Human Resource Management in Europe

Christian Scholz, Hans Böhm

• Publisher: Routledge
• Year: 2008
• Print ISBN:
  9780415447607
• eBook ISBN:
  9781134062058
• Topic: Business
• Subtopic: Business General
• Index: Business

The European Union is expanding. Wide cultural, political and economic differences within the Union have a significant impact on the management of human resources, so crucial to the success of any enterprise. Businesses within the EU have regularly tried to re-evaluate the context in which they work, and for investors from other continents, no

1 Introduction

Christian Scholz/Hans Böhm/Tanja Bollendorf

IN SEARCH OF A ‘HUMAN RESOURCE MANAGEMENT’

Searching for a European approach to human resource management (HRM) is no easy undertaking. A look at the piles of books about European HRM published in recent years shows that the topic can be treated in many ways: we can look at how specific HRM issues interact from a European perspective (Supiot/Meadows 2001; Sofer 2004) at country-specific practices and context variables (Brewster et al. 1992; Brewster/Mayrhofer/Morley 2004); at country-specific approaches to specific HRM topics (Brewster/Mayrhofer/Morley 2000); and at international companies with their specific problems, such as international recruitment or management of expatriates (Harzing/Ruysseveldt 2004; Dowling/Welch 2005; Linehan/Scullion 2005).

Sparrow/Hiltrop (1997:201) make a cautious attempt to distinguish European HRM from US HRM when they write: ‘If European management exists, it is in terms of greater cautiousness, sophistication of methods, and pursuance of elitist reward and career systems’. They emphasise five characteristic features where they perceive qualitative or quantitative differences compared with HRM in the USA:

1. European HR departments are more restricted in their autonomy.
2. European HRM has traditionally been less exposed to market processes.
3. European approaches to HRM focus more on groups than on individuals.
4. European social partners, such as trade unions or employee representatives, are more influential than their US counterparts.
5. In the European arena, labour market politics is more regulated, i.e. there is a greater influence of governments on the management of businesses.

Although the characterisation of HRM in Europe addresses different influencing factors, such as socio-cultural traditions, the legislative framework and institutional context, these factors only provide a framework in which European HRM can be positioned relative to non-European HRM. The whole landscape of HRM in Europe becomes less consistent if the standard of comparison is to be changed or if HRM in Europe is to be analysed in more detail. Differences exist between approaches of countries and there is no single European pattern of HRM (Sparrow/Hiltrop 1997:201).

In order to better handle the differences within Europe for comparative analysis, researchers tended to build clusters of countries with similar approaches to HRM, or they identified clusters of homogeneous countries in empirical analysis (Ronen/Shenkar 1985; Brodbeck et al. 2000). For example, Nikandrou/Apospori/ Papalexandris (2005) find relatively independent and congruent north–west and south–east clusters with regard to HRM practices in Europe, whereas Communal/ Brewster (2004) make a hierarchical distinction which considers overlappings between countries. The first level of their typology separates HRM in the UK from the rest of Europe, which is due to the cultural proximity between the UK and the USA. On a second level, three main clusters can be distinguished within the rest of Europe, namely HRM in the south, the north and the east of Europe. Each of these clusters can be further differentiated. As to the northern countries, Scandinavian countries have, for example, some characteristics in common that distinguish them from other northern countries, of which Germanic countries (Switzerland, Austria and Germany) as well as small countries (Belgium, the Netherlands, Luxembourg) form sub-clusters.

All in all, approaches to HRM are quite heterogeneous within Europe. A consistent view of what European HRM means does not exist in literature. Therefore it would be more correct to speak of ‘HRM in Europe’ or ‘HRM with European characteristics’ than of ‘European HRM’.

The contribution of this book

This book is supposed to present the whole diversity of HRM in Europe. Thirteen teams of authors give a comprehensive overview of the conception of HRM in their respective countries. They do not reason about an abstract definition of the term, but instead present a picture of HRM roles, practices and discussions of each country’s HRM.

This book therefore provides a reliable and authentic source of national viewpoints and approaches to challenges which are often global in nature. The great advantage is that there are no national biases in tracing out the field of HRM in Europe. Ethnocentric presentations have been prohibited by the editors, and our advice is that ethnocentric reading should be prohibited by everyone who deals with this book. This book therefore does not provide a definition of ‘European HRM’, but it certainly makes a contribution to clarifying the concept.

HRM IN EUROPE: ITS IMPACTS AND CONTEXTS

THE SIGNIFICANCE OF HRM ACTIVITIES IN GLOBAL COMPETITION

It has been argued, and proven sufficiently and convincingly, that HRM is one of the most sensitive and important fields of action for the future success of economic companies (Pickett 2000; Sparrow/Schuler/Jackson 2000; Evans/ Pucik/Barsoux 2002; Hayton 2005). It has become an undeniable fact that the best HRM and leadership creates the most competent and strongest people and teams as a convincing basis for optimal achievement in global competition in terms of innovation, quality, speed and customer orientation. In a world in which mere customer knowledge in all disciplines and new scientific findings become more and more accessible to everybody, the most important success factors in global competition are the people: their competences, their motivation to learn and to perform, leadership and cooperation, corporate values and culture.

After years of disappointing approaches to implementing the ‘Lisbon Strategy’, decided by the European Union Council in March 2000, which aims at developing Europe into the world’s most competitive and dynamic knowledge-based economy, it has become most urgent to concentrate on people management and development, people competences and leadership in the real world of economy and work.

In this context, HR activities become more and more important for companies to strengthen their economic position, since they can be directly linked to organisational value creation. The performance of a company’s workforce depends on these very activities, and it is even possible to prove its value for the company on the balance sheets. Recent approaches to human capital management established the link between HRM in companies and the monetary value of the company’s human capital (Scholz/Stein/Bechtel 2004), and so created a currency for assessing the quality of HRM activities and investment in people. Evans/Pucik/Barsoux (2002) present a study from the USA according to which the marginal value of investing in the human capital of a company is about three times greater than the value of investment in machinery. Tzafir (2006) demonstrated in an empirical analysis of several business sectors that besides training, employee participation also enhances organisational performance.

In detail, HRM comprises the following activities:

1. —the attraction of qualified and talented job applicants (personnel marketing);
2. —the placement of the right people in vacant positions (personnel selection);
3. —the knowledge update, education and training of employees (personnel development);
4. —the creation of incentive systems (motivation and encouragement of employees); and
5. —the determination of the employee’s monetary value for the company (human capital management).

The significance of people becomes most evident in the discussion about strategic HRM. In this process of strategic realignment of the HR function with the company’s business goals, the HR function becomes a business partner for the line management, which means that HR managers work hand in hand with line managers to institute and manage the process of accomplishing the company’s goals—whether these goals are financial targets, balanced scorecards, visions, or others (Ulrich 1997). Key HRM policies and practices in gaining competitive advantage are, according to Sparrow/Schuler/Jackson (2000:45–6):

1. —culture;
2. —organisation structure;
3. —performance management;
4. —resourcing; and
5. —communication and corporate social responsibility.

Theory about strategic HRM has been treated sufficiently in other contexts (Ulrich 1997; Evans/Pucik/Barsoux 2002). The editors of this book decided to provide practical examples, comprising all of the above listed fields of policies, always embedded in a specific national context. All in all, this book contains fourteen case studies of company-specific HRM systems or practices for a high-performance workforce—one per country except for the Netherlands, for which we present two examples.

THE INFLUENCE OF HR DEPARTMENTS ON CORPORATE PERFORMANCE

HR managers in companies have competences and roles which differ with regard to their working context and therefore also shape the HR profile of a company. Sparrow/Hiltrop (1997) distinguish five factors influencing the roles and competences of HR managers: the professional allegance (functional background); the HR experience (career route and line exposure); the strategic integration through representation, participation and formal process in the company; the decentralisation and devolvement of HR to the line management; and the level of outsourcing of specialist services.

Indeed, among the trends that can actually be observed in HRM in many countries are the implementation of (internally used) shared services and the (external) outsourcing of HR functions. Shared services can take the form of service, providing not only to a company’s own departments, but also to external client organisations, and it can also aim at restructuring the service provision through recentralisation and the creation of an internal market system (Shen 2005).

HR outsourcing means the contracting out of specialist services and tasks which have traditionally been fulfilled by personnel departments. Outsourcing of HR functions to personnel service providers can occur for cost reduction purposes, but the search for experts, focus on core competences, access to technology platforms and further reasons can also cause outsourcing activities. Shen (2005) quotes studies according to which between 62 per cent and 85 per cent of participating companies indicated outsourcing at least one HR function.

Although practised from time to time for economical reasons, the outsourcing of personnel departments is problematic. A company risks losing its competitive advantage when buying personnel services which are sold identically to several other companies and are not designed for the company’s specific context. Some authors therefore refer to the risks of outsourcing HR services, such as the loss of in-house knowledge and capacity or the loss of long-term competitiveness (Cooke/Shen/McBride 2005).

The importance of the contribution of company-owned HR departments should not be neglected. When analysing the impact of HR departments, different perspectives can be applied. The multiperspectivity view from the field of strategic management distinguishes between the mechanic, the strategic, the organic, the cultural, the intelligent and the virtual dimension (Scholz 2000a).

The mechanic dimension

This is the structural backbone of a company and refers to the organisational and procedural structure of a company: process responsibilities need to be fixed, workflows have to be created and control mechanisms implemented. HRM aims at placing people with adequate capabilities and experience so that these workflows function optimally, but it aims also at preparing people for changed organisational procedures, and for adapting their capabilities under HR development programmes.

The strategic dimension

This refers to the alignment of the HR department’s work with the company’s goals. It is the basis of multiperspectivity, because the company’s structures and processes can be judged against the background of the strategy. HR departments have great influence and few restrictions, i.e. they are free to resort to a broad range of instruments and practices to fulfil all tasks related to HRM, from personnel recruitment to contract designs and personnel dismissals.

The organic dimension

This analyses a company’s internal dynamics as an organism with individual specifics. HRM has to analyse patterns of growth or development, of single employees as well as of the organisation as a whole. It focuses on the observation of employees’ individual development and adaptation from their entry into the company to departure, it observes the development of the organisation and its interaction with the environment, and it has to respond to the needs associated with every developmental phase.

The cultural dimension

This affects the value system of a company and its environment. HR managers need to position their own corporate strategy within this more general cultural framework, to create a motivating and identity-supporting climate. In the cultural dimension, the focus lies on analysing (visible) artefacts, (more or less conscious) values and (unconscious) underlying assumptions of HR practices. These affect, for example, recruitment and dismissal practices, official commitments to employees’ development and social relationships within organisations.

The intelligent dimension

This develops HR as the intellectual potential of a company, by creating a knowledge base which can be shared by all employees. It means, for example, the use of information systems for the management of knowledge or employee development, as in knowledge management systems which prevent knowledge from being lost when employees leave the company, or as in learning software for meeting development goals.

The virtual dimension

This focuses on new organisational structures caused by diminishing organisational orders. Flexible forms of employment like telework or project contracts require new forms of contracts, supervision and communication. Not only flexible forms of works but also multiple locations or subsidiaries of a company make management more complex. In huge groups division of labour might even be international. This expands HR managers’ tasks, since it requires international recruitment, foreign assignment of managers and other employees, as well as the support of those expatriates.

The multiperspectivity view demonstrates that HRM affects all domains of organisational performance, and it illustrates the variety of tasks related to the HRM function.

THE ROLE OF HR INSTITUTIONS AND ‘SOCIAL PARTNERSHIP’

The HR institutions of a country are strongly associated with the notion of ‘social ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• List of figures
• List of tables
• 1 Introduction
• 2 HRM in Austria: behavioural school of thought
• 3 HRM in the Czech Republic: striving towards a worldwide standard
• 4 HRM in Denmark: on the top of Europe
• 5 HRM in France: changes in the corpus
• 6 HRM in Germany: mission (im)possible
• 7 HRM in Hungary: from party functionaries to business managers
• 8 HRM in Italy: the evolution of a profession
• 9 HRM in Latvia: show respect and get results
• 10 HRM in the Netherlands: economics of personnel policies
• 11 HRM in Poland: integrate to develop people
• 12 HRM in Spain: reinventing the function
• 13 HRM in Turkey: the dawn of talent management
• 14 The United Kingdom of Great Britain and Northern Ireland (the UK): between North America and continental Europe