HRM in Germany, the United States, and Russia - Literature review Example

The Similarities and Differences between the Human Resource and Employment Relations Strategies and Processes Adopted in the Fast Food Industries in the United States, Germany, and Russia Student’s name: Course: Tutor’s Name: Date: List of acronyms BdS – Bundesverband der Systemgastronomie (an employer’s federation meant to negotiate a collective agreement for the workers in Germany) ER – Employee Relations HR – Human Resource(s) HRM – Human Resource Management MNC – Multinational corporation Introduction The fast food industry across the world shares some similarities regardless of the national boundaries in that it is expected to provide quick service to its customers, it offers standardised menus, and its product offerings are limited and meant for quick consumption. The highlighted similarities are all meant to produce a “uniform outcome and to make the organisation less dependent on skills of individual workers” (Leidner, 1993, p. 24). Like in many other sectors, the fast food industry depends on labour input from workers. As noted by Royle (2002a, p. 9), the different “employment relations and statutory contexts” present in different countries affect how the fast food industry manages the human resource (HR) functions as well as how it handles the employment relations. Regardless of the country differentials however, Royle (2002a, p. 9) holds the opinion that the fast food industry relies on part-time workers, whose wages are low, and their task are rigidly standardised. Such form of employment system generates high rates of employee turnover, and as a result, unionisation in the fast-food industry is almost non-existent (Royle, 2002a). Human Resource Management (HRM) and Employee Relations (ER) in the fast-food industry are thus presented as favouring the employer while disadvantaging the employee, who can be replaced just as fast as he/she was hired. This essay will compare and contrast HRM practices in Germany, the United States, and Russia. The essay will use McDonald’s Fast Food restaurant as the subject of the essay due to its presence in the three identified countries. The essay will be based on three articles addressing how the three identified countries manage the labour relations in their respective fast food industries as authored by Royle (2002b), Lediner (2002), and Shekshnia, Puffer and McCarthy (2002). The essay will start by comparing the similarities in the fast food industry in the three countries. The second part will then contrast the differences in the same countries, while the final part will draw conclusions and make recommendations on what needs to be done if the fast-food industry is to improve its HRM and ER practices. Similarities The fast-food industries in the United States, Germany and Russia as represented by Leidner (2002), Royle (2002b) and Shekshnia et al. (2002) share similarities in that there are low unemployment rates, but there is also high employee mobility. In other words, it seems that the fast-food industries in all three countries have difficulties retaining the recruited employees. Another similarity in the three countries relates to the determined employer oppositions especially as reflected by McDonald’s opposition to unionisation. In Germany for example, Royle (2002b) documents how McDonald’s has constantly battled employees’ unionisation, something that occurred in the United States and in Russia too as reflected in the writings of Leidner (2002) and Shekshnia et al. (2002) respectively. Despite McDonald’s stance on non-unionisation of its employees, there seems to be disquiet among the employees in all the three countries. In Russia for example, and in spite of the under-developed labour laws in the country at the time, Shekshnia et al. (2002, p. 134) observe that “the company faces opposition to many of its policies... such as hiring, work hours, employee evaluations and... employee representation”. The conditions in the United States and Germany were no different. In the US, Leidner (2002) notes that workers perceive the fast-food industry as an ideal first-time employer for the provision of part-time or job-entry work. The high turnover in the fast–food industry is a reflection of the human resource discontent especially considering that aspects such as unionisation and employee benefits are non-existent. Unlike Russia however, the fast-food industry in the United States seems content with the possibility that unionisation and other HR benefits common in other sectors is an impossibility. As such, employees seem to understand that their stints at the fast-food industry should be short, and should pave way for ‘better’ jobs. In Germany however, the employees in the fast-food industry seem to be complacent in claiming their rights even though their legal systems recognise the need for employee representation in decision-making (Royle, 2002b). Notably however, it must be observed that the country’s union laws have helped the employees to advance their cause, and even though Royle (2002b) notes that multinational corporations (MNCs) like McDonald’s have restricted the formation of work councils “to a small number of restaurants”, the German laws require some form of Work Council presence in the fast-food industry (Royle 2002, p. 99). The use of franchise systems in the fast-food industry is also common in all three countries. In McDonald’s case for example, Shekshnia et al. (2002) notes that the MNC established its presence in Russia through joint venture, but had to train employees on the McDonald’s culture. Similar happenings occurred in the United States and Germany where McDonald’s had to work with the franchisees in order to ensure uniformity in branding of its products and services. This means that despite the cultural differentials in the three countries, McDonald’s had to use HRM aspects such as training in a manner that enhances the company’s culture. Shekshnia et al. (2002, p. 128) further note that McDonald’s uses training to inculcate skills needed to perform well at work in the employees, and to inculcate the company culture in the employees. The training of employees without due consideration of their input is also a common trait in all three countries. As McDonald’s seeks to inculcate its company culture in its employees both in the US and abroad, it has consistently disregarded the employees’ opinions regarding the same. In Russia for example, Shekshnia et al. (2002, p. 128) observes that McDonald’s has been criticised for its apparent one-sidedness, which did not give employees room to influence the “human resource policies and procedures adopted by the company”. Similar occurrences are observed in Germany, where instead of creating room for the policies it found on the ground, McDonald’s tried to fight them. For example, the company fought any attempts by its employees to participate in Work Councils and only bowed in when its public image was at stake (Royle, 2002, pp. 85-86). As an American company, McDonald’s culture is probably better understood by employees in the United States than elsewhere in the world. As Leidner (2002, p. 16), although workers may pose resistance to the working conditions and/or wages, such do not usually lead to unionisation. In other words, in the US, just like in Germany and Russia, the employees’ voices or concerns do not influence the employment conditions or relations adopted by the employer. Differences The differences in fast-food industries in the three subject countries are evident in the cultural environment, where for example, the US has labour laws regulating the food retail sector, while Germany has room for fast-food companies to be flexible in the application of the labour laws. Russia on the other hand appears to be lacking comprehensive labour laws that would govern the fast-food industry even minimally. Based on the cultural differentials in the three countries, it is notable that in the United States, the fast-food companies try to meet the labour requirements by providing the employees with basic provisions as detailed in the labour laws (Leidner, 2002). In Germany on the other hand, a company like McDonald’s created the Bundesverband der Systemgastronomie (BdS) as a new employer’s federation that would negotiate a collective agreement for the workers. By so doing, McDonald’s, which is traditionally opposed to any form of union activities, appeased the Germany legal systems, but also created a vehicle which it could use to lobby the public into believing that the corporation does not oppose labour unions (Royle 2002). Through the latter, McDonald’s was able to counter any negative publicity from critics, hence enabling it to gain wider acceptance in the German market. Another contrast in HRM/ER as reflected in the three subject countries is evident in how the fast food industry players (specifically McDonald’s) carried out recruitment and other HRM aspects such as “training, motivation and compensation” as indicated by Shekshnia et al. (2002). In Russia for example, the criteria for new hires was that the new employees should be “young, mobile, flexible, honest, and without previous experience in the food industry” (Shekshnia et al., 2002, p. 129). The latter requirement is especially relevant to the cultural environments of specific countries because as Shekshnia et al. (2002, p. 129) note, it was meant to ensure that the negative employee experiences such as unfriendly service, theft, and drinking on the job prevalent in Russian restaurants were not transferred to McDonald’s restaurants. From the HRM practices of McDonald’s in Russia, it is also apparent that the corporation discriminates against specific social groups such as married people, older people, and those who have worked in the food industry before. In countries like the US and Germany where discrimination on the basis of age, or even marital status is barred by the legal systems, McDonald’s could not have used the HRM practices as practiced in Russia. Notably however, the corporation designed its HRM policies to suit the existing societal norms in each country. Further, unlike the US where unionisation of fast-food industry employees is systemically challenging because of the high turnover, the demographic composition of the workforce, and the lack of interest in unions by the workers; and unlike Germany, where fast-food players is involved in the BdS if only to meet the legal requirements, Russian fast-food players (especially McDonald’s), have been accused of effectively barring the employees from joining unions (Shekshnia et al., 2002). Observations/conclusions From the comparisons and contrasts above, it is evident that just as Budhwar and Debrah (2001, p. 2) note, HRM practices are determined by both the cultural-bound factors such as national culture and/or institutions, and the culture-free factors such as nature, size and age of the organisation. The local country culture seems to specifically play a significant role in how an organisation conducts its HRM practices (Dowling, Festing & Engle, 2008). From the comparisons above, it appears that a corporation like McDonald’s had to adjust its institutional factors (albeit unwillingly) in order to gain acceptance in respective local cultures. In other words, there is an apparent attempt by McDonald’s as an exemplar of the fast-food industry to be context-specific when operating in different countries. In the larger part however, it is evident that the corporation seeks to instil its corporate culture in its employees abroad, since it believes that the same culture will replicate its successes in the US in other countries abroad. The context-specific HRM practices that McDonald’s voluntary engages in are those that favour its profit-making objectives, while any context-specific HRM practices that may compromise its profit-making position are only adopted after initial resistance, and perhaps (as happened in Germany amid heightened negative publicity) for image-saving purposes. From the comparisons above, it is also clear that the national culture as evident in the common values shared by people in a country, assumptions that shape their mindsets, the meaning of work and deduction of value from the same, and influence from pressure groups are just some of the factors that shape whether, and to what extent a multinational corporation will pursue context-specific HRM practices. In countries where pressure groups are absent, MNCs like McDonald’s probably impose their culture on the employees without paying consideration to their input. Additionally, in a country like the US where jobs in the fast food sector are perceived as job-entry level jobs for college graduates, and where people move on to other jobs just as fast, there are no pressures mounted on the employers to adopt HRM that may work to the employees’ advantage in the long-run. A country like Germany on the other hand stresses the importance of work councils, and hence the fast-food companies, despite maintaining their corporate culture as used elsewhere in the world have embraced collective bargaining, if only as a publicity gimmick. In Russia, fast-food industry players like McDonald’s make use of the non-restrictive laws on discrimination by the employer to lock out specific groups from possible recruitment and employment. In addition to national culture, the comparisons above also indicate that institutional factors such as the labour laws in a specific country, trade unions, labour market composition, the industry in context, the level of education and vocational training, and even politics among other institutional factors affect the HRM practices that an organisation adopts. The inactive presence of trade unions across the three featured countries in the fast-food industry means that a majority of employers discourage, or categorically bar their employees from taking part in such unions. Even in Germany, where a company like McDonald’s formed BdS as a negotiation vehicle with workers, commentators perceive such an approach as being a publicity and self-seeking action on the part of McDonald’s, rather than a genuine tool that would handle a HRM aspect (Royle, 2002). According to Budhwar and Debrah (2001), “antingent variables” such as the organisation’s nature, size, age, and life-cycle stage are among the factors that influence how an organisation interacts with the cultural and institutional factors in its target market. Most MNCs are at a mature stage in their lifecycle and hence have the capacity to bargain their HRM strategies in the different cultural and institutional contexts. Using the McDonald’s case for example, it was reported that “a new McDonald’s opens somewhere in the world every eight hours” (McDonald’s serves..., 1997, p. 42). Before entering the international markets however, it is reported that the corporation finds out about the labour laws in the target market, the legal position of flexible work schedules and part-time work, whether there is a limit to the working hours an employee is legally allowed to work, and the kind of services the corporation would provide in the target market (McDonald’s serves..., 1997, p. 42). From the comparisons, HR practitioners and employment relations managers can learn several valuable lessons. The importance of pursuing context-specific HRM practices is one such vital lesson. According to Royle (2001), a company is most likely to attain market acceptance if it is seen to be valuing its employees. The “seen to be valuing its employees” in this case should be a perception both by internal stakeholders (employees), and external stakeholders (consumers, legal systems, labour unions among others). The challenge in seeking to promote such perceptions is creating a moral or ethical ground for doing so. In McDonald’s case in Germany for example, the organisation has been criticised for forming BdS as a public relations activity to appease the consumers and regulatory authorities by creating an impression of abiding by the co-determination concept of German laws, while changing nothing internally to enhance the relative well-being of its employees. Another valuable lesson would be the importance of understanding local cultures (i.e. the way of doing things in the political, social, and cultural spheres). Royle (2001, p. 119) cites some criticism to McDonald’s, where the critic argues that the corporation failed to understand the German work councils – mistaking them for trade unions. Simply put, the critic accused McDonald’s of failing to “understand the Works Constitution Act” in Germany (Royle 2001, p. 119). Interpreted, this means that HRM and ER practitioners need to understand the cultures, the expectations of employees and the value systems guiding them in their specific societal contexts. Overall, it is worth noting that the cultural, economic, political and legal factors in different countries affect how the fast-food industry is operated in different countries. However, and as observed through the McDonald’s exemplar, other factors such as the size, life-cycle stage, nature, and the size of the corporation also affect its capacity to impose its corporate culture on the employees although only to the degree allowed by the legal, social and political systems in specific countries. References Budhwar, P S, & Debrah, Y A 2001, Human resource management in developing countries, Routledge, London; New York. Dowling, P J, Festing, M & Engle, A D Sr. 2008, International human resource management, 5th Edition, Thomson, Australia. Leidner, R 1993, Fast food, fast talk: Service work and the routinization of everyday life, University of California Press, California. Leidner, R 2002, ‘Fast food work in the United States’, in Royle, T & Towers, B (eds) Labour relations in the global fast food industry, Routledge, London, pp. 8-23. McDonald’s serves...1997, ‘McDonald’s serves up HR Success...in 91 countries around the world’, Management Development Review, vol. 10, no. 1, pp. 42-43. Royle, T 2001, Working for McDonald’s in Europe: The unequal struggle? Routledge, New York; London. Royle, T 2002a, Labour relations in the global food industry, Routledge, New York; London. Royle, T 2002b, ‘Undermining the system? Labour relations in the German fast-food industry’, in Royle, T & Towers, B (eds) Labour relations in the global fast food industry, Routledge, London, pp. 76-101. Shekshnia, S, Puffer, S & McCarthy, D 2002, ‘To Russia with Big Macs: Labour relations in the Russian fast-food industry’, in Royle, T & Towers, B (eds) Labour relations in the global fast food industry, Routledge, London, pp. 117-35. Read More