European Model of HRM - Essay Example

To what extent is it possible to speak of a European model of human resource management rather than a collection of national models (e.g. British, French, German etc.) Concept of HRM Very easily we confuse human resource management with the general supervision of employees. Supervision is a just an odd word; the entire concept of human resource management is much more than this. Michael Armstrong, Angela Baron (2002) proposed that conventionally, human resource management is about managing employees at all levels in the organization in a manner that is well structured and organized. This includes recruitment and selection, training and development, compensation and rewards, performance management, change management. We can say that human resource management is an upgraded version of personnel management. Human resource management also has the responsibility to build a good relationship between employees and management; once goodwill is established, employees will work effectively towards achieving the goals laid down by the organization. Human resource management is also strategic in nature. It assists the organization in attaining its goals by taking care of the needs of its employees and motivates them to align their personal goals with those of the organization. European Model of HRM In the context of human resource management, there is no universal model for managing employees that is applicable on a global level. There are basically three types of HRM models being practiced worldwide namely, the European model of HRM, American model of HRM and National/Asian model of HRM. The reason for this classification is strictly based on two factors: a) Cultural Difference b) Legal Framework Beyer (1991) states in his book what truly determines the success of an organization is its human resource management. When you look at the management literature, you will see that a lot has been written and discussed about Asian (mostly Japanese) and US models of human resource management and rarely would you come across anything that is related to the human resource management of Europe. This is because of the trade union legislations, history, culture, employment laws that vary from one country to the other within Europe. According to Brewster, C. (1993), the presence of unions is significant however; the meaning, concept and reliability of these unions are different in all European countries. In countries such as Germany and France, the laws have made it mandatory for all organization to consult unions regarding the strength and size of employees whereas in other European countries, there is no existence of such rules. The importance of unions can be understood from the fact that there is a certain percentage of union membership of working residents such as for United Kingdom it is forty percent, France has twelve percent and eight five percent in Sweden. It has been argued that the core aim of trade union is to ensure a collective bargain for the workers at the national as well as industrial level. Thus, trade unions in European countries act like social partners which certainly have a positive inclination towards human resource management. Such a concept of trade union is quite the opposite of American style of human resource management. US Model of HRM It has been proposed by Tome, E., (2005) that there are a definite set of principles that define HR policy and are aimed at solving problems. Taylor conducted a study on scientific management and came up with the following points: For the growth and development of any organization, organizational competences and employee skills are important. A large base and small top makes the pyramid of skills valid. The small top possesses most of the knowledge. Those at the top must be given high rewards because they are the carriers of the organization’s crucial asset that is knowledge. These are the points which act as the foundation for the US model of HRM. Hofstede (2001) proposes in his research that the people in the US are more success oriented and the culture is more towards the individualistic end. This is quite the opposite of the culture in Japan where people believe in collective achievement and build moral and personal connections with their organizations. The US model of HRM is based on anti unionism and has no inclination towards collective bargaining. As mentioned, the American society is follows the individualistic approach in their jobs so the trend of trade unions is not even close to being popular. The US model of HRM is more about independence and autonomy. Asian Model of HRM In Asian countries, employees express loyalty for their organization and look forward to having a long term relationship with which is a contrasting approach to American management and culture. Performance monitoring and assessment is taken positively in Asian culture and it increases employees’ levels of motivation and loyalty. On the other hand, in European countries, employees do not view performance assessment to be constructive. They assume it to be a cause of attrition and that is why they usually end up in short term employment relationships. Training and development is seen as a moral obligation and focus on polishing the skills of existing employees whereas in European context, training is about self improvement of technical skills. In Europe, organizations are mostly concerned with acquiring new and better staff rather than training of already existing employees. HRM in Cross Cultural Mergers & Acquisitions Almost all organizations around the globe agrees that in order to grow successfully at the international level, they need to undergo mergers and acquisitions. Mergers and acquisitions are sometimes successful but other times they are clearly not. What justifies the failure of mergers and acquisitions is the lack of cultural integration. Such failures of cultural integration are more pronounced when the organizations are based in different countries with different cultures, norms, legal legislations, language etc rather than domestic organizations. Literature is full of examples of unsuccessful mergers and acquisitions such as that of Daimler Chrysler where the employees of both companies spoke different languages and had different approach towards the task achievement. Companies mostly fail to understand that when they talk about merging their names, they need to first take measure to merge the culture and employee’s approach into one because without proper cultural integration form both ends, merger and acquisitions cannot survive. Pucik, V., Björkman, I., Evans, P. and Stahl, G.K. (2011) logically looked at the concept of cultural integration. They state that integration is actually assimilation based on the idea of making the culture of the acquired company like that of the purchasing entity. They have further classified the type of cultural integration into various types depending upon the need for change. When no cultural change is required in a merger and acquisition, we refer to it as preservation change. On the contrary, cultural transformation happens when massive cultural changes have to be done. When the acquired company has to undergo a lot of change, we call it absorption. Best of the two options is chosen by companies who adopt some procedures from acquired and some from the acquirer. Very rarely it occurs that the acquired company’s culture has to be followed by the new entity-this is called reverse merger. Pucik, V., Björkman, I., Evans, P. and Stahl, G.K. (2011) suggested that most companies just rush into mergers and acquisitions without taking into account the fact that they will have to deal with the consequences later that may arise due to cultural differences. Strategic plans must be made at an earlier stage so that step by step actions are taken to make the cultural integration possible. In the context of HRM, emphasis has been laid on communicating the employees about the nature of merger and acquisition. Whenever the news of merger and acquisition is disclosed, it is important the management communicates it as a positive venture to the employees. Whenever employees hear of merger and acquisitions, what firstly strike them is downsizing and the fear of losing jobs. Employees must be shown the bright side of mergers and acquisitions so that their fears can be at least suppressed. Proper workshops and training must be conducted on culture and they must be told what changes this merger and acquisition will bring along and how they should be managing it. The HR must come up with stress and anxiety management techniques so that employees do not stay in the state of shock for long. Good companies give enough time to their employees to understand the merits and demerits of cross border mergers and acquisitions and make sure that their suggestions and concerns are taken into account. What most companies usually ignore during the process of mergers and acquisitions is the retention of their best talent. Talented employees smell insecurity and search for better opportunities. A special management team must be designed for supervising the process of merger and acquisitions so that every step and concern could be monitored. Mergers and acquisitions is a good topic for discussing the models of human resource management. The European policies, procedures, set of rules and regulations, laws, employee attitude and behavior and most significantly, culture differs from one country to the other within and outside Europe. So whenever two companies belonging to different regions undergo mergers and acquisition, they face many issues of which cultural inregration top the list. Mergers and acquisitions bring challenge for both the acquirer and the acquired. The acquirer has to put in effort to ensure that the acquired company understands its laws and culture and the acquired company has difficulty in going through the three step change process of unfreeze, change and refreeze. Employees from two different companies have problems accepting each other due to cultural stereotypes probably. Especially when an Asian and a European company merge, assimilation brings in a huge challenge for them because they have been practicing entirely different values and norms when they were independent. Going from high or low power distance and individualism to collectivism are most important of the changes that the employees have to make in their everyday work routine. It is the responsibility of human resource management to take measures so that employees do not see cultural shift as a challenge. More and more interactive sessions should be organized for employees of both companies so that their negative perceptions about each other can be eradicated and they learn to become adoptive to the new change. Conclusion We can conclude our essay by saying that managing employees in various countries with an agreed upon way is highly dependent on the values and culture prevailed in an organization. Pieper (1990) stated in one of his studies on the European model of human resource management that there cannot be an existence of a standardized HRM model because culture plays a major role in the success of an organization. Even the companies that operate at global level cannot have uniform values because values and culture depends on the countries where it is functioning. However, mission and vision can be same for all country branches as they communicate the ultimate however, broad goals of the organization. The challenge of managing people with different values and culture falls on the department of human resource management. References Beyer, H.T. (1991) “Personalarbeit als integrierter Bestandteil der Unternehmensstrategie” paper to the 1991 DGFP Annual Congress, Wiesbaden. Chris Brewster (1993). Policy and Practice in European Human Resource Management: The Price Waterhouse Cranfield Survey. London: Routledge. Hofstede, G. (1991), Cultures and Organizations: Software of the Mind, McGraw-Hill, London, Michael Armstrong, Angela Baron (2002). Strategic HRM: The Key to Improved Business Performance. London: Cromwell Press. Pieper, R. (1990), Human resource management: An international comparison, Berlin Pucik, V., Björkman, I., Evans, P. and Stahl, G.K. (2011), in A.-W. Harzing and A.H. Pinnington, International Human Resource Management, London: Sage Publications, pp. 119-152. Tome, E. (2005) “Human resource policies compared: What can the EU and the USA learn from each other?” pp 405-418 Wood, S., Wall, T. (2002), "Human resource management and business performance", in Warr, P. (Eds),Psychology at Work, Penguin, London, pp.351-74. Read More