International Human Resource Management: The United Kingdom - Research Paper Example

HRM in the European Context: Focus on the UK In the UK, management of employee relations is innovative, but still is somehow influenced by the European context. European Management is described as emerging and existing in limited circumstances. It is broadly linked to the idea of European integration, which is continuously expanding further into different countries. European management is influenced by pluralism, tolerance, and is associated with a balanced stakeholder philosophy and the concept of Social Partners. (Thurley and Wirdenius, 1991: p. 128, cited in Gooderham, 2004, p. 21) HRM in the European context is intriguing yet interesting to talk about – a topic for investigation. The cultural differences and diverse qualities of the different parts of both the EC and of the wider Europe allow some challenges for closer economic and business cooperation (Leeds, Kirkbide & Durcan, 1994, p. 11). However, there are distinct features when it comes to country-to-country HRM. Each place has its own outlook, innovation, and perspective on what HRM is practiced and how it should be, but as a whole they have a general characteristic. There is the prospect of a Single European Market which has focused attention on the development of a European HRM. But of course in Europe, there is an unclear pattern of diversity in economic, cultural and industrial practices among states. The country differences in Europe can only be understood and explained in the context of national cultures and associated histories, laws and industrial relations traditions. There are three elements of the European HRM mapped out by Brewster and Bournois (1991, cited in Goss, 1994, p. 175), and these are: 1) close involvement of HRM and corporate strategy; 2) organizational independence to take personnel decisions, including inter alia an independent remuneration policy and minimal influence from trade unions; and 3) preference for carefully controlled or internal labour market, including inter alia freedom to recruit, absence of limitation on employment contracts, and a substantial degree of training. Scholz and Böhm (2008) emphasized that organizations are focused on organizational value creation. Brewster and Bournois (1991, cited in Goss, 1994, p. 177) conducted a study and found that there were two paradoxical trends that run through HRM in Europe. There is an identifiable difference between HRM in the European context and the situation in the USA. The study also point to a greater degree of influence from the social partners who are the trade unions and employers and the government. In most countries in Europe, economic policy has been heavily influenced by the neo-liberal ideas which underpin the competitive flexibility approach, but which are limited by so-called capitalism and social and political opposition. (Grahl and Teague 1991, p. 89, cited in Goss, 1994, p. 178) The European model is more of a union-oriented style – they require labor unions for collective bargaining. The ideological underpinnings make HRM to react from the original concept which has an American background. It is quite intriguing in the sense that, while the US opted to disregard unions, European countries encourage it; the law requires union recognition for collective bargaining. This is also known as the model of convergence in HRM. Many of the union functions in such areas as pay bargaining, for example are exercised at industrial or national level – outside the direct involvement of managers in individual organisations – as well as at establishment level (Hegewishch, 1991; Gunnigle et al., Traxler et al., 2001, cited in Gooderham, 2004, p. 20). International firms face three alternatives with respect to the staffing of management positions abroad; the employment of parent country nationals (PCNs), host country nationals (HCNs) or third country nationals (TCNs). Much of the existing research focuses on the advantages and disadvantages of using expatriates as opposed to local managers and identifies a range of host country, company and individual factors as important to consider international staffing decisions. (Scullion, 1994, p. 199) Traditionally, management style is composed of individualism and collectivism (Purcell, 1987, cited in Bratton and Gold, 1999, p. 33). Individualism is more of the types of HRM practices concerned with rewarding and developing employees to fully utilize each employee’s capacity and role in the workplace. This is also known as the reward system. At the low end of the individualism axis are employers who view employees as a ‘commodity’ and a cost that should be minimized – this is the ‘hard’ HRM model. At the high individualism end of the axis are those employers who recognize employees as being critical to organizational success and invest in people; this style approaches the ‘soft’ HRM model. Collectivism management style describes the way management deals with trade unions. Both individualism/collectivism dimensions cause variations in the mix of individual and collective approaches to workplace relations. (Bratton & Gold, 1999, p. 3) The UK HRM A striking feature of HRM in the UK is its being innovative, with the introduction of key concepts and practices associated with HRM taking root in UK workplaces; some added features are the contingency pay which is cited as a symbolic desire by British employers to change towards ‘individually-orientated cultures’ (Bacon and Storey, 1993, cited in Bratton & Gold, 1999, p. 31). A major key study found ‘extensive take-up of HRM-style approaches in mainstream organizations’ (Storey, 1992, p. 30, cited in Bratton & Gold, 1999, p. 30). Another study found evidence of some take up of HRM-style practices from high-technology companies. These practices are defined ‘in terms of an emphasis on individual modes of job regulation and of high degrees of strategic integration’ (McLoughlin and Gourlay, 1992, cited in Bratton & Gold, p. 30). Millward et al.’s (1992, p. 29, cited in Bratton & Gold, 1999, p. 31) large-scale survey found that in 1990 the vast majority of UK specialists had ‘personnel’ in their titles and less than 1 per cent of specialist managers being called ‘human resource’ managers. This trend, a traditional approach to human resource management, was also followed by Canadian companies (Betcherman et al., 1994, p. 58, cited in Bratton & Gold, 1999, p. 31). Employee involvement programme with a renaissance of ‘individualism’ and a fall in the importance attached to ‘collectivism’ in HRM was found by Millward et al. (1992). Another study by Marginson et al. (1993) found a significant change in employment management practices wherein 54 per cent from establishments surveyed had increased employee communication and involvement. These HRM features could exist within either an HRM or a traditional personnel management model, depending both upon circumstances and strategic choice (Keenoy, 1990; Bratton, 1992). Legge (1989, 1995, cited in Bratton & Gold, 1999, p. 32) says individual rather than ‘bundles’ (or groups) of HRM practices constitute the “diffusion of the ‘hard’ HRM model with its focus on increasing labour productivity and cost minimization”. Brewster and Smith (1990, cited in Bratton & Gold, 1999, p. 32) found that HR specialists in the UK, in particular, and in the European Union in general, did not have a seat in the strategic table. Fifty percent of respondents said that the individual responsible for HR personnel is involved in the development of the corporate strategy from the outset. Sisson’s (1995, cited in Bratton & Gold, 1999) also said that the HR profession remains largely made up of ‘clerks’ and ‘contract managers’, which means that the number of HR ‘architects’ in the highest levels of decision making is small. Staffing is a problem in the British and Irish contexts: there is a shortage in international managers. A survey of 440 executives in European firms found that a shortage of international managers was the single most important factor constraining corporate efforts to expand abroad. Almost one third of the executives surveyed had experienced difficulties in finding managers with the necessary international experience and orientation. (International Management, November 1986, cited in Scullion, 1994, p. 198) Majority of the UK and Irish international firms continue to rely heavily on expatriates to run their foreign operations. Research showed that while almost 50 per cent of companies had formal policies which favoured using host country managers to run their foreign operations, in practice just over a third operated with HCNs (host country nationals) in senior management positions in their foreign operations. Using expatriates for management development purposes was important and was increasing in significance for British multinationals. The research showed that thirty-four out of forty-five companies reported that expatriates were used for development purposes and twenty-five of these firms claimed that use of expatriates for this purpose was becoming more important. British companies see expatriation as part of the career development process, and the management of expatriates was the responsibility of the corporate human resource function. Younger managers were given international experience in their career. Some companies want younger managers to broaden their opportunities for international development. (Scullion, 1994, p. 199) Training and development When it comes to training, the UK is the ‘model’ for Europe (Larsen, 1994, p. 117). The training and development field clearly illustrates the trends in line manager responsibility for human resources. As the line manager is expected to ensure a given output of products or services from his or her area, the match between each employee and the job becomes of vital importance. The person as well as the job undergoes continuous change and development, and it is part of the managerial responsibility to ensure a continuous match between the person and the job. This development has two significant consequences. First, decentralization and devolvement of human resource responsibility to line managers have been generally encouraged, although there are a number of potential problems in this (Blyton and Turnbull 1992; Brewster and Holt Larsen 1992, cited in Larsen, 1994, p. 118). Training becomes a crucial tool, as training is one of the ways of providing the employee with necessary, non-present qualifications for the job. Similarly, job design and development are ways of adjusting job characteristics to the needs and capability of the job holder (Hackman and Oldham 1980, cited in Larsen, 1994, p. 118). Across Europe there are very great differences in line management responsibility for training and development. In Turkey and Portugal, the responsibility for training and development is devolved to line managers to a very considerable extent. The same applies to a slightly lesser extend in the Nordic countries (Denmark, Sweden, Norway and Finland). On the contrary, line manager responsibility for training is very low in France, the United Kingdom and the Netherlands. Between these two extremes are Spain, Germany and Ireland. Culture plays a significant role. With the trends enumerated here, national and managerial, culture is more pronounced, or remarkable. UK firms spend just over 3 per cent of their labour budget on training, which is just a little above the EU average. HR development practices vary considerably by country in Europe (Tregaskis 1997; Mabey 2004, cited in Brewster, 1998, p. 398). This is much criticized by governments and academics. Managers and professional staff get around five days per year for training days, while other staff get less. Some of the key questions in HRM are about communication and consultation with the workforce. Employee representation can take individual or collective forms. In the UK, the collective forms include both union-centred and non-union mechanisms. Individually, effective communication is at the heart of effective HRM. It might, therefore, be expected to be increasingly everywhere. Communication may not be a problem nowadays in the European environment. There is little hindrance as far as the digital divide is concerned, or this thing is not anymore present in the vocabulary of the European countries. Europeans can use electronic communication through the internet, e-mail, the intranet, and other new means of communication. (Brewster et al., 2008, p. 399) Discussion International HRM is important in the UK given the international nature of the UK economy with British people working in many UK multinational corporations (MNCs), in the subsidiaries of foreign MNCs and in organizations with substantial international sourcing or exporting. Issues and coordination, shared learning (both top-down and bottom-up) and the dual and conflicting pressures of standardization and the need to be responsive to local context and culture become critical in this context. In this international environment, a number of new roles of HR departments operating in multinational corporations are emerging based on different HRM internationalization strategies (Sparrow et al, 2004, cited in Brewster et al., 2008, p. 399). There is little empirical research on the international HRM issues associated with the management of managers in British international firms, especially in relation to the considerable literature on international HRM in US firms. The advent of the internal European market and the rapid growth of British investment abroad since the early 1980s means that issues of international staff, recruitment and development are increasingly important concerns in a far wider range of organizations than the traditional giant multinationals. International HRM problems are becoming increasingly important for a growing number of smaller and medium sized companies who significantly internationalized their operations in recent years. HRM in Europe lacks some clarity (Brewster, 1998, p. 56). Different countries draw different definitions. In the UK, for example, HRM teaching has been ‘promoted as a new orthodoxy and necessary route to corporate, and personnel policy, success’. This could be due to some inconsistencies, some of the reasons of which are: ‘lack of precision; prescriptive normative nature of HRM theories; the lack of empirical evidence in support of HRM; the lack of distinction from traditional personnel management theories; the inappropriateness of HRM prescriptions with regard to the European industrial relations history and practice’ (Brewster, 1998, p. 57). It can be said that this is the age of many revolutions – revolutions characterized by technological advancement, globalization, and information and knowledge. The effects of all these are further characterized by the falling of the dominoes. HRM in organizations is one of its victims, specifically international HRM. The interest afforded on international HRM is due to several factors as enumerated in the introduction: this is due to the rapid growth of industrialization and globalization. Complex changes and innovations occur on organizations, particularly in the workplace. HRM should be able to handle organizations in a global setting. Competitive advantage can be further enhanced with proper handling of HRM. International HRM is a determinant factor in the success of a business, and the quality of management contributes to the success of the organization. In Europe, International HRM takes an active role in the workplace. This is due to the growth of trading blocks. But the concept of HRM was brought to Europe from the United States. This has evolved into the model of convergence in HRM which states that European countries are more heavily unionized. The law in many European countries requires union recognition for collective bargaining. When collective bargaining is being conducted, the union takes an active role, outside from the intervention of the manager. This concept is very distinct from the United States model which discourages unionism. As a whole, HRM in the UK is evolving but still needs a lot of improvement, for example fifty percent of those surveyed in the UK responded that those involved in the HR practices were not given a chance to participate in strategic management. Many UK firms are run by expatriates and that HR personnel are mostly clerks and are not involved in HR major decisions. References Armstrong, M., 2006. A handbook of human resource management practice. London: Kogan Page Limited. p. 13. Bratton, J., 1999. Human resource management phenomenon. In J. Bratton and J. Gold, Human resource management: theory and practice. London: MacMillian Press Ltd., pp. 3-11. Bratton, J. & Gold, J., 1999. Human resource management: theory and practice (Second Edition). London: MacMillan Press Ltd. pp. 30-32. Brewster, C., 1998. European HRM: reflection of, or challenge to, the American concept? In P. Kirkbride (ed.), Human Resource Management in Europe: Perspectives for the 1990s. London: Routledge. pp. 56-57. 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