HRM in Europe

For each country, we will highlight the influence of labor unions and similar labor representative bodies as well as the strength of the labor legislation at the firm level. We will then assess the magnitude and detail of the regulative pressure firms have to contend with, together with the degree to which the personnel function in firms is operatively oriented...


In Germany, wages and working hours are the exclusive territory of the labor unions in a system of regional, industry-wide bargaining. Although unionization in German worklife has dropped considerably since the 1970s, and in 1994 was down to 30 percent, over 90 percent of the workforce is covered by collective bargaining agreements (Economist, 1997; see also Scholz, 1996). In addition, attention should be drawn to the elaborate German system of co-determination, which is regulated at the plant level by the Works Constitution Act of 1972 and at the enterprise level by the Works Constitution Act of 1952, which was extended in 1976 (cf. Hollingsworth, 1997). As a consequence of this legislation, employers need to maintain positive relations with the works councils. These are powerful, employee-elected bodies that are legally entitled to co-determination, consultation, and access to important information, and hence restrict the degree of managerial autonomy (Wachter and Stengelhofen, 1995; Scholz, 1996).

The generally substantial size of German personnel departments is primarily a response to the detailed legal rights enjoyed by the works councils, which at any time can demand written information on any aspect of personnel policy and veto changes in working hours, training agreements, recruitment of personnel, and disciplinary procedures (Bennett, 1997). The role of the personnel department is in general largely restricted to providing such information and to ensuring that the firm is not in breach of any of the numerous regulations that constitute national employment law and agreements.
Hence, the primary task of the personnel department is to engineer highly formalized and standardized procedures as well as to supervise and implement the comprehensive collective bargaining agreements with the unions. Thus, in the case of Germany, personnel managers and departments have to cope with the burden of a comprehensive and detailed legislative regime, which in turn leads to a highly operative focus that is expected to inhibit the use of collaborative practices.

It is this narrow, operative focus, Wachter and Stengelhofen (1995) argued, that largely prevents any large-scale adoption of more recent international human resource management practices in Germany. As they pointed out, a German parallel to or a direct translation of the term
human resource management does not even exist. This is not to say that various calculative techniques associated with the rational HRM model are completely absent, but their potential use has invariably been subject to the critical eye of the works councils (Lane, 1994; Marginson and Sisson, 1994). In large measure, these councils have also sought to preserve the strong traditions of social welfare that have characterized employers' treatment of their human resources. Thus, for example, numerical flexibility is largely alien to the German context. Firms seeking such flexibility have tended to shift labor- intensive operations to foreign locations, with 25 percent of manufacturing companies having relocated production abroad in the period between 1993 and 1996 (Financial Times, 1996b).


Brunstein (1995) characterized French firms as hierarchical and Tayloristic with elitist "grandes ecoles" educated managements. Similarly, van der Klink and Mulder (1995) and Lane (1994) described French companies as being based on the principle of control with power concentrated at the top. According to these writers, a consequence of the strong managerial autonomy is a general lack of trust between employer and employees. Managers seem to be reluctant to grant employees access to information about the production process and managerial matters, since asymmetric information is a precondition for maintaining power. This lack of trust and mutuality is exacerbated by the role of the labor union movement, not least the communist-oriented CGT, which has traditionally been in strong opposition to corporate management (Slomp, 1995).

Although French unions have little influence over corporate management, they do have a substantial impact on the work of the personnel function. Despite the fact that unionization is currently only slightly higher than 10 percent in France, collective bargaining agreements are extended by law to nonunionized workers. This has meant that resources that might have been used by personnel departments to develop collaborative practices are concentrated on overseeing a complex and detailed system of wage bargaining that is carefully scrutinized by antagonistic unions (Brunstein, 1995). Hence, the personnel department has been obliged to have a high level of legal expertise.

An additional factor that constrains French personnel departments in developing collaborative practices is that they are also charged with the important task of maintaining good relations with the Inspection du Travail, a public body that rigorously checks that companies are not contravening employment legislation, particularly with regard to the use of temporary labor (Financial Times, 1996a).

Finally, the function of the personnel department as a means of coping with the legislative context peculiar to France is particularly pronounced in the area of training. Whereas the rational HRM model assumes that training is driven by the firm's inherent needs for increased competence and flexibility through employee development, in the case of France it is difficult to overlook the impact of the legal arrangements that oblige firms to annually invest a sum equivalent to at least 1.2 percent of their wage bill so as not to be punished financially through the tax legislation. As Brunstein (1995) pointed out, in practice this has often resulted in firms preferring to hand over the economic monitoring of their training obligation to the Fonds d'Assurance to ensure that they remain within the boundaries of the law (see also Jenkins and van der Wijk, 1996).

...[B]ecause union power is limited to collective bargaining, management in French firms is able to pursue a tradition of autonomous, non-consultative decision making. Because personnel departments are exposed to comprehensive and detailed legal regulations combined with a distrustful union movement, however, their scope for human resource management innovations has been limited. This leads to the following hypotheses:

Denmark and Norway.

Strong managerial autonomy has never been a feature of Danish employment (Kristensen, 1992; Bevort, Pedersen, and Sundbo, 1995), in large part because the labor union movement, with delegates firmly entrenched even in relatively small enterprises (Slomp, 1995), has been too powerful to permit this. Instead, Denmark is distinguished by a closely linked institutional system of cooperation and negotiation (Bevort, Pedersen, and Sundbo, 1995). Changes in employment practices are subject to bipartite agreements, with the state functioning both as a mediator and a guarantor.

A recent survey conducted among European companies through the Euronet-Cranfield research program and covering the period 1991-1995, indicates no significant changes in the balance of power between unions and management in Danish firms. The 23 percent of firms reporting a decrease in local union influence are outweighed by the 77 percent either reporting an increase or no change (Nordhaug, 1997). The stability of the labor union influence in the Norwegian system appears to be even more entrenched than that of the Danish, with only 8 percent of the Norwegian firms reporting any decrease in local union influence in the period 1991-1995 (Nordhaug, 1997).

The institutionalized local pattern of cooperation has resulted in relatively informal employer-employee relations at the firm level, but this collaborative approach must not be confused with commitment, in the sense that individual employees uncritically identify with the aims of the firm and view their personal and professional competence development as being at one with these aims. On the contrary, there is still considerable identification with the worker collective, particularly among low-level male employees. In other words, there remains engrained in Danish as well as Norwegian worklife an assumption of divergent and conflicting interests between employer and employees at the firm-level and, therefore, an ongoing resistance to calculative practices.

In a comparison of the legislative environment for worklife in Denmark and Norway, Graver (1995) observed that in both countries there is a strong and pronounced framework intended to ensure that conflicts are resolved at the firm level. Labor unions are legally entitled to be consulted on issues relating to major structural changes, such as downsizing, outsourcing, and potential mergers. Graver (1995) concluded that there is a distinct Scandinavian model of employment law that is sufficiently general to permit personnel departments to experiment with and implement human resource management practices of the collaborative type. Concomitantly, the law preserves the rights of labor unions to withdraw their cooperation in the case of disagreement with the management. As Borgen (1995) indicated, the sense of security granted by the national framework of government- guaranteed agreements makes it possible for labor unions to involve themselves in the development of collaborative, firmlevel solutions designed to contribute to enhanced functional flexibility (Simensen and Isaksen, 1995; Gooderham and Nordhaug, 1997).

In summary, in Denmark and Norway, labor unions generally both possess and exert considerable influence on the management of firms. Together with the fact that individual rights of employees are strongly protected by laws and agreements, this means that the general autonomy of management is significantly restricted. At the same time, the legislative framework is so general that personnel departments are not burdened with having to oversee the mass of detail that their German and French counterparts have to deal with. Consequently, the personnel function has the opportunity to innovate in terms of collaborative practices...


In their account of the human resource management field in Spain, Florez- Saborido, Gonzales-Rendon, and Alcaide-Castro (1995) pointed to the authoritarian legacy of the Franco regime (1939-1975), during which there was an absence of free labor unions and a wide scope for lawful dismissal. With Spain's change to democratic government, the major focus of personnel management was on the reduction of labor conflict, which resulted in a series of agreements on procedural rules governing the contents of collective bargaining in the first half of the 1980s. Nevertheless, institutional structures still remain weak, thereby granting management great autonomy (Lucio, 1992).

Although the unions in Spain have increased their influence since 1975, the degree of influence over managerial decisions enjoyed by Scandinavian unions or German unions and works councils remains much greater. Moreover, the bargaining effectiveness of unions varies widely between provinces and regions, in large part because of their relatively poor financial and organizational resources (Lucio, 1992). The main focus of the two big labor federations, the UGT and the Workers' Commissions, has been on limiting changes to the rules governing employers' liability to redundancy costs. But their general weakness has simply resulted in employers side-stepping the legislation to achieve numerical flexibility by negotiating individual employment contracts. Hence, in 1996 only 4.1 percent of all new employment contracts were for full-time permanent jobs, bringing the total of all wage earners in temporary employment to more than onethird (Financial Times, 1997). Furthermore, it must be expected that Spanish employers, essentially conservative and paternalistic and uninhibited by union influence, will have a particular propensity for adopting calculative human resource management practices.

With regard to collaborative practices, a comprehensive and detailed regulative pressure on Spanish firms in the field of human resource management has evolved during the 1980s and 1990s as a response to the many variations of employment contracts. As noted by Florez-Saborido, GonzalesRendon, and Alcaide-Castro (1995: 240), "this wide range of contractual arrangements generated a complex system, in which clear, common rules did not exist .... The government followed a gradualist type strategy in introducing greater contractual freedom, but the process also produced unnecessary administrative complexity and legal insecurity for the employer." In addition to this operational constraint, the personnel function in Spanish firms has also historically been underdeveloped and generally has had no other function than to serve relatively autocratic managements. Hence, personnel practices in Spain have exhibited a reactive and highly operatively oriented character, with specialist personnel departments in possession of scarce resources and limited status. As Baruel (1996) noted, Spanish firms have substantially disregarded novel developments within the human resource management field, meaning that collaborative practices can be expected to be rare.

As indicated, Spain is characterized by weak labor unions without any significant influence on worklife and by a substantial managerial autonomy. At the same time, the personnel function has traditionally been highly operatively oriented, lacking the opportunity to introduce collaborative human resource management practices.

The United Kingdom.

The United Kingdom is unique in the European context in that during the 1980s its employment legislation was subject to radical changes. Most notably, this legislation includes the Employment Acts of 1980, 1982, 1988, and 1990 and the Trade Union Act of 1984, which impose severe civil penalties. Together, these acts curbed the unions' right to recognition, outlawed the closed shop and secondary picketing, and narrowed the freedom of unions to call strikes, for instance, by requiring that a secret ballot of the members be called first. The result was a considerable increase in general managerial autonomy (Edwards et al., 1992).

At the same time, union membership dropped from more than half of the workforce in 1979 to less than a third in 1995 (Economist, 1996), and, more significantly, the proportion of workers covered by collective bargaining declined from 75 percent in 1980 to 45 percent in 1994 (Economist, 1997). The continuing ebb in the power of unions is clearly indicated by the finding that 38 percent of British firms in 1994 reported a decrease in local union influence (Nordhaug, 1997). These changes in union power have provided "wide scope for managerial innovation in employment and labour strategies" (Rubery and Wilkinson, 1994: 11), thereby paving the way for the introduction of calculative practices (Hendry and Pettigrew, 1990).

Not only did the changes in the United Kingdom effect an erosion of the bargaining power of labor unions and a concomitant increase in managerial autonomy (Edwards et al., 1992), they also provided the impetus for a shift in the role of personnel departments in British firms. Throughout the postwar period, but particularly in the 1970s and early 1980s, personnel specialists had, with some success, emphasized their role as industrial relations experts (Legge, 1995). With the demise of this role, personnel departments have been under pressure to develop a broader range of professional services, which in large part has included the various techniques associated with the collaborative approach. To a large extent, they have reacted by seeking to preserve their credibility by attempting to become facilitators preoccupied with issues related to training and development, internal communication, and integration of business strategy and human resource management (Marchington et al., 1994)...

In summary, British firms generally are confronted with neither detailed regulative pressures nor labor unions with any significant influence on management...