarization of seafarers

3.2.7. Outsourcing HR Activities

Table 11. Subcontractors for manning/ crew management

3.3. Examining the VRIO Criteria for Achieving Competitive Advantage

Human resources, compared to financial, physical, organizational and intangible

Table 12. Importance and contribution of resources to the shipping companies’

Rank from 1: most crucial to 4:

3.3.1. Criterion of Value

Table 13. Evaluation of officers’ characteristics (per nationality*)

Score from Officers

Table 14. Evaluation of ratings’ characteristics (per nationality*)

Score from Ratings

3.3.2. Criterion of Rareness

Table 15. Conduct benchmarking, in order to examine the quality

Company’s size* In Total Large Medium Small

Table 16. Conduct benchmarking, in order to examine the best HRM

Company’s size* In Total Large Medium Small

3.3.3. Criterion of Inimitability

Table 17. Imitation of HRM practices by competitors (per company size)

Company size* Large Medium Small Total

Table 18. Observed imitation in HRM practices, referring to seagoing

Company size**/ Large Medium Small

3.3.4. Criterion of Organization Support

4.1. Ignoring Cultural Diversity

4.2. The Role of the Mediators and/or Support Groups

A. Foreign Mediator, at Shore (Mediator of Nationality 2)

B. National Mediator, Regularly on Board (Mediator of Nationality 1)

C. Support Groups (Culturally Diverse)

Figure 2. Strategy of Mediators or Support Groups.

Strategies of mediators or support groups can be adopted individually or in combination,

4.3. Cross-Cultural Training

4.4. Utilizing Diversity to Develop Core Competency

(a) A multicultural corporate culture, and

Figure 3. Interaction, cooperation and information flow between HRM activities.

Figure 4. Integrated Strategic International Maritime Human Resources Management (SIMHRM)

corporate culture and employees’ philosophy, if it is to develop a core competency based in

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