Unitarism, Pluralism, and Human Resource Management in Germany.Introduction
This paper discusses the convergence thesis using the example of human resource management in Germany. Convergence theories dominated social sciences in the 1950s and 1960s. Arguably ar·gu·a·ble
1. Open to argument: an arguable question, still unresolved.
2. That can be argued plausibly; defensible in argument: three arguable points of law. the most influential contribution to this discussion was Kerr et al's "Industrialism in·dus·tri·al·ism
An economic and social system based on the development of large-scale industries and marked by the production of large quantities of inexpensive manufactured goods and the concentration of employment in urban factories. and Industrial Man" (1960). They suggested that technology will, over an extended period, lead to the development of similar economic, political, social and organizational aspects in all industrialized in·dus·tri·al·ize
v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es
1. To develop industry in (a country or society, for example).
2. societies. It assumed that there is a link between the development stage of an economy and its dominant managerial practices. Kerr et al. saw technology as the driving force behind convergence. Today competition and globalization globalization
Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation are more often given as the main reasons for a convergence of managerial practices (Mueller 1994).
Over the last two decades the concept of HRM HRM Her/His Royal Majesty
HRM Human Resources Management
HRM Heart-Rate Monitor
HRM Halifax Regional Municipality (Canada)
HRM Hotel Restaurant Management
HRM Hrvatska Ratna Mornarica (Croatian Navy) (Human Resource Management) has emerged as one of the most important prescriptions for a world-wide convergence of managerial practices. Like most other management concepts it originated in the US. However, HRM (1) not only offers a range of modern management techniques in much the same way as lean production and re-engineering, but is also about values. "More than any of the other innovations, it impacts directly on culturally specific ways of doing things buttressed but·tress
1. A structure, usually brick or stone, built against a wall for support or reinforcement.
2. Something resembling a buttress, as:
a. The flared base of certain tree trunks.
b. by national institutions and values systems" (Hendry 1991, p. 416). The values of HRM are essentially unitarist and individualistic in·di·vid·u·al·ist
1. One that asserts individuality by independence of thought and action.
2. An advocate of individualism.
in . The philosophy underlying HRM becomes apparent, if one has a closer look at the case studies that form the empirical basis of the American HRM literature. Most of the successful and innovative companies which have been studied as HRM models in the USA are non-union and use sophisticated human resource management techniques targeting the individual employee (Foulkes 1980). They do not recognize trade unions and employee relations are determined unilaterally u·ni·lat·er·al
1. Of, on, relating to, involving, or affecting only one side: "a unilateral advantage in defense" New Republic.
2. by management. It has been questioned whether US type HRM prescriptions should be imported to Europe, because the values of HRM run counter to European traditions of pluralism pluralism, in philosophy, theory that considers the universe explicable in terms of many principles or composed of many ultimate substances. It describes no particular system and may be embodied in such opposed philosophical concepts as materialism and idealism. and collectivism collectivism
Any of several types of social organization that ascribe central importance to the groups to which individuals belong (e.g., state, nation, ethnic group, or social class). It may be contrasted with individualism. as well as a stronger regulated environment for companies (Brewster 1995, Ferner/Hyman 1992, Guest 1994, Kirkbride 1994, Muller Mul·ler , Hermann Joseph 1890-1967.
American geneticist. He won a 1946 Nobel Prize for the study of the hereditary effect of x-rays on genes.
Mül·ler , Johannes Peter 1801-1858. 1999b).
A particularly interesting case for a convergence towards HRM is Germany. In contrast to the free market US economy, companies in Germany have to operate in an elaborate institutional environment (Ebster-Grosz/Pugh 1996, Lane 1992, Warner 1998, Wever 1995). The three main German labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience institutions of co-determination, collective bargaining collective bargaining, in labor relations, procedure whereby an employer or employers agree to discuss the conditions of work by bargaining with representatives of the employees, usually a labor union. and initial vocational training, in particular, restrict managerial autonomy and therefore might hinder hin·der 1
v. hin·dered, hin·der·ing, hin·ders
1. To be or get in the way of.
2. To obstruct or delay the progress of.
v.intr. the application of a unitarist type of HRM. To be more precise, companies in Germany usually have a works council Noun 1. works council - (chiefly Brit) a council representing employer and employees of a plant or business to discuss working conditions etc; also: a committee representing the workers elected to negotiate with management about grievances and wages etc . This body has extensive co-determination rights and plays a crucial role whenever there are organizational changes affecting the workforce. In addition more than 80 per cent of German employees are still covered by multi-employer collective bargaining. This means that their salaries and conditions of employment conditions of employment
that part of an employment that sets out the duties, responsibilities, hours of work, salary, leave and other privileges to be enjoyed by persons employed, for example a veterinary nurse, in private practice. are standardized standardized
pertaining to data that have been submitted to standardization procedures.
standardized morbidity rate
see morbidity rate.
standardized mortality rate
see mortality rate. to a high degree (for a more detailed overview of the German system of industrial relations industrial relations
Relations between the management of an industrial enterprise and its employees.
the relations between management and workers see Baethge/Wolf 1995, IDE (1) (Integrated Development Environment) A set of programs run from a single user interface. For example, programming languages often include a text editor, compiler and debugger, which are all activated and function from a common menu. 1993, Jacobi/Keller/Muller-Jentsch 1998, Muller 1997, Streeck 1993, Visser/Ruysseveldt 1996). Furthermore, about five per cent of the German workforce take part in an initial vocational training. This training is governed gov·ern
v. gov·erned, gov·ern·ing, gov·erns
1. To make and administer the public policy and affairs of; exercise sovereign authority in.
2. and regulated by a tripartite system The Tripartite System, known colloquially as the grammar school system, was the structure by which Britain's secondary education was organised in England, Wales and Northern Ireland between the 1944 Butler Education Act and 1976. that involves the state, employers' organizations An employers' organization, employers' association or employers' federation is an association of employers. A trade union, which organizes employees is the opposite of an employers' organization. and trade unions and therefore also reduces organizational autonomy (for recent descriptions of the German system of initial vocational training see Gehin/Mehaut 1995, Steedman 1993). Given this strong institutional environment one could imagine that it exerts pressures for a convergence of human resource practices towards a German model.
The next section will present the context of the research conducted to examine the above issues. The following two parts analyze some of the data collected. Then a typology typology /ty·pol·o·gy/ (ti-pol´ah-je) the study of types; the science of classifying, as bacteria according to type.
the study of types; the science of classifying, as bacteria according to type. will be introduced that helps to classify clas·si·fy
tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies
1. To arrange or organize according to class or category.
2. To designate (a document, for example) as confidential, secret, or top secret. the human resource approaches of firms operating in Germany.
The analysis so far raises the question whether there is a convergence about international forms of management such as HRM or a divergence divergence
In mathematics, a differential operator applied to a three-dimensional vector-valued function. The result is a function that describes a rate of change. The divergence of a vector v is given by centered around national institutions. However, human resource policies and practices at the company level are influenced not only by national institutions and opportunities offered by modern management approaches, but also by factors in the organizational context (for context factors having a potential influence on human resource management see Jackson/Schuler 1995, Sparrow/Hiltrop 1997). Consequently the conceptual framework For the concept in aesthetics and art criticism, see .
A conceptual framework is used in research to outline possible courses of action or to present a preferred approach to a system analysis project. guiding this research assumes that human resource policies and practices of individual organizations are influenced by the national context, the opportunities created by modern management approaches and the organizational context [ILLUSTRATION FOR FIGURE 1 OMITTED].
On the basis of the conceptual framework, three hypotheses can be developed that will help to sharpen sharp·en
tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens
To make or become sharp or sharper.
sharp the focus of this paper. Firstly, a precondition pre·con·di·tion
A condition that must exist or be established before something can occur or be considered; a prerequisite.
tr.v. for national labor market institutions having an influence on human resource practices is that firms comply with their requirements. Therefore one can formulate formulate /for·mu·late/ (for´mu-lat)
1. to state in the form of a formula.
2. to prepare in accordance with a prescribed or specified method. the hypothesis that all firms operating in Germany should comply with the requirements of the three key labor market institutions of centralized cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. collective bargaining, co-determination and initial vocational training. A company complies fully with the German system of multi-employer collective bargaining, as long as it is a member of an employers' association and follows the rules set out by the association's agreement. If it has a company collective bargaining agreement The contractual agreement between an employer and a Labor Union that governs wages, hours, and working conditions for employees and which can be enforced against both the employer and the union for failure to comply with its terms. , it only partly complies. Similarly, a firm fully complies with initial vocational training as long as it has a significant percentage of apprentices (e.g. more than 3 per cent of the total workforce). Those with only a few apprentices are considered to partly comply. Finally, all those companies which have works councils in all major establishments and which do not avoid board level co-determination fully comply (Muller 1998).
Secondly, a related hypothesis is that HRM is incompatible incompatible adj. 1) inconsistent. 2) unmatching. 3) unable to live together as husband and wife due to irreconcilable differences. In no-fault divorce states, if one of the spouses desires to end the marriage, that fact proves incompatibility, and a divorce with German labor market institutions. Thus we want to find out whether German firms use HRM techniques and if this fostered by the institutional environment. In order to do this, it is necessary to define and operationalize what we mean by HRM techniques. The classic statements by Beer et al. (1984) and Walton (1985) mention a number of HRM practices. Since then various lists of human resource practices associated with HRM have been drawn up (for recent lists by US researchers see Huselid 1995, MacDuffie 1995, Pfeffer 1998, Youndt et al. 1996; and by UK researchers see Brewster/Hegewisch 1994, pp. 247-273, Guest/Hoque 1994, Storey 1992, Wood/Albanese 1995, Wood/Menezes 1998). Although some of the indicators presented in these check lists, such as employment security, single status and high investment in training appear to be commonly accepted by most academics that have drawn up inventories of HRM practices, there is, as Guest (1997, p. 266) points out, still a lack of "a coherent theoretical basis for classifying HRM policy and practice." HRM still appears to be an academically constructed stereotype stereotype (stĕr`ĕətīp'), plate from which printing is done, made by casting metal in a mold, usually of paper pulp. The process was patented in 1725 by the Scottish inventor William Ged. that is a convenient shorthand shorthand, any brief, rapid system of writing that may be used in transcribing, or recording, the spoken word. Such systems, many having characters based on the letters of the alphabet, were used in ancient times; the shorthand of Tiro, Cicero's amanuensis, was used for a number of practices. In the absence of a commonly agreed list of HRM techniques this research will use Guest's (1987) human resource policy goals of commitment, flexibility, quality and strategic integration to judge whether a particular human resource practice is a HRM technique or not. Hendry (1994) and Legge (1995) have used the same route to examine HRM in the UK. Particularly in the European context, where organizations have to operate with restricted autonomy (Brewster 1995), such a normative nor·ma·tive
Of, relating to, or prescribing a norm or standard: normative grammar.
nor approach seems to be appropriate.
Thirdly, as mentioned before, HRM is not only about techniques, but also about values. There is a potential clash of culture between the unitarist ideology of HRM and the collectivist col·lec·tiv·ism
The principles or system of ownership and control of the means of production and distribution by the people collectively, usually under the supervision of a government. pressures exerted by German labor market institutions. If companies operating in Germany largely comply with the requirements of these institutions, then the question is what other HRM approach is or can be followed. One which may be compatible with the German system is to achieve the HRM outcomes of commitment, flexibility, quality and strategic integration with a pluralist plu·ral·ist
1. An adherent of social or philosophical pluralism.
2. Ecclesiastical A person who holds two or more offices, especially two or more benefices, at the same time.
Noun 1. style of management. Hence, the third hypothesis is that the German system fosters the development of a pluralist type of HRM. The term 'pluralist HRM' was coined by Guest (1989) to describe the combination of a high HRM priority and a high industrial relations priority. Other terms used to express that HRM and trade unionism are compatible are "the new realism New Realism
Early 20th-century movement in metaphysics and epistemology that opposed the idealism dominant in British and U.S. universities. Early leaders included William James, Bertrand Russell, and G. E. " (Guest 1995, p. 119), "the motivated mo·ti·vate
tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates
To provide with an incentive; move to action; impel.
mo competence model" (Heller 1993), "pragmatic eclecticism eclecticism, in art
eclecticism (ĭklĕk`tĭsĭz'əm), art style in which features are borrowed from various styles. " (Regini 1993, p. 567), or "mutuality" (Walton 1985). For the UK, survey evidence indicates that the presence of trade unions has a positive impact on the introduction of HRM techniques (Guest/Hoque 1996, Millward 1994). If this is so, one would expect this to apply even more strongly for Germany. The co-operative style of industrial relations thought to be a pivotal part of the German system makes it possible for employees in this country to have a dual commitment to both the company and the trade union. This at least was shown by a comparative study of workers in the electronics industry (Guest/Dewe 1991). Hence, the case of Germany could show that HRM and unions can coexist co·ex·ist
intr.v. co·ex·ist·ed, co·ex·ist·ing, co·ex·ists
1. To exist together, at the same time, or in the same place.
Methods and Data Collection
The research presented here is built on case studies of twelve German-owned, four British, and nine US companies operating in Germany (see Table 1). Foreign-owned firms were included as they are thought more likely than indigenous firms to challenge national labor market institutions (Ferner 1997). Therefore, their example could help to illuminate il·lu·mi·nate
v. il·lu·mi·nat·ed, il·lu·mi·nat·ing, il·lu·mi·nates
1. To provide or brighten with light.
2. To decorate or hang with lights.
3. the pressures on the German system. This particularly applies for US multinationals, as they are renowned for deviating from national industrial relations and human resource practices (Chi-Ching/Keng-Choo 1995, Muller 1998, Tayeb 1998). In order to facilitate a comparison between the foreign-owned firms which have a world-wide workforce of at least five thousand employees, only large German companies were included in the sample (see Table 1). [TABULAR tab·u·lar
1. Having a plane surface; flat.
2. Organized as a table or list.
3. Calculated by means of a table.
resembling a table. DATA FOR TABLE 1 OMITTED] Among these were well known firms such as Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/) (ISIN: DE0005140008, NYSE: DB) (English: German Bank , Hoechst, and Henkel. This sample selection was somewhat biased, as the US subsidiaries in particular were relatively small, and this has to be taken into account in the following analysis. Due to sectoral factors having an influence on the behavior of multinationals in their host country, only banks and chemical firms were chosen. One reason for selecting these industries was that in both of them a number of UK and US firms were operating. In the chemical industry I selected pairs of companies with similar businesses such as oil companies and pharmaceutical firms. In banking this was not possible, as German banks are usually universal banks which offer all types of banking services, whereas most foreign banks in Germany This is a list of banks in Germany; see also: (Association of German banks)
Europe's financial center in Frankfurt am Main is home to the Euro and the Frankfurt Stock Exchange, as well as base of operations for various financial institutions: Central banks
Large financial-services conglomerates combine commercial banking and investment banking, and sometimes insurance. . It is also important to acknowledge that the analysis only applies to former West Germany West Germany: see Germany. , as all firms visited were based there.
The company case studies are based on multiple sources of evidence. Primary and secondary evidence such as company newsletters, annual reports and works agreements were collected. Between 1991 and 1994 the sample firms were visited at least twice and more than 150 face-to-face and phone interviews were conducted. Most of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. were personnel managers. When possible the researcher also talked to line managers and employee representatives. The interviews were conducted in a semi-structured style. For each sample firm a case study report was written and fed back to the key informant informant Historian Medtalk A person who provides a medical history . The respondent In Equity practice, the party who answers a bill or other proceeding in equity. The party against whom an appeal or motion, an application for a court order, is instituted and who is required to answer in order to protect his or her interests. validation See validate.
validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. helped to find out if the understanding of particular company facts and situations was correct. The case studies contained general information such as legal form, organizational structure This article has no lead section.
To comply with Wikipedia's lead section guidelines, one should be written. ; data about the compliance of sample firms with German labor market institutions; and details about the use of human resource instruments such as appraisal and remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. systems. The researcher inquired about the instruments used, what they looked like, whether they had changed and when they were implemented for the first time. The first part of the data presentation will now discuss the compliance of the sample firms with German labor market institutions.
Compliance with German Labor Market Institutions
In regard to compliance with the major German labor market institutions of collective bargaining, co-determination and initial vocational training, the sample firms can be divided into two groups. The first group consists of all German firms, the British subsidiaries and three of the US transplants (US Branch Bank, US Consumer Chemicals, and US Oil). They either fully or partly comply with the German labor market institutions studied (see Table 1).
In contrast to these firms, six of the nine US subsidiaries generally do not comply with German labor market institutions. US Pharmaceutical and US Chemical avoid at least one of them entirely. It is worth noting that US Chemical is one of the few large companies operating in Germany that has no collective bargaining at all. The non-existence of a works council in a company as big as US Pharmaceutical's German subsidiary is also worth noting. The four smallest US banks deviate even more from the majority of the sample. None of them is subject to collective bargaining. Only one deals with a works council and only one offers initial vocational training. Employment size is clearly important. German institutions leave more choice for smaller than for large firms. Nevertheless, unlike the six US firms in the sample, the majority of firms of similar size in these industries, do comply (Muller 1998). Furthermore, although employers are dissatisfied dis·sat·is·fied
Feeling or exhibiting a lack of contentment or satisfaction.
dis·satis·fied with elements of the German system, there are so far no serious attempts by them to challenge it. For example, although the German system of multi-employer bargaining is blamed for causing inflexibility in·flex·i·ble
1. Not easily bent; stiff or rigid.
2. Incapable of being changed; unalterable.
3. Unyielding in purpose, principle, or temper; immovable. and a too high wage burden, there is no widespread trend to leave employers' associations. Adjustment and adaptation largely occurs within the institutional framework (Muller 1997). Hence, the six deviant deviant /de·vi·ant/ (de´ve-int)
1. varying from a determinable standard.
2. a person with characteristics varying from what is considered standard or normal.
adj. companies in the sample do not appear to provide a model that is likely to be widely followed.
The second hypothesis, that HRM is incompatible with the requirements of German labor market institutions, is linked to the first one. Arguably companies that want to follow a unitarist HRM policy cannot at the same time comply with co-determination, collective bargaining and/or initial vocational training. German labor market institutions restrict management's right to manage. For example, in those companies that have works councils, management has to negotiate with employee representatives about the introduction or change of most human resource instruments and sometimes even has to accept that works councilors control their operation. Therefore, as the majority of companies in the sample comply with the requirements of the above institutions, they cannot follow a unitarist policy. However, six US subsidiaries appear to pursue an avoidance strategy. Nevertheless, this does not necessarily mean that they have a unitarist HRM approach, as they could be high or low users of HRM practices. Similarly, although the majority of firms in the sample comply with the requirements of the German system, they could still use some of the techniques associated with HRM. Therefore the following sections will examine the extent to which HRM is practiced by the sample firms in the key areas of human resource flow, communication and rewards.
Human Resource Practices
Human Resource Flow
We start with human resource flow. Companies that practice HRM should select new employees carefully, monitor their development with regular appraisals and also offer them extensive training and employment security to achieve the human resource outcomes of commitment, flexibility and quality.
In terms of selection and induction induction, in electricity and magnetism
induction, in electricity and magnetism, common name for three distinct phenomena.
Electromagnetic induction most sample firms put a special emphasis on the recruitment of school and university graduates. Apprentices are selected with written tests and management trainees often with an assessment center. The initial vocational training offers apprentices a structured induction into the organization, as well as a training in occupational skills. Newly recruited graduates usually also receive some form of structured induction. In contrast to apprentices and management trainees, tests and assessment center are hardly used for other groups of employees, even for managers. This finding is confirmed by the more representative Cranet-E data (Brewster/Hegewisch 1994, Table 3.6). Only a few of the sample firms offer any form of structured induction for this group of employees.
Turning to training, most sample firms offer an initial vocational training (see table 1). Employees can then acquire further vocational training qualifications. Almost all sample firms support those who want to get this qualification financially as well as with time off. In addition to these general qualifications, technical and non-technical company specific training is usually extensively provided. In the sample firms, some change was observed not such much in the extent of training, than in its form and focus. There are attempts to integrate on-the-job and off-the-job training more closely, as there is a perception that off-the-job courses do not necessarily result in behavioral changes, especially if the environment does not facilitate this process. One example is team training for all employees working together in a department, branch or project. Whereas in the 1980s three of the sample firms offered such training, seven introduced it in the early 1990s. There also seemed to be a bigger emphasis on job rotation 17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)17:43, 15 October 2007 (UTC)~~×≥ An approach to management development is job rotation between functions.
Most of the sample firms regularly operate a written performance appraisal Performance appraisal, also known as employee appraisal, is a method by which the performance of an employee is evaluated (generally in terms of quality, quantity, cost and time). system. Whereas in the past this was usually based on a trait trait (trat)
1. any genetically determined characteristic; also, the condition prevailing in the heterozygous state of a recessive disorder, as the sickle cell trait.
2. a distinctive behavior pattern. rating, in recent years most of the companies studied have extended their appraisal system by introducing new elements. In the 1990s, seven of the sample firms introduced goal appraisals, five regular career development talks and three management development assessment centers. The main reason for this appears to be a dissatisfaction with the traditional personality and trait rating system's ability to assess accurately performance and career development prospects. Career development talks, management development assessment centers and development schemes are also introduced to identify candidates with leadership skills and/or develop these skills. This is a break with the past where progression has depended more on technical skills than leadership qualities. Whereas the traditional rating appraisal systems tended to cover all staff, the new elements are often targeted at managers only (Muller 1999a).
The evidence presented so far indicates that most sample firms follow an internal labor market According to Doeringer and Piore (1), internal labor markets are an administrative unit within a firm in which pricing and allocation of labor is governed by a set of administrative rules and procedures. policy. This is also supported by the fact that they have a system of job posting, usually advertise all vacant positions in the establishment first and have committed themselves in written documents to a policy of internal promotion. It is also reflected in outflow policies. Starting in 1992, several of the banks and chemical firms had to reduce their workforce significantly. The reductions were achieved by a combination of halting halt·ing
1. Hesitant or wavering: a halting voice.
2. Imperfect; defective: halting verse.
3. Limping; lame. recruitment, early retirement and voluntary redundancies voluntary redundancy n (BRIT) → despido voluntario
voluntary redundancy n (Brit) → départ m volontaire (en cas de licenciements) . Compulsory dismissals were only used in exceptional cases. A similar picture emerges from the data of the 1992 Cranet-E survey (Brewster/Hegewisch 1994, Table 9.6).
So far, similarities between the sample firms have been emphasized. Nevertheless, there were also differences. One was that modern human resource techniques such as assessment centers, team training and management development schemes were more widespread in some firms than in others. A probably more important difference was that a minority of the organizations, the three smallest US banks, did not follow an internal labor market policy. They offered little training, had no internal job posting system The posting system refers to the baseball player transfer system currently in effect between Japan's Nippon Professional Baseball and Major League Baseball. The posting system was implemented to prevent Japanese teams from losing young star players to the Major Leagues without , no written commitment to internal promotion, a relatively high labor turnover and compulsory redundancies were not avoided at all costs. Their practices resembled their affiliates in London and New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , rather than those of the indigenous sample firms.
In terms of reward, companies practicing HEM will have a systematic system of pay, will have only minimal status differentials and will reward good performance in order to achieve the outcomes of commitment and quality.
The major determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant. for individual salaries in the collective bargaining firms are multi-employer or in the case of three firms company level collective bargaining agreements. These agreements prescribe pre·scribe
To give directions, either orally or in writing, for the preparation and administration of a remedy to be used in the treatment of a disease. certain job grades into which employees have to be fitted. To facilitate the grading they also define bench-mark jobs and give an indication of the formal qualifications required. The works council usually takes an active part in the grading process. On an annual basis, wage increases and many fringe benefits fringe benefits,
n.pl the benefits, other than wages or salary, provided by an employer for employees (e.g., health insurance, vacation time, disability income). are determined by collective bargaining negotiations. Others are negotiated at the company level between management and works councils and thus also apply collectively to the whole workforce. Furthermore, in banks as well as in the chemical industry there are the same wage grades for blue and white collar workers and employment conditions are also equalized. This reward system only applies for tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic employees, 'exempts' are only indirectly affected. Exempts (Aussertarifliche Angestellte) are all those employees who earn significantly more than those in the highest wage group of the collective bargaining agreement. This group normally accounts for about 15 to 20 per cent of the total staff. Traditionally, the pay system used for tariff employees was, by extending the number of job grades, transferred to exempt positions (Muller 1999a).
All in all, the collective bargaining firms in the sample seem to have a systematic pay system which, as it is governed by management and works council, can help to foster commitment and reduce grievances about pay. The traditional dominance of job-based pay means that performance-related pay Performance-related pay is money paid to someone relating to how well he or she works at the workplace. Car salesmen, production line workers etc. may be paid in this way or through commission. is less important in Germany. Nevertheless it appears that the ideology of performance-related pay has had some impact on German managers. Several of the firms in the sample have attempted to link pay more to performance by introducing analytical analytical, analytic
pertaining to or emanating from analysis.
control of confounding by analysis of the results of a trial or test. job evaluation Job evaluation is the process of systematically determining a relative value of jobs in an organisation. In all cases the idea is to evaluate the job, not the person doing it.
Job Ranking is the most simple form. for exempts, by changing fixed bonuses into variable ones and by linking merit increases and bonuses to an appraisal scheme. A growing importance of performance-related pay in German firms also emerged from the 1992 and 1995 Cranfield surveys (Brewster/Hegewisch 1994, Table 4.2a, Weber/Kabst 1996, p. 32). However, the question is how much performance related pay fits into the more collectivist German culture (Trompenaars 1993) or whether it makes sense at all. This may explain why works councils are critical of performance-related pay and sometimes prevent its introduction.
Again there were only minor differences between the majority of sample firms. For example, in the 1980s and 1990s, some of the firms had introduced analytical job evaluation systems to determine exempt pay, whereas others did not have a formal system. The most important difference emerged between some of the US-owned firms and the rest. The five US subsidiaries that avoid collective bargaining appear to pay more performance related, e.g. salary increases are sometimes not paid and annual bonuses are directly linked to individual performance. This also applies to the non-works council firm US Pharmaceutical. Interestingly, US Oil has a plant agreement with its works council that assures each manager a certain minimum increase.
An important element of HRM should be intensive employee communication. The assumption is that this leads to a greater commitment of the workforce which in turn is expected to enhance motivation and performance (Guest 1987, p. 513). The following analysis will look separately at indirect and direct communication.
In the past the German-owned firms, all of which have works councils, relied mainly on indirect communication. The co-determination law assures that works councils play an important role in employee communication. It not only stipulates that management must share information with employee representatives, but also gives them several means, such as works meetings, to communicate with the workforce. This system provides an employee voice system and could explain why company journals and suggestion schemes were in many of the German-owned sample firms the only direct communication instruments used. This changed in the 1980s and 1990s. All but one of the indigenous firms started to use attitude surveys. Again with one exception all German-owned chemical companies and one of the banks introduced quality circles. A further development was that in most firms management started to organize regular employee meetings. Before, only works meetings, which are called by the works council and chaired by its leader, took place. However, this example shows that the increase in direct communication has not been at the expense of indirect communication, a finding confirmed by the 1992 Cranet-E survey (Brewster/Hegewisch 1994, Tables 6.4, 6.6). The employee meetings organized by management are usually confined con·fine
v. con·fined, con·fin·ing, con·fines
1. To keep within bounds; restrict: Please confine your remarks to the issues at hand. See Synonyms at limit. to organisational units that do not have their own works meetings such as small branches or departments.
Not surprisingly, direct communication instruments were more widespread in some sample firms than in others. It is worth noting that foreign-owned firms such as US Oil, UK Oil, US Chemical and US Pharmaceutical have introduced direct communication devises such as attitude surveys much earlier than the indigenous companies. Nevertheless, there were also differences among the foreign firms. Whereas the non-works council firms US Pharmaceutical and US Chemical, which has no works councils in its headquarters, extensively use direct communication methods, the four smallest US banks do not operate any sophisticated employee involvement instruments. The findings presented so far will now be summarized with the help of a typology.
A Typology of Human Resource Management Approaches
The classification presented in Figure 2 is intended to summarize sum·ma·rize
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.
sum the data and to show the options for human resource management in the German context. Being aware of the problems associated with the construction of typologies (for a summary of this critique see Kitay/Marchington 1996) and the small sample, this simplification does not entirely represent a more complex and less clearly defined reality. However, it helps to group otherwise unique cases for the purpose of comparison. The typology was inspired by Guest (1995, p. 118) and contrasts the sample firms compliance with German labor market institutions with their HRM priority. HRM priority is defined here as the extent to which HRM prescriptions are implemented. The classification results in four different quadrants. Each is now discussed starting with the first option 'traditional personnel management.'
Companies in the first quadrant quadrant, in analytic geometry
1 In analytic geometry, one of the four regions of the plane determined by two lines, the x-axis and the y-axis. 'traditional personnel management' largely comply with the key German labor market institutions examined, but at the same time practice little HRM. This represents the stereotypical view of human resource management in Germany in the comparative HRM literature (see for example, Begin 1997, Sparrow/Hiltrop 1994). It is mainly based on a 1982 study by Lawrence (1991) which suggests that German labor market institutions prevent German companies from using sophisticated human resource techniques. As many of the companies have only recently introduced modern human resource instruments such as attitude surveys, development assessment center and performance-related pay, Lawrence's findings may well have been valid at the time of his research. In the early 1990s, only two of the sample firms fall into this category. However, the use of instruments may well be less important than broad human resource policies, as even they fulfil ful·fill also ful·fil
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils
1. To bring into actuality; effect: fulfilled their promises.
2. major HRM prescriptions such as providing extensive training, employment stability and offering an employee voice system.
The companies in the second quadrant, 'pluralist HRM,' practice HRM, but at the same time comply with German labor market institutions. Most British- and German-owned firms, as well as all but one of the large US subsidiaries, fit into this category. Such a human resource approach fits well with the high cost, high quality business strategy pursued by German industry (Porter 1990). It is worth noting that in the 1990s some of them have started to use human resource techniques such as goal-based appraisal, attitude surveys and performance-related pay. This development suggests that there is room for the introduction of HRM elements that are not clearly supported by the German system. Firms can apply techniques associated with HRM and at the same time comply with the requirements of the German system. As discussed in more detail later, employment size may at least partly explain whether firms pursue this option for the management of their human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. . Again it depends on the importance one attaches to the use of human resource instruments as opposed to broad policies whether one perceives the predominance pre·dom·i·nance also pre·dom·i·nan·cy
The state or quality of being predominant; preponderance.
Noun 1. predominance - the state of being predominant over others
predomination, prepotency of a pluralist HRM approach among the sample firms as a recent development encouraged by the opportunities created by modern management approaches or something already applied for a long time. Even in the 1950s, labor management in large German firms was characterized char·ac·ter·ize
tr.v. character·ized, character·iz·ing, character·iz·es
1. To describe the qualities or peculiarities of: characterized the warden as ruthless.
2. by internal labor-market type training, good promotion prospects, the existence of internal employee voice systems and job security (Gospel 1999). On similar lines, some German academics suggested that there has traditionally been an orientation in personnel management in German firms which is in line with many HRM prescriptions (Garnjost/Wachter 1996, p. 805, Staehle 1988, Streeck 1987, Wachter/Stengelhofen 1992).
Turning to the third quadrant, three of the firms in the sample, US Pharmaceutical, US Chemical and US Merchant Bank, have a 'unitarist HRM' strategy. These US subsidiaries show little compliance with the requirements of German labor market institutions and seem to follow a non-union policy. They also have a relatively high HRM priority. Their example demonstrates that a unitarist US-type HRM can be applied in Germany and thus they contradict con·tra·dict
v. con·tra·dict·ed, con·tra·dict·ing, con·tra·dicts
1. To assert or express the opposite of (a statement).
2. To deny the statement of. See Synonyms at deny. the second hypothesis. Nevertheless, there appear to be only a few companies operating in Germany that follow such an approach. Although in the absence of more detailed empirical data one could speculate about how widespread the unitarist HRM approach is, it is interesting that neither the three US subsidiaries in this quadrant nor any other company operating in Germany with such an approach has emerged as a model for a unitarist HRM. Even the German subsidiary of Hewlett Packard, which is widely known for its excellent human resource management, is not associated with or described as a model for a unitarist management approach. For example, it is not generally known that it is one of the largest companies in Germany without collective bargaining. This is different to the UK or the US where a number of large, well known companies have been presented as successful models for a unitarist HRM. One reason for this could be that the costs of such a deviant strategy are too high in the German context. It is worth emphasizing at this point that three of the four large US subsidiaries in the sample, US Branch Bank, US Oil and US Consumer Chemical, follow a pluralist HRM strategy. This is of particular interest as their parents are known in the US as models for a unitarist HRM. Therefore, at least for large firms, the German system appears to leave little room for maneuver maneuver /ma·neu·ver/ (mah-noo´ver) a skillful or dextrous method or procedure.
Bracht's maneuver a method of extraction of the aftercoming head in breech presentation. .
Organizations that avoid both German labor market institutions and HRM are classified in the fourth quadrant, 'market-type personnel management.' The three smallest US firms are in this category. In comparison to the other sample firms they have a more market-type employment system (Delery/Doty 1996) by extensively using external labor markets, offering little training and strongly emphasizing performance-related pay. As all three banks are big international firms, each employing at least 5,000 people world-wide, a conscious strategy rather than employment size is more likely to account for their behavior. Nevertheless, for small firms operating in Germany a market-type personnel management rather than the pluralist HRM approach may be the dominant human resource strategy. Survey evidence shows that only a minority of firms with less than 100 employees have a works council (Mendius/Semlinger 1991, Table A3.15), many of them are not subject to collective bargaining (Kohaut/Bellmann 1997, p. 323) and they are also less likely to offer initial vocational training (Mendius/Semlinger 1991, Table A3.17). In regard to human resource policies, large firms are much more likely to offer further training, to use a written performance appraisal and to have an internal job posting system than small firms (Mendius/Semlinger 1991, Tables A3.06, 3.09, 3.18). Therefore, even in the institutionally strong German context, at least for small firms that want to follow a low cost, low quality strategy, it is possible to opt for a human resource approach that fits.
The research presented here examined the management of human resources in Germany. In contrast to previous research which suggested that companies operating in Germany are low users of HRM, this research found that several of the policies and techniques associated with HRM are widely used. It seems that the German system even fosters the use of some HRM practices. For example, initial vocational training contributes to a relatively high emphasis on training. Co-determination exerts pressure on German companies to guarantee employment security and offers a significant mechanism of employee involvement. Over the last decade the companies that participated in the case studies introduced HRM techniques such as development assessment centers, performance-related pay and attitude surveys that were not used in the past. Such attempts can meet with resistance by employee representatives who have the power to stop the introduction or change of human resource instruments.
This observation directly leads to the second main finding. The German system favors a pluralist approach to HRM. Medium and large sized firms operating in Germany can hardly avoid the labor market institutions of collective bargaining, co-determination and initial vocational training. Hence, their autonomy is restricted in several pivotal human resource management areas. Either decisions made by external bodies such as the collective bargaining parties, the state and the chambers of industry and commerce are imposed on them, or the introduction and operation of human resource instruments has to be negotiated with employee representatives. Therefore, although German companies can use practices associated with HRM, they can generally not adopt the unitarist values of HRM. Consequently, a unitarist type of HRM can hardly be followed in the German system. This suggests that the case of HRM in Germany does not support convergence theory. Nevertheless, the data presented indicate that German firms are relatively open to managerial ideas originating from the US. The sample firms already apply or are currently introducing many of the techniques associated with HRM. However, this is a "constrained con·strain
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.
2. convergence" rather than a full convergence. Far from supporting convergence thinking, the human resource management of companies in Germany remains distinctively different from US practices.
A number of HRM scholars are critical of the unitarist ideology of the HRM model. They suggest a pluralist HRM model as an alternative. The case of Germany, where at least among large firms pluralist HRM seems to be the dominant model of human resource management, illustrates that such an approach can work in practice. Despite high unemployment rates, German companies have remained competitive and the German system, which is in many respects a refined version of the European Union's Social Model, remains robust. Nevertheless, as the German model limits organizational autonomy, it might threaten rather than appeal to employers. It is not unreasonable to assume that only if there is institutional pressure on companies will they follow a pluralist HRM approach. Such a condition may well be fulfilled ful·fill also ful·fil
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils
1. To bring into actuality; effect: fulfilled their promises.
2. in Europe, as European concepts of HRM need to reflect key values such as pluralism and tolerance, a balanced stakeholder stakeholder n. a person having in his/her possession (holding) money or property in which he/she has no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property. philosophy and the concept of social partnership (Brewster 1995, Guest 1994, Sparrow and Hiltrop 1997, Thurley and Wirdenius 1991). A pluralist model of HRM may well become the preferred option for European companies It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome.
This is a list of companies from the countries in the European Union. that follow a market strategy based on high quality and could offer a serious alternative to the unitarist US type HRM model.
Although differences between the human resource practices of individual companies might as a result of the relatively strong institutional framework not be as marked as in other countries, this research found some diversity. Firstly, the US subsidiaries in the sample show that it is possible to transfer to Germany techniques developed and applied in their home country. Some of them even manage to follow a unitarist HRM approach. This makes them different not only from the German-, but also from the British-owned firms studied. Secondly, small firms appear to be under less pressure to comply with German labor market institutions than medium and large sized companies. They are less likely to have works councils, to be involved in collective bargaining and are under less public pressure to employ apprentices. Thirdly, in contrast to ownership and size, industrial sector seems to be less important. Hardly any differences between banks and chemical firms emerged in regard to their compliance with collective bargaining, co-determination and initial vocational training.
The study inevitably has limitations. One problem is the lack of good outcome data that would have enabled an assessment of the success of different human resource approaches in the German context. In particular, it would have been interesting to find out whether companies that comply with the requirements of German labor market institutions exhibit better outcomes than those who follow an unitarist HRM or a black hole approach. A second limitation is that on the basis of the data collected it has not been possible to distinguish between those companies that merely comply with the requirements of the German system and those that are committed to it. A final weakness is that there are hardly any UK and US banks operating in Germany that from their size and the type of their business can easily be compared to indigenous banks. Hence, it was somewhat difficult to assess which differences are accounted for by national ownership and which by other factors and in particular employment size.
Emerging from this study, there appear to be four priorities for future work. Firstly, findings that at least among large firms the pluralist HRM model is predominant pre·dom·i·nant
1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant.
2. in Germany need to be tested by more representative survey data. Secondly, insights about the future direction of HRM in Germany could also be gained from more detailed studies of the human resource and industrial relations practices of German firms abroad. How do they behave when they are 'freed' of institutional constraints CONSTRAINTS - A language for solving constraints using value inference.
["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. (Ferner/Quintanilla 1998)? A third valuable area of further research would be to study the human resource management of small companies in Germany, whose practices will in several ways be different from large firms. It is widely assumed that such companies are one of the main factors accounting for the success of German industry (Porter 1990). A fourth priority for research would be to collect similar data in other countries to contribute more directly to the theory of comparative HRM. To build such a theory, there is a need to study models of human resource management in different countries and to analyze how these are shaped by actors such as the state and labor as well as cultural traditions (Boxall 1995, Muller 1999b). In line with these recommendations it would be of particular interest to study the dominant options for the management of human resources in other European countries to find out if a European model of HRM is emerging.
The authors owes a profound debt of gratitude to David Guest
Referees are usually appointed by a judge in the district in which the judge presides. of this issue, members of the research seminar at the "Department for Business Education and Human Resource Management" of the University of Innsbruck It is currently the largest education facility in the Austrian Bundesland of Tirol and third largest in Austria according to student population, behind Vienna University and Graz University. , and participants of the 1996 conference of German human resource management academics made useful remarks on earlier versions of this paper.
1 In the following the abbreviation abbreviation, in writing, arbitrary shortening of a word, usually by cutting off letters from the end, as in U.S. and Gen. (General). Contraction serves the same purpose but is understood strictly to be the shortening of a word by cutting out letters in the middle, HRM is only used when there is a reference to the HRM debate or a specific HRM concept. In contrast, the term human resource management is used as a modern expression for personnel management.
2 Originally it was aimed to include organizational outcomes as a further dependent variable to test the effectiveness of the human resource management practices identified. During the course of the study the researcher realized this was not feasible. Information about outcomes such as labour turnover, absenteeism ab·sen·tee·ism
1. Habitual failure to appear, especially for work or other regular duty.
2. The rate of occurrence of habitual absence from work or duty. and profits was not available in all sample firms and/or not possible to compare across them. Furthermore, there is a range of factors that influence these outcomes.
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