We need to examine how HRM is applied in Europe and what differences there are between HRM as practised in Europe and in other countries. In this examination there must be a recognition of the European experience of cultural diversity.
Price Waterhouse Cranfield Survey in Strategic Human Resource Management
Whilst studies of the comparative and contrasting aspects of managing people have been undertaken, there appears only to be one internationally comparative quantitative survey in the recent past which has undertaken to examine HRM practices - in five countries in 1989-90 (France, Germany, Spain, Sweden and the UK) and ten (the original five plus Denmark, Italy, the Netherlands, Norway, Switzerland) in 1990-91. This is the Price Waterhouse Cranfield Survey in Strategic Human Resource Management and, prior to looking at aspects of HRM in particular nations, it is worth briefly examining one or two of the results of this, whilst recognising that these needed to be handled with care� as any such survey of this nature is bound to encounter difficulties in creating an internationally compatible questionnaire in the first place.
Note that in the Tables which follow, the countries are identified (as is common in the EC) by their international car identification symbols: CH = Switzerland, D = Germany (West Germany only in the period referred to), DK = Denmark, E = Spain, F = France, I = Italy, N = Norway, NL = Netherlands, S = Sweden and the UK.
HRM and Business Strategy
In this context it is understood that the term Strategic HRM was taken to mean that the creation of HRM policy is aligned to, and an important part of the business strategy. The survey looked at companies employing over 200 people and despite difficulties in interpretation and language, and differences in definitions of staff categories as well as other methodological problems, the survey reported that observable trends were in evidence.
The survey revealed, for example, that it would seem that the HRM function is becoming more important in organisations if one considers the indications given by the high percentages of HRM managers having places on the Board of Directors.
Head of Human Resources Function on Main Board of Directors or Equivalent (Per Cent of Organisations)
And in order to combat the fact that such an indication could be said to be superficial in its nature, the survey also tried to ascertain the extent of influence exercised by HRM managers by asking how much involvement they had in developing corporate strategy.
HR Involvement in Development of Corporate Strategy (Per Cent of Organisations)
Whilst you will observe a drop in the figures between the first and the second table indicating the degree of involvement of HRM managers in the creation of corporate strategy, the involvement from the outset from one third to one half of all organisations in the Survey would seem to be impressive, particularly Sweden, Norway and Germany.
The Survey also revealed that the Scandinavian countries (Denmark, Norway, Sweden) had the highest percentage of organisations (60%), which had written personnel or HR strategies, the Netherlands and Switzerland had over 50%, while the rest, including the UK had less than 50%. Of those which had a Personnel/HR strategy, only half to three quarters translated them into work programmes and this raises a substantial question-mark over the extent of strategic human resource management in Europe (Price Waterhouse Cranfield Project 1991).
Using the data from the Price Waterhouse Cranfield Project 1991 together with other material, Brewster and Bournois (1991) attempted to map the differences in the input of HRM to the formulation of corporate strategy as displayed below:
Position of the Ten Countries in Relation to Strategy Formalisation and HRM Input to Strategy. Source: Brewster and Bournois (1991)
Figure 4:1 ranks the ten countries on two axes; the formalisation of strategies and the involvement of HRM in strategic processes. This figure is most valuable in clarifying the relationships between HRM and corporate strategies and the different tendencies visible in the different countries.
Brewster and Bournois also consider the notion of organisational independence and autonomy. In considering both corporate ownership and structure and at the level of HRM, they consider that the European system tends to have considerably less independence than, for example, the North American model. In Europe public ownership remains widespread.
They also state at the level of HRM, many European countries are more centralised and co-ordinated. The point is clear if the pay determination system is examined. For organisations of more than 200 employees, basic pay for manual employees is often set outside the organisation. This is the case for nearly all German organisations.
In the UK some 37 per cent of organisations have basic pay for manual workers established in national industry bargaining and to quote Brewster and Bournois there is little controversy about the fact that the European organisations continue to accept, to a substantial degree, the establishment of pay levels outside the organisation.
Trade Union Influence
Europe also, is in general highly unionised. Brewster and Bournois quote some of the following figures relating to union membership: Sweden 85% UK 40% France 12% And further, it must be noted that in many European countries trade union recognition for collective bargaining purposes is required by law wherever there are trade unions. Even in the UK where the legal mechanisms differ, 72% of organisations with more than 200 employees still recognise trade unions. Union influence in the workplace differs between countries. It has fallen sharply in the UK, Italy and France, stabilised in Sweden, Switzerland and Denmark. Overall data shows that trade unionism remains widespread and important in Europe, and this is only on the increase with Directives emanating from the EC.
Employee Communication
The subject of employee communication is of real importance as both a live issue and an academic one. Included in the majority of concepts of HRM is improved employee communication in order to generate commitment of all employees with the aim of improving organisational performance. For trade unions, employers and the EC, improving communications at all levels is a subject on current agendas.
The Survey results confirm that consultation in Europe is widespread and increasing. The law has a considerable influence. Brewster and Bournois conclude that: Organisational management operating in Europe has much less autonomy and freedom of action than those in the USA.
They consider the examples already discussed and say there are many more: in Europe legal constraints on the employment contract are substantial. These are considerable variations in how an organisation may recruit, what salaries may be paid, what hours may be worked and in what pattern, how many holidays must be given and how employment contracts can be terminated.
They state: Overall, however, across Europe, HRM is supported, or constrained, by numerous factors of ownership, trade union and employee involvement and legal requirements which mean that managerial autonomy is far from complete.
Labour Markets
Brewster and Bournois also examine the use of both internal and external labour markets from the perspective of different approaches to HRM - hard and soft.
External
They look at the core-peripheral labour market outlined by Atkinson (1984), where the organisation tries to limit its legal and moral obligation to employees and to ensure that the workforce is fully occupied by employing workers on a range of atypical contracts. Examining the results of the Survey shows that a considerable percentage of organisations use these arrangements and Brewster and Bournois also state this is a developing trend.
Use of a typical Contract
Percentage of Organisations with More than 10 Per Cent of Employees on Terms Shown
They state their Survey shows other widely touted new employment relationships (annual hours, contracts, homeworking, teleworking ) to be restricted to a small percentage of organisations.
The subject of atypical contract arrangements causes concern within the Commission of the EC. The Social Charter includes provision to extend workers rights to individuals on atypical contracts and the European Court of Justice has been making judgements under the Equal
Opportunities legislation which are restricting the cost advantages of employing workers under these contractual arrangements. Brewster and Bournois look at the Survey results of the different countries that concentrate on recruiting from within the organisation and in Germany for example, 63% of organisations recruit less than 30% of their managers externally compared to 59% of British organisations. They also compare other aspects of recruitment from internal and external sources. They continue to examine some of the issues which form themes of HRM and examine the resource contribution into employee development.
Proportion of Annual Salaries and Wages Currently Spent on Training (Valid Percentage)
This table examines manual workers as the group that receives least training and even here more than one in 10 organisations in the UK devote 5 or more days per annum to training. Brewster and Bournois do warn that these figures take no account of the significant differences in the educational system and the State-supported vocational training systems in operation in these countries.
Brewster and Bournois discuss the need for a European model and refer to two paradoxical trends running throughout HRM in Europe. They refer to the clear country differences which can only be understood and explained in the context of each national culture and its manifestations in history, law, institutions and trade union and employing organisation structures. and secondly to the identifiable difference between the way in which HRM is conducted in Europe and the situation in the United States of America. Thereafter they question the appropriateness of the HRM concept as defined by some US commentators.
Considering the survey overall, Brewster and Bournois relate back to the arguments of many theorists, Porter (1985), Schuler and Macmillan (1984), that there is some correlation between business success and strategic HRM. They suggest that as they stand, the results of the Price Waterhouse Cranfield Survey challenge this, as the national differences in HRM have no obvious correlation with national differences in economic performance.
They state:
This leads us to argue that simple assumptions about strategic HRM being linked to economic success are inadequate and re-emphasises our view that the US based concept of HRM is culturally linked and too narrow.
They look at three elements of HRM to find out why there should be this difference:
� correlation of HRM with corporate strategy
� organisational autonomy
� controlled labour markets
They conclude that in Europe a greater degree of influence from social partners and from government exists than in the United States of America and this fact makes direct comparison with the US not possible.
They reiterate the need for a model of HRM that re-emphasises the influence of culture, or of ownership structures, or trade union organisation. They particularly point out the different views on trade unions, citing the European success in working with them and suggest the US model to be inappropriate. They return to their proposal for a European perspective on HRM as discussed in an earlier section in this Unit, which includes a suggestion of a return of industrial relations models as outlined in the Dunlop industrial relations systems approach earlier discussed. They also point out that in their view, Europes organisations have a lead in flexibility, responsiveness and workforce involvement which are needed for success in the future.
The Survey also confirmed a number of trends including:
� Continuing devolution of some aspects of HRM to line managers.
� Industrial relations remaining within the personnel department (which reflects the strong national pay bargaining in countries other than Britain and France).
� Trade union strength retaining a strong influence.
� A significant increase in employee communication on a pluralist basis (note there are legal requirements for this in EC countries which do not sit well with the American unitarist view on HRM).
� A distinct increase in atypical employment contracts.
The results of the Survey are most interesting, but the results serve us well by reminding us of the fact that whatever model of HRM is used, it must be used within the context of the legal requirements and assumptions of the country concerned.
