Human Resource Management in Europe

Table of Contents

List of Figures and Tables

1. Introduction

2. HRM in the United States of America
2.1 Private enterprise culture
2.2 Low level of state involvement
2.3 Antagonism of US management to trade unionism

3. HRM in Europe
3.1 Characteristics of European HRM
3.1.1 Legislative framework
3.1.2 Trade unions and consultation
3.1.3 Patterns of ownership
3.2 Regional clusters
3.3 Convergence versus divergence within Europe

4. The Influence of American HRM on Europe
4.1 Factors against American HRM influence
4.2 Factors in favor of American HRM influence

5. Concluding Remarks

References

List of Figures and Tables

Figure 1 - Typology of management orientations in Europe

Table 1 - Public expenditure in labor market programs in OECD countries in 2003

Table 2 - Trade union density and bargaining coverage in 2001

Table 3 - HR clusters in Europe

Table 4 - Differences in HR practices in Europe

Table 5 - Features of HRM in the USA and in Europe

1. Introduction

A cursory view on Europe will at once reveal a multitude of economic, political, social, cultural and institutional differences. Nowhere else in the world have so many diverse and deep-rooted cultures co-existed over such a long period of time. For centuries, these differences made Europe the scene of many conflicts and wars. Tough richly diverse, a quiet revolution has been happening over past decades. Today, the 25 countries that form the European Union (EU) are all committed to the same elementary values: peace, democracy, the rule of law and respect for human rights. In past years, significant standards of living have been achieved overall Europe. Indeed, to sustain and to develop these standards further the European ministers agreed in Lisbon in March 2000 to build knowledge infrastructures, to enhance innovation and economic reform and to modernize the social welfare and educational systems within the EU. By 2010 the EU should “become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth and more and better jobs and greater social cohesion.”^[1] To achieve these ambitious objectives and taking into account recent globalization trends it becomes aware that significant human resource requirements are necessary. However, are the European countries moving towards one another in the way that they handle human resource management (HRM)? If so, is the HRM model of the United States (US) one that will unavoidably be followed in Europe? Or, will the European countries inevitably be different due to their country specificities?

This paper aims to analyze and answer these questions and is therefore structured as follows. In the second part the special characteristics of the US HRM model will be presented. The third chapter deals with the individual features of HRM in Europe. In particular, regional clusters will be identified and discussion on convergence and divergence of HRM within Europe will be given. The fourth section will contrast the US and European HRM models and demonstrates if Europe is affected by American HRM. Finally, in the fifth part some concluding remarks will be given.

2. HRM in the United States of America

Management in general and human resource management in particular has been mainly influenced by thinking in the United States of America (USA). It seems not to be surprising that the USA is the birthplace of modern management due to the fact that it has been, for decades, the largest economy in the world (Brewster, 2004, p. 366). The USA and its culture are quite unique and many scientists consider the USA to be very atypical to the world as a whole. Indeed, the US culture in comparison to other cultures seems to be more individualistic and achievement-orientated. American HRM is underpinned by a high degree of formalization (process), but also a strong understanding of a managerial ‘right to manage’. This is reflected in building up clear sets of procedure as well as formal management development programs (Communal and Brewster, 2004, p. 173). The Americans have developed hegemony concerning what HRM involves and what good practice comprises. Indeed, many countries world-wide seem to adopt American HRM practices to ‘catch-up’ in economic terms.

The American ideals of ‘freedom’ and ‘autonomy’ are best reflected in the private enterprise culture, the low level of state involvement and the antagonism of US management to trade unionism which will be presented in the following.

2.1 Private enterprise culture

HRM in the USA is closely linked with business strategy and, therefore, very much based on the improvement of the management of human resources within organizations. It is assumed that the improvement of organizational performance has a remarkable impact on the organization’s corporate strategy, the customers, or shareholders. Hence, ‘systems’ of employment regulation are mostly firm-based, with a usually high degree of managerial autonomy in setting human resource policies. This might be a consequence of social norms, laws, regulations or custom. In fact, the employers’ interests are paramount in order to achieve the companies’ goals (Communal and Brewster, 2004, p. 175).

2.2 Low level of state involvement

The business and employment system in the USA is regarded as being market-based. Thus, the degree of active regulation of companies’ activities by the state is relatively low. Moreover, subsidies and supports in the area of education, life-long learning and tax incentives for organizations by the government are also very limited (Brewster, 2004, p. 368). In fact, this concept perfectly fits with the right of every individual to act in its best interest without external interference. Table 1 underpins the minor role of US state interference by demonstrating that public expenditure on labor market programs in Europe is considerably higher than in the USA (0.61%). Finally, Beardwell, Holden and Claydon (2004, p. 602) emphasize that the low state involvement has resulted in the weakest system of employment protection among major developed countries.

illustration not visible in this excerpt

2.3 Antagonism of US management to trade unionism

Besides the relative shortcomings of protective legal regulation of most parts of the employment relationship, collective regulation is also generally weak (Morley, 2004, p. 355). Despite defensive strength of some trade unions in manufacturing sectors, trade union density and, moreover, bargaining coverage are very low in comparison with European countries

(see table 2). Although collective regulation exists, it is uncoordinated, with nearly no sectoral regulation. Moreover, there is little cooperation between rival employers and less coordination between inter-firm trade union policies. The defensive position towards trade unionism mainly arose during the 1930s Depression where an accommodation of organized labor became necessary. Due to the quasi-legal contracts agreed at that time this represented a major constraint on the adaptability of companies’ HR practices. This led to attempts to avoid organized labor. Equally, many large employers used paternalist, human-relations-style personnel strategies to avoid trade union influence. Recently, again forceful attempts have been made to diminish the inflexibilities triggered by collectively negotiated job classification systems, work rules and seniority provisions (Beardwell, Holden and Claydon, 2004, pp. 602 - 603).

[...]

^[1] Taken from Morley, 2004, p. 354