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Similarities and Differences in Human Resource Management in the European UnionLisbeth Claus

Executive Summary This study explores similarities and differences in human resource management (HRM) in the European Union (EU). Common factors in the development of European HRM are the importance of consultation, the emergence of flexible work patterns, the role of work and the employer in the life of employees, and the introduction of the Euro. National, company, and regional factors create divergence in European HRM. National factors include societal hierarchy, different cultures and mental models, societal structure, and language. Company factors include size of companies, public versus private, and multinational or local. Regional factors differentiate along north-south and east-west axes. The EU had relatively little impact on HRM in terms of harmonization of labor and tax laws but had major impact on the opening up of markets to foreign competition and privatization of public sector companies. While cultural diversity remains strong, the influence of large multinational companies may lead to more regional integration in the practice of HRM. European HRM is much more comfortable operating in a polycentric mode than U.S. HRM, which seeks universality and standardization. 2003 Wiley Periodicals, Inc.

INTRODUCTION

T

here is a simplistic notion among U.S. HR executives that global companies operating in Europe can deal with European Union (EU) countries as a regional entity. This notion has been reinforced by the growing economic and political unification of Europe resulting in the free movement of capital, goods, and people and ongoing harmonization of EU legislation. Some multinational companies assume that their EU subsidiaries can be managed from a regional perspective through shared HR services and that corporate culture and stanLisbeth Claus is an associate professor of global HR at the Atkinson Graduate School of Management at Willamette University. She previously held faculty and administrative positions at the Fisher Graduate School of International Business at the Monterey Institute of International Studies and managerial positions with Safeway Inc. and Maritz Inc. She is president of the SHRM Global Forum. Her research interests lie in international HR, cross-cultural management, global leadership, global teamwork, and global corporate social impact. E-mail: lclaus@willamette.edu

Thunderbird International Business Review, Vol. 45(6) 729755 NovemberDecember 2003 2003 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/tie.10100

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Lisbeth Claus

dardized HR practices can be imposed throughout their European operations without major consequences. Chris Brewster (1994a, 1994b, 1995), a prolific academic writer on the subject, makes the point that while there are substantial differences between the way human resource management (HRM) is understood and operaA theoretical or tionalized in each country, Europe as a whole has a different practice HR model developed approach to HRM than the United States.in the cultural context of one country should not indiscriminately be applied to another country . . .

Keeping in mind this tension between globalization/standardization and localization/adaptation of HR practices as well as the existence of a distinct European regional approach, this article focuses on similarities and differences of HRM in the EU and explores whether or not there is a European model of HRM leading to greater homogeneity of HRM across the EU region.

LITERATURE REVIEW European authors have acknowledged that HRM originally developed in the United States (Brewster & Bournois, 1991; Brewster & Hegewisch, 1994; Brewster & Larsen, 1992). After taking root in the United States, it spread, first to other nations with cultural proximity, then to more culturally distant countries (Clark & Mallory, 1996). The claim has been made that U.S. HR models have dominated HRM research and practice worldwide (Brewster & Harris, 1999; Harris & Brewster, 1999). European writers (Albert, 1989; Bournois, 1991; Conrad & Pieper, 1988; Gaugler, 1988; Guest, 1990; Hendry & Pettigrew, 1990; Legge, 1989) have been critical of applying American HRM views to other countries, especially Europe. Such criticism is entirely valid. A theoretical or practice HR model developed in the cultural context of one country should not indiscriminately be applied to another country without testing the cultural biases of its assumptions. While the hegemony of U.S. influence in HRM has been criticized, there is also a particular fondness among some European HRM academic writers (at least those who publish in English) to compare and contrast European with U.S. HRM (Brewster & Bournois, 1991; Brewster & Hegewisch, 1994; Hegewisch and Brewster, 1993; Pieper, 1990). Brewster and Bournois (1991) posed the following question as a point of departure to justify such a comparison, To what extent is there sufficient similarity in Europe to require us to question whether there may not be significant differences between730

Thunderbird International Business Review NovemberDecember 2003

Similarities and Differences in Human Resource Management in the European Union

HRM in Europe as a whole and the United States of America? (p. 34). The comparison points out that in Europe, HRM is less dependent, companies have less autonomy and freedom of action, trade unionism is more important, the social partners have more influence, legal regulations are more important, and there is a stronger tradition There are of employee involvement. Brewster and Hegewisch (1994) push the identifiable comparison between European and American HRM even further and differences justify the existence of a European HRM model based on these dif- between the way ferences. They conclude that, There are identifiable differences in which HRM is between the way in which HRM is conducted in Europe and that of conducted in the United States, a difference which allows us to speak of a Europe and that European form of HRM . . . (p. 5). Brewster and Bournois (1991) of the United also speak of two paradoxical trends that run through HRM in States, a Europe. On the one hand there are clear country differences that can be understood and explained in the context of each national culture difference which allows us to and its manifestations in history, laws, institutions, and employee speak of a organizations. On the other hand, there is an identifiable difference European form between the ways in which HRM is conducted in Europe versus the of HRM . . . United States (p. 47). Brewster has made an important contribution in pioneering the notion that there is a European HRM tradition distinct from others. He must be credited with being the first to attempt to develop a European model of HRM distinct from existing U.S. models. His European HRM model locates organizational issues within sectorial (organization size, structure, culture) and national influences. He also spearheaded the development of a large body of empirical comparative HR research across Europe (Brewster, Hegewisch, & Lockhart, 1991). However, according to Clark and Mallory (1996), Brewsters European model has four main problems. First, talking about European HRM is an example of reductionism that fails to take into account the cultural diversity of the European nations. Second, Brewster overestimates the level of autonomy enjoyed by HR managers and organizations in the United States. Third, his model is potentially culturally conditioned (as he uses the Anglo-American literature) and inherently ethnocentric (as he perpetuates the view that American notions of HRM can be found to a greater or lesser degree in other countries). Finally, Brewsters most critical problem is that he does not take into account divergent understandings in different national settings. Responding to his critics, Brewster (1999) later revised his position and shifted his viewpoint from a European HRM731

Thunderbird International Business Review NovemberDecember 2003

Lisbeth Claus

model to the existence of models depending on the paradigm used. This led him to consider a juxtaposition of a universalistic paradigm to a contextual paradigm. The universal paradigm uses a monothetic approach and tends toward acceptance of convergence while the contextual paradigm is ideographic and seeks to understand differences based on context. Another crucial question that needs to be answered is whether one can talk about Europe (i.e., speak of it in a universal manner), or a clustering of various countries with similar characteristics, or whether one must consider Europe as a set of highly diverse and particularistic countries. The HRM literature is mixed regarding this issue. Laurent (1986) pointed out that every culture has developed through its own history specific and unique insights into the management of organizations and their human resources. Pieper (1990) asserted that a single universal model of HRM does not exist. Clark and Mallory (1996) questioned whether it is valid to talk of a European notion or model of HRM given that the nations of Europe do not share a common set of cultural characteristics. They suggested using a polycentric approach in developing an alternative model for understanding European HRM. They argued that the nature of HRM and the type of practices that will predominate in a particular nation would be the result of three factors: the international institutional context, the national culture, and the national institutional context. Sparrow and Hiltrop (1994) opposed any European model of HR and asserted that one can only speak of HRM in Europe because of the marked differences in HR practices between European countries. They