Human Resource Management in Western Europe [Reprint 2015 ed.] 9783110873504, 9783110142747

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de Gruyter Studies in Organization 68 Human Resource Management in Western Europe

de Gruyter Studies in Organization International Management, Organization and Policy Analysis

An international and interdisciplinary book series from de Gruyter presenting comprehensive research on aspects of international management, organization studies and comparative public-policy. It will cover cross-cultural and cross-national studies of topics such as: - management; organizations; public policy, and/or their inter-relation - industry and regulatory policies - business-government relations - international organizations - comparative institutional frameworks. While each book in the series ideally has a comparative empirical focus, specific national studies of a general theoretical, substantive or regional interest which relate to the development of cross-cultural and comparative theory will also be encouraged. The series are designed to stimulate and encourage the exchange of ideas across linguistic, national and cultural tradition of analysis, between academic researchers, practitioners and policy makers, and between disciplinary specialisms. The volume will present theoretical work, empirical studies, translations and 'stateof-the art' surveys. The international aspects of the series will be uppermost: there will be a strong commitment to work which crosses and opens boundaries. Editor: Prof. Stewart R. Clegg, Faculty of Business and Technology, University of Western Sydney, Macarthur, Campbelltown, Australia Advisory Board: Prof. Nancy J. Adler, McGill University, Dept. of Management, Montreal, Quebec, Canada Prof. Richard Hall, State University of New York at Albany, Dept. of Sociology, Albany, New York, USA Prof. Gary Hamilton, University of Washington, Seattle, Washington, USA Prof. Geert Hofstede, University of Limburg, Maastricht, The Netherlands Prof. Pradip N. Khandwalla, Indian Institute of Management, Vastrapur, Ahmedabad, India Prof. Surenda Munshi, Sociology Group, Indian Institute of Management, Calcutta, India Prof. Gordon Redding, University of Hong Kong, Dept. of Management Studies, Hong Kong

Human Resource Management in Western Europe Editor

Ingrid Brunstein

W G DE

Walter de Gruyter · Berlin · New York 1995

Dr. Ingrid Brunstein, Institut d'Administration des Entreprises, Université Robert Schuman, Strasbourg, France

With 11 figures and 26 tables

© Printed on acid-free paper which falls within the guidelines of the ANSI to ensure permanence and durability. Library of Congress Cataloging-in-Publication

Data

Human resource management in Western Europe / edited by Ingrid Brunstein. p. cm. - (De Gruyter studies in organization ; 68) Includes bibliographical references and index. ISBN 3-11-014275-9 (pbk.) ISBN 3-11-014274-0 (cloth) 1. Personnel management - Europe. 2. Division of labor — Europe. 3. Industrial management - Europe. 1. Brunstein, Ingrid. II. Series. HF5549.2.E9H862 1995 658.3Ό094—dc20 95-23143 CIP

Die Deutsche Bibliothek - Cataloging-in-Publication

Data

Human resource management in Western Europe / ed. by Ingrid Brunstein. — Berlin ; New York : de Gruyter, 1995 (De Gruyter studies in organization ; 68 : International management, organization and policy analysis) ISBN 3-11-014275-9 brosch. ISBN 3-11-014274-0 Gb. NE: Brunstein, Ingrid [Hrsg.]; GT

© Copyright 1995 by Walter de Gruyter & Co., D-10785 Berlin All rights reserved, including those of translation into foreign languages. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Printing: Werner Hildebrand, Berlin. - Binding: Dieter Mikolai, Berlin. - Cover Design: Johannes Rother, Berlin. Printed in Germany.

Foreword

The history of this book has faithfully reflected the dynamic pluralism of contemporary Europe. In the beginning... there was the idea of bringing together men and women from different European countries in order to paint a picture of human resource management in Europe as it is now. The fact that they were able to meet at all was a direct result of a European initiative: the Brussels-based ERASMUS programme, which funded albeit indirectly and incidentally the enterprise. In many universities and business schools, those responsible for the administration of the ERASMUS programme were, quite logically, lecturers and researchers specializing in human resource management. This meant that they had teaching and research interests in their academic discipline on a wider scale than their own national boundaries. The idea of such a collective effort was born in the course of a meeting of the "Strasbourg Network": "Given the fact that many of us teach the same subject, why don't we try to put together our ideas on human resource management, drawing both on our hands-on experience and the prevalent theoretical concepts in each of our countries!" Thus this publication is the fruit of a positive association of a large and impersonal European Organization with the personal desire of individuals from different countries to write a book about HRM. The result of this initial collaboration was the publication, under the direction of John Berridge and Ingrid Brunstein, of a series of nine articles in two special editions of Employee Relations (Volume 14, numbers 4 and 5) in 1992. Some of the authors of these articles then went on to develop their ideas more fully at the AGRH Conference (Association Française de Gestion de Ressources Humaines) in Lille, under the title "Human Resource Management With and Without Frontiers". At that time it was already clear to the authors that, due in part to the constantly evolving nature of the subject-matter, a great deal of research remained to be done. The same must be said today, and will probably continue to be true in the future: the fact that three new countries have joined

VI

Foreword

the European Union since the completion of these articles, and that the Union will continue to grow, is in itself sufficient justification for this qualification. It was therefore after the publication of the first nucleus of articles (and with the agreement of the publishers of the original versions: MCB University Press Ltd., Bradford, England), that the authors decided to broaden the scope of their research, firstly by including the then missing countries. The team of contributors, consisting of academic researchers well-known in their different countries, was expanded. The scope of the themes, to be treated from a scholarly as well as professional view-point, was also subsequently broadened, to include the essential question (already approached by Pieper in 1990): what, really, is human resource management? Is it not simply, in some countries, Personnel Management which, without a great deal of reflection, has been dressed up under a fancy name? Is it not even reasonable to say that it is sometimes more successfully realized as a concept where the term does not exist? Does HRM not pose ethical problems? These questions, similar to those posed by a group of French researchers who ask whether we should "Rethink Human Resource Management" (Brabet 1993), underlie the description given by each author of the history, of the models and the function of human resource management, including its principle of sharing, its reactive or proactive approaches, its strategic dimension and its eminently economic role in the light of new technology, among other recent developments. While the annual Price-Waterhouse Cranfield Project consists of a report based on statistics, here the approach is, by way of contrast, to give detailed insider descriptions. The authors describe developments and tendencies towards greater flexibility in HRM, through differentiated management of core and peripheral workers and external partners. The impact of the unions, the diminution of their audience in many countries and the simultaneous need for a representative body structured on the principle of negotiation is also a concern for many of the authors. This problematic, among others, has led to research which although initially hesitant, is now making steady progress in nearly all countries. One important theme approached in the various monographs is that of the construction of Europe, particularly the implementation of the Single European Market and its social dimension. In some countries, frustration is prevalent as the social partners seek to define their positions in the face of multiple difficulties and delays, while at the same time remaining conscious of the imperative need for progress. The link between company competitiveness and social consequences in relation to employment thus represents a new stake for the European Union, as the summary chapter shows. It is thus

Foreword

VII

evident that the Europeans possess common concepts, values and perspectives (as others have shown, such as Pieper 1990; Brewster, Tyson 1991). Although the book deals in this way with common themes and preoccupations, it does not seek to give the impression of an omnipresent generality. The editor's concern throughout has been simultaneously to harmonize the themes treated and to highlight particular reflections pertinent in their originality, precisely because Europe remains a patchwork, the entire interest of which lies in the diversity of its colours and fabrics. There is no European human resource management! The contribution of this book to the field of Human Resources lies in the detailed description of the many and diverse situations, cultures, methods and perspectives of HRM in Europe. The authors have been strongly encouraged to bring to the fore, without dilution, the particularities which mark the management of people in their countries, and to render these comprehensible to readers in other countries. In this way, a very personal view is brought to the treatment of female personnel in Portugal for instance, or to the development of the banking sector and its influence on human resource management in Italy. Omissions also have been carefully considered such as that of the economic impact of the Single European Market in the Netherlands, where European integration is an everyday reality to the extent that talking about it might be considered pleonastic. New perspectives emerge from the forecasts and analyses contained in each chapter. In Luxembourg, the phenomenon of cross-border commuting already exists, anticipating this development in other European countries. Germany today is faced with the challenge of having to influence attitudes in East Germany through human resource management, in order to pass from a rationale of planning to one adapted to the market economy. This is a problem pertinent also to the future of Central Europe, in which Greece now has a growing interest. Readers of this book will no doubt notice that the style employed by the contributors varies considerably from one chapter to another. By allowing each author to retain his or her idiosyncracies of style and expression, this book is unique in offering, in a lively and direct manner, the critical views of academics from all over the EU. If the image painted in this book of human resource management in the different countries of Western Europe has become a piece of quality workmanship, it is because all of the authors have responded with enthusiasm and promptitude to diverse solicitations. Their reward is the finished work, notwithstanding its difficulties. Warm thanks go to John Berridge of the Manchester School of Management, UMIST, who played a central role in the initial phases of this book's creation and who also participated intensively towards the end by reading the entire final version, making numerous corrections and improvements of

Vili

Foreword

meaning and expression. The editor's two colleagues in Strasbourg, native English speakers, Helen E. Mundler and Terence Boyle, who promptly stepped into the breach to ensure the linguistic quality of the work when this proved necessary, are to be congratulated. Thanks also go to the ERASMUS student Gwen Bridges in this regard. Pascal Dumond-Souaillat diligently made up for the deficiencies of the editor in the realm of information technology! The most important result of the collaboration of all involved in this work should make us confident. This book is the material proof that Europe exists: men and women, all of them European academics, describe it here in all its socio-economic diversity; and in spite of their differences, they do it together.

References Brabet J. (ed.), Repenser la gestion des ressources humaines?, Economica, Paris 1993. Brewster C., Tyson S., International comparisons in human resource management. Pitman, London 1991. Hofstede G., Culture's consequences, Sage, Beverly Hills 1980. Pieper R. (ed.), Human resource management: An international comparison, Walter de Gruyter, Berlin/New York 1990. Price-Waterhouse Cranfield, Project on international strategy, human resource management, annual report, Ecole Supérieure de Commerce, Lyon (various years).

Table of Contents

Foreword

V

Introduction Ingrid Brunstein

1

Part I Human Resource Management in Twelve European Countries Belgium Marc Hees

7 9

1 Introduction 2 The Economic Context and its Impact on HRM 3 The Industrial Context 3.1 Industrial Partners 3.1.1 The Union Movement 3.1.2 The Employers'Movement 3.2 Industrial Relations 4 Human Resource Management 4.1 The Development of HRM in Belgium 4.2 The Training of Directors of Human Resources 4.3 Challenges for HRM 5 Ethics and HRM 6 Belgium in the European Industrial Landscape References

9 9 13 14 14 16 16 19 19 23 24 25 26 29

Denmark Frans Bévort, John Storm Pedersen, Jon Sundbo

31

1 Introduction

31

X

Table of Contents

2 The Current State of Danish HRM 2.1 Traditional HRM: Personnel Functions and Specialists 2.2 Recent Experiments within Danish HRM 3 The Historical Development of HRM in Denmark 4 A New Paradigm of Rational Management 4.1 Individual Level: From Action-centred to Intellective Skills 4.2 The Interaction Level: A New Distribution of Authority 4.3 The System Level: A New System of Motivation 5 The Impact of the European Union on HRM in Denmark 6 Elements of a New HRM Strategy 6.1 The Self-programming Employee 6.2 The Dialogue 6.3 A New Role of Middle Management: The Second Moment of Truth 6.4 The Multidimensional Barter 7 Attitudes and Expectations 7.1 General Attitudes of the Employees 7.2 Different Attitudes in the Public and Private Sector 7.3 Employees' Expectations Concerning Management 8 Conclusion References

32 32 33 35 38 40 41 41 43 45 47 48

France

59

48 49 50 50 52 53 55 55

Ingrid Brunstein

1 Introduction 2 Managing the French: A Cultural Maze 2.1 Cultural Background 2.2 The French Education System 2.3 Executives and the Reinforcement of Hierarchical Barriers 2.4 Trade Unions 3 Outline of Human Resource Management in France 3.1 History of its Role 3.2 State of HRM in the Company 3.3 Training and Research in HRM 4 HRM at the Intersection of the Tracks 4.1 A Shared Role 5 The Social Dimension of the Single European Market 5.1 Euroscepticism 5.2 European Social Union as Seen by French Workers 5.3 Social Union as Seen by Managers 5.4 European Social Union as Seen by the Trade Unions 6 Thoughts for the Future

59 60 61 62 63 64 66 66 67 68 69 69 77 78 79 80 81 82

Table of Contents

6.1 New Technology and the Organization of the Workforce 6.2 Side Effects — Exclusion and Stress 6.3 A New Ethical Dimension Against the "Gospel of Efficiency"... References

XI

82 83 84 86

Germany Hartmut Wächter, Theo Stengelhofen

89

1 Salient Features of German Personnel Management 1.1 Institutional Settings and Management Action 1.2 German "Corporatism" 1.3 Worker Participation in Economic Affairs 1.4 The Educational Tradition 2 Personnel Management in Post-war West Germany 2.1 The Development of the Personnel Function in the Firm 2.2 Current Topics in German Personnel Management 2.3 HRM as an Academic Field 3 New Challenges for German HRM: Re-unification Issues and Impacts of EU Initiatives 3.1 Issues Arising from Re-unification 3.1.1 Personnel Management and Unemployment 3.1.2 Leadership Patterns, Performance and Pay 3.1.3 Industrial Relations at the Workplace 3.2 Impacts of EU Initiatives 3.2.1 Internationalization of German Industry 3.2.2 Influence of EU Regulations on East Germany 3.2.3 Protecting Social Standards 4 Future Prospects of HRM in Germany References

89 89 90 90 92 92 92 95 98 99 99 99 101 103 105 105 105 106 107 110

Greece Nancy Papalexandris

113

1 2 3 4

113 114 115 117 117 118 120 123 125 126

Introduction Human Resource Management in Greek Organizations Role and Professionalization of Personnel Managers Major Activities of Personnel Departments 4.1 Selection and Recruitment 4.2 Performance Appraisal 4.3 Training and Development 4.4 Employee Relations, Pay and Benefits 5 Public Sector Management 6 Impact of EU Initiatives

XII

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7 Prognosis for the Future 7.1 Professionalization of HRM in Smaller and Family-owned Firms 7.2 Links with Research and Academic Institutions 7.3 Identifying and Developing Managerial Talent 7.4 New Patterns of Employment and Changing Workforce 8 Future Developments Due to European Unification 8.1 Collaboration of HRM with Other Departments 8.2 Employee Participation 8.3 Collaboration with Unions 9 Concluding Remarks References

129 129 130 130 131 131 131 132 132 133 133

Ireland

135

Patrick Gunnigle, Michael Morley, Kieran Foley

1 Introduction 2 The Development of Human Resource Management in Ireland 3 Determinants and Nature of HRM Policy Choice 3.1 External Environment 3.2 Internal Environment 3.3 Key Areas of HRM Policy Choice 4 The Specialist HRM Function in Ireland — Status and Role 5 Change in Human Resource Management 5.1 Growth of Atypical Employment Forms and the "Flexibility" Phenomena 5.2 Strategic Integration of HRM Considerations 5.3 The Role of Trade Unions 6 Conclusions References

135 135 138 138 142 142 145 148

Italy

157

148 150 150 152 154

Carlo Alessandro Sirianni

1 Introduction 2 Development of Human Resource Management Models in Italian Companies 2.1 General Analysis According to Historical Development 2.2 Distinctive Models of Human Resource Management 3 Personnel Management and the Context of Industrial Relations in Italy 4 Current Trends in the Management of Human Resources in Italian Companies

157 159 159 159 163 165

Table of Contents

XIII

4.1 Human Resource Management in Large Companies 4.1.1 Structure and Activity of the Personnel Function 4.1.2 Management Systems and Techniques 4.1.3 The Strategic Role of the Personnel Function 4.2 Human Resource Management in Small Businesses 4.3 Human Resource Management in the Banking Sector 4.3.1 Reference Scenarios 4.3.2 Present Tendencies in Banking Strategies 4.3.3 Personnel Policy 5 Some Ideas about Human Resource Management and the Single European Market 5.1 The Labour Market 5.2 The Single European Market and Professionalization of HRM in Italy 5.3 The Impact of the Single European Market and the Process of Change in HRM Policies 6 Conclusion References

165 166 167 169 169 170 171 173 173

Luxembourg Hartmut Wächter, Theo Stengelhofen

185

1 HRM Research on Luxembourg 2 The Influence of the Neighbouring Countries on Industrial Relations and Social Policy in Luxembourg 3 Luxembourg: An Emerging European Labour Market 4 A European Dimension: Nothing New to Luxembourg HRM 5 Conclusion References

185

177 177 178 179 180 181

186 188 189 189 189

The Netherlands Arndt Sorge, Ad van Iterson

191

1 2 3 4 5

191 194 197 204 207 208

Business Systems in the Dutch Economy and Society Generation of Human Resources Work Organization and Personnel Management Industrial Relations Conclusion References

XIV

Table of Contents

Portugal Rita Campos e Cunha, Carlos Alves Marques

211

1 2 3 4 5

Introduction Economic Evolution Cultural Context Brief Record of the Development of HRM Impact of EU Initiatives 5.1 Flexibility 5.2 Communication 5.3 Equal Opportunities for Men and Women 6 Prognosis for the Future 6.1 The Educational System 6.2 The Management of People 7 Conclusions References

211 212 213 214 218 219 220 223 225 225 227 228 229

Spain Ignacio Flórez-Saborido, Manuel González-Rendón, Manuel Alcaide-Castro

231

1 Introduction 2 Human Resource Management during the Franco Regime 3 Human Resource Management, Economic Crisis and Political Transition in the 1970s 4 Human Resource Management during the 1980s: From Crisis to Recovery 4.1 The Evolution of the System of Union Relations 4.2 The Labour Market 4.3 Employment Policy 4.4 Contracts of Employment 5 The 1990s: The Beginning of a New Period of Economic Recession.. 5.1 Reform of the Labour Market 5.2 Reform of the Vocational Training System 6 Current Practices of Human Resource Management in Spain 6.1 The Status and Nature of the Specialist Personnel Function 6.2 Recruitment and Selection of Personnel 6.3 The Growing Need For Training 6.4 The Functional Mobility and Promotion Systems 6.5 The Resurgence of Incentive Mechanisms Linked to Salary 6.6 Fringe Benefits 6.7 Technological Innovation and Human Resource Management.... 7 The Impact of the Single European Market

231 231 233 235 235 237 239 240 241 241 243 243 245 246 247 248 249 251 252 254

Table of Contents

XV

7.1 The Free Circulation of Workers 7.2 The Impact of the Single European Market on Employment 7.3 Wages and Competitive Level of the Spanish Economy 8 Conclusion References

255 255 256 256 257

United Kingdom

259

John R. Berridge

1 Introduction 2 The Evolution of HRM in Britain 3 The Occupation and Practice of Human Resource Management 3.1 The Individual HR Practitioner: Age, Experience and Conditions of Employment 3.2 The Organization of the Human Resource Function 3.3 The Human Resources Professional Body 4 The Multiple Paradox of HRM 5 Personnel Models and the Evolution of HRM 5.1 A Three-stage Progression of Roles 5.2 Two Post-professional Analogies 5.3 Summary 6 EC and EU Influences on British HRM 7 Conclusions References

259 260 271 271 272 275 276 279 281 282 283 284 288 289

Partii Statistical Data

293

Belgium and European Union Denmark and European Union France and European Union Germany and European Union Greece and European Union Ireland and European Union Italy and European Union Luxembourg and European Union Netherlands and European Union Portugal and European Union Spain and European Union United Kingdom and European Union

295 296 297 298 299 300 301 302 303 304 305 306

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Table of Contents

Part m Summary

307

Europe and its Human Resources in the Context of Worldwide Competition: The Emergence of a Paradoxical Dilemma

309

Ingrid Brunstein

1 The Strategy of Evolution for the Life and Survival of the Firm 309 2 Opportunities and Constraints — The Influence of Internal and External Factors 311 2.1 External Factors 312 2.2 Internal Factors 313 3 Human and Organizational Efficiency — The Qualitative Strategy .... 315 3.1 Flexibility, Individualization and Autonomy 317 3.2 Qualification, Responsibility and Motivation 319 4 The Best Performance and its Effects on Human Resources 322 4.1 Survivors Have to be Redeployed 322 4.2 The Marginalized Call for Short-term Integration 323 4.3 Incapables are Excluded 324 5 Performance and Survival of the Welfare State 325 6 Societal Learning as a Principle for the Survival and Development of the European Society 328 6.1 In Search of a New Understanding of the Contradictions in Today's World 328 6.2 Societal Learning — A Possibility to Sort out the Dilemma 330 6.3 Characteristics of Societal Learning 332 6.4 Societal Learning — An Economic Factor for a Europe Reconciled with its Differences 333 6.5 Perspectives for HRM 335 References 336

Notes on Contributors

339

Introduction Ingrid Brunstein

After a great deal of collective hard work, throughout which we have proceeded cautiously, along with the authors from twelve countries of Western Europe, we would like to be able to say to the reader: "We have collated all the necessary information and this is human resource management in Europe: both its similarities and its differences." But even before starting, we had to ask ourselves if we could reasonably draw conclusions from these articles in comparative terms regarding HRM in the different European countries. We share the belief (Livian 1992) that care must be taken concerning hastily drawn comparisons for several different reasons: - Situations have a qualitative side, full of nuances, because different words incorporate connotations linked to the national culture and history of each country. Terms which seem as simple as simple as "Arbeiter", "worker", "ouvrier", "obrero" do not really have the same meaning; they are tinged with the reminders of the workers' movement, the roots of the first industrial locations (mines, textile and heavy goods industries), traces of great political and historical events (the French revolution, national socialism, Françoism) and indirectly by philosophical and religious beliefs. - This brings us to the point that it would be intellectually dishonest to compare HRM practices in countries that have been industrialised for many years with those countries which are still on the way from the preindustrial to the industrial state and which joined the free trade systems more recently. - Moreover, no detailed statistical analysis exists for the EU countries with respect to all the questions asked. Therefore any worthy comparison can neither be based on the figures collected from studies of identical samples of the European population nor follow an ethnographic course, studying in depth quantitatively comparable situations. - Our own practical experience of HRM does not cover more than a few countries for each one of us. Therefore a comparison proposed by the authors would for the most part seem "second hand".

2

Ingrid Brunstein

All things considered we realize that we are not sure whether we want to propose standardized comparative material. We probably prefer to concentrate on what seems to us the main strength of this book: the revelation of national peculiarities. Thus we are faced with one unavoidable question: is it possible to study Europe's men, businesses and nations whose greatest similarity lies in their differences? If we renounce the idea of a truly comparative study of HRM in twelve European countries, is there at least a minimum degree of universality to be found in these human resources, leaving aside the way in which they are managed? Are there really a sufficient number of common denominators of significant overall importance? It is the detailed work of Eurostat in Luxembourg1 that has allowed us to gain a quantitatively global image of the men and women of the European Union (EU). When interpreting the statistical data we have found striking resemblance. There is a family likeness in certain areas which comes from the demographic and sociological factors that will strongly affect HRM. Thus we note that transversal usage of the statistical data in Part II confirms that the EU presents a relatively homogenous quantitative image. Europe is clearly marked by statistical characteristics which are unique. On the other hand, we also wanted to find out about the possibility of more qualitative resemblance within the EU. What about common values? Research carried out on values important to Europeans proves that if these values are changing, which is certainly the case, they are following a common trajectory. In the introductory passage which follows, we will present some statistical extrapolations and then show the evolution of the system of common values. After these preliminary thoughts which prove that a certain limited universality does exist, the contributors will then mostly underline factors of contingency in the European countries. In the summary chapter we shall finally try to develop an explanatory model that helps to understand why the EU countries are confronted with a common and seemingly inextricable dilemma: the European nations will find it difficult to outlive their companies' competitiveness. Practically everywhere, a marked drop in the birth rate has led to a slowing in population increase. Even if Ireland, France and Holland have a level of growth naturally higher than that of the other countries, their rates have also started to slow down. Over the last ten years, the natural growth rate of the twelve has been under 0.2 per cent and continues to fall. On the other hand, people are living longer. The average annual increase in life expectancy over the past five years has increased by 0.15 per cent. Today, approximately 15 per cent of the European population is aged over 65; this proportion can only increase, having important repercussions on the

Introduction

3

rate of demographic dependency (that is the under 15s and over 64s in relation to the active population). Independently from the fertility hypotheses that have been formulated for the next fifty years, the elderly population will increase in the majority of European countries. The relationship of the "aged population" to the "active population" will thus continue to deteriorate and inevitably cause welfare and retirement problems. The realization of this evolution along with the disruptions, both social and organizational, that it entails seems very weak. This can be shown by the fact that it is not dealt with in any depth by the different contributors with respect to HRM practices within Europe. In Europe as a whole, there is an average of 42.6 per cent of women who work even though this figure comprises wide variations, from 61 per cent in Denmark to 32 per cent in Spain. This should then be linked to the female rate of unemployment (as high levels discourage women from even trying to enter the labour market): approximately 12 per cent for the EU as a whole, with only 6.4 per cent in Portugal and as much as 28 per cent in Spain. But even if these national situations are contrasted, the common tendency over the years is towards increasing rates of women at work. This is a reality which is accompanied by another such reality: the glass ceiling of women's promotion. Attitudes to women's employment, reflected by the average unemployment rate of 12 per cent for women and 9 per cent for men, are changing slowly, as described in detail in the chapter about Portugal. In a lot of cases, the promotion of women to higher levels of management is used as an egalitarian alibi to hide the true situation. Another of these statistical characteristics which represents an unfortunately common trait in the EU is the rate of unemployment with a particularly high average (10.5 per cent) compared to other large industrialized regions. It can be expected to reach a record level of over 18 million by the end of 1995. The burden of unemployment is not shared equally by the sexes nor by the different age groups: women and young people being the most affected. The growing number of aged jobless can be directly correlated with the long term unemployed. Due to the internationalization of the world market, the ever increasing productivity rates and the quality of welfare payments, Europe comes up against a fundamental problem which is discussed in the summary chapter as well as almost every other national study. The inter-relation between all these points (reduction in the birth rate, the ageing of the population, increase in the female workforce and increasing unemployment) shows that certain statistics will only worsen in the future. We will, however, limit ourselves to two examples: - Job instability and unemployment are the factors which slow the formation of the couple and hence fertility to a further degree. The probability of unemployed men living without a partner is greater than that of wo-

4

Ingrid Bninstein

men. (In European perceptions, the man is still seen as the breadwinner.) Therefore male unemployment especially leads to a decrease in the population. - The ageing of the European population corresponds to a notable increase in chronic illnesses which are costly to treat. The young active population will have to put up with health costs increasing much faster than the simple relationship active population/retired population. An unstated worry emanates from an outdated perception of the life cycle. We have ignored for too long now the disruptions caused jointly by the regular recoil of the age of the "biologically old", the changes in the world of work and the distribution of revenues and inheritances. Let us keep the figures and percentages in mind and try now to understand the system of values and their evolution in Europe. What constitutes the greatest link between the European countries is the elaborate good quality social welfare system which will be discussed in the summary chapter. But public solidarity towards hardships encountered and risks taken is not the only area where a common set of values is established. According to two studies done, ten years apart, by ARVAL (Association pour la Recherche sur les Systèmes de Valeurs) on the evolution of European values (Riffault 1993), there is evidence of similarities in European values, the results of which show the extreme importance of the family, a certain wariness towards "others", work achievement seen as a form of personal accomplishment, a reduction in the perceived power of politics and the dream of a society in which less importance would be attached to money and material goods. But according to the study, for practically each of these fundamental values the concept is evolving. Take work for example, which Europeans claim (along with the family) to be an essential part of their lives. In ten years (1981-1990) expectations concerning the development of the individual at work (initiative, responsibility, use of skills) have increased to the detriment of pay rises and physical working conditions. Furthermore, the participative movement now questions the principle of authority. Work, as a concrete value, is coupled for Europeans, with a general desire to affirm their individuality and responsibility. Other results of the same study show that in the area of religious practices situations vary greatly (from Ireland with 87 per cent of churchgoers to Denmark with only 11 per cent) even though there is a general declining tendency everywhere. However, non-practicing does not mean non-believing. Spirituality keeps an essential place high on the priorities of most Europeans. It is formal religious restrictions that have lost their importance as the base of Christian beliefs remains intact. External moral judgements tend to have been replaced by the individual setting his or her own responsibilities.

Introduction

5

This seems symptomatic and reflects a general trend despite a number of contradictions in the attitudes revealed by these studies in nine countries. The main principles remain intact and form the basis from which everyone acts according to his conscience, deciding for himself how far he will go in accepting constraints and in exercising his freedom. This is not irresponsible individualism but on the contrary autonomously assumed responsibility which seems to characterize the evolution of European values. We could further examine the continentality of situations, evolutions and values. The examples given seem to back up our findings: Europe is a distinct area that can be studied as one entity. On one condition! It must not be forgotten that what marks Europe is that within a certain homogeneity, a lot of room is assigned to and taken up by the differences. The structure of this book will inevitably follow the paradox of the European entity. We will try to outline all contrasting situations and practices. If this effort is to have meaning, we have to answer the fundamental questions of the survival of the firm and of European society as a whole. If we want to present a global vision and not limit ourselves to a technocratic description of HRM in the different countries of Europe, we cannot skirt the social issue which will be described in the summary chapter. It will question logics common to the twelve countries, but the constraints, the opportunities and the solutions all bear the particular traits of the national backgrounds. The chapters that follow will prove that the solutions adopted are heavily influenced by national dynamics. It will appear that Europe is indeed an entity, but a Protean one, irreducible into one geographic element or into one of its historical, political, cultural or economic events. It is a combination of these logics, following the same unwavering path of time, which has pointed to the one unity hypothesis. Today this is still only a potential. It is developing as a hologram, each element being a constituent of the whole of Europe and carrying within it this unity.

Note 1

Eurostat remains the most reliable source for comparable statistical data in the European Union. Its considerable effort to collect statistical information from the different EU countries at regular short term intervals has to be recognized. On the other hand, its results may still be considered as largely unsatisfying for research as well as management on a European scale. Many data lack comparability because: - they are incomplete: e.g. the latest Eurostat table on "Wages, Salaries and Labour Costs in the EU" (edited in 1994) which would have been of great interest for the statistical data in Part II of this book does not give any figures for Europe as a whole; - the data are collected supposedly according to the same criteria but cover identified different time periods, i.e. the same table contains figures about salaries, wages and labour costs concerning the year 1988 (for Greece, France and Italy) and concerning 1991 (for the other countries);

6

Ingrid Brunstein - the data have not been updated recently: the significance of wages paid in 1988 is limited. It will be up to the different EU countries to collect and deliver important statistical information more rapidly to the statistical service of the European Union so as to transform it into a reliable and useful tool for economic decision-making at a European level.

References Livian Y.F., Du bon usage des comparaisons, in: Personnel, November-December 1992. Riffault H., L'évolution des valeurs en Europe, in: Futuribles, December 1993.

Parti Human Resource Management in Twelve European Countries

Belgium Marc Hees

1

Introduction

Belgium is a very small country covering a mere eighteenth of the surface area of France. It has about 10,000,000 inhabitants and three political divisions: to the north, the Dutch-speaking Flemish region, to the south and east, the Walloon region, French-speaking with a German-speaking minority, and, in the centre, the Brussels region which is bilingual (French and Dutch) but with a majority of French-speakers. An assessment of Belgian national assets must include the native industry of its inhabitants as well as its natural resources (coal, rich farmlands and woodlands), its geographical location (Belgium has ports on the North Sea and is facing the Channel) and extensive road and rail networks linking north and southern Europe. Belgium is most naturally a "nation of shopkeepers", or businessmen and women. Belgians have acquired, over the centuries, the talent for compromise and bargaining as a means of self-defence in the face of successive invasions by Austria, Spain, France, the Netherlands and Germany. Survival in such conditions presupposes a good dose of common sense, a certain wariness when faced with innovation and an confidence in one's own ingenuity.

2

The Economic Context and its Impact on HRM

After World War II, Belgium, along with its European partners, benefited from a long period of economic growth. The "Golden Sixties" were characterized by a highly satisfactory increase in productivity, a gradual move towards full employment and an overall increase in salaries creating a subsequent demand for more consumer goods.

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By early 1969, 94 per cent of the total capacity for industrial production was being put to use (Vandeputte 1993); due to the exceptional prosperity of this period, the buying power of Belgium's population improved substantially, not only because rises in salaries and wages were linked to a price index1 which automatically reflected rises in prices, but also because there were rises in salaries in excess of increase in prices and the price index. This was the result both of aggressive union activity and market tension arising from the lack of qualified labour and the reduction of the working week to 43 hours (Vandeputte 1993). The impact of the changing economy in the 1960s may be summarized as follows: - The official plan for economic growth followed by an economic boom led companies to hire more personnel as their activities increased. - Company development, boosted by this time of economic growth, meant that the demands of managers for promotion could easily be met. This was the time of management forecasting and career planning. - During this period, those in charge of HRM were committed to keeping industrial peace within their companies (in order to ensure economic efficiency) by conceding a certain number of social benefits to the unions. The benefits, signed in collective agreements (national, sectoral, or company), then became part of the permanent contribution of the company to avoiding industrial conflict. - Towards the end of this period of economic growth were years of "full" employment with the inevitable result of reinforcing union negotiating power. - The increased need for a more highly qualified workforce, as well as the change in management models (management by objectives), obliged HR managers either to organize in-house training, or to send personnel to outside training centres. - Full employment made inter-company mobility much easier. This mobility, considered detrimental to productivity, was counter-attacked by a strategy aimed at attaching personnel to the company, either by financial inducements (group insurance, profit sharing) or by the development of psychological tools (in-company news, improved personnel information, annual social reports). The 1970s were affected by alarming inflation, increased by factors including the oil crisis, a gradual deceleration of the economy and the resulting increase in unemployment. Iron, steel, non-ferrous metals, plate glass and paper were the most seriously affected areas, showing an inability to maintain previous levels of exports. Belgian companies entered the 1980s handicapped by high manufacturing costs, low profit margins, saturated export markets and a low profile in in-

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novation. There remained, however, a perceptible difference between the North and the South of Belgium. Flemish industry was especially highly developed in the transformation of semi-finished goods and had more modern industrial equipment, creating a real competitive advantage. On the other hand, heavy industry, mostly in the Walloon area, was affected by the recession to a greater extent. The high price of energy (oil or natural gas) and the high level of salaries and wages (Vandeputte 1993) reduced the capacity of Belgian firms to invest in innovative areas and weakened competitivity against aggressive international competitors such as Japan. This disastrous commercial situation was part of an equally bad economic period. The Belgian people, accustomed to prosperity, could not adjust to an economic era requiring great austerity. The balance of trade, which had shown a healthy profit in previous years, declared a loss of 170 million Belgian francs in 1980 (Vandeputte 1993). At the same time, the national debt increased dangerously and the level of unemployment rose to 320,000 fully jobless and 66,000 people working only part-time: that is over 12 per cent of the working population. How did this affect HRM in the 1970s? Given the uncertain nature of the overall economic situation, companies tended to exercize greater caution in HRM. Personnel and managers were recognized as being an essential resource, requiring rational administration. The evaluation of performance and of potential became a key tool for decisions concerning training and promotion. Competition could be defined as being based on quality control. Programmes for quality circles and total quality control sprang up. At the same time, the HR manager was given responsibility for the development of specific training and a policy of corporate culture. The quest for excellence resulted in the institution of performance-related pay. This usually takes the form of payment relating to the individual's performance. Unions are opposed to this method, seeing it as detrimental to solidarity among workers and arguing that individual performance depends increasingly on technical and organizational mechanisms over which workers have no control. Individualization as a means of motivation is therefore more effective and logical at a managerial level. The past ten years have been marked by a lower level of consumption of goods per family and by the employee's fear of redundancy. Moreover, when a negative balance of trade forced the government to borrow on the foreign exchange, the national debt continued to increase and the devaluation of the Belgian franc in 1982 (-8.5 per cent) barely sufficed to restore competitivity in exports. For the first time in years and in spite of a slight increase in salaries, the buying power of employees decreased. In the second half of the 1980s, economic indicators suggested some improvement. Inflation had slowed to almost two per cent per annum and the trade balance appeared to show a new equilibrium. However, public fi-

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nances continued to look disturbing because the national debt was higher than the annual gross national product, a major factor in which was the uncontrolled cost of social security.2 Unemployment remained high and was increased by companies' efforts to rationalize and restructure. This frequently led to mass redundancy for employees and even managers. In the past few years two new problems have arisen, proving to have a contradictory impact on HRM. First of all, the need to increase flexibility in the workplace has led employers to choose a policy of deregulated social welfare which lowers benefits obtained through previous collective bargaining agreements. Secondly, faced with international competitors, quality production has become essential. Many companies have developed strategies based on quality (quality circles, total quality) whose success, according to the experts, depends mainly upon a change in outlook and greater personal involvement in one's work (quality culture). Employers have thus been obliged, in the name of flexibility, to try to reduce benefits given to their employees, while, at the same time, attempting to inspire them with the idea of "quality". These conflicting purposes have certainly not simplified the job of personnel managers. The idea of quality circles seems, when viewed objectively, and allowing for certain exceptions, to be more a passing trend than the beginning of a new style of management. Supported by an association which no longer exists (the Association des Praticiens des Cercles de Qualité, the PRACQ), quality circles were based on concern over the restoration of direct relations between the chain of command and workers eliminating, or at least reducing, the power of local union delegates. As such, quality circles can be considered more as a way of restoring psychological control on the shopfloor than as a preparation for a new system of industrial relations. The influence of this period on HRM may be summarized as follows: - The result of economic stagnation or recession was to bring two important changes to the fore: increases in flexibility within the company and rationalization in work structures and procedures. - The rationalization of structures and procedures along with the introduction of new technologies led to the remodelling of many areas where it was possible, by processes of retraining, to adapt skills to new needs. - The search for greater flexibility in companies remains visible in strategies which favour internal mobility for managers (i.e. reallocation of human resources). - This greater internal mobility at the same time will have quite logically the effect of hindering the flexibility of the general labour market. A disquieting degree of competitivity may be foreseen. - Finally, the combined effect of internationalization and greater flexibility has increased redundancies and outplacement.

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It was against such a background that on August 9, 1993, King Albert II made his inaugural speech. He launched the idea of a new social security and welfare pact, the purpose of which would be (as after World War II), to redefine, in co-operation with the various parties concerned, the new tendencies shaping Belgium's future. This project, adopted by the Prime Minister, was rejected on two counts: firstly, employers were anxious to encourage fiscal and salary measures which would support competition and secondly trade unions were united in insisting on a reduction of unemployment and greater taxation of capital gains, maintaining the remuneration index link and greater penalties for tax fraud. As the representatives failed to arrive at an agreement, the government proposed a "global plan" which would balance the budget, particularly regarding social security and welfare, restore competition to business and reduce unemployment. No one was satisfied with this plan. Parliament did however vote it in. The government plans, with a few amendments, to apply it in 1994. Salaries will be frozen in 1995 and 1996 and will be linked to a "health" index4 which excludes the price of tobacco, alcoholic beverages and petrol. Laws governing part-time jobs and the working week (readjusted once a year) will become less strict. The cost of redundancies will be credited to the cost of hiring the unemployed. As will be explained below, it can already be noted that until the middle of the 1970s, industrial partners, carried away by economic prosperity, were for different reasons in favour of the regulation of industrial relations, notably for the conclusion of numerous collective agreements: employers wished to preserve social harmony favourable to the company's activities, the unions to limit employers' power in the name of social justice.

3

The Industrial Context

Although it is difficult to define a Belgian model, Belgium is a country known for its system of industrial relations based on the principle of mutual agreement (co-opération) among representatives at all levels (company, sectoral, interprofessional and national) and on the recognition of unions as part of the institution. The basis for this system was laid down when representatives of unions and employers met secretly towards the end of the second world war in order to establish the conditions necessary for industrial peace. This was facilitated by their common desire to resist and to fight the occupying forces. The tangible result was the establishment of the rules by which future agreements could be reached.

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3.1

Marc Hees

Industrial Partners

3.1.1 The Union Movement Belgian unions are greatly influenced by those cultural and philosophical differences interwoven in the fabric of modern-day Belgium. The Confédération des Syndicats Chrétiens (CSC — Confederation of Christian Unions) is Catholic, and believes in the right of the individual. While the CSC is in evidence throughout Belgium, it is stronger in the Flemish region where Catholicism is more widespread. This Union represents 50 per cent of unionized workers in Belgium (Arcq, Blaise 1986). The Fédération Générale du Travail de Belgique (FGTB — General Federation of Workers of Belgium) is a Socialist union. It has long been wellrepresented in the large industrial companies in the Walloon region. Its membership represents 42 per cent of unionized workers in Belgium. The remaining 8 per cent belong to the Centrale Générale du Syndicat Libéral de Belgique (CGSLB — General Association of "Liberal" Unions of Belgium), which is non-Catholic, non-Socialist and in favour of capitalism. Unionized workers represent 70 per cent of the workforce which is considered to be a very high percentage. The fact that unions have long functioned as an official body for the payment of benefit to the unemployed perhaps provides a partial explanation of this ratio. Such a situation puts the union representatives, present in each unemployment office, in a position to explain exactly how each unemployed "candidate" should fill the necessary legal or eligibility conditions to claim unemployment benefits. Many workers rightly or wrongly interpret this as meaning that "it is worth being on good terms with the union". The best way of ensuring this is to be in possession of a valid membership card. The structure of unions in Belgium presupposes a high degree of ideological difference. But this does not account for the typical cultural characteristics of Belgians: a good dose of common sense and a capacity for compromise. Thus it is that without abandoning their own conception, for instance, of proper company organization (shared management for the CSC or self-management for the FGTB), the two major unions do not hesitate to join forces to fight management if they feel that a joint decision could positively affect workers' rights. This occasional co-operation does not, of course, keep them from competing when the annual elections of workers' representatives within companies come around. It must also be borne in mind that Belgian unions really are a movement established to protect workers' interests. Originating in the working class, they now play an important part in decision-making in the Belgian economy. This is reinforced by the fact that the FGTB (in spite of the "class war") as well as the CSC have influence on various official bodies where decisions are made.

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This development may be accounted for by several factors. The union movement started with small local welfare societies organized by workers in the same line. Local societies gradually turned into professional federations and these in turn became national interprofessional organizations where action and policy were decided by the centralized national union. Today, this centralization of union power was strengthened by the professionalism of the permanent union staff, composed of members whose full-time activity was devoted to organizing, motivating and managing the movement. This professionalism was further encouraged by training opportunities organized by the unions, often in collaboration with external experts (for example scientists or teachers); or even by the creation of training networks allowing union members to gain access to a full university course without the usual academic requirements.3 In order to control decisions more effectively, union leaders were instrumental in establishing institutions in which they became part of the ruling body (for instance, the Bureau du Plan). The Bureau du Plan (which started as the Bureau de Programmation Economique in 1959) was born of the unions' desire to control national socio-economic policies and the transformation of the industrial structure (including the creation of housing projects) in the post-war period. Without at this stage entering into the complexity of its working, it may be stated that the role of the Bureau du Plan consisted in presenting to the Senate, after having collected the opinions of several joint advisory committees, a document defining over a period of five years the major political and economic tendencies and, more importantly, national investment policies. This role has dwindled somewhat recently with the increasing bulk and complexity of the central task of really establishing the plan. Nowadays, the Bureau du Plan is more active as a "technical research office" the analyses of which are used as reference material by political decision makers and industrial partners. Finally, the growing complexity of the economy combined with a need for results led unions into areas of great technicality. Their leaders then had to organize research centres and rely on teams of experts whose impact on decisions grew steadily stronger. Although the gradual integration of unions into the decision-making process and the subsequent technicality of union interventions smoothed out ideological differences, they also tended to weaken union awareness of the workforce's aspirations or needs. In order to strengthen the confidence workers had in them, unions had to periodically tackle employers on specific problems. This allowed union leaders to maintain tighter control over their members and to lessen the risk of wildcat strikes. Whatever the reason, Belgian unions are influenced by the national culture of compromise to the extent that they prefer to maintain a certain equi-

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librium between conflicting social forces rather than to pursue a precise goal or policy. It must be added that as far as industrial relations are concerned, a form of compromise is characteristic of relations between trade unions and the governmental instances with whom the unions have the closest ties. This "culture of compromise" is a prerequisite for group survival in a small country which is divided by strong cultural, linguistic, philosophical and social differences.

3.1.2 The Employers'Movement The Fédération des Entreprises Belges (FEB — Federation of Belgian Industry) is the largest group representing employers. Since 1973 it includes both the former Fédération des Industries Belges (FIB — Federation of Belgian Industry) and the Fédération des Entreprises Non-Industrielles de Belgique (FENIB — Federation of Non-Industrial Belgian Companies). The FEB is a national organization with over 40 subsections comprising a number of industrial and some distribution and service sections (Arcq 1982). In accordance with the language split, all three Belgian regions also have their own organizations: the Vlaams Economisch Verbond (VEV) for the Flemish, the Union Wallonne des Entreprises (UWE) for Wallonia and the Union des Entreprises de Brussels, for Brussels. Small and medium-sized firms, believing that they are not well represented by the FEB, have their own representatives: the Union des Classes Moyennes (middle class association). The ideological leanings of the FEB are quite clear. It defends a market economy, free trade, free exchange and, within a company, the unquestionable authority of top management. As far as this latter is concerned, it is agreed that participation should not turn workers into associates: there must be no weakening of the hierarchy (Fabrimétal 1975). This position is justified by the argument that a group's fate cannot be put into the hands of those who are only committed to the group (Cannae 1988). This clearly illustrates the preference employers have for economic rather than social justification, for the only important risks are those run by shareholders. Industrial risks, such as the loss of jobs, are not considered and do not justify treating workers as true partners in deciding on company policy.

3.2

Industrial Relations

Industrial relations are organized at three levels (national, sectoral, company) and around two functions (industrial negotiations and economic consultations). Table 1 provides a summary of the situation.

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Belgium Table 1 : Level

Industrial Negotiation and Economic Consultation Situation Negotiation

National Sectoral Company

Consultation

Conseil national du travail Conseil central de l'économie (representing all groups) (representing all groups) Representative Commission Professional councils (representing all groups) (representing all groups) Union delegations (representing unionized Conseil d'entreprise and comité de sécuworkers) rité et d'hygiène (representing all groups)

The distinction between negotiation and consultation is not as clear-cut as it would appear officially. At company level, negotiation must concur with national and sectoral agreements and thus always implies greater demands on the company than at the other two levels. However, within a company, economic and financial matters are excluded from negotiations as a prerogative of management, as are certain matters concerning social aspects which affect the organization of production. At national level, employers tend to approve of the role of "regulation" that unions assume. However, in companies there is a strong tendency to try and restrict the influence unions have on personnel to as great an extent as possible. Industrial relations are not clear unless a distinction is drawn between the levels at which they are applied and the different stakes that are at risk. Thus, as it appears from our analysis of the economic context, during a period of growth and prosperity, employers and unions appear as objective allies seeking to regulate industrial relations by the signing of national sectorbased collective agreements. Over the past decade, however, employers have tried to obtain greater room for manoeuvre — they have done so for reasons of flexibility rather than from a desire to transfer negotiations from a national or sectoral level to a company level. As a result, unions have virtually no means of reprisal as far as unemployment is concerned. Having given an overview of industrial relations with a distinction, somewhat artifciallly, between negotiation and consultation, a more detailed analysis of developments over the last thirty years may be made. Industrial relations, based on the principle of negotiation and agreement since 1946, remained on a fairly even keel until the end of the 1960s. However, this relationship gradually broke down over the ten years that followed, during which the privately owned company, its hierarchical structure in particular, was the object of much criticism. The idea of the democratization of companies appeared and developed at the same time as the principle of control of company management by workers (Moden, Sloover 1980). While employers recognized the fact that workers wanted to condemn autocratic management (Dubuisson 1974), they refused any form of utopie "self-management" (Moden, Sloover 1980) as proposed by the unions

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which were becoming more radical. Employers tried to regain control of the situation by attacking what they considered a dangerous switch in union ideology. They proposed a rejuvenated doctrine of free enterprise and a set of participative management actions. Several methods of restructuring specific jobs (broadening of tasks, semi-autonomous groups) characterized this "shopfloor democracy" in workshops and offices with participation in the workplace itself. These experimental changes aimed in fact at avoiding any institutional reform of the company which was absolutely contrary to what employers could accept. As one top manager said, "Participation is mainly in the offices, the workshops, the stockyards, the stores... where people are actually working... this concerns attitude and not the institution" (Vaxelaire 1977). Management policy was quite clear. Its development was helped by the increasingly difficult economic situation whereby employers could insist on their own interpretation. In one opinion (van der Schueren 1976), the explanation for these difficulties resides in the fanatical insistence on policies which relied on putting up barriers around a market economy. Among the facts covered by this remark are the constraints imposed on companies by collective agreements obtained by unions, in particular the automatic linking of remuneration to a price index, the limits imposed on the right to fire employees, and the gradual reduction of working hours. Thus, after 20 years of industrial regulation set up during a period of economic growth, employers were aiming at a policy of deregulation which would weaken existing benefits, reinstate greater liberty for management and allow more flexibility in the company: from the almost complete linking of remuneration to the cost of living through corporate legislation, Belgium has always supported a policy of rigidity, thereby upsetting the natural balance, eliminating any encouragement to mobility and maintaining statutory continuity instead of replacing it by the right to contract. The legitimate representation of the various interests present in Belgian society has created a swarm of corporatiste empowered with the right to veto and provoking a global effect of immobility (Smets 1979). In the 1980s, globalization of competition, economic difficulties, the overwhelming cost of social security and the public deficit reinforced the position of employers as opposed to that of the unions, which were on the defensive. In the future, employers will gradually obtain certain concessions such as: short-term contracts, temporary employees, the relaxation of legislation or conventions regulating working hours and improved training organized by the Office National de l'Emploi (ONEM — Labour office), all meant to coordinate manpower and company needs, and to facilitate the reintegration of the unemployed as well as early retirement.

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In such a context, employers have a very clear stand in relation to the unions: the role of the unions is to be sure that present changes come about with as little social difficulty and suffering as possible. Unions should agree on the convergence of both workers' and employers' interests at a time when profitability is insufficient to guarantee a given level of employment (Stouthuysen 1980). The unions will have to assume a greater role in negotiations concerning redundancies when companies restructure and rationalize by reducing their workforce. Even if, when companies have to shut down, unions do still have a say in decisions regarding reinvestment or obtaining state subsidies; most of the time they fail to take advantage of this power and simply negotiate details of assistance to laid-off employees and managers. The recent strikes, held to oppose the government's "global plan", allowed unions to maintain a certain image for their members but showed how powerless they were to force through any major changes in government decisions. For employers, however, these measures were not considered sufficient.

4

Human Resource Management

4.1

The Development of HRM in Belgium

An analysis of HRM requires that some kind of a conceptual framework — albeit a very general one — be defined, to better understand the complexity of such a context. This is all the more important given that Belgium is not a country with innovative HRM practices. Affected by the great economic trends both in Europe and world wide, Belgium has been in the cross-current both of US and Japanese trends and of those of its neighbouring countries, France and Germany. HRM practices in companies can thus be seen as an amalgamation of foreign methods and techniques rather than specifically developed tools. This is once again an example of the positive and negative aspects of Belgian pragmatism. The personnel function must be analyzed both via its activities and the various structures within which it works. The personnel function has changed over the years and has followed a certain "chronology" which can be accounted for by outside constraints affecting a company and by inner conflicts which management has to resolve. Finally, as well as the diversity of situations affecting companies, the "limited rationale" of the agents (employers, managers, personnel, unions) and the diversity (March, Simon 1971; Crozier 1989) of their respective strategies must also be considered.

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Having in mind the aforementioned aspect and the fact that Belgian companies also tend to react strongly to current managerial practice and ideas, several phases in personnel function may be identified (Warnotte 1980): Personnel administration: The formalization of personnel administration is closely linked to the widespread development of the scientific organization of work. This is evident in the development of remuneration as a form of stimulus, close control of personnel (i.e. workshop regulations, instruction manuals), systematic task and job analysis and, finally, formalized procedures of recruitment and redundancy. The gradual development of industrial legislation and the increasingly large numbers of collective agreements strengthened the administrative aspect of the personnel function. Personnel manangers' initiatives were limited to social benefits (pensions, sick benefits) and the correct management of social institutions such as cafeterias. The personnel function was generally taken by personnel administration which itself depended upon another administrative department or production. This was the case well into the 1950s. Management of human resources: Economic growth and increased competition, as seen in the 1960s, combined with the troublesome development of disfunctional behaviour (absenteeism, staff turn-over, sabotage, vandalism) in large industrial and administrative concerns made employers look for new concepts of management. In order to deal with these recurrent problems from within, they frequently turned to management by objectives (MBO). The concept of "objectives" made personnel planning necessary at all levels, management and personnel planning procedures had to cover both quantitative and qualitative aspects. As a result, the evaluation of performance and potential produced information which supported decisions for nominations and promotions, as well as for training and remuneration. Moreover, objective-oriented recruitment and selection methods resulted in a better distribution of skills throughout the company. Consequently, the management of skills and a policy of motivation were considered important assets positively affecting work organization, furthering personnel communication and promoting a certain ritualization of life within the company (a prelude to the concept of corporate culture). Little by little, the personnel function was structurally and strategically integrated. Its various activities were co-ordinated within one specific department and its head was progressively drawn into the board of managing directors of the company. Organizational management: The past ten years have been characterized by a growing number of interaction between the company and other groups (competitors, financiers, customers, the state, etc.) and by a dual need for flexibility and quality, the somewhat contradictory role of which has already been mentioned. It is now essential that management master the internal interaction among the various members of the organization. There is a growing feeling that for a company to obtain the best possible economic perform-

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ance it must first obtain human and social results; it must in other words be able to develop optimal internal synergy. This would mean the recognition of the multitude of actors motivated by various factors which are not always compatible. It would then become necessary to go above and beyond a logic based on constraint (personnel administration) or psychological conditioning (participative management) to reach a management logic based on internal negotiation. "Compromise" would then replace "consensus". Why should this be expressed as a possibility rather than a certainty? While these ideas already potentially exist, they still have to be developed. At present, this type of logic is still in an experimental phase and only rarely applied. It is too early to claim that this is a type of management which is applied by a majority of managers. Using this rough outline, C. de Brier (1990) tried to determine the nature of HRM at the end of the last decade through a survey of 80 Belgian companies. Among the 74 firms which answered the questionnaire, three different versions of HRM appeared: - 38 per cent of the companies had a basic system of personnel administration. Most of these were small companies with less than 500 employees. The organizational aspects of their activities were not considered important. The only activities were administrative: computing salaries, administering contracts and keeping up with social and labour legislation and rulings. This job was even, in some cases, given out to independent "personnel consultancies". Hiring and firing were random operations, handled by the head of the company or one of his specially designated assistants. - 32.5 per cent had a partially developed HRM system. Part of this group was made up of companies with systematic structures for recruitment, evaluation, training and remuneration. Little attention was paid however to motivating, assigning responsibility and informing personnel. This constituted a very technocratic form of HRM. The remaining companies in this group were the complete opposite, having no specific structures or tools for personnel. Top decision makers aimed at enlarging personnel management not only for the benefit of individuals (salaries or wages and careers) but also as part of the overall company strategy (including quality circles, communication). This situation, moving towards a full HRM policy, was particularly true of the service sector, with 500 to 1,000 employees. - 29.5 per cent of companies participating in the survey had an active HRM system. Here management believed that human resources are the real key to success. Formalized structures in all the traditional areas of HRM were developed. All complementary measures were encouraged: an active communication policy, quality strategy, involvement and shared respon-

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sibility for employees and managers alike, and management by objectives. Human resource managers shared in decision-making at a high level and HRM was considered to be an integrated part of company policy. This group comprised both subsidiaries of multinational European companies where the parent company set an example in HRM and also companies facing tough competition and whose prospects were directly linked to developing skills and to involving employees and managers in aggressive commercial and industrial strategies. This survey shows that the most advanced systems of HRM are to be found in medium-sized or large companies. This results from outside pressures (home company policy or competitive environment) rather than from a particularly dynamic management policy. In all other cases, i.e. in the great majority of companies, the juridical aspects of the HRM function prevail. These conclusions agree with those of J.M. Hiltrop (1993) of the Lausanne Management Centre (IMD). He points out that many managers in HRM have a legal background which they carry over into the job. This is explained by the necessity of being able to co-ordinate collective agreements signed at various levels (national, sectoral or company) and by the growing complexity of labour legislation. In most cases, the autonomy of the DHR (Director of Human Resources) is, as we can see, very limited and his or her major responsibility consists in applying the rules correctly so as to avoid disagreement and conflict. This "legalistic" tendency could quite well be reinforced by the future European Charter: one of the objectives which have been announced is the harmonization of social and labour legislation throughout the European Union. Another characteristic of Belgian companies which influences HRM is the rigid hierarchy combined with a low propensity to delegate power and responsibility. According to IMD's 1993 World Competitiveness Report, delegation is more widespread in countries to the North of Belgium (Denmark, Sweden, Norway and the Netherlands). Belgium is in the 14th position out of 22 countries — marginally better positioned than France, Spain, Italy, Portugal and Greece. This situation, unfavourable to social innovation, does however ensure a certain continuity in management practices, while encouraging a high level of productivity (in which Belgium ranked 3rd). However, human resource management is not, generally speaking, one of management's top strategic priorities. Remuneration, recruitment and training are all considered, with very little perspicacity, as just a competitive tactic (Hiltrop 1993). If the Director of Human Resources of the early 1980s seemed destined to become a key member of management, today's director is no longer attached to the head quarters as such and is often replaced by the Finance Director. This situation, which would seem to be the opposite of what de Brier (1990) observed in companies, involves an active HRM policy and under-

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lines the large variety of situations and solutions the managerial actor has to face.

4.2

The Training of Directors of Human Resources

Whether the educational background of Directors of Human Resources helps to explain the various phenomena described earlier, certainly is a question worth examining. Broadly speaking, their educational background may be divided into three groups: - The first type of director has a degree in law, has been chosen because of his or her knowledge of legal matters (labour, social and welfare legislation). He or she will have gained on-the-job experience and will have mastered the complicated world of collective agreements. - The second group is composed of psychology graduates (labour-oriented), who start their career in the Director of Human Resources' office. This gives them experience in contact with line managers so as to identify training needs and learn how to organize training. Their knowledge of the company as a whole prepares them for the wider responsibilities of HRM. - The third group includes other university graduates, with a clear majority of business and management graduates. They will have successfully held positions of responsibility as managers before being appointed as Director of Human Resources. These three groups do not of course cover every educational background, but a majority of directors should be able to identify with one of these. It is rare to see a young manager become the head of human resources. This is, moreover, a position which relatively few university students think of at the beginning of their career. This may also explain why certain universities are wary about organizing specific programmes in HRM, and it is an excellent reason for university schools of management not wanting to become "professional" business schools for the young student who still has to learn how to learn. The market for training centres, on the other hand, offers specialized programmes to managers with experience, wishing to turn towards responsibilities in "personnel". In this programme, however, shortterm results and the mastering of "tools" take precedence over the "art" and the precepts of HRM. The result is that there are too few Directors of Human Resources with sufficient knowledge of the concepts which would allow them an improved comprehension of the complexity of the company as a social organization. Nor are they sufficiently familiar with the difficult art of developing a HRM policy in relation to the major functional areas of management.

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DHRs have become aware of this weakness and have begun to establish professional associations, of which the Association des Directeurs du Personnel is an example in order to analyze the future changes in their own function. Although this solution provides a forum for the discussion of ideas and experience, its weakness lies in the training of its members, which is often insufficient in areas such as the sociology of organizations in general and of the workplace in particular. In addition to this, there is the constant pressure of immediate problems which have to be solved.

4.3

Challenges for HRM

Among the problems and challenges HRM has to face today, three points should be particularly stressed: - the search for greater flexibility, leading to subcontracting with the subsequent elimination of certain activities and personnel within the company; - restructuring brought about by financial needs or by the goals of internal reorganization, leading inevitably to a reduction of personnel; - the intensive use of new technologies combined with the rationalization of work in order to increase productivity, with the result of reducing some functions and accelerating change in surviving functions. This triple evolution is often euphemistically termed "downsizing" or, even more discreedy, "rightsizing". The DHR is responsible for the application of this process in accordance with existing collective agreements. In a more positive situation, the following points may also come into play: - the development of quality strategies where implementation depends on cultural changes (a switch in mentality from that of a producer to that of a supplier) and on the elimination of functional specialization; - the need for greater adaptability in the internal allocation of human resources, implying greater mobility but also adapting to change in functions — with greater emphasis on training and executive development; - the need to develop strong synergies, sustained by a policy of information and communication between managers and employees. These various elements imply that HRM can still play an important role in management policy. Such an optimistic viewpoint should, however, be tempered by admitting that these areas are not necessarily part of the DHR's job but sometimes shared out among colleagues, such as the Communications Director and Quality Director who are directly controlled by General Management and are thus in direct competition with the DHR.

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The evidence shows that there is often a gap between the strategic role of HRM as it is perceived and what really exists.

5

Ethics and HRM

Any discussion of HRM practice must make some reference to matters of ethics (Hees 1993). An extensive body of literature reminds managers that their behaviour should be such that they give their collaborators a "feeling" of appreciation and respect. Moreover, rules of behaviour for recruitment and appraisal in particular are currently being rediscovered (even if they should have to have been followed all along). On the other hand, the term "HRM" itself raises essential questions which until now have been considered as having only marginal importance. The expression "human resource management" originally had very positive associations: it meant that the human element was considered important and worthy of management. Human resources were presented as being "the" resource: "there is no resource other than man" (an expression which today has again become rather banal). However, the classification of people as a resource may also carry the idea that they will become an instrument or just another set of numbers to be dealt with: they may then be subordinated to objectives for which they have had no say and which could even be contrary to their interests. This very utilitarian approach can only lead to situations in the workplace which are characterized as heteronomous or subject to a variety of regulations. This results in expecting people to actively subscribe to company goals while, at the same time, reducing them to the role of an inferior resource: they are expected to show independence and decision-making capacities while being put in a situation of heteronomy, constraint and dependence. It is difficult to reconcile the use of people as a simple resource with the provision of opportunities of self-development for employees. The utilitarian intention behind the term "HRM" is, as a principle, directly opposed to that of the development of the individual as such. The job of Director of Human Resources is not made any easier by this situation. If, because of the requirements of the job, he or she is forced to adopt a utilitarian attitude in order to serve the company loyally, he or she can then measure to what extend this kind of management is inhumane. At grass roots level, the HR Director can thus be seen as an executive for ever ready to make a compromise between the company's requirement of efficiency and the need of the individual to be protected from being swallowed up by a logic based on pure profitability. Viewed from this angle, human resource management may be considered ambiguous.

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6

Marc Hees

Belgium in the European Industrial Landscape

The European authorities, encouraged by circumstances such as the disappearance of trade barriers and growing unemployment, seem anxious to take up the challenge of the social aspects of the new European market. This desire to finally develop a common social policy and to harmonize national legislation has to take account of a large diversity of situations explained by the huge cultural, economic and social differences from one country to the other, as they clearly appear in these chapters. However, some progress has already been made in areas such as the protection of health and safety in the workplace. For Belgium, this will mean that this kind of protection will have to be extended to the previously unprotected workers (e.g. without a contract) or to the self-employed who are not as yet covered by existing legislation. There will also be stricter safety measures covering the use of dangerous tools and equipment. Other areas of HRM will probably also be affected by European recommendations and directives: i.e. the reconciliation of careers and family life,5 the freedom to work anywhere, information and consultation preceding group redundancies (especially for multinational firms), the homogenization of social protection for expatriate or migrating workers, the encouragement of profit sharing for employees and the adaptability of working hours. While in some cases these are merely recommendations, in others, different factors are open doors to new opportunities for concertation among industrial partners. There remains, however, one problem which affects all of Europe: unemployment. Belgium is seriously affected by unemployment: 70 per cent of the jobless have held no job for over a year, and 55 per cent for over two years. Belgium may therefore be considered as one of Europe's less developed countries, probably due to inappropriate structures for job offers and applications. European experts are aware of this aspect of the problem. P. Flynn, in charge of the commission for employment, industrial relations and social affairs at EU level, said in the 1993 Report on Employment that this problem will not be solved merely by greater economic growth (Commission of the European Community 1993). Certain points of a new plan for growth proposed in the report should be mentioned in this context: - new structures for working time and new kinds of organization for work schedules supporting new jobs; - the development of training and qualification systems improving the integration of the unemployed into die workplace and providing for structural changes; - the creation of new types of jobs;

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- the encouragement and support of small and medium-sized companies for the creation of new job opportunities. According to Flynn, Europe could reach a solution to the unemployment problem if the member states of the European Union could agree on a single policy and provide a new consensus between unions and employers (Commission des Communautés Européennes 1993). This is already the case for social and fiscal contributions which affect the cost of labour, for the adaptability of the labour market and professional and technical training. Why insist, with respect to unemployment, on the necessity of a new consensus between industrial partners? It is clear to any remotely interested spectator that unemployment analyses, especially when they claim to be "explanatory", are often influenced by a point of view, adopted implicitly by the analyst, and sometimes based on ideological criteria. In many cases, these analyses can therefore be considered biased and underpinned by partial interpretations of the phenomenon. For some the search for a consensus between industrial partners may be seen as a learning process, while others, confronted with different convictions, modify their opinions; in other words, efforts are made to better understand the complexity of the phenomenon and then to agree on a new social project and on the role that each partner will assume within it. An economic logic which intensifies the concern for profitability of capital can only lead towards rationalization and the reduction of the workforce, i.e. give rise to increasing unemployment. A hypothetical economic turnaround would only temporarily mitigate this phenomenon. On the contrary, a social logic which commended job creation "at any price" would not be capable of withstanding the economic reality for long. Taking into account the complexity of the problem, the confrontation of these two kinds of preoccupation could provide the impetus for research and a series of experiments focused on revealing unknown territory, where companies could be made more profitable, while at the same time creating different work structures for new jobs. This idea is very close to that developed by European experts who believe that simply waiting for a return to growth is not the solution to the unemployment problem. It is the growth charts themselves that need to be rethought and this cannot happen without debate. As a result, we will undoubtedly have to forget our traditional conception of the market, in particular of the labour market, which, for example, makes us think of training in terms of a simple short term adjustment of the supply of work to the company's demand. The fact that, in late 1993, Belgium was unable to ratify the social chapter shows how difficult it would be to put into practice the European Union's suggestions. Belgian employers adopt an attitude which is principally aimed at the reinforcement of competition and which concentrates upon the

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reduction of fiscal and social contributions linked to salaries. Up to now, they have refused to undertake effective action in the matter of job creation. It is, however, possible that the measures taken by the European authorities concerning the mission, functioning and financing of the European Social Fund (conceived to prepare workers for new industrial changes and for the new technologies in production) could induce industrial partners to anticipate their future needs in technical qualifications and to improve the training system itself. It is still much too early to analyze the impact of suggestions for improvement made by Jacques Delors in the White Paper, nor, of course, is it possible to evaluate the effect they could have on the Belgian labour market. However, the role of the European authorities is essential: - They have analyzed and interpreted social problems which may be considered not significant enough or representative of only one of the partners concerned but which are quite important on a large scale. - They instigate the development of common solutions to problems which are obviously transnational and for which any one government would be unable to find adequate solutions. - They "force" member states to complete and to harmonize their social and labour legislation. While finally Belgium probably has one of the most developed frameworks of employment legislation, it can but profit from the actions of the European authorities in other fields. The fate of "Industrial Belgium" is clearly linked to that of "Industrial Europe".

Notes 1

The retail price index, known more simply as the index, is a measuring instrument which keeps up with the changes in the retail price of perishable goods going into the average grocery basket. Linking salaries and wages automatically ensures employees of maintaining their buying power. Unions believe that the link between remuneration and the index, which they obtained, is a vital point. The most important is the expenditure on sickness and disability insurance (Assurance maladieinvalidité, or AMI). The Belgian system, under certain conditions, pays part of the expenses incurred on medicines and special healthcare (through the intermediary of an insurance scheme — mutualité). These reimbursements are financed by social subscriptions paid by diverse groups of workers. During the past fifteen years, Belgium has seen demand for healthcare grow rapidly and markedly: the population has become increasingly well informed and their demand in this field continues to grow and diversify. In addition to this, the hospital finance system until recently encouraged an over-prescription of some medicines and the excessive increase in the use of other medical services and laboratory analyses. The National Fund for the AMI found itself confronted with a serious increase in medical expenses and consequently an increase in the repayments offered by the AMI. The equilibrium be-

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tween the receipts (subscriptions) and the expenses (repayments) from then on became more and more seriously jeopardized and the authorities were very slow to react to this problem. In response to this, the Christian Workers' Movement (MOC), to which the Christian Union (CSC) belongs, founded in the early 1960s the Institut de Culture Ouvrière (ISCO) which allows union activists to obtain through four years of studies (every Saturday) a gradual which is a qualification corresponding closely to the level of a first year university candidate. In certain circumstances, this graduai can provide entrance to the Faculté Ouverte en Politique Economique et Sociale (FOPES) established in 1974 in collaboration with the MOC and the Université Catholique de Louvain. After two years of studies, the FOPES awards a degree equivalent to that of a university. A real training network, running parallel to the traditional ones, has thus been created through a collaboration between the CSC and the UCL. The "health" index is the retail price index, minus tobacco, alcoholic beverages and fuel. The state can raise taxes on these goods, the prices of which will then go up without automatically raising salaries and wages. Research on this theme is under way at the Human Resource Unit of the Institut d'Administration et de Gestion, Université Catholique de Louvain (IAG/UCL). It is being conducted by A.S. Stainier, under the direction of A. Spineux.

References Arcq E., Les relations collectives du travail en Belgique, no. 17, CRISP (Centre de Recherche et d'Information Socio-Politiques), Brussels, 1982; pp. 4, 16. Arcq E., Blaise P., Les organisations syndicales en Belgique, no. 23, CRISP (Centre de Recherche et d'Information Socio-Politiques), Brussels, 1986. Brier C. de, Les pratiques de formation dans les entreprises belges, Université Catholique de Louvain, Institut des Sciences du Travail, Louvain la Neuve, 1990. Cannac Y., quoted in Bodson Ph., Management participatif, slogan ou nécessité, in: L'Entreprise et l'Homme, no. 1, 1988; p. 23. Commission des Communautés Européennes, Dix-huit mois de politique sociale communautaire (January 1992-June 1993), in: Europe Sociale, no. 2, Brussels 1993rp. 19. Crozier M., L'entreprise à l'écoute, Interéditions, Paris 1989. DubuissonA., Pour une recherche doctrinale, Fabrimetal, Brussels, 1974; p. 19. Fabrimetal, Les grands axes d'une politique d'entreprise, Work report on "Politique patronale", Brussels, 1975; p. 19. Hees M., Les ambiguïtés de la GRH, in: Actes du Congrès, Mangement des Ressources Humaines de Beaume, Rêves, 1993, pp. 15-22. Hiltrop J.M., Gestion du personnel: la Belgique à la traîne (interview), in: Talents, 23 September 1993, pp. 1-2. March J.G., Simon H.A., Les organisations, Dunod, Paris 1971. Moden J., Sloover J., Le patronat belge, CRISP (Centre de Recherche et d'Information Socio-Politiques), Brussels, 1980, pp. 108, 111. Schueren R. van der, Préoccupations actuelles d'un syndicalisme patronal, in: Bulletin de la FEB, 10 February 1976, p. 423. Smets P.F., quoted in De Bondt F., L'économie des libertés contre l'économie des corporations, in: Le Soir [Brussels], 17 March 1979, p. 19. Stouthuysen R., Mutatiebeleid: noodzaak voor een tinvolle economische toekomst, V.E.V., Brussels, 1980, pp. 13, 14. Vandeputte R., L'histoire économique de la Belgique: 1944-1990, Labor, Brussels, 1993; pp. 103, 214, 195 , 238. Vaxeleire F. (interview), Un homme, une entreprise, in: Bulletin de la FEB, 1 October 1977, p. 2873. Warnotte G., De l'administration du personnel à la gestion sociale, in: Cahiers de la Faculté des Sciences Economiques et Sociales, Namur, October 1980, pp. 1-23.

Denmark Frans Bévort, John Storm Pedersen, Jon Sundbo

1

Introduction

The main theme of this article concerns a new wave or a new paradigm which emerged within human resource management in Denmark, at the beginning of the 1990s. The causes that brought about these profound changes are: - a greater emphasis on service and on quality production; - the diffusion of new information technology; - the absence of the expected increase in productivity from the introduction of new technology in the mid-eighties; - new patterns of class co-operation at the level of the firm replacing negotiations between unions and employers' organizations at the national level. Some elements of the new paradigm observed in Denmark are of course also observed internationally. However, one must stress that the new pattern in Denmark has some specific national characteristics. An analysis of the new model has to take into account: - the particular historical Danish form of employer-employee relationship based on co-operation and negotiation; - small and medium sized enterprises (SMEs) as the core of Danish industry would explain a very weak development of scientific management/ Taylorism and mass-production/Fordism in Denmark; - a special Danish version of the Scandinavian model of the economy; - improvement in working conditions by legal and public administrative systems. The state of traditional HRM in Denmark, and some recent experiments reflecting the new paradigm of HRM in the country, are described first, followed by the historical reasons why Fordism and Taylorism have developed so weakly in Denmark and why the situation there may very well generate a

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new model of HRM. The historical background is then used as the startingpoint for the presentation of a theoretical model and a conceptualization of the new paradigm of HRM. The impact of the European Union (EU) on Danish industrial relations is subsequently treated. The challenges to HRM specialists in the 1990s, drawing on research projects on HRM trends in large Danish companies, concludes the discussion.

2

The Current State of Danish HRM

2.1

Traditional HRM: Personnel Functions and Specialists

The personnel and HRM practices in Danish companies are characterized by a relatively low level of professionalism. This fact has been underlined by several recent studies. Jargensen et al. (1990) undertook a large study of employment relations in Danish companies, sponsored by the Ministry of Work. One result which is very typical was that in 1989 only 5 per cent of companies employing up to 19 employees had a personnel department. What is more important is that only 46 per cent of companies with more than 200 employees answered that they had a personnel department (Eriksen, Lind 1990, p.61). Asked whether the companies which made written personnel plans did not provide a more "professional" image of HRM practices in Danish companies; 12 per cent of small companies and 53 per cent of large companies said they made personnel plans in writing (Eriksen, Lind 1990, p.62). The general conclusion was: However, the degree of professionalism and institutionalization of personnel planning is low. When only approximately 10 per cent have a personnel department and only approximately 20 per cent made use of written personnel plans, both professionalized and formalized HRM and HR planning is the exception in Danish enterprises (Jergensen et al. 1990, p.306).

In another recent report (IP 1991), based on questionnaire returns from 732 Danish enterprises with more than 100 employees, a possible explanation of this state of affairs is given: Danish line managers are drawn into personnel matters and have that responsibility much more frequently than their European colleagues... When this is the case, the role of the HRM specialist becomes one of stimulation and co-ordination. The data point to the fact that Danish personnel departments are comparatively small, although they employ a relatively high number of specialists (IP 1991, p.4).

These results imply that the degree of institutionalization and professionalism of Danish HRM is not impressive. But is this the same as concluding that Danish HRM is lagging behind and only poorly developed? The près-

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enee of formalized personnel departments or personnel planning in enterprises may not be the most appropriate way to measure the state of a country's HRM. Some interesting experiments in Danish companies show this clearly and point to the emergence of a new trend of HRM in the 1990s.

2.2

Recent Experiments within Danish HRM

A number of recent experiments in Denmark are causing much debate in the early 1990s: - At the forefront of Danish HRM, the introduction of autonomous work groups in the Post Office eventually will reduce the postal delivery service's payroll by some 2000 jobs. By leaving the planning of work to the operators and letting the work group fill vacancies during illness, this remarkable cost saving was achieved in co-operation with a traditionally very radical union, thus disproving the axiom that services cannot be rationalized. - In another case, Oticon, a well-known manufacturer of hearing aids, decided to break up the departmental structure in the administration and research and development departments. In co-operation with HewlettPackard, they created what has been picturesquely termed the "spaghetti organization". The idea is that nobody has his own desk or fixed physical position in the organization. Bosses and managers compete to attract the best employees to specific tasks and projects circulated to all employees in the organization. When the project group is formed, they set up a temporary organization within the larger organization. - A regional bank, Nordjyllands Sparekasse, tried to assess the performance of the firm in view of the relevant stakeholders in the local area, including the employees. By implementing a system of "Ethical Accounting", the bank tried to develop a common basis of values and norms on which an enhanced dialogue and co-operation within the enterprise, as well as with relevant outside actors, could be built (Thyssen, 1989; Bévort et al. 1992). These experiments are, if not typical of what is going on in Danish enterprises, then symptomatic of the HRM concerns of managers and shop stewards when they are asked what they expect from the future (Bévort et al. 1992). Another, and maybe more substantial, glimpse into the future of Danish HRM can be distilled from the results of the so-called Κ 2000 (Competence 2000) project (K2000 1992). The purpose of this project was to examine what judgements managers and employees themselves make concerning their needs for further training and education, seen in the context of the enter-

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prises' strategic aims. The Κ 2000 project was sponsored and run by some of the largest Danish services enterprises: DSB (railways), SAS (Scandinavian air transport, Danish section), DR (public broadcasting), ISS (International Service Systems — international cleaning and security services etc.) and Great Nordic (production and operation of telecommunications equipment, and now also an investment company) along with a number of business and vocational schools. It received substantial financial support from the Danish Ministry of Education. One very interesting finding was that the skills and qualifications most in demand in the further training of employees were the so-called "soft" qualifications. The needs disclosed by the investigation focused on qualifications such as people management skills, communication and information skills, strategic personnel management, organizational development and projectoriented work in management, as opposed to "hard" technical skills such as statistics, accounting, computing. This, surprisingly, applied even to the most technically-oriented departments and corporations, such as aircraft and locomotive maintenance in SAS and DSB. The report also showed that there is a great demand for further training to make employees more flexible, for instance, by increasing the ability to work across traditional skill demarcation lines, though this is at the same time relevant also for the promise of job-enrichment in the view of the employees (K 2000 1992, p. 11). The demand for further training, reflected in the Κ 2000 project and the experiments of HRM in Danish companies, shows the growing awareness of the necessity to utilize human resources more efficiently. Again, this reflects a necessary response to a major problem which confronted many Danish companies in the 1980s, when increased investment did not result in significant rises in productivity. A group of scholars from Alborg University analyzed this problem and came to the following main conclusion: It is in the fracture between technology as "hardware" and the human resources as "software" that enterprises find great prospects for growth and the opportunities to augment their competitive advantage. At the same time, this is also the point where the greatest trouble is encountered when enterprises introduce new technologies (Gjerding et al. 1992, p.44)... And in Denmark a major problem is that human potential is not utilized and developed to the necessary extent in the Danish system of production (Gjerding et al. 1992, emphasis added).

The quest of modern HRM strategies seems to be to: - handle the complexities of promising new technologies; - secure a level of commitment and loyalty from the work force; - utilize the potential of lower rank employees. The successful management of these three areas of interest could make HR investments extremely profitable. The basic challenge of Danish HRM in the 1990s will be to create a form of techno-human efficiency as a response to techno-economic inefficiency of

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the 1980s. A tentative answer to this challenge will be given later. First, some characteristics of Danish HRM will be discussed to locate the analysis of the future of HRM in Denmark in its historical background.

3

The Historical Development of HRM in Denmark

Denmark became an industrialized country mainly relying on industrial manufacturing only in the post Second World War period. Therefore, scientific management/Taylorism and mass-production/Fordism did not arrive to any significant extent before the 1950s and 1960s respectively. When eventually it did arrive, its progress was unlike that in the USA or UK. Traditional mass-production had only a short heyday in Denmark during the late 1950s and the 1960s. After that period, many industrial mass consumer goods manufacturers were eliminated by the competition from abroad, which benefited from economies of scale and usually lower wages. In addition, with union membership of more than 80 per cent of the work force, the labour market was characterized by an equal balance of power. The strategic aims of the trade unions and the employers' associations were to create a labour market based on high salaries, good physical working conditions, etc. in exchange for highly efficient production. This was achieved through a closely linked institutional system of co-operation and negotiation. For instance, piecework and time and motion studies were introduced in the 1950s at the demand of the trade unions, not the other way around (Hull Kristensen 1986). The result of the class compromise in Denmark in the 1950s and 1960s, was the creation of a well organized labour market with a low level of conflict. Furthermore, the predominantly Social Democrat governments paid allegiance to the general concept of the welfare state. Both the labour market and industry became elements in the creation of the model of a mixed economy in Denmark, within the framework of the so-called Scandinavian Model. In Denmark, as in the rest of Scandinavia, several attempts were made to generate class co-operation, reflecting the special Danish-Scandinavian socio-economic and political conditions. For example, in each workplace, works committees and safety groups were established. The democratization of work was a major focus of attention (Agersnap, Fivelsdal 1978). It was discussed as a phenomenon, entirely separated from motivational techniques, since the goal was that the employees should have a voice in management and should have more decision power over work conditions. At the national level of debate these ideas and activities were combined with the proposal of "economic democracy" at the level of the company, to

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be achieved by the creation of funds owned by all wage earners, which would buy shares in Danish firms. "Economic Democracy" has, however, not been successful at the national level, because of massive resistance from employers and some scepticism among the employees themselves. Another important theme was the improvement of working conditions. The development of this theme was more successful and it became to be regarded as a national political task. Several investigations were made (e.g. Arbejdsmiljogruppen 1974, 1975) and a radical law on working conditions was passed in 1975. The enforcement of the law on working conditions was carried out by the civil service, the employees and their unions and the business corporations as three equal actors. The psychological conditions of work (which may be a part of HRM) were intended to be included in the law but the recession of the 1970s stopped further legal improvements in work conditions. The Danish labour market relations as well as human resource relations in individual firms are in some respects extreme, compared to other European countries. Such relations in Denmark have always been characterized by pragmatism and a willingness to negotiate on both sides. This can also be seen from Hofstede's (1980) investigation of cross-cultural dimensions. Denmark was very low on the dimensions of power distance and the need for structure and masculinity. Thus, the need for Taylorism has never been so pressing in Denmark as in many other European countries. This is also a background for current developments in HRM. Seen in a HRM perspective, the post-war period in Denmark had several important implications. It is quite evident that the lack of big mass-production companies in Denmark created a situation where a large self-conscious profession of HRM or personnel specialists never developed. Although the HRM movements were much discussed, they never became as important in Denmark as in many other countries. In fact, HRM was never really differentiated from general management to the same extent as it was in larger industrial economies, partly as a result of the relatively small size of Danish companies. Nevertheless, the influences from abroad meant that HRM specialists and managers gradually achieved a broader role in enterprises as managers in general became slightly more aware of the importance of the management of human resources. In general, the post-war period in Denmark can be characterized as a period with a very high level of systematic institutional co-operation and a low level of conflict, this being the basis of the Danish version of the Scandinavian model. Many observers have characterized the Danish economy as an example of a negotiated economy (Hemes 1978), or welfare corporatism (Brulin 1990; Lincoln, Kalleberg 1990), to a large extent because of the existence of a high degree of self-regulation of the labour market carried out

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by employers and trade unions. As a consequence, the business climate has been very stable for decades compared to other European countries. In this context, practicing HRM managers have had a very important role because they handle these negotiations on behalf of the enterprises. Furthermore, the great number of SMEs in Denmark have a tradition for developing and sustaining the occupational training system in a joint effort with the trade unions. This system produces workers with a high level of polyvalence or multi-skills (Maurice et al. 1986). Therefore, it has frequently been argued that Danish industry could be the perfect setting for industrial models like flexible specialization (Sabel, Piore 1984; Hull Kristensen 1986), based on the notion of functional flexibility in the workforce. Such workers create functional flexibility because their wide skill base allows management to employ them in a range of different task areas. This explains why a fairly prosperous nation like Denmark can well survive with SMEs as the industrial base. The Danish version of the Scandinavian model has become a social model, which covers many "overhead costs" for the SMEs through welfare state activities financed mainly by taxation on incomes. The SMEs are, even if indirectly, heavily subsidized by the state and the taxpayers. All programmes for basic education and most programmes for further training, education and research are run by the state or local authorities. This is also the case for health-care, hospitals, social security programmes, pension schemes, expenditure on environmental problems, etc. In effect, the state delivers much of the input to the SMEs free of charge and pays many costs created by the existence of the SMEs. This model has, however, over time developed some rather illogical institutions. For example, there are fewer legal complications in dismissing an employee in Denmark, than in any other European country, as a result of Danish employment legislation and the comprehensive unemployment benefit system (Gjerding et al. 1992). In Denmark, it is generally very cheap for a company to recruit employees with the necessary skills and, conversely, get rid of those employees whose skills are obsolete, or for any other reason. But the tradition for humanity and local negotiations has ensured that the work force is not generally used in a numerically flexible way. Only in a few instances are human resources used in this old-fashioned way compared to the need for a sophisticated utilization of the human resources in the 1990s as discussed in the previous section. However, currently this crucial problem seems to be reflected in changes in the Scandinavian model. Brulin (1990) states that the focus of corporatism in Sweden has moved from the level of tripartite negotiations, including the employers' organizations, unions and the government, to a kind of managerial corporatism at the level of the enterprise. In Denmark, the same trend is confirmed by research of Bévort et al. (1992) and Storm Pedersen (1993). A wide range of issues concerning the employment contract and employment relations is currently

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moving downwards from the level of national representative organizations in the labour market in such a way as to utilize the human resources more efficiently (Storm Pedersen 1993). This is having a major impact on the HRM activities. In practice, Danish HRM is currently moving from the traditional tasks of the personnel function (administration, record-keeping, mediation, recruitment etc. [Larsen, Wegens 1986] and motivational social engineering) to an approach more dominated by a general concern for the development and education of employees. This, in turn, demands new kinds of co-operation and dialogue between employees and managers, both of which are seen as central HRM concerns in the future. In fact, the employment contract is developing from a narrow "wage for work" economic contract to a much wider framework of mutual reciprocity between the employee and the organization. This new phenomenon within Danish HRM can be conceptualized as a multidimensional barter. This will be discussed at greater length in the following part of this article.

4

A New Paradigm of Rational Management

As we have discussed previously, the traditions in Denmark have been negotiation, involvement of the employees in certain management areas and a public welfare system to assist HRM at the level of the firm. Furthermore, the management culture has mostly been pragmatic and problem solving. These traditions are now being challenged by the emergence of a new paradigm of HRM in Denmark in the 1990s. Among others, Perez (1983) asserts that a new techno-economic paradigm is emerging. A new economic rationality or "best practice" necessitates new social and institutional ways of organizing enterprises. New production technologies and new demands from consumers for goods and services are changing the emphasis of production from one of low-priced mass consumption goods in long production runs to the flexible manufacturing of variedly-priced goods for highly segmented markets in shorter production runs. A catchword for such market development is "service" in the sense that the competitive edge of goods and services alike is seen as determined by the level of "service content" in the product in terms of speed of delivery, documentation, quality, design-aesthetics etc. Enterprises will have to either expand through the provision of service as secondary activities supporting industrially-manufactured standard goods or they will have to focus on personal services. An example of the first trend is the development of peripheral services in transport service systems that traditionally have focused on the core service: the transport of people. The transport service is supple-

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mented with hotel bookings, car rental, clerical assistance to business travellers, etc. An example of the second trend is the expansion in financial services regarding personal services, computerized banking, tailor-made insurance packages for individuals, families, firms or other specialized segments. The necessity of interpreting and satisfying the constantly changing demand of customers has made flexibility, quality and customization the decisive parameters of competitive advantage in services (Storm Pedersen 1993). Even traditional industrial goods are frequently viewed in this perspective (Bévort et al. 1992). This development is reinforced, and to some extent caused, by the diffusion of information technology (IT) and its applications in virtually all areas of business; industrial robots, machine- and process-management controlled by computer-aided-techniques (e.g. CAD-CAM) etc. The introduction of IT provides the flexibility that is needed to differentiate the service aspects of products almost indefinitely. The flexible properties of production systems meet the demands of service markets in three ways: - the ability to change from one product line to another rapidly and cheaply; - the ability to handle many lines of production simultaneously; i.e. they enhance the ability to differentiate the enterprise's mix of products on the same set of machines; - the ability to increase the level of "consumptive complexity" in terms of product features which are attractive to customers (Storm Pedersen 1993; Hull Kristensen 1986; Sundbo 1991). All this adds up to a new techno-economic paradigm for economic rationality at the level of the company which in turn has several important consequences for the internal organization of work and hence, HRM practices (Perez 1983; Sable, Piore 1984; Zuboff 1986; 1988; Storm Pedersen 1993; Madsen, Thois 1991). This close link between a new paradigm in the economy and the related changes in work practices was also predicted in the extensive work of the socio-technical school (Trist 1981). Production technology is no longer posing the most important restrictions on the corporate ability to respond to the demands of the service markets or markets in general. The ability and skill with which the employees handle the new technology is the more important factor regarding an efficient corporate response to the service market demand. Because of the character of the markets and the technology, it is impossible to "programme" the activities of an enterprise and the behaviour of the employees efficiently by the traditional "top-down" command system. Seen in this perspective both HRM and work organization are being challenged at three levels as shown in Table 1.

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Table 1:

Theoretical Causes and Organizational Effects Influencing H RM

Causes behind changes in HRM practices

1.

Individual level

Information technology 2.

4.1

A new distribution of authority

System level

The need to incorporate strategic knowledge and make the employees responsible or autonomous in their own work Source:

A new structure of knowledge

Interaction level

IT and changes in product demand; service 3.

Organizational effects leading to a new paradigm of HRM

A new system of motivation

Bévort (1991).

Individual Level: From Action-centred to Intellective Skills

One of the most profound effects of ΓΓ on the labour process or work organization is in the skills needed to operate computer-aided production, surveillance, design, etc. These aspects of production demand from the worker a new kind of learning and knowledge (Zuboff 1988). Zuboff has termed the difference in the skills required in a non-IT context and the skills required by IT as the difference between: action-centred skills and intellective skills. Action-centred skills are largely implicit and primarily learned by doing and seeing/hearing/feeling what other operators do. Action-centred skills are context dependent, non-communicative and personal. As opposed to actioncentred skills, the intellective skills that the IT-workplace will favour are based on explicit, abstract knowledge learned through linguistic communication; these skills are universal context-wise and are operationalized by inferences from other knowledge, inductively or deductively (Bévort 1991; Zuboff 1988, p. 61). The point is that the intellectual skills that workers need in the IT workplace can only function efficiently if they get access to comprehensive information about the production processes, not just that fraction related to the specific task. Seen from a HRM point of view therefore two options exist. Following Zuboff (1986) the choice is between an informating strategy or an automating strategy. An informating strategy aims at enhancing the problem solving capacity peculiar to one while the automating strategy seeks to eliminate the reliance on manpower altogether.

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In the Danish context particularly for SMEs, a strategy of total automation seems rather exotic because of the prohibitive cost of even less ambitious technology strategies like FMS (Flexible Manufacturing Systems) and CIM (Computer Integrated Manufacturing) (Hull Kristensen 1986). For our purposes, the important aspect is that the present divide between employees who have access to formal knowledge about the business and the employees who possess the concrete insights used to "make the wheels turn" will narrow if an informating strategy succeeds (Bévort 1991). This will in turn challenge the hierarchical distribution of knowledge in the organization.

4.2

The Interaction Level: A New Distribution of Authority

If employees are required to use their newly-acquired knowledge to make the necessary decisions, they must be given the necessary discretion. Furthermore the introduction of intellectual skills relies upon some degree of joint decision-making between workers and managers as well as horizontal communication between operators in order to work out in practice (Zuboff 1988). Operators therefore need more interpersonal and communicative skills in order to work efficiently. Concepts like quality circles, just-in-time management, service management etc. all put a strong emphasis on the independent judgement of the individual worker and his/her work group. The purpose of these techniques is to reap the benefits of a more dedicated, co-operative and responsible attitude to work among the employees (Bévort 1991). Employees will need to have the authority to make decentralized decisions as well as the interpersonal skills necessary to do this efficiently in collaboration with colleagues and supervisors. Thus the difference in the knowledge and interpersonal skills demanded from supervisors and managers will diminish. The question is whether employees in general will want to commit themselves to developing and utilizing these skills that demand a higher degree of personal involvement and which will irreversibly disturb "the way things are" from the shopfloor perspective. Or, in other words, how is it possible to motivate the employees to invest themselves and expend the effort necessary in an organization geared to IT and service?

4.3

The System Level: A New System of Motivation

Alan Fox (1974) described organizations in terms of discretion and trust. He asserted that vertical (top-down and vice versa) low trust and low discretion and vertical high trust and high discretion are structurally bound together by the nature of the relationship between the different actors in organizations of

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modern industrial capitalism. Functionaries and managers of most enterprises enjoy high trust from their bosses and are counted upon to perform their function without necessarily being monitored. Consequently, they have a high level of discretion to do their job in the way they see fit. On the other hand, hourly workers, according to the Taylorist ideal, should be kept under strict supervision in order to ensure that they do what they are told to the letter of the contract. Management and the workers display little trust in each other, so both parties want to keep the contract as formal and transparent as possible. Fox draws upon the work of Blau to develop these two corresponding forms of exchange relationships; social exchange and economic exchange, in order to describe the employment relationships of different groups in organizations. Economic exchange is the modern, explicit, time-specific and limited relationship known from other economic contracts. Social exchange is characterized by unspecified, diffused and lasting obligations and an implicit trust rooted in reciprocity (Blau 1964; Fox 1974). The question then is, can a significant proportion of employees enter into a relationship to their enterprise that is similar to the above-mentioned social exchange? On the one hand, the demand for such a development is intrinsic in the modern workplace; the specificity of the economic contract is counter-productive because of the high rates of change and turbulence in most modem organizations (Zuboff 1988). Specificity of contract is highly rational in a stable environment, but in the ever more changing conditions of production, management will have to rely on still more limited rationality (March, Simon 1958). In practice, environments do change and workers will have to adapt accordingly on a continuous basis. Rigid contract structures and hostile negotiations will not make adaptation easier. On the other hand, considering the intellective and interpersonal skills which the enterprises demand from employees in order to succeed within the framework of a new techno-economic paradigm, the enterprise will rely much more on the personal attitude, loyalty and commitment of the employees at all levels. Thus the enterprise will want to weld ties of trust which are as strong as possible with a much larger group of employees than was formerly seen as being necessary (Bévort 1991). The employees may support these changes if they get guarantees (or a credible promise) of something more in return than merely wages: a reasonable degree of job security, training to secure their value on the labour market, professional challenge and personal development (Bévort et al. 1992). In short, while the Taylorist motivational system could attain its objectives through a one-dimensional economic contract, a new paradigm of HRM will need to be based on a multidimensional barter (Bévort et al. 1992) bearing many similarities to the social exchange described above. The term "barter" is used to designate the non-monetary elements in the new kind of employment relationship.

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The challenge for HRM specialists and functions is to facilitate the development of middle-management as a dialogue partner, to help in developing the "self-programming employee", to stage the necessary dialogue and to contribute to the development of the multidimensional barter. Before some practical consequences of this more theoretical approach of HRM in Denmark can be discussed, the impact of European regulations will have to be underlined.

5

The Impact of the European Union on HRM in Denmark

Formally speaking the EU initiatives have not had any notable effect on HRM in Denmark. However, three themes have been discussed related to various initiatives taken by the EU. These are: - the workers' and the trade unions' fear of social dumping; - the preservation of independent negotiations on the Danish labour market and at the level of firms, strongly supported by the workers and the trade unions, managers in firms, as well as national associations of the firms; - the division of labour between the private and public sector, corresponding to structural changes of the welfare state. A number of cases have shown that the fear of the workers and the trade unions of social dumping has so far been groundless. One example is the Great Belt bridge project. Workers coming from other European countries have worked to the Danish rules and respected the existing agreements. And, in cases where parts of the Great Belt bridge were built in Southern European countries, the Danish trade unions have been able to verify that these parts are produced in accordance with national agreements and minimum standards required by the EU. Until now the EU has only had limited effects on Danish labour market conditions. It at least has had some impact on equality between sexes, since the regulation from EU has gone further than Danish law. Moreover, the obligation to inform the workers about large numbers of dismissals in big firms has been strengthened by the EU. Apart from the above-mentioned examples, the impact has been rather diffused. The growing influence of the EU has also affected the setting up of rules governing the standards of working conditions that Danish employers have to meet, in so far as the EU Commission has the initiative of making new regulations on the subject. However, the conventional wisdom has been, partly justified by facts, that the Danish regulations on working condition have been so much ahead of those in the rest of the member countries that

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the minimum standards put into effect by the EU will not noticeably affect the Danish standards of working conditions. In spite of this state of affairs, a number of cases have pointed to the fact that the Danish working conditions may be more affected by the EU regulations than was anticipated at first by most observers. The case of work in front of computer screens (Article 118A, section 12) has shown that, in specific areas, EU directives may impose stricter rules on Danish employers than the existing ones. Before the directive there were not any Danish rules concerning work at computer screens. Another case is that of white spirit and other chemicals which in Denmark are seen as dangerous agents that may cause brain-damage, for instance among employees like painters and printers. Referring to the rules forbidding technical trade barriers in the single market, these chemicals were paradoxically not to be labelled "dangerous". As the examples show, the effects of the EU-regulations on Danish working conditions can go either way. In some instances, new or stricter rules have been introduced and in other cases, the rules have been slackened to a certain extent. The general tendency has been that the momentum of independent Danish initiatives concerning regulating working conditions has been weakened and that the legislators are waiting for EU-initiatives and new directives on working conditions to occur. In the meantime the rules imposed on Danish employers concerning working conditions remain among the most rigorous in the EU. The social charter of the EU does not seem to have much impact on the Danish HRM situation. Firms in Denmark do not assess the impact of the EU initiatives to be very important. In a survey, a sample of Danish firms (IP 1992) were asked about the consequences of the social charter concerning their personnel policy. About 45 per cent of the firms did not think the social charter would request any changes in their personnel policy at all, and 40 per cent do not know. Even the realization of the Single European Market, which could be supposed to have comprehensive consequences, has not determined many specific steps in Danish firms. Only 33 per cent of the firms have a business strategy and 17 per cent have a personnel strategy which anticipates the impact of the single market (IP 1992). This very low focus on the European single market and the social charter is partly due to ignorance of the coming problems, but also partly due to the fact that regulations from the EU, until now, have only slightly affected the labour market relations in Denmark. The Danish system of independent negotiations has been defended successfully by an alliance of the employers' associations and the trade unions. It is clear that the right to conduct independent negotiations on the labour market will continue to be defended in the years to come. One reason is that the Danish labour market is well organized by the trade unions and the em-

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ployers' associations as compared to many other countries in the EU. Thus, an agreement made on the Danish labour market may almost be compared with a law made by the Danish parliament. The division of labour between the public sector and the private enterprises has been affected by the EU initiatives in so far as a debate, concerning the responsibilities in the welfare state to be assumed by enterprises, was triggered off. Until now, no major structural changes have been introduced. However, there is a trend requesting that the contracts between the workers and the firms contain more than just agreements of the amount of wages to be paid for certain jobs. Indeed, the contracts are still more related to the situation of the firms instead of taking the features of a national contract as described by the trade unions and the employers' associations. Furthermore, a tax reform in Denmark has been introduced, obliging the firms to recover a certain tax mainly used to pay for public expenditure related to unemployment.

6

Elements of a New HRM Strategy

A new HRM-strategy has appeared within Danish firms in the last decade. This is demonstrated in our own research (Bévort et al. 1992) as well as in a survey study (IP 1992) covering a representative sample of Danish firms. Our own study came about in the following way: A group of Danish enterprises, namely the Danish State Railways, the Post Office, East Asiatic Company, Great Nordic and Scandinavian Airline System, were looking for answers and advice, reflecting some of the themes discussed in this article and stemming from their everyday experiences. The problems were stated by the companies themselves as follows: "We are facing a new paradigm regarding the utilization of people as labour power or partners in order to achieve the goals of the enterprise." They wished to have an analysis of the probable effects on the enterprise of such an emerging paradigm shift. Our research method in this project was to develop a range of themes in collaboration with the directors and personnel managers of the enterprises. The examination of these themes was used to confirm or disprove the view that a new paradigm of co-operation is emerging in public as well as private enterprises. These themes were grounded in a range of literature studies that sought to distil a number of historical trends in corporate concepts of production, organization and co-operation. A series of 47 interviews in Danish enterprises were carried out in the companies mentioned, as well as others like LEGO, Bang & Olufsen, Danfoss. All levels of employees (rank and file, managers, directors and shop stewards) were interviewed. Finally, a questionnaire was sent to a represen-

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tative sample of the largest enterprises in Denmark in which both the manager responsible for the personnel function and a representative of the employees were asked to respond. 57 managers and 49 representatives submitted their answers. One of the most important results of the research was that these companies are seemingly being forced to develop a new concept of co-operation based on conditions similar to those discussed in this article. We are situated in an era in which corporations are being obliged to base their business activities on service concepts and "informated" production processes (Bévort et al. 1992, chapters 1 and 2; Bévort 1991). In the survey part of our study (Bevort et al. 1992), a series of statements which described a future situation of a HRM variable were presented. The respondents could mark their complete agreement or disagreement on the statement. The variables that got the highest average score, and which thus were assessed as the most characteristic for the future HRM situation, were the following: - The working environment is an important part of management's responsibility to the workers. This is already the case so there will not be much change in that for the future. - Personnel planning and personnel development will be a central part of the firm's strategy. In the other study (IP 1992), this was also confirmed as becoming an important change in relation to the current situation. This prospect must be seen in relation to the fact that personnel planning has not normally been an important element and the fact that Danish personnel management is very decentralized as compared to other countries. It will probably become even more so in the future (IP 1992). Thus the future function of the middle managers as central in implementing the firm's strategy, their role changing from technical leaders to personnel leaders, was strongly emphasized in the first study. - Increase of productivity, flexibility and quality awareness in the workforce will have the highest priority. The most important means for increasing these factors in the future is training and education. Then come the possibilities for personal development (outside formal training). The amount of salary and material advantages are evaluated as considerably less important. However, the material factors were assessed as more important by the worker respondents (shop stewards) than by managers. This variable may therefore have an ideological bias. - The large firms admit their social responsibility. It is for example considered as a normal procedure that an employee who has his working capacity reduced will be moved to another position. - Not with the highest, but nevertheless with a relatively high score, comes the hypothesis that decentralization of responsibility and dialogue between the management and the employees will be normal in the future. The

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employees will take more responsibility and decide more often themselves. Dialogue (e.g. informal meetings) is considered as a means for implementing the firm's strategy and influencing the attitude of the employees. The conclusion of the research, especially our own, is that enterprises are placed in a situation where the rational approach to management includes the following four elements: - the management of the company puts in place a business and production context plan at the strategic level, after which - the employees interpret and implement these concepts in the production context in their everyday working life (conceptualized as the self-programming employee), supported by - a continuous dialogue with the middle management of the company, which results in - a multidimensional barter as the framework of co-operation between the company and the employee. The outcome of the successful implementation of such a process will depend on how the following challenges are managed by Danish HRM.

6.1

The Self-programming Employee

Employees will have to be "self-programming", i.e. self-responsible, each taking over to a still greater extent the control and management of his own work, in collaboration with colleagues. The required qualifications and traits are active participation and self-initiation of activities. These traits, developed and nurtured by Danish social institutions, will be sought and utilized in order to create a more rational production process. The investigation shows that employees are willing to back such a model of co-operation if job-enrichment, self-actualization, various fringe benefits and more permanent benefits, such as supplements to public education, employment guarantees and retirement pay schemes, are offered (Bévort et al. 1992). In relation to this development of a new paradigm of HRM, a new "human resource profile" will emerge. The core group of employees will be well-educated and flexible, based on the skilled worker's competencies and professional attitude and the well-educated white-collar worker's individualistic working style and acceptance of the ever-changing content of work.

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6.2

Frans Bévoit, John Storm Pedersen, Jon Sundbo

The Dialogue

Companies will have to organize small networks that are loosely coupled through various management and organizational principles. Communication must pass through dialogue and networks as opposed to "top down" hierarchies. In this way important elements of democracy and participation are introduced and refined in enterprises. Our research shows that this can happen by dialogue between the first line or middle management and employees regarding the daily routine of organization of work. This dialogue forces managers to guarantee that the necessary information is available to workers in order to handle production, sales, etc. in a decentralized way in the enterprise. As a result the goals of the firm can be achieved efficiently, and the necessary faith in the model of co-operation is created among employees. The dialogue has two essential functions in the modern industrial enterprise. On the one hand, it is a way of communicating information which is an important element of organizing. Dialogue at its best, is an efficient way to generate and maintain flows of information in the firm. Employees are (so to speak) culturally "programmed" to use dialogue as the form of communication as a consequence of their prior experience of the Scandinavian Model, where democracy and human rights play a very important role. On the other hand the dialogue creates the foundation of consensus regarding a mutually acceptable exchange between management and employees. It is necessary to develop such a contract of co-operation in the shape of multidimensional exchange relationships between the company's management and its employees.

6.3

A New Role of Middle Management: The Second Moment of Truth

The "people manager" role of middle management will take on a central importance in operationalizing the new paradigm of HRM. Carlzon (1987) and Normann (1991) described the meeting of employee and customer as "the moment of truth" in the service enterprise. In the new paradigm of HRM envisaged here, the meeting of the employee with the immediate superior is "the second moment of truth" in the sense that the dialogue and the multidimensional barter both depend on the behaviour of this level of management. It is the reciprocal behaviour at this interface that guarantees that the multidimensional exchange is implemented in practice. The middle manager is also the direct medium through which the dialogue between the employee and the general management of the enterprise is transmitted. This role has been labelled as the "dialogue-partner"

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of the individual employee (Bévort et al. 1992). But the middle manager will not just bureaucratically pass on orders and directions from the management. The middle manager, as "people manager", will help the self-programming employee to interpret the overall strategy of the enterprise and try to provide the necessary information, technology and training etc. which the employees need to do their job. It is very important that the middle manager, as a "people manager", is supported by general management and by the HRM staff. The middle or first-line manager all too often acts as scapegoat for organizational inefficiency, and is badly trained and educated for the job he/she is asked to do. In addition, the middle manager's task is often drawn up too ambitiously and includes contradictory goals (Walton, Lawrence 1985, p.60; Bévort et al. 1992). For instance, the middle managers are expected to implement the strategy, act as change agents in their own department and are yet held responsible for the overall productivity of the enterprise. They are also frequently required to be technical experts and psychologically sophisticated people managers at the same time. Thus, top-management will have to decide what kind of first-line manager it wants and what share of responsibility he or she will be entrusted with. A great challenge of Danish HRM in the 1990s is to recruit, train and support a breed of "people managers" at the first-line level who can manage to provide a successful "second moment of truth" in the enterprise (Bévort et al. 1992; Storm Pedersen 1993; IP 1992).

6.4

The Multidimensional Barter

The new rationality of management must be based on a new model of cooperation between the enterprise and the employee. The employee gets education/training, a high level of participation and personal opportunities for self-actualization, retirement benefits, health insurance etc. In return he/she agrees to endow the work with a more proactive and responsible attitude in order to reach the company's goals. The efficient utilization of human potential in the enterprise is achieved, and thus, all resources are in this way based on a complex set of internal exchange relationships between the employee and the enterprise. Complex contracts and exchange relationships are a necessary part of modern business management. In this new brand of exchange relationship, wages will mean still less in motivating the employee compared to social welfare arrangements and the opportunities to develop professional and interpersonal skills. Evidence points to the fact that most employees will comply with and even identify with the goals of the enterprise if these personal assets are included in the exchange between company and employee (Bévort et al. 1992). Other ob-

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servers have analyzed the same phenomenon in terms of a commitment model (Walton, Lawrence 1985) and welfare corporatism (Lincoln, Kalleberg 1990), the latter taking its point of departure in the so-called commitment gap between Japan and the USA. The socio-technical school referred to the phenomenon as the psychological contract between employee and enterprise in their long quest to show how new work designs could be motivated (Emery, Thorsrud 1976; Trist 1981, pp.29-30). In our view, however, the concept of multidimensional barter adds to the understanding of what direction the HRM paradigm shift will take in Denmark and elsewhere. If the four elements of a new HRM strategy discussed here, i.e. the selfprogramming employee, dialogue in the companies, the second moment of truth and the multidimensional barter, are managed in clever and effective ways, it will be demonstrated that HRM has very much to do with the success of companies in the 1990s.

7

Attitudes and Expectations

7.1

General Attitudes of the Employees

The attitudes of the employees towards the new paradigm of HRM described in this article is, of course, important. Until now we have discussed the emergence of a new model within the framework of some megatrends and cases focusing on the point of view of the biggest companies in Denmark. It will be very difficult to implement this new paradigm of HRM without support from the employees. And the support from the employees will depend on the benefits the employees can get from this new approach. Will they gain any benefits? In the so-called APL project, carried out in the beginning of the 1990s, the attitudes of Danish employees towards co-operation, management, work and the enterprise were surveyed. APL is the acronym in Danish for Worklife and Politics in a wage-earner's perspective. The project set out to map the biography, experiences and aspirations in relation to worklife, the trade union, the welfare state and the family of the members of National Association of Trade Unions (LO). The survey consisted, among other things, of a questionnaire covering 5,400 members; 36 interviews were carried out. The project took place between 1991 and 1993 (Jorgensen et al. 1992). Some of the results of the APL project can be used to test whether or not the employees support a new paradigm of HRM (Bild et al. 1992, chapter 6; Jorgensen et al. 1992, chapters 6 and 7). A general conclusion drawn from the APL survey is that the culture of Danish enterprises is in the process of changing from an "adversarial to a

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consensus culture of co-operation". Furthermore, each employee finds to an increasing extent that "the enterprise" is the primary producer of resources in relation to more and more aspects of individual welfare, materially, socially as well psychologically speaking. It is also shown that the enterprise has evolved into an arena where management and unions fight for the loyalty of the employees. So far the management has turned out to be the most successful. The traditional norms and core values like solidarity and the unified workers' collective are weakened. On the other hand, this leads to rising expectations concerning the ability — and wish — of enterprises to fulfil the needs of employees in a number of ways. The authors of the APL project produce documentation for our observation and prove that great changes in the technological and organizational makeup of work are going on and that employees want to participate in a dialogue relationship with the management, if the management "plays fair" and acknowledges the worth of their workers. If so, the management can expect a committed labour force that feels a large degree of common interest with the management and a strong motivation and sense of ownership towards work. The main findings of the APL project indicates that the employees indeed support a new paradigm of HRM. In the APL project, it is believed that an important trend behind the development described is what the authors term the "tertiarization" of the system of employment. The authors use the term "tertiarization" in contrast to terms like service society or post-Fordism. These terms are criticized for being too imprecise and for obscuring the fact that society persists in being class divided. Also the authors state that the trend towards service society and post-Fordism not only consists of positive effects on the world of work but also holds negative aspects, like for instance the individualization of risks, a growing potential (and practice) of control with employees, that whole groups of workers are made superfluous, especially semi-skilled workers. A fact that most will agree upon. However, the APL study submits that the production of public sector as well as private sector services are becoming ever more important. Therefore the term "tertiarization" is used. The "tertiarization" is based on three subtrends, which all are in line with our general argument: - feminization: the growing proportion of women in the labour force; - intellectualization: rising demands on the individual concerning education, mobility and an open attitude to change; - individuation: the growth of number of the white-collar workers and the proliferation of lifestyles and orientations. (The usage of the term individuation does not simply mean "individualization" but the fact that each person steps outside the peergroup and evolves her/his own norms, values and behaviour to a larger extent than before.)

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Contrary to what one would expect, the trends including individuation, support the values of economic liberalism, and the proliferation of lifestyles and new social groups have not led to a weakened support of the welfare state. Strong support for the welfare state remains, even among the groups of wage earners which hold values and standards of economic liberalism. The welfare state is seen more as a precondition than an obstacle to intellectualization and individuation of work. However, what is seen as a problem is the inclination towards the principle of equality that traditionally has been widespread in Denmark and all over Scandinavia in relation to the welfare state and work. It is no longer perceived as a universal truth that everybody in society should be entitled to the same benefits, regardless of efforts, and that this principle should apply to the world of work as well. It is still more generally accepted that outstanding effort, efficiency and legal criteria can form the basis of the distribution of resources in society as well as in the firm. The overall trend points towards a pluralism of value orientations. One set of issues, however, gives rise to general agreement across the entire union membership. The members unequivocally state that standards of the work environment and the environment in general are valued highly even when this might have negative effects economically and materially.

7.2

Different Attitudes in the Public and Private Sector

The APL project also provides some interesting information about the differences that appear between the public and private sector when confronted with change in the work situation. The public sector employees experience more change in the organization of work: 53 per cent as opposed to 37 per cent in the private sector. Furthermore, 47 per cent of the public sector employees as opposed to 31 per cent in the private sector expect future changes in the work situation. Naturally, large variations are found within each sector. Thus 65 per cent of the employees of the so-called SUS-area (health, education and social services) have been affected by changes in their work situation. The typical pattern is an enlargement of each employee's task. The larger the organization, the more changes are experienced. The better the education, the deeper the insights into planned changes. Changes in work practices caused by new technology, as experienced by 50 per cent of the LO-membership, have brought about a demand for new skills. This and the reorganization of work entailed by the introduction of new technology create jobs that are more challenging and interesting, as far as the employees are concerned. However, a certain pattern emerges that shows that the more training the workers have had, the greater the promotion he/she can expect, while the poorly trained are much more likely to be

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made superfluous by new technology. This pattern prevails also in relation to opportunities for further education and personal development. The better educated get more opportunities for further training and education. Furthermore, it can be concluded that the public sector is "ahead" of the private sector regarding opportunities for training as well as a high level of employee autonomy in work. There could be two explanations to support these conclusions: - the public sector is predominantly a service sector with a high level of education; and - a great amount of co-operation is needed to produce high-quality service. It might be interesting to underline that the results of the APL project are not entirely in accordance with the results of our own research; indeed, it questions a number of our positions. For instance, the results of the survey fail to support the notion that large modem private and public enterprises are the most fertile setting for new models of HRM. Different pieces of evidence point to the fact that the new model of HRM is developed in the public sector, at least in part of it. In any case, the public sector enterprises and organizations within the so-called SUS area receive high ratings from the LO-membership on variables like opportunities for personal development, autonomy at work and opportunities for additional training and further education. It is, however, difficult to evaluate this area because the public sector, on the one hand, has been lagging behind in terms of organizational and technological development and, on the other hand, is in a permanent squeeze between productivity demands and tight budgets. These are realities that could easily dampen the enthusiasm for consensus-based models of co-operation. Taxpayers are becoming equally tough "employers" as the market.

7.3

Employees' Expectations Concerning Management

Regarding the evaluation of the company's management and the level of "common interests" with the management, the majority of LO members say that they experience "common interests" with the management (57 per cent). Young employees think this less than the older ones, and the farther out into the countryside and the smaller the enterprises, the higher is the level of employees feeling "common interests" with the employers. Not very surprisingly, the feeling of "common interest" is the most widespread among the white-collar workers and the least among the semi-skilled and unskilled workers. However, the attitudes towards "common interests" also vary considerably among different areas within each sector. More than 60 per cent of the so-called SUS-area, commerce, catering and hotel, private service and pub-

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lie administration think they have "common interests" with the management. The ratings are the lowest among the union membership of foodstuff industry workers (NNF), postal workers' union, clothing and textile workers. The employees who identify the most with the management are typically women, between 30-50 years old, white-collar workers, public sector employees within the so-called SUS-area, for instance unskilled child care assistants or skilled social workers. The employees who identify the least with the management are relatively young non-skilled in primary sector occupations, private service employees and members of the semi-skilled female workers' union (KAD) or the foodstuff industry workers' union (NNF). More than 50 per cent of the LO membership think that the management values efficiency above all. Almost as many think that management values job satisfaction and working climate highly. Almost 50 per cent of the employees think that work offers them good opportunities for personal development. About 25 per cent state that their work offers them poor opportunities for personal development. The last opinion is strongest within primary sector employees and industrial workers. Globally, one might say that the attitudes towards management have a tendency to polarize. Employees tend to be either in favour of the management on a wide range of aspects or not; the larger the enterprise, the greater the conflicts between management and employees. However, this may only reflect that the possible outlet for dissidence is greater in large enterprises compared to SMEs. It is also interesting to note that 66 per cent and 44 per cent respectively of the LO members think that they should have more influence on the organization of work and more general company decisions respectively. In addition to this, the APL survey shows that the employees are willing to cooperate and to participate in a dialogue with the management if they can have a larger say regarding their own work. Likewise, the APL survey shows that the disappointment is great when management refuses to engage in a proper dialogue, rejects co-operation and does not take the employees and their work effort seriously. The disappointment should be seen in the perspective that employees increasingly consider the enterprise as the context for and provider of satisfaction of psychological, social and material needs, with an ever-growing emphasis being put on the psychological and social needs. If the management wants to win (the next round of) the fight for the loyalty of its employees it will have to meet these demands, among other means by implementing the new model of HRM. In addition, we must face the fact that autonomy, opportunities for personal development and the degree of co-operation between the management and the workers do not add up to an unequivocal pattern. It is fairly evident that the white-collar workers support the new paradigm of HRM while a number of other groups are less prepared to do so. The "size of enterprises"

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variable remains to be analyzed more precisely, as the large enterprises are in accordance with some parts of the model, while other aspects are primarily found in smaller enterprises. However, the overall picture in the APL survey supports the general trends also disclosed by the surveys presented by Bévort et al. (1992) and IP (1992) focusing mainly on the expectations of managers. The evidence shows that gradually a new model of HRM in Denmark is emerging, partly driven by the needs of enterprises and partly by new aspirations and demands of employees.

8

Conclusion

There has never been a strong tradition for formalized HRM in Denmark but instead, a great inclination exists for locally and more informally-based HRM and co-operation between employees and management. This has, in the past, been related to strong traditions in favour of centralized negotiations between unions and employers' associations, and politics dominated by the welfare state ideal. This "social capital" created by the latter phenomenon is apparently being exploited today in the current trends of Danish HRM, discussed in this article, at the level of the firm. These developments on the micro-level could result in a new powerful formula of Danish HRM based on "high-trust relations" between employees and management, and co-operation, rather than expert HRM implemented from the top down. On the other hand, the traditional Scandinavian corporatist model seems to be withering away at the macro-level. This, however, is a phenomenon that could disrupt the intricate system of social services and indirect subsidies which are vital to the Danish SMEs, and in turn, adversely affect the historical basis of the new wave of Danish HRM.

References Agersnap F., Fivelsdal E., Demokrati i organisationer [Democracy and Organizations], Nyt Nordisk, Copenhagen 1978. Arbejdsmiljegruppen, Arbeidmiljoundersogelsen [Investigation of Working Conditions], Report, no. 2, Arbejdsmilj0gruppen, Copenhagen 1974. Arbejdsmiljagruppen, Arbeidmiljoundersogelsen [Investigation of Working Conditions], Report, no. 3, Arbejdsmiljegruppen, Copenhagen 1975. Baker M.J., Marketing Strategy and Management, MacMillan, London 1985. Bévort F., Omstillingsproblemer og forandringer i danske virksomheders arbejdsorganisering [Problems of Changes in the Work Organization of Danish Enterprises], MA thesis, Institute of Economics and Planning, Roskilde University, Roskilde 1991.

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Bévort F., Storm Pedersen J., Sundbo J., Wernespersonaleledelse — etparadigmeskifi [Personnel Management in the 1990s], Systime, Herning 1992. Bild, T., jOTgensen H., Lassen M., Madsen M., Fasllesskab og forskelle [Community and Differences], CARMA, Aalborg University, Aalborg 1992. Blau P., Exchange and Power in Social Life, John Wiley & Sons, New York 1964. Brulin G., From Societal to Managerial Corporatism: New Forms of Work Organization as a Transformations Vehicle, Arbetslivscentrum, Stockholm 1990. Carlzon J., Moments of Truth, Harper & Row, New York 1987. Emery F. E., Thorsnid E., Mod nye samarbejdsformer, Hasselbalch, Copenhagen 1976. Eriksen J., Lind J., Virksomhedernes vurdering af personaleplanlsgningen og samspillet med de offentlige myndigheder [The Enterprises' Assessment of the Personnel Planning and Relationship to Public Authorities], ATA Report No. 21, Aalborg University, Aalborg 1990. Fox Α., Beyond Contract: Work, Power and Trust Relations, Faber and Faber, London 1974. Freeman C., The Economics of Industrial Innovation, Pinter, London 1982. Gjerding A. N., Johnson B., Kallehauge L., Lundvall B.-Â., Thais Madsen P., Den forsvundne produktivitet [The Productivity Mystery: Industrial Development in Denmark in the 1980s], Dansk Jurist-og ekonom forbunds forlag, Copenhagen 1992. Hemes G., Forjhandlingsekonomi og blandingsadministrasjon [Economy and Administration of Negotiation], Universitetsforlaget, Oslo 1978. Hofstede G., Culture's Consequences, Sage, Beverly Hills 1980. Hull Kristensen P., Teknologiske projekter og organisatoriske processer [Technological Projects and Organizational Processes], Forlaget Samfunds0konomi og Planiaegning, Roskilde 1986. IP, Copenhagen Business School, Price Waterhouse, HRM 91. Human resource management i danske virksomheder [HRM 1991. Human Resource Management in Danish Enterprises], Price Waterhouse, Copenhagen 1991. IP, Copenhagen Business School, Price Waterhouse, HRM 92. Human resource management i danske virksomheder [HRM 1992. Human Resource Management in Danish Enterprises), Price Waterhouse, Copenhagen 1992. Jergensen H., Lassen M., Lind J., Madsen M, Medlemmer og meninger [Members and Opinions], CARMA, Aalborg University, Aalborg 1992. Jergensen H., Lind J., Nielsen P., Eriksen J., Nielsen K., Personale, planlxgning og politik [Personnel Planning and Politics], Report no. 23, ΑΤΑ-Project, Aalborg University, Aalborg 1990. Κ 2000 (Kompetence 2000), Hovedraft (Main Report), Kompetence 2000 Project, Copenhagen 1992. Larsen H.H., Wegens J. (eds.), Personaleadministration og personaleudvikling [Personnel Administration and Personnel Development], Nyt fra samfundsvidenskaberne, Copenhagen 1986. Lincoln J. R., Kalleberg A.L., Culture, Control and Commitment, Cambridge University Press, Cambridge, Mass. 1990. Madsen M., Thais P., Mysteriet om den forsvundne produktivitet [The Mystery of Productivity that Disappeared], in: Samfundsekonomen, no. 5, Copenhagen 1991. Maurice M., Sellier F., Silvestre J.J., The Social Foundations of Industrial Power, MIT Press, New York 1986. March J.G., Simon H.A., Organizations, John Wiley & Sons, New York 1958. Normann R., Service Management, John Wiley & Sons, New York 1991. Perez C., Structural Change and Assimilation of New Technologies, in: Futures, Vol. 5, No. 5, 1983. Rose M., Industrial Behaviour, Penguin, London. Säbel C.F., Piore M., The Second Industrial Divide: Possibilities for Prosperity, Basic Books, New York 1984. Storm Pedersen J., A New Paradigm for Rational Management of Enterprises and Handling Developmental Problems in the 90s, in: Holland S. (ed.), Economic and Social Cohesion in the 1990s, Spokesman, Nottingham 1993. Sundbo J., Market Development and Production Organization in the Financial Firms of the 1990s, In: Scandinavian Journal of Management, No. 2, 1991.

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Thyssen O., Det immaterielle og det estiske [The Immaterial and the Ethical], in: Samfundsekonomen, No. 7, Copenhagen 1989. Trist E., The Evolution of the Sociotechnical System, Issues in the Quality of Working Life, A Series of Occasional Papers, Ontario Quality of Working Life Centre, Ontario Ministry of Labour, Ontario, No. 2, June, 1981. Walton R.E., Lawrence P.R. (eds.), HRM, Trends and Challenges, Harvard Business School, Boston 1985. Zuboff S., Technologies that Informate: Implications for Human Resource Management in the Computerized Industrial Workplace, in: Walton R.E., Lawrence P.R. (eds.), HRM, Trends and Challenges, Harvard Business School, Boston 1986. Zuboff S., In the Age of the Smart Machine: The Future of Work and Power, Heinemann, London 1988.

France Ingrid Brunstein

1

Introduction

"Human resource management" in France: Immediately the question arises as to whether HRM exists "à la française" or whether, on the contrary, this term suffices to describe management practices that have been invented and are used elsewhere and were then simply imported to France. During the 1970s and 1980s, the professional press was overzealous in giving hope to French managers in general and human resource managers in particular: they wanted to confirm the idea of the economical housewife who believes that an ideal recipe does exist (in the USA, Japan and to a lesser degree in Germany) and that its exact usage automatically ensures positive results. Then they developed little by little a "diverging squint" (Berry et al. 1993) ogling at a better world but still obliged to manage here and now, and successfully, French peculiarities. In fact successes based on our own methods have existed for quite a while now without us finding them on the best-sellers list. For instance the "avec et par" (with and by) approach was developed and put into practice by Antoine Riboux within BSN (Boussois-Souchon-Neuvesel) in the 1970s: production personnel's involvement in the improvement of working conditions is encouraged by the executives and becomes self-supporting in a pragmatic way. Nothing is done without them in this field, thought and action being closely linked. It goes without saying that, in this case as in many others, the Directeurs des Ressources Humaines (later abbreviated: DRH) have played an important part in the development and application of such methods without their contribution being admired in a very visible way. It's behind the scenes that their contribution has had a certain impact and thus, a surprising factor has come to light at the beginning of the decade. The function whose gross salaries have advanced the most during the 1980s, is human resource management (Institut Technique des Salaires, 1991). A better understanding of the fact that there has been such an increase in the

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salaries of those responsible for human resource management offers three possible explanations: - a belief in the well known expression "No matter what the level of investment, it's the human impact that makes the difference"; - the increasing complexity of jobs for which they are responsible is such that this progression is merely a justified reward; - the handling of social problems was, until recently, neglected, and therefore the salary advancement is merely corresponding with natural adjustments. Reading between the lines of these three alternatives, a basic consensus is emerging in France, and is illustrated by this salary increase. Whatever the role of HRM has been in the past, the more emphasis companies put on this function, the better they will succeed in managing the impending social changes that are on the horizon due to technological progress and economic fluctuations. In order to reveal the characteristics of HRM in France, this article will firstly describe the cultural aspect. Then the contours of the role and status of HRM will be detailed. We shall subsequently concentrate on a fundamental aspect: the sharing of responsibility for the HRM function with general managers, line managers and consultants. Examples will be given to illustrate this decentralization. We shall then try to analyse the impact of the Single European Market and mainly its Social Charter on HRM in France. To conclude, some potential future problems will be presented.

2

Managing the French: A Cultural Maze

There is no other function in a company that is so predominantly marked by culture as HRM. It has the permanent responsibility of encouraging the economic efficiency of everyone. As each employee has been through the educational system and is now participating in all sorts of activities within and outside the company, it is French society as a whole, complete with its cultural aspects, which is the determining factor of this role. It may, therefore, be useful to take a look at what is called French culture, although it is inevitable that national stereotypes will emerge. We may use them in order to clarify (but not judge) situations and attitudes which otherwise would remain confusing and incomprehensible (Bosche 1993). Although its use may help to structuring what may appear surprising to the foreign reader, let us not forget that French reality has more diversity than its stereotyped representation. Individual opportunities of social interaction

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with members of French companies should therefore be used in order to enrich and correct these naturally biased views.

2.1

Cultural Background

Three important elements may be discussed in this context: The essential impact of Descartes and his method of analytical selection still exists in current patterns of thinking, in particular his mathematical and geometric logic of classification to resolve problems. French people have a tendency to: - separate out information in order to understand and manage others; - use classification and ranking in order to take the qualitative dimension into account; - maintain a hierarchical distance in order to guarantee an apparent integration. These characteristics are reflected in French management thinking and methods and may explain why reasoning along the lines of Taylor's scientific management still prevails. In the everyday running of French companies simple rational concepts and ensuing classical methods, such as sequential organization of elementary tasks and measurement of local productivity, are far from being abandoned. This happens, in spite of a growing awareness that we are "progressing" from uncertain to unforeseeable contexts (Cohendet, Llerena 1989) and that the structure of managerial objectives is getting more and more complex. The French Revolution brought to the surface the need for individual freedom, together with the desire to abolish the ever-presiding God-given authority. The passion for anti-authoritarian individualism explains the positive connotation that is associated with a behaviour which is classed as typically French and an attitude which remains untranslatable: la débrouillardise. It describes the shrewdness with which the constraints imposed by society are transgressed, got around and generally minimized. Napoleon attempted to reduce the revolutionary chaos by resorting to a stringent and unifying legislation (the Code Civil) and a centralized administration. Even today the centralist government comes across as the supreme authority. The consequences of the centralist approach are generally attributed to the idea of a bureaucratic phenomenon forever embedded in the French culture. On the one hand uncertainty may be reduced by centralizing the decisionary authority and by edicting numerous regulations within a bureaucratic hierarchy (d'Iribarne 1985); but this will reduce, on the other hand the possibilities to decide at middle and lower levels. A long term critic and opponent of bureaucracy is Crozier (1978) with many followers

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who have vigorously denounced it, but have never succeeded in quashing it (Mine 1991). Hence, abstract and impersonal regulations, corporatist pressure and the renunciation of individual responsibility remain means of regulating French society. Thus, HRM is permanently confronted by contradictory tendencies and this is one of its difficulties. Descartes' rigid approach, which emphasized the importance of quantitative methods, has eroded social sensitivity towards the individual; yet employees at the same time expect a deeper comprehension of their personal and professional problems. In other respects, the same employees demonstrate an attitude towards authority which is in itself quite inconsistent. On the one hand, they do not submit easily to authority and find as many ways as possible to disobey the rules. On the other hand, it has also become obvious to them that authority is indispensable for collective action, which would only be hampered by deviating individualistic initiatives. This explains why the apparently decisive cultural crisis of 1968 did not become the historical turning point that the French had hoped for (Le Goff 1992). The public and private sectors have found different ways to neutralize these contradictions. In the public service, the solution hinges on an administrative, impersonal and centralized organization. Bureaucracy, along with all its malfunctions and individual disruptions is actually "necessary" for the public service to balance out its own weaknesses. Whereas in the private sector, the manager's halo, crowned with all his values, seductive ways and means, and his natural gift of persuasion, will guide individual initiative and encourage from within employees' commitment to a collective project.

2.2

The French Education System

The education system has an even more pronounced impact on individuals than that generated by their general cultural background. The predominant characteristics of the French education system are summarized as follows: - the Ministry of Education (Education Nationale) is a "dinosaur" with a highly centralized administration. With 1.2 million teachers, it is arguably the biggest employer in Europe, and public expenditure on education is higher than anywhere else in the EU reaching 5.5 per cent of GDP, as compared to 4 per cent in Germany (CNPF 1992); - manual work is given little value and so has a tendency to absorb young people with fewer perspectives. This is one of the reasons for the high level of unemployment amongst young people which stands at 19 per cent in France (1991-1992), compared to a rate of only 4.5 per cent in Germany; 43 per cent of the active population are unskilled as compared to 20 per cent in Germany (CNPF 1992);

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- a clear distinction prevails between school education and professional training; companies do not consider themselves responsible for education. French companies spend 4.5 billion FF annually on training, whereas German companies allocate 70 billion FF to education (CNPF 1991); - the learning process is characterized by methods that resemble cramming, with little scope for personal initiative; pupils acquire what often appears to be "textbook knowledge", and structuring this knowledge is an important pedagogic objective. - individual competition is considered a prime value, with the opportunity to work together in groups being rarely provided; - quantitative ability is reinforced by a selective system which concentrates on mathematics; it does not allow for the "middle-of-the-road" performer but is organized on the basis of success or failure; - the elite among higher education students are selected for entry into the exclusive fee-paying grandes écoles (specialist graduate schools) and will be provided with a semi-guarantee of a prestigious professional career; the remaining masses have free access to the universities which are of a markedly lower standard of prestige, resourcing and career preparation. The uniqueness of the French higher education system which neglects certain competencies and reinforces others in comparison with German provisions for instance (Brunstein 1991), is often pilloried and at the same time described with a certain pride. This admittedly brief description of the past and present situation contains some generalizations, but it also illustrates certain historical and cultural values, such as individualism, quantitative logic, theoretical understanding, structured classification, and the importance of a hierarchy. Public measures instituted at the beginning of 1992, as well as wider negotiations concerning la formation par alternance (flexible education), put into effect jointly by the national education system and the companies, will progressively transform this image.

2.3

Executives and the Reinforcement of Hierarchical Barriers

The notion of the cadre (executive category of employees) with its status of prestige and privileges, constitutes another typical aspect of French society (Ammon 1989). This socio-professional category of employees is analyzed by Boumois (1991) and Morin (1989) who depict the traditional role of the French cadres as being a hindrance for the development of organizations. The perks enjoyed by the individual cadres highlight the barriers that distinguish them from other social categories and also perpetuate a certain social immobility. On the other hand, this status-like division produces among

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other employees a spontaneous and rather subversive solidarity against the particular authority of the cadre. A substantial number of cadres in executive positions in companies and public service alike have graduated from the grandes écoles. Through this system they have acquired a kind of legitimate access to an "automatic" elite and become integrated, with other such high-status graduates, into a relational network which covers the private sector and the higher spheres of public administration. Introduction to these spheres is considered as part of their professional abilities. The relative absence of emphasis on human relations skills amongst these cadres may be surprising, but it is only recently that social sciences have been accepted among the subjects taught within a business curriculum in a grande école.

2.4

Trade Unions

Trade unionism in France is distinctive in that it is sharply divided into different confederations or groupings: - CGT (Confédération Générale du Travail) has communist tendencies and is marked by growing internal divergence. - CGT-FO (Force Ouvrière) has socialist tendencies, sometimes refuses innovative experiments and clings to its desire to use contracts as a means of protection. - CFDT (Confédération Française Démocratique du Travail) has socialist and self-governing tendencies, progresses to the detriment of the CGT and has signed the greatest number of company agreements over the last few years. - CFTC (Confédération Française des Travailleurs Chrétiens) has Christian-socialist tendencies. - CGC (Confédération Générale des Cadres) is a corporatist union for executives only. Apart from the above-mentioned confederations, each industrial branch, profession and company may have its own union, but their importance on a national scale is negligible. The CNPF (Confédération Nationale du Patronat Français) represents the employers. The five largest employees' unions evolved out of ideological conflicts and reflect the pattern of social division in France based on class war. Within companies, multi-unionism or multi-confederationism may be found, with union representatives who oppose and try to outdo each other over specific demands (higher salaries, reduced working hours, etc.) in order to attract as many members as possible. Such efforts have not received their just rewards. Since 1975, total union membership has dropped to a level that

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stands at roughly 9 per cent today. This figure is even lower in the private sector and almost negligible in the small and medium-sized companies. As a result, the level of union recognition in France is the lowest in Europe and ranks in 24th position within the OECD. According to ANDCPECCO (1991), the "leading employees' organization" in France is now the so-called non-union organization; i.e. no union exists at enterprise level. Commentators on this sombre situation, whether unionists or external analysts (Noblecourt 1990), generally agree on the reasons for the decline, but do not concur over methods to recapture membership. This decline may be explained by various factors: the rise of individualism, the absence of benefits given to employees and the unions' lack of real power, in spite of legal recognition designed to reinforce the unions' role within the Comité d'Entreprise. (The latter body is a Works Council committee elected by the employees and playing a mainly consultative role.) The unions profit from special legal protection in so far as they can put forward the only candidates for the first round of the elections to the Comité d'Entreprise (Amadieu 1989). However, one of the fundamental reasons behind this decline is the compartmentalized conception of the employee, which is apparent in the way the unions deal with his problems; letting him down completely when he most urgently needs the unions' help: the day he is made redundant (Amadieu 1990). The other deep-seated reason is the ideological (i.e. Marxist) approach of most French unions who have preached the objective of creating a "new order". Today this keyword suffers a total lack of credibility amongst the rank and file members. Complaints about trade union organization and influence are now emerging from the employers' ranks. The ever-growing importance attached to social bargaining at company level (described later) will become meaningless if the unions can no longer represent the employees (Segrestin 1990). In the recent past, examples appeared when spontaneously created special workers' committees, the so-called coordinations, contested agreements signed by the trade unions. They thus summoned up the traditional logic of French labour relations which have always been based on conflict, centralized organization and ideology. However when the coordinations have taken over from the unions (15 per cent of disputes in 1992), they have also found it difficult to federate the contradictory demands and negotiate on behalf of a workforce seeking all or nothing. The description of the education system, the role of the cadres and the position held by the unions has highlighted some of the weaknesses of the French system which are having an effect on HRM. It is clear that the personnel manager has a much harder task in France than elsewhere, as it is up to him to compensate for the problems discussed. He or she will have to find means and ways in order to accelerate the "socialization" and training of the younger employees, improve conditions for teamwork, reinforce the

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social awareness of the cadres, soften and reduce the hierarchical barriers and smooth the way for a different conception of the employee capable of playing his or her own role. Indeed, the social and cultural weaknesses in France give rise to the unquestionable importance of the role fulfilled by HRM.

3

Outline of Human Resource Management in France

The paths through the maze of French culture as well as history have shaped the development and nature of HRM as it is practiced today in France.

3.1

History of its Role

From its birth, when it first emerged distinctly from the cluster of tasks involving administration and accounting (Fombonne 1988), two main responsibilities of HRM came to light: - the need to impose order and discipline; - the need to use the ever-present human motivator of money in the most efficient way. Thus retired army officers and accountants used to occupy the post of chef du personnel. Since 1936, the continuing nature of state intervention through social legislation has made the administration of staff more complex. The necessity to rely on law specialists became evident and even today, solid juridical competencies remain a prerequisite for HRM, partly because in France, social relations continue to manifest a conflictual nature with legal intervention as a last resort. The complexity of French jurisdiction, the institutionalized nature of collective bargaining, as well as relations with the Ministry of Employment's overseeing Inspection du Travail (Labour Inspectorate) require professional legalistic expertise and training. Influenced by the research of American psychologists and also by the violent students' revolution in May 1968, managers have become aware of a pressing new need: the harmonization of human interaction. The strong links between Canadian and French management specialists, and the natural interest of the former in American management methods, facilitated their arrival in France, in spite of a conflictual relationship that still weighed on French companies. Hence the new title of Directeur des Relations Humaines emerged. In 1981, the election of a socialist government after a long absence from power coincided with the application of former ideas, some of which had

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been brewing in the CJD (Centre de Jeunes Dirigeants d'Entreprise), a progressive young employers' movement. One third of the relevant employment legislation (le code du travail) was amended. Two of a series of interlinked laws reforming employment legislation (les lois Auroux) and passed in 1982, had a significant impact and presented a new outlook: l'expression directe et collective, i.e. the right of employees to express themselves directly and collectively with employers, and the obligation to bargain annually with union representatives at company level. Following a rather euphoric period, when many thought that the impossible would become possible (lower working hours together with increased wages), people became aware of new perspectives. They now understood that measures had to be taken in order to improve employees' training and qualifications, thus allowing the creation and more even distribution of wealth. Gone is the time when the employee was merely considered a cost; he or she is now seen, both by himself and his superiors, as a resource that is worth as well as worthy of being developed. This change in opinion is made apparent with the creation of yet another title, Directeur des Ressources Humaines (DRH), and of a new function Gestion des Ressources Humaines (GRH) which equates with HRM. Its qualitative strategy tends to set off human resources to advantage so as to obtain optimal performance. It operates in a resource-based perspective and concentrates voluntarily on human resource development within the firm. The evolution of HRM in France has been accumulative with each step forward in its history leaving its mark. The elements of its evolution have contributed to its distinctive evolutionary (rather than revolutionary) nature, and can still be witnessed in HRM as we know it today.

3.2

State of HRM in the Company

Nowadays, HRM has a justified position at the highest executive level and the DRH is accepted as a board member, especially in large companies (in 84 per cent of cases according to the Price-Waterhouse Cranfield Report 1993). Smaller and medium-sized companies present a different picture. They should not be neglected, since they play such an important part in the French economy with 53 per cent of the French workforce found in companies with less than 50 employees. In this context, it makes sense to distinguish between the function and the person who is actually in charge. In most medium-sized companies, it is the managing director who takes responsibility for the strategic dimension of HRM (Tic 1990). His involvement, at the expense of the DRH, may be explained by the fact that the ever-charismatic French patron (boss) is obliged to play the role of mediator, so as to assure the integration of anti-authoritarian individualism into the necessary overall

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cohesion of the company. With the "magic" personality he is claimed to possess, he neutralizes the contradiction between individual aspirations and economic constraints, and so it appears natural that he himself should play the role of the top HRM strategist. The mass-media hype that surrounds certain managers creates a desire amongst employees in all companies to be led by a similar supposedly-inspirational figure. Subsequently, the employees' ability to resolve conflicts themselves diminishes in many instances.

3.3

Training and Research in HRM

The tide of an article published in the main practitioners' review PersonnelANDCP, "Should HRM be taught? If so, is that possible?" (Fauchon, Rojot 1989), indicates a strong dose of scepticism. It explains the late arrival of HRM in the corridors of higher education. Initially, teaching often transplanted managerial techniques and methods developed elsewhere (USA, Japan). Nowadays, the understanding is that the efficiency of such methods depends on the social circumstances of the country in which they are developed and applied. There is a new consciousness (Le Goff 1992) as far as HRM is concerned, that cultural characteristics often hinder the direct transfer of methods, through which corporate projects and behavioural spurs are laid on companies like plaster. The recognition of the importance of HRM has now led to its being taught as an essential and widely relevant subject in higher education and management studies. In order to specialize in HRM and acquire a high level of knowledge, students may apply to the grandes écoles de commerce (graduate business schools) which often have created a department concentrating on HRM. Alternatively, they may decide to study HRM at postgraduate level for the Diplôme d'Etudes Supérieures Spécialisées (DESS), which may be acquired in the IAE (Instituts d'Administration des Entreprises) after 5 years of university studies. Yet, such a fast pace of integration of HRM into the business school and university curricula is coming up against a crucial lack of qualified teachers reflected by the number of theses in HRM presented between 1985 and 1989 being only 48 for the whole of France, that is 10 per year (Igalens 1991). This has led to a major recourse to practitioners and consultants in lecture theatres but, at the same time, it raises questions on the solidity of the theoretical foundations of the HRM training which is being provided for future leaders of the function. Publications and research studies in HRM (Igalens 1991) are numerous and issued by many institutions and by consultants, but their quality varies (Brunstein 1995). The approach mainly explored by French research is double-sided: socio-organizational (Sainsaulieu 1977; Veltz, Zarifian 1993;

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Crozier, Friedberg 1977) and system-bound with a strategic outlook (Bonami et al. 1993; Martinet 1990). Research centres, especially in the universities or grandes ecoles, such as the LEST at Aix-en-Provence, as Travail et Société at the famous management university Paris IX-Dauphine, ISEOR in Lyon, or IREP in Grenoble often focus either on the detection of general trends or on the diagnosis (audit) of particular institutions. Overall, there still is a lack of theoretical underpinnings in research, which sometimes is more closely linked to consultancy than to a disinterested tradition of independent scholarship and the creation of a body of knowledge. Public institutes such as ANACT (/4ÍSOciation Nationale pour l'Amélioration des Conditions de Travail) attached to the Ministry of Labour, specializing in ergonomics in the wide sense, tend to seek to influence through the use of a normative approach. The most important of the professional bodies is ANDCP (Association Nationale des Cadres et Directeurs du Personnel), the prevailing pragmatism of which corresponds to the expressed needs of practitioners. Last but not least, the young association AGRH (Association Française de Gestion des Ressources Humaines) brings together people involved in the research and teaching of human resources. The recent emergence of this association in 1989 symbolizes the hesitation which the scientific recognition of this subject has encountered, but its vigorous growth and advocacy as well as its insistence on the importance of epistemology denotes a will to establish the subject solidly and prominently in the French business culture. The leitmotiv of the 1993 AGRH-congress "universality and contingency of HRM" is of particular interest for this publication.

4

HRM at the Intersection of the Tracks

The urgent need for modernization in companies confirms the key role of HRM in modifying the organization's orientation and culture, as it is people who actually carry out changes. The DRH is responsible for handling the tensions and contradictions which may arise between the social climate and the industrial logic of the company.

4.1

A Shared Role

The HRM function, however, is not involved with direct hierarchical decisions made on a day-to-day basis in different departments of the firm. It is marked by the stamp of ubiquity, with its philosophies, policies and procedures pervading the operation of every part of the enterprise. The notion of

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HRM as a shared role therefore appears frequently in the literature (Martin 1989). HRM is everybody's responsibility with respect to everybody else. Each employee is both subject and object at the same time. There is no activity in a company that does not refer to HRM. Each manager in the company, whether responsible for production, marketing, financial or other affairs, takes part in the corporate effort for increased efficiency. In addition to specific responsibilities, the DRH is above all concerned with developing methods for the stimulation and motivation of employees and the creation of values that make people join in with the collective enterprise. Thus he or she opens the way for opportunities to induce social change but which will then be carried out by others. Through its ubiquity and with its three dimensions — technical, relational and strategic — HRM is situated at the intersection of all the other functions. It must not be the exclusive territory of the DRH. Above all, it must be supported if not championed by the Managing Director. It should involve all the executive team, the trade unions and even those outsiders (such as consultants and sub-contracted staff and specialists) who play a significant people-related role in the firm. A new problem may arise from this vision of HRM as a shared function: if the administrative tasks are dealt with by the computer and if the relational and strategic dimensions are left to operations and general managers, HRM could fade into insignificance. In that case, the vital lead for collective co-operation would be lost and manipulation as well as the exclusive survival of the fittest would be facilitated. A consensus needs to be agreed upon reuniting common values. It is up to the DRH to propose means of rallying the many individual initiatives and direct them towards the same objective. Finally, his task is a very strategic one as we shall later see. The three dimensions of HRM (strategic, relational, and technical) and the sharing of its responsibilities can be seen in Figure 1.

Executives

Managers and supervisors in other departments Consultants

General managers

\

Trade unions

Figure 1: The Three Dimensions of HRM

\ \

Strategic Human resource managers

and HR staff members

Relational

Technical

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The main body of this chapter will be dedicated to the description of those three dimensions with reference to an example for each one. Some considerations about participation and consultancy with particular respect to the French context will follow. The technical dimension — illustrated by the introduction of data processing. The technical dimension covers administrative, legal and financial aspects, as well as the choice and the application of methods of management. At this level the DRH is only partly sharing his expertise with the other executives. The technical nature of HRM can be witnessed clearly in the drawing-up of job offers for personnel specialists in advertisements: specific practical skills are demanded in matters involving salaries, job descriptions and employee appraisal, human resource planning and career management, disciplinary matters, company training programmes, time management, and the annual production of the company's social report or bilan social (a document that is produced annually, taking a three-year timeframe and containing the main statistics concerning the social situation of the enterprise). All these competencies rely on data processing which is used these days in practically all HRM departments in France (Merck 1991) and will therefore serve as an example for the technical skills brought into HRM. It is through the most sensitive and the most repetitive "window", i.e. wages, that data processing has penetrated HRM which for a long time had remained hostile to the use of computers. Its delayed introduction, compared with other departments in the company may be explained by a certain number of difficulties. The basic one encountered by the DRH is the contradiction inherent in the quantitative analysis of human behaviour. Moreover, data processing can only take into account information which already exists and is organized and codified. It is also impossible to make concrete statistical projections if the relevant information has only been collected over a short and recent period. Human resource planning, with the help of data processing, often has to face the fact that the prerequisites do not exist. For example, the provisional succession planning for employees to future vacant positions sometimes remains impracticable, due to the fact that job definitions have not been previously drawn up. One of the well known and widely-tested French software systems, used for personnel planning, is Resource. Being horizontally organized, it covers six fields of HRM: career; positions; salaries; training; time; manpower and employment. The choice of the most efficient system in terms of return on investment is a difficult one, depending on the number of employees, the technical competencies within the HRM department and the company's choice concerning autonomy. An average 3.6 per cent of the HRM budget is spent on data processing (starting with wages in 75 per cent of companies,

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time management 73 per cent, bilan social 59 per cent, simulations of wage evolution 57 per cent, the administration of training programmes 56 per cent: Rioux 1992). In many companies, in particular the small and medium-sized firms, data processing of certain information (staff records, salary, employee training and the preparation of formal documents required by central government) is left in the hands of an external consultant specializing in data processing. His/her role as an external consultant also comes up against certain constraints. He or she will find it difficult to be responsible for creating a computer-based HR function shared with line and general management. According to the shared role of HRM, each executive should be able to find and know how to use all the data relevant to his area of accountability. Ideally, all successive hierarchical levels would have compatible visions which would fit together. By applying the knowledge obtained from the database, executives should be able to visualize the situation in which each of their employees will find themselves at future stages in the company — that is, enquire directly about their position in training programmes, employee appraisal and career planning. This interweaving between the different domains of human resource management is yet to come and will demand that the coherence of HRM concepts as well as the ethical dimension, i.e. the protection of individual data, are reconsidered. It is only the very large companies that are making progress along this line. Likewise, the use of data processing for HRM in France remains a technical competence which is still at a developmental stage. The relational dimension — illustrated by development of employee training. At this second level the DRH is the facilitator for a different kind of management training. One of the tasks is to make the French cadres aware of the recent questioning of their role relative to their subordinates. Executives' power has to be franchised to their subordinates so as to ensure that employees face up to the company's risks and opportunities. We have chosen employee training and its development to illustrate this proposition. France was well in advance of other industrialized countries when it introduced a clause in the labour legislation in 1971, requiring all companies to allocate a minimum percentage of payroll costs to employee training. (In 1993, the figures for companies were a minimum 1.2 per cent and an average 2.7 per cent of payroll costs.) From that moment on, the employee training market boomed. Faced with the difficulty of finding their way amongst the nooks and crannies of training schemes and of managing the financial provisions, many companies habitually hand over the financial side of employee training to the regional or national FAF {Fonds d'Assurance Formation: Administrative Training Agency), which play a double role of accountant and savings bank for employee training.

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Later, under the impetus of the DRH, businesses became aware of the waste of time, money and motivation, represented by this formal and bureaucratic conception of employee training. Hence, they have attempted to integrate the corporate strategic objectives with the training and forward planning of competencies. Currently, we have entered a third phase. Many French companies have to cope with a shortage of skilled and qualified staff which creates the notion of employees being the mainspring of the company's development. The governmental operation called Modernisation négociée testifies to the fact that employee training is now considered as a national priority. Consequently, the idea of co-investment emerges (Maignan 1990). Knowing her or his own aspirations for personal and professional development, it is now the employee who is just as involved as the superior with the advancement of the individual's abilities. Moreover, the superior relies on the newly-gained qualifications of the subordinates to be able to meet departmental objectives. One of the many examples proving how forcefully certain French companies and their DRH are advancing in putting qualification, autonomy, and responsibility to the forefront is the USINORCAP 2000 agreement (1991). It reflects the consensus reached by the management and unions concerning procedures and aims of training and flexible work organization in the introduction of new technologies. According to a recent survey, over 40 per cent of companies further increased their training expenditures in 1993 (ANDCP-ECCO 1993b). The DRH is the architect who must supervise the coherence of the whole process of competence and career planning. This coherence is all the more difficult to obtain as the training may be carried out by different bodies by: -

line management hierarchy in-company; the training department in big companies; the many consultants specializing in employee training; self-tutoring, with computer assistance.

Confronted by the complexity of tasks and the large number of people involved, a new concept has recently been developed known as "educative engineering" (Caspar 1988). It is a matter of integrating traditional teaching methods with techniques used for large industrial projects, and calling for competencies that may be compared to those necessary for implementing large technical innovation programmes. Quite logically, initiatives along these lines are based on the long term and appear in those 50 per cent of companies which establish their training programmes over several years. The strategic dimension — illustrated by practices of social bargaining. At this point, the sharing of the HRM role goes one step further, and aims at the integration of financial orientations, commercial options, plans for industrial development and human resource planning, in order to obtain the

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best possible competitive advantage for the enterprise. At the same time, individual and group autonomy is to be developed without damaging the aforementioned integration. Finally, the transition should move away from a hierarchy based on barriers and exclusion towards one based on open management, ready to accept confrontation of ideas and challenge of social change. Hence the question arises of the impact of HRM strategy within the global strategy of the French company (Besseyre des Horts 1991). In the past, HRM strategy often corresponded with the idea of assistance. Its objective was to help carry out strategic decisions made by other departments in accordance with their environment. It appears now that a turning point is approaching which provides HRM strategy in France with an enhanced role. An illustrative example of this is the way in which it has become very difficult to find engineers and highly specialized workers with the necessary technical and company training on the labour market. In 1991, the shortfall represented 16 per cent of engineers, 27 per cent of highly qualified technicians, 25 per cent of qualified workers (ANDCP-ECCO 1991). This is all the more crucial as companies largely count upon "supplies" from the labour market, instead of building up trained workforces themselves. Such a shortage of qualifications which coincides with the aggravation of unemployment where unskilled workers are concerned (Blanchet, Marchand 1991) will probably lead to a reconsideration of the overall strategy of the company. That strategy may well depend upon the company's own capacity to retain and develop the competencies already existing within the company. What was a reactive role played by the HRM strategy now becomes a fully active contribution, increasingly capable of incorporating future trends and their organizational impact. For different reasons, social bargaining is another particularly interesting example that illustrates this development toward the strategic role of HRM. Its results will either encourage or depress employee involvement and at the same time, its many contradictions become apparent, in the resolution of which DRH plays a key role. Three levels of social bargaining are intermeshed within the general and legal framework which sets the rules over the following procedures: - negotiation at a national level which establishes the general rules; - negotiation at sector level which is more concerned with minimum standards; - negotiation with the union representatives within the company which includes the compulsory issues of salaries and working-hours and may deal with more basic problems such as the operational methods of technical systems and workplace organization. This latter form of negotiation is influenced by the "direct and collective expression" of the employees stemming from the Auroux Laws (see above),

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and impinges on the position of both trade unions and general management. The "direct expression" provisions, even if they remain unsatisfactory in their concrete outcomes, have shown positive indirect results: people tend to talk more and listen better. This has a qualitative impact on the recent trend towards decentralization of negotiation which now takes place essentially at company level (Coffineau 1993). It also restricts the tradition of excessive or unrealistic demands put forward by the trade unions. They are at present obliged to integrate into the bargaining process the concept of the health and survival of the company, that is, to represent the employees not only in social but also in economic debates. But is it not the case that trade unionism holds little importance in most French companies today? Are we not already living in a post-union society? Because of new technologies, the traditional contours of working teams are becoming indistinct, ad hoc structures are proliferating and working communities have a fluctuating life-span. The logic behind formal and collective bargaining with unions is being eroded by these changing contours of industrial relations (Weiss 1988). A trend towards a more continuous and, above all, spontaneous negotiation is emerging and superimposing itself on the compulsory consultation of the comité d'entreprise and the legally-required annual bargaining with the unions. The legal obligation to consult and negotiate is often concerned more with the procedure itself than with the actual agreement. The complexity of the French system with the different levels of employees' representation (trade unions delegates, personnel delegates, works' council, committee for hygiene, security and working conditions) and the varying election principles is another stumbling block on the road to efficient institutionalized co-operation. Yet any company needs a permanent level of active consent and commitment from each staff member in order to ensure its own smooth operation, especially in times of modernization of technology or organizational structures. Thus the DRH has a double role. Bargaining with the unions is required, whatever the outcome may be. But it is also essential to obtain commitment of the individual employee through some sort of informal negotiation. Many French companies' HRM strategy consists of encouraging individuals to express themselves in a way that will eventually transform trade unions' cultures. The social dialogue then serves to replace the unions' restrictive claims; participation is substituted for the divisive and schismatic tendencies which have been apparent for such a long time in French trade unions. Since 1991, there has been clear evidence of this development. ANDCP-ECCO (1991) reports a strong tendency towards a broader approach to negotiation including various types of issues. Even if in many cases the unions do not sign the agreements, this opening up of the bargaining agenda proves that a great number of employees are aware of what is at

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stake. The politically and socially moderate CFDT for instance cites employee involvement in the modernization process as one of its priorities; "The time for quarrelling is over. We shall have to invent something else." Paradoxically, there is one point on which unions and employers agree: it is vital for both of them to enhance employees' desire for involvement in collective progress by both sides of industry. Double-sided participation. We have already indicated that scientific management still prevails in many French companies. Even if its stratified nature and restriction to lower echelon posts may be a source of dispute for the average employee, paradoxically, it will sometimes be reinforced by the cadres who emphasize their role as the boss and tend to impose a hierarchy of status upon the "pyramid-shaped" organization (Landier 1991). The ensuing social and organizational immobility is quite inimical to employee participation. It is therefore understandable that the management of change and participation becomes a prime concern in many French companies. This is hampered by French unionism which has traditionally been opposed to all kinds of participation. In the unions' eyes, too strong an involvement on the part of the employees has always been considered as an erosion of the unions' collective strength, even as far as including the prospect of take-over by the patronat (the body of top managers). Confronted by such internal barriers and the conflictual relationship with the unions, open employee participation is more difficult to achieve in France than in other countries. Yet the reality is not as negative as it seems. Hand-in-hand with the difficulties of open participation there exists a hidden participation which is swift and efficient. This form of participation is represented by the making of specific local-level decisions, involving the spontaneous intervention of workers regarding adjustment to unpredicted problems, and allowing for initiatives outside the official agenda and organizational rules. It is a typically French practice to resort to le système D, i.e. the use of la débrouillardise, with its connotations of craftiness and canny resourcefulness. It can be contradictory to the formal hierarchy and yet be silently accepted. Transgressée of formal machinery and agreement, while at the same time being highly productive, these internal and informal deals hold the key to the comprehension of what could also be called "paradoxical participation" (Borzeix, Linhart 1988). In view of this situation what is the role of HRM? It must develop a form of mobilization of employees' contributions that harmonizes individual initiatives, rather than allowing them to cancel each other out. It must ensure that the slow progress towards open participation finds its own particular flavour in order to compensate for the declining opportunity to break the rules. The widespread introduction of quality circles in the 1980s probably reflected the hope that they might offer this special attraction of co-operation

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and contribution. Their decline in the 1990s could prove that the collective (i.e. group) approach did not fit in with the French culture. Interaction with the environment — the prominent role of consultants. On social matters, a very French characteristic is the willingness of most companies to call in consultants for "head-hunting", recruitment, salary policy, legal affairs, workplace organization, training, communication and even redundancy. There are two explanations for this demand for outside assistance. Firstly it is due to the insufficient importance accorded to HRM, as evidenced by the small number of employees in many personnel departments and the ensuing overload of work. Yet it is also evidence of doubts about the social capabilities existing within the company. This doubt appears to carry the prevailing mark of the Cartesian culture. While the complex nature of the economic world intensifies, it becomes more and more important, yet also more difficult to integrate at a corporate level the qualitative dimension of HRM whose background has many traces of irrationality. The biggest problem is that of putting the right person in the right job, in accordance with the French system of employee grading. In this context another dilemma arises. Certain DRHs summon consultants who sometimes propose methods which are "tried and tested", but which, paradoxically, often end up opening the door to practices which are "magic" and regressive (Amado, Demie 1991). Above all, it is with the recruitment and training of the cadres that top managers and their DRH are looking for determinism at the end of the rainbow. With the help of consultants in graphology, numerology, morphopsychology, and even survival tests, the decision-makers overcome their anguish. With the consultant as a third party, they will acquire legitimacy for their decisions. Thankftilly, the French esprit d'indépendance exists as an effective antidote to the ascendency of such "magic" determinism.

5

The Social Dimension of the Single European Market

Due to the deepening of the recession and the growth of unemployment, the French no longer view European issues in the same way. The general interest in European development, which was reinforced when the barriers came down at the beginning of 1993, has now diminished.

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Euroscepticism

In an atmosphere of economic crisis, a practice of "each man for himself' proves more reassuring than the uncertainty of one large European market. This defensive position is further reinforced by people realizing that the threats are more often found outside Europe. Not only the goods market, but also the labour market, has been internationalized to minimize production costs which are for instance 25 times lower in China. In the textile and shoe industries for example, derealization has meant a chance of survival for French companies. The greatest opportunities of low cost production are now to be found in South East Asia as well as Central Europe and to a much lesser degree in Southern Europe. The European inability to contain the human and social catastrophe in the former Yugoslavia has given further impetus to the Eurosceptics. The varying standpoints taken by the different nations at the outset of the conflict brought back memories of former alliances and oppositions. But the most common feeling of all is one of disappointment: the European economic union has not provided the necessary encouragement for the European social union as the forefathers of free trade had led us to believe. The people who manage Europe on a day-to-day basis have focused too strongly on the logic of the market, that is, on the short term (de SaintEtienne 1993). Thus neglecting any strategic long term plans, they have endangered the European democratic system in which economic efficiency and social solidarity should coexist. This addresses a further question: is it really feasible to treat social issues at a European level? Would other approaches be more efficient such as solving problems linked to social diversity at a regional level or within the different industrial sectors? The majority of French people waver between doubt and hope, not knowing whether the creation of the social union will be able to prevent the laws of the market taking away the social advantages acquired over the past 50 years. The adoption of the Social Charter in 1989 did not manage to eliminate the fierce competition that existed not only between products but also between geographical sites. Its incapacity to act as a partial counterweight to the Single European Market is due to the method that had been chosen: to encourage and not to constrain whenever social decisions are to be taken at a European level (Guéry 1991) in the following fields: freedom of movement of labour; employment and mimimum pay; working conditions; social welfare schemes; freedom to join a trade union, to engage in collective bargaining and to participate in strike action; vocational training; equal opportunities; health and safety; child labour; pensioners; disabled. Through the principle of subsidiarity and the fact that it is not legally binding, the Charter's scope has been considerably reduced. For many French people, the Hoover affair represented the first social failure and il-

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lustrateci the ease with which social dumping could be practiced within Europe (Fourçans 1993): the American group MAYTAG, the parent company of Hoover, decided at the beginning of 1993 to transfer its production (650 employees) from Dijon in France to Cambusland in Scotland. Apart from the subsidies promised by the British government, this derealization was motivated by: - lower social costs in Scotland (reduced by 37 per cent); - the possibility of more open and decentralized negotiations with Scottish trade unions because of the lack of previous nation-wide agreements; - the no-strike agreement contained in the employees' contracts. This much-talked-about affair revealed to the French the darker side of European social union. The Social Charter of Fundamental Rights, in spite of its undisputed symbolic value, will remain ineffective as long as it does not impose any legal restrictions. It reveals more clearly the difference between countries where these rights already exist, at least for the most part (as in France), and those who tend to lag behind (such as Portugal, for instance). Any effort toward social cohesion in Europe is useless, since the Maastricht Treaty has allowed one country (Great Britain) exemption from the rules. After this general description of the French viewpoint let us now take a closer look at the reactions of the different social players.

5.2

European Social Union as Seen by French Workers

The active population is concerned mostly by the first of the fundamental rights contained in the Social Charter: the freedom of movement of labour. In this context, the new-born system of equivalent professional qualifications and university degrees is an indisputable asset. On the other hand, problems relating to social advantages have only been solved superficially: workers from any member state benefit from the same level of protection as native employees of the host country, in terms of health insurance, unemployment benefits, child benefits. But neither the quality, nor the level of protection are the same in all the European states, and compared to most of their neighbours, the French believe that they lose out. The usual reassurance that French social protection is among the best in the world needs to be looked at carefully (Chatagnier 1993). The French have encountered problems and taken time in defining their welfare system and in making it as widespread as that of other member states (Germany and Great Britain). Because of its composite structure and unbalanced sources of financing, its future appears problematic (Richez 1992). Its economic impact

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is ambiguous in that it weighs heavily on the labour costs. The benefits paid reinforce dangerously the cyclic movement. Is this the reason why French employees seem reticent to take up the opportunities of free movement within the EU? The number of French expatriates moving to West European countries only slightly increased between 1980 and 1989: + 0.5 per cent (Actualités Expatriation 1991). In the meantime there has been no marked increase. Only recent graduates and especially those who have acquired a multicultural and European outlook due to the ERASMUS programme "prefer to work in another country to being unemployed back home". However, this other country is not necessarily European. Youth unemployment, which is especially high in France, could cause a brain drain out of France and, moreover, out of Europe.

5.3

Social Union as Seen by Managers

French managers probably consider the Single Economic Market as more important than most of their colleagues from other countries. This can be explained by the active role taken by France in its development since 1950 (Atamer, Calori 1993). In spite of this, January 1st 1993 was still seen as a "non event". This may be commented on in several ways: - French managers are right, in so far as the economic impact is variable in the different sectors but weak overall. Taking steps towards a single market started a long time ago. - It is really at a managerial level that the single market introduces new exigencies. Different talents need to be found, developed and remunerated within multinational companies. Career development of multicultural executives able to adapt their own vision to that of the guest country is becoming an essential task (Peretti et al. 1990; Hermel 1993) The practices of participative management, of working as a team and of project management do not mean the same things and do not meet with the same reactions in different European countries. - The organizational impact of the Social Union is marked by a certain asymmetry: integration and concentration in fields like R&D, production or logistics but differentiation where sales and marketing are concerned. - On a purely judicial and institutional level, France is further ahead than most of its European counterparts. Legislation concerning redundancies, which at the beginning of the 1980s was very restrictive, has now been relaxed and adapted to the economic evolution. In spite of the high level and rigidity of the SMIC (Salaire Minimum Interprofessionnel de Croissantι, minimum wage), the average labour costs are equivalent to those in other industrialized countries. The removal of index-linked wages (which

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has caused disputes between employers and trade unions in other countries) has been a reality in France for over 10 years. The flexibility of working hours is negotiated within the companies themselves. In this context, one problem nevertheless remains unsolved: the existence of trade unions is necessary for the conclusion of company agreements which have to be signed by both parties. The low level of unionism as compared to other countries may create difficulties. Although today France is one of the member states with the most advanced social legislation, in the long term, outside influences may put a brake on this advantage (Fourçans 1993) such as greater penetration of the German participative model through the European works councils. The coexistence of national and European social norms may lead to legal conflicts (on night shifts for instance).

5.4

European Social Union as Seen by the Trade Unions

French workers' unions are not very interested in Europe as a whole. This is mainly due to their division and their ensuing concentration on competitivity within each company. Trade unions do not strongly adhere to the Social Union because, on the one hand, centralized negotiations are weakening, and on the other hand, specific localized structures of representation, the above-mentioned coordinations, have emerged. The trade unions' attitude towards the recurring social dialogue of Val-Duchesse remains ambiguous (Héritier et al. 1991). It was Jacques Delors who in 1985 took the initiative for the social dialogue between the European Trade Union Confederation (ETUC) and the employers' representatives of both private and public companies at Val-Duchesse. Common viewpoints on the strategy adopted by the European Council concerning employment, the introduction of new technologies and training, have been detailed (Rojot 1993). But the employers' representatives do not intend to go any further than this. Collective bargaining on a European basis on subjects such as the creation of trans-European works councils in multinational companies is not on their agenda. On the other hand, the CGT (the most powerful French union) is hostile to the idea of a social European union and is therefore not part of the ETUC. How far has this general strategy been put into practice? Different answers show how varied European reality may still be: - The first European strike of railwaymen in October 1992 was mainly followed by unionized employees of the SNCF (French railways) and the Belgian unionists. Can this really be called a European strike?

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- In the Hoover affair, there was no sign of European unionist solidarity of any kind (Rojot 1993). - Several negotiations instigated by the directors of public multinational companies have succeeded on a European scale: e.g. Thomson, Bull, BSN, Péchiney, Rhône-Poulenc, Elf-Atochem. Even before the creation of a European works' council might have been imposed on them, they succeeded in reuniting the unionists from the different countries and creating a unique structure of consultation. Here, as elsewhere, the first achievements (of which there are many in France) came more from the goodwill of the players than from the initiatives of Brussels' superstructures. In most cases the approach is pragmatic: thus "The Annual European Trade Union Congress of Saint Gobain" assembles the 70 union delegates of the different European countries. The method of designation is adjusted according to the great variety of representation systems within the EU It remains simpler and more flexible than the propositions of the European Commission concerning the creation of a European works council in multinational companies (September 20th, 1991). The experimental approach and its formal result that is the "Saint Gobain convention for a social European dialogue" encompasses a long social tradition of problem solving on a European scale (Guirlet 1992). - The first appearance of direct collaboration between French (CGT) and Portuguese (UGT) trade unions, centred on professional training on the one hand, and between French (CFDT) and British (NALGO, National and Local Government Officers' Association) unions, concerning new technologies on the other hand, proves the need for direct inter-union contacts which may lead to joint strategies.

6

Thoughts for the Future

6.1

New Technology and the Organization of the Workforce

For many French DRHs, technological progress also comprises the hope of a more highly trained and a more participative organization. If this relationship really did exist, and if the only way to control the uncertainties associated with new technology were to combine them with high levels of training and participation, then CIM (Computer Integrated Manufacturing) would not be accessible to many French companies, because of the relatively low level of qualification. These days, we know this to be untrue (von Behr, Brunstein 1991). A tridimensional approach is necessary uniting the organizational, the socio-cultural, and the technological dimension. Organizational possibilities are determined by the socio-cultural context; if weakness is recorded

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along the cultural axis, then the desired organizational changes may become very difficult. In such situations, it is heavy investment in the technological field that will make the CIM project possible, even in companies where low qualifications still prevail. As any technological leap should not occur simultaneously with an organizational one, an assessment of the social composition of the workforce should be carried out before organizational decisions are made. The French DRH will then have to be both wise and daring, often having to opt for a conservative organization which continues to apply Taylor's principles, because of the cultural and social constraints that still exist in France, while at the same time trying to create scope for improvement right from the start, in order to facilitate the progressive advance towards a more highly trained and participative organization. This advance has rapidly become imperative because the cheap production of mass-produced goods by unskilled workers in developing countries puts a permanent threat on the comparable category within the French workforce (de Jouvenel 1994). In numerous French companies, the transition from CIM to the concept imported from the USA of CHIM (Computer and Human Integrated Manufacturing) has thus been put into progress (d'Iribarne 1989). In each case, it depends upon the speed at which HRM succeeds in advancing from yesterday's level of skill towards that of tomorrow. In many big companies this transition is well under way. Thus one third of the 30,000 employees of Pechiney (1991) have been covered by an agreement on the social policy of the group implying the upgrading of qualifications and management competencies.

6.2

Side Effects — Exclusion and Stress

Any general enthusiasm over the future of HRM is tempered by threats and counterthreats. Even if change is inevitable, social equilibrium will be disrupted, if it is overly precipitous. Two different aspects are often discussed in this context: - Many French companies, where a low level of training is accepted, are permanently endangered by a slow-down of activity and are often hit by what is modestly known as a plan social, that is economic redundancies, due to the derealization of their activities to South East Asia. - As a result, the phantom of a dual society and a two-tier labour force emerges from behind the scenes. A highly-qualified minority is responsible for the "excellence" of the modern company whereas the vast majority is left on the side-lines. Could we possibly be provoking the recurrence of times before the French Revolution when there was a strong distinction between the privileged orders and the tiers état, the third estate

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comprising all those who did not belong either to the aristocracy or to the clergy? Present day opinion concerning the economy in general and the firm in particular does not question the logic of development or the search for profit. But profit at any cost, according to the "gospel of competivity" (Petrella 1991), is met with public indignation because it raises to a level of dogma a principle that has commercial value: namely exclusion. By considering immediate efficiency and excellence as an absolute priority, this principle legitimizes the hold the company has on the individual in a world where relentless competition prevails. At first sight it seems that the only possible choice offered to the employee is that between the suffering endured from exclusion (unemployment) and the distress linked to intellectual and psychological exhaustion provoked by too demanding a task (stress). This explanation has been advanced to understand why the wide-reaching strikes at the beginning of the 1990s have been interpreted as "strikes of fear and anguish" facing situations of restructuring, technical change, or new investments (ANDCP-ECCO 1991). In the face of such adverse situations, the role of the DRHs evolves. As well as the afore-mentioned tasks, they are called upon to check that the methods used to introduce technological changes are not in themselves causes of stress or exclusion, provoked by the inability of certain employees to adapt to technological changes (Schwartz 1994). Difficulty to adapt arises in at least five areas to which the DRH will have to pay special attention: abstraction, interaction (understanding and reaction), speed, disappearance of barriers (between work, family life, leisure, consumer activities) and diagnosis (risks of breakdowns in highly integrated systems [see Lasfargue 1992]). The growing discrepancy between the involvement required from the employee and his or her inability to wholly adopt the technological and organizational change instigated by the company may push the employee towards a seemingly senseless future.

6.3

A New Ethical Dimension Against the "Gospel of Efficiency"

Faced with this dilemma, criticism often focuses on concepts such as "active participation" and "company involvement". Journalists, HRM researchers, and industrial psychologists are asking why companies are permitted to demand from their employees a maximum involvement in their work together with compliance to ideological rules which are introduced and even forced upon them in the name of competitiveness. Commentators such as Le Mouet (1990) or Laville (1994) do not question the economic necessity of efficiency, but criticize the deviation which transforms it into an absolute criterion of reference, not only within the company but for every social activity.

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This questioning reveals a fundamental ambiguity in HRM. There are two distinct loci of legitimacy for HRM in companies: capital/proprietorship and individuals (Lorino 1991): - Through the first referent, HRM has the responsibility and task of enhancing the contribution of human resources on an economic basis. From an economic point of view, nothing justifies the juxtaposition of production sites and places of distribution. The DRH must therefore adopt the financial reasoning whereby goods should be produced where costs are lowest, that is, accept and even organize the derealization of production. In the same vein, he or she should reduce the wages of the many unskilled workers while increasing the salaries of the skilled ones and thus to enlarge the wage differentials instead of narrowing them down (Maillard 1993). The DRH should also fight for a downward redistribution of social payments demanding a fundamental reconsideration of the workers' and former workers' social protection. - The same human resources provide the DRH with another responsibility of a social nature which goes much further than answering employees' immediate needs in terms of direct remuneration and social payments. Qualifications seem to be the solution for the French economy as well as for individuals themselves. It is the DRH's responsibility to permanently stimulate learning opportunities for the workers. The DRH has to educate each individual on the use of the competence which he or she has gained and on the resulting compensation that can be derived from it. Contrary to the assumptions which existed during the 1980s, concerning the convergence of economic needs and social aspirations, these two types of responsibility neither automatically nor necessarily converge. The management of overmanning, including "plans sociaux" (Mallet 1993), as well as concrete measures assisting those who are made redundant come under the responsibility of the Personnel department. This carries with it an obligation to become more and more inventive for those that the company must, or believes that it must, lay off. This has a further implication for the DRH: he or she will have to accept the disappearance of many boundaries (Weiss 1994). To draw a hard and fast line between the working and the non-working population, between casual work and an occupation becomes difficult. What used to be an institutionalized social system has now become unstable, transient and hazardous. The edges of the company are interwoven with other structures which are workplaces in themselves encompassing associations, districts, families, neighbourly groups etc. (Lebaube 1993). They may be able to accommodate those that the company has made redundant and for whom the DRH is responsible because of the social plan. From the clear vision that the DRH used to have of a classical job (where an employee was fully integrated into

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the company and remunerated according to his or her contract), we move on to a co-existential view of a "more-or-less job" where the productive requirements vary depending on the systems to which they belong in a transient or progressive way. Judging by the numerous publications based on this subject (de Gaulejac, Aubert 1991; Mine 1993), the short-termism towards efficiency is now being questioned and the manipulative hold over employees in the name of "commercial war" and "economic survival" is being severely contested. It is a growing belief that French managers have put too much importance on short term logic for too long (Lorino 1991) and that DRHs have relied too exclusively upon their economic legitimacy. The rejection of those who do not possess the correct qualifications and the imposition of the remaining employees, under stress from the threat of failure, is unacceptable on a human and social scale and is unprofitable in economic terms. Other strategies are emerging which aim at a global success for the enterprise in the long term and demand a continuity of development that respects the identity and rhythms of organizational, occupational, local and national cultures. Indeed, there is evidence (Landier 1991; Schwartz 1994) which proves that HRM actively participates in the general quest of a new social model that will take on an ethical dimension. If in the past, the French company has been strongly characterized and even handicapped by some sort of cultural viscosity, it could be wished that, by contesting the short term approach, the enterprise is now entering a phase of reform which may be considered as a modern and more civilized alternative to the spirit of French Revolution (Mine 1991). As a final thought HRM would then have another role to play. This role would involve a transition from the management of human resources to the management of human intelligence which accepts pluralism of interests and incorporates the individual's freedom to make decisions regarding the mobilization of personal expertise, training and values in her or his personal interest, or (as she or he sees fit) in that of the organization.

References Actualités expatriation, La France et ses expatriés, in: Actualités expatriation no. 54, 1991. ANDCP-ECCO, Le baromètre de la conjoncture sociale; L'emploi, les rémunérations, la régulation sociale à l'aube de 1992, ANDCP, Paris 1991. ANDCP-ECCO, Le baromètre de la conjoncture sociale; L'emploi, les rémunérations, la régulation sociale à l'aube de 1992, ANDCP, Paris 1993a. ANDCP-ECCO, Le baromètre de la conjoncture sociale; La formation, ANDCP, Paris 1993b. Amadieu F., L'horizon européen du gestionnaire des ressources humaines est-il exempt de syndicalisme?, Paper presented to the 9th national IAE meeting, Institut d'Administration des Entreprises, Strasbourg 1989.

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Amadieu F., Une interprétation de la crise du syndicalisme: Les enseignements d'une comparaison internationale, in: Problèmes Economiques, no. 2182, July 4th, 1990. Amado G., Demie C., Pratiques magiques et regressives en gestion des ressources humaines, in: Revue de Gestion des Ressources Humaines, October 1991. Ammon G., Der französische Wirtschaftsstil, Eberhard, Munich 1989. Atamer T., Calori R., Enquête: Les défis des années 1990 pour les entreprises et les managers européens, in: Revue Française de Gestion, February 1993. von Behr M., Brunstein I.,Technologies nouvelles et organization du travail — Des leçons d'outreRhin?, in: Cahiers du CESAG, Strasbourg, November 1991. Berry M., Bouchiki H., Kimberley J., Le management ne peut-il donc être français?, in: Revue Française de Gestion, February 1993. Besseyre des Horts C.H., L'intégration stratégie-ressources humaines: De la théorie à la pratique, in: Les Actes du Congrès AGRH, AGRH, Bordeaux 1991. Blanchet D., Marchand O., Au-delà de l'an 2000 — S'adapter à une pénurie de main-d'oeuvre, in: Economie et Statistique, no. 243, May 1991. Bonami M., de Hennin B., Boqué J.M., Legrand J.J., Management des systèmes complexes, de Boek, Brussels 1993. Borzeix Α., Linhart D., La participation: un clair obscur, in: Sociologie du Travail, no. 1, 1988. Bosche M., Universalité et contingence de la GRH: les stéréoptypes nationaux, médiateurs interculturels, in: Les Actes du Congrès AGRH, AGRH, Jouy-en-Josas 1993. Bournois F., La gestion des cadres en Europe, Editions Eyrolles, Paris 1991. Brunstein I., Die Betriebswirtschaftslehre in Frankreich unter einer vergleichenden Lupe, in: Die Betriebswirtschaft, no. 1, 1991. Brunstein I., Führung und Führungsforschung in romanischen Ländern, in: Handwörterbuch der Führung, Schaeffer-Poeschel, Stuttgart, 1995. Caspar P., Un renouveau de la fonction formation, in: Weiss D. (ed.), La fonction Ressources Humaines, Les éditions d'organisation, Paris 1988,. Chatagnier F., La Protection Sociale, Le Monde Poche, Paris 1993. CNPF, Cartes sur table, CNPF, Paris 1991. CNPF, Cartes sur table, CNPF, Paris 1992. Coffineau M., Bilan des Lois Auroux — Dix ans après, Report to Premier Minister, Paris, February 1993. Cohendet P., Llerena P., Flexibilité, information et décision, Economica, Paris 1989. Crozier M., La société bloquée, Le Seuil, Paris 1978. Crozier M., Friedberg E., L'acteur et le système, Le Seuil, Paris 1977. Fauchon T., Rojot J., Faut-il enseigner la gestion des Ressources Humaines?, in: Personnel, June 1989. Fombonne J., Pour une histoire de la fonction Personnel, in: Weiss D. (ed.), La Fonction Ressources Humaines, Les Éditions D'organisation, Paris 1988. Fourçans A., L'entreprise en Europe — Clés pour le décideur, Interéditions, Paris, 1993. de Gaulejac V., Aubert N., Le coût de l'excellence. Le Seuil, Paris 1991. Guéry G., La dynamique de l'Europe sociale, Dunod, Paris 1991. Guirlet C., La représentation du personnel et le comité d'entreprise, in: Personnel, December 1992. Héritier P., Taddéi D., Ion J., Bertrand H., Grozelier A.M., Les enjeux de l'Europe sociale, La Découverte, Paris 1991. Hermel P., Management Européen et international — Approche comparée des Ressources Humaines et de l'organisation. Economica, Paris 1993. Igalens J., L'état de l'art en GRH, Paper presented to the 10th IAE national meeting. Institut d'Administration des Entreprises, Clémont-Ferraud 1991. Institut Technique des Salaires (1ST), Etudes sur les salaires, in: Challenges, September 1991. d'Iribarne Α., La gestion à la française, in: Revue Française de Gestion, January-February 1985. d'Iribarne Α., La compétitivité — Défi social, enjeu éducatif. Presses du CNRS, Paris 1989. de Jouvenel H., La France à l'horizon 2010, in: Futuribles, no. 186, April 1994. Landier H., Vers l'entreprise intelligente, Caiman Levy, Paris 1991.

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Lasfargue Y., Nouvelles organisations et nouveaux métiers: Quelle évolution dans la GRH?, in: Personnel, no. 334, 1992. Laville J.L., La nouvelle question sociale, in: Eme Β., Laville J.L. (eds.), Cohésion sociale et emploi, Desclée de Brouwer, Paris 1994. Lebaube Α., Social par ici la sortie, Le Monde Editions, Paris 1993. Le Goff J.P., Le mythe de l'entreprise, La Découverte, Paris 1992. Le Mouet J., La critique de l'efficacité. Le Seuil, Paris 1990. Lorino P., Pour une démocratie vraiment participative — Etre citoyen dans l'entreprise, in: Le Monde Diplomatique, September 1991. Maignan A., La stratégie du plan individuel de formation et ses tactiques. Editions Retz, Paris 1990. Maillard D., Délocalisations et emplois, in: Futuribles, October 1993. Mallet L., Réduction des effectifs, in: Cahiers Français, no. 262, 1993. Martin D., Gestion des ressources humaines — Crise d'identité et gestion de la modernisation, in: Revue Française de Gestion, September-October 1989. Martinet A.C., Epistémologies et Sciences de Gestion, Economica, Paris 1990. Merck B., La gestion informatisée du personnel, in: Personnel, August 1991. Mine Α., Français, si vous osiez, Edition Grasset, Paris 1991. Mine Α., Le nouveau moyen âge, Editions Grasset, Paris 1993. Morin P., Le développement des organisations, Dunod Entreprise, Paris 1989. Noblecourt M., Les syndicats en question, Editions ouvrières, Paris 1990. Pechiney, Accord sur la mise en oeuvre du changement de l'organisation du travail, in: Liaisons Sociales, December 12th, 1991. Peretti J.M., Caza] D., Quinquandon F., Vers le management international des ressources humaines, Editions Liaisons, Paris 1990. Petrella R., L'évangile de la compétitivité à outrance, in: Le Monde diplomatique, September 1991. Price Waterhouse Cranfield, Project on International Strategy, Human Resource Management, Report, ESC Lyon, Lyon 1993. Richez N., La sécurité sociale en danger, Collection Enjeux Hatier, Paris, 1992. Rioux O., Le social assisté par ordinateur, in: Liaisons Sociales, no. 66, 1992. Rojot J., Les pistes ouvertes pour l'évolution avant et depuis Maastricht, in Personnel, October 1993. Sainsaulieu R., L'identité au Travail, Presses de la Fondation Nationale des Sciences Politiques, Paris 1985, 2nd edition, de Saint-Etienne C., L'Europe contre le capitalisme, Armand Collin, Paris 1993. Segrestin D., Le syndicalisme français et l'entreprise, in Sainsaulieu R. (ed.), L'entreprise une affaire de société, Presses de la Fondation Nationale des Sciences Politiques, Paris 1990. Schwartz Β., Moderniser sans exclure, La Découverte, Paris 1994. Tic A., Consultants, La rue vers l'homme — DRHde 1989 à 1992, Tic, no place 1990. Usinor, CAP 2000 — Accord de qualification, in: Liaisons Sociales, March llth, 1991. Veltz P., Faut-il parler d'après-taylorisme?, CERTES, Noisy-le-Grand 1991. Veltz P., Zarifian J., Vers de nouveaux modèles d'organisation, in: Sociologie du Travail, no. 1, 1993. Weiss D., Négociation et ressources humaines, in Weiss D. (ed.), La Fonction Ressources Humaines, Les Éditions d'Organisation, Paris 1988. Weiss D., Nouvelles formes d'entreprise et relations de travail, in Revue Française de Gestion, March-April 1994.

Germany Hartmut Wächter, Theo Stengelhofen

1

Salient Features of German Personnel Management

1.1

Institutional Settings and Management Action

If personnel management is looked at from a functional point of view, there is hardly any difference between the major industrial countries. Most companies recruit, select, purposely influence (e.g. pay), maintain, and lay off the labour force, and make use of techniques (such as assessment centres, job descriptions, quality circles) which are not all that different in various countries. The meaning, importance and composition of these techniques, however, are shaped by the institutional setting of each country and even the "style" of the individual company. For instance, in Germany, the Stil des Hauses (company tradition) had been a notion long before the rise of the discussion on corporate identity. There seems to be a peculiar "fit" between the importance and shape of personnel techniques deployed, on the one hand, and the beliefs, traditions, norms and regulations, which are deeply rooted in the respective society, on the other hand. The institutions which shape these configurations are, to a large extent, pre-existent. They are also partly the result of management practice itself. In any case, they are reproduced in, and through, the actions of management, as well as of other "players" in the game. There is, thus, a definite fit between the deployment of personnel (e.g. seniority rules), investment by the firm in human capital, broad job classifications, and selection procedures, which can be attributed to the impact of the educational system of the country. By the same token, the emergence of particular lay-off rules and employment patterns signify the features of the national industrial relations system (Osterman 1987). A comparative view on national personnel management systems elicits the institutional settings that go beyond daily practice. In the case of Germany, three traditions come to mind when one looks for an institutional framework that shapes German personnel management in a general way.1

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German "Corporatism"

Within the industrialization process of Europe, Germany was a latecomer. Germany's rise, by 1914, to the leading industrial power in Europe, was achieved only in the last thirty years of the nineteenth century, through a joint planned effort in which government authorities, industrial firms, and financial institutions worked closely together. Cartels, close ties between banks and industry, and exchange of know-how between firms have always been a dominant feature of German capitalism. Even today, the awareness of being largely dependent on conquering and defending world market shares, thus the notion of all Germans "sitting in one boat", is, although frequently derided, a lingering fact of German economic and social life. Being prepared for fierce world market competition can hardly be ignored, in view of Germany's dependence on exports. In 1988, over one third of the West German GNP was earned on the world market. For major industrial sectors (chemicals, machine tools, vehicles, electrical engineering) this proportion is up to 50 per cent and beyond. "Organized capitalism" in Germany has always included a social dimension. The expansion of industry in the late nineteenth century was accompanied by pioneering social legislation which brought about a basic security and integration of virtually all members of society. This was, at the same time, designed to weaken potentially revolutionary movements of the working class. The combination of social legislation with the banning of the socialists has been called a "double-edged sword against socialism" (Trebilcock 1981: 81). Despite periodic heavy conflicts over employees' rights, working conditions and social policy, the major political decisions on social affairs in Germany have been brought about in a climate of consensus-seeking and through a cooperative process between adversarial groups. The structure of the German company also reflects this co-operative mood between divergent interest groups. The dual board structure of Vorstand (management board) and Aufsichtsrat (supervisory board) allows for co-optation of representatives from banks and other companies, and has also been used to both represent and curb union influence. As a result, the influence of the shareholders is limited and channelled in such a way that management can pursue long-range goals without being threatened by an everpresent, unfriendly, take-over bid.

1.3

Worker Participation in Economic Affairs

The system of co-determination has been widely acknowledged as an important feature of Germany's reconstruction, economic welfare, and social stability after the war (Fürstenberg 1987). Surprisingly, the point of the

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positive impact of co-determination on economic performance is being made by foreign observers more frequently than by Germans themselves (Diefenbacher, Nutzinger 1981; Wächter 1983). In contrast, the bulk of German research and publication centres around the description of institutions and processes rather than outcomes. There is also, in Germany, a tradition that is very critical in respect of co-determination. The claim is that it is not achieving "real" goals, i.e. a more substantial influence of workers' interests on economic decisions. The roots of co-determination reach back long before the post-war period. There were a number of experimental forerunners in the nineteenth century, with different ideological foundations (patriarchic, artisan traditions, Catholic, in addition to the emergent Social Democratic movement). It was however, the so-called Burgfrieden (truce) between the government and the Social Democratic Party (SPD), at the beginning of the 1914 war, that paved the way for a law that provided for workers' participative rights in industrial firms in exchange for intensified war production (Gesetz fur den vaterländischen Hilfsdienstin 1916). The Weimar Republic, with its initial SPD majority, followed these lines and made both works councils and board representation for labour a legal obligation for large firms. The experience with the collapse of democracy and the Nazi regime convinced the large majority of union members, after 1945, to form a unified union movement which was not divided on ideological lines. They also determined to strive for a strong representation of the union and of workers in the firm, as a safeguard against the resurgence of totalitarism, and as an extension of democratic principles to the confines of the firm's decision-making process. Since reconstruction in West Germany was brought about on the basis of a market economy, union influence and the institutions of co-determination served as an important building block for the "social dimension" of what is known as the Soziale Marktwirtschaft (social market economy). In an overall assessment of the role of organized labour, both inside and outside firms, it can be said that this influence has not really interfered with economic decisions on expansion, rationalization, and modernization. It has had, however, a mitigating impact insofar as the side-effects on employment, working conditions, etc. have attracted considerable attention and have become part of the management's decision process. This is illustrated by the "stretching" of employment over a longer period in order to avoid immediate lay-offs or by side-payments to those affected by rationalization.

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The Educational Tradition

Education, at least since the modernization of the Prussian state at the beginning of the nineteenth century, has been a major concern of virtually all economic and political agencies in Germany. It has also been of value to each German individual and an important topic of family life. Educational reforms in Germany have caused, through the years, the most heated and emotional debates in domestic affairs. The special aspect of the German educational system is its emphasis on a strong interlocking of theory and practice (Locke 1984). This is particularly well exemplified in the apprenticeship system (Duales System der Berufsausbildung) that combines practical knowledge and early integration into the working process with a deepening of theoretical knowledge in school (Lane 1989). Although the apprenticeship system dates back to pre-industrial times it performs, through constant modernization, important functions in today's high-tech world. It is normally expected of somebody who applies for a job at the lower and middle levels of the enterprise that he/she has successfully passed an apprenticeship. The system thus provides relatively high qualifications, even for the lowest level on the shop floor and, consequently, makes wide definitions of individual jobs possible. Since positions on higher levels of the hierarchy are very often filled with people who have, at some point in their career, also passed through the apprenticeship system, technical competence is present at all hierarchical levels of German firms. Moreover, the early socialization of the young apprentice is very often the basis for his/her promotion. As a result, German organizations — up to a certain level — have fewer layers than comparable organizations in France, for instance. Pay differences between hierarchical levels are smaller, and vertical communication around a common technical "code" is enhanced (Lutz 1981).2

2

Personnel Management in Post-war West Germany

2.1

The Development of the Personnel Function in the Firm

The history of German personnel management has yet to be written. Some authors who touch on the subject tend to assume a more or less similar development as in America. This often is expressed in a placatory way as a sequence of Taylorism, human relations, human resource/systems management. However, if one refers first, to earlier writers on the subject, and second, to economic and social development and the emergence of practical problems and procedures, the following general lines appear.

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There is in Germany a long tradition of patriarchal responsibility for the social welfare of the workforce. Ernst Abbé, of Carl Zeiss Jena and the Krupp tradition are the most prominent symbols of a whole range of similar endeavours. At the same time, bureaucratic principles have always played a significant role in the organization of social and personnel affairs. After all, bureaucracy in its modern form has deep roots in the modern Prussian state, and has found its most prominent analysis by a German, Max Weber. Up to today, rules and procedures have been an important feature of German personnel management in its strive for equity and fair treatment. However, in work organization there are probably distinctive differences between German companies and their West European and American counterparts. Taylor's work was translated and introduced rather early (the first translation in 1909), and it has often been argued that mass production, standardization and rationalization could not have been achieved in Germany without Taylorism. However there has been, from the very beginning, an important debate on the viability of Tayloristic organization, not only from a critical-social perspective, but also from economists and engineers. So the question can well be raised to what extent, and in what form, Taylorism ever existed in Germany. The founder of German business economics, Eugen Schmalenbach, was very sceptical about the introduction of "mechanistic" planning and organization procedures that would, in his view, undermine responsibility in the organizations and hamper the "feeling" for economic principles (Locke 1984). From the mid-twenties onwards there was an influential debate among engineering professors on Arbeitsfreude (enjoyment of work) as an essential precondition of efficient production. With its strong emphasis on Gemeinschaft (communalism) as opposed to Gesellschaft (contractual relations) and with its promise of reconciliation of labour and capital, it had strong ideological undertones and an affinity to the Nazi ideology and propaganda. Thus, this tradition was absorbed by the economic and social practice of Nazi Germany and disappeared with it. (For a critical evaluation see Hoffmann 1985.) The development of the personnel function in large German firms, after the war until the 1980s, is marked by a substantial increase of personnel specialists, as well as a strong tendency towards juridification {Verrechtlichung) and ensuing professionalism. This is also reflected in the emergence of personnel as a field of specialization within the university curricula of business administration from the early 1970s onwards. The establishment of personnel as a functional specialization, in both firms and educational institutions, can be attributed to the shortage of labour during the reconstruction and "economic miracle" period. The emergence of personnel specialists is also a reaction to the various legal regulations that impose certain tasks on the firm and, probably most importantly, to the legal

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rights of works councils and their extended influence. The works council can request, for instance, that before a person is laid off, the possibilities of further employment in another job in the company or a subsidiary be checked. Without a detailed roster of positions and job descriptions, the employer can hardly comply. Also, the works council can demand companywide information on job opportunities. It has to be informed in writing about applicants who are being considered for a job. The implementation of collective agreements on wages, job evaluation, performance appraisals, etc., are also important areas of works council activity, and sophisticated techniques and regulations have been developed and are widely used. In short, in fulfilling the requirements which the law imposes on the employer, and to ward off "undue" action on the part of the works council, employers find it advisable to develop standard procedures, general regulations, and forms for as many areas as possible of the personnel function under the political influence of the works council. In the process of fulfilling its functions, works council members themselves have to acquire considerable professional expertise and procedural knowledge. Consequently, the personnel function in the typical German firm is characterized by formalization and standardization of procedures. Conflicts between employer and employees are, to a large extent, channelled through the process of legal works council participation. Some managers consider the works council a nuisance to the personnel function, or an unjustified expense, for instance regarding the costs of arbitration commissions {Einigungsstellen·, Oechsler, Schönfeld 1989) and works councils (Wauschkuhn 1985); there can be no question that, through the process of its involvement in conflict resolution, the works council does perform important parts of the personnel function itself. This is one of the pillars of social stability and of the economic efficiency of German capitalism. In recent years, the necessity of a more flexible, decentralized and individualized approach to personnel management has been recognized in Germany. However, the enthusiastic reception of "human resource management" apparently received in France or Britain is not shared in Germany. Two factors can explain a specific German response: - To a certain extent, German personnel management has always been concerned about human resources on all levels of the hierarchy. This can be attributed to the legacy of the dual system of apprenticeship training and a high concern for education on the part of major interest groups — the unions in particular. Since the influence of co-determination leads, in many cases, to a relatively stable workforce over time, it is quite rational for the employer to make the best of it and invest in human capital. - The existing balance of co-operation and conflict resolution between the employer and the works council is threatened by this new development.

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The works council may feel undermined in its own vested position, fearing a destabilization of the employment relationship, and a general trend against worker solidarity. The employer may be reluctant to promote a new approach because the result could be a certain ambiguity, if not radicalization, in dealing with the workforce. At present, new forms of co-operation in working arrangements are being carefully tested. After major unions' total opposition to quality circles, and similar instruments of direct worker involvement, there is today a much more experimental attitude. The works council tries to combine a robust framework that ensures the preservation of general rights, which, at the same time, leaves room for group and individual worker participation. A similar point can be made with respect to the implementation of working time reduction and flexibility systems at the enterprise level. In economic policy, despite its conservative government, Germany is far from having a militant programme of deregulation, cherished by other conservatives in the world (e.g. Thatcherism and Reaganomics). The same can be said for the level of the firm, where the tendencies towards increasing flexibility and decentralization are also taking a unique form.

2.2

Current Topics in German Personnel Management

As far as actual trends of the practice of personnel management in Germany are concerned, the Deutsche Gesellschaft fiir Personalfiihrung (DGFP — the German Association for Personnel Management), Germany's leading practitioners' association, is very important. The DGFP does not have the impact on the practice and professionalization of personnel management that, for instance, the Institute of Personnel Management has had in Britain. Its links with universities are comparatively weak. It is, however, the leading agency in specialist post-graduate training. It also serves as major clearing house for member companies through consulting, documentation and publication of comparative data, and organizes regionally and functionally specialized work groups (Erfahrungsaustausch). Since it is supported by most of the large companies, it has a high visibility in Germany. If one takes, as an indicator, the main topics of "Personalfiihrung (Personnel Management), the monthly journal of the DGFP, there can be no doubt that over the last three years, new challenges and innovative approaches concerning personnel management are dominant, just as they are represented in comparable British or French publications. The new role of personnel management, personnel marketing, personnel development, communication, continuing education, flexibility, internationalization of personnel problems, the role of personnel in ecological issues, co-operation between personnel de-

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partments and consultants are, in addition to some social policy issues, very well represented. These topics, and the way they are treated by their authors — mostly practitioners from leading German companies — may be representative of what is on personnel managers' minds in large firms and how they like to think about it. One can be doubtful whether it reflects general practice in Germany. Since the DGFP leans heavily on the large, well-established companies in Germany, there is in the Personalflihrung articles a strong bias towards the organization structure of the large firm and personnel management for the upper layers of the management hierarchy. As much as the DGFP publications and its activities truly represent one reality of German personnel management, there are other "realities" that should be looked at in order to reach a more complete picture. This will be illustrated briefly by three additional points: - The practice of personnel management in Germany is still very much characterized by juridification. Employment problems such as Kündigungsschutz (protection against dismissal), Einstufung (allocation of workers to jobs), or entitlement for fringe benefits, are processed through the legal framework which the Betriebsverfassungsgesetz (BetrVG, Works Constitution Act) and labour laws in general, provide. There are about 100,000 cases being brought to the labour courts every year, either by the employer or the individual worker, usually with the support of the works council. Almost half of these cases are related to dismissals (Diekmann 1983: 97). This may seem high by international standards. However, taking into account the ease, provided by the law, with which labour court action can be taken, the number is surprisingly low. The law represents rather a "control in being" that entices the parties involved to bargain for a compromise at the level of the firm, without running the incalculable risk of the vagaries of an outside decision. - The concern for sustaining productivity and technical competence on the shopfloor is accompanied, as it has always been, by a strong concern for the impact of new technology on job content and workers' skills. This concern is shared by engineers, union officials and employers' associations. This is particularly true for those sectors of the economy which are highly innovative and which are the backbone of Germany's strength on the world market. This concern is also shared by many small firms that are organized on traditional craft lines. As a result, job design and work organization are overwhelming topics in German personnel management. The search is for forms of organization which are compatible with the prevailing patterns of work attitudes and co-operation, in spite of the fact that the personnel department is scarcely involved in these matters. Work design is considered a prerogative of the production department, of engineers and work study specialists. It would be, in our view, an important issue for the personnel de-

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partaient to break through these traditional lines of compartmentalization, and to link the process of introduction of new technology with overall human resource strategy. It is interesting, in this respect, that leading German automobile manufacturers are heavily recruiting Wirtschafts-Ingenieure (engineers with additional training in business) for the personnel staff. - The employment policy of German firms is marked, on a comparative basis, by a relatively high stability of the workforce. Comparative research in the automobile sector revealed that compared to US firms, German companies did not match the output curve closely with their levels of employment. In a recession, the level of employment (Personalbestand) remained relatively high. When the economy picked up, companies were reluctant to hire new personnel and continued overtime for as long as possible (Köhler, Sengenberger 1983). The institutional framework (works council, labour market policy) has brought about instruments — from Kurzarbeit (shorttime work), via retraining, to Arbeitsbeschaffungsmaßnahmen (job creation programmes) and Beschäftigungsgesellschaften (emergency employment schemes) — which are quite uniquely German. These instruments are now being implemented and refined in coping with the crisis in East Germany. The result of this policy is a stable core of employees, with high job security and a variety of skills, that makes flexible deployment possible. This leaves another segment of the labour market which has increasing problems to get a permanent job. Although firms are increasingly using unprotected employment contracts to fill periodic vacancies, the extent of Leiharbeit (temporary work on loan), part-time work, and other forms of flexible employment, is still comparatively weakly developed in Germany (Gaugler, Krüsselberg 1986). This is a combined result of social law, wage rigidity, and labour union pressure. The density of union membership (Organisationsgrad) in Germany has not dropped as dramatically as in other West European countries. This is, of course, an ambiguous figure (Müller-Jentsch 1986: 84-89). Today, the net density of employed persons to the total labour force for Germany has remained relatively stable at around 34 per cent (Niedenhoff, Pege 1989: 320). It can be presumed that new arrangements of flexible working time will be an increasingly important topic in Germany. These will have to take into account both the increasing needs for more flexibility on the part of certain groups of workers (particularly women, whose employment participation rate is relatively low in Germany), and their protection against exploitation in unprotected labour contracts. Also, wage rigidity, combined with a high percentage of fringe benefit costs (Lohnnebenkosten) is an incentive for workers and small firms alike to circumvent the "official" contract. Fringe benefits, in Germany, average about 43 per cent of total labour costs but, in some sectors (banks, chemicals) up to 50 per cent. Illicit work (Schwarz-

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arbeit) is a major concern of both government agencies and employers' associations, particularly the chambers of artisans (Handwerkskammern).

2.3

HRM as an Academic Field

As an academic field, German personnel management usually takes the particular national institutional framework into account, but it also draws heavily from American sources and concepts. There is a bias towards large firms and their management perspective according to the practitioner's view in German textbooks on personnel management. The seemingly simple question of "what personnel managers actually do", cannot be sufficiently answered from this literature and, in most cases has not even been raised. There is a lack of detailed description, in-depth enquiry, and theoretical analysis of the every-day practice of the personnel function, the various agents and their interests and power bases, the interaction of personnel management and labour market conditions. The lack of information about processes and procedures in small and medium-sized companies is particularly striking. Personnel management, being closely linked to business economics (.Betriebswirtschaftslehre) in German institutes of higher education, shares the concern for applicability and practical "relevance". As much as this can be considered a strength, it has also led to a relative neglect of systematic empirical research at company level (Sadowski, Stengelhofen 1989: 113— 114). In an academic approach, HRM also lacks critical assessment. There is a huge agenda for future empirical research on personnel management in Germany. The concept of human resource management (HRM), for which a German translation does not yet exist, is gradually being recognized, but a complete departure from existing concepts and practices is apparently not considered necessary, neither by HR managers, nor by most academics. In this respect, Germany seems to be similar to Japan. Could it be that those who talk about principles of HRM the least actually do the most about it? With the launch of a new journal, Zeitschrift für Personalforschung (ZfP), in the late 1980s, the academic discussion of personnel problems and a more rigorous theoretical treatment of personnel issues have emerged. The fact that a recent issue of ZfP was entirely given over to doctoral dissertations in the field provides a clear indication of the turn towards new conceptual and theoretical problems (see Weber 1993). Quite a number of dissertations are based on the new institutional economics (agency problems, constitution of the labour market, etc.). This interest in new theoretical approaches has also been reflected in the topics of the meetings of the Kommission Personalwesen im Verband der Hochschullehrer für Betriebswirtschaft, the scholarly association of researchers and professors in the field.

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The recent move towards new theoretical foundations and approaches resembles similar trends in Britain, with the controversial discussion on concepts of HRM (e.g. Blyton, Turnball 1992), or in France within the AGRH (e.g. Brabet 1993).

3

New Challenges for German HRM: Re-unification Issues and Impacts of EU Initiatives

3.1

Issues Arising from Re-unification

East German HRM has been and still is closely connected to the transformation of a centrally-planned economy into the so-called social market economy. In this context, the labour market situation and the adjustment of living standards and real incomes to Western standards are, by far, the issues of greatest concern. Firstly, the question was if and how the social consequences of the macroeconomic adjustment process could be facilitated by personnel management concepts. Secondly, it was necessary to examine whether those concepts would also create a framework and develop techniques for retraining the East German workforce in order to enable it to live and act in a market economy (Pieper 1990a: 2-3). 3.1.1 Personnel Management and Unemployment Production and employment structures in the GDR (German Democratic Republic) were, in contrast to capitalist economies, highly influenced by political decisions of the party, the Sozialistische Einheitspartei Deutschlands (SED) (Voskamp, Wittke 1990: 14; Pieper 1990b: 10-11). This led to a high level of monopolization of industries, sometimes to the extent that only one company (Kombinat or VEB) existed in an industry or industrial sector. This company then developed a technology which made it largely self-supporting (Voskamp, Wittke 1990: 16-18). Companies with more than 1,000 employees counted for almost 70 per cent of the industrial workplaces ('Wirtschaftswoche, 22.3.1991). The first HRM steps after re-unification were either the closing of production facilities or large labour force reductions in an attempt to raise productivity. Therefore, one of the major differences in the East German economy was the appearance of unemployment since re-unification. Article 24 of the GDR constitution gave every citizen a right to work. Unemployment, by definition, was not possible.3 The results of the reorganization of the non-competitive production structure in East Germany were contrary to the labour market developments in

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the old Länder or states (Lipschitz, Me Donald 1990). The consumption boom from East Germany overshadowed the overall economic crisis in the West. In the old Länder, unemployment fell from 1.81 million to 1.67 million between August 1990 and August 1991. During the same period, unemployment in the five new Länder rose to 1.06 million. In addition, another 1.4 million workers were working short-time, 58 per cent of them less than half of the official weekly working hours (Bundesanstalt für Arbeit 1990: 1480; Bundesanstalt für Arbeit 1991: 1510-1511). After three years of re-unification 1.17 million workers were still unemployed in the East, and another 0.6 million were participating either in retraining or job creation programmes (Bundesanstalt für Arbeit 1993: 1866 and 1903).4 Also, the prospects for re-employment are still not the same in West and East Germany: approximately nine unemployed workers in the West are competing for every vacancy, compared to approximately 30 unemployed workers in the East. As the goal of full employment has always been strongly emphasized in German economic policy, it was clear that the labour market problems described above in the five new Länder could not be resolved by market forces and traditional interventions. On the contrary, the transformation process had to be supported by new concepts which allowed for retaining labour in the working process during the period of the economic downswing. It was not sufficient to help people to become employed. They also had to be reoriented, retrained, and requalified. The concepts employed should therefore guarantee the workers' social well-being, as well as retrain them for modern western technologies (Feuchthofen 1991: 189-190). The measures used to achieve these objectives had been quite consistent with the German HRM traditions. They implied the co-operation of employers' associations, trade unions and state authorities, especially the Treuhandanstalt (the holding group for all GDR-companies), who are all committed, in different ways to the goal of full employment. While those organizations do not see any alternative to further education and retraining, different opinions had been voiced as to how the various schemes should be implemented. The resulting "Temporary Employment Scheme" (.Auffanggesellschaft), "Emergency Employment Scheme" (Beschäftigungsgesellschaft) and "Retraining Scheme" (Qualifizierungsgesellschaft)5 were based on models demanded by the metal workers' union (IG-Metall) in the mid 1980s for the steel crisis in the Ruhr and Saar regions (Feuchthofen 1991: 188). Those schemes are generally defined as institutions for all those workers who are affected by redundancy measures. The employment contract is not terminated, but is transferred to the new institution, where the workers receive further education or are retrained for future jobs. The implementation of these schemes raised a number of problems. The first problem was defining the standards of retraining. Secondly, inappro-

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priate incentives were being set for those who were willing to be trained. They received only 68 per cent of their former income, as compared to 90 per cent if they remained unemployed. Thirdly, these schemes were not linked to the employer, so they were more or less fully financed by the government. Fourthly, trade union involvement between the various economic sectors differed. Today, after three years of implementation, these measures are being heavily criticized, because they could not prevent the collapse of production and the labour market. The creation of new production facilities is being hindered by the protection of old industrial structures (Hankel 1993: 160). 3.1.2 Leadership Patterns, Performance and Pay In the past, comparative management researchers did not regard Eastern Europe as an important field of study. If they did so at all, West German studies concerned Poland and Hungary, rather than the GDR (Pieper 1989a: 2-5). Empirical investigations in the GDR itself generally were expected by the government to serve as agitation and propaganda and were not intended to further scientific knowledge in a Western sense (Andersch-Niestedt, Lilge 1981; Pieper 1989b). Thus, any descriptions and analysis of the history of personnel management in the GDR are based on publications of East German authors, who reflected on previous practice after the re-unification, on 3 October 1990 (see for further reading Scholz 1990). Personnel management in the GDR focused on two major topics: Kaderarbeit (selection and induction of the political and managerial elite) and Sozialpolitik (social welfare) (Pieper 1990a: 1). Kader were senior and junior managers in the company, as well as in party and state institutions. The recruitment and selection of these managers was more influenced by their political attitudes and affiliations than by their professional knowledge. The main objective of the Kaderarbeit was the production of the leading political and societal elite (Pieper 1990b: 34-38). Sozialpolitik was used in a broad sense. It comprised traditional fields like occupational health and welfare; training and education of the workforce; social integration of the disadvantaged; and fringe benefits such as company housing, subsidized meals, childcare, kindergarten and holiday camps. The company in the GDR was understood as a social security institution, which compensated for ineffective public social security. It provided basic services for the social welfare of the workers and their families for all their lives. The company also served as an important socializing agency. It was a source of identity and social relations. The social character of the company, combined with the lack of market-induced efficiency measures, also explains the high female employment participation, compared to Western countries (Ziegenbein 1990: 91-92).

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After the re-unification, Kaderarbeit had to be replaced by HRM strategies based on economic, rather than on political criteria. Training, promotion and selection of senior and junior managers had to be based on the interest of the company rather than on the vague concept of "interest of society". This has led to a severe shortage of managers in East German companies. Due to the comparatively bad living conditions there and the high risk of failure, it was very hard to entice West German managers to fill the vacancies. Parts of East German Sozialpolitik match the West German Humanisierung der Arbeit programme (humanization of work scheme) (Altmann, Diill, Lutz 1987), but knowledge about the reality of Sozialpolitik remains sketchy, due to the lack of empirical research. There are, however, a number of practical measures and theoretical concepts on the humanization of work which were exemplary and which would be worth maintaining and pursuing (Hacker 1978; Hacker, Hallersleben, Teske 1989). With reunification, fringe benefits in most companies were cut for cost reasons. Because of their former importance, this is a source of insecurity and even anger on the part of the workforce. It is very hard to generalize about working relations on the shop floor. Apparently, there was a peculiar "(un-)productivity" pact between workers and first-line supervisors. Since the regime was dependent on production output, and since the party (SED) was highly suspicious of potential unrest among workers, the production workers held, in fact, considerable power. Due to poor logistics and shortages of material and parts, there were periods of very low work activity, followed by periods of excessive activity, resulting in considerable overtime and weekend working. This situation was used by the workers to raise their earnings with overtime premiums, so pay levels for production work were relatively high. In fact, the real income of the worker was very often higher than that of the supervisor, who had to take the blame for not meeting production standards and deadlines. Very often the superviser, being a party member and potential Kader, was also under pressure from political officials. In practice, workers adapted to these often absurd circumstances in a quite rational, though cynical, way. Their power was insufficient to change anything, but they held considerable power of obstruction and passive resistance. This peculiar relationship had to be threatened and broken up after the reunification. Management control had to be enhanced and standards had to be enforced. Since this had been done, two different developments have been noticed. On the one hand, as management takes place through the existing lines of authority, and with the same supervisors, there seems to be a tendency towards "retaliation". First-line supervisors became very authoritarian. At a time when traditional control structures and Tayloristic work organization are on the retreat in Western countries to allow for more worker

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responsibility and involvement, the way in which the climate on the shopfloor in the Eastern Länder is changing may be disastrous to an intelligent and efficient deployment of modern production technology, which is so much dependent on self-motivated, co-operative workers. On the other hand, Heering and Schroeder (1993: 358) argue that a market economy requires certain preconditions in order to function. Deficiencies in institutional, behavioural and mental terms might undermine formal structures through informal arrangements. This undermining still occurs because the old networks in the East German companies have not been fully destroyed. In the 1960s and early 1970s, HRM in the GDR was based on a socialist definition of human nature; the intrinsic motivation of the workforce for high job performance was assumed. Subsequently, as the deficiencies of this ideology could no longer be ignored, materialistic incentives such as performance related pay were introduced, and became equally important alongside political measures (Pieper 1989b: 222-228). We should, therefore, find a differentiated pay structure in the five new Länder, which would be closely connected with both qualification and performance (AnderschNiestedt, Lilge 1981: 94-97; Pieper 1990b: 17-23). However, a first investigation into this question, by Stephan and Wiedemann in 1988, showed an undifferentiated salary structure (Stephan, Wiedemann 1990). Today's main problem with performance-related pay is not so much the former pay structure, but the differences in pay for comparable jobs between East and West Germany. To curb the migration of young, well-educated workers from East to West Germany, a rapid adjustment of the level of pay in the East to Western standards was and still is essential. However, this puts the firms in the East in an awkward situation. They are starting to have to carry the high cost burden of West German firms without having reached a comparable productivity, market position and degree of innovation. In this hotly debated issue {Handelsblatt, 20.6.1991), employers' associations and trade unions had agreed upon wage settlements, in which East German wages should attain about 60 per cent of the comparable West German wage. By the end of 1992, the average East German worker, in the industrial sector, received only 58,2 per cent of the gross income of his or her West German counterpart (WSI Informationsdienst, No. 3, 1993, p. 3). Nevertheless East Germany is the only part of the former Eastern bloc where living standards and real incomes improved after the fall of the Iron Curtain. 3.1.3 Industrial Relations at the Workplace All aspects of economic and social life in the GDR were highly influenced by the political system. This was also true for industrial relations. The FDGB (Freier Deutscher Gewerkschaftsbund, Free German Confederation

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of Trade Unions) was less a union to promote basic workers' economic interests, but more a political institution to ensure the socialistic attitudes and behaviour of the workforce. Employer-employee bargaining was not present on any level, so there was no tradition of collective bargaining. Employee representatives on the shopfloor were in a situation of role conflict between political and societal interests on the one hand, and the economic and social requirements of the company and/or the employed workforce on the other hand. Due to dependence on central control and planning, the role conflict was generally solved in favour of political requirements. That is why former employee representatives lost their credibility within the workforce (Lang 1990) and a whole new representative structure had to be built up. In order to implement the West German system of co-determination, it was necessary to rebuild works councils and create a new trade union structure. These bodies faced challenges, including learning their new rights and responsibilities under the Works Constitution Act, negotiating with management the terms and shape of new production and work organization and, in particular, negotiating the terms of massive layoffs, not only with management and employers, but also with state authorities (Jürgens, Klinzing, Turner 1993: 233). The GDR had an independent labour code, which was ideologically linked to the socialist system. A similar code does not exist in the West, and some authors conclude that the different sources of the West German labour legislation are a great disadvantage (Kunz 1990: 309). The main difference in labour legislation between the two countries was that, in the Federal Republic only minimum standards are established. On these bases, negotiations take place between employers' associations and trade unions, and between an employer and a works council in order to settle conflicts, set standards and wages. This results quite often, particularly in the large firms, in standards above the legal minimum. In the GDR, standards were universally fixed. Individual rights in the West are closely connected to individual labour market risks. Those workers whose dismissal would result in a lower social status, or inflict a particular hardship on them (e.g. unemployment) are especially protected. In the GDR, dismissal as a disciplinary instrument had no power, due to the right to work and the non-existence of unemployment. Legal protection against dismissal therefore did not exist. Consequently, there was a general feeling of legal uncertainty in the East German population, as changes in the former East German labour legislation became obvious (Kunz 1990: 309).

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3.2

Impacts of EU Initiatives

3.2.1 Internationalization of German Industry As in all member states, the completion of the Single European Market (SEM) by 1993 attracted a great deal of public attention in Germany. However, as far as German companies are concerned, 1993 was considered less significant as a turning point. This is partly due to the fact, that for many export-oriented German firms the SEM has resulted in only a slight variation of their international affairs, particularly since Germany's Western neighbours, France and the Benelux, have been its most important markets for quite some time. In domestically oriented firms, the SEM has more or less been ignored. This is also reflected in HRM in Europe. However, the neglect of the repercussions of the SEM, and the attitude of the international German firms of "being there" already, may prove to be a severe mistake. In addition, one might get the impression that German firms are still very ethnocentric, compared with similar companies in the Netherlands, Scandinavia, or Great Britain. Although it is difficult to prove this point with hard facts, for German firms it is almost inconceivable not to control the central technological processes and the finance department of a foreign investment. Apart from the HRM issues of an accelerating Europeanization, which will not be dealt with here, attention should also be drawn to certain repercussions of the EU on domestic HRM problems, concerning Germans, particularly in the areas of employment and the maintenance of existing social standards. 3.2.2 Influence of EU Regulations on East Germany The EU has regulated a number of markets, for instance, the agriculture and steel market. Therefore, production quotas exert a high level of influence on employment in the regulated sectors. This is true for all member states. In this context, the re-unification of Germany, which was also the starting point for the integration of the five new Lander into the EU, produced some strange results: - All EU regulations, for example, on technical construction of products, consumer and environmental protection, came immediately into power after re-unification. Exceptions to these regulations during an adjustment period of two years, were only allowed if the products were sold solely on East German markets. Exports of these products were forbidden (Werner 1991: 151). As East German consumers preferred Western products, these products could not be sold at all. - Take-overs of East German companies by Western investors might have led to a market dominating position. Therefore, these mergers were under the

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control of the EC commission (Werner 1991: 146). This was in conflict with the objective of selling East German companies to Western investors in order to protect employment and to restructure industry. One example of the difficulty of attempting to rescue East German companies (and workplaces) was the acquisition of EKO-Stahl, at Eisenhüttenstadt, by the Italian company RIVA (Die Welt, 18.12.1993). In order to get the permission of the EC commission, RIVA had to reduce their capacity by two million tons elsewhere. - Financial interventions by state authorities and government were also under control and permission of the EU commission. As these interventions had to be compatible with EU competition regulations, government intervention was restricted (Werner 1991: 146-147). These examples demonstrate, that the adjustment process for the East German economy was more difficult than expected. Due to EU regulations, an unexpected intensification occurred in labour market problems and adjustment difficulties. 3.2.3 Protecting Social Standards As far as social issues are concerned, Germany is particularly concerned with the fear of "social dumping", the potential consequence of considerable differences in social standards among EU members. The term social dumping refers to two related problems: firstly, the fear that countries with lower production and social costs, such as Portugal, may undercut the costs of German firms and put pressure on them to lower social standards; and secondly, the related tendency of German firms to remove production facilities to the South of Europe, thus causing unemployment at home. This fear is the reason for the German government's persistence regarding the passing of the Social Charter and its insistence on a strict enforcement of its stipulations. This goal has not been achieved: the Social Charter has so far remained an unbinding resolution of not even all the member states. As a result, there will be pressure on Germany to weaken social policy regulations. Also, the Germans have had to learn that their regulation of worker participation, which they consider superior to most other systems in Europe, is not universally accepted and sometimes not even wanted by those who could benefit from it. Also, the proposals for the regulation of European industrial relations by the Commission, originally based on the German system, have been watered down considerably over the years. Most of them indeed have not been put into action (Wächter, Metz 1993). Nevertheless, adjustment to the challenges of the wider European market can also take place in the system of co-determination. Despite the detrimental effects on employment and, to a certain extent, on the German way of

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industrial development and industrial relations, the flagships of German industry, such as Daimler and Siemens, have heavily invested in new production facilities in Germany and not in the South of Europe. These decisions have not been reached without concessions from labour regarding cost cutting exercises. They will have a certain influence on both Germany's social conditions and traditional ways of bargaining.

4

Future Prospects of HRM in Germany

Traditions and historical experience led West Germany to opt for a type of market economy after the war which has become, under the label of "social market economy" (Soziale Marktwirtschaft), a symbol for prosperity and relative social stability. The practice of personnel management in German firms reflects this. The impact of a "social dimension" on economic decisions, a concern for building up human capital in the firm, and worker participation, are generally accepted by all parties involved, in spite of major differences in putting them to work. This shapes the daily practice of personnel management. A striking feature of German firms is their elaborated internal labour market, due to high barriers against lay-offs and extensive involvement of works councils in decisions on the level of employment. Job security, and the relatively high wages and salaries earned in Germany, are compensated for by high labour productivity, a flexible adjustment of the workforce to new requirements, and a relatively constructive way of resolving conflicts through negotiations between capital and labour at the company level. However, the employment effects of the more severe recessions and structural changes that Germany has experienced (like all the other industrial countries over the last ten to 15 years) go increasingly beyond the problemsolving capacity of the negotiation system at the company level. Thus, a closer co-operation with the Arbeitsamt (labour office) and regional state agencies has been established. The experience from this, and the instruments that ensued, meet a much more severe challenge in overcoming employment and social problems in those parts of Germany which previously formed the German Democratic Republic GDR. The various employment schemes in which companies and unions co-operate and which are heavily subsidized by state agencies, have become an important feature of economic and social policy in East Germany. The spread of the employment schemes has not been limited since 1989. Prior to 1989, it was heavily disputed on ideological grounds. Today, this has changed significantly. For the future, it is hardly conceivable that in an industrial crisis, for instance the automobile sector, the instruments, which

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are being developed under the special conditions of the labour market in East Germany, will not be heavily used elsewhere. The employment schemes (Beschäfiigungsgesellschaften) are definitely having a positive impact on social stabilization. Under favourable circumstances they can also have a positive economic impact on strategic planning and thus help to create new jobs, or secure existing ones. However, they could also be in the way of structural change and might just figure as a disguise for unemployment of the poorly motivated and less qualified workers. The trend may signal a departure from the doctrine that the state should mainly provide a framework in which the parties involved reach a fair compromise, but should not be implicated directly through subsidies in the restructuring process. Arguably, Germany would then look more like France, at a time when France itself is trying to move away from its traditional heavy state intervention in economic affairs. The approach to the economic and social problems of East Germany, as unique as these problems may appear, does nevertheless, follow lines that are performed by German traditions and institutions; e.g. the founding of the Treuhandanstalt holding company as an intermediate agency, being neither fully state nor privately organized, is quite in the tradition of German corporatism. In addition to the consequences of re-unification, a new phase of labour migration (for details see Klauder 1993) puts further pressure on the labour market. The inflow of refugees (Flüchtlinge) after the Second World War and of foreign workers (Gastarbeiter) in the 1960s and early 1970s was one of the preconditions for the Wirtschaftswunder (economic miracle). Due to the labour market problems after the first oil crisis in 1973 a ban on recruitment (Anwerbestopp) of foreign workers from non EU-countries was put into practice. Although this ban still holds, other sources of labour migration have appeared within the last four years. On the one hand, the number of emigrants of German origin (Aussiedler) from Eastern Europe increased after the fall of the iron curtain.6 On the other hand, the number of asylum applicants (Asylbewerber) from the third world rose dramatically. The unification of Germany may provide an explanation for the current labour migration into Germany. It has served Western Germany a massive public deficit, but one which has spurred the economy at a time when the rest of the industrialized world was sliding into a substantial recession. This recession, however, caught up with Germany only two years later and is now causing an economic slump unknown in Germany since 1949. The experience of this unexpected deep recession provides the background for a far-reaching discussion about the structural problems of the German economy. The competitiveness of Germany as a location for new investments (discussed under the label Standort Deutschland) is being questioned and lack of innovation and a pressing need for modernization is being diag-

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nosed, but it is the problem of high labour costs which has received the most attention and is at the bottom of all current economic discussions. Since the funding of social benefits is predominantly based on direct labour costs, the acceleration of unemployment and the increase of early retirement schemes puts a very high burden on labour costs. Because the neo-classical project to reduce labour costs would be unacceptable in Germany, German firms and bargaining partners have to find ways of reducing costs while still maintaining the basic social consensus and a level of social security that meets public expectation. The traditional reactions to unemployment (short-time work, early retirement, compensation for mass lay-offs) are only of limited value in the present situation, because public spending on these programmes has been reduced and because of a lack of the cost-reducing effects expected for the firms. As a result, new plans and instruments are needed. Cost-reduction programmes, reduction and flexibility of working-time pose new challenges to HRM at the company level. The results of the current efforts to reach agreements with work councils and unions will change both the future direction of such programmes and the future negotiation patterns. The cost reduction programmes and productivity pacts in Germany's large automobile factories have had the most important impact on the public debate. The agreement in the Volkswagen concern (VW) has particularly caught the public attention. VW has reduced working time by 20 per cent for all employees with a respective cut in wages.7 The reasons why VW has pursued the strategy to retain all personnel by cutting each individual's working-time and income ("Costs instead of heads", was the slogan under which this programme has successfully mobilized support among the employees) can be seen in the following developments: - The agreement was reached very rapidly without the usual ritual of prolonged bargaining which might have taken another year. Speed has saved considerable costs. - As in the whole of industry, VW has introduced new forms of work organization with greater group autonomy and higher levels of individual responsibility. It would have been disastrous to the success of this programme if, at the same time, the security of the workplace of a considerable portion of the workforce had been threatened. The dilemma of HRM, i.e. demanding employee commitment, yet undermining basic security needs (Legge 1989: 29), has been recognized by this company and possibly been resolved. - VW is the major employer in a region which is not highly industrialized. Such a company is expected to carry considerable responsibility for the regional labour market. The VW strategy may be the result of a specific situation of this company. Still, the agreement can be seen as a signal for wage concessions which two or three years ago were unthinkable. It has also spurred the debate on work-

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ing-time in Germany, a topic already hotly debated in the 1980s. The agreement may also pave the way for future negotiations between companies and worker representatives. Unlike the traditional division of labour between collective agreements on wages and labour conditions on the branch level, and the situational adjustment through negotiations within the firm, there will be a major shift towards negotiations on the company level. This creates a whole new agenda both for HRM specialists and for works councils. The picture will be more diverse, there will be more flexible and firmspecific agreements. The role of trade unions in this development will also have to be redefined. HRM meets new challenges. New intelligent solutions to employment problems and working-time schedules have to be found that meet both the need for an increase in efficiency and the maintenance of social peace and justice, an expectation with deep roots in German society.

Notes 1

'

These will be briefly discussed here, but for an English-speaking audience a good background picture of the practice of management in Germany is given by Lane (1989) and Lawrence (1980). For an historical comparison of different developments in the industrialized countries see Trebilcock (1981). The major research in this area has been done by LEST (Maurice, Sellier, Silvestre 1986). For a more detailed description of the economic and labour market developments in East Germany between 1989 and 1992 see Bach (1993). Figures from August 1993; unemployment rate 16.2 per cent. For a more detailed description of these schemes see Knuth (1992). For further information on the integration of emigrants see Koller (1993). For an analysis of the importance of this agreement see Meinhardt, Stille, Zwiener (1993).

References Altmann N., Diill K., Lutz Β., Zukunftsaufgaben der Humanisierung des Arbeits lebens, Campus, Frankfurt-on-Main 1987. Andersch-Niestedt H., Lilge H.-G., Betriebliche Führung im Vergleich, Spies, Berlin 1981. Bach H. W., Synopse der ökonomischen und arbeitsmarktpolitischen Entwicklung in Ostdeutschland 1989 bis 1992, in: Sozialer Fortschritt, 1993,Vol. 42, No. 1, pp. 3-10. Blyton P., Turnbull P. (eds.), Reassessing Human Resource Management, Sage, London 1992. Brabet J. (ed.), Repenser la Gestion des Ressources Humaines?, Economica, Paris 1993. Bundesanstalt für Arbeit (ed.). Amtliche Nachrichten der Bundesanstalt für Arbeit (ANBA), Vol. 38, No. 10, Bundesanstalt für Arbeit, Bonn 1990. Bundesanstalt für Arbeit (ed.), Amtliche Nachrichten der Bundesanstalt fir Arbeit (ANBA), Vol. 39, No. 10, Bundesanstalt für Arbeit, Bonn 1991. Bundesanstalt für Arbeit (ed.), Amtliche Nachrichten der Bundesanstalt fir Arbeit (ANBA), Vol. 41, No. 10, Bundesanstalt für Arbeit, Bonn 1993. Diefenbacher H., Nutzinger H.G. (eds.), Mitbestimmung — Probleme und Perspektiven der empirischen Forschung, Campus, Frankfurt-on-Main 1981.

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Diekmann J., Empirie betrieblicher Kündigungen und Arbeitsgerichtsbarkeit, in: Ellermann-Witt R., Rottleuthner H., Russig H. (eds.), Kündigungspraxis, Kündigungsschutz und Probleme der Arbeitsgerichtsbarkeit, Westdeutscher Verlag, Opladen 1983, pp. 97-111. Feuchthofen J.E., Qualifizierungsgesellschaften — Hit oder Kinder in der Not?, in: Grundlagen der Weiterbildung, 1991, Vol. 2, No. 4, pp. 187-190. Fürstenberg F., Industrial Relations in the Federal Republic of Germany, in: Bamber G., Lansbury R.D. (eds.), International and Comparative Industrial Relations, Allen & Unwin, London 1987, pp. 165-186. Gaugier E., Krüsselberg H.-G., Flexibilisierung der Beschäfiigungsverhältnisse, Duncker & Humblot, Berlin 1986. Hacker W., Allgemeine Arbeits- und Ingenieurpsychologie. Psychische Struktur und Regulation von Arbeitstätigkeiten, Huber, Berlin 1978; 2nd edition. Hacker W., Hallensieben K., Teske S., Human-centered CAM Requires Reorganisation: A Psychological Case Study on System Design, and Some General Conclusions, in: Teikari V., Hacker W., Vartiainen M. (eds.), Psychological Task Analysis, Design and Training in Computerized Technologies, Working Papers of Dresden-Ontaniemi Workshop, Ontaniemi 1989. Hankel W., Marktwirtschaft für den deutschen Osten, in: Gewerkschaftliche Monatshefte, 1993, Vol. 44, No. 3, pp. 159-170. Heering W., Schroeder K., Ostdeutsche Arbeitsbeziehungen zwischen ökonomischer Transformationskrise, neuer arbeitsrechtlicher Normierung und alten Sozialbeziehungen, in: Arbeit, 1993, Vol. 2, No. 4, pp. 357-374. Hoffmann R.-W., Wissenschaft und Arbeitskraft, Campus, Frankfurt-on-Main 1985. Jürgens U., Klinzing L., Turner L., The Transformation of Industrial Relations in Eastern Germany, in: Industrial and Labor Relations Review, 1993, Vol. 46, No. 2, pp. 229-244. Klauder W., Zu den demographischen und ökonomischen Auswirkungen der Zuwanderung in die Bundesrepublik in Vergangenheit und Zukunft, in: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, 1993, Vol. 26, No. 4, pp. 477^94. Knuth M., Eine Brücke zu neuen Ufern?, in: Sozialer Fortschritt, 1992, Vol. 41, No. 8, pp. 177183. Köhler C., Sengenberger W., Konjunktur und Personalanpassung, Campus, Frankfurt-on-Main 1983. Koller B., Aussiedler nach dem Deutschkurs: Welche Gruppen kommen rasch in Arbeit, in: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, 1993, Vol. 26, No. 2, pp. 207-221. Kunz F., Arbeitsrecht und Vereinigung beider deutscher Staaten, in: WSI-Mitteilungen, 1990, Vol. 43, No. 5, pp. 308-312. Lane C., Management and Labour in Europe: The Industrial Enterprise in Germany, Britain and France, Edward Elgar, Aldershot 1989. Lang R., Industrielle Beziehungen: Strukturen und Handlungsmuster in DDR-Betrieben vor und nach der Wende; Paper for the conference Industrielle Beziehungen und sozialer Wandel in Mittel- und Osteuropa, University of Bielefeld, Bielefeld 1990. Lawrence P., Managers and Management in West Germany, Croom Held, London 1980. Legge K., Human Resource Management: A Critical Analysis, in: Storey, J. (ed.), New Perspectives on Human Resource Management, Routledge, London 1989, pp. 19-40. Lipschitz L., Mc Donald D. (eds.), German Unification — Economic Issues, International Monetary Fund, Paper 75, Washington 1990. Locke R.R., The End of the Practical Man — Entrepreneurship and Higher Education in Germany, France and Great Britain, 1880-1940, JAI Press, Greenwich, Conn. 1984. Lutz Β., Education and Employment: Contrasting Evidence from France and the Federal Republic of Germany, in: European Journal of Education, 1981,Vol. 16, No. 1, pp. 73-86. Maurice M., Sellier F., Silvestre J.-J., The Social Foundations of Industrial Power, MIT Press, Cambridge, Mass. 1986. Meinhardt V., Stille F., Zwiener R., Weitere Arbeitszeitverkürzungen erforderlich — Zum Stellenwert des VW-Modells, in: Wirtschaftsdienst, 1993, Vol. 73, No. 12, pp. 639-644. Müller-Jentsch W., Soziologie der industriellen Beziehungen, Campus, Frankfurt-on-Main 1986.

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Niedenhoff H.-U., Pege W. (eds.), Gewerkschaftshandbuch, Deutscher Instituts-Verlag, Cologne 1989. Oechsler W.A., Schönfeld, T., Die Einigungsstelle als Konfliktlösungsmechanismus, Kommentator-Verlag, Frankfurt-on-Main 1989. Osterman P., Choice of Employment Systems in Internal Labor Markets, in: Industrial Relations, 1987, Vol. 26, No. 1, pp. 46-67. Pieper R. (1989a), Einleitung: Betriebswirtschaftslehre und DDR-Forschung, in: Pieper, R. (ed.), Westliches Management — Östliche Leitung, de Gruyter, Berlin 1989, pp. 1-12. Pieper R. (1989b), Leitungswissenschaft und Managementlehre — Ansätze eines Vergleichs aus Sicht der Managementlehre, in: Pieper R. (ed.), Westliches Management — Östliche Leitung, de Gruyter, Berlin 1989, pp. 193-245. Pieper R. (1990a), Einleitung, in: Pieper R. (ed.), Personalmanagement — Von der Plan- zur Marktwirtschaft, Gabler, Wiesbaden 1990, pp. 1-4. Pieper R.(1990b), Personalmanagement und personalwirtschaftliches Wissen in der DDR — Versuch einer Bestandsaufnahme, in: Pieper R. (ed.), Personalmanagement — Von der Plan- zur Marktwirtschaft, Gabler,Wiesbaden 1990, pp. 7-48. Sadowski D., Stengelhofen T.,Betriebswirtschaftliche Theorie und Empirie der Nichtlohn-Arbeitskosten am Beispiel der Fluktuation der Arbeitnehmer, in: Emmerich K., Hardes H.-D., Sadowski D., Spitznagel E. (eds.), Einzel- und gesamtwirtschaftliche Aspekte des Lohnes, Nuremberg 1989; BeitrAB 128, pp. 103-116. Scholz C., Personalwirtschaftliche Probleme in der DDR — eine einführende Problemskizze, in: Zeitschrift ftir Personalforschung, special issue "Personalwirtschaftliche Probleme in DDR-Betrieben", 1990, pp. 7-17. Stephan H., Wiedemann E., Lohnstruktur und Lohndifferenzierung in der DDR, in: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, 1990, Vol. 23, No. 4, pp. 550-562. Trebilcock C., The Industrialization of the Continental Powers 1780-1914, Longman, London 1981. Voskamp U., Wittke V., Aus Modernisierungsblockaden werden Abwärtsspiralen — zur Reorganisation von Betrieben und Kombinaten der ehemaligen DDR, in: SOFI-Mitteilungen, 1990, No. 18, pp. 12-30. Wächter H., Mitbestimmung, Vahlen, Munich 1983. Wächter H., Metz T., Industrielle Beziehungen, in: Gerum E. (ed.), Handbuch Unternehmung und Europäisches Recht, Schäffer-Poeschel, Stuttgart 1993, pp. 125-156. Wauschkuhn P., Kosten des Betriebsrates, Sauer, Heidelberg 1985. Weber W. (ed.), Personalforschung an Hochschulen, in: Zeitschrift ßr Personalforschung, 1993, Vol. 7, No. 3. Werner H., Die deutsche Einigung, die europäische Integration und die Vollendung des Europäischen Binnenmarktes, in: Walwei U., Werner H. (eds.), Beschäftigungsaspekte und soziale Fragen des EG-Arbeitsmarktes, Nuremberg, 1991, BeitrAB 142, pp. 141-153. Ziegenbein Α., Betriebliche Personal- und Sozialpolitik in der DDR in der Umgestaltung, in: Pieper R. (ed.), Personalmanagement — Von der Plan- zur Marktwirtschaft, Gabler, Wiesbaden 1990, pp. 89-99.

Greece Nancy Papalexandrìs

1

Introduction

Following the Maastricht Treaty, efforts to meet the challenge of the European integration are being made by all member states of the European Union (EU). These efforts and their successful outcomes are of vital importance, particularly for the economically weaker countries of the community. As one of them, Greece is faced with the necessity of rethinking its policies and strategies, in both the private and public sectors of its economy. All the functions of enterprises (marketing, finance, production) are being re-examined, restructured, and adjusted in order to meet the forthcoming changes. In view of the above, it is evident that the adoption a successful strategy in any economic sector or organization depends largely on the human resources. Many Greek firms, especially larger ones, seem to have realized this to a considerable extent. Human resource policies and practices are being re-examined in general. But, in particular, Greek firms are trying to adopt methods and techniques already successfully applied by multinational companies (MNCs) operating in the country. At the same time, there is a strong movement towards introducing human resource management (HRM) in the public sector. This article will aim: - to present an overall picture of the current state of HRM in Greek organizations, in both the private and public sectors; - to describe the impact of EU initiatives on employment practices and human resource management; - to anticipate future prospects as they appear to be emerging from the country's full integration into the European Union, and the gradual but inevitable removal of borders between its member-states.

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Human Resource Management in Greek Organizations

Human resource management has received an ever-increasing amount of attention during the past two decades in the highly industrialized countries of the world. This has resulted in a situation where the personnel function has come to be regarded as being of equal importance for production, finance or marketing. In many instances, top managers are heard to maintain, in public, that the key factor to their firm's success can be found in the quality of their human resources. In Greece, some formalized personnel activities in the selection, appraisal and remuneration have already been implemented in the larger private and public sector firms for a considerable period of time. However, these activities have not so far been geared towards assisting individuals to develop their potential, or to make a significant contribution to their organizations' effectiveness as a result of increased job satisfaction. In the early 1960s, there was a spectacular upturn in the economy, following the Association Agreement of Greece to the EEC and the influx of foreign multinational firms which invested in the country. Foreign firms provided a challenge to the attitudes of Greek company owners concerning the practice of management in general and HRM in particular. MNCs started successfully using sophisticated management staffing techniques of which Greek firms were unaware at that time. Greek firms followed their example only at a rather slow pace until the start of the 1980s. Research studies covering this period (Greek Management Association 1972, Georgoulis 1978, Hassid 1977) showed, that compared to other management functions, HRM seemed to lack sophistication, and the application of modern human resource management practices was rather limited. This was seen as a reason for the low level of organizational effectiveness of Greek firms at the time (Hassid 1980). In the 1980s, and following Greece's full membership to the EEC the situation seemed to change, as some large and progressive Greek firms applied HRM similarly to the MNCs operating in Greece. A research study (Papalexandris 1986) was conducted in 1986 among 25 medium-large (100-499 employees) and 25 very large (more than 500 employees) manufacturing firms in the private sector. Its main objective was to identify the methods by which companies recruit, select, appraise, promote and train their managers. A follow-up study in 1988 examined a paired sample of 5 larger Greek and 5 multinational manufacturing firms (Papalexandris 1991). A survey in 1989 studied 272 firms operating in Greece belonging to all sectors of the economy (manufacturing, trade, banking, insurance, transportation, shipping, tourism, construction and various other services). These firms were selected because they had specifically developed a personnel

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function, employing managers to deal exclusively with personnel matters (Kanellopoulos 1990). Finally, a detailed survey was carried out in Spring 1993 within the framework of Jhe Price-Waterhouse Cranfield Project on international strategic human resource management. This survey covered 126 firms, employing more than 150 employees, and used a questionnaire developed by academics at Cranfield University in collaboration with a number of institutions throughout Europe. Based on these surveys, as well as on information about the Greek managerial context in general, an overall picture of HRM activities can be presented. The term HRM will be used interchangeably with the term personnel management as there is no real distinction between them in Greece.

3

Role and Professionalization of Personnel Managers

According to survey data (Kanelloupoulos 1990; Price-Waterhouse Cranfield Project 1993), in almost all firms which possess a personnel department, its significance is equal to that of other departments (production, finance, marketing) and the personnel manager reports directly to the head of the company. In some MNCs the personnel manager reports directly to the personnel manager at the company headquarters. In 66 per cent of the firms in the Price-Waterhouse Cranfield Project the head of the HR Function had a place on the main board. In most cases, personnel managers are university graduates, have attended executive seminars in personnel matters and speak at least one foreign language. Their university education typically covers economics or business administration, while a smaller percentage have studied social sciences, law, technical subjects or have previously served in the military forces. The educational level of personnel managers can be considered satisfactory, although economics and business graduates who studied in Greece during the 1960s and 1970s, and who are now heads of departments, will not have received any training in personnel matters. Such subjects were not included in university curricula at the time, and personnel managers' lack of academic knowledge may have been offset by attendance at training courses. In past decades, the presence of retired military officers was significant, since it was felt that they possessed personnel skills acquired during their service. There was also a preference in the past for personnel managers with legal backgrounds, which was justified by the frequent changes and complexities of labour legislation. Many personnel managers, however, had no university education but had joined their firms at low hierarchical levels and had achieved their position following long years of loyal service. The shift

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of qualifications among personnel managers towards more business-related subjects appears to be an encouraging sign. Nevertheless, there seems to be more need for post-experience training in the field, especially in firms located outside Athens or Salonika, where the main opportunities for training are concentrated. Personnel managers reach their position as head of their department following an average of 13 years experience in the personnel function. Most of them have worked in various firms and in various departments. This is due to the fact that HRM has only recently become established in Greece, and so managers from various other departments have moved in. Another reason is the small size of firms which means that opportunities for promotion are limited, and high levels of mobility can be seen both between departments and between firms. A range of qualities, abilities and characteristics appears to play a major role in determining the effectiveness of personnel managers. These include experience, knowledge of personnel matters and business matters in general, social and negotiation skills, an acceptable personality, interest in the job and in people. Such criteria indicate even more the need for special training in both personnel matters and in human skills development. This training has already started over the past years but it needs to be further developed. According to the recent surveys (Kanellopoulos 1990; Price-Waterhouse Cranfield Project 1993), the activities which are considered of major importance to Greek personnel departments are: -

selection and recruitment; performance and appraisal; training and development; industrial relations; salary and wage administration.

These activities coincide with activities which are mentioned in the international literature as those most important for HRM. The least important activities include: -

handling of employee suggestions and complaints; opinion and attitude surveys of employees; disciplinary action; working hours and shift patterns; transfers; dismissals and demotions.

These results show that personnel departments consider most important those activities which could be characterised as developmental. They rate as of least importance those which are concerned with discipline and control. The fact that employee attitude surveys are not considered important shows

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that there is scope for an enlargement of HRM activities, especially in the area of communications and employee relations. In the sections which follow, additional information will be presented on those activities which occupy most of personnel managers' time and which are considered by them to be most important in Greek firms.

4

Major Activities of Personnel Departments

4.1

Selection and Recruitment

Until recently, few Greek firms appeared to have formalized systematic policies for selecting and recruiting to managerial posts (Papalexandris 1986, 1988). Today, most larger Greek, and all multinational, firms try to recruit young graduates who show managerial potential, so as to be able to subsequently apply a policy of staffing from within. As a general rule, practices differ according to the size and ownership of firms. Larger Greek firms and foreign subsidiaries use a variety of sources for recruitment, including the use of consultants' services, advertisements and personal connections. This allows a wider number of alternatives than have smaller Greek firms, which make extensive use of their personal contacts. For recruitment to top management positions, such as managing director and/or functional directors, foreign subsidiaries also have the alternative of accepting a manager directly from the company headquarters or from other sister companies. The policy of attracting managers from other firms ("poaching") also occurs, primarily through offering a higher reward package. On the other hand, larger firms have the advantage of receiving more employment requests from various individuals at any given time, thanks to their prestige and good name in the business market; this occurs despite their compensation practices which are not necessarily more generous than those of smaller firms. The larger Greek firms and foreign subsidiaries are more demanding when it comes to selection. In fact, the more extensive lists of characteristics and qualifications (person specifications) which they expect from their potential employees (in contrast to smaller Greek firms) indicate clearly that such firms are in a position to demand them. Despite occasional variations in the qualifications expected, all firms set defined selection criteria. Foreign subsidiaries seem to give more weight to experience, co-operation or team spirit as well as education in the particular field of the position concerned, followed by an MBA obtained abroad. Among Greek firms, a tendency to look for intelligence and a wide perception is apparent, together with adequate references or experience.

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In smaller firms, friends' recommendations are often taken seriously into consideration and such candidates are favoured, provided they are equal to, or not significantly worse than other candidates. In manufacturing, it is very common to have members of the same family or their relatives working together, and this is believed to improve loyalty to the firm. Apart from blue collar workers, where references play a major role, administrative and managerial staff undergo initial screening and selection (which as a rule are separated) due to the large number of candidates. An initial screening from the curriculum vitae is usually undertaken by the personnel manager, the managing director, or by an organization consultant. Psychometric tools and personality tests are often used by consultants for higher posts. The final selection of more senior managers is usually the responsibility of the managing director, but is preceded by a series of interviews with the department head and personnel manager. Recruitment consultants are occasionally involved in initial screening, so that the personnel manager does not spend time on obviously unsuitable candidates. In some firms, apart from interviews, questionnaires are completed by the candidates in order to assess their perceptions, objectivity, team spirit, drive and other personal characteristics. Additional optional written tests on the specialist field of employment concerned may be administered. In general, selection follows a strict procedure, starting from screening carried out by a personnel department (where one exists) or by a personnel bureau; it continues with interviews given by the immediate superior or the director of the position to be filled and ends up with an interview, or just the approval of the managing director, depending on the importance of the position. Occasionally, a committee for higher managerial position is also formed in some foreign subsidiaries. Summing up, we can conclude that selection and recruitment in Greece varies primarily according to the size and ownership of the firm. Sophisticated practices, implemented with the assistance of business consultants or by.the firms' human resources specialists are applied by larger Greek firms and subsidiaries of foreign multinationals. On the other hand smaller Greek firms rely most on family connections, personal contacts or newspaper advertisements, although opinions are being expressed for the situation to change drastically in favour of more sophistication and objectivity.

4.2

Performance Appraisal

Performance appraisal aims at keeping a record of how well an employee is performing in her or his job. Originally, the most widely used method of performance appraisal in Greek firms, even of larger size, was the superordinate making some sort of unstructured judgement of the subordinate.

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Appraisal later became more formalized and comprised (in most cases) part of the routine job of the personnel department. It typically consisted of the routine measurement of employee characteristics, using checklist forms and giving grades for various character traits such as initiative, reliability, personality, etc. Today the trend is in the direction of evaluating more what the person does (job behaviour) rather than what he, or she is, although this is quite often not without difficulties. Performance appraisal for managerial posts is increasing in sophistication, along with the growing size and professionalization of Greek firms; the problems involved in its practice are also multiplying. According to research data (Papalexandris 1986), commonly found problems are the selection and measurement methods for criteria of evaluating performance, as well as the impartiality of the appraiser. Among the main objectives of appraisal systems are detecting those employees who have undeveloped potential and are eligible for promotion, and those who are able to profit from training opportunities in order to replace superiors or secure the expansion, diversification or succession needs of the firm. In the event of no opportunities existing for improving a manager's position, salary increases are used to compensate high-performing managers, who must also be kept informed on their organizational ranking. A complete appraisal system was found to exist in all MNCs, which adhered to guidelines laid down by parent companies abroad. Three persons were involved in the appraisal: the immediate supervisor, the personnel manager and the department manager. Appraisal was based on Management by Objectives (MBO) or target setting and managers were informed on the results of the appraisal. Some of the Greek firms surveyed had tried to combine appraisal with MBO or target-setting. It was reported that this had worked well, but mainly in marketing departments where the planned volume of sales was an easy target to define. In most firms, the immediate superior was required to conduct the appraisal annually with the help of standard printed forms. Subordinates were evaluated according to certain rather general and subjective criteria such as loyalty to the firm, integrity, hard work, theoretical knowledge and the ability to communicate with subordinates. Some more objective criteria were also used, such as meeting deadlines in preparing financial statements, or filling orders in time. This emphasis on more subjective criteria is in line with the similar approach (mentioned earlier) used by Greek firms in recruitment and selection. Some Greek firms were rather reluctant to disclose appraisal information to the employees, as this could possibly create tension; only the personnel managers and/or the chief executive had access to this information. Firms surveyed mentioned the following difficulties in implementing appraisal programmes. When deciding to introduce performance appraisal a

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few years ago, one company faced conflict between top management and other managers who could not agree on the criteria to include in the evaluation. Personal likes and dislikes were brought up during the experimental stage of the appraisal to such an extent that finally the effort was considered a waste of time and was abandoned. A second company reported that the need for an appraisal system had been realized, but the lack of job specifications and job descriptions for managers made it difficult to proceed. Most companies reported that they practiced appraisal only for lower technical and some supervisory jobs; managers were perfectly adequately assessed informally or not assessed at all. They believed that there was no actual need for evaluation, as everyone knew how everyone else performed, and informal everyday contact gave the opportunity for observation and appraisal. While formal appraisal was not considered justifiable in smaller, familytype firms, the rather limited use of formal appraisal in larger Greek firms is due to the existence of close personal relationships and the difficulty in setting precise targets, as a result of frequent changes in the external environment of firms. Employees, especially in larger firms where unions exist, usually resent the introduction of appraisal systems, favouring seniority as the main criterion for promotion instead. Personnel managers in most progressive firms believe that the limited utilization of performance appraisal has implications for promotion and training. It is the less able employee who will profit from lack of appraisal, or from routine appraisal using subjective criteria. As any determination of training needs and procedures depends very much on promotion opportunities as well as on the appraisal of managers' capabilities, a serious restriction is placed on the firms' HRM in those cases where appraisal is not carried out objectively. Hopefully, this situation is gradually changing. Personnel managers in many Greek firms are spending time and effort to find ways of overcoming obstacles and improving the objectivity and accountability of their performance appraisal system. Efforts are being made to link payment with productivity and MBO and target setting is becoming more extensively practiced. All these changes are believed to be very important steps which will increase the competitiveness of Greek firms, and in the process, the importance of HRM.

4.3

Training and Development

One of the main features emerging from HRM research in Greece is the strong belief, of almost all respondents, in the value of training as a means of improving individual, group, or company performance. In the 1986 study, 84 per cent of the top managers surveyed claimed to be enthusiastic about

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training (Papalexandris 1986). In 20 per cent of firms there was also a specific policy for training which provided for a linkage between training, appointments to management positions, and business plans. All the MNCs, and some of the Greek firms surveyed, carried out an analytical identification of training needs, made a careful selection of training activities and methods, and set relevant criteria for training evaluation. This percentage has increased significantly according to the 1990 and 1993 surveys. In 1986, much variation was found in the extent of participation in training courses. Some firms sent one or two managers annually to attend a seminar. Other firms, especially foreign subsidiaries, provided training for all members of managerial status. Interviews showed that there was a significant relationship between company size and foreign ownership and the sophistication of training offered. Larger and foreign-owned firms were more likely to possess a developed in-house training function. They also had more precise criteria for the selection of participants and attached more value to their training efforts than did smaller and Greek-owned firms. - On-the-job training programmes were found to be a small part of the total training offered, with the exception of technical training for middle managers which was provided in most manufacturing firms. Serious efforts were made in the field of accident and fire prevention. Technical managers had to act as trainers themselves to help their subordinates in accident prevention. Publications, posters and films were used and, in some cases, technical managers followed training seminars outside Greece in order to be better able to communicate their knowledge to their subordinates. One company reported that its technical managers were also using class discussions, held during training events, as a means to observe which of their subordinates would be able to move up into middle management. Two mechanical equipment manufacturing firms with branches all over Greece, organized technical demonstrations using their head-office technical managers as tutors for their regional technical personnel, as well as offering courses for their customers. Apart from acting as trainers themselves, technical managers were in close contact for technical acceptance with machinery suppliers abroad. There were exchanges of visits with relevant factories abroad under "know-how" or consulting agreements, and frequent visits to international technical exhibitions. - Off-the-job training practices included both internal and external courses. Internal Courses were organised in 38 per cent of firms, including all foreign subsidiaries. Greeks who had replaced foreign nationals in top positions in these firms had continued to follow guidelines provided by the parent company, which invariably gave support to extensive training. Thus, managers in foreign firms were sent to attend courses or conferences at the headquarters training centres abroad, while junior recruits were sent to receive practical local on-the-job training. In-house seminars

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were organized locally in Greece and a training department responsible for the co-ordination of activities was reported to exist in these firms. Internal training seemed to have gained popularity also among Greek firms. Some were found to organise courses quite frequently, while the remaining ones would invite foreign experts, or Greek consultants, once or twice a year, to conduct seminars on issues requiring immediate attention. Again, technical managers were more involved in internal training activities, receiving training in data processing, production control, and planning, stock and quality control. This training was also offered by experts sent from abroad by machinery suppliers. External courses were used by 52 per cent of firms which did not have inhouse training, as well as by 28 per cent of those which did. The two main management training centres used were the Greek Management Association and the Greek Productivity Centre, which attracted 90 per cent of training participants. A small percentage of courses was offered by private firms such as banking, insurance or computer companies, which organised training events and invited participants in order to increase their publicity, or to promote their own products. Attendance at management centres abroad, such as Management Centre Europe, the American Management Association, the Harvard Business School, INSEAD and IMEDE, was reported by 10 firms. Managers in the buying, export/import and marketing function were reported to travel frequently to attend conferences or visit exhibitions. Firms with in-house training participated occasionally in external courses, when the topic was of interest. In some cases where the course was thought to be useful for the whole firm, management centres were asked to make an in-house presentation. The most popular subjects were management, organization and personnel. This is to be expected since these areas have only recently been covered by business schools and since the increase in the size of firms has made the organization of the personnel function relatively more complex. Over the past few years, the amount of internal training offered has increased considerably, as a result of subsidies provided by the European Union. Several consultancy firms have started to offer specialized training courses, at both an executive and middle management level, while lower level employees have also had exposure to general non-technical managerial and administrative subjects. This general increase in the quantity of training is gradually being followed up by an improvement in its quality. There is evidence today of a more systematic approach to the identification of training needs, to the measurement of training results, and to the selection of participants on the basis, of learning and performance needs. Even smaller firms have realized that training can be valuable only if done on a systematic and needs-related basis and with a subsequent critical evaluation. This, in turn, forces training agencies and training consultants to improve the quality

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of their services in order to meet competition and to satisfy a market which is much more aware today than it was a few years ago. Overall, the considerable emphasis placed on training is demonstrated by the 1993 Price-Waterhouse Cranfield Survey. Training and development of personnel rank first among the main objectives of HRM in Greek organizations as a priority over the next three years.

4.4

Employee Relations, Pay and Benefits

Employee Relations are of major importance for personnel managers, especially in larger firms (Papavassiliou, Tzekinis 1988). Personnel managers interviewed in the 1986 study all agreed on certain characteristics of the labour force which they had to take into careful consideration in order to keep industrial peace (Papalexandris 1986). These included: - pressure by workers for higher wages; - importance of fairness in payment, and workers' expectation of various benefits; - length of service, rather than merit, as a payment criterion and the value attached to job security; - unwillingness to accept orders from middle managers and the desire to have access to grievance procedure leading to top management; - the problem of reconciling an intelligent and hard-working labour force, which also displayed tendencies to question authority, to be strongly individualistic, and to have difficulty in teamwork. In consideration of these characteristics, big manufacturing firms have been active in providing fringe benefits which, reportedly, have worked well in preventing labour conflicts. Generally speaking, firms which can afford to do so offer as much as possible to keep their workers satisfied. According to the Price-Waterhouse Cranfield survey, group and individual bonus schemes are quite common for clerical, technical and manual staff, in 50 per cent of firms, whereas 40 per cent of firms have some form of merit-performancerelated pay, and 10 per cent will propose a bonus at the end of a profitable year. In smaller firms top management is always available to handle complaints and sort out misunderstandings. Added to this is the fact that a close, almost family relationship is maintained with many members of the workforce; the owner may act as the best man at weddings for example or as godfather to his workers' children. Two personnel managers in the survey reported that they always keep an open telephone line and accept calls by workers to solve misunderstandings within the workforce or with their supervisors. These seem to occur quite often, as most supervisors were promoted from shopfloor and their authority

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is frequently questioned. In one particular firm, bad manners and insults from a supervisor to a worker caused a strike and serious loss of time and money. Besides problems of relations between the workforce and supervision, problems among workers themselves have often to be resolved by personnel managers. An illustrative example was given by a firm in food processing, where, whenever seasonal workers had to be employed, permanent workers unjustifiably considered them a threat to their employment, treating them in such a hostile way that the atmosphere became extremely unpleasant. In larger firms especially, personnel managers have to cope with the strong influence of trade unions and their representatives within the firms (Nikolopoulos 1987). Strikes were not an uncommon phenomenon in larger firms during the 1980s. Besides claims by trade union representatives for higher pay, demands were made for better working conditions and various claims pressed for involvement in management decisions. In larger firms, working conditions are a main concern of management and regulations exist for safety at work. Nevertheless, some accidents have occurred due to the unwillingness of workers to follow safety regulations. Personnel managers have therefore a very important task in educating workers about hazards and convincing them to wear necessary accessories such as glasses, helmets or rubber shoes. Handling trade union representatives' claims and complaints requires much skill and effort on the part of personnel management. Often, investment decisions (such as the introduction of technology or plans for modernization) can be a source of dispute between management and workers' representatives who fear the loss of jobs. Some firms are encouraging the training of trade union representatives in order to improve mutual understanding, since when it comes to investment decisions, workers lack the necessary background knowledge to understand the situation. It was found that the growing complexity of industrial relations in larger firms, in the 1980s, had forced the more innovative firms to look for personnel managers or assistants with professional training in inter-personal skills. However, the industrial relations climate of the 1990s appears to have changed in favour of industrial peace and better employee relations within firms. A characteristic example is the attitude of trade union leaders during the collective bargaining, in 1991, between the General Confederation of Greek Workers and the Association of Greek Industries (General Confederation of Greek Workers 1991). During discussions over pay agreements, workers' representatives showed their wish to establish the basis for a continuing dialogue in order to help fight recession and to establish conditions which would encourage investment and reduce unemployment. All these developments mean that there will now be more time for HRM to deal with practical problems facing employees in firms and also to take

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advantage of collaboration with workers' representatives, replacing the confrontation of past decades.

5

Public Sector Management

Even in highly industrialized countries, research (Solomon 1986) has shown that the lower level of performance among public sector organizations is due to the unwillingness of employees to perform as productively as in the private sector; similar evidence is in Greece as well. Empirical data demonstrating this phenomenon was gathered during a recent survey in Greece (Bourantas 1990) from employees in ministries, public organizations, public corporations and private firms. Differences in employees' attitudes towards their jobs were measured on a comparative basis. The analysis of the results has shown (Papalexandris, Bourantas 1991, 1992) that employees in private firms are more satisfied and committed, feel higher motivation and show less indifference than those in public organizations. A number of factors negatively affect the performance of employees in public sector organizations. Special issues are: - the characteristics of the job content, especially the lack of variety and significance of jobs, the lack of job autonomy, the absence of feedback and results; - the confusion and conflict between roles, policies and procedures; - the missing link between efforts, results and rewards; - the organizational climate, which gives little recognition for achievement and few opportunities to employees to influence their own levels of efficiency; - the poor quality of leadership at all hierarchical levels; - lack of reward for goal-oriented behaviour. These factors negatively affecting performance point to the improvements which must take place in the public sector. These need to be focused mainly in the organization of human resource management in order to provide: - more effective feedback to employees and more clarity over goals and responsibilities; - more exact definition of the policies and procedures of their organizations; - more distinct links between effort, results and rewards; - a climate favouring recognition and competition which, in addition, militates against job indifference and neglect.

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These improvements cannot occur without the adoption of techniques such as: - job rotation and job enrichment; - the cultural orientation of new entrants to the organization; - a well understood and fair system of selection, promotion, evaluation and reward; - a respect for basic principles of the organization; - development of short, medium and long-term goals, both at departmental and organizational levels. Undoubtedly, in order for such improvements to occur, the general environment of public administration needs drastic changes. These include: -

the decrease of party influence and involvement in decision-making; emphasis on professionalism; decrease in red tape and in bureaucratic formalities; encouragement of innovation and entrepreneurship; the upgrading of HRM in public administration.

Recently, legislation was passed in the Greek parliament, aiming to modernize and upgrade public administration. This legislation provides for goal setting, performance appraisal, strict selection procedures, linkage of pay with performance, extensive induction training for new entrants, and internal or external courses for all levels of employees. Furthermore, various committees are working to introduce incentives for performance (performance-related pay) to create a new appraisal system, and put into practice generally all the ideas included in the Law. While it is still too early to say what results will eventuate from these efforts, the mere fact that public administrators have realized the need to borrow concepts and practices, which are already widely practiced in the private sector, is a basis for optimism.

6

Impact of EU Initiatives

Greece became a full member of the EC in 1981. In 1989, Greece adopted the Social Charter, which was approved by almost all member countries. As a result of EC membership, various measures aimed at improving working terms and conditions have been introduced, including: - flexible working patterns, such as part-time work (Koukiadis 1991). This allows women and students to get jobs, something which had previously been very difficult, as only full-time jobs were officially allowed to exist. However, while part-time work offers advantages to certain categories of employees, it may also be considered to contribute to further instability;

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- training initiatives, with the purpose of promoting equality between sexes, fighting unemployment, upgrading the skills of the workforce and encouraging entrepreneurial action; - employment contracts which were obligatory only in the public sector and in larger firms have now spread into smaller companies allowing workers to be informed about terms and conditions of employment, thus clarifying the mutual obligations for both employers and employees; - legislation providing security of employment and better working conditions for pregnant women; - the participation of employee representatives in discussions about redundancies and the proviso that only two per cent of workforce can be made redundant at any one time. - the establishment of work councils in larger firms as well as health and safety committees for the protection of the work force and the improvement of working conditions. Undoubtedly an area in which the impact of EU has been very strong is that of training. Some examples of training programmes, at least partly financed by the European Union, and greatly used by Greek students and employees, may be mentioned in this context: - the COMETT programme, which helps university students spend time working in companies in order to gain practical experience; - the NOW programme which aims at training unemployed women and encourages them to start small businesses, either alone or in partnerships. This programme also trains unemployed women, who are university graduates and who themselves wish to become trainers. It helps to establish training centres in collaboration with partners within the Union; - the PETRA programme which helps young working people find jobs in other European countries. This gives them the opportunity to become acquainted with a different working environment while also promoting the exchange of information and communication between people from different countries. These are just a few of the programmes aimed at promoting skills among the work force, which can be largely attributed to EU initiatives. Beyond the possibility of a acquiring new skills, they allow for intercultural learning and provoke some sort of cultural transfer. The effects of this process are not clearly visible but may play an important part as far as socialization and a certain type of economic reasoning (competitivity, productivity, quality) are concerned. They will probably influence university teaching programmes and styles of management in the long run and thus counterbalance the predominant North-American impact. In 1993, after signing the Maastricht Treaty for European Unification, member countries assumed responsibility for the implementation of certain

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measures in their economic, monetary, social and political policies. These measures, which will be gradually enforced, will have a considerable impact on employment issues within the Union. A co-operative strategy for achieving better levels of employment is one of the major objectives of Maastricht. In January 1994, during the inaugural meeting of the Greek presidency of the European Union in Athens, it was stated that the Union's second major target, after peace in the former Yugoslavia, should be fighting unemployment. Although, recent statistics about unemployment in Greece are still lacking (see the chart in Part II of this book) it is clear that this concern converges with a priority, which is common to all EU countries. In order to create further jobs, additional investment, both in the private and public sectors, is planned. A delicate point here is how to invest without jeopardizing the goals of Maastricht. Private investment should not add to inflation, while public investment should not add to the public deficit. In order to fight unemployment, each country has to adopt specific policies. In Greece, one of the main measures to stimulate private investment is the reduction of interest rates which was decided on January 1st, 1994. Then came measures providing incentives to small- and medium-sized companies in order to generate new family businesses. Another outlet for private investment may be mentioned in this context, although it does not resolve the problem of unemployment and may, on the contrary, even threaten Greece with derealization, as is frequently the case in other European countries: Balkan and Central European countries offer good opportunities for Greek investors, a certain number of whom have started trading for production units. In terms of public investment, Greece, together with Spain, Portugal and Ireland, is being encouraged to invest in infrastructures in the areas of transportation and environmental protection. These activities will help the economies of weaker countries to reach a desirable level of cohesion within the European Union. Greece has begun to undertake substantial development projects with the aid of the Cohesion Fund, including the construction of roads and motorways, and the expansion of Athens' underground railway. Apart from efforts aimed at fighting unemployment and improving working conditions, EU initiatives have influenced the nature and role of labour unions in Greece, especially in the area of manufacturing. This has stimulated and upgraded the role of human resource management. As already mentioned in this article, there is no evidence of more individualistic approaches, greater rationality in decision-making process, and better collaboration between unions and employers. During the Conference of the European Trade Unions Confederation in November 1992 in Athens (Labour Institute 1992), the future of social dialogue and of collective bargaining was discussed.

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Participants expressed the need to include certain social criteria in plans for convergence between countries and to follow an appropriate speed for each one of them. It was agreed that competitiveness should not be enforced without the consent of social partners and that the negative impact on the workforce would have to be taken into consideration. However, European collective bargaining, as was stressed, should remain complemetary to bargaining on a national, sectoral or company level. However, Greek trade unions realize that their role is changing. Although European directives cannot affect their activities directly, the European trend towards reducing production costs through rationalization as a means of fighting recession affects their role and calls for more realistic claims and better collaboration with company ownership.

7

Prognosis for the Future

Human resource management has come a long way over the past two or three decades in Greece, when the typical personnel manager was an exservice man and the HRM department dealt mainly with maintaining employee records and the distribution of wages and salaries. Personnel is a function which still affords enormous scope for development. Some of the future developments may come from changes in local conditions while others will be the result of the country's participation in the European Union.

7.1

Professionalization of HRM in Smaller and Family-owned Firms

Extensive training in personnel matters is needed for owners of smaller firms and in the larger family-managed firms. In such enterprises, the owners usually keep for themselves the role of personnel management, without possessing the knowledge or the skills for its effective practice. While it is true that consultants have developed a range of services, these mainly relate to employee selection and training. Much more development is needed in the areas of job descriptions, person specifications, job evaluation, payment systems and performance appraisal systems even in the larger firms. Furthermore, special systems geared to the needs of small-firm owners particularly are needed since 98 per cent of firms in Greece are in the small-medium size category. Training for HRM will become increasingly important and more young people are anticipated to specialize in this field with programmes which will be offered in Greece and abroad.

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Links with Research and Academic Institutions

Research in HRM is quite recent in Greece. It is, however, growing in parallel with the introduction of more HRM courses in Greek universities. Already such courses are offered in the Athens University of Economics and Business, the Piraeus University and the University of Macedonia in Salonika. Post-experience training courses are provided by management centres, consultants and training agencies. The business studies departments of Greek academic institutions are increasingly producing articles for publications on the subject of HRM (see references). Additionally, professional bodies such as the Association of Personnel Managers and the Institute for Training and Development of the Greek Management Association are organizing conferences, lectures and research projects, to further examine and bring forward personnel issues to larger audiences of company managers.

7.3

Identifying and Developing Managerial Talent

The issue of identifying and developing managerial talent is yet to be tackled by Greek firms which still rely mainly on their circle of friends and relatives for recruitment. MNCs are very active in this respect and the differences in results between them and Greek firms are often only too apparent. It is of major importance for firms to widen their sources of recruitment, especially by including recruitment from universities. The Association of Greek Personnel Managers has organised career days, during which university business graduates are interviewed; these efforts, which have been very successful, need further expansion and development, in order to enlarge the recruitment base to the HRM function. Furthermore, consultancy firms which at present recruit mostly for executive posts, should gradually include hiring for entry-level posts from university graduates. It is feared that the imminent removal of the borders between European countries may mean a loss of young Greek managerial talent. Many young Greek graduates possess higher degrees and an excellent knowledge of foreign languages; hence they can easily move to countries where pay and job prospects appear more favourable. This might therefore demand of Greek business increased efforts to identify and retain young graduates who could move later to managerial ranks. Through suitable selection and appointment procedures, many promising candidates who lack necessary contacts and orientations could be identified and developed early in order to develop their full potential in a job that fits their abilities.

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New Patterns of Employment and Changing Workforce

Human resource managers have gradually to realize that, in the future, they will be dealing with more diversified workers. Women have moved into managerial ranks and into technical specializations previously restricted to men. Moreover, the level of education (even among entry-level workers) is rising. Citizens from EU countries have the right to work in Greece since January 1st, 1993, and the expected influx of workers will mean a more diversified labour market. Patterns of employment are also changing with increased job mobility both among workers and managers, and part-time employment playing a more prominent part in Greece for the first time in the 1990s in die formal labour market. Mergers and acquisitions which occur more and more frequently require integration of new employees coming from different organizational cultures; changes in technology and job requirements also demand constant re-training and up-dating of skills. Hence labour force flexibility and structural change are likely to become issues which HRM managers will need to tackle constructively in the 1990s. All these activities further complicate the task of personnel managers, but are also challenges which cannot be met without improvements and development of the techniques, policies and philosophies.

8

Future Developments Due to European Unification

The impact of European Union membership on Greece described in section 6 will be more strongly in evidence in the future, as a result of the Maastricht Agreement. Several analyses have been carried out which present the treaty as a major challenge to the problems facing the Greek economy and Greek society (Linardos-Rylmon 1992). In order to meet these challenges, Greek industry will have to increase its competitiveness: more efforts will have to be made in order to limit the public deficit, reduce the cost of money, and encourage productive investment. The role of HRM in implementing these changes is crucial to three major points at least which are outlined in sections 8.1, 8.2 and 8.3.

8.1

Collaboration of HRM with Other Departments

Human resource managers must co-operate closely with finance, production, and marketing departments in order to draw up appropriate development and employment strategies which will enable the country's economy to gradually approach richer partners in Europe. This might partly be achieved through

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effective utilization of funds made available by the second Delors Package. Human resource managers will play an important role co-ordinating the preparation, implementation and evaluation of development programmes.

8.2

Employee Participation

Human resource managers will inevitably help in creating and implementing employee participation institutions which, although widespread in the USA., Japan, and in most member countries of the Union, are still very limited in Greece. Studies and research carried out by the European Foundation for the Improvement of Living and Working Conditions have concluded that the implementation of employee participation in company finances would contribute to enterprise efficiency, more constructive labour relations, greater creativity of the workforce and a better distribution of financial resources within the company (Manolis 1992). In 1990, 1.3 million workers in 1,600 German companies owned shares amounting to 15 billion marks. In the United Kingdom, 1,175 profit sharing plans and 6,107 other types of participation schemes existed at the same period. In France, where such schemes are regulated by law, 6 million workers participated in one way or another in capital or profits. In Greece, although some bonus schemes and performance-linked pay exist, formal discussions or clearly defined programmes have not yet been established. This deficiency is particularly apparent in profit sharing or stock ownership. Major protests have come from unions which believe that participation will somehow bridge the gap between labour and ownership and reduce the importance of unions as mediators. This is mainly due to the inadequate educational background of most union leaders who are suspicious of strategies aiming at reducing conflict.

8.3

Collaboration with Unions

From now on, human resource managers will enter into a gradual process of collaboration with union leaders in order to introduce policies which will help in creating an atmosphere of mutual trust, improved communication and employee satisfaction. Trade unionists will have to be educated in order to understand the necessity of economic convergence foreseen by the Maastricht Treaty. Will it be up to the human resource managers to play this educational role? In some cases, given the declining impact of trade unions, they will assume the responsibility of acting as spokesmen for employees, and will try to reconcile the conflict between ownership and labour. An important aspect of the role they will be asked to assume will be the identification of means of increasing competitiveness without reducing employment.

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In order to succeed in this creative use of HR policies, tools such as training, motivation techniques and better communication practices will have to be fully utilized.

9

Concluding Remarks

From the information presented, and the issues discussed in this article, it has been made apparent that HRM in Greece is in a state of rapid development as well as fundamental change. Personnel managers enjoy a high status in most of the larger firms and deal with a range of activities similar to those exercised in industrially-developed countries. Professionalism is quite high among personnel managers who are, as a rule, university graduates with company experience in various departments. Companies who have not yet developed a personnel department can and are gradually starting to use the services of consultancy firms. But in the smaller and family-owned enterprises which are still numerically dominant in the Greek economy, it is evident that HRM still must develop much more in order for it to take an equal place with other business functions. Future developments may strengthen and increase the significance of HRM in Greece. The Single European Market means increased competition for products and markets for Greek firms. This carries implications regarding the need for effective HRM so that firms compete effectively in the new European economic and social context. Hopefully, this is a message which most firms in Greece have received, and are taking steps to implement.

References Bourantas, D., Motivation, Commitment and Motivation of Employees in Public Sector Organizations, Centre of Economic Research, Athens 1990. General Confederation of Greek Workers, National General Collective Labour Agreement, General Confederation of Greek Workers, Athens 1991. Georgoulis V., A Comparative Management Study of Selected Greek and European Multinational Manufacturing Firms Operating in Greece, PhD Thesis, University of Bath, Bath 1978. Greek Management Association, Management of Greek Firms, Greek Management Association, Athens 1972. Greek Management Association, Management of Greek Firms, Greek Management Association, Athens 1986. Hassid J., Greece and the EEU: Comparative Study of Industrial Structure, Institute of Economic and Industrial Research, Athens 1977. Hassid J., Greek Industry and the EEC: A Study of the Impact from Entry, Vol. I., Institute of Economic and Industrial Research, Athens 1980. Kanellopoulos Ch., Personnel Management and Personnel Managers in Greece, Greek Productivity Centre, Athens 1990.

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Koukiadis G., The Flexibility Principle and the Evolution in Labour Law, in: Labour Law Review, no. 1, 1991. Labour Institute, Decision of the ETUC Direction Committee, in: Information Bulletin, no. 22, December, Labour Institute, Athens 1992. Linardos-Rylmon P., The Economic and Monetary Union from the Workers' Point of View, in: Information Bulletin, Labour Institute, Athens 1992. Manolis G, Participation Institutions, in: Information Bulletin, no. 22, December, Labour Institute, Athens 1992. Nikolopoulos Α., Trade Unionism in Greek Firms, Papazissis Publications, Athens 1987. Papalexandris, N., Management Development Practices in Manufacturing Firms in Greece, PhD thesis, University of Bath, Bath 1986. Papalexandris N., Factors Affecting Management Staffing and Development: The Case of Greek Firms, in: European Management Journal, vol. 6, no. 1, 1988. Papalexandris Ν., A Comparative Study of Human Resource Management in Selected Greek and Foreign-owned Subsidiaries in Greece in: Brewster C., Tyson S. (eds.), International Comparisons in Human Resource Management, Pitman, London 1991. Papalexandris N., Bourantas D., Factors Affecting Employee Performance in Private and Public Sector Organizations in Greece, Paper presented at the International Conference of the Greek Productivity Center, Athens, June 17th-18th, 1991. Papalexandris N., Bourantas D., Variables Affecting Organizational Commitment: Private versus Publicly-owned Organizations in Greece, Journal of Managerial Psychology, vol. 7, no. 1, 1992. Papavassiliou, M., and Tzekinis, C., Practical Issues in Personnel Management, Gáleos, Athens 1988. Price-Waterhouse Cranfield Project, Survey on HRM in Greece, Research Monograph, Athens University of Economics and Business, Athens 1993. Solomon E., Private and Public Sector Managers: An Empirical Investigation of Job Characteristics and Organizational Climate, in: Journal of Applied Psychology, vol. 71, no. 2, 1986.

Ireland Patrick Gunnigle, Michael Morley, Kieran Foley

1

Introduction

This chapter considers the nature of human resource management (HRM) in the Republic of Ireland. It attempts to review current practice in HRM and critically evaluate the nature and extent of change in HRM in Irish organizations. We begin by providing a historical perspective on the development of HRM and the dominant current variants of HRM in evidence in Ireland. This is followed by an examination of key areas of HRM policy choice and a review of alternative approaches to HRM practice in Irish organizations. The status and role of the HRM function in Ireland is then considered. Finally, the evidence of change in HRM practice is evaluated with a particular focus on key dimensions of change such as developments in employment forms and flexibility, the role of trade unions and the emergence, at establishment level, of more proactive approaches to HRM.

2

The Development of Human Resource Management in Ireland

Workforce management practice in the great majority of medium and large organizations in Ireland has traditionally been associated with a strong collectivist, industrial relations emphasis — generally referred to as the "pluralist" model (Roche 1990). In this model HRM policies tended to focus on short term issues with little conscious attempt to develop linkages with business policy. Manifestations of this pluralist tradition include high levels of union density, well developed collective bargaining institutions at establishment level, and industrial relations as the key role of the specialist HRM function. However, the 1980s were a decade of reappraisal of the HRM role in many Irish organizations. The onset of recession lessened the need for

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many core personnel activities such as recruitment and, particularly, industrial relations. Trade union membership fell by almost 9 per cent in the period 1980-1985 (see Table 1) and industrial unrest also declined significantly over the decade (see Figure 1) (Roche, Larraghy 1989; Kelly, Brannick 1988). Table 1: Year 1945 1960 1975 1980 1981 1982 1983 1984 1985 1986 1987 1988*** 1989 1990

Trade Union Membership 1945-1990 Membership

Employment Density*

Workforce Density**

172,300 312,600 448,800 527,200 524,400 519,900 513,300 500,200 483,300 471,000 457,300 470,644 458,690 462,451

27.7 49.6 59.3 61.8 61.5 60.3 61.1 60.7 59.9 58.0 56.2 57.1 55.6 54.6

25.4 45.4 52.3 55.2 53.5 51.4 49.7 48.2 46.6 45.0 43.1 44.2 43.4 43.2

* Employment Density = Trade union membership/civilian employees at work χ 100 ** Workforce Density = Trade union membership/civilian employee workforce χ 100 *** Figures for 1988-1990 are estimates and are derived from die annual affiliated membership of the Irish Congress of Trade Unions Source:

Roche (1992); Roche, Larragy (1990).

Source:

Department of Enterprise and Employment, Annual Reports, Dublin, Department of Enterprise and Employment, 1990-1994.

Figure 1: Working Days Lost 1946-1990

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At the same time, increased market competition forced many organizations to seek ways of establishing competitive advantage including improved approaches to the management of human resources. It has been argued that competitive pressures, reduced trade union power and new models of management practice have encouraged Irish organizations to adopt more innovative HRM practices (Flood 1989). However, a problem with many analyses of change in HRM in Ireland is that there is little consensus on the precise nature and extent of such change or how new developments contrast with more traditional approaches to HRM. Much of this confusion seems to stem from the tendency to view HRM as an essentially distinct and homogenous approach, incorporating a specific philosophy and combination of personnel policies. However, practice seems to indicate there are numerous variants of HRM, incorporating different approaches to workforce management (Keenoy 1990). In the Irish context it is suggested that there are four particular variants of HRM: - "Soft " HRM: This approach emphasizes the human resource aspect of the term "human resource management". It is the most visible form of HRM in Ireland as practiced by companies such as IBM, Digital and Amdahl. It is characterized by a resource perspective of employees incorporating the view that there is an organizational pay-off in performance terms from a combination of HRM policies which emphasize consensualism and mutuality of management and employee interests. - Neo-Pluralism: This second type of HRM involves moves towards greater consensualism and commitment in unionized companies. It is characterized by what might be termed a "dualist" approach, involving the use of HRM techniques such as direct communications with employees and performance related pay systems alongside established collective bargaining procedures. It is indicative of management approaches in a number of Irish organizations such as the Electricity Supply Board, Aer Rianta and Analog Devices. While possibly less visible and certainly less analyzed than "soft" HRM, this seems the most common form of HRM in Ireland. - "Hard" HRM: This variant is characterized by the integration of human resource considerations into strategic decision-making to ensure maximum contribution to business performance. The emphasis here is on the management aspect of the term "human resource management". In this approach the organization's human resources (incorporating not only employees but also subcontracted labour) are seen as similar to any other resource. Thus, human resources should be procured and managed in as cheap and effective a fashion as possible to ensure achievement of the organizations "bottom line" objectives. Examples of this approach are most obvious in the adoption of "atypical" employment forms, particularly extensive use of sub-contracting and temporary/part-time employees, to improve cost effectiveness while meeting required performance standards,

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and in the use of performance management techniques which are designed to achieve maximum return on the organizations investment in human resources. - Traditional industrial relations: In this model HR considerations rarely concern strategic decision-makers and relations between management and employees are grounded in the pluralist tradition with a primary reliance on adversarial collective bargaining. While there are obvious differences between these HRM variants, it is significant that the first three approaches are all characterized by greater integration of human resource considerations into strategic decision-making and the development of complementary policies to improve human resource utilization while the latter approach, the traditional pluralist industrial relations model, is more reactive in nature. HRM is therefore a perspective on workforce management which can take numerous forms.

3

Determinants and Nature of HRM Policy Choice

HRM can, therefore, take numerous forms and organizations clearly differ in the HR policies they adopt and the approaches chosen in a particular organization will generally reflect the interplay of factors in that organization's internal and external environment.

3.1

External Environment

Trends in the external environment such as levels of economic performance, changing societal values and developments in technology have impacted significantly on business strategy and HRM management practice in Ireland. Guest (1989) has suggested that technological or production feasibility is a requisite condition for the successful implementation of "soft" HRM and that large scale investment in short cycle, repetitive, assembly line technology mitigates against the job design principles and autonomous team working characteristic of "soft" HRM. Ireland does not have a heavy industry tradition and much of the recent investment in the manufacturing sector has been in the electronics and software sectors, often considered more conducive to "soft" HRM practices. Some of these companies operate in capital rather than labour intensive sectors, a factor which may allow these organizations greater scope to adopt, for example, more attractive rewards and employee development policies. On the other hand it appears that much of the recent inward investment has been by sub-assembly suppliers to the

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electronics industry. Many of these companies operate on a highly cost competitive sub-contract basis and thus need to curtail expenditure in HRM areas, particularly in relation to wages, benefits and training. The labour market has exerted possibly the most profound influence upon HRM in Ireland, especially in the areas of recruitment and training. The Irish labour market is characterized by extremely high levels of unemployment, currently standing at almost 20 per cent of the workforce, and a high dependency ratio which is largely concentrated in the younger age categories (see statistical data at the end of this chapter). Such oversupply in most sectors of the labour market has a consequence that "dipping" into the external labour market is a ready option for employers. These labour market conditions would seem to reduce the onus on organizations to engage in wage competition to attract labour or develop comprehensive employee development policies — as might be the case in less buoyant labour markets. Product market performance has also a significant influence on strategic decision-making and HRM. It is clear that favourable market conditions such as high market share allow organizations greater scope to adopt more benign HRM practices such as attractive reward systems. Levels of economic activity in Ireland remained depressed for much of the 1980s and recovery since 1987 has now been severely curtailed by the international recession which has strongly impacted upon Ireland's largest export market — the UK. These product market conditions mean that many Irish organizations are operating under high levels of market pressure and thus may have considerably reduced scope for choice in terms of appropriate HRM policies so that more traditional cost and labour control approaches may be appropriate. There are a number of important aspects of public policy which impact upon HRM practice in Ireland. The traditional approach of successive governments to HRM and particularly industrial relations has been grounded in the "voluntarist" tradition whereby employers and employees or their representative bodies are largely free to regulate the substantive and procedural terms of their relationship (Hillery 1989). However, this approach would seem to have been considerably diluted in recent years with the emergence of a neo-corporatist model involving greater state intervention in industrial relations (Roche 1989). The past and current government have been strong advocates of centralized agreements on pay and other aspects of social and economic policy involving negotiations with the main employer and trade union federations. The most recent centralized agreement, the Programme for Competitiveness and Work (PCW), formally unveiled in February 1994 and embracing both the public and the private sectors, provides for an increase of 8 per cent in basic pay over the three years up to 1997. A more established aspect of public policy is the constitutional guarantee of freedom of association. This constitutional guarantee of freedom of asso-

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dation, embodied in article 40.6.1. of the Constitution, confers the right on workers to form or join associations or unions. However, while the Constitution supports the freedom of workers to organize, there is no statutory provision for trade union recognition with a consequence that there is no obligation on employers to recognize or bargain with trade unions. Historically, this lack of a statutory mechanism for securing trade union recognition did not seem to cause many difficulties as most larger employers seemed happy to recognize and conclude collective agreements with trade unions. However, with the declining membership and power of Irish trade unions, the issue of recognition appears to have become more contentious with some evidence of increased opposition to unionization in recent years (Gunnigle, Brady 1984, McGovern 1989). Overall, it would seem that Irish governments have generally been supportive of trade unions and a consensus approach to labour relations (Gunnigle, Morley 1993). A final important aspect of public policy relates to approaches to industrial development. Since the mid 1960s Irish government policy has been to actively encourage foreign investment in Ireland. There are now over 1000 overseas companies operating in Ireland with a particular focus on the engineering (including electronics) and chemicals sector. These companies employ over 80,000 employees. The USA and UK have been the major source of overseas investment. Ireland has been the most profitable location for US firms in the EU, achieving an average return on investment of 23 per cent in the period 1982-1987 or three times the EU average. A final issue of immediate significance to HRM practitioners is the advent of the Single European Market/Social Charter. European integration offers a new form of international stability by creating, over and above the nation states, a new political and legal system that functions without a hierarchical apex (Von Bogandy 1993). A particularly prominent initiative, and one which has in the past and promises in the future to have a profound impact on HRM practices in Ireland, is monetary union. Membership of the EMS, while having a number of advantages, has led to some government surrender on currency valuations. The impact of this has been to shape the economic environment facing organizations in Ireland and to ensure that wider European economic considerations are critical in the formulation of financial strategies. Further integration may have significant ramifications for the HRM function as Hourihan (1993) suggests a two tier Europe is emerging. Such developments are particularly alarming as the place of Ireland in the primary tier is not assured and failure to achieve such status will result in the loss significant transfers of resources (Teague, Grahl 1992). Countries such as Ireland may be forced to singularly compete on cost which may reduce the capacity of organizations in Ireland to pursue more sophisticated HRM policies.

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With respect to social policy initiatives, the ideal of harmonization of living and working conditions in a European context has manifested itself in a plethora of directives in Ireland over the last three decades spanning a host of labour issues. Directives in areas of equal pay, collective redundancies, equality of treatment, transfer of undertakings, and health and safety, have already impacted on national law and consequently on how HRM is conducted at establishment level. Interest in and commitment to the social dimension of Europe reached its peak in 1989 with the publishing of the action programme to fulfil and implement the principles set out in the European Social Charter. While a deal of success has been recorded in the implementation of the action programme it has not received universal support from the business community. Despite the fact that employers were anxious to be seen to be fulfilling their social obligations towards their employees, they were concerned about the cost implications of the initiatives and their effect on competitiveness (Fitzgerald 1992). Overall, however, despite the existence of European initiatives as environmental influences, recent research evidence appears to indicate that employers in Ireland are not overly concerned with the Single European Market. 1 Table 2 summarizes the responses of senior HRM practitioners on their state of preparedness for the SEM in 1991. Table 2:

Single European Market, Social Charter, HR Strategy (in %)

Yes (written) Yes (unwritten) No Source:

Business strategy

HR strategy

14.5 21.7 58.7

4.3 15.9 69.6

Price-Waterhouse Cranfield Project (Ireland), University of Limerick, Limerick 1992.

Only some 36 per cent of respondents to the Price Waterhouse Cranfield Survey reported the existence of a business strategy in response to the Single European Market and the Social Charter. Perhaps even more surprising, in light of the historical impact of European initiatives on HRM, is the fact that less than 21 per cent of organizations had developed a HRM strategy in response to such issues. Furthermore, only in 4.3 per cent of respondent organizations were such strategies written. Initiatives in relation to working hours, health and safety and procedures for consultation and participation of employees were regarded as most likely to require a major change in respondent organizations HRM policies. Conversely, equal treatment and use of part time, temporary and fixed term contracts were seen as likely to require no, or only minor, changes in the bulk of respondent organizations. Such an apparent lack of concern amongst practitioners may perhaps be understood by reference to the fact that the charter contains measures which

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are now already enshrined in most statute books. Thus, apart from the area of health/safety, most initiatives will continue to be the subject of unanimity. Thus, the period of large scale harmonization may be over.

3.2

Internal Environment

The internal environment of an organization helps determine unique organizational responses to external factors. Such factors include the characteristics of the current workforce and established HRM practices. Organization structure and size are other important factors impacting upon HRM. Irish organizations are generally smaller in scale and employment numbers than is the case in most of the more industrialized EU states. There are key variables in interpreting developments in the external environment and developing "appropriate" organizational responses in areas such as HRM. A traditional criticism of the culture for business in Ireland is that it has not always encouraged enterprise and innovation. This trait was felt to be attributed to Ireland's relatively late independence which created, what some have termed a "dependence mentality". However, this culture would seem to have been effectively laid to rest over recent decades. Levels of productivity and export performance have increased dramatically and compare very favourably with international standards. Recent studies have noted the flexibility of the Irish workforce and the relevance of coherent and strong corporate culture formation among Irish organizations (Kakabadse 1990).

3.3

Key Areas of HRM Policy Choice

The manifestations of HRM policy choices are most evident in the policies and practices adopted in key HRM activity areas, particularly in areas such as job design, remuneration, recruitment, training and employee relations. - Work system: The work system incorporates the way the various tasks in the organization are structured and impacts on issues such as organization structure and job design. The past decade has seen an increased emphasis on improving and sustaining overall competitiveness in many Irish organizations. This is manifested in work redesign initiatives aimed at restructuring work systems to facilitate greater flexibility and improve performance and quality levels in a number of Irish organizations. Much of the focus of "soft" HRM has been on restructuring organizations and jobs to incorporate greater scope for intrinsic motivation and to facilitate greater employee involvement. The consequent management emphasis was on developing broadly defined, challenging jobs within a more or-

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ganic, flexible organization structure. At the same time there is also evidence of the adoption of "hard" HRM as evidenced in job/work design initiatives which seek to tightly prescribe performance targets/objectives, accelerate the pace of work and closely monitor individual employee performance. - Communications: A second important area of HRM policy choice is communications. Differences in management approaches to this HRM policy dimension seem to focus on the range of communications mechanisms used and the level of senior management involvement in, and commitment to, these mechanisms. An emerging development in HRM practice in Ireland is an increasing focus on direct communications with employees. The recent Price Waterhouse Cranfield survey on HRM practice in Ireland found that there had been a significant increase in verbal and written communications with employees (see Table 3). This study also found that communications on strategy and financial performance with managerial and professional/technical employees was extensive (see Table 4). Table 3:

Communications with Employers (in %)

Increased Decrease Same Not answered

Staff bodies (incl. TUs)

Verbal-direct

Written-direct

14.2 11.2 44.2 30.4

49.8 1.5 38.2 10.5

36 3.0 41.9 19.1

Source:

Price-Waterhouse Cranfield Project (Ireland), University of Limerick, Limerick 1992.

Table 4:

Employment Briefing: Business Strategy and Financial Performance (in %) Business strategy

Management Professional Clerical Manual Source:

92.5 64.4 41.6 36.0

Financial performance 90.6 57.3 39.0 33.0

Price-Waterhouse Cranfield Project (Ireland), University of Limerick, Limerick 1992.

However, the level of communications on these issues falls dramatically for clerical and manual grades. In general it seems that the more sophisticated firms tend to use a range of communications mechanisms with particular emphasis on direct communications with individual employees. Such expansive approaches seem to be quite evident in newer organizations but not

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nearly as widespread in longer established organizations. A study of HRM practices in newly established ("greenfield") companies confirms this focus on extensive direct communications with individual employees (Gunnigle 1992a, 1994). This study suggests that the nature and scope of communications were more sophisticated in the great majority of US owned firms — particularly in the computer/high technology sector. The most common approaches focused on "cascade" mechanisms with briefings for different employee levels augmented by communications through line management, general workforce meetings and other written and oral communications. However, most of these communications tended to focus on work related matters such as scheduling and quality rather than on corporate data such as financial performance. Also, the majority of older indigenous organizations seem to adopt less sophisticated approaches and rely primarily on collective bargaining, basic written communciations and normal line managementemployee interactions. - Reward systems: An organization's reward system is an important indicator of organizational approaches to HRM. Basic wage rates, the level and basis of wage increases and the range of fringe benefits provide valuable insights into the corporate approach to workforce management. Significant considerations in the design of reward systems are the role of pay and the degree to which pay increases are based upon measures of employee performance and the compatibility of the reward system with business goals and other HRM policies. In the Irish context basic pay has traditionally been based on the "going rate" for similar jobs in other organizations/sectors. Pay increases in recent years have, in most instances, been determined at national level through centralized agreements. These apply to all unionized employees but also have "knock-on" effects for some non-union employees. Increases for managerial and other professional/technical categories are generally agreed at enterprise level. This often occurs as a result of annual performance reviews based on a range of criteria such as individual performance, section or company performance and comparisons with pay increases in other organizations. An interesting trend in the Irish context is the growing incidence of performance related pay systems (PRP). The incidence of performance related pay (PRP) based on formal performance appraisals for all employee grades is seen as a significant indicator of a preference for a more individualist (as opposed to collectivist) approach to employee relations. A recent study of HRM in recently established companies found that the incidence of PRP for all employee categories seems strongly linked to union recognition and company ownership (Gunnigle 1992a; 1994). Most companies which used PRP for all employees were non-union and US owned.

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- Recruitment and internal flow practices: A final significant area of HRM personnel policy choice is recruitment and internal flow practices. This dimension incorporates policies in the area of HR planning, recruitment and selection, employee development, performance appraisal, placement and termination of employment. A number of developments are important in the Irish context. Firstly large scale unemployment together with the young age profile and high education levels of the Irish labour force mean that most company vacancies are oversubscribed by well qualified applicants. Another development has been an increase in the use of performance management techniques, particularly performance appraisal. It also seems that in some organizations there is an increased desire to focus on the internal rather than the external labour market as a means of filling vacancies. Such an internal labour market emphasis is in line with "soft" HRM approaches and is often linked to a range of supportive HR policies in areas such as employee development, appraisal, and career counselling. On the other hand, there is also evidence of an increased adoption of "hard" HRM approaches particularly a greater emphasis on sub-contracted labour and use of more "atypical" employment forms. This is further discussed below.

4

The Specialist HRM Function in Ireland — Status and Role

A particularly significant aspect of managerial approaches to HRM concerns the role of the specialist HRM function. The growth of overseas investment since the 1960s, coupled with an expansion in both indigenous manufacturing and the public sector resulted in the establishment of a dedicated HRM function in most larger organizations by the late 1970s. The precise role of the specialist HRM function often varies considerably from company to company and clearly depends on various internal and external factors impacting upon the organization. Recognizing the existence of this diversity and the consequent potential for establishment level alternative approaches to the nature of the specialist HRM function, Tyson (1987) identified three alternative role models of the specialist HRM function: - Administrative/Support role: Within this role model HRM is a low level activity operating in a clerical support role to line management. It is responsible for basic administration and welfare provision. - Systems/Reactive role: Within this role model HRM is a high level function with a key role in handling industrial relations and developing policies and procedures in other core areas. The role is largely reactive, deal-

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ing with the HRM implications of business decisions. This model incorporates a strong "policing" component where the HRM department is concerned with securing adherence to agreed systems and procedures. - Business manager role: Within this role model HRM is a top level management function involved in establishing and adjusting corporate objectives and developing strategic HRM policies designed to facilitate the achievement of long term business goals. HRM considerations are recognized as an integral component of corporate success with the HR director best placed to assess how the organization's human resources can best contribute to this goal. Routine HR activities are delegated allowing senior practitioners adopt a broad strategic outlook. A study by Shivanath (1987) considered the relevance of Tyson's role models for HRM practice in Ireland. The survey evidence indicated that the systems reactive model seemed to most accurately reflect the role of the majority of Irish HRM practitioners. While HRM departments were, of necessity, concerned with routine clerical/administrative tasks, these were generally delegated, thus allowing senior HRM practitioners to deal with more strategic matters. Industrial relations was identified by most HRM practitioners as the most crucial area of their work. The study also found that the business manager model was prominent in a number of organizations. The 1980s may be typified as a period of both continuity and change in the development of the HRM function. Continuity, in that the HRM function continued to form a central component of organizational hierarchies throughout the 1980s. Respondents to the Price Waterhouse Cranfield Survey indicated the presence of a specialist HR manager/function in 86.3 per cent of organizations with more than 200 employees. When one looks at all organizations with more than 50 employees the figure falls to 61.7 per cent. However, change has occurred as organizations continue to investigate different/more innovative modes of workforce management principally focusing on sophisticated HRM approaches. Such change has particularly manifested itself in a shift in emphasis away from traditional industrial relations as the key concern of HRM practitioners. Recent research indicates that training and development is presently one of the overriding issue facing the HRM function in the medium term (Heraty et al. 1993). A second significant area of change in recent years concerns the actual role of the function. While Shivanath (1987) found some evidence of the adoption of a more strategic role among Irish personnel practitioners, more recent research aids in clarifying the actual magnitude of this change. The Price Waterhouse Cranfield Survey offers encouraging evidence of the achievement of top hierarchical status on the part of HRM practitioners. Almost 45 per cent of respondents suggested that the HR manager occupies a

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seat on the establishment's board. Such high level representation facilitates the integration of HRM concerns into the formulation of overall business strategy and ensures that, not only are such factors considered, but also represent definite criteria upon which strategic decisions are made. With respect to the involvement of the HRM function in overall business strategy, 60 per cent of respondent practitioners suggest that they are involved either from the outset or on a consultative basis. In recent years, a key aspect of the adoption of what has been termed a "strategic business manager role" has been the devolvement of decision-making and increasing the accountability of local and less senior managers (Edwards 1987). Given the nature of their jobs, there is general agreement that the day to day conduct of industrial relations must inevitably lie with line and staff managers and subordinate supervisors. However, in the Irish context, evidence indicates that line managers have not been passive in accepting greater responsibility in HRM and have sought increased input into policy making decisions in these areas (see Table 5). Table 5:

Responsibility for Policy Decisions in HRM Areas (in %) Line Mgt.

Pay and benefits Recruitment Training and development Industrial relations Health and safety Workforce inclusion in dec. Source:

8.7 10.1 7.2 8.0 14.5 14.5

Line Mgt and HR Dept. 12.3 21.0 16.7 18.8 21.0 26.1

HR Dept. and Line Mgt. 36.2 44.9 54.3 42.8 43.5 39.9

HR Dept. 32.6 15.2 13.0 21.7 13.8 11.6

Price Waterhouse Cranfield Project (Ireland), University of Limerid., Limerick 1992.

The Price Waterhouse Cranfield Survey offers prima facia evidence of the growth of the "business manager role" as a prominent model of HRM in Irish organizations as senior HR practitioners adopt an increasingly strategic role, devolving operational tasks to less senior managers. However, such generalizations are subject to a number of qualifications. A considerable number of the innovations noted above have occurred in a piece-meal and ad hoc fashion. While board level representation and participation in strategy formulation appear to indicate the operation of strategic HRM in respondent organizations, other associated activities appear to be neglected. One such critical area is strategic planning, specifically strategic manpower planning. Whilst a majority of respondents indicate that manpower planning is undertaken (83.3 per cent), such planning cannot be considered strategic however, as in many cases it fails to consider environmental trends and is predominantly short term in nature. While strategic HRM may have become a topic

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of increasing interest in recent years, it appears that for many organizations it remains an aspiration and a deal of work needs to be done in order to develop a truly strategic and internally consistent process of managing human resources in many Irish organizations. A second notable qualification is that changes have not been homogenous across organizations. In attempting to explain variations in the role and status of HRM practitioners studies by Murray (1984), Shivanath (1987) and Gunnigle (1992a) revealed that company ownership has a pronounced affect on the role and status of HRM practitioners. Evidence from the Price Waterhouse Cranfield Project seems to indicate a trend towards increasing polarization in the fortunes of the HRM functions in organizations of various ownership. In particular, it seems that HRM practitioners in US owned companies operate at a higher level and are engaged in a broader range of HRM activities than is the case in most indigenous or European owned companies.

5

Change in Human Resource Management

As indicated in the preceding discussion there is a widespread view that HRM practice in Ireland has undergone significant change over the past decade and that the traditional pluralist model is being replaced by approaches incorporating either a variant of traditional pluralism (neo-pluralism) or a unitarist perspective involving a range of HRM policies designed to eliminate employee needs for collective representation (neo-unitarism) (Gunnigle 1992b, Hannaway 1987, McGovern 1989). This section considers the evidence and nature of change in HRM practice in Ireland.

5.1

Growth of Atypical Employment Forms and the "Flexibility" Phenomena

One of the most visible changes in employment practices in Ireland has been the growth of "atypical" employment forms. Atypical employment is defined as any form of employment which deviates from the full-time, permanent format and includes self-employment, temporary and part-time work. However, this trend must be viewed in the context of broader changes in employment patterns: particularly the expansion in unemployment (by over 250 per cent since 1979); and shifting employment patterns characterized by a fall in agriculture, manufacturing industry and the public sector and growth in the private services sector — an area which has been traditionally associated with atypical employment forms.

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Ireland Table 6: Year

Typical and Atypical Employment 1983-1989 Total employment ('000)

Atypical employment* Number ('000)

1983 1985 1987 1989

859.1 830.1 841.0 840.8

180.7 195.6 215.4 226.3

% of total employment 21.0 23.5 25.7 26.9

* These figures are adjusted for overlaps in atypical employment forms (see Dineen 1989). Source:

Labour Force Survey Data, Central Statistics Office, Dublin, 1983-1989.

An associated issue is the contention that the flexible firm model as advocated by Atkinson (1984) characterized by the planned development of a core/periphery employment model is emerging in Irish organizations. Within this scenario the "core" is composed of full-time staff enjoying relatively secure challenging jobs with good pay and employment conditions while the "periphery" is composed of an amalgam of temporary, part-time and contract groups enjoying much less favourable pay and employment conditions and less job security or training and promotion opportunities. The flexible firm scenario is based on the planned development of this core/periphery employment model incorporating increased flexibility in three key areas, notably: - functional flexibility incorporating multi-skilling; - financial flexibility whereby pay rates are linked to state of the organization's labour and product market and pay increases for individual employees are variable dependent on evaluations of employee performance - numerical flexibility incorporating extensive use of atypical employment forms which allow the organization to take on and shed labour flexibly in line with business needs. Current Irish evidence indicates a definite trend towards greater flexibility (Suttle 1988). However, this is essentially confined to numerical flexibility, predominantly in the service sector, and may in part be a factor of record employment levels currently running at 20 per cent of the workforce. This ensures an abundant supply of labour to fill such temporary, part-time or sub-contract jobs. However, the Irish evidence suggests that functional flexibility is much rarer and largely confined to manufacturing industry. Equally there is some limited but piecemeal evidence of the emergence of greater financial flexibility largely related to the increased incidence of performance related pay systems. However, the evidence to date does not point to any widespread combination of different forms of flexibility. Indeed it seems that, while flexibility is on the increase, this is occuring in a some-

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what piecemeal form in reaction to depressed labour and product market conditions rather than as a planned emergence of the totally flexible firm.

5.2

Strategic Integration of HRM Considerations

Strategic integration refers to the integration of human resource considerations into wider strategic planning and the development of proactive and coherent HRM policies which are powerfully linked to business strategy. This contrasts starkly with the traditional industrial relations/personnel management model as discussed above. The Irish evidence suggests that the most visible examples of proactive HRM type polices are in foreign owned companies, particularly of US origin, which have established in greenfield sites since the late 1970s (Murray 1984, Gunnigle 1992a). Ireland has seen a dramatic growth in the number of Multinational Companies (MNC) establishing here since the 1970s. This MNC investment has come mostly from US owned firms in the high technology sectors (mostly electronics, software development and pharmaceuticals). Many of these MNCs originate from a culture of non-unionism. Consequently, they will generally seek to pursue the non-union path in establishing plants abroad and have done so with considerable success in the Irish context. In general there is need for caution in generalizing on HRM practices of MNCs on the basis of limited, if prominent, examples. Industrial structure and product market conditions are important factors influencing employee relations styles and related issues at establishment level (such as labour costs) and it is difficult to draw any general conclusions from current data on the Irish experience, which is largely piecemeal and anecdotal. However, there are indications that some organizations are pursuing more sophisticated approaches, particularly in companies established since 1970. However, such approaches may range from sophisticated, employee centred HRM policies to "harder" based on low pay/low cost strategies.

5.3

The Role of Trade Unions

Despite Ireland's history of relatively late industrialization, trade unions and collective bargaining were well established by the early 1900s. Trade union density in Ireland is quite high with approximately 44 per cent of the workforce unionized. Irish trade unions are organized on an occupational basis. They can be loosely categorized into three groupings:

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151

- craft unions catering for workers who possess a particular skill in a trade where entry is restricted through apprenticeship or equivalent; - general unions catering mainly for unskilled and semi-skilled employees; - white collar unions catering for professional, supervisory, technical, and clerical employees. The total number of unions in Ireland amounts to some 65 unions catering for a total membership of around 460,000 or 44 per cent of the workforce (see Table 1). The 1980-1987 period witnessed the most serious decline in trade union density since the 1930s. In the period 1980 to 1985 trade union membership in the Republic of Ireland fell by some 44,000 members. However, this decline is principally attributed to macro-economic factors, most notably economic depression, increased levels of unemployment and changes in employment structure characterized by a decline in traditionally highly unionized sectors (typical employment forms in manufacturing industry and the public sector) and growth in sectors which have traditionally posed difficulties for union penetration, particularly private services (see Roche, Larraghy 1989, Roche 1990). A study by McGovern (1989) points to increasing opposition to union recognition in the 1980s, suggesting that management approaches to unionization have either hardened in line with the "anti-union" style or become "more subtle" in attempting to avoid unionization. As mentioned above, the US has been the major source of foreign investment in industry through the establishment of manufacturing plants here. Initially, a majority of such firms which established plants in Ireland adopted "soft HRM" approaches and union avoidance was seen as a result of benign personnel policies. However, recent evidence points to movement, in some of these firms, from "soft" employee centred HRM to "harder" HRM forms which prioritize business/cost considerations (Gunnigle 1992b). Some more recently established large non-union companies also appear less inclined to adopt "soft" HRM practices to ensure union avoidance and are adopting "hard" HRM styles from the outset (Gunnigle, McMahon 1992). Despite some of the developments discussed above, trade unions remain integral to the fabric of HRM in Ireland. The recent Price Waterhouse Cranfield Survey of HRM practice found that the over 84 per cent of large Irish firms surveyed recognized trade unions and this figure rose to 100 per cent in the public sector. Over half the respondent firms reported that more than 75 per cent of their staff were trade union members. This would seem to indicate that union membership in Ireland remains robust. Turning to the issue of trade union influence in workplace industrial relations, the PWC survey found that 19 per cent of Irish firms felt that trade union influence has decreased, 56 per cent felt there had been no change and 8 per cent felt that union influence had increased (see Table 7).

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Table 7:

Change in Trade Union Influence (in %) Trade union influence 7.0 19.0 52.0 22.0

Increased Decreased Same Missing Source:

Price-Waterhouse Cranfield Project (Ireland), University of Limerick, Limerick 1992.

A somewhat different picture emerges from a recent study of HRM practices in recently established organizations (Gunnigle 1992a, 1994). This study found a high incidence of non-union firms (54 per cent) and lower relative levels of trade union density. The incidence of non-unionism was mainly related to ownership and industrial sector. Indeed non-unionism was predominantly confined to US owned firms. Most Irish, European and Japanese owned companies recognized trade unions. The study also found that, for the great majority, the decision to pursue the non-union route was determined at corporate headquarters. Most firms which recognized trade unions had closed shop agreements with one or more trade unions. Also union recognition was generally confined to manual grades and concentrated in general rather than craft or white collar trade unions.

6

Conclusions

This chapter has attempted to sketch the nature of HRM in Ireland and the major HRM policy choices facing Irish organizations. Of particular significance in the Irish context is the degree to which more individualist approaches are being adopted and replacing traditional pluralism. In evaluating current Irish developments, there has been a trend to incorrectly equate notable examples of individualist HRM practices with the widespread pervasiveness of such approaches. Much of the evidence suggesting the adoption of more "sophisticated" HRM approaches emanates from the US. However, differences in industrial and employment structure, employee relations traditions and trade union density are some of the unique factors influencing organizational approaches to the management of human resources in Ireland. This chapter suggests that there is evidence of more proactive and individualist approaches to HRM, particularly among newer organizations. Indeed it would seem that developments in business strategy, technology and product markets are creating greater organizational awareness of the impact of HRM considerations on business performance. Recent developments suggest a strengthening of the unitarist ideology, greater opposition to union

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recognition, and the emergence of a strong non-union sector. It seems likely that more innovative HRM approaches will continue to be adopted with the more significant change (particularly the incidence of union avoidance) likely to occur among large firms establishing at greenfield sites. Among established firms it seems likely that change in HRM will be more piecemeal and incremental. Indeed the widespread integration of HR considerations into strategic decision-making and the adoption of complementary and coherent HRM polices would require considerable change in the approach of Irish organizations. Thus, for established firms it is suggested that such change in HRM approaches will be gradual rather than dramatic and involve incremental change on the traditional industrial relations model. In terms of HRM approaches this would infer that the thrust of any change will be towards neo-pluralist approaches incorporating more sophisticated HRM practices being developed alongside, rather than necessarily in place of, traditional collective bargaining. Looking to the future it seems that the specialist HRM function will play an important role in the effective management of organizations. Continued MNC investment, particularly from the US, will ensure that organizations practicing sophisticated HRM approaches incorporate HRM considerations in strategic planning. HRM policies in areas such as recruitment, employee development and remuneration policies will need to complement strategic purpose and help achieve broad business goals such as improved performance and quality. For indigenous organizations the increased drive for competitiveness together with existing models of "good" HRM practice may accelerate the search for competitive advantage through better workforce management. Organizations pursuing the non-union route may come under increasing pressure for union recognition again emphasizing their need for a developed HRM function to facilitate union avoidance. In established organizations, including the state sector, it is likely that existing arrangements will survive together with a reliance on collective industrial relations. However, institutional innovations involving change in management approaches and work systems will evolve, necessitating a significant input from HRM specialists.

Notes 1

The Price Waterhouse Cranfield Project on International Strategic Human Resource Management was established in 1989 and is designed to analyze the nature of human resource management practices at organizational level in Europe. The most recent survey, conducted in 1992, involved an analysis of HRM practices in twelve European countries. The project is co-ordinated by Professor Chris Brewster and Ariane Hegewish at Cranfield University School of Management in the United Kingdom. For a Review of the data emanating from the Price Waterhouse Cranfield Project see Brewster (1994).

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The Republic of Ireland participated in the survey for the first time in 1992. The project in Ireland is co-ordinated by Patrick Gunnigle at the University of Limerick with the assistance of the Labour Relations Commission. Further details are available on request from the author. The data used in this chapter includes organizations with more than 200 employees only.

References Atkinson A.J., Flexible manning: The way ahead. Institute of Manpower Studies, London 1984. Brewster C., Hegewisch A. (eds.). Policy and practice in European human resource management, Routledge, London 1994. Dineen D., Changing employment patterns in Ireland: Recent trends and future developments, Irish National Pensions Board, Dublin 1989. Edwards P., Managing the factory, Blackwell, Oxford 1987. Fitzgerald I., Social charter: Implications for Irish personnel practice, Unpublished BBS Thesis, University of Limerick, Limerick 1992. Flood P, Human resource management: promise, possibility and limitations, Research Paper, University of Limerick, Limerick 1989. Ouest D., Human resource management: Its implications for Industrial Relations and Trade Unions, in: Storey J. (ed.), New perspectives on human resource management, Routledge and Kegan Paul, London 1989. Gunnigle P. (1992a), Management approaches to employee relations in greenfield sites, in: Irish Business and Administrative Research Journal, 1992, Vol. 13, No. 1. Gunnigle P. (1992b), Changing management approaches to employee relations in Ireland, in: Employee Relations, 1992, Vol.14, No. 1. Gunnigle P., Exploring patterns of industrial relations management in Greenfield Sites, Mimeo, University of Limerick, 1994. Gunnigle P., Brady T., The management of industrial relations in the small firm, in: Employee Relations, 1984, Vol. 6, No. 5. Gunnigle P., McMahon J., Change in HRM practices: Developments in employee relations styles in Irish industry, Unpublished working paper, University of Limerick, Limerick 1992. Gunnigle P., Morley M., Something old, something new: A perspective on industrial relations in the Republic of Ireland, in: Review of Employment Topics, 1993, Vol. 1, No. 1. Hannaway C., New style collective agreements-an Irish approach, in: Industrial Relations News, 1987, Vol.13. Hannaway C., Why Irish eyes are smiling, in: Personnel Management, May, 1992. Heraty N., Morley M., Turner T., Trends and developments in the organization of the employment relationship, in: Continuity and change in Irish employee relations. Report to the Department Of Enterprise and Employment, University of Limerick, Limerick 1993. Hillery B., An overview of the Irish industrial relations system, in: Industrial relations in Ireland: Contemporary issues and developments. University College, Dublin 1989. Hourihan F., The impact of European union on industrial relations, in: Industrial Relations News, 1993, Vol. 8. Kakabadse, Α., Top people, top teams, Paper presented to the Annual Conference of the Irish Institute of Training and Development, Changing people and business, Limerick 1990. Keenoy T., HRM: A case of the wolf in sheep's clothing?, in: Personnel Review, 1990, Vol.19, No.2. Kelly Α., Brannick T., Explaining the strike proneness of British companies in Ireland, in: Irish Business and Administrative Research Journal, 1988, Vol. 26, No. 1. Mc Govern P., Union recognition and union avoidance in the 1980s, in: Industrial relations in Ireland: Contemporary issues and developments, University College, Dublin 1989. Murray S., Employee relations in Irish private sector manufacturing industry, Industrial Development Authority, Dublin 1984.

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Roche W.K., Industrial relations research in Ireland and the trade union interest, Paper presented to the Irish Congress of Trades Unions Conference on Joint Research between Trade Unions, Universities, Third Level Colleges and Research Institutes, Dublin 1990. Roche W.K., Modelling trade union growth and decline in the Republic of Ireland, in: Journal of Irish Business and Administrative Research, 1992, Vol. 13, No. 1. Roche W.K., State strategies and the politics of industrial relations in Ireland, in: Industrial relations in Ireland: Contemporary issues and developments, University College, Dublin 1989. Roche W.K., Larraghy J., The trend of unionisation in the Irish Republic, in: Industrial relations in Ireland: Contemporary issues and developments, University College, Dublin 1989. Roche W.K., Larraghy J., Cyclical and institutional determinants of annual trade union growth in the Republic of Ireland: Evidence from the DUES data series, in European Sociological Review, 1990, Vol. 6. Shivanath, G., Personnel practitioners — Their role and status in Irish industry, Unpublished MBS Thesis, University of Limerick 1987. Suttle S., Labour market flexibility, in: Industrial Relations News, 1988, Vol. 38, pp. 13-16. Teague P., Grahl J., Industrial relations and European integration, Lawrence & Wishart, London 1992. Tyson S., The management of the personnel function, in: Journal of Management Studies, September, 1987. Von Bogandy Α., The contours of integrated Europe, in: Futures, 1993, Vol. 25, No. 1.

Italy Carlo Alessandro Sirianni

1

Introduction

In recent years in Italy, as in the rest of Europe, new and profound changes have occurred both in institutions and in the economic and political world as a whole. Such transformations in social and economic systems, typical of societies in the phase of transition to industrially advanced economies, have determined the need for strategic and organizational re-orientation of Italian companies. Much of the transformation which has occurred derives from the great importance of "information", and the ever more variable "knowledge" of a strategic order which stems either from the attenuation of the dominance of the production of goods in favour of services, or from structural changes in company organization. Moreover, there have been changes in value systems at company level which place less emphasis on "social responsibility", but instead the correct performance of an institutional role according to business logic. There have also been changes at the level of individual workers for whom, according to this same business logic, ability and personal characteristics must count more than an ideology of guarantees at any price (Auteri 1987). Thus, the concepts of meritocracy, professionalism and recognition for individual performance have taken on greater relevance, radiating outwards towards other domains which, in turn, are linked with aspects of the global strategy of the company, such as remuneration. Thus it can be seen that each transformation provokes a chain reaction for other changes in the company. In the past, it was first and foremost the outside world which played a determinant role in the strategic choices of the company: its influence was felt right through to the level of internal organization. Today, companies seem to be developing towards behavioural models in which the energy being stored up against future upsets, on the contrary, comes from the inside. In this context, companies require management techniques which are coherent with the level of environmental complexity. In all companies, but es-

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pecially in large ones, increased competition has arisen mainly from human resources, which must in consequence be managed with the greatest attention. Models of HRM thus develop which are distinct from the "management of big numbers", and use more refined techniques, in which the abilities and competences of individuals find considerable and adequate recognition. According to applied management theories, the personnel function in Italy has moved from an administrative role (staff accountancy, legal and social security concerns), to an auxiliary role (the personnel office helping the other functions), then to a specialized functional role, and finally to a strategic role (Actis Grosso 1983, 1992). Thus it is in a transitional phase from personnel management towards human resource management. Four main functions are carried out by human resource management: selection, evaluation, the creation of incentives, and development. These elements reflect the sequential tasks of personnel management and can be represented by the scheme of the "human resource cycle" (Tichy et al. 1982). The various elements are programmed to influence individual behaviour in order to improve individual and company performance. Another two elements must be added to those noted above: human resource planning and industrial relations. Personnel planning, based on the tools and techniques of determining and controlling employee numbers, permits decisions related to the satisfaction of human resource needs in the enterprise, and constitutes a tool for the integration of the various activities of human resource management in order to make personnel policies coherent through strategic and organizational design (Manzolini 1984). Industrial relations have always occupied a prominent position in Italy. The need to orient human resource management toward a more strategic vision is felt on many sides (Costa 1990; Fontana 1984, 1991; Boldizzoni 1990). It can thus be seen that in Italy the personnel function must co-ordinate these changes, beginning with the transformation of the structure of the personnel service. It will pass from having a responsibility for operational problems, and thus only a marginal role, to assuming a more strategic part. Studies on human resource management, first developed in the USA and now also in Italy, have concerned the following areas: - "the strategic management of human resources" (Tichy, Fombrum, Devanna 1984; Dyer 1976); - "the application of the value chain to human resource management" (Porter 1987; Costa 1992); - "human resource management as a service" (Costa 1992). The present study will outline an innovative approach to personnel management, making use of techniques which have hitherto remained at the level of theory rather than being put into practice.

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The development of the personnel function has pushed it toward a new configuration, characterized by high pervasiveness, relative de-specialization and changes in the professionalism of employees in this function (Costa 1991, Fontana 1991, Maggi 1979).

2

Development of Human Resource Management Models in Italian Companies

2.1

General Analysis According to Historical Development

From a first general analysis we can distinguish four phases in the development of human resource management models in Italian companies: - A first phase, from around the 1930s, shows personnel management principally orientated to problems of employee discipline. The dominant logic of these personnel management models was "productional", reinforced by a supply of labour much greater than the demand, and by the non-strategic character of the human factor. - The next phase (the 1950s) was characterized by the expansion of "human relations" philosophies imported from the United States. At this stage, models of human resource management focused primarily on the search for consensus. - The 1960s saw personnel management claim its own autonomy and its own power within the company system. It took on the role of "an intermediary between the requests of the employees and the company" (Boldizzoni 1990). Moreover, the techniques of human resource management, acquired but not used in the preceding period, began to permeate into company management systems. - At the beginning of the 1970s the prevailing role of personnel management was that of "managing union conflict" which was very intense in those years, so that little attention was given to human resources in terms of development. In the second half of this period the personnel department took on a new role, which was largely "political", increasing its own power and involvement in company strategies.

2.2

Distinctive Models of Human Resource Management

The high degree of environmental instability, the rising level of competition, and the progressive globalization of economies and markets determine the need for companies to revise the policies and techniques normally used in

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business management in order to confront future challenges based on emerging changes. As productive systems are based essentially on people (especially those systems producing services), human resources represent "capital" in which to invest. There is, however, a difference between the ideal profile of human resources, expressed by the behavioural needs of the organization structure, and the real profile of existing employees. The objective of these decisions is to have available, at the right time, personnel with qualifications appropriate to the task to be carried out. The task of human resource management thus becomes one of evening out the existing discrepancy. Research on new methods of human resource management has produced several models, which may be divided into two streams: - human resource planning; - strategic management of human resources. The first approach, which may be attributed to dominant strategic thinking, sees human resource planning as an integral part of the strategic planning process. Human resource planning has the task of providing an adequate flow of employees and their best distribution and use among the various company activities. HR planning employs techniques of varying sophistication and methodologies in order to improve the quality of decisions related to human resources, in a systemic view (Fontana 1984). Planning permits the definition of needs of personnel on a temporal scale (according to the plans for company development projects), using both external (selection) and internal (mobility) sources, and also the diagnosis of the need for restructuring and training interventions. The main phases of such a process are firstly the definition of the real needs of the company by a comparison between present and future availability, and secondly the definition of management policies for training, career planning, mobility and integration are concerned. The principal criticisms of this conceptual framework relate to the high level of rationality attributed to the human factor and the possibility of its being the object of planning. Furthermore, the model is more suitable to a stable business environment than to a dynamic one with high levels of environmental turbulence (Mintzberg 1985). These two factors have notably reduced the applicability of the model in general, and particularly to Italian companies (Cocco 1979). The "strategic human resource management" approach (see e.g. Tichy et al. 1982) is less easily criticized than "human resource planning", but this does not account for the fact that it has been more often applied in Italian companies. The original researchers' objective was the definition of a conceptual model that would ensure the integration of human resource management in the strategic business framework, through the development of

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coherent patterns and schemes "for the conceptualization of human resource management, understood as a strategic technique for reaching the goals of the company" (Tichy et al. 1982; Tichy et al. 1984). The starting-point is the recognition of the dialectic between strategy and structure, between subjects and environmental context, between technology and operative systems, and the necessity of creating a balance (Camuffo, Costa 1990; Camuffo 1987). The goal is to elaborate a model capable of interpreting the possible combinations between the strategic profile of the company and the profile of human resource management. The main target for strategic management is the continuous effort to create coherence between company strategies, organizational structure and HRM (Boldizzoni 1990). "The most efficacious and efficient firm is the one which succeeds in dynamically securing this situation" (Tichy et al. 1982). This formulation also presents certain weaknesses. One criticism raised derives from the hypothesis of "a causal direction between strategy/structure/human resources" sustained in the model and its consequent entrapment on the shoals of the dominant strategy/structure paradigm (Grandori 1984). Further studies on the connections between strategies and human resources have emphasized two dimensions in the strategic outline of the enterprise: strategy and the approach to strategic decisions (Costa 1990). Strategies may be classified according to five definitions: entrepreneurial, related to dynamic development, to profit and rationalization, to disinvestment and restructuring, as well as to balancing the budget and may be approached in a linear, interdependent or evolutiuonary way. Thus analyzed, the strategic outline of the company is associated with all the decisions characterizing human resource management, and striving to find a balance. These aspects of decision-making at management level may then again be classified as (Manzolini 1984): - transactional: the leadership form chosen by the enterprise in work transactions for the acquisition of human services (such as marketing, hierarchy/organization, informal network, clan); - relational: the fundamental reference point between the enterprise and the worker (object, subject, system); - contractual: the characterization of work relations as implicit/explicit, or as individual/collective; - temporal: past and near future, future and long term. The complex interaction among the various possible orientations allows us to identify some typical situations arising from the strategic setting. Thus, for example, the strategic evolutional approach within a dynamic development strategy is coherent with a human resource management characterized by an orientation towards the future systematic relationships, and mixed

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forms of market and organization. A decentralized organization derives from a personnel policy emphasizing creative, innovative and participative attitudes, developed through training. The systems of potential evaluation and retributive policies, characterized by incentives for both goals and results, are equally important. The present approach to the strategic management of human resources does not attempt to prescribe precise formulas to be applied to individual situations, but instead attempts to outline a model which can be used for the analysis of choice and planning problems in operative systems, and which helps to create a connection between the definition of strategies and the strategic management of the human variable. Another model for the analysis of coherence between a firm's strategy and human resource management appears when the concept of the value chain (Porter 1987) is applied to the activities of the personnel function. The value chain divides and subdivides the company into value generating activities which are strategically relevant to obtaining competitive advantages. Such activities are divided into primary activities and support activities. The value chain approach is related to the need to formalize the personnel department's contribution to company results. It explains how and why HRM contributes to reinforce the global competitiveness of the firm. The third approach to HRM in fact does not propose a new model of human resource management, but a review of the techniques available to the personnel department, attempting to overcome criticisms raised through the interpretation of the organization as a system that learns and transforms itself through the action of a plurality of internal and external subjects, which interact with environmental changes (Costa 1989). In this case, the formulation of business strategy emerges in an incremental manner, strengthened by a management of human resources aimed at stimulating learning abilities and organizational innovation (Boari 1986). This approach to the personnel department as a service (Costa 1989) is interesting, insofar as it is considered a distributor of a multiplicity of services, to as many functions and company units as there may be. Through this change in the traditional orientations of HRM, the personnel function tries to reclaim legitimacy, in both the firm's strategy and environment, developing a new image based on the capacity to offer an effective contribution to problem-solving. Thus human resource management adopts internal market concepts. Activities of the personnel function are perceived as "services" to be "sold" to an internal market constituted by employees and other units of the firm. This new approach analyzes the tasks of the personnel department according to a different perspective: the tasks are considered as the mission or the functional strategy; the employees are treated as customers and internal organization is seen as the method used for service and technology.

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Services are classified as: -

compensation elements (different kinds of incentives); economic products (financial facilities); welfare products (medical and legal services); informational products (handbooks, periodicals); logistic and recreational products (canteens and internal banks).

The service view of personnel management emphasizes new frontiers for human resource management and underlines its contributions to the company goals as well as its integration into the firm's strategies. Service as a means of action should not be an end in itself, but should be applied to an interfunctional context and embedded in a strategic vision of personnel management.

3

Personnel Management and the Context of Industrial Relations in Italy

The 1980s witnessed the decline of the "large integrated and diversified" economic organization which had been the symbol of the dominant structure of the firm in the preceding decade. The decline of the large firm led moreover to a reorientation of the trade union process which until that moment had taken on the distinguishing features of mass trade unionism with a tendency toward centralized decision-making (Boldizzoni et al. 1989). New characteristics of the Italian labour market tended on one hand to the elimination of proletarian consciousness in workers (Boldizzoni et al. 1989). On the other hand, they pushed toward a transformation of class interests into numerous specific interests connected to social-professional groups. In the industrial relations system the main actors are, management, workers, trade unions, the three important unions being CGIL (Confederatione Italiana Sindacati Dei Lavoratori), CSIL (Confederazione Generale Italiana Del Lavoro) and UIL (Unione Italiana Del Lavoro). Relations between management and workers can be regulated by direct transaction or mediated by trade union organization. As emphasized above, the 1980s were characterized by a notable reduction in the influence of trade unions, partly due to competition among the different unions and therefore a low propensity to co-ordination. Other explanations for this phenomenon are varied and interdependent (Chiesi 1988). Errors made by trade union organizations may be mentioned, but also attacks by entrepreneurs. Moreover, structural changes in the labour market and society also had a strong influence. On the other hand, the loss of trade union centrality does not seem to have been accompanied by a parallel reduction of the tendency to collective

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action. When analyzing the rates of overall trade union density of approximately 40 per cent (Breisig et al. 1993), one notices that the reduction in membership registered from 1976 to 1986 in the agricultural and manufacturing sectors (-9.0 per cent) is roughly compensated by an increase of the unionization rate in the tertiary sector (+9.1 per cent). It is also interesting to note that, while the geographic distribution of trade unions shows a clear decrease in the northern industrial triangle, there is a significant increase in the south. This may be related to other problems provoked by the North/South contrast such as qualifications, motivation and productivity, which do not have the same meaning in the two parts of the country and necessitate special managerial attention in the Mezzogiorno (Brunstein 1995). The interpretative key to the evolution of the context of industrial relations in Italy is not so much a dimensional and quantitative one, relating to the variation of density and new memberships of trade unions. It signals, rather, the beginning and development of autonomous trade unionism, testifying to the lack of congruity between the present structure of the main trade unions and the present composition of the central core of the Italian workforce (Nacamulli et al. 1989). The first consequence of the changed relationship with the trade unions within companies has been a decrease in the political role of the personnel function which moved from a trade union logic to a logic of human resource management, where relations became more negotiable than conflictual necessarily transforming the patterns of managerial self-presentation in respect to relations with the labour force. Enterprises no longer react by following a logic of defensive opposition to trade union claims. Instead they try on their own initiative to find forms of agreement in which there is a common advantage. The near absence of a clear legal framework regulating procedures for the defence of workers' interests by unions allows for a great variety of situations (Breisig et al. 1993). A positive orientation has developed toward trade union relations in order to improve the organizational climate. Moreover, the decline of trade union power and the greater complexity as well as environmental and competitive uncertainty in which the companies must operate, all push managers toward a more efficient use of internal political relations. They thus aim at increasing loyalty toward the company through a more intense involvement of workers, not limited only to utilitarian and calculated aspects, but also extended toward ideal and moral ones, which previously belonged exclusively to trade union organizations (Boldizzoni et al. 1989).

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4

Current Trends in the Management of Human Resources in Italian Companies

In order to analyze the current state of the art in human resource management in Italian companies, it is necessary to emphasize the particularity of the structure of Italian industry. From 1STAT (National Institute of Statistics) data of the 1971 and 1981 censuses on Italian industries, the importance of small companies is evident. In these decades — and this data has also been confirmed by more recent studies — the growth pattern of these enterprises is clearly more marked than that of companies of large dimensions. For example, companies with between 10 and 99 employees registered an increase of 21.1 per cent in terms of employees and 39.3 per cent in terms of results, while companies with 100 to 499 employees registered increases of 2.6 per cent and 5.3 per cent respectively (Boldizzoni 1985). These findings suggest that we must consider the problem of human resource management separately in small and medium-sized companies. Moreover, the banking sector should be considered separately. Over the last few years, there have been big changes in legislation as well as in management and organizational models in this sector. Diversification, privatization and concentration are pushing the banks to review their HRM models. The results will be interesting to analyze.

4.1

Human Resource Management in Large Companies

Focusing attention on the following fundamental aspects, the most important empirical research done in the past decade (ENI 1978, ISTUD-HAY 1981) identifies three areas of observation concerning HRM. Problems of power are illustrated by the level of formalization of the personnel function and its activities. The technological advance appears in the degree of sophistication and the use in practice of techniques and methodologies for human resource management. The influence upon strategic decisions may be seen in the important role of human resources and the related involvement of the personnel function in the boardroom Models of personnel management are evolving in different directions and revealing specific trends. Thus the HRM function tends to be intitutionalized within the organizational system of the enterprise. Specific HRM-related know-how and the use of more sophisticated HRM techniques are increasing. More and more often the personnel manager will be intregrated through co-optation into the strategic decision-making team. In the every-day running of Italian companies and their HR departments these evolutions have concrete consequences. Objective-connected and re-

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suit-linked methods of evaluation and compensation are progressively introduced. Growing importance is given to internal development "potential" of staff numbers. Management in general and human resource management in particular is continually trying to achieve greater coherence between organizational development, training and company plans, in spite of a low level of existing internal coherence, from a systematic perspective. The human resource management policies in Italian companies are prevalently characterized by orientations of efficiency inspired by an intensive use of the human factor in order to improve company performance, and not so much by the objective of making the most of human resources. 4.1.1 Structure and Activity of the Personnel Function In most Italian firms one finds great attention paid to human resources, with greater emphasis in service industries, in particular those with a high professional content and with an organizational location of the personnel function at the highest levels of the hierarchy, reporting directly to the managing director or the chief executive officer. Given such institutionalization of the function and of its "strategic" role, even in a supportive way, there is no strong tendency towards the vertical mobility of personnel managers or directors. In fact, a manager with a background in personnel was found at the top of only 2.6 per cent of the companies involved in the ISTUD study. Whenever the HR manager attains a key position in the organizational structure, this will substantially determine the number of activities carried out by the personnel department, leading to a significant influence in the change process. The prevalent title of "Department of Personnel and Organization" is a testimony to the increase of activities carried out in the area of organization. In most medium-large and large Italian companies, the personnel function shows an organizational structure which is already sufficiently articulated and diversified in terms of the tasks to be carried out. In addition to the functions that constitute the "core" of the organizational task, we find communication or internal relations, hygiene and work safety, planning and development of human resources and training. However, such articulation undergoes notable limitations as the size and/or internationalization of the company decreases. The ISTUD study shows that a significant variation occurs concerning the level of HR employees in comparison to the growth of activity, while the professional profile of specialists in personnel management also varies (ISTUD 1990). In terms of decision-making power, Italian companies show a tendency to channel responsibility towards the central personnel units, delegating a certain autonomy to the peripheral structures only in areas of managerial/nonprofessional training, employee management and union relations. A distinc-

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tion between the activities delegated to line management and those passed down to the periphery does not exist, except for the union relations activities which are entrusted exclusively to decentralized personnel management units (Boldizzoni 1990). Hence a shift of "focus" on the part of the personnel department emerges, moving away from industrial relations activity and from the management of excess personnel numbers, toward a greater attention to the "value" of human capital and to keeping quality, efficiency and effectiveness dynamically constant through development and training plans. Such an orientation is confirmed by increased investment in the training and development of executives and managers, by higher recruiting and selection expenses and by the introduction or updating of evaluation, career and compensation systems. However, such considerations count more for medium and large companies, both national and multinational than for small companies, where the activities of personnel administration and union relations constitute the pivotal function performed by the personnel department. The various programmes introduced by many firms in order to improve internal relations confirm this greater attention to human resources. Such programmes range from the provision of recreational facilities, to the creation of an appropriate section concerned with internal relations, including the diffusion of documents and information, the organization of meetings and social activities, as well as the involvement in development plans. Projects for the improvement of overall quality in the company may be related to such activities (Beer et al. 1985), with particular reference to quality circles and performance improvement groups. Quality is, in fact, one of the strategic priorities for Italian businesses in which the personnel department is directly involved. 4.1.2 Management Systems and Techniques In the past decade Italian companies have invested considerable amounts of energy and resources in the acquisition of and/or the development of specific know-how and methods of human resource management. Increasingly over the last three years, companies have concentrated their efforts on formalized systems for the evaluation of specialist expertise concerning positions and potential for top management, with the aim of organizing promotion of intermediate management and in many cases of non-managerial levels. On the contrary, investment in other techniques of human resource management has not been equally substantial, as the substitution tables and formalized succession plans show (Table 1). It is useful to note that for larger companies and multinationals, the changes in management techniques have followed a more regular developmental process throughout the decade, while in medium-sized companies

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with a prevalently national mission, an exponential growth has been registered in the last four years. In fact, the "smaller" companies, lacking strategic control systems, have not been able to anticipate changes in the competitive environment with sufficient immediacy nor to adapt their own strategic behaviour and managerial systems to the changed scenario. Table 1:

Existence of Human Resource Management Procedures (in %)

Job evaluation for managerial positions Job evaluation for non-managerial positions Systems for evaluation of managerial performance Systems for evaluation of non-managerial performance Systems for evaluation of potential at managerial levels Systems for evaluation of potential at non-managerial levels Formalized compensation schemes Formalized recruitment and selection schemes Formalized succession plans at managerial levels Formalized training schemes at managerial levels Training/practice schemes at non-managerial levels Source:

1981

1987

5.4

87.5 8.0 87.5 7.0 7.0 5.5 87.5

2.8 3.5 2.8 3.5 0.5 5.3 3.5 0.5 62.5 3.5

8.0 7.0 8.0 87.5

I S T U D (1990).

Among the changes recorded in human resource management, one of the most relevant is the transition from performance evaluation systems based on behaviour to systems based on objectives and results. Moreover, the evaluation of specialized competences at managerial levels has decreased in importance. It has been replaced by a more global concept of professionalism that demands greater "synergy" among the different competences, capacities and abilities of the manager (Fontana 1991). Nevertheless, the evaluation of techno-professional competences still remains important for non-managerial levels. These transformations have also modified the methods of compensation and career management within organizations. The individual remuneration of managers, is no longer restricted by the hazy concept of "merit", but takes into account the achievement of assigned quantitative objectives. In the past decade, strategic criteria have also been introduced to career management, making a career dependent on managerial ability rather than seniority and, in more advanced companies, on the level of potential shown in specific business areas or functions. Many firms have adapted their plans and training systems to these new characteristics aiming at the same time at both a valorization of human capital and a basic coherence between strategic management, organizational structure and personnel policies. Training is less focused on the needs of the person than on those of the organization, with a strategic vision grounded in organizational development.

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The degree of effectiveness of training thus becomes important to the company. Procedures of feedback and of evaluation have been introduced over the last few years in Italian companies, and these tend to indicate a certain gap between intentions and reality. 4.1.3 The Strategic Role of the Personnel Function In most Italian companies, the personnel function has assumed a key role participating actively in the formulation of strategy in larger companies. The contribution of the personnel function to decision-making often consists in the elaboration of different inventories in fields like managerial positions, skills and competence profile needs for key positions and potential skills and competencies available. It is also apparent in the efforts made to find a certain coherence between the changing reward systems and strategic objectives, making forecasts of labour cost trends all the more important. The strategic role of HRM may also be seen in its active contribution to organizational development plans intended to support strategic changes which may comprise redundancy. It should be stressed that the contributory role of the personnel function to strategy formulation has occurred late in Italian companies in comparison with the United States, where potential inventory succession plans, forecasts of future occupational needs, identification and evaluation of key positions were introduced much earlier.

4.2

Human Resource Management in Small Businesses

One distinguishing characteristic of the Italian industrial system is the existence of a great number of small companies. This particularity of the industry is not a temporary but a structural characteristic. It has represented one of the main determinants of the Italian phenomenon in the 1980s (Boldizzoni 1985). The small company has patterns of competitive and managerial business logic, as well as learning and development processes which are very different from those of large industries. Management processes are strongly determined by personal characteristics of the entrepreneur (culture, education, abilities). Enterprise development models are strictly dependent on the life/development of the entrepreneur, and also on his or her ability to react and adapt to environmental changes. These are some of the characteristics which have prompted many researchers in studies of small businesses to start from the socio-cultural features and personality of the entrepreneur. From the research of Deeks (1976), Collins, Moore (1970) and Boldizzoni (1988) it can be noted that in small companies human resource policies derive directly from the entrepre-

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neur and correspond to his or her personal characteristics and management style. Consequently it is impossible to find a homogeneous personnel policy for all small businesses; but there exists a variety of policies closely connected to the entrepreneur's profile (Boldizzoni 1985). Research on the current Italian context shows that in the face of problematic situations the entrepreneur will become personally involved in management activities. These may well be conceived of as operative in a few functional areas (economic and financial management, production), and not as a wholly integrated activity in all developmental aspects of the company. On the other hand, personnel management activities, even if admitted as generally important and problematic, are neglected, and delegated almost exclusively to line managers on an administrative basis (Boldizzoni 1985, 1988; Nanut, Compagno 1989). This orientation is also confirmed by research done in other European countries (Mahé de Boislandelle 1988); maybe Italian entrepreneurs are not so unique in HRM matters. Keeping this particular point in mind, one can synthesise the distinguishing features of human resource management in Italian small industries as follows: - Entrepreneurial values and motivation are of great importance. - Belonging (or not) to the entrepreneurial family nucleus may be an element of discrimination against co-workers. - The entrepreneur is only superficially involved in human resource management for which he has relatively weak specific abilities. - Personnel policies are implicit and contingent. - The entrepreneur and his or her executive collaborators often opt for an authoritarian management. - Globally human resource management meets with a low level of interest.

4.3

Human Resource Management in the Banking Sector

The banking sector has been chosen to illustrate in detail a certain number of recent trends such as the evolution of service firms towards consultancy, the growing interrelation of business strategies between clients and suppliers, changing corporate culture, the introduction of new technologies, the internationalization of HRM etc. The credit sector in Italy is undergoing a period of radical change, with considerable consequences regarding competition. Banks are currently undergoing strategic reorientation which makes organizational changes necessary and encourages the development of new management models, as well as profound modifications in the traditional ones.

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4.3.1 Reference Scenarios The creation of a single European market will contribute to the globalization of the competitive limits of many businesses traditionally considered domestic, and reinforce the interdependence both between countries and sectors (for example banks, financial intermediaries and insurance companies). The globalization of the banking sector is also being hastened by the growing needs for internationalization of companies (both industrial and service) in which the banks play an important support role with regards to competitiveness. This globalization is accompanied by the segmentation or even micronization of markets by homogeneous classes of clients. This phenomenon leads to the adoption of global product/service strategies, without neglecting the opportunities that may be derived from specific orientation of local needs or of particular categories of clients. Decentralization and the division of clientele into segments represents an organizational solution which allows strategic and operational flexibility, orientation toward the client and the separation of retail and wholesale banking. The prerequisite for efficiency in the organization and for decentralized decision-making is the availability of human resources. In addition, the existence of an adequate flow of information serving as a decisional support instrument is also needed. It will therefore be necessary to improve the ability of employees in problem-setting and problem-solving and also to develop communication skills, above all among those who increasingly hold front office positions. The segmentation of the market is derived from the growing sophistication and differentiation of the consumer styles of financial servicing. Individuals have become more skilled in handling savings, but at the same time, their need for financial assistance is on the increase. This need is also strongly felt by businesses. As far as companies are concerned, the banks provide competitive services, focusing particular attention on critical phases in the value chain of their business customers. The bank constitutes an important link in the multiple supply chains. As the modes of sales and distribution are changing, it is fundamental that the banks cater specifically for their clients, with the dual aim of understanding their needs and evaluating their reliability (no longer according to their wealth but to their business plans). At the same time, the adequacy of their own structures, skills and banking strategies will have to be taken into consideration. These new management trends are appearing widely in the business culture of the banking industry. As in other sectors, the common elements of this business culture are often ambiguous. They can be synthesized thus: - The role and professionalism of the banker. The principal responsibility of the banking executive consists in the concession of credit. The skill of

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the individual is measured in relation to this. On the other hand, the granting of credit, which is inherently risky, limits the possibility of assuming a purely client-centred management. This puts the banker into a conflictual position. - Sense of hierarchy. The activities of the headquarters of the bank are considered more interesting and satisfying than those carried out by branch offices. The ensuing sense of hierarchy influences the behaviour considered necessary in order "to advance one's career". In a client-centred management model, however, the order of importance must be reversed and the traditionally exacerbated attention to procedure along with a tendency to avoid responsibility eliminated. - Value attributed to information. The peripheral structures are depositories of mass information on the characteristics of the reference market, which they tend to keep to themselves as a source of organizational power. - Limited strategic vision of human resource management. Often discrepancies emerge between individual expectations and job assignments. In the processes of selection, derealization of offices, promotions and in the rotation of duties, the expectations of the employee are not always taken into consideration, in spite of the organizational theory which specifies the "task" as a motivator while "remuneration" or "transfer" are viewed as "factors of hygiene". Another basic tendency in all sectors and particularly in the banking area concerns the dynamics of technological innovation, with special emphasis on information technology (IT). In this field, innovation has been manifested by increasing changes, which in the long run have had a strong impact on the organization of the banking system. Information technology in the financial sector presents the peculiar characteristic of being an essential component of the product/service sold and at the same time representing the technology of processes of the relative operational cycle. This aspect is particularly evident in cash dispensers, points of sale and home banking. For Italian banks, automation and computerization determine the need for re-organization of work at both the central and peripheral level according to new quantitative and qualitative criteria. In this context, the role of the "single operator" carrying out the tasks of client reception, accounting and billing may be mentioned by way of example. On the other hand, the massive development of self-service has liberated resources which are available for other specialized activities. Moreover, the introduction of the role of "financial consultant" has strengthened commercial policies. The development of IT has led to the redistribution of existing resources to new professional families, and the institution of management logic as well as management instruments specific to their needs. Traditional office work is progressively disappearing, while a more global professionality is devel-

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oping. The new technology will allow the unification of the various tasks of the front and back office, leading to a reduction of the procedures involved. Thus information technology offers a wider selection of organizational solutions chosen because of their competitive nature. Consequently, it will be the market which assumes a central role, overcoming classic conceptions of computer technology as a determinant of specific organizational models. The evolution of banking organizational models can be efficiently analyzed according to three criteria: - Relationships with clients. The selection of a bank by a client, especially a business client, is based on strictly techno-economic criteria. This calls for a qualitative improvement in organizational assets of both the credit agency and the business client. The identification of one person (or office) in the bank who is responsible for client relations will become necessary. The functional organization according to product lines (i.e. the divisional principle) will become ineffective. - Assets of the network. The boost given to product automation by the development of I.T. has diluted the assets of the network of sub-branches (Baravelli 1989), while increasing the need for differentiation in branch banking: full service branches with a middle range of automation coexist with basic branches offering restricted services and being highly automated. - Centralization/decentralization. The present competitive situation is pushing banks to carry out a process of progressive decentralization of decisional responsibility towards the peripheral structures so as to intensify client relationships (Ruozi 1992). 4.3.2 Present Tendencies in Banking Strategies The integration of the European market has represented the opportunity of internationalization, especially for larger banks, which strive to work at high qualification in international markets and at the same time to be in full competition with banks of other countries. This requires adequate organization and the hiring or training of people with new kinds of skills. The process of privatization is being carried out simultaneously by some Italian banks; it often brings about an increase in job productivity as well as a process of internal restructuring, with the principal aim of reducing personnel. 4.3.3 Personnel Policy A description of personnel policy in the banking sector may be used as a basis for the definition of the Italian labour market in general. The job market of the 1990s presents certain tendencies signalling discontinuity in re-

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spect to the past. The marginal segment, that which is fed by non-European migratory workers, is growing. Moreover, the process of occupational restructuring is being enlarged in many sectors. In the banking sector in particular, the excess of personnel, although it has not yet reached threatening proportions, requires immediate attention. This excess is generally eliminated by turnover or re-absorbed by means of internal reconversion or through expansion programmes within the firm, in a perspective of rationalization and re-qualification of the whole entity. However, these initiatives are hindered by aspects of rigidity due to the incapacity of firms to adapt to demands which have become increasingly sophisticated and selective. The consequences of this are seen as unemployment in certain segments and as demands not satisfactorily met in others. In the banking sector as well as elsewhere, the remuneration policies are marked by efforts to contain labour costs and to increase competitiveness through the adoption of more flexible systems of remuneration, based on performance evaluation and incentives by objectives. The remuneration systems adopted by most Italian banks have not yet reached the necessary level of development for the introduction of mechanisms focused on individual performance incentives (IBO). However, there are some forms of incentives which at least make remuneration plans more flexible, even if they are less effective than IBO. These incentives are generally collective rather than individual and are carried out through: - performance premiums: included in the employee's work contract and awarded equally to all employees who have attained a "satisfactory" job performance level; - specific product sales premiums: individual premiums based on the volume of sales achieved by an employee in the commercial sector; they are not yet wide spread; and - value added premiums: collective annual premiums which are regulated contractually and determined by company results. The processes of personnel evaluation are divided into performance appraisal and evaluation of potential. In the first field, ratings have always existed in banks, independently of their size. The present trend towards a quantitative rating of the employee's performance now also includes and indeed concerns above all, the evaluation of his or her behaviour according to a series of behavioural objectives. This appraisal is generally carried out by the employee's direct supervisor, with a review by the head supervisor or the personnel department. The second stage of the performance appraisal process is based on the evaluation of the employee's behaviour in respect to the requirements of his or her position in terms of leadership ability, the ability to motivate co-workers, self-motivation, communication, decisionmaking ability and interpersonal relations. The evaluation is quantitative in

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so far as it uses a numerical scale to rate each of the afore-mentioned aspects and compare them with the required performance. The evaluation of potential is the other system used. In this case the employee's potential is identified in advance. This is quite a new trend in Italy, principally followed by larger banks and big companies in general (but not yet in small credit institutions) and committed to external consultants. Evaluation of potential compares foreseeable behaviour, professionalism and motivational characteristics of the employee with the future needs of organizational positions and responsibility in order to plan the development of personnel. As a consequence it may appear desirable to reduce the level of contractualization in order to leave more room for the evolution of internal relations and to give more importance to individual development. The aforementioned development towards performance appraisal and a flexible remuneration system have become necessary because of the clientfocused quality of service. It presupposes a different relationship between the management of the bank and its employees. A "bottom up/top down" relationship cannot strive in an atmosphere of permanent confrontation between trade unions and management. Trade union mediation will have to be replaced by a direct supervisor/colleague relationship integrating the supplier-client perspective. It is not intended that trade unions will disappear, but their roles will be redefined in order to overcome the logic of conflict that has until now distinguished them. The prescriptions of the Amato Law and of the second EC directive define the legal limits for strategic changes in the banking sector, but business culture may also be considered as a limitation. On the other hand, business culture may also be seen as a true organizational variable, and in particular, as a soft organizational control mechanism that operates ex ante, making the company, on the whole, more flexible. It has already been indicated that banks are characterized by a powerful culture. This will gradually be softened and integrate certain new fundamental principles, the most important one being an orientation towards performance (economic and quality of service) and towards the market. What is needed to make this come about is strong and consistent leadership with clear priorities in fields such as training and internal communication. As far as professional development of the employee is concerned, specialization remains the backbone of various professional constellations. It co-exists with new global qualifications. The synergization of basic abilities (knowledge, conceptual competence, behavioural ability) will favour the emergence of new combined metaqualities. These will be necessary for exercising responsibility as Specialisti Operativi (i.e. professionals who have to incorporate roles that were formerly separate). "Administrative" needs will be reduced; instead there will be more need for expanded global vision and inter-functional competences.

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Because problems will not always be solved by procedural approaches, more conceptual and behavioural flexibility will be required of the workforce. In decentralized networking organizations more responsibility will have to be assumed at the top of peripheral structures. People in these roles will often be called upon to make decisions that cannot be codified by organizational procedure. Flexibility will therefore become a fundamental prerequisite for the success of the company (Baravelli 1992). Professional obsolescence will be a permanent threat to be reduced through internal mobility and learning through experience for greater organizational know-how. Thus, a form of contingent professionalism, in which abilities are re-arranged in new professional contours in order to face management complexities in a more creative manner, is substantially developed. At the same time, the new competitive scenarios underline the importance of certain traditional abilities that may have been neglected: the ability to communicate, motivation, problem solving, negotiation and learning. The need for professionalism imposes serious revisions in the criteria and objectives of training programmes with particular stress put upon the development of collective learning and cross fertilization of organizational knowhow. However, in Italian banks, training is traditionally considered as a mere support function of operational activity rather than as a strategic asset. It suffers heavily from the dominant banking culture, a culture still oriented towards tasks and procedures. In consequence, training is at times viewed as an obligation by the participants. This factor is also due to the lack of adequate connections between training, career advancement and remuneration. The fact that the trainee either does not receive any feedback after the training programme or receives it only after a considerable delay reduces its effectiveness in terms of motivational reinforcement. Because organizational and personnel policy assets represent a definite competitive advantage, training will be considered as a priority of the management strategy. Thus it may be said that the competitive organization tends to be selectively articulated and simultaneously integrated. We clearly stand at the beginning of a new process. Growing attention is already being paid to the development of the critical factors of success, among which quality and time play an important role. Organizational vitality is increasingly considered as a means to make work intrinsically motivating.

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Some Ideas about Human Resource Management and the Single European Market

5.1

The Labour Market

The 1980s in Italy represented a turning point in unemployment. During that decade, the growth dynamics was reduced and unemployment started to become a real problem. The development of this tendency consolidated the traditional discrepancy in the occupational picture of Italy: structural excess of supply in the south and centre and the exact opposite in the north. This diversity of the labour market within one country is interesting in that it represents on a small scale the contrast that may be found within the EU. In the north, the low supply of labour due to the absence of the baby boom has coincided with a period of economic growth, and the level of unemployment has therefore been in net reduction. In the centre and the south, however, the continuance of a demographic increase has contributed to the stimulation of the employment unbalance. Can we draw any lessons from the Italian situation and its north/south divide? The national report on the application of the Social Charter in Italy (Commission of the European Community 1993) proves that reforms were urgently needed and shows that recent initiatives coincide with the European Social Model. For instance, the conditions according to which the Cassa Integrazione will step in where partial or total unemployment is concerned had to be defined precisely as they now are. Employment of those who continued to suffer from redundancy because of the principle of nominal job demand had to be declared a priority. Three-party negotiations (government/ trade unions/employers) concerning the definition of remuneration, of the cost of labour and of modifications of the mobile scale of salaries had to be initiated. The 1990s have been characterized by a climate of economic uncertainty provoked by international political upsets and world-wide economic crises. The effects of this situation have been felt in the Italian economy, as well as in many others among the principal industrialized nations, in terms of a modest expansion in production activity. In 1991, employment at first did not seem to have suffered from the complex international situation. There was an increase in both the demand and the supply of jobs, factors which allowed a further reduction in the level of unemployment. The data from 1STAT regarding 1992, however, indicated an accentuation of the difficult elements which had already emerged at the end of 1991: the volume of total employment had severely dropped. In particular, large companies of the industrial sector were the most exposed and registered an important increase in the use of Cassa Integrazioni Gua-

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dagni (CIG). In 1992, 230,000 workers in CIG were affected by a recourse to "social amortization", 45,000 by early retirement and 75,000 others by mobility schemes. The statistical data in Part II show that female job holders suffer even more from this problem, their unemployment rate being higher by nearly 50 percent than the EU average. There is clear evidence of the influence of the tense job market on human resources management in the individual Italian companies. Companies localized in the centre-north areas and those in the centre-south areas do not use modern and sophisticated HRM techniques in the same ways, the former being far more advanced. From this difference results a cultural as well as a professional gap between the personnel managers of companies located in the two distinct areas. Industrial relations are intensively called upon, in the search for non-inflationary wage agreements and of instruments to increase the productivity of work. There is a tendency to shift from co-operative types of industrial relations which are still at their beginnings to other types in which the unilateral weight of the entrepreneur is predominant. The potential risks are evident if this process is not adequately controlled. Innovative instruments for the management of excess personnel have been imported from elsewhere or been developed spontaneously (such as the more intensive use of contracts of solidarity or job and company creation). They are frequently replacing the traditional instruments of CIG and early retirement. Other and more functional and consensus-based forms of work (part-time, multiple working hours etc.) have been introduced in many companies, according to the annual report mentioned above (Commission 1993). They follow rules fixed through collective bargaining in accordance with the European Social Charter.

5.2

The Single European Market and Professionalization of HRM in Italy

The increased level of competition, above all international competition, has forced the emergence of a higher level of professional competence in human resource management in Italian companies. Inter-related knowledge (basic and professional) and skills (conceptual, managerial and communicative) are greatly needed and are pushing Italian companies towards a global professionalization of the personnel function. Although in the last twenty years the basic structure of knowledge has changed significantly in Italy, the country has still not reached the point of developing a continuous system of training. The cause of this has been ascribed to the characteristics of the Italian productive system in which small and medium-sized companies prevail; these are not inclined to invest in

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training programmes. The difficulty for companies in evaluating their future professional needs, the fear of losing the personnel in whom they have invested, and a generalized diffidence towards classroom training are other reasons for this deficiency. Companies tend to concentrate moreover on investment in specific training programmes limited to their key personnel because of the scarcity of available resources. Finally, the non-existence of national financial resources dedicated to a "trilateral training pact" (government/company/employee) may also be mentioned, as well as the lack of a clear support strategy for the training of workers when using community funds destined for the weaker social categories end regions.

5.3

The Impact of the Single European Market and the Process of Change in HRM Policies

The creation of a Single Economic Market will determine changes in HRM policies. The tendency will be towards a progressive adjustment of the various activities of HRM (selection, training, management, evaluation and compensation) to the new environmental context. The job market will be transformed in both its composition and its boundaries, which determines the need for still other and new methods of recruiting and selecting potential employees which take into account the fact that the company itself often gets chosen by the candidates. New professional families emerge. They require a managerial logic which is different and more flexible. In the last few years there have been significant changes in company strategies and their use of resources (technological, financial and human), but the cultural adjustment has often lagged behind in Italy. New professions have indeed been created in all sectors. Parallel to these developments, however, differentiated management systems and techniques answering employees' expectations have not been established. The process of European integration emphasizes these problems. On one hand, companies gain certain advantages from the abundance of the supply of labour in so far as they can choose the best resources from the labour market often even from other nations. On the other hand they have difficulty in retaining their own critical resources within their organization. Career planning paths for the more qualified resources have to be redefined. This is all the more important as these employees tend to construct their own professional development with paths that do not necessarily come from inside the company itself. Therefore, the realization of a single market will speed up the process of change in the social contract that binds the employee and the company, shifting the emphasis from job security to the search for opportunities.

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Personnel management must therefore develop the ability to retain the best resources within the organization. The change required is basically cultural; managers must learn to consider people not as resources that are definitively acquired by the company but as individuals who must be systematically won over. New instruments, based on criteria that are less paternalistic or demagogic and more professional are needed to increase the sense of belonging to the organization. A further impact of the Single European Market on HRM comes from the various professional, cultural, generational and geographical interrelations within the job market. This interweaving takes place to an extent that one talks more and more about the change from the job market to the profession market with very different expectations, motivation, language and organizational behaviour. HR managers will thus have to imagine approaches in accordance with the ideas of the professional community. Finally, the adjustment of the social compensation system to the changed scenarios represents another relevant aspect of the situation. Existing compensation systems appear inadequate in the face of the life cycle of the employee in the organization; nor do they correspond to the segmentation of the job market (geographical and in terms of qualifications). The logic of systematic compensation adjustments clashes with the ever more frequent need of rapid acceleration bound to the cost of living index. One of the future challenges for Italian companies, and especially those of smaller dimensions, will therefore be to introduce flexible compensation systems responding to the various needs of the key resources.

6

Conclusion

In the last decade, important changes of the labour market combined with the system of industrial relations have obliged Italian companies to re-define their personnel policies in terms of centrality and strategic significance. This need for cultural, professional and organizational change exists in both large and small companies, even if in different measures and in different ways. The search for strong and coherent interaction of the company's strategies with those of the different stakeholders and more generally with environmental dynamics, represents one of the greatest challenges for the near future. Change should come from greater coherence between organization planning and human resource planning (Costa 1990), while the organizational design should favour interaction between people and company functions, by advantaging contextual criteria. Cultural changes in management should increase problem solving abilities in human resource management,

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and the professional structure as well as the role of employees in human resource management should be developed. Personnel policies should become more segmented. The professionalism of the personnel managers should become more specific and more related to the problems of various professional figures and various companies, and it should be transferred quickly to the managers who have business responsibilities. Paradoxically, one can affirm that an idea about the future functions of personnel managers can be got from the behaviour of companies which have worked in these last years without a personnel manager (Costa 1990).

References Actis Grosso C. (Eds.), Evoluzione della direzione del personale e contesto italiano [Change in the Italian Personnel and Competition Policy], in: Sviluppo & Organizzazione, Sept.-Oct., 1983. Actis Grosso C., Profilo storico dell'evoluzione della direzione del personale in Italia [Historical Profile of the Changes of Italian Personnel Policy], in: G. Costa (Ed.), Manuale di gestione del personale [Handbook of Personnel Management], Vol. 1, UTET, Turin, 1992. Auteri E., La Nuova attenzione alle risorse umane [New Attention to Human Resources], in: L'impresa, no. 5, 1987. M. Baravelli, La progettazione delle risorse umane nelle istituzioni creditizie [Planning of Human Resources in Credit Institutes], in: G. Costa (Ed.), Manuale di gestione del personale [Handbook of Personnel Management], UTET, Turin, 1992. Baravelli M. (Eds.), L'organizzazione della banca [Organization and Banking], EGEA, Milan, 1989. Beer M., Spector Β., Lawrence P., Mills D., Walton D., Human Resources Management: A General Manager's Perspective, The Free Press, New York, 1985. Boari C., Strategia e risorse umane nelle imprese multibusiness [Strategies and Human Resources in Multibusiness Enterprises], in: Sviluppo & Organizzazione, no. 98, 1986. Boldizzoni D., La piccola impresa: gestione e sviluppo delle imprese minori [Small Enterprises: Management and Development], Edizione il Sole 24 Ore, Milan, 1985. Boldizzoni D., Creazione e rivitalizzazione delle piccole imprese: dati di ricerca e riflessioni sul comportamento imprenditoriale [Foundation and Restructuring of Small Enterprises: Research Data and Consideration of Entrepreneurial Behaviour], in: G. Lorenzoni, Zanoni A. (Eds.), Gli studi sull'imprenditorialità in Italia [Studies on Entrepreneurialism in Italy], Bulzoni, Bologna 1988. Boldizzoni D., Nacamulli R., Preti P., Turati C., Relazioni sindacali ed iniziativa manageriale [Labour Relations and Management Initiatives], Angeli, Milan, 1989. Boldizzoni D., Nuovi paradigmi per la direzione del personale [New Paradigms of Personnel Policy], ISEDI, Turin, 1990. Breisig T., Hardes H.D., Metz T., Scherer D., Stengelhofen T., Handwörterbuch Arbeitsbeziehungen in der EG, Gabler, Wiesbaden, 1993. Brunstein I., Führung und Fiihrungsforschung in romanischen Ländern, in: Handwörterbuch der Führung, Poeschel, Stuttgart, forthcoming 1995. Camuffo Α., Ricerca sulla direzione del personale [Research on Personnel Policy], in: Personale e Lavoro, nos. 294-295, 1987. Camuffo Α., Costa G., Strategia d'impresa e gestione delle risorse umane [Business Strategies and Human Resource Management], Cedam, Padova, 1990. CENSIS (Ed.), 28° rapporto sulla situazione sociale del paese [28th Report on the Social State of the Country], Angeli, Milan, 1992.

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Cesarini F., Scelte strategiche per le banche europee [Strategie Decisions for European Banks], in: L'impresa, no.6, 1988. Chiesi A.M., Declino dei sindacati e fiducia nei rapporti diretti con i capi [The Decline of the Unions and the Direct Relationship with the Bosses], in: Sviluppo ά Organizzazione, no. 108, 1988. Cocco G.C., A proposito di manpower planning [On Manpower Planning], no. 55, 1979. Cocco G.C., La gestione delle risorse umane in ambienti competitivi [Human Resource Management in Competitive Environments], in: Sviluppo & Organizzazione, ISEDI, Turin 1991. Collins O., Moor D.G., The Organization Makers: A Behavioural Study of Management Entrepreneurs, Appleton, New York, 1970. Costa G., La risorsa umana nella sfida degli anni Novanta [Human Resources and the Challenges of the 1990s], in L'impresa, no. 3, 1989. Costa G., La ricorsa umana i rapporti verticali tra le imprese: incentivazione e controllo [Human Resources and Contract Relationships between Enterprises], in: Pilotti L. Pozzana (eds.), I contratti di franchising [Franchise Contracts], Egea, Milan, 1990. Costa G., Economia e direzione delle risorse umane (Economics and Human Resource Management], UTET, Turin, 1991. Costa G. (Ed.), Manuale di gestione del personale [Manual of Personnel Management], UTET, Turin, 1992. Cuneo G., (Eds.), Riprogettare l'impresa [Restructuring of Enterprises], Il Sole-24 Ore, Milan, 1992. Deeks J.T., The Small Firm Owner Manager: Entrepreneurial Behaviour & Management Practice, Praeger, New York, 1976. Dyer L., Bringing Human Resource Management into Strategy Formulation Process, in Human Resource Management, Autumn, 1983. Donnelly J.H. Jr., Skinner S.N., Nuove banche, nuovi banchieri [New Banks, New Bankers], Edibank, Milan, 1992. ENI, L'evoluzione del ruolo e delle finalità della funzione del personale nelle aziende italiane [Changes of the Role Models and Goals of Personnel Functions in Italian Agencies], Quaderni Dipers, Luglio, 1978. Fontana F., Professionalità e carriera nel rapporto di lavoro [Professionalism and Career in Labour Relations], La Goliardica, 1984. Fontana F., Piani e programmi d'impresa [Drafts and Programmes of Enterprises], Cedam, 1984. Fontana F., Lo sviluppo del personale [Development of the Personnel], Giappichelli, 1991. Gardin F., Rossignoli C.,Vaturi S., Sistemi esperti, banche e finanza [Expert Systems, Banks and Finances], Il Mulino, Bologna, 1991. Grandori Α., Teorie dell'organizzazione (Organization Theories], Giuffrè, Milan, 1984. ISTUD-HAY Italiana, La direzione del personale [Personnel Management], Edizioni Mondo Economico, Milan, 1982. Levionnois M., Marketing interno [Internai Marketing], ISEDI, Turin, 1991. Mahé de Boislandelle H., Per una migliore gestione del personale delle piccole e medie imprese [For a Better Personnel Management in Small and Middle-Class Firms], in: Problemi di gestione, voi. 17, nos. 11-12, 1988. Maggi B., Teorie e comportamenti di ruolo nelle organizzazioni [Theories of Role Model Behaviour in Organizations], in: Sviluppo & Organizzazione, March-April, 1979. Manzolini L., Ristrutturazioni aziendali, cambiamenti organizzativi e ruolo della direzione del personale [Restructuring of Enterprises, Organizational Changes and the Role of the Personnel Management], in: Sviluppo & Organizzazione, November-December, 1983. Manzolini L., Sviluppo del personale e contrattazione sindacale [Personnel Development and Unions], in: Sviluppo & Organizzazione, no.84, 1984. Martelli M., Scenari e strategie [Scenarios and Strategies], ETAS, Milan, 1989. Mintzberg H., La progettazione delle strutture organizzative [Planing of Organizational Structures], Il Mulino, Bologna, 1985. Nacamulli R.C.D., Le politiche delle relazioni sindacali in impresa [Union Policy in Enterprises], in Costa G. (ed.), Manuale di gestione del personale [Handbook of Personnel Management], UTET, Turin, 1992.

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Nanut V., Compagno C., Strutture organizzative e processi gestionali nelle piccole e medie imprese [Organizational Structures and Management Processes in Small and Middle-Class Firms], Angeli 1989. Porter M., Il vantaggio competitivo [Competitive Advantages], Edizioni Comunità, 1987. Porter M., Competizione globale [Global Competition], ISEDI, Turin, 1987. Radaelli C., Scenari di evoluzione delle relazioni industriali [Stages of the Developement of Industrial Relations], in; Sviluppo & Organizzazione, no. 133, 1992. Ratti F., La diffusione delle tecniche di direzione del personale nelle aziende italiane [The Diffusion of Personnel Management Techniques in Italian Enterprises], in: Sviluppo & Organizzazione, January-February, 1983. Ruozi R. (Eds.), Lo sportello bancario del futuro [The Bank of the Future], EGEA, Milan, 1992. Smircich L., Concepts of Culture and Organizational Analysis, in: Administrative Science Quarterly, no. 28, 1983. Tichy N. et al., Strategie Human Resource Management, John Wiley, New York, 1984. Tichy N., Fombrun C., Devanna M., Human Resource Management: A Strategie Perspective, Organisational Dynamics, 1982. Unnia M., La funzione del personale in Italia dal dopoguerra ad oggi e la possibile evoluzione a medio termine [Personnel Development after the Second World War until Today and in MidTerm Perspective], in: L. Vanni (Ed.), Manuale di gestione del personale [Handbook of Personnel Management], ISEDI, Turin 1978. Unnia M., La seconda stagione delle relazioni interne [The Second Stage of Internal Relationships], in: Sviluppo & Organizzazione, no. 123, 1991.

Luxembourg Hartmut Wächter, Theo Stengelhofen

1

HRM Research on Luxembourg

Luxembourg is by far the smallest of the EU member states. It has a population of approximately 385,000 (Eurostat 1993a: 7), which is similar to middle-size cities in other member states. It has always been influenced by developments in the neighbouring countries. Recently, it has profited greatly from its geographic centrality in Europe and its relatively small size by attracting many international firms, particularly in the banking and insurance sectors. As a consequence of this, Luxembourg has done very well economically. It is at the top of the European league for per capita income and has the lowest rate of unemployment (Eurostat 1994: 6). The city of Luxembourg is a major financial centre in Europe, partly due to attractive fiscal legislation and a relatively low level of state regulation. Traditionally Luxembourg maintains strong economic, social, and political ties with Belgium. The two countries established an economic union as early as 1921, and this was later extended to a monetary union. But despite the strong impact of Belgian economic, financial, and social policies, developments in Luxembourg are proving quite unique. The uniqueness of Luxembourg has scarcely been reflected in recent comparative publications on HRM or industrial relations. Those publications which merely document facts and figures (on labour law, labour markets, the social systems, etc.) usually include Luxembourg (cf. Däubler, Lecher 1991; Breisig et al. 1993). By way of contrast, major comparative studies by Brewster et al. (1992), Baglioni, Crouch (1990), or Pieper (1990) have not included a chapter on Luxembourg at all. Neither was Luxembourg surveyed in the Price Waterhouse Cranfield Project on international strategic human resource management. Only the recent comparisons on industrial relations by Bispinck, Lecher (1993), and by Ferner, Hyman (1992), have each devoted a separate chapter to Luxembourg. The respective articles by Schintgen (1993) and Tunsch (1992), though quite informative, are written without any references. Luxembourg — terra incognita?

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In this short chapter we do not aim at providing a full conspectus of aspects and issues of HRM in Luxembourg. Our comments will focus on two questions: - To what extent are norms and procedures influenced by Belgian, French, and German traditions? - Are there specific and distinctive features of HRM in Luxembourg companies?

2

The Influence of the Neighbouring Countries on Industrial Relations and Social Policy in Luxembourg

At the company level, there are two bodies which represent workers' interests: the employee committee {Délégation du Personnel) and the joint works committee {Comité Mixte d'Entreprise) (Tunsch 1992: 399; Praschma, Breisig 1993: 393). An employee committee is compulsory in every private or public organization with 15 or more workers. The joint works committee is designed for large private companies with more than 150 employees. The employee committee consists of elected employee representatives, who have the duty to protect employees' working conditions, job security and social rights; whereas the joint works committee is composed of equal numbers of employer and employee representatives and is involved in personnel policies, such as recruitment, promotion, transfer and dismissal, employee appraisal, and company rules. The extent of involvement is quite substantial, because "management must inform and consult the committee in advance of decisions on technical changes, working methods and the working environment, current and forecast demand for labour, and vocational education and training" (Tunsch 1992: 399). As far as industrial relations are concerned, two interesting features appear: - there is a high union membership density with estimates ranging from 50 per cent (Tunsch 1992: 394) to 66 per cent (Schintgen 1993: 234); - in many companies a "structural pluralism" is found with both major unions, LCGB and OGB-L being represented. The LCGB (Luxembourg Confederation of Christian Trade Unions) is closely linked to the conservatives. It is in favour of preserving trade union pluralism. On the contrary, the OGB-L (Independent Trade Union Confederation of Luxembourg) with its more socialist orientation still seeks trade union unity (Tunsch 1992: 395). They are also striving for a standardization of the wage system and the enhancement of working conditions when new technologies are being introduced (Schintgen 1993: 234-235).

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The employers' associations are highly centralized regrouping in the FEDIL (Federation of Luxembourg Industrialists), which like most of its member sectoral association is not involved in collective bargaining, because negotiations at company level are the norm (Schintgen 1993: 397). Statistics on working days lost due to industrial disputes (see e.g. Ferner, Hyman 1993) omit Luxembourg, mainly because of the very low level of activity (Hub, Hardes 1993; 244). The high capacity for compromise and the mutually cooperative attitudes of both trade unions and employers' associations can also be seen at the national level, where their influence is relatively strong. The Economic and Social Council (Conseil Economique et Social) was founded in 1966 to advise the government on policy issues in such areas with a membership drawn from employers' association representatives, as well as independent experts (Hub, Hardes 1993: 245). During the economic crisis of the 1970s, a corporatist "Luxembourg Model" evolved in which a tripartite co-ordination committee (Comité de Coordination Tripartite) of government, trade unions, and employers work together to solve labour market problems (Hub, Hardes 1993: 245). A recent assessment of this institution by the conservative Luxemburger Wort (May 21, 1994), demonstrates its continuing importance for the country: The tripartite committee, combined with shrewd government policies succeeded in finding a practicable way between economic requirements, on the one hand, and the preservation of social peace, on the other, which makes our country such an admired exceptional case [authors' translation].

The above brief description of industrial relations in Luxembourg shows quite clearly the influence of other European countries. The employee committee resembles, to a certain extent, the German Betriebsrat, whereas the joint works committee is similar to the French and Belgian traditions of the Comité d'Entreprise. The national "Tripartite Coordination Committee" could be compared to the German corporatist tradition of the Konzertierte Aktion. The system of social security was, around the turn of the century, designed along the lines of the German system, characterized by principles of insurance and self-government (Kordel et al. 1993: 481^82) with employers and employees participating in the process (Weber, Leinenbach 1989: 106). It is interesting to note, that social institutions in Luxembourg applied German jurisdiction and turned to relevant German literature to solve problematic cases (Thill 1993: 61). After 1945, however, Luxembourg adopted its own direction in developing a country-specific system (Thill 1993: 61), the principal features of which are minimum security standards, e.g. in pension schemes (Weber, Leinenbach 1989: 112), and greater economic efficiency (Thill 1993: 62).

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Luxembourg: An Emerging European Labour Market

Due to its financial power and attractiveness, Luxembourg has taken a distinctive route, making it an interesting country through which to study the emerging HRM issues in Europe. A number of research questions may be addressed in this context. Three problems are selected: - Luxembourg is host to a large number of foreign workers. On January 1, 1991, approximately 30 per cent of the population (Eurostat 1993a: 7), and an even larger proportion of the workforce (Tunsch 1992: 393) were foreigners. However, an interesting and novel aspect of the labour market is that the foreign population is not stable over time. Labour turnover is by far the highest in any member country of the European Union (Eurostat 1993b: 3). For researchers on labour mobility as well as HRM, Luxembourg could, therefore, present unusual and interesting material, especially since turnover takes place mainly in the relatively homogenous banking sector. - There is also a high number of daily cross-frontier commuters from Belgium, France and Germany (Tunsch 1992: 393). This is due to excellent employment prospects and favourable tax laws in Luxembourg. The unemployment rate is by far the lowest in Europe, averaging about 2.6 per cent in 1993 (Eurostat 1994: 6). The specific advantages which "pull" commuters into Luxembourg offer unfamiliar problems and opportunities to HR managers. Do firms in Luxembourg pursue particular policies to attract commuters? How do they design compensation packages to take into account the fiscal advantages of their foreign employees? - Questions of labour supply in Luxembourg (especially of highly-qualified young people) represent an interesting case of comparative higher education. Since Luxembourg does not have its own university system (only the first year of higher education can be taken internally) students have to transfer to Belgian, French or German universities. Thus, Luxembourg's employers are faced with the problem of establishing equivalents between different qualifications. Since companies have a long experience of comparing qualifications and training, and since this evaluation is based on real recruitment decisions instead of on a hypothetical "what if'-basis (Jentjens 1993), companies in other EU countries faced in the future with such decisions in HRM, could profit much from this experience and pragmatic approach to recruitment decisions.

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A European Dimension: Nothing New to Luxembourg HRM

It is almost absurd to look for specific reactions of Luxembourg employers to European integration. Luxembourg is a centre of international business and the European institutions located there have made the country European right from the beginning. Major employers, particularly in the banking and insurance sector, represent subsidiaries of multi-national companies. For the HRM policies of these companies the completion of the European domestic market constitutes just one aspect of their international perspective. The biggest Luxembourg employer, ARBED, a steel company, with about 9,000 employees in 1992 (Tunsch 1992: 394), has had close links with Belgian and German steel companies (Saarstahl) since the end of World War II. The emergence of a united Europe has created therefore a special market niche for Luxembourg, endowed as it already is with European institutions, banking, and transport. It is quite understandable, that the Luxembourg government as well as the leading companies in this country will do everything in the context of European integration to retain their existing competitive advantages.

5

Conclusion

Thus it may be seen that Luxembourg is worth more than just a footnote in international comparisons. It is rather a very interesting case for research in international human resource management, particularly in the context of an emerging EU labour market. Increased information on and interest in HRM in Luxembourg could well make it a testing ground for relatively specific hypotheses on international HRM, particularly in its cross-cultural and comparative institutional aspects.

References Baglioni G., Crouch, C. (eds.), European Industrial Relations, Sage, London 1990. Bispinck R., Lecher W. (eds.), Tarifpolitik und Tarifsysteme in Europa, Bund-Verlag, Cologne 1993. Breisig T., Hardes H.-D., Metz T., Scherer D., Stengelhofen T. (eds.), Handwörterbuch Arbeitsbeziehungen in der EG, Gabler, Wiesbaden 1993. Brewster C., Hegewisch Α., Lockhart T., Holden, L. (eds.), The European Human Resource Managment Guide, Academic Press, London 1992. Däubler W., Lecher W. (eds.), Die Gewerkschaften in den 12 EG-Ländem, Bund-Verlag, Cologne 1991.

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Eurostat, Schnellberichte: Bevölkerung und soziale Bedingungen, Luxembourg 1993a, No. 6; pp. 6-7. Eurostat, Schnellberichte: Bevölkerung und soziale Bedingungen. Luxembourg 1993b, No. 12; p. 3. Eurostat, Themenkreis 3: Bevölkerung und soziale Bedingungen, Luxembourg 1994, No. 3; pp. 5-6. Ferner Α., Hyman R. (eds.), Industrial Relations in the New Europe, Basil Blackwell, Oxford 1992. Hub G., Hardes H.-D., Gewerkschaften, Luxemburg, in: Breisig T., Hardes H.-D., Metz T., Scherer D., Stengelhofen T. (eds.), Handwörterbuch Arbeitsbeziehungen in der EG, Gabler, Wiesbaden 1993; pp. 243-245. Jentjens S., Der Vergleich von europäischen Hochschulabschlüssen in Unternehmen, dissertation, University Trier, Department of Management Studies, Trier 1993. Kordel S., Peter V., Stengelhofen, T., Soziale Sicherung, in: Breisig T., Hardes H.-D., Metz T., Scherer D., Stengelhofen T. (eds.), Handwörterbuch Arbeitsbeziehungen in der EG, Gabler, Wiesbaden 1993; pp. 481^91. Pieper R. (ed.), Human Resource Managment: An International Comparison, de Gruyter, Berlin, New York 1990. Praschma Y., Breisig T., Mitbestimmung, Luxemburg, in: Breisig T., Hardes H.-D., Metz T., Scherer D., Stengelhofen T. (eds.), Handwörterbuch Arbeitsbeziehungen in der EG, Gabler, Wiesbaden 1993; pp. 392-394. Schintgen R., Luxemburg, in: Bispinck R., Lecher W. (eds.), Tarijpolitik und Tarifsysteme in Europa, Bund-Verlag, Cologne 1993; pp. 233-255. Thill Α., Das soziale System in Luxemburg und seine jüngsten Entwicklungen, in: Wirtschaftsund sozialwissenschaftliche Gesellschaft Trier (eds.), Tätigkeitsbericht, Wirtschafts- und sozialwissenschaftliche Gesellschaft Trier, Trier 1993; pp. 61-71. Tunsch G., Luxembourg: An Island of Stability, in: Ferner Α., Hyman R. (eds.), Industrial Relations in the New Europe, Basil Blackwell, Oxford 1992; pp. 393-403. Weber Α., Leinenbach V., Soziale Sicherung in Europa, Nomos, Baden-Baden 1989.

The Netherlands Arndt Sorge, Ad van Iterson

1

Business Systems in the Dutch Economy and Society

The Netherlands are the most densely populated country in Europe with about 453 inhabitants per square kilometre. The country is extensively and intensively cultivated, and generally "man-made" to an extent which is probably singular in the world. Pure nature is hard to find. Fertile marsh lands around river estuaries and low-lying water-rich grounds close to the coasts form the backbone of a highly productive agriculture. The land surface has been extended, by taking land back from the sea, and by securing it against floods through the construction of elaborate dikes and dams. Natural and artificial waterways have for centuries formed an important transport infrastructure. Capital intensity and the level of technology in agriculture have been traditionally very high. Advanced agriculture, trade and transport, by sea and domestic waters, have emerged as the strong points of the Dutch economy. These have been extended into the industrial processing of foodstuffs and different forms of transport, by road and air, to constitute the core export industries of the Dutch economy (van Iterson, Olie 1992). The Dutch economy has therefore come to be focused on activities which are elementary and yet highly modernized and capital intensive, simultaneously pre- and post-industrial due to a high service sector share in total employment: about 72 per cent at present (including government). The manufacturing industry is strong where it is closely related to natural inputs, and both agriculture and services have for a long time been industrialized to an extent which is exceptional in Europe. The social organization required to win and secure lands, build dikes, dams, canals and ports, has been exacting. However, this collective effort to "civilize" the water and other assets of nature, has been less mobilized, as for instance in some Asian countries, by despotic rulers or bureaucratic elites. Instead, we have seen the rise of quasi-governmental, partly voluntary, organizations and associations, founded on the traditional Germanic co-operative principles of government through peer control. This has sur-

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vived, in novel forms, the influence of Roman engineering, bureaucracy and law. Independent farmers have thus prevailed over large estates, because they have been able to develop economies of scale and market access, through co-operative associations at the service of agriculture and its marketing. The co-operative principle and company networking are reinforced by corporatist associations which go on to play an important role in the self-government of the agricultural and fisheries sector, through produktschappen which are a modern form of the medieval guilds. This extensive sector of small farms, breeding and greenhouse operations, is complemented by a highly concentrated sector of large, often multinational companies which further process natural inputs, largely in the food and drinks industry. Also, there is a large and concentrated chemical industry which is similar to the food and drinks industry in production process type and industrial concentration. Among the concentrated multinational industries, Dutch electronics and electrical engineering are also prominent. This end of the industrial spectrum is marked by a few companies like Shell, Unilever, AKZO, DSM and Philips, which are called the "Big Five". A highly productive agriculture, the prevalence of very productive large enterprises in process industries — which generally have the greatest capital intensity and labour productivity in most countries — and a highly rationalized system of ports, logistics and transport combine in order to make the Netherlands the country with the highest labour productivity in Europe. If you control for the industry mix in an economy, i.e. if you deduct the effect due to a favourable industrial structure, the Netherlands still come out as the second most labour-productive country, behind Germany (Cohendet et al. 1991: 52). So, the Netherlands are very productive even in industries which elsewhere are less productive, and they have more of those industries which have high productivity everywhere. There is precious little between the small units and the very large ones. Van Iterson, Olie (1992: 2) call this phenomenon the "waisted" (or "hourglass') structure of Dutch business. In transport services, there are also large international hauliers and small independent ones. Dutch transport is over-proportionately represented internationally, through river barges, lorries and KLM jets. Business life in the Netherlands has a number of characteristics which set it apart from that of neighbouring countries (Britain, Germany and Belgium): - The emphasis on organized consensus is very strong. Supervisory boards of joint-stock companies represent shareholders', employees' and the public interest, without differentiating clearly between these groups. This form of "co-determination" by self-co-opting representatives of vaguely differentiated interests occurs nowhere else. It is facilitated by the traditional strength of

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autonomous professional top management, divested from shareholder rule, by dispersed ownership of joint-stock capital, and by an absence of combative competition and unfriendly take-over bids (van Iterson, Olie 1992: 99103). In a way, firms strengthen their position in international competition, to which they have been strongly exposed for a long time, through the strong position of the Board of Management (rather than the Supervisory Board), in the company and in outside relations, and by very effective protection against unfriendly take-overs. The co-operative and corporatist principle which is strong in the agro-related sector (dairies, marketing of food), is rather weakly developed in manufacturing industry and trade. These sectors characteristically feature the socalled waisted structure, which means that large enterprises prefer to operate independently, or have sub-contracting relations with smaller companies, which is also different from the co-operative principle. Historically, the Netherlands has featured a much more corporatist industrial organization. But this had mainly been for purposes of industrial relations and more or less vanished in the 1970s, giving way to a more "liberal" order marked by individual enterprise activity. The capital structure of enterprises is only moderately leveraged. A 40 per cent ratio of equity to assets would be fairly common. This is more in line with countries like Britain and Switzerland, and different from countries like Germany and Japan where half this ratio or less is common. Ownership of equity capital is rather dispersed. This fits with the preference given to professional top management rather than to owning families or owner-managers (van Iterson, Olie 1992: 112-113). This applies to the concentrated sectors and industries; below the "waist" owner management is naturally strongly rooted. The professional background and ethos of Dutch management shows, in a way, a middle position between German-style specialism and the cult of engineering, and Anglo-Saxon generalism and the cult of short-term financial responsibility (cf. Evans et al., 1989, who report that Dutch companies have adopted both the German "functional model" and the British "generalist model" in recruiting their managers). A commercial, marketing orientation is, however, strong throughout various enterprise functions (Lawrence 1991: 124-128). Differently from usage in all other European languages, the Dutch word for farmer/peasant, boer, also denotes small retail shop-owners or distributors; a supplier of coal would be referred to as kolenboer, and a fierce direct marketing campaign may be referred to as de boer op gaan. This shows how the language suggests to everyone that the original producer is or should be the one who has direct consumer contact and makes sure the product is bought. Dutch management is less flamboyant, career-minded, personally ambitious or eccentric than in other West European countries. Inter-firm mobility is

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low — the sum of the percentage of people entering and leaving the organization was only 14.1 per cent in 1993 (Coopers & Lybrand/Berenschot 1994). The management ethos is one of sobriety, correctness and aversion to demonstrative display of power or hierarchical differences (Lawrence 1991: 128-135). Extreme characterizations of management and entrepreneurship, as folk heroes or devils, are largely absent. The roles of managers are influenced by the combined professional postures and attitudes of the commercial trader, the church vicar, the inn-keeper and the nurse; this implies an integration of commercial, humanitarian and doctrinal postures, in a spirit of sober accountability and responsibility (Hofstede 1987).

2

Generation of Human Resources

The characteristics of human resources are brought about through many different socialization processes. Family upbringing, education at school, learning on the job and in company training, and a rich array of specific courses all work together to produce what may be called a human resource. The Dutch system of public education is, in comparison with others, very stratified. After primary school which starts at the age of four and takes eight years to complete, there is a rich choice of secondary schools: - the "lower vocational school" (Lager beroepsonderwijs, LBO) which mixes general education and basic education and training in a vocational area such as metal-working, domestic work etc., and takes four years to complete; - middle secondary education (Middelbaar algemeen voorbereidend onderwijs, MAVO) which offers general education for four years at least; - higher secondary education (Hoger algemeen voorbereidend onderwijs, H AVO), which takes one year longer than the MAVO; - the grammar school (Voorbereidend wetenschappelijk onderwijs, VWO), which takes at least six years. This fine-grained stratification is compensated by integrating mechanism, such as: - a "bridge class" (brugklas) after primary school, in which pupils are evaluated according to ability, in order to make a selection of which school stream (MAVO, HAVO or VWO) and specialty to follow; - combination of several school streams in one location, so-called scholengemeenschappen, to facilitate fair selection and transfer. These secondary school types are provided in preparation for a specific training and education which follows, and delivers job applicants for the labour market. LBO often sets the scene for formalized apprenticeship train-

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ing (Leerlingwezen) accompanied by day-release education (two or three years). M AVO education is a preparation for middle vocational education (Middelbaar beroepsonderwijs, MBO) which takes three to four years. HAVO leavers are targeted for higher vocational education (Hoger beroepsonderwijs, HBO) which may take between three and five years, depending on the subject chosen. VWO gives access to universities; a university education requires four or five years of study as a minimum but usually lasts longer (six years being a maximum), depending on time restrictions attached to government scholarships, and speed of progress. But again, there are possibilities of transfer between these streams which temper their selectiveness and make initial choices less rigid in their effects. For instance, substantial numbers of HBO leavers go on to university, usually with a dispensation for the first year or first two years of university study. The basic architecture of education and training looks rather French, with its hierarchical differentiation. In addition, the practice of mixing normal work experience with further education and training is not widespread; education is concentrated on the period before sustained work activity. To that extent, vocational education in the Netherlands is quite different from that in Germany, where the German equivalent to MBO, and even the equivalent of HBO or university education, may very often occur only after apprenticeship and work experience. Although substantial investments were made in the 1980s to improve dual education in the Netherlands (van der Klink, Mulder 1995: 169), apprenticeship has remained a similarly residual training category as in France, a kind of Cinderella to the overall education and training system. Apprenticeship figures are substantially lower than in Germany, and apprenticeships are predominantly taken up by those who have not made it into "proper" secondary, and subsequent vocational or university, education. Numbers of pupils in middle vocational education (MBO) were in the later 1970s, twice as large as the numbers of apprentices (Baars 1979: 22, 57), and the trend has been for employers to deplore, more and more, the absence of sufficient numbers of apprenticed workers and qualified candidates for apprenticeships. This shortage has resulted from the preferences and selection behaviour of both employers and younger people: employers have given preference to MBO leavers in recruitment and promotion, and young people have increasingly tried to avoid apprenticeship, as a kind of "poor man's" route to the world of work. This has led to shortages of qualified workers, notably in the building and metalworking trades. However, it would be wrong to describe the Dutch education and training system as overly academic. At various levels, curricula and the style of instruction strike a reasonable balance between more academic and more practical orientations. Periods of practical work experience are obligatory both in MBO and HBO, reducing the clash between the world of school and

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the world of work. End-of-study work placements in companies or administration are also frequent in university studies, leading to an empirical or practice-oriented examination thesis. If there is a consistent development, it is for HBO and university education to be less different in profile and requirements, mainly because university education is becoming somewhat more like HBO. The government is trying to cut the number of years needed to finish a course, and it has made university finance dependent on output: The higher the student drop-out or failure rate, the less finance there is. T o that extent, education in the Netherlands is radically different from that in France. Breeding intellectual high-flyers or technocratic elites, and setting these apart from less talented people, are culturally and institutionally resented, like a kind of original sin against Dutch social responsibility, modesty and sobriety. The educational "output" in the Netherlands does not aim to excellence, in the English or French meaning of the word, but at the extremely solid and reliable assurance of sound standards on a larger scale. This applies at several levels; the Dutch university-trained engineer or business administrator is, like the Dutch technician from the MBO, no matter which institution has trained her or him, for any employer a reliable and competent educational "product". On the other hand, whereas the British government has set up "centres of excellence" with great ease, in university research, a similar attempt by the present Dutch minister has led into a morass of tangles, based on the assumption that every decent faculty should have or be a centre of excellence. Thus, although the overall system of education and training is very stratified, it is neither elitist nor marked by great social differences between the rich and the poor, the excellent and the intellectually neglected, the noble and the "great unwashed". This tends to smooth out the contrast between intellectual and manual work, planning and execution. Another distinction is that the Dutch are very proficient in the foreign languages of neighbouring countries. Surveys show that they are the second most competent foreign language speakers after Luxemburg, in Europe (Hofstede 1991: 213). This is another reflection of the fact that schools do make their pupils meet high standards. However, it is also said that the interest and the proficiency of recent age cohorts in a second foreign language (after English) are declining. Yet, Dutch people are and will remain well-prepared to have international careers, not because of their capacity to force the locals to adapt (as in the case of the ubiquitous American manager), but because of their own capacity to adapt to local circumstances themselves. T o use Perlmutter's (1969) often-quoted typology of attitudes of international executives: the Dutch are rather "polycentric" (host-country oriented) than "ethnocentric" (home-country oriented). Such an adaptive capacity not only requires the learning of languages but also a readiness to respond to local

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conditions, instilled by a socialization to be open towards actual or potential clients — a traditional Dutch virtue which follows the archetypal posture of the "trader".

3

Work Organization and Personnel Management

The above description of the Dutch business system has mentioned a "waisted" structure, with a lot of small units, often linked into enterprise networks, co-operatives and corporatist systems on the one hand, and dominant multinational enterprises on the other, which operate more on their own. Such a glaring contrast sits uncomfortably with the Dutch preference for smoothing differences and installing a negotiated order in which contrasting opposites find a legitimate place. As a result, human resource management in the smaller units of employment is less professionalized, contentious and subjectively problematic. It occurs, moreover, in a more co-operatively organized economic sector that is in keeping with the Dutch popular values of social equality and peer control. Let us disregard this sector and look at the firms "above the waist". What can we expect regarding work organization and management structures in such concentrated concerns, on the basis of general experience? In larger units, there will be a tendency to formalize rules, regulations and expectations. Production and services will be more rationalized, so that the division of labour, segmentation of organizational sub-units and specialization of work roles prevail. Management, design, development, planning and other "indirect" functions will be more separate from direct work, and concentrated into specific departments or at specific levels. In short, organization structures will be "bureaucratic", in one way or another. In addition, let us look at the industries prevailing in the Netherlands, and what these entail with regard to organizational structures. There is a concentration of food and drink, chemical, fibre and similar process industries. Philips is an engineering concern but is traditionally strong in mass-produced consumer goods, notably consumer electronics. Thus, we find that most of the large Dutch concerns are located somewhere between large batch production and continuous process production in terms of the technology scale put forward by Woodward (1965), with mass production and intermittent process production, in batches, in between. Accordingly, most of the products made in these Dutch concerns are, either, composite (consisting of many separate parts) and made in large numbers, or "integral" in Woodward's sense, i.e. homogeneous fluid, gaseous, viscous or solid substances. In such industries, the tendency to detach planning, engineering and other indirect functions from direct work roles is particularly great. All along the

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Woodward scale, there is a tendency for the number of management levels to increase, reaching the top value in continuous process production. The scientific or technological basis of such processes is usually elaborate, i.e. not easily transparent to direct workers, either for organizational reasons or because the chemistry and physics of product and process cannot be apprehended by direct human sensing, perception and understanding. Such work processes are subject to a high degree of hierarchical co-ordination and control by professional specialists. Scale of operations (volume of identical output), organization, and the nature of products in capital-intensive equipment, all contrive to breed the afore-mentioned bureaucratic conundrum of formalization, hierarchical intensity, specialization and organizational segmentation. An organizational juggernaut of this type, again, clashes with the traditional Dutch mechanisms of peer control. But in a way, it does fit the highly stratified education and training system, described above, in which training by systematic apprenticeship has come to have a Cinderella function. In a nutshell, the emphasis on the technician and engineer in mass production, chemicals and other process industries, is parallelled by the emphasis on MBO, HBO and university training in the overall education system. Apprenticeship, and the alternation of work experience and further education, are the stronghold of building companies and mechanical engineering firms producing customized products in smaller batches. The latter is typically found in Germany, but not the Netherlands. The analysis brings out the affinity which organization patterns (based on firm size and technology) have with human resources generation in a country (Sorge 1991). But there are also conflicts inherent to any kind of affinity. The conflict which emerges for the Netherlands is, again, that between traditional peer control, with its egalitarian lateral elements, and integration of separate functions in richer work roles on the one hand, and hierarchical, bureaucratic and professional specialist control on the other. This conflict is, of course, known in most industrialized countries. But different countries have been worried about it to very different degrees. The intensity of the perceived conflict not only depends on the level of industrialization and the industry structure of a country, but also on traditional forms of social control. Where peer control is more strongly rooted, the conflict with other modes of control is experienced all the more severely. This applies, in particular, to Norway, a country which was only partially industrialized when it spawned a highly visible and productive socio-technical movement to overcome the conflict, by bringing back peer control through job enrichment, autonomous work groups, the shortening of hierarchical distances and participation in decision-making. A similar phenomenon has occurred in the Netherlands. Previous to publications on the Norwegian socio-technical experiments, the pioneer of

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Dutch socio-technical approaches put out a book on changes in work systems in the national postal giro service (van Beinum 1963). This kind of experimentation and change has persisted ever since, albeit in specific cases only and with mixed results. However, a series of experiments (which took place between 1977 and 1983) was sponsored by the tripartite top body of the national corporatist system of industrial relations (Sociaal-Economische Raad, SER). These envisaged a more pervasive change of enterprise and work organization in general. The composition of enterprises taking part is indicative of Dutch industrial structure and the background of organization and human resources thought. There were: - a textile manufacturer rooted in Roman Catholic social policy thinking; - a psychiatric hospital; - a co-operative enterprise in construction which had established a link with the academic socio-technical movement; - a household installations firm, originating from a bike repair shop, with an entrepreneurial philosophy rooted in the more fundamentalist and populist variant of Protestant religion; - the largest road haulage firm in the country; - a leading flour mill. The experiments had diverse backgrounds, goals, problems and outcomes. They originated at a time when high expectations of employers and trade unions built up and clashed, involving a complex set of targets from shop and office floor work organization to institutionalized industrial relation and enterprise structure and strategy. This concatenation of ambitions and problems led to reduced success (de Man 1988). However, industrial relations and work organization changes became increasingly dissociated from each other, and events shifted from politically sponsored and highly visible experiments to a series of piecemeal experiments with more restricted ambitions — notably regarding work organization. The largest engineering industry enterprise, Philips, also became involved. Consultancies were established to design and monitor experiments, partly as spin-offs of specific experiments or because a large enterprise contracted out consulting work. The largest and conceptually most distinctive of these consultancies was KOERS. The current leading proponent of the Dutch socio-technical approach is Ulbo de Sitter; his group's programme and experience are also at the top of the international state-of-the-art (de Sitter 1986). This kind of work has expanded from job redesign to more comprehensive human resource research, policy and development. Currently, there is a high concentration of organization and human resource consultancies in the Netherlands. It is a commonplace idea that the Netherlands is the country in Europe with the greatest density of organization consultants. Very clearly,

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consultancy in a variety of work organization, training, personnel policy, organization development, enterprise structuring and strategy-making activities has become a spectacular "growth industry" and apparently, firms have a preference for contracting out this kind of work, rather than relying on internal consultants (for the "putting-out" of training to consultants, see: Warmerdam, van den Berg 1992). Conceivably, they appreciate advisers who are independent of internal interests, coalitions and power groups, with their "tunnel vision". At the same time, it is also obvious that firms and governmental organizations are increasingly hiring human resources and organizational specialists. How can this tendency, and the top position of the country in the growth of this "industry", be explained? One reason is that customization of output and services, client orientation of firms, application of new technology, innovation of products and processes have taken place in many European countries. This has rendered socio-technical thinking and human resource development more acute in many countries, and it has become intertwined with more technically, commercially and administratively oriented design of new computer hardware, software and firmware, as well as organizational structures and routines. However, whereas the emphasis in Dutch industry had clearly been on productivity, economies of scale, division of labour and rigid automation in the post-war past, and in view of the country's sectoral structure more than in many other countries, the recent changes towards more differentiated output produced in a more flexible way required a more systematic change of thinking and practice. The new targets of flexibility and economies of scope, of promoting profit margin and value-added results, rather than concentration on the quantity of output and low selling prices, require a distinct reorientation of organization and human resource concepts. This has created a new, commercial rather than purely ideological, "market" for innovative socio-technics and human resource management. To some extent, this has meant that consultancy in these matters has become more sober and technocratic. At the same time, it has given reformist thinking an impetus which is much greater than in the 1960s and 1970s. This tendency has become one of the key ingredients in transforming the Dutch economy from a cost-sensitive bulk producer into a value-added sensitive specialty producer, competing at a time of heightened international competition and advanced phases in the life cycles of bulk products. However, another explanation has to be added to this, more businessminded one. As mentioned above, the human resource and organization conditions of the post-war industrial regime was in conflict with Dutch social thinking and structures. It can almost be imagined to have produced a kind of guilt feeling. The Dutch love to typify social thinking in their country as beset by both conflicts and synergy, between the archetypal postures

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of the trader and the church vicar. More recently, renovated human resource management and organization practice have offered the chance to alleviate such feelings of guilt, resulting from the conflicting postures of the moneyconscious bulk producer and the socially conscious vicar. In a regime of value-added intensive customized production and services, the postures of the trader and the vicar are more in harmony although, naturally, new conflicts have emerged, such as ecological issues. A more structuralist interpretation would be that division of labour and hierarchically differentiated management control, which have always struck an uncomfortable peace with traditional patterns of peer control and social equality, can now be changed in the direction of the latter. The recent emergence of organization and human resource consulting therefore responds to the perceived conflict, and it feeds on a drive to bring back, and turn into a productive asset, structural features of Dutch social organization which have been subdued or lying dormant for some time. In a way, the new consultants are the missionaries or preachers of the kind of social hygiene which is in better accord with traditional structures and Christian values. That a great deal of them do not go to church or believe in God is no matter. Most of Holland's social thinking is imbued with modern, laic spin-offs of Calvinist social thought, which has penetrated Roman Catholic, socialist, liberal and agnostic world views (Lawrence 1991: 114-119; van Iterson, Olie 1992: 105-108; Hofstede 1987). It can be noted that the recent standard textbook of the Dutch Open University (Kluytmans, Hancké 1990) offers a very complete and detailed conceptualization of human resource management in the more ambitious sense: an important management specialty which is much larger than personnel management in the conventional form, and essential to turn an enterprise into a competitive and successful concern. Human resource management is seen to facilitate development of sound enterprise policies in various functional domains, as well as generic strategy-making. This is a break with earlier, more restricted concepts which had locked the personnel management function into coping with the problems created by top commercial, technical and production management. The new view sees human resource management as a creative producer of business options, rather than as a passive absorber of decisions made in other functions or at higher levels. This picture is propagated by textbooks, university teachers and consultants — in short, the preachers and social hygiene specialists of the business world. It would be difficult to find a country which clearly surpasses the Netherlands in this programmatic drive. But there are, obviously, two caveats. One is that we are not simply dealing with the victory of Christian or humanistic values over the tight-fisted trader. The rise of human resource management is linked with increased self-assurance of businessmen and managers in Dutch society, with a positive evaluation of the motive to make

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money and profit, whereas management and profit had almost become dirty words in the 1970s (Lawrence 1991: 146-148). What has happened is that, whereas in the 1970s the conflict between the trader and the preacher was very acute in society and politics, and the preacher gained importance in the unbridled prosperous welfare state, now the trader is much more accepted because he or she has internalized some of the preacher's elements after prosperity and welfare had entered a crisis. Hence, the status of business rather than preaching has been elevated. But the new lease of life for business depends on infusion with preacher elements along with, of course, popular attitudes, voting behaviour, party politics, the labour market situation and industrial relations factors. The second caveat is that it is not yet quite clear to what extent advanced concepts of human resource management have in practice gained ground. More or less spectacular examples in individual firms are often held up for lesson. Kluytmans and Hancké (1990: 288) found, on the basis of other research, a growing trend towards the application of these advanced concepts. Buitendam (1979) reported findings from a period when the tendency had just started and distinguished functions of: -

personnel administration; adaptation of human resources; development of human resources; collective participation.

Buitendam had suggested that the first two functions, which he called "classic domains" of personnel work, were still predominant, but there was a shift of emphasis from the traditional to other domains which are more active, and more clearly oriented towards development rather than administration. More recent research has shown that the trend has continued (van Sluijs, den Hertog 1992). The more developmental activities are given high priority by managements. Though current practice is surely at a distance from the ideal models of active human resource management (van Sluijs, den Hertog 1992). Heijltjes et al. (1995), who have examined HRM in fourteen large Dutch companies in the chemical and food & drink industries, underline the nuances of this issue by arguing that the degree to which HRM is applied in practice is a matter of definition: If strategic integration is the determining factor, the conclusion that HRM is not extensively practiced in the Dutch companies interviewed is readily reached. If however emphasis on employees as human resources is the defining feature, HRM is indeed present in Dutch companies through extensive training and development activities (1995: 25).

All in all, we think that the tendency towards active management of human resources aimed at development of human capabilities is highly visible and

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sustained. An active integration of HRM in the overall strategy of Dutch firms — which requires at least board membership of the personnel manager — seems to be the next frontier. In their study of HRM in 25 Dutch organizations, van Sluijs and den Hertog only came across five organizations (all larger ones) where the personnel function and the strategy-making process were fully integrated in a "dynamic, interactive relationship, both formal and informal" (1992: 7-8). Even traditional personnel management in the Netherlands is comparatively extensive. The importance of larger concerns and the prevalence of paternalist enterprise concepts have worked together to bring about extensive systems of fringe benefits, pension funds, employment guarantees and internal labour markets. A model example which is often held up, is Philips. This has almost been a community in the community, with coverage of the employees' work, career and social needs "from the cradle to the grave". Recently, however, employment security and social benefits have come under attack and been partly dismantled, being identified with problems of organizational conservatism, entrepreneurial stagnation, mismanagement and "featherbedding" of vested interests at all levels (e.g. Wennekes 1993: 283-338). Many companies are eliminating activities which are not considered "core activities". This may also affect the extent to which social benefits are provided. Hiving off a core activity may mean that the employees who perform it are not provided with the same sort of benefits in the subcontracted firm. Similarly, there has been a pervasive tendency to hire casual labour, on contracts with the company itself or via a manpower agency. Employers have effectively increased the flexibility of labour use through introduction of new types of working time, subcontracting of production or services, and use of temporary labour from employment agencies. This has led to a multiplication of types of employment relationships and contractual forms. Casual or unregulated forms of labour are very much in evidence in, for instance, agriculture and small textile and clothing workshops. They involve a great number of migrant foreign workers, and to some extent also foreign entrepreneurship. This is a far cry indeed, from "regular" work in the Dutch welfare state. Such a phenomenon is, of course, different from the advance of demanding human resource management. The latter applies to a core set of business activities, whereas quantitative flexibilization of labour has the appearance of early capitalism. But it does not only include routine or dirty kinds of work. The practice of contracting-out has also extended to qualified professional work, such as repair, overhaul, transport, training, automation, research, development and consultancy. The Netherlands have seen a rise of this phenomenon which is surely international in character. Although it cannot be quantified, the authors' impression is that its extent is probably particularly important in the Netherlands. It constitutes another break with the

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post-war past, in the shift away from coordination by management decision, back to coordination by markets of different kinds. Thus, employees have become more frequently exposed to market relationships, even if they supply services to a larger enterprise on a fairly regular basis, possibly under a long-term contract. This phenomenon is another move back to traditional Dutch practice, different from but also parallel with job enrichment and other experiments. As mentioned earlier, commercial and monetarized social relations have a strong tradition, comparable to that in England. In particular, the principle that the producer of a commodity should look after its commercial exploitation is strongly rooted, as has been shown above. The Dutch like, however, to take up what are considered international fashions and trends. This has applied to American management ideas, sociotechnical thinking, social and economic planning, social reform, and now human resource management and business strategy-making. But they are highly selective in the trends they follow, and discriminate, at least unconsciously, in favour of those which match their own cultural repertoire. This section can be summarized by saying that Dutch human resource management shows the impact of various drives to make the enterprise a more flexible unit. On the one hand, with regard to the concentration on core activities and quantitative flexibilization, we see more "commercial" employment relations and contracts with flexible time arrangements emerge. On the other hand, to achieve qualitative flexibility (customization and innovation of products/services), we see the step-wise progression of human resource management, through organization development, restructuring, education and training. Both of these moves are international phenomena. But at the same time, they respond to typically Dutch predicaments and offer typically Dutch solutions. Most Dutch of all is the rather smooth blending of the "commercial" and the "humanitarian" elements inherent to the quantitative and qualitative flexibilization drives.

4

Industrial Relations

Many countries in Europe have ideologically segmented trade union movements, and this is usually deplored as a problem in negotiation between employers, unions and governments. But there is no country in Europe where ideological segmentation of unions and employers' associations is higher than in the Netherlands: There is, at present, a general union movement (Federatie Nederlandse Vakverenigingen, FNV) and a Protestant one (Christelijk Nationaal Vakverbond, CNV), a general employers' association

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(Verbond van Nederlandse Ondernemingen, VNO) and a Christian one (Koninklijk Nederlands OndernemersVerbond, KNOV). The Roman Catholic union movement had joined the general union confederation, whereas the Roman Catholic employers have teamed up with the Protestant ones in a Christian association. But despite these splits, ideological segmentation is not felt to be a major issue. How can this be explained? In the first place, there has never been a major communist-oriented union movement, and the strategies of unions have not been very different in practice or in their degree of combativeness. Secondly, joint consultation and negotiation, and collective bargaining, have become well institutionalized. Post-war relations were mainly governed by a highly corporatist system of tri-partite toplevel regulatory bodies (Sociaal-Economische Road, SER, and Stichting van de Arbeid) and industry boards. These bodies have negotiated and enforced restrictive, standardized wage policies and practices, which has left almost no bargaining autonomy to individual industries and enterprises (Albeda, Dercksen 1989: 57-60). Union and employer federations of different world views have co-operated in this corporatist regime, with a government which has in this way checked inflation, assured similar wages for similar work, and promoted the export competitiveness of the economy. In the mid-1960s, however, the institutionalized consensus broke up, giving way to bargaining in line with industry and enterprise-specific productivity developments and "ability-to-pay". This reduced top-level corporatism and went hand-in-hand with more industrial conflict and increased inflation. But corporatism managed to hold its own in the agricultural sector. Elsewhere, a characteristic mixed structure of collective agreements both by industry and by specific enterprises, resulted, with company agreements mostly in large enterprises. This is about half-way between German style industry bargaining and enterprise or plant bargaining British style. But wage differentials between regions, industries, enterprises and professions have still not become large. Collective agreements according to industry are usually declared generally applicable to all workers concerned, by ministerial decree. In addition, there is governmental regulation on minimum wages. Recently, there have been attempts to lower minimum wages, but they have not yet succeeded, and minima do assure a very acceptable level of welfare by European standards. Other governmental regulations of social security, health hazards and pensions are similarly geared to assure protection against work inability and unemployment, to an extent which again stands out in Europe. Increasing early retirement because of inability to work has, however, recently led to financing problems. It has generally become ever more difficult, since the 1970s, to assure benefit increases in line with wage increases, and similar wage rises in the market sector and in public services. These are the permanent predicaments

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of governments, and they have been resolved, by different governments in different ways, letting either the public sector borrowing requirements increase, or public service wages and/or benefits slip behind. Nevertheless, despite a more conservative government since the 1980s, the Netherlands have continued to provide an impressive array of social security measures and levels of benefits. In return, social security deductions are similar in size to direct income taxation, and more than half the gross domestic product is redistributed through government and social security activity. Nonwage costs of labour are correspondingly high, but labour costs are on the whole fairly variable costs, since remuneration of employees who fall ill is quickly taken over from the enterprise, under general illness and work disability schemes. It would be wrong unilaterally to blame a supposedly decadent welfare state, lazy employees and feather-bedding trade unions for growing problems of transfer payments, as often happens in Europe. In fact, management has used such schemes to get rid of the medical and human wastage of a highly productive economy, including demotivated workers who were not really ill. Those who did not meet expectations were in this way nudged out of formal employment, with the consent of the, then, silent majority of unions, employers and government. This is part of the social cost, of being and remaining the most labour-productive economy in Europe. Industrial relations at the national and industry levels are articulated with company and plant level relations in a way which is similar to the German system, except that company collective agreements are frequent in the Netherlands (e.g. Visser 1992, who offers an interesting English-language discussion of new trends in Dutch industrial relations) and very rare in Germany. In Dutch enterprises, there are works councils (Ondernemingsraad, OR), now constituted not to have a top management member, as in France and Belgium, and not be purely a consultation and information committee, as, perhaps, again in France and Belgium (Koene, Slomp 1991; summarized in: Slomp 1995). They are independent consultation and bargaining agents, elected by the whole work force, which also enjoy co-determination rights roughly similar to those in Germany (Koene, Slomp 1991). Works councils also have the right of objection to a new member for the supervisory board. All considered, they have a comparatively strong position in the manufacturing of consensus in the enterprise, Dutch style. But they also are defacto union bodies, although not formally so, where union membership ratios are high (at present about 75 per cent) and works councillors therefore likely to be union activists. So, there are no strong independent union representatives on their own right, in the company, but where unions are well represented, works councillors have come to take over this role, possibly in conjunction with outside union officers, whenever an enterprise concludes its own collective agreements.

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Union membership figures are recently not high, in an international comparison, having declined from 41 per cent in 1977 to 26 per cent in 1994. Figures have to be corrected further downwards in view of union members who are not in the labour force any more (Albeda, Dercksen 1989: 47). However, the decline in membership figures does not reflect a proportional decline of the importance of unions in the overall regulatory apparatus and in human resource management. The government does reckon with unions, and human resource management does have to reckon with works councils which have co-determination rights particularly in this field. That works councils and unions are reckoned with, shows in the fact that large scale rationalization and labour-shedding manoeuvres, such as in the recent Philips crisis, in ship-building and port operations, have been achieved in a way that avoided massive confrontations.

5

Conclusion

Clichés about the Netherlands stress the country's humanitarian concerns, tolerant and democratic civic spirit, friendly openness and good cheer. This is certainly not untrue. But the Netherlands are also a very well organized society with a social control that is effective through consensus-building in a dense network of peer groups. In human resources generation and management, the country is good at assuring decent standards of security, well-being and performance (Heijltjes 1995, who demonstrated the positive effects of HRM on the profitability of Dutch firms in the above-mentioned chemical and food and drink industries). The institutional apparatus has, in the past, promoted a high degree of efficiency, and it is being adapted to promote greater effectiveness. Spurred on by the report of the government-initiated Wagner Commission, "Towards a New Industrial Elan" (1981), which called for a better co-ordination of state policy and business, there is also an endeavour to increase effectiveness structurally, by promoting growth of the higher value-added sector, notably in investment goods engineering. Reorganization, technical and strategic change have an important role to play in this endeavour which is backed by the development of professionalism, both in management within firms and in burgeoning organization and human resources consultancy. The development of this professionalism, which is orientated by international recipes, is bolstered by reliance on domestic traditions of commercialism, peer control, and the intertwining of the public interest with voluntary and quasi-governmental associations. The manufacturing of consensus and social equity has produced slack and problems, but it will also continue to remain one of the productive assets of the country.

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References Albeda W.,. Dercksen W.J., Arbeidsverhoudingen in Nederland [Industrial relations in the Netherlands], Samson, Alphen-on-the-Rhine 1989, 4th impression. Baars W.S., Description of vocational education systems: The Netherlands, European Centre for the Development of Vocational Training (CEDEFOP), Berlin 1979. Beinum H. van, Een organisatie in beweging: Een sociaal-psychologisch veldexperiment bij de postcheque- en girodienst [An organization on the move: A social-psychological field experiment at the post office giro], Stenfert Kroese, Leiden 1963. Buitendam, Arend, Personeelsafdelingen in de industrie [Personnel departments in the manufacturing industry], Konstapel, Groningen 1979. Cohendet P., Llerena P., Sorge Α., Modes of usage and diffusion of new technologies and new knowledge. A synthesis report. Commission of the European Communities: FAST-MONITOR Report FOP, Brussels 1991; p. 227. Coopers & Lybrand/Berenschot, Ken- en stuurgetallen voor personeelsmanagement: resultaten Nederland 1993 [Ratio's and steering parameters for HRM: Results for the Netherlands], Coopers & Lybrand/Berenschot, Utrecht 1994. Evans P., Lank E., Farquhar Α., Managing human resources in the international firm: Lessons from practice, in: Evans P., Doz Y., Laurent A. (eds.), Human resource management in international firms: Change, globalization, innovation, Macmillan, London 1989; pp. 113-143. Heijltjes M., Organizational hit or failure: Competitive environments, generic and specific strategies in Great Britain and the Netherlands, Maastricht: Datawyse/Maastricht University Press, 1995. Heijltjes M., Witteloostuijn A. van, Diepen S. van, The Dutch business system and human resource policies, in: Clark, Τ (ed.), International perspectives of human policies, Basil Blackwell, Oxford 1995. Hofstede G., Dutch culture's consequences: Health, law and economy, Limburg University, Faculty of Economics, Research Memorandum 87-037, Maastricht 1987. Hofstede G., Cultures and organizations. Software of the mind, McGraw-Hill, London 1991. Iterson A. van, Olie R., European business systems: the Dutch case, in: Whitley R. (ed.), European business systems. Firms and markets in their national contexts, Sage, London 1992; pp. 98-116. Klink M. van der, Mulder M., Human resource development and staff policy in Europe, in: Harzing A.W., Ruysseveldt J. van, International human resource management, Sage, London 1995; pp. 156-178. Kluytmans F., Hancké C.(eds.), Leerboekpersoneelsmanagement [Textbook human resource management], Kluwer, Deventer 1990. Koene A.M., Slomp H., Medezeggenschap van werknemers op ondernemingsniveau: een onderzoek naar de regels en hun toepassing in zes Europese landen [Employees' participation at company level: A research into rules and their application in six European countries), VUGA, The Hague 1991. Lawrence P., Management in the Netherlands, Clarendon Press, Oxford 1991. Maenhout J.M.M., Hoof J.J. van, Personeelsresearch in kaart gebracht: een overzicht van personeelsonderzoek en uitvoerende organisaties in Nederland [HRM research mapped: An overview of personnel research and executive organizations in the Netherlands]. SlSWO-informatief, 1, Institute for Social Services, Amsterdam 1993. Man H. de, Organizational change in its context, Eburon, Delft 1988. Perlmutter H.V., The tortuous evolution of the multinational corporation, in: Columbia Journal of World Business, 1969, 4 (1), pp. 9-18. Sitter, L. U. de (ed.), Hetflexibele bedrijf [The flexible enterprise], Kluwer, Deventer 1986. Sluijs E. van, Hertog F. den, Praktijkverkenning personeelswetenschappen [An exploration of HRM in practice, Research Memorandum 92-027, University of Limburg: Economic Research Institute in Innovation and Technology (MERIT), Maastricht 1992.

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Slomp H., National Variations in Worker Participation, in: Anne-Wil Harzing A.W., Ruysseveldt J. van (ed.), International human resource management, Sage, London 1995; pp. 291-317. Sorge Α., Strategic fit and the societal effect: Interpreting cross-national comparisons of technology, organization and human resources, in: Organization Studies 1991, 12; pp. 161-190. Visser J., The Netherlands: the end of an era and the end of a system, in: Ferner Α., Hyman R. (eds.), Industrial relations in the new Europe, Basil Blackwell, Oxford 1992. Warmerdam J., Berg J. van den, Scholing van werknemers in veranderende organisaties [Employees' training in changing organizations], Ministry of Social Affairs and Employment, The Hague 1992. Wennekes W., De aartsvaders. Grondleggers van het Nederlandse bedrijfsleven [The patriarchs. Founders of Dutch business], Atlas, Amsterdam 1993. Woodward J., Industrial organization: Theory and practice, Oxford University Press, Oxford 1965.

Portugal Rita Campos e Cunha, Carlos Alves Marques

1

Introduction

The last decade in Portugal has been accompanied by an ever growing complexity in the business environment, as in the rest of Europe, which is dictating profound changes in the strategic and operational directions taken by companies. The Single Economic Market presents many different challenges for Portuguese companies which are still relatively underdeveloped in terms of their management systems and techniques, particularly the management of the human factor. Personnel/Human resource management in Portugal has emerged in parallel with major changes in the country's political and economic history and has enjoyed, in recent years, "a tremendous boost [...] in terms of both status and salary levels" (Mendes, 1992, p.40). This is a necessary reaction to the technically limited personnel departments that used to accomplish little more than wage administration and the control of absenteeism. The need to become competitive in order to survive in the new economic and technological environment has created a new awareness of the importance of the people working for the company and of the over-riding importance of increasing productivity, as well as the efficiency of business operations. As other EU countries have advanced towards a strategic conception of human resource management, Portugal has been obliged to rapidly catch up. In this chapter, we will try to briefly cover the economic evolution of Portugal, and its cultural context, followed by the historical development of personnel/human resource management. Finally, some comments will be made on the impact of EU initiatives in this area and a few future trends will be identified.

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Economic Evolution

Portugal, geographically located in the south-western corner of Europe, was, until the early sixties, mainly a closed rural society. Only in the sixties were the first impacts of the investment process in industrialization, namely foreign investment, felt. At that point Portugal opened itself to the international community, becoming a founding member of EFTA. A large rural exodus to foreign countries (mainly France and West Germany) and to the Portuguese coastal cities followed this process of industrialization and of opening to external communities. Although emigration to other countries can be said to have stagnated in the 1970s, the process of urbanization did not; it is, in fact, still going on at present, creating a certain imbalance between inland and coastal Portugal, despite the fact that the country is only 1,000 kilometres wide. By the mid 1970s, the employment structure showed identical proportions regarding the primary, secondary and tertiary sectors. From 1973 to 1985, as a result of the two oil crises and the internal political situation, the Portuguese economy went through serious difficulties that led to the implementation of two IMF rescue packages intended to reduce the large internal and external imbalances and to curb inflation rates which were situated around 25 per cent. From 1985 to 1990, with the full membership of the European Community coupled with political stability, Portugal experienced a period of significant economic growth, at a rate around 4 per cent. OECD estimates for Portugal showed an increase in the Gross Domestic Product per capita, adjusted for purchasing power parities, from 50 per cent of the Community average in 1985 to 56 per cent in 1991 (OECD, 1992). This economic dynamism allowed Portugal to enjoy, until now, one of the lowest unemployment rates within the EU, with approximately 6.2 per cent against a Union average of 10.7 per cent in 1994 (see Part II). Since the beginning of the 1980s, a progressive growth of the tertiary sector in the Portuguese economy has been apparent, with a large contribution from tourism and commerce as well as financial services. In five years (from 1987 to 1992), the tertiary sector was responsible for 55.4 per cent of the total working population against 42.5 per cent in 1987. On the other hand, the primary sector decreased from 22.2 to 11.2 per cent, while the secondary sector still maintained a figure of around 34 per cent (Instituto Nacional de Estatística, 1993). With the 1992 international recession, the country experienced a slow down, attaining in 1993 a negative GDP growth of -0.5 (Instituto Naçional de Estatística, 1993). Another factor that should be referred to is the low productivity level, which in Portugal is about 50 per cent of the Union average. A great number of firms (mainly small and medium sized ones), with few exceptions, still favour a management based on low-wage and less-qualified human re-

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sources, postponing the necessary restructuring process and automatization, which would allow for improvements in productivity and competitiveness and accordingly a better quality of life for the Portuguese. Consequently, a high priority of the present government and of the more successful companies nowadays is to achieve a productivity increase in order to guarantee the survival of Portuguese firms. In this process, both the Portuguese government and the OECD forecast a significant increase in the unemployment rate (reaching levels of over seven per cent), for the next two years.

3

Cultural Context

From a cross-cultural point of view, the main information about Portuguese organizational culture comes from the empirical study by Hofstede (1984), which was carried out during the 1960s and the 1970s. In that period, Portugal was described as being a country of collectivist culture (which was predictable bearing in mind its economic development), having large power distance, strong uncertainty avoidance and marked feminine characteristics. While we may question whether these characteristics can still be seen with the same strength in recent companies with a majority of younger employees, our experience tends to confirm Hofstede's findings concerning the larger and more traditional Portuguese firms, in which there still is a strong need to avoid uncertainty, with older managers being preferred (only young managers risk joining smaller companies) and competition among employees being avoided. A strong emphasis is still placed on the law and official regulations while, at the same time, there appears to be a shift towards a more technological approach, similar to the one existing in Japan. Among the older and the female employees (a juxtaposition without prejudice), the establishment of close co-operation between employees and of a pleasant human environment at work still is a question of great importance. In spite of a reduction in working-hours, the working week for full-time employees is the second highest of the EU, after the United Kingdom (Eurostat 1989). This fact matches the Portuguese organizational culture, whereby the workers tend to prefer to spend time in groups or at the working place. Portuguese employees also value the possibility of learning, improving and applying their skills and knowledge in their work. Conflicts in the work place are felt to be threatening and require the intervention of intermediaries or discreet negotiations far away from the other employees. The self-esteem of all parties has to be maintained at all costs. In terms of power distance, in the larger and more traditional companies, employees are fearful of expressing disagreement with their managers and

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tend to see them as paternalistic figures. A recent study carried out by one of the authors of this chapter (Alves Marques 1991) showed that, concerning work-related values, the Portuguese place a great deal of emphasis on the importance of "attaining results/goals", besides the values that are generally found in Europe (MOW 1987). This fact, coupled with the characteristics related to the feminine culture, could explain the reputation that Portuguese emigrant workers have gained throughout France and West Germany, in terms of excellence and motivation.

4

Brief Record of the Development of HRM

The economic and business environment in Portugal has always been characterized by the dominance of small and medium sized companies which represent about 99.8 per cent of the companies and 78.1 per cent of employment.1 These companies have always had a paternalistic culture, with the decision-making power centralized in the owner who was "in charge of everything" and knew everything relating to the management of the business. They were managed by their owners and family members, with no professional managers being employed to lead or direct the operations. In fact, the proprietor is supposed to know everything about management but often lacks education in this field, such as theoretical basis, information in order to structure correctly, techniques of decision-making, strategic approach which may explain the deficiencies previously mentioned (Brunstein 1995). Three main periods can be distinguished in the evolution of the personnel function: Up to 1974. The first period, which extends to 1974, was marked in the first two decades of the twentieth century by great political instability, with the fall of the monarchy and the rise of the republic. The majority of the active population worked in agriculture, by traditional means and with outdated methods. The few industrial areas were concentrated around major cities: Oporto, Aveiro and Braga, in the northern part of Portugal, and Lisbon and Setúbal in the center. Then industrial workers became militant with strikes being used as the main instrument in their struggle for better salaries and working conditions. Legislation was approved, recognizing the right to strike and the constitution of unions, as well as regulating the duration of the working week. Several different governments succeeded each other at a very fast pace, up until 1926 when the republic was overthrown and a dictatorship installed. Trade unions were forbidden, the labour movement was strongly repressed and the Salazar regime institutionalized "corporatism", which recognized private initiative as the way to progress, forbidding strikes

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and lock-outs, establishing a "co-operative" and social role for capital and work and designing the corporative models of association for both employers and employees in the industrial and rural sectors. Education and training were relegated to a minor role (Aníbal, Costa 1987). The 1960s were marked by the beginning of the war in Africa and by a great deal of emigration. Economic and educational backwardness, relative to other European countries was accentuated. Low salaries attracted multinational companies who established production units in Portugal bringing about increases in wage and productivity levels, as well as a greater concern for education and training. In the 1970s, military service which had become compulsory due to the war, was, nevertheless, a source of great discontent, and a breeding-ground for the growing opposition movement. With a new prime-minister, the socio-political situation was a little more "liberal" and the role of education and training was emphasized. Industry was now employing about half of the active population and was controlled by a small number of families. Low wages and low educational levels contributed to the emergence of labourintensive industries. During this long period, personnel/human resource management remained an administrative and reactive function, with a very low status on the scale of managerial functions. In terms of internal organization it assumed the dimension of a section or service under an administrative or finance department and was mainly composed of clerical personnel. A great number of the people responsible for these services were from military backgrounds. A few companies, such as multinationals and some of the larger economic groups, had personnel departments with non-bureaucratic activities, such as development. Companies did not feel a great need for personnel specialists. The universities did not offer courses in that field, since courses in human and social sciences were not tolerated by the political regime until 1974. Degrees in psychology and sociology were only created in the Portuguese universities after April 1974. From 1974 to the mid 1980s. In 1974, the government was overthrown by a coup d'état that re-established a democratic regime. Soon, a pro-communist government was formed and the main sectors of the economy were nationalized. Works councils were created in companies, owners and top managers were expelled from their firms and unions took on a conflictual approach to labour relations. Once again, personnel departments reacted to the dominant political and economic factors in the new environment, and collective bargaining took on a central role. With a lack of managerial skills and know-how, companies were staffed on a political basis, which resulted in low efficiency and poor profitability. Any form of flexibility, either numerical or functional, was re-

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duced greatly by collective agreements, and dismissals were legally forbidden. There were no incentives for enhanced productivity, career planning or development, and security became the criterion for promotion. Motivation through pay became non-existent; some cost of living adjustments were made to compensate for high inflation rates. Unions and works councils, which traditionally were communist-inspired, came to be the major political force in companies, and management (particularly personnel managers) had to negotiate with them on a daily basis. As personnel management evolved into human resource management, it became more highly centralized, increased its staff numbers, and assumed greater importance in medium and large companies. In addition to the existing bureaucratic activities of the personnel function (wages and personnel records), new bureaucratic duties arose to manage the workers' social rights. New services were also created in areas of selection, training, job analysis and evaluation, occupational health, labour relations and human resource planning. The new HRM departments developed complex procedures for the management of employees, incorporating many tasks previously reserved for line managers or general managers. As a consequence of this concentration and centralization of the personnel function, emphasis was laid upon: - heavy bureaucratic planning procedures, which rarely reflected the company strategy and which therefore had little practical application; - training, whereby companies filled the need to substitute for the technicalprofessional training to which an end had been put in 1984; - labour relations, as a consequence of the high level of national conflict, the low standard of living of employees, and the growing complexity of labour laws. During this period, law graduates typically managed HRM departments. The late 1980s and onwards. The election of a social democratic government, coinciding with Portugal's entrance to the EC, brought about a profound change in the business scene. The challenge of turning around inefficient nationalized companies, in order to make them profitable and competitive in the new economic arena, was, and still is, a tremendous job with consequences that spilled over to the smaller and more flexible companies. A privatization programme was started, with financial services being among the first to be sold off to the private sector (in some cases to the original pre-nationalization owners). These companies underwent some restructuring prior to privatization, in which the importance of the human factor was recognized, notably the need for talented, knowledgeable workers, more open communication policies, functional and numerical flexibility, and less bureaucratic corporate cultures. With the acquisition of nationalized

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companies, the new owners took the re-organization process even deeper, making major changes in both human resource and corporate strategy. Around this period, an attempt was made to change the long-established logic of labour relations in Portugal. New legislation was introduced through dialogue and the so-called Social Pact (Concertaçâo Social). As well as measures concerning the competitiveness of firms, this legislation covered workers' rights and legitimate interests, the freedom of unionization, collective employment contracts and the right to strike. In conjunction with the prohibition of lock-out, redundancy was only permissible in exceptional circumstances, such as when the company's survival was at stake. On the other hand, the Social Pact Commission (a tripartite commission including the government, employers' associations and union confederations) was required to analyze and recommend socio-economic policies for restructuring and redevelopment, and for their implementation. Additionally, the commission was charged with devising economic policy proposals, particularly in the employment and labour relations areas, which would serve as guidelines for collective bargaining over specific time periods, usually one year. Currently employers' associations advocate a greater flexibility of labour laws, while trade unions strongly maintain the opposition to it. Given the practical impossibility of individual redundancy, personnel management has to make efficient use of motivation and training techniques in order to use to the full the available human resources, which requires a considerable technical expertise in terms of personnel management. On the other hand, trade union influence is decreasing. According to a survey on international strategic human resource management, 42 per cent of the companies surveyed reported a decrease in trade union influence, against 16 per cent who reported an increase. Trade union density averaged 30 per cent, with significantly higher figures in the public sector (Gunnigle, Morley, Brewster 1993). As many companies, due to productivity gains, can pay above the union rate for qualified technical/professional personnel, collective agreements began to lose their importance. Management has started to commission or conduct its own salary surveys, to determine the types of salaries and fringe benefits commensurate with the labour market position of some occupational groups and to decentralize to the middle managers the attribution of compensation according to the potential of and the results obtained by individual employees or work teams. Numerous consultancies in the area of the personnel management were created in the last decade. Personnel departments reduced the number of their own headcount while still maintaining or increasing the number of graduate staff members; they are tending to become more flexible and to decentralize their operational activities to the line managers. With the reduction of clerical staff, the classical bureaucratic management tasks were computerized and personnel departments started to develop an expert and stra-

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tegic focus. Personnel managers, in this period, were drawn from a great variety of academic backgrounds including, by the end of the 1980s, the first graduates in human and social sciences. With the emergence of the Single European Market and the ensuing need to increase productivity in order to survive, individual sectors and companies underwent accelerated restructuring processes and modifications of their organizational cultures, some of them becoming major successes and role models to be followed by others. A notable example is the banking sector. With the privatization of the Portuguese banks and the liberalization of financial markets several new banks were set up in the Portuguese market (both Portuguese-owned and subsidiaries from European and American banks), thereby creating greater competitiveness. One of the new banks, mainly Portuguese owned, grew in a few years from a small bank to one of the main financial groups. Its success was achieved by an innovative approach to the market, the use of advanced information technologies, and a personnel policy which was considered at the time aberrant to Portuguese culture. As a result the bank became a case study in the leading schools of management in the world and a major cultural symbol for the remaining banking sector. The present business context allows the opportunity for personnel and human resource managers and researchers to take on a strategic position in companies and help turn them around, while at the same time, promoting the physical and psychological well-being of their workers, whatever their professional status.

5

Impact of EU Initiatives

The greatest task of the Single Economic Market (and a Herculean one it is!) is to increase productivity and competitiveness of Portuguese companies. The historical evolution which has been traced points to the underdevelopment of companies in terms of managerial and workforce competences, and also the full use of new technologies. In this chapter, we will not restrict our analysis to the implementation of the rights and principles set out in the Social Charter, but rather focus on a few topics that have been studied in this context, and which contribute to the economic and social convergence of Portugal to the norms of the EU.

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Flexibility

The trend towards flexibility, both numerical and functional, seems to be a logical consequence which emerges from the characteristics of the organizational structures that are replacing the old ways of managing business. It has already been underlined above that companies are becoming flatter in their hierarchical structure, more decentralized, with a younger and more highlyeducated workforce. Streamlining is being achieved mainly through early retirement, negotiated voluntary redundancies and natural wastage. As a consequence, companies started to use subcontracting for many of the non-core jobs. Many of the remaining jobs will be more general, in the sense that a greater variety of tasks will have to be performed (in one functional area), initiative and responsibility for the organization of work will have to be assumed and more discretion will have to be exercised by the individual employee. Employees will therefore require not only more information but also less restrictive supervision. Numerical and functional flexibility are, however, restricted by the Portuguese labour law which is quite rigid. To overcome these legal restrictions in terms of individual dismissals, companies have always tended to use short and fixed term labour contracts and other types of precarious work contracts as their preferential employee admission methods. In order to discourage these precarious contracts, new legislation has been approved, specifying the situations that justify fixed term contracts and circumscribing them to accidental, temporal and seasonal situations. As one of the objectives of the Social Charter aims at increasing the transparency of the labour market, a European Commission directive was adopted, under which all workers have to be informed of terms and conditions of employment; while short and fixed term contracts have to be in written form, permanent ones may be verbal, but employers must provide a formal document containing the terms and conditions applicable. Current labour law is considered by the employers to promote functional inflexibility, by making it difficult to change the content of an employee's job in the context of new business conditions, particularly where collective agreements are in force. This is one of the areas of discussion and negotiation between employers' associations and trade unions and one where consensus, in general, has not yet been reached. The implications of this phenomenon in terms of training and development are clear, since many different skills will be required from the new breed of employees. The hard technical/functional competencies must be coupled with soft interpersonal, negotiation, and communication skills. Functional flexibility does not mean the disappearance of experts and specialists, who will always be needed, particularly in dangerous jobs and

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where job conditions give rise to the risk of accidents or operating mistakes with potentially grave financial consequences. It means rather that employees have to "reach beyond their traditional skills and gain a wider appreciation of their role within their organization" while recognizing and accepting change and the inherent role ambiguity (Morgan 1988).

5.2

Communication

The issue of communication is also a central theme, not only because of the Social Charter proposals in this area, but also for its role in the processes of cultural change, increased productivity and worker motivation. Many companies report an increase in employee communication, especially the use of direct verbal and written methods of communication (Table 1). Table 1:

Change in the Use of Verbal and Written Methods of Communication (in % of the organizations surveyed)

Organizations reporting a change in the use of Direct verbal methods to communicate major issues to employees Direct written methods to communicate major issues to employees Representative staff bodies for communicating major issues to employees Source:

Increased

Decreased

Same

45

1

39

40

1

41

8

15

45

The Price Waterhouse Cranfield Survey. The Price-Waterhouse Cranfield Survey was first established in 1989 in order to obtain comparable data on human resource management practices in the different European countries. The survey is based on a postal questionnaire focusing on information about policies and practices. This questionnaire was distributed in Portugal in 1992; 93 valid responses were received from companies of 200 employees or more.

This increase in the use of direct verbal and written methods of communication was particularly relevant for the companies that were being privatized, in order to either prepare employees for the changes that were going to take place in these companies so as to become more efficient, or to present the plans and strategies of the new owners and clarify the "new rules of the game". CEOs became real charismatic figures using many different methods, such as having lunch in a hotel every two weeks with heterogeneous groups of employees, having meetings with all employees in different offices of the company or sending a personalized letter to all employees on the first day of taking charge of the company, as the representatives of the new shareholders (Cunha 1992). With regard to bottom-up communications, the line managers are the most important contacts, a tendency common to other EU countries. Trade

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unions and work councils which are, everywhere else in Europe, the second most important sources of communications, are not relied upon in Portuguese companies as a means of upward communication. This is probably a consequence of the climate of intense (and frequently fruitless) conflict between unions and management that was created after the 1974 revolution, which tarnished the image of trade unions (Table 2). Table 2:

Methods Used for Employees to Communicate their Views on Management

Methods of upward communication

Percentage of companies

Immediate supervisor Trade unions/work councils Regular workforce meetings No formal methods Source:

94 29 40 34

The Price Waterhouse Cranfield Survey. The Price-Waterhouse Cranfield Survey was first established in 1989 in order to obtain comparable data on human resource management practices in the different European countries. The survey is based on a postal questionnaire focusing on information about policies and practices. This questionnaire was distributed in Portugal in 1992; 93 valid responses were received from companies of 200 employees or more.

The nature of information that is being communicated is another issue of relevance. In fact, most of the management literature stresses the importance of developing a good fit between the company's strategy and its personnel and also of enhancing the identification of employees with the organizational mission and goals. This is a powerful motivational tool, given that full and relevant information is a potent source for developing responsibility for results and personal accountability. However, the Portuguese companies are not passing this type of information on to their employees (Table 3). Table 3:

Communication of Strategic and Financial Performance Information to Employees

Information concerning

Strategy of the company Financial performance Source:

Employees informed Management

Professional Technical

Clerical

Manual

94 83

53 48

18 22

16 18

The Price Waterhouse Cranfield Survey. The Price-Waterhouse Cranfield Survey was first established in 1989 in order to obtain comparable data on human resource management practices in the different European countries. The survey is based on a postal questionnaire focusing on information about policies and practices. This questionnaire was distributed in Portugal in 1992; 93 valid responses were received from companies of 200 employees or more.

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While not even all management is briefed on the strategy of the company, only about 50 per cent of the technical and professional staff gets this type of information and this percentage becomes quite irrelevant where clerical and manual workers are concerned. Given the characteristics of the professional/technical staff as knowledge workers with high educational levels and the need for greater participation in the decision processes, a failure to receive this information will certainly not increase their involvement and commitment to the organizational goals. The same comment may be made for the communication of financial information on the company and conclusions may be drawn regarding the efforts to increase efficiency and the companies' need to have everyone involved in these productivity improvements. Another area in which communication is vital for the enhancement of the company's performance is the corporate cultural change. One of the conclusions that could be drawn in a survey of privatized companies (or those still in the process of being so2), is the tremendous change in the prevalent culture. A great number of the public companies in the run up to privatization could be characterized by a lack of the sense of profitability and accountability, centralization in the decision-making processes, excess personnel, indifference to the production processes and clients alike. This was ultimately the culture of companies with no owners. Many of these companies, which originated from mergers, were still experiencing difficulties with the integration of different cultures. The most important objectives to be achieved with the cultural change were the creation of a market orientation, a commitment to the company's profitability, the value of meritocracy and accountability and a new basis of personal skills and competencies. This cultural revolution has not been brought about by internal regulations. It has been a slow process, with a series of resistances to be overcome stemming from the uncertainty associated with a situation where power relations will be altered, job security threatened, new compensation schemes put in place, and jobs radically changed. It is undoubtedly a very significant and stressful event in the life of employees and managers. One can assume that, in the absence of reliable and accurate information, there will be an increase in distorted information, passed by word of mouth. In turn, this process will further increase the anxiety felt by managers and employees causing yet more morale and productivity problems. It is not surprising, therefore, that communication was considered to be one of the priorities in CEOs' agendas. Changes in organizational structures, notably downsizing and delay ering, have entailed more sharing of responsibilities and a less authoritarian management style. Managers have to develop a better understanding of employee needs and learn effective listening skills. They have now to communicate task goals clearly to their subordinates and provide timely feedback. One of the new managerial roles will thus stress the soft aspects of develop-

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ing and enhancing interpersonal relations, based on trust and open information exchange.

5.3

Equal Opportunities for Men and Women

Since the political change in 1974, in conjunction with the development of the women's movement, the political parties and more recently, the EU directives on this subject, legislation establishing the principles of non-discrimination and equality of rights and opportunities has been approved. The attentive reader who is aware of Portugal's dominant Catholic and Latin culture, may well be very surprised to learn from the statistical data at the start of this chapter, that in 1991, the female activity rate reached 49.1 per cent. In addition, the female labour market participation rate is about 44 per cent. We believe this high rate reflects not only the need to contribute to the family budget and the creation of short term and part-time jobs, but also the need to fulfill social and personal development needs. This applies particularly for more highly-educated women, as well as being a cultural trait according to which women are expected to play their role in the labour market. Data on the percentage of female students in higher education is indicative of what the labour market will look like, in terms of gender distribution, for managerial and white collar jobs. In 1989/90 the percentage of women entering university courses was 54 per cent. The majority of students studying law are now women, and in business and economics around 48 per cent are women, and more than 50 per cent in some schools. Medicine, agronomics, industrial production engineering, mathematics and information sciences are some other areas where the female population is now the majority of all first-year students (Cunha 1993, p. 183).

Very soon the labour market in Portugal will have a significant number of talented and highly qualified women applying for technical and managerial jobs. Companies cannot neglect this pool of candidates and depend exclusively or persistently on the male candidates if they want to really use good talents. While Portuguese women in leadership and managerial positions are still underrepresented, especially in the private sector, Portugal has, in its public administration, not only the highest feminization rate but also the highest rate of women in leadership positions (Figure 1). As shown, in Portugal women hold 20 per cent of the higher level jobs (Al-A3 levels) and 38.4 per cent of the A4-A8 level ones, with much lower percentages in the other EU countries. We think that this trend will gradually and with no great social resistance be replicated in the private companies, whatever their size or economic sector.

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Portugal

EU Countries

EU Commission

Figure 1: Percentage of Women in Public Administration, in Portugal, in the EU Commission and EU countries

However, the entrance of women into the managerial ranks will bring about some changes in the way human resources are used and managed. Women are still expected to fulfill their maternal role, which includes childbirth but also childbearing responsibilities. In Portugal, like all other EU countries, demand for childcare facilities is greater than supply, which presents an obstacle to returning to work. Being aware of these difficulties, the European Commission has drawn up some guidelines on childcare policy within the Union. This is certainly a field in which Portugal must improve, although, the government does not seem to consider it a priority. On the other hand, most well-educated women want to go back to work after the three months' maternity leave that is legally granted. "And while a few women put their career first and, in order to climb the corporate ladder, choose to forego motherhood, the majority of women are still trying to pursue a serious professional career and, at the same time, remain actively involved in childrearing" (Cunha, 1993, p. 182). They want to have it all! This means that companies should not waste these human resources and should consider offering them some trade-offs, such as greater flexibility of working hours as part of the perks that come with career advancement. But the impact goes beyond these trade-offs. The majority of these professional women are partners in dual career couples, in which husbands not only respect and support their wives' professions, but also want to have it all — being good professionals and involved fathers. We are therefore about to witness a major social and cultural transformation, which will take some time to achieve, but which is already influencing the management of human resources. Multinational companies, for example, are already feeling they have to consider the opportunity costs for the spouses' careers, when planning international appointments for their executives. The redefinition of gender roles may be accompanied by increased levels of occupational stress, since a heavy load of time management, work organ-

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ization and "child" management activities will be experienced. Results from a pilot study on occupational stress that is being carried out by one of the authors (Cunha), point to greater levels of occupational stress in men than women.3 A possible explanation is that the redefinition of men's roles that is now starting to occur has already taken place at least a decade or two ago, for women. A less sophisticated explanation has to do with the existence of good support facilities, in terms of child care centers, the closeness to the family circle (and grandmothers!) and domestic employees, coupled with the high quality these women must have to have reached their positions. Greater flexibility will nevertheless have to be provided in almost all aspects of human resource management, particularly work schedules, compensation practices, training and development, which may be costly but produce greater productivity and innovation, greater job satisfaction and reduced staff turnover.

6

Prognosis for the Future

6.1

The Educational System

The dawn of the enlarged European economic market and the technological revolution that has occurred and still is taking place, are influencing and determining the new "modus operandi" of Portuguese society and, in particular, business organizations, for which the need to increase both productivity and quality is a primary goal. Advances in automation and other high technology derivatives are molding the demand for different knowledge, skills and abilities from human resources of the present and the future. According to Rodrigues, the skills required for the production workers will include an increasing practical mastery of sophisticated and changing technologies [...], a greater multivalence (performance of several tasks in one occupation) or even polyvalence (performance of more than one profession) [...], proficiencies in common languages (mother tongue, foreign language, mathematics, diagnostic methodologies) to facilitate communication and the analytical ability as well as learning, which requires a higher level of education, and the ability to work with autonomy and responsibility in a collective organization based on teams (Rodriguez, p. 131).

This kind of worker is not being produced by the national educational system, since the technical-professional schools were phased out. However, these workers are in great demand with industrial companies (the case of the electro-mechanics is a notable example) which do not have the time or the skills, motivation and pedagogical resources to conveniently develop employees through in-house training programmes.

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Rodrigues still proposes that supervisors will be expected to motivate, coach and manage the human factor, while at the same time managing the technological processes. Technical/professional white-collar employees, on the other hand, will need to be prepared to innovate, to manage production and human resources and to fully use expert systems. For middle and top management, new skills will certainly be demanded and will make a difference in the bottom line — technical competence combined with the negotiation, coaching and communication skills to enhance innovation in the workplace. How these skills will be developed, remains to be seen. Apart from the efforts of individual companies to develop in order to meet their specific competitive skills requirements, the role played by the educational system in the creation of a labour market capable of responding to new organizational needs cannot be neglected or its importance underestimated. While, historically, education and training have never received the attention they deserved from governmental institutions, nowadays it is clear that ignoring them will constitute a decisive backwards step. Formal education, at all levels, should thus be analyzed and benefit from special and substantial investment programmes, to produce the needed knowledge and skills. This will require a serious effort on the part of government in order to forecast the critical skills and to develop a more innovative higher quality education, in order to respond to the needs of the labour market. A greater co-operation between schools/universities/research institutes and companies or business associations will emerge either in the form of tailor-made degrees and diplomas or in more specific consulting and research projects. This trend is already starting to be seen in Portugal in some of the more forward-looking companies and universities. On the other hand, the educational system (and in particular the universities) will have to be able to provide companies with short programmes to disseminate the state of the art in their specific areas and thereby contribute to a more flexible and sophisticated workforce. This will be a great challenge but should the State and the educational system fail to fulfill this role, companies will have to look elsewhere for the skills they need. The free circulation of employees, stemming from the Single European Market, may provide a substitute, with know-how coming from the more developed countries in the EU, but at a higher cost for the country, both in terms of higher (and consequently inequitable) salaries and in terms of a lower value being placed on Portuguese workers and a reduced quality of life.

Portugal

6.2

227

The Management of People

Human resource management will tend to evolve into the management of people. From the legal and quantitative accent of the previous phase it will evolve into a qualitative and decentralized personnel management, with the accent on productivity and quality. From a formal planning approach, personnel management is developing into a kind of strategic planning where, more than just the number of employees and respective plans of succession, priority areas of recruitment, training and work organization/reorganization are specified. From stressing the quantitative personnel aspects, management will accentuate the manwork relationship and its duality. Some personnel departments will be called upon to support managers in the processes of work structuring and work automatization. The key-note will be the growing emphasis on productivity, in a better ergonomie interface of man-work relationship and the improvement of quality: TQM (Total Quality Management) will thus tend to become common. With the agreement of both labour unions and employee committees, it has been possible, in some companies, to start developing jobs and occupational groupings into a more functional polyvalence and flexibility, thus allowing the companies to give a more adequate reply not only to the market but also to their employees in terms of enhanced career progression. Selection and training will be managed by skilled workers and line managers but their implementation will tend to be assigned to external consultancy companies. At the same time, the evaluation of the impact of both selection and training is becoming more and more important, relative to the results attained by the companies and the workers' career progression with validation studies becoming more common. In terms of selection techniques, Portuguese companies are not significantly different from companies in other EU countries. As far as training is concerned, firms tend to accentuate the areas of management and marketing and industrial and services automation. Another trend which is currently being identified is the use of external contractor companies for the provision of traditional medical services, while internal occupational health departments are gaining influence with and within personnel departments. In the area of communications policies, personnel departments will take on a more proactive role, disseminating strategic and financial information throughout the organization. Employee participation will be encouraged at the levels of both the definition of corporate goals and the appraisal of individuals' performance. Upward communication will also increase through line management channels, meetings of workers, or by more informal methods such as "open door" practices.

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Finally, the management of organizational culture will remain one of the main concerns of the personnel departments in the more dynamic companies. For the achievement of this goal, the three major instruments will be staffing, compensation and work organization. The selection of a competent and flexible workforce, the establishment of congruent compensation policies and the design of more meaningful, enriched jobs, supported by training programmes to help reduce resistance to change, will be the strategic tasks for the new philosophy of management of people.

7

Conclusions

This paper has attempted to analyze the enormous leap that Portugal has made, in two decades in order to become a fully integrated member of the EU. The pace at which change has occurred can easily be seen from the outside and is felt from within. Indeed, people feel the urge to change and although change is accompanied by ambiguities and confusion, they still know it is a necessity. Personnel/human resource management is playing its part in this movement and has transformed itself progressively from a purely bureaucratic and administrative function to a formal planning perspective and more recently to a people-centred approach. Some of the trends that have been outlined above were: - increased flexibility, both numerical and functional; - the establishment of more open communication channels, downwards and upwards; - increased personnel responsibilities for line managers, in particular the areas concerning staffing, compensation, training and development, and work organization decisions; - the rejuvenation of the workforce, coupled with higher educational levels and higher feminization rates; - concern with quality and customer service; - development of managerial skills, especially the so-called soft ones. These characteristics are already being practiced by some companies, but it is still wishful thinking to believe that they will be more generally applied in the near future. There is still a long way to go and top management has a great responsibility in promoting them. However, hope does not hurt and we believe that more and more, personnel management is considered as being equivalent to work motivation, for which the two major goals are productivity and the quality of working life.

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Notes 1

2

3

Unpublished data provided by Instituto de Apoio às Pequeñas e Médias Empresas e ao Investimento, pertaining to December 1993. This survey was conducted by Rita Cunha and a consulting company. It was based on a interview with pre- and post-privatization CEOs, followed by a postal questionnaire, about the challenges, difficulties and opportunities faced by these companies. This study, by Cunha, is part of the Ph.D. research project that is being carried out on the impact of privatization on the health and well-being of employees in Portuguese organizations.

References Alves Marques C., Value Analysis in Organizational Context, Tilburg, Tilburg University Press 1991. Aníbal Α., Costa V., Gestäo dos Recursos Humanos e os Direitos dos Trabalhadores [Human Resource Management and the Rights of Workers], Lisbon, Editorial Caminho 1987. Brunstein I., Führung und Führungsforschung in romanischen Ländern, in: Handwörterbuch der Führung, Schaeffer-Poeschel, Stuttgart forthcoming 1995. Cunha R., A Privatizaçâo em Portugal: Uma Revoluçâo Cultural [Privatization in Portugal: A Cultural Revolution], presentation in a seminar on The Challenges of Post-Privatization, New University of Lisbon, Lisbon, March 23rd, 1992. Cunha R., Women in Business and Management — Portugal, in: European Women in Business and Management, M. Davidson and C.L. Cooper (eds.), Paul Chapman Publishing, London 1993. European Institute of Public Administration, Women in Higher Public Service, European Institute of Public Administration, Maastricht 1988. Eurostat, Labour Force Survey Results 1987, European Community, Luxembourg 1989. Gunnigle P., Morley M., Brewster C., Changing Patterns in Industrial Relations: Differentiation and Convergence, in: P+ European Participation Monitor, European Foundation for the Improvement of Living and Working Conditions, vol. 7, 1993. Hofstede G., Culture's Consequences, Sage, Beverly-Hills 1980. Instituto Naçional de Estatistica, Contas Nacionais [National Accounts], Instituto Naçional de Estatlstica, Lisbon 1993. MOW, The Meaning of Working, Academic Press, London 1987. Mendes P., Personnel Management in Portugal, in: Personnel Management, vol. 24, June 1992. Morgan G., Riding the Waves of Change, Jossey Bass, San Francisco 1988. OECD, Études Économiques, Portugal 91-92, OECD, Paris 1992. Rodrigues M.J., Competitividade e Recursos Humanos [Competitiveness and Human Resources], D. Quixote, Lisbon 1991.

Spain Ignacio Flórez-Saborido, Manuel González-Rendón, Manuel Alcaide-Castro

1

Introduction

Human resource management in Spain has traditionally been characterized by various traits, all of which are interrelated and which largely explain one another. Taken together, they produce a somewhat negative account of the situation of this important aspect of business management: - the pre-eminence of its purely administrative aspect which gave rise in the past to little more than the completion of bureaucratic-type tasks; - the limited use of the techniques and instruments of Human resource management, such as job analysis, planning, determination of training needs, career management, job evaluation, performance evaluation, etc.; - its reactive character, as personnel policies had nearly always been established as an answer to a necessity, responding to events rather than foreseeing and preventing them; - the limited status and resources of the specialist personnel departments, when and where these existed. Various reasons come together to explain this poor status, as will be referred to in the following characteristics of the background to Spanish HRM during the period of the 1970s and 1980s.

2

Human Resource Management during the Franco Regime

During the Franco regime, especially from 1958 to 1973, HRM practice was characterized by two key aspects, relating to wage determination and the use of temporary employment respectively. In the first place, its institutional context was marked by pseudo-collective bargaining, in the absence of free trade unions and with considerable

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participation by government. This created an extraordinary degree of wage flexibility, which was however paralleled equally strongly by a labour market rigidity since employers were not permitted to lay off employees without justified reasons. During this period, the economy was characterized by a general situation of expansion with short periods of recession. However, there were more than enough elements of flexibility present to allow the adjustment of labour costs to the economic cycle. Among these elements, the most important were: -

the absence of specific unionization effects in the labour force; the actual flexibility of the payments included in wages and salaries; the low level of base pay; the systematic resort to cheap overtime.

Among the various factors of wage flexibility, the following should be noted especially: - the extensive use of variable components of wages linked to profits, productivity, or even the general prosperity of the company, amounting to up to 40 per cent of wages, - the intensive use of overtime, which permitted adjustments of production to the changing conditions of the product market, causing modifications in per capita wages without changing the number of employees (Serrano, Malo de Molina 1979). In the second place, during this period there was a low level of temporary employment despite the legal constraints to lay off employees, and despite a 1944 Law (Ley de Contrato de Trabajo) which left it up to the affected parties (employer and employee) to opt for either a permanent or a temporary contract. This situation can be explained by two basic aims. Companies wanted: - to protect the large investments in vocational training which they were making as a substitute for the general lack of training given by the state education system. This protection entailed a widespread use of internal promotion as opposed to external selection. The entry of personnel occurred therefore mainly at the bottom of the organization, which contributed to the explanation of the low rate of external mobility in the Spanish labour market. It was also reinforced by the importance given to seniority as the basic criterion for promotion, even in collective agreements and labour law; - to balance the lack of employment protection and basic workers' rights such as independent unionization, free collective bargaining, the existence of an institutional framework to conduct industrial conflicts, etc. (Rodriguez Miranda 1982).

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For these reasons, the legal judgements as well as subsequent changes in the labour legislation, limited the use of temporary employment even in those sectors in which its existence would be more logical in the long run. The employment legislation during this period gave a wide scope for lawful dismissal, and furthermore certain legal loopholes existed which allowed companies to avoid the reengagement of illegally dismissed workers, in the case of a judgement sentence against the employer. Under certain circumstances of economic difficulties, companies could use collective dismissal as a mechanism to reduce personnel numbers, which still conformed with the legal framework. So while a basic element of rigidity is found in the high cost of dismissal of permanent workers, the stringent legal conditions through which employees were made permanent, combined with the lack of union control and observation considerably softened its impact. This gave rise to various forms of employment abuses, like the excessive duration of trial periods and other types of temporary employment, which allowed for staff numbers to be easily regulated (Durán et al. 1987). This system of adjustment allowed for the reduction of production costs through wage flexibility without eliminating losses incurred by an excess of personnel. It curbed rather than stimulated the efficient use of the workforce and created considerable accumulation of inefficiencies in the production sphere. Additionally it contributed to the Spanish economy being characterized by its intensive use of the labour, making it especially vulnerable to wage rises. The effects of all these factors were the losses shown in a spectacular way when, in the 1970s, the unfortunate coincidence of the economic crisis and the political transition occurred.

3

Human Resource Management, Economic Crisis and Political Transition in the 1970s

In more recent times, the extraordinary difficulties of Spain's political transition within the context of a deep economic crisis did not contribute to the necessary modernization and development of Human resource management. During this period, priority was given to the reduction of labour conflict. This in turn delayed the much needed adaptation of the economy to the context of the crisis, which became more apparent as the problems from the previous period surfaced. During the second half of the 1970s and the early 1980s, a series of changes occurred which constituted important barriers for the required modernization of the personnel function in Spain. In particular, from 1973 to 1980 various factors resulted in companies reducing wage flexibility

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without providing the necessary compensating adaptation of the workforce to the new demands which were facing the company. These were: -

an intense escalation of labour costs in spite of the severity of the crisis; a progressive limitation of salary ranges; legal limitations on the use of overtime and its increasing cost; a reduction in the importance of the variable components of remuneration.

We shall discuss these four factors. Major barriers of putting into practice the precepts and techniques of HRM were created by the increase of union pressure, virtually from the beginning of the 1970s, and by the lack of clear negotiation targets on the part of company owners. Later, the nation-wide appearance of a range of political pacts and social agreements sacrificed important aspects of flexibility in the interests of macroeconomic salary control. From 1970, an intense escalation of labour costs took place, because of the increase in the real wage and the real costs of social security. The real unit labour cost in the industrial sector rose by nearly 55 per cent between 1970 and 1980. Only from 1980, with the important "Social Agreements" (see below) was there any considerable moderation in salaries. There was, however, no decrease of real salaries (except in 1982) basically due to the intensity of wage drift. On the other hand, as already mentioned, employees experienced an increase of social security payments and greater fiscal pressure on their incomes. These pressures gave rise to a widening gap between real labour costs and the purchasing power of incomes, with the latter only able to be raised at the cost of strong upward tendencies on the former. Wage ranges were becoming compressed considerably. The linear character of desired wage increases was converted into constant demands which lasted until 1980, reflected in wage campaigns which were a frequent cause of conflict in collective bargaining. These dynamics had very negative consequences from the point of view of HRM, as it notably diminished promotion as an instrument for motivation, as had been done before. The variable component of payments linked to production or performance became a much-reduced component of the gross wage. In the 1960s, commissions, bonuses and incentives typically reached levels of between 30 per cent and 40 per cent, and even in 1975 the importance of incentives was still significant. But from this date on, variable compensation concepts and those of production-related pay, diminished regularly through their integration into base pay or into basically-permanent compensation. It seemed as if the salary had been definitively abandoned as an instrument for motivation (Alcaide-Castro 1987).

Spain

4

235

Human Resource Management during the 1980s: From Crisis to Recovery

Three contextual factors are of special interest in order to understand the changes which were produced in Human resource management in Spain during the 1980s.

4.1

The Evolution of the System of Union Relations

Social agreement was the answer offered by the Spanish system of union relations to the difficulties of political transition amid the deep economic crisis. During the first half of the 1980s, the necessary process of wage moderation was tackled as the largest national unions and employers' associations began to participate in nation-wide social economic pacts. One of the basic objectives of these agreements has been, during the years over which they have been taking place, the determination of various general procedural rules about the content of collective bargaining. These may be described as "agreements in order to agree". During this new stage the state participated in these processes. At times this participation happened in a direct way, that is to say, signing agreements and accepting certain compromises. For instance, in one of these agreements, The Acuerdo Nacional de Empleo, 1985-1986 (National Agreement on Employment, 1985-1986), the government accepted certain compromises with respect to: fiscal incentives on job creation, unemployment protection, reform of the social security system, job creation in the public administration sector, etc. At other times, the state acted in an indirect way by establishing inflation forecasts and targets, or by determining the wage increases of civil servants. In order to face up to the consequences of the economic crisis, these social agreements tried to discipline sectoral or company collective bargaining by limiting and specifying the costs of the labour factor. Hence the criteria of wage increases became completely oriented in this field, in terms of successive "bands", formed by a minimum and a maximum percentage, between which the parties (social partners) undertook to establish the effective applicable increase. These social agreements had obvious positive consequences: - they contributed substantially to political stability; - they established a sufficiently flexible and effective negotiation mechanism in order to make possible the necessary wage moderation; - they diminished the intense labour conflicts of the previous decade.

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Nevertheless, this meant the sacrifice of certain aspects of flexibility in favour of the macroeconomic control of salaries: - the excessive narrowness of the salary bands (in which the unions saw an element of solidarity) led to the fact that the salary increases did not sufficiently take into account the differing situations of industrial sectors, individual companies and professional categories; - the motivational consequences of the lack of incentive for the professional groups (for whom there was a larger demand in the employment market); - the fiiture lack of adjustment of those groups with less potential in the labour market. Once the economic crisis was overcome and the application of one of the social economic pacts, the Acuerdo Economico y Social (Economic and Social Agreement), was finalized on December 31, 1986, no framework agreement or pact applicable on a nation-wide level has been produced again up to now — in spite of attempts to the contrary. In this way during the expansion phase of the economic cycle which developed during the second half of the 1980s, the Spanish unions modified their activities to fit into new rules of conduct, abandoning the patterns of action which had been developed during the previous period. These new rules of conduct can be synthesized in the following concrete points: - Strong and united pressure in opposition to the economic and social policies developed by the socialist government. The unions were acutely aware of the spectacular economic results obtained by large companies and by the private banking sector. They stressed that the government, through its economic policy, had clearly favoured company profits to the detriment of improvements in the economic and social conditions of workers. This conclusion has given rise to unified union action, after a long period of differences between the two main unions, UGT (Unión General de Trabajadores, General Workers' Confederation) and CC.00 (Comisiones Obreras, Confederation of Workers' Commissions). Furthermore, such action was combined with open confrontation between the government and the socialist union (UGT). - The creation by unions of a single campaigning platform. In October 1989, the so-called Principal Union Offer {Propuesta Sindical Prioritaria or PSP) appeared. This was a consequence of the previous unions' response to the social-economic policy of the government and was consistent with the unions' demands for social change. The PSP was an attempt to provide a way out of the previous period of conflict. It was made up of a total of 20 claims of varying types, grouped under four thematic headings: (1) increasing employment levels and improving the quality of working life, (2) improving employees' rights and security at

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work; (3) modifying the distribution of earnings from employment; and (4) increasing employees' participation rights. - The birth of a new model of union activity in 1990 — after three years (1987-1989) without any national unified agreement. The PSP gave rise to a new model of collective action which no longer hoped to achieve large national pacts at the highest level and which was characterized and differentiated from the previous model by the following points: (1) it did not establish a fixed period of the year for collective bargaining; (2) it was structured according to thematic groupings; (3) it did not consider the presence of all possible representative bodies to be totally necessary. This has been repeatedly disputed by the employers' association Confederación Española de Organizaciones Empresariales (CEOE, Spanish Confederation of Employers' Organizations), which wants to return to the tripartism of the previous period. This new process of dialogue has proceeded in two very different phases. In the first phase, in spite of strong opposition by the employers (CEOE), the government took on board the relevant parts of the PSP (Palomeque 1990). The second phase was started with the government's proposal of a Competitiveness Agreement (Pacto de Competitividad), later re-named the "Social Agreement for Social Progress" {Pacto Social de Progreso). It was intended to enable the Spanish economy to confront the competitive challenges of operationalizing the Single European Market. This second phase of these negotiations, however, was pursued without reaching any concrete agreement. The two leading unions (UGT and CC.OO) consequently presented the so-called Union Initiative for Progress {Iniciativa Sindical de Progresó) as an alternative to the Competitiveness Agreement {Pacto de Competitividad). This proposal includes measures on pensions, strikes, employment contracts, industrial training, health and safety at work, taxation, housing, industrial policy and the European Union.

4.2

The Labour Market

At practically the same time as the provisional date for the completion of the Single European Market was made known in 1985, the Spanish economy started to emerge from the tunnel of crisis. This expansion process, which had not been experienced for many years, had many major repercussions on the labour market. During the second half of the 1980s an intense process of job creation occurred, reversing the pattern of employment from 1980 to 1985 inclusive which had shown an equally intense process of decline. During these years 1,270,300 jobs were lost. However, from 1985, a strong recovery took place and from 1986 to 1990, 1,937,700 jobs were created in only five

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years. On average, employment increased by 3.6 per cent per year, with a positive total for the decade of 667,400 jobs. This improvement in employment was ended however by the sharp economic slow-down recorded in 1991, a year in which, for the first time since 1985, the loss of about 60,000 jobs occurred. This intense process of job creation during the second half of the decade produced however no substantial decrease in unemployment. The global analysis of unemployment during the decade shows an marked rise in absolute terms until 1985, when 2,938,600 were unemployed. From then on, a slow and uninterrupted decrease occurred, reaching 2,441,200 in 1990. Figure 1 shows the relationship between the creation of employment and the decrease of unemployment. The differences between the columns of job creation and the decrease in unemployment illustrate the increase of the active population. These increases are due to the massive incorporation of women into the work market from 1985, especially women over 25 years of age. In 1987 and 1988, women represented nearly 90 per cent of new entrants to the labour market.

•

Source:

J o b creation

^Unemployment

decrease

National Institute of Statistics, Madrid.

Figure 1: Job Creation versus Unemployment Decrease (1981-1990, in thousands)

During the whole decade of the 1980s the unemployment rate in Spain was the highest in the EC, reaching a peak in 1985 of 21.64 per cent and being in 1992 over 16 per cent. Added to the seriousness of the general unemployment problem, was the fact that the percentage of long-term unemployed rose until 1988, since when a fall has occurred. Nevertheless, in 1990 more than 35 per cent of the unemployed had been looking for work for more than two years and more than 50 per cent for more than a year. On the other hand, juvenile unemployment remains extremely high at around 32 per cent, in spite of the decrease shown in the last years (Alcaide-Castro, González-Rendon 1990).

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4.3

Employment Policy

Spanish employment policy during the 1980s can be characterized by two basic features: - It was not an employment policy developed in a unilateral way by the government, but one in which other representative bodies (employers and unions) intervened, although not always jointly. - As a consequence of the above, it was an incongruous employment policy, lacking coherence in its development. Nevertheless, it is possible to identify five strategic lines of action (MISEP 1988): - An increase of numerical or external flexibility resulting from the reform of employment contracts. In the 1980s, progressive changes occurred, causing a considerable increase in flexibility from 1984 onwards. This situation is now the subject of keen debate. - The establishment of policies giving a positive encouragement for job creation and the setting up of companies; this in turn has given rise to a range of specific substrategies. - The widening and diversification of vocational training programmes. The national Training and Job Start Plan (Plan Nacional de Formación e Inserción Profesional, known as Plan FIP) was started in 1985. It has managed to greatly increase the number of trainees and courses, achieving a greater diversification of training without effecting the involvement and participation of the private training providers. - Labour market redistribution strategies containing the following proposals for: (1) encouragement of part-time work for workers near retirement age, as well as early retirement plans, with the consequent replacement of personnel from among the unemployed. In this area, unions have proposed reducing the retirement age to 64 and increasing the encouragement of early retirement; (2) reform of part-time contracts, which has resulted in a major increase in the use of this type of contract, although below the level found in other European countries. In Spain the percentage of parttime workers with respect to the total working population was around 6 per cent in 1988, while in Holland, United Kingdom and Denmark this figure ranged between 20 per cent and 30 per cent; (3) autonomy of the negotiating parties in collective bargaining to establish the length of the working week, complying with the legal maximum of 40 hours (unchanged since 1983). Unions are trying to reduce this legal maximum to 35 hours a week; (4) a limit of 80 overtime hours per employee per year. In order to promote new labour contracts, unions have proposed both the progressive elimination of regular overtime hours as well as the

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establishment of daily, monthly and yearly limits to overtime; (5) autonomy to establish annual paid holidays by collective agreement, which has existed since 1983. However, unions are trying to achieve a legal minimum of 5 weeks per year. - Finally, the reform of the Spanish National Employment Service (Instituto Nacional de Empleo or INEM) due to the fact that at present, the INEM's function is solely limited to providing unemployment statistics and to supplying lists of the unemployed to employers. There is a level of consensus between the government and the representative bodies on the reform of this service, although no specific actions have yet been taken.

4.4

Contracts of Employment

One of the costs for Spanish firms of the transition from dictatorship to democracy was the introduction of a presumption in law that all labour contracts were permanent, resulting in excessive job stability for workers during a period of economic crisis. This presumption was immediately varied by introducing certain exceptions, giving incentives to various sectors of the labour market (e.g. young people and the unemployed) and to meet specified temporary needs. In practice, permanent contracts monopolized almost all employment along with excessively high redundancy payments. The employers, becoming alarmed, demanded a relaxation of this protection against dismissal. The government answered with the 1984 legislative reform, putting a wide range of powers at the disposal of employers for temporary hiring, thus contributing decisively to giving more flexibility to the (until then) rigid labour market. However, this wide range of contractual arrangements generated a complex system, in which clear, common rules did not exist. This lack of clarity was partly due to the fact that each type of contract was regulated separately. The government followed a gradualist type strategy (Valdés DaiRe 1985) in introducing greater contractual freedom, but the process also produced unnecessary administrative complexity and legal insecurity for the employer, and lack of employment guarantees for the worker. In an attempt to encourage more employment, some of these contracts introduced, on the one hand, a series of discounts of social security payments which the employer has to pay for each worker. On the other hand, they provided certain subsidies for employers who gave permanent contracts to designated groups such as the handicapped, the long-term unemployed and women. These discounts and subsidies also lacked consistency of application, and an additional complexity was introduced by some regional administrations subsidizing this type of contracting.

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The philosophy which inspired this employment policy for temporary contracts is the following (Espina 1991: 1027-1069): - permanent employees should not experience job insecurity, and measures ensuring such stability should be left intact; permanent contracts of employment therefore were the only ones left untouched by the reform, in spite of employers' demands for a reduction of the costs of dismissing workers; - the substitution of permanent workers by temporary workers should be prohibited; - the terms and conditions of temporary contracts should be widened, made more flexible, and to some extent, subsidized. From 1987 to 1991, these policies caused doubling of the number of employees with some type of temporary contract, and by the end of 1991 the figure had reached over 33 per cent of the Spanish work force, a percentage higher than any other in the EU. These outcomes were strongly criticized by the Spanish unions as causing considerable duality and instability in the labour market. Although Spanish legislation requires equal conditions between permanent and temporary workers, this legal equality is not so clear in practice. Surveys show that a temporary worker earns almost 40 per cent less than one with a permanent contract and that two out of three accidents at work affect temporary workers. Nevertheless, it is stated that this type of contract has revealed part of the underground economy (Lorente, Marin 1987) which possesses even worse work conditions. The use of temporary contracts therefore, could have on the whole meant an improvement of work conditions and less abuse by employers.

5

The 1990s: The Beginning of a New Period of Economic Recession

5.1

Reform of the Labour Market

A new period of economic recession began in 1991, a year in which an almost continuous process of job losses took place. More specifically, up to the second quarter of 1993, 809,430 jobs were lost, representing a decline of 6.38 percent in the working population. The unemployment rate reached 22.25 percent of the active population during this period, a record level in Spain.

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This crisis is at present forcing the government to implement significant changes in employment policy. However, this process of reform in the labour market did not generally take effect until December 1993, more than two years after the beginning of the crisis, although in 1991 and 1992 some concrete actions were taken with the aim of improving the operation of the labour market. Specifically these were: - In January 1991, an agreement was signed by the government and the most representative Spanish trade unions, but without the participation of the employers' associations. The main objective of this pact was to avoid fraud in the use of temporary contracts. To this end, certain means were made available to the workers' representatives for the effective control of temporary job contracts. - In April 1992, the government reviewed the economic incentives linked to certain types of job contracts, focusing on the encouragement of permanent employment and the elimination of discounts on social security payments for temporary contracts. This significant reform, adopted to limit the widespread use of temporary recruitment was also used to reduce the budget deficit brought about by unemployment payments. The practice of temporary hiring had been provoking an excessive turnover in the workforce. - In December 1993, as mentioned above, an overall process of reform in employment policy was undertaken by the government (given the gravity of the economic crisis and the lack of participation by the social partners). This process will foreseeably continue in 1995. The initial measures implemented within this process of reform were as follows: - the elimination of the legal requirement to use the National Employment Service (INEM) as the primary source of recruitment, as well as the elimination of other bureaucratic obligations associated with it; - the creation of a contract of apprenticeship, as well as the modification of job training contracts and work experience contracts; - economic incentives directed to small and medium-sized enterprises (SME) for the creation of employment; - the encouragement of part-time contracts, without the implementation of other relevant work distribution measures; - finally, temporary work agencies and non-profit placement agencies are now permitted to operate, although more specific regulation is expected.

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5.2

Reform of the Vocational Training System

During the last three years, an important process of reform in the Spanish vocational training system has been undertaken, affecting both the public system of occupational training and the training activities developed within the companies. The state system of vocational training was reformed in May 1993 through the reorganization of training activities developed within the Employment Training and Integration Plan (Plan FIP), part of the Spanish National Employment Service (INEM). Since this reform, the training activities carried out by the INEM have been exclusively aimed at the unemployed. The reform of in-company training activities was undertaken in December 1992 with the signing of the National Agreement on Continuing Vocational Training by the social partners (employers' associations, CEOE and CEPYME, and the trade unions, UGT and CCOO), and with the signing of the complementary Tripartite Agreement by these associations and the government. These two agreements were aimed at the promotion of investment in training by Spanish firms and left the general responsibility of training employees to the social partners. For its part, the government assumed the responsibility of transferring funds for subsidizing the training of employees to the social partners. These funds consist of a percentage of the total income obtained by the administration through the compulsory levy for training, contributed to by both the employers and employees as part of the social security payments. This percentage will increase during the years these agreements remain in effect (1993-1996).

6

Current Practices of Human Resource Management in Spain

There can be no doubt that a steady process of modernization has occurred in Spanish business, even if the present outlook remains varied and uncertain. Equally, a significant degree of harmonization of practices in the rest of the industralized world has been brought about in the area of human resource management. Various factors have substantially contributed to the fact that human resource issues have acquired of late a greater importance in Spain within the general context of business management. - In recent years, Spain has participated fully in a unique way in the "globalization" process which has taken place in all areas of management. The opening-up of Spain to external investors and markets ac-

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celerated with its entry to the EC. From this date increasing foreign inward investment especially from the EC, with mergers and buy-outs of Spanish companies, has had a notable impact on many aspects of the management of Spanish companies. Management concepts have "globalized" in the same way as markets. The personnel practices increasingly adopted by the larger companies, many of them multinationals, are being followed gradually by the rest. A greater level of activity and influence by foreign consulting companies has also contributed to a substantial extent in the modernization of the personnel function. From 1985 to 1990, the interruption of the economic crisis and the intensive expansion process has contributed to change in business priorities concerning personnel. During the second half of the 1970s and the first half of the 1980s, managing human resources was about trying to cope with the recession within narrow pre-existing constraints. For many years, this constituted a major obstacle to the dynamism of personnel management. For many companies, especially the larger ones, it entailed: (1) finding means of reducing staff without resorting to large scale dismissals, which were impossible to implement for reasons of cost and industrial conflict; (2) not covering vacancies; (3) offering early retirement; (4) trying to reduce the sharp increases of labour costs which took place especially during the second half of the 1970s. Nevertheless, the beginning of a new period of economic recession in 1991 forced a change in the priorities of HRM practices in Spain. Once again, the main objective of many Spanish companies has been to adjust the size of the workforce to the demands of the economic environment. Spanish companies are acquiring an increasing need for labour flexibility, both external and internal, as has happened in other industrialized countries. This trend is at the root of much of the growing importance of HRM. Consumers are more demanding than before and are more receptive to innovations in products, causing the life cycle of products to be shorter, and the rate of the introduction of new models, designs and innovations to be faster. Demand is more difficult to foresee both in quality and in quantity. In order to be able to compete in a market with these characteristics companies need to have greater flexibility at all levels — especially concerning human resources. Spanish companies are also participating in the Europe-wide trend towards new systems of labour relations based on individual negotiation of employment contracts and conditions, on the total integration of workers in the company's plans, and on salaries linked to productivity, merit and personal contribution. Finally, the growing importance of vocational training is another factor contributing to the dynamism of the Personnel Function in Spain. Training is necessary, not only to adapt the workforce to new demands of

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the competitive environment, but also to protect workers against unemployment in a period of economic crisis, as at present. In a period of rapidly changing needs for skills and qualifications, the traditional slowness with which the official educational system responds to business demands, is being widely felt today.

6.1

The Status and Nature of the Specialist Personnel Function

Although the organizational position and role of the specialist personnel function varies greatly from one enterprise to another, certain major trends in its development can be identified creating a difference between SMEs and larger companies. Despite the fact that an increasing number of small and medium-sized companies now have a specialist personnel department, they still remain as small administrative units, to deal with routine personnel administration tasks. When larger scale or more problematic issues arise, specialist consultancy companies usually are called in. In larger companies, the personnel function in recent years has experienced major developments both in its position in the organizational structure and its nature. Organizationally, it has moved to report directly to top management, and the personnel manager has been integrated into the management boards and committees at the highest level of the company. This development has been slowly but increasingly accompanied by the adoption of a more strategic and more long range perspective for the personnel function in companies. New functions have been created such as the formulation and implementation of formal policies and plans concerning staff development, careers and remuneration, etc. Such a trend strengthens personnel's role as a staff department, in carrying out the activities of planning, policy implementation, controlling, advising and servicing line management — all of which are intimately related to the hierarchy of the company. The image of personnel departments retaining exclusive authority on personnel management subjects is giving way to a service role. In this scenario, the various processes of HRM are fundamentally integrated into the company hierarchy with an equal distribution of tasks alongside line management. The idea is steadily being accepted that HRM is an activity and responsibility which involves not only personnel specialists but also all the levels of the company hierarchy. Nevertheless, there is still resistance by board level directors to assuming responsibilities for personnel at the same time as personnel specialists insist on linking their status to the maintenance of significant amounts of authority in their expert field.

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Recruitment and Selection of Personnel

The most commonly used methods of recruitment in Spain continue to be those which could be termed "informal". These sources of applicants involve relatively little advertizing of companies' job vacancies, but rely more on personal contacts, the files of previous applicants, internal advertizing, etc. These methods have traditionally been used in Spain, in spite of the legal obligation to use the National Employment Service (Instituto Nacional de Empleo) as the primary source of recruitment. However, this has been a purely formal obligation, considering that the Spanish placement system is governed by the principle of managerial freedom of employment. 90 per cent of the cases (as the official data show), when the manager turned to the National Employment Service, he did so with the specific name of the person to whom he wanted to offer a contract. In December 1993, as has been mentioned above, the legal obligation to use the National Employment Service as the primary source of recruitment was eliminated. The cost of using press advertizing as a source of recruitment and selection represents on average approximately 20 per cent of the annual salary of the post on offer. By contrast the use of the "head-hunting" system usually costs around 35 per cent of annual salary of the post. This latter method was introduced into Spain in the mid 1970s. Even if it still lacks the importance of other recruitment methods, it has seen a remarkable growth in the last few years in the face of the great shortage of qualified and experienced managers. Clear evidence of this expansion is that there are roughly 30 foreign companies operating in Spain providing this type of service. Another source of recruitment which is becoming increasingly important in Spain is temporary work agencies. This service is provided by more than 400 national and foreign companies, placing more than 100,000 workers annually, in spite of the fact that their activities, as it has been mentioned above, are still not regulated by law. Work or performance sample tests continue to be the principal method in the selection of middle management, clerical workers, salesmen and bluecollar workers. Behavioural science methods such as group interaction exercises are used mainly by external consulting agencies, and their use is on the increase in companies wishing to fill middle management or technician posts. Psychological tests are still used in Spain more than they are in many other countries, mainly for the selection of young and inexperienced staff. However their use declined during the 1980s for various reasons: - The tests were mainly imported from the United States, where a reduction in their usage has occurred. - Experts in selection are no longer only psychologists, but professionals with different backgrounds who are more frequently occupying recruitment posts in personnel departments.

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- Graphology is not frequently used in Spain, its use being largely restricted to subsidiaries of French and German companies. Finally, references and letters of recommendation are of little value as a means of selection, due to the traditional lack of trust in Spain. The interview undoubtedly is still the most commonly used means of selection and there is a trend for operational managers and not only psychology experts, to participate more actively in interviewing.

6.3

The Growing Need For Training

The atmosphere of change and reconstruction in which Spain now finds itself, implies not only technological modernization but also changes in organizational structure and in traditional methods of management. In-company training is considered as the most effective means of bringing about these changes. It is not surprising, therefore, that in recent years training has become a central issue in human resource management in Spanish companies. The majority of human resource professionals, as well as the representatives of workers and managers, all agree that training is a key element in achieving the required adaptation of Spanish companies. However, in spite of training's new leading role, a number of deficiencies and problems can be found in Spanish companies: - A great number of organizations, in spite of the need for change, still have not introduced a staff training programme. Although this problem is also found in larger companies, it is especially serious in small and medium-sized companies, where little, if anything, is being invested in employee training. - Although it is fashionable to talk of the importance of training all personnel in the organization, in practice training efforts in companies are centred on certain specific groups, particularly senior and middle managers and technical personnel, paying much less attention to the employees at the operative level. The increase in training activity in Spain has caused a major surge in external provision of courses by private training centres. However, the rapid growth of this market has caused certain doubts, principally over variable quality and excessive cost. In many cases, the outcome has been for companies to substitute rigorous analysis of their training needs for the acceptance of a poor or inadequate external course. Spanish companies turn to this type of external training mainly for senior and middle-management, while the training of technical personnel is carried out using in-company training. Gradually, both the budgets allocated to training and the number of com-

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pañíes with specific training departments are increasing, especially in large organizations. The agreements on continuing vocational training signed in December 1992 by the social partners and the government, as has been mentioned above, might yield an increase in in-company training activities in Spain.

6.4

The Functional Mobility and Promotion Systems

The structure of job categorization currently found in Spanish companies was created by the legal system prior to the 1980 Ley del Estatuto de los Trabajadores (Law of Workers' Statutory Rights). This structure was established in order to guarantee the rights and obligations of workers and it resulted in excessively detailed job definitions, which are in practice often out of date. Great difficulties have been caused by the attempt to replace the old system of job categories by collective bargaining. In particular, problems have been posed by reduction in the number of job categories, and by the reductions in wage differentials between them. In most cases, the best-paid categories have been taken as the benchmark, so the process of equalization has entailed an increase in wage costs. Nevertheless, serious institutional obstacles to the growing need for internal flexibility do not currently exist in practice. The problems which still exist in this area are largely the result of shortcomings in the training of the workforce and result from a lack of managerial initiative. Promotion structures in Spain traditionally have been characterized, as indicated previously, by the great importance of seniority and by their fundamentally intra-organizational character. In 1983 the average length of service in a company with over 200 workers was 15 years, even higher than in Japan. Four systems of promotion can be identified; by seniority, open appointment, merit and competitive examination. In recent years, the steady disappearance of seniority as a criterion for promotion has occurred from the use of an examination system and of appointment on merit. This development is consistent with the change in the attitude of the unions towards this subject in the last few years. They have switched from defending seniority to defending the competitive examination system. An explanation may lie in the fact that present systems allow for the participation of workers' representatives in the establishment of the minimum standards for appointment (where seniority reappears once more disguised as experience) and even in the control and design of the examinations or tests. Nevertheless, the increasing use of more positive promotional criteria such as merit, aptitude, and even potential for key management posts can be seen, while at the same time the practice of career planning is increasing.

Spain

6.5

249

The Resurgence of Incentive Mechanisms Linked to Salary

We have already commented on the fact that during the period of economic crisis and political transition there was a marked trend to raise the basic fixed proportion of wages. The variable amount of wages currently represents a percentage which is still relatively low in comparison with other EU countries. In companies with over 200 workers, the percentage is in the 15 per cent range and arguably even lower in smaller companies. This situation clearly represents a barrier to achieving higher competitive levels in Spanish companies, due to two fundamental reasons: - the loss of the motivating role that variable remuneration plays as a motivational factor of profits; - on the other hand, the existence of a guaranteed level of remuneration implies a major loss of flexibility; in conditions of economic difficulties, companies cannot reduce labour costs without having to reduce the headcount. The low proportion of variable payments can be explained by two facts. On the one hand, workers and their representatives are unwilling to accept payment based on performance and are committed to the defence of fixed wages. On the other hand, managers have focused for many years on other problems such as the adjustment in the size of the workforce and the moderation of wage costs. These two complementary factors have caused even those parts of the salary which should be variable, to be treated as another part of the fixed wage. This problem is not only evident in respect of shopfloor workers, but also at management levels. Until very recently, the low level of competition for managerial staff between Spanish companies caused management to favour loyalty to the company rather than efficiency. Managers' careers developed, as has been described, mainly in one organization and in a specific functional area: mobility between different organizations or a change of geographical location are not very frequent. As a consequence, companies have not really needed to rely on highly-competent managers in achieving results. Nor have they faced, until recently, the problem of having to retain their best managers due to this low mobility of staff. Variable wages have usually been adopted in Spain in one of the following forms: - contribution to overall company performance usually is applied only to employees at the upper echelons of the organization. According to several estimates, only two per cent of employees of Spanish companies receive a variable wage linked to organizational profits (Sáez 1990); - variable remuneration linked to the achievement of defined targets;

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- variable remuneration based on performance evaluation in those cases when the determination of objective targets becomes too complex; - discretionary bonuses whose allocation is predominantly subjective; although they can be based on the completion of work, their evaluation is not systematic and lacks rigour. This type of evaluation is now disappearing in favour of the first three types (Osorio 1991). However, in the last few years there has been a notable qualitative change in the patterns of performance-related pay. Principally this was caused by the existence of greater competition between companies and by the increasing complexity of the environment. In an ever changing business context in which competitiveness is a key factor, adaptability and competence are values which have assumed a greater importance. Logically, these values have also had an impact on the wage systems of Spanish companies. As a consequence, companies are trying more and more to ensure that their wage systems serve to motivate workers, and to attract and retain able and qualified staff members. In particular, the latter point is a key objective, considering the current lack of qualified personnel in Spain (Bournois 1991). Such changes have caused a greater interest in ensuring that the wage system is designed to meet the goals of performance and competitiveness in the following ways: - An increasing number of companies, especially the larger ones, are using job evaluation, with the aim of increasing internal equity in wage systems, this technique has been used in Spain since the 1950s, but has seen a great increase in the last decade. The points rating and job classification systems are the most commonly found, with the latter method being used especially in the determination of job categories in collective agreements. Recent trends in evaluation are to reduce the number of categories in organizations. - A greater interest on the part of companies in offering competitive market wages, a fact which is reflected in a greater demand on the part of companies for information about wage markets. Consulting companies offering this service by means of periodical wage surveys are continually increasing in number. - An interest in how these systems serve to motivate workers, and as a consequence to achieve higher competitive levels by linking wages to workers' output. However, Spanish companies are faced with the problem that, as already indicated, their blue-collar workers are still opposed to a rise in the variable component of their wages. The most important changes in linking remuneration to performance can be identified only at managerial levels. With the majority of Spanish companies needing to adapt to new competitive environments by increasing their own levels of competitiveness, it is ex-

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pected that in the next few years there will be greater pressure on the companies to link workers' payments to their output to a greater extent at all levels, not only at that of management.

6.6

Fringe Benefits

In the last few years there has been a marked increase of payments in kind as a complement to payments in cash within companies' remuneration strategies. This seems to have occurred not so much as part of a wider payment plan but, in the majority of cases on the margin of such a plan. A broad debate is taking place in Spain about the motivational impact of this type of pay strategy. The main arguments in favour of fringe benefits are based on the fiscal advantages for both the company and the employee. However, given the growing need to attract and retain highly-qualified staff, Spanish companies are becoming consistently more aware of the use of this type of payment. Consequently, firms are increasingly designing fringe benefit plans as part of a wider pay strategy, especially for more senior staff groups (Cifuentes 1990). In 1991 however, a fiscal change brought about the inclusion of payments in kind into the category of taxable benefits. While managers previously had been willing (for financial reasons) to accept a significant proportion of their salaries in kind, at present this trend is not so clear. Some 15 to 20 types of fringe benefits are generally offered by Spanish companies. Those most frequently offered to employees generally are, in descending order of use: -

life insurance, accident insurance, gifts, supplements to the social security in case of illness, clothing allowance, company car, loans, meal allowances, job transfer allowances, parking subsidies, study allowances.

Over 70 per cent of a sample of Spanish companies from different sectors included these items as part of a range of fringe benefits. The reimbursement of medical costs and health insurance have a low incidence within these plans, just as private pension plans do, although more and more companies are planning their future introduction. For managerial staff, a dif-

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ferent range of fringe benefits is found. Those most commonly offered in order of frequency are: -

company car, participation in company share-holding plans, subsidized membership of private clubs, company credit cards (Jones, González 1990).

6.7

Technological Innovation and Human Resource Management

For the majority of Spanish business leaders and researchers alike, there is no doubt that the technological renewal of companies is essential to improve their competitive ability. The capacity to adapt to change is a must in order to compete in the new business environment. This process of continual change adopts a strategic nature, with not only the efficiency of the company and consequently its profits at stake, but also more importantly its very survival. The imperative of not being left behind in the process of adjustment to technological change is seen as being of utmost priority. Some companies, however, are not always in a position to put the necessary adjustments into practice, due to various circumstances which are discussed below. Technological renewal in Spanish companies has been slower than in other European countries. The main reasons for this delayed development are as follows: - The political situation of the end of the 1970s (the period of transition from autocracy to democracy) meant that political priorities were centred on avoiding labour conflicts at the expense of delaying the modernization of production facilities — just at the time when other economies were initiating this process. - The restriction regarding workforce mobility and the reduction of staffing levels, both of which are necessary conditions for adjustments accompanying the modernization of the productive system. These factors have led to the present situation where a significant proportion of Spanish industry still finds itself faced with an urgent need to modernize in order to meet the competitive demands of the Single European Market. The attitude of Spanish unions to the introduction of technological innovations has been one of "no-opposition", provided that workers' job security is guaranteed. This stance determines much of the action carried out by Spanish companies with respect to their human resources. The introduction of technological innovations has influenced, and still is influencing, the composition and characteristics of the workforce in Spanish companies in the following ways:

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- While there is a greater demand for trained staff, there is clearly an excess of unskilled and less-skilled workers at the lower levels of organizations. - Conversely, given the acceptance of continuous technological change, companies are constantly demanding greater flexibility on the part of their workforces, so as to enable a rapid adjustment of the organization to the circumstances of the environment. In those companies where there has been more intensive introduction of technological innovations (as in the case of the car industry), a greater flexibility can be informally observed. On a formal and legal level, however, very precise definitions of job content still exist (Mamkoottam, Herbolzeimer 1991). There are contradictory opinions as to whether technological innovation has produced a reduction of the actual numbers employed in Spanish companies or not. Those who defend the position that technological innovation does not necessitate any reduction of jobs accuse the parties involved of slowing down the process of technological renewal by carrying out only a simplistic and short term analysis on its effects upon employment. However, without entering here into this debate, it is significant that in the car industry (one of the sectors where the introduction of new technology has been most closely observed in Spain) the workforce decreased from 113,721 workers in 1980 to 97,963 in 1989, whereas sales increased four-fold in the same period. As already indicated, Spanish unions are not directly opposed to the introduction of technological innovations, provided that job security is guaranteed. This constraint on internal labour market has caused companies to opt for the following measures: - the recycling of less skilled workers, so that the excess workforce at these levels can be reallocated within the same organization. However, normally only the younger workers are willing to accept such retraining. This may be a cause for concern when the high average age of the workforce of many Spanish companies is taken into account. The age distribution imbalance is due to two basic reasons: (1) the considerable length of the period of employment of workers in Spanish companies, since the majority of individuals until recently developed their careers in one organization; (2) during the long period of the economic crisis many companies considerably reduced their recruitment of young workers; - workforce reductions of full-time permanent staff, even given the difficulties already mentioned. The methods used by Spanish companies to reduce excess staff (mainly in semi- or unskilled areas) have been to either negotiate redundancy pay for workers who leave the company voluntarily, or early retirement.

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The application of these methods, however, does not always achieve the best results in a reasonable period of time. The process of introduction of technological innovation has had therefore to develop at a slower rate than often desired. These methods have caused companies to feel themselves obliged to maintain traditional forms of production alongside modern processes. The younger workers and those who are in general more inclined to adapt to the changes caused by technological innovation, are assigned to the new processes. The rest of the staff, who have not been recycled or laid off, continue carrying out the traditional processes.

7

The Impact of the Single European Market

The impact of the social dimension of the EU upon Spain is likely to be quite considerable. This is due to the amount of preparation made by government in recent years, and also to the relatively low extent of community harmonization to date. It is widely believed that Maastricht represented a great sacrifice for all the member states (excepting Britain, as a non-signatory) in developing the Social Charter originally agreed in 1989. The principal impact is expected in the following areas: - employment contracts, especially for temporary or part-time work; - regulation of temporary work agencies, the activity of which is presently prohibited in Spain, although there has been a major increase in the number of agencies operating in the last few years; - work redistribution strategies; - the protection of pregnant women in the workplace; - safety and health at work; - the protection of young people at work; - worker participation. Indeed, it is even foreseeable that, in the short term, sufficient harmonization on an EU-wide scale will not be found on such issues. On the other hand, as has been mentioned above, an important process of reform in the Spanish employment policy was undertaken in December 1993, which will affect issues such as: types of job contracts, functional and geographical mobility, wage composition, working hours, dismissals and collective bargaining. Three questions in particular deserve comment due to their particular relevance to HRM in Spain and to the context of its future development.

255

Spain

7.1

The Free Circulation of Workers

Of all the EU countries, Spain especially has been affected by workers' emigration. This phenomenon is particularly relevant as the economic development of the central European countries is creating a demand for an experienced industrial workforce. Between 1963 and 1973 roughly a million emigrants were aided by the Spanish Institute of Emigration on their migratory journey to destinations within Europe, but nearly 800,000 of these returned before 1978. The general picture is, therefore, of massive flows in the 1960s and early 1970s, with an equilibrium between exits and entries after 1979. In contrast to the 15 per cent of the Spanish population that has been affected either directly or indirectly, only 3 per cent of the total currently manifests a general intention to emigrate. This percentage is likely in practice to be further reduced, by taking into account the relatively small number of people who are willing to accept the employment conditions on offer. It may therefore be concluded that the Spanish migratory movement into Europe has been stemmed, as shown by the balance of exits and returns, even under conditions of high unemployment, due to the increasing stability within the labour market of both emigrants and their families. Consequently, it can be argued that the existence of exit flows of workers will not be a characteristic of the short-term outlook. As a consequence of free labour movement within the EU however, a gradual and progressive growth of the general level of mobility is predicted. This growth will mainly affect the more highly-qualified workers who are those who have a wider conception of their job market and who can take advantage of greater freedom of movement. It must be remembered in this respect that multinational companies already consider that their most highly-qualified staff work in an European or even world job market. However such staff do not comprise more than a limited number of people who are concentrated in the most expert and specialized functions. Nevertheless, labour mobility could be intensified in those occupations in which clear imbalances exist between countries in the supply and demand for personnel.

7.2

The Impact of the Single European Market on Employment

Industrial employment in Spain will not be greatly influenced by the implementation of the Single European Market; estimates of the percentage affected suggest that it will not reach 50 per cent. The problem rather lies in the fact that at least 30 per cent of such employment is found in the industrial sectors which are in a weak position with regards to the new competitive environment. These sectors lack a competitive advantage, and can count on fewer possibilities of obtaining EU financing for reconstruction or expan-

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Ignacio Flórez-Saborido, Manuel González-Rendón, Manuel Alcaide-Castro

sion. In this respect, Spain, along with Portugal, Greece and the United Kingdom, seems to be in the worst situation among EU member states. Additionally, a growing conviction exists that the advantages of the SEM are more questionable in peripheral countries and for small companies in particular. In Spain these two negative factors seem to coincide (Commission of the European Community 1990).

7.3

Wages and Competitive Level of the Spanish Economy

The large differentials which exist between the various countries of the Union regarding salaries have caused a considerable debate about the effects of the free circulation of goods, services, labour and capital on the preferential location of investments — thereby causing problems of social "dumping". Spain, along with Greece and Portugal, are the EU countries with the lowest salary levels. However, it cannot be therefore deduced that these countries are going to become major zones of attraction for investment, nor that wages will constitute a determining variable of their competitive levels. The factors which influence a company's decision to invest in a country are multiple; among them, labour cost differential and the training investment needed to attain desired production criteria are both of relevance. But, on the other hand, even unit labour costs have an increasingly limited role in the competitive process, compared to the advantage of other factors which are acquiring an increasing relevance such as quality, design, distribution and aftersales service.

8

Conclusion

Personnel departments have been gradually increasing their status in Spanish company hierarchies. There is an increasing trend towards a strategic perspective for the function, as opposed to the traditional administrative focus of the past. An increasing number of Spanish companies realize that competition goes beyond that which exists in the market for goods and services, but they must also compete in the labour market for the best qualified workers. In this sense, companies which incorporate new HRM practices are proving how these resources give them a competitive edge in the market. Moreover, companies which incorporate new HRM practices are proving how these resources give them a competitive edge in the market. The search for: - a greater flexibility in the workplace;

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greater rigour in training; increased responsibilities for management; greater worker participation; and performance incentives for different categories of workers, especially management, by means of the widespread use of variable remuneration

constitutes a new agenda for human resource managers in large Spanish companies. As in many other countries, in spite of their varying characteristics, there is a movement in Spain towards the company achieving a greater amount of both internal and external flexibility, achieved through various groups of workers. On the one hand, a core of stable workers exists, in whom major training investment has been made. To these staff members with a high level of qualifications, the company offers job and career opportunities and a considerable level of functional flexibility. On the other hand, there is a peripheral group of workers with a low level of qualifications, who make up the firm's numerical flexibility, performing the more routine jobs and employed on temporary contracts. Lastly, there is a group of external workers (subcontractors and independent self-employed workers, etc.) who give the company both numerical and functional flexibility. There can be no doubt that the necessary existence of this last group demands a greater concern for training, career development, motivation and workforce planning — in other words, a growing concern for human resource management.

References Alcaide-Castro M., La Gestión de los Recursos Humanos en España: Claves para su Desarrollo [Development of Human Resource Management in Spain). In: Aedipe, December 1987. Alcaide-Castro M., González-Rendón M., Análisis del Mercado de Trabajo en Espana Durante la Década de los 80 [Analysis of the Spanish Labour Market in the 1980s]. In: Relaciones Laborales, No. 10, 1990. Bournois F., Pratiques de Gestion des Ressources Humaines en Europe: Données Comparées. In: Revue Française de Gestion, March 1991. Commission of the European Community, Employment in Europe, Commission of the European Community, Luxembourg 1990. Cifiientes C., Tendencias en la remuneración de los directivos [Trends in the Payment of Managers]. In: Alta Dirección, No. 151, 1990. Durán López F., Montoya Melgar Α., Salas Franco T., El Ordenamiento Laboral Español y los Límites a la Autonomía de las Facultades del Empresario [The Spanish Labour Law and the Limitation of the Firms' Autonomy], Ministry for Work and Social Security, Madrid 1987. Espina A., Un Balance de la Etapa de Implantación de las Políticas Activas de Mercado de Trabajo en EspaSa: 1983-1989 [Analysis of the Implementation of Public Policies in the Spanish Labour Market 1983-1989]. In: Estudios de Economía del Trabajo en España. III: El Problema del Paro, Ministry for Work and Social Security, Madrid 1991. Jones C., González Β., Retribución: Beneficios Extrasalariales [Payment: Fringe Benefits]. In: Capital Humano, No. 27, 1990.

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Lorente J. R., Marín L., La Flexibilización del Mercado de Trabajo y la Contratación Temporal [Flexibilization of the Labour Market and Temporary Employment]. In: Economistas, No. 29, 1987. Mamkoottam K., Herbolzeimer E., Las Nuevas Tecnologías y la Gestión de los Recursos Humanos: El Caso de la Industria Automovilística en España [New Technologies and Human Resource Management: The Case of the Spanish Car Industry], In: Economía Industrial, March-April 1991. MISEP — Ministry for Work and Social Security, Mutual Information System on Employment Policies, La Política de Empleo en España, Informe de Base sobre Instituciones y Medidas de Política de Empleo [Employment Policy in Spain, Report on Institutions and Measures], Ministry for Work and Social Security, Madrid, 1988. Osorio M.R., Prácticas Retributivas en España y Europa, Retribuciones del Personal Directivo [Payment in Spain and Europe: Top Managers]. In: Dirección y Progreso, No. 115, 1991. Palomeque Lopez M.C., Los Sindicatos Españoles en el Umbral del Mercado Unico [The Spanish Unions in the Shadow of the Single Market]. In: Economia y Sociologia del Trabajo, No. 10, 1990. Rodríguez Miranda S. (Ed.), Medidas de Fomento del Empleo [Employment Incentives], Ministry for Work and Social Security, Madrid, 1982. Sáez Fernández F., Políticas de Retribución y Participación en Beneficios [Payment and ProfitSharing Policies], In: Economistas, No. 47, 1991. Serrano A, Malo de Molina J. L., Salarios y Mercado de Trabajo [Wages and Labour Market], Blume, Madrid, 1979. Valdés Dal-Re F. Flexibilidad en el Mercado de Trabajo y Ordenamiento Laboral [Labour Market Flexibility and Labour Law]. In: Papeles de Economía Española, No. 22, 1985.

United Kingdom John R. Berridge

1

Introduction

The origins of present-day human resource management (HRM) in Britain lie in the nineteenth century, where its antecedents and early forms are to be found, and its evolution can be traced through a number of phases over the past hundred or so years. It has been formed (as in other countries) by a complex interaction of forces — economic, technological, social and legal. It now represents a distinctive if not unique configuration of philosophies, organizational structures and practices reflecting the national distinctiveness that typically characterizes a country's HRM, when it is examined comparatively. While HRM can now be said to be firmly rooted in British business and industrial culture, it nonetheless is still in a state of change in terms of the status of the function, its patterns of activity, and the orientations of its practitioners and managers. This article first will identify the development of the HRM function in Britain up to the present; second, it will examine the extent of its coverage and of the main areas of personnel practice in organizations and offer some statistics on the profile of the personnel practitioner and the professional body, third, it will assess aspects of the impact of the EC/EU on British HRM and fourth, it will raise some of the problematic aspects of HRM, in terms of its role, status, activities and philosophies, as experienced in Britain at present. An initial issue that needs to be tackled is that of terminology — whether to refer to "personnel management" or to "human resource management" (HRM). In American usage, the two expressions are virtually synonymous, but much debate occurs in Britain over the distinction which can be made. The traditional term since the 1940s has been personnel management. The professional body in the occupational area from 1946 to 1994 was the Institute of Personnel Management (IPM). Personnel management conventionally also encompassed industrial relations, whether within formal collective bargaining or in its more individualized or informal aspects, as well

John Berridge

260

as the individual and collective management of people which are typically more within the employer's prerogatives. During the 1980s, however, the term human resource management came into prominence in Britain, originating in the US: this importation occurred both conceptually at academic levels, for example through the writing of Fombrun et al. (1984), and practically at enterprise level as a response to different and more demanding business environments. HRM has often defied precise definition and differentiation from personnel management in a British context, and there has been since the later 1980s an active debate on the existence, nature and operationalization of a new paradigm of HRM. Elements claimed to distinguish HRM include a greater strategic integration of people-related issues, a larger planning component, more individualized focus, especially in selection and rewards, shorter time perspectives for results, more participative management styles, mechanisms and structures, and more management control through programmes linked to performance, customer orientation, quality and commitment (Guest 1987). In this account, we shall use the term personnel management for the activity prior to the 1980s and the term HRM subsequently, unless particular contexts require a different usage, which will be clearly indicated as such in the text.

2

The Evolution of HRM in Britain

The evolution of personnel management (and subsequently HRM) in Britain has been a haphazard process, occurring in an uneven, unplanned, almost random fashion, and owing more to the environmental forces in industry, business and society than to rational, logical, juridical or central development. The state traditionally has adopted an abstentionist stance to most matters of employer-employee relations. Until the 1970s, across administrations of varying political complexions, the state's preferred role was to "hold the ring" rather than to intervene in terms of either institutions or substantive outcomes. Even where the state was an employer (for instance Civil Service, National Health Service) the personnel function was late and partial in its development. Only in the industries which were nationalized in the 1940s (rail, road and air transport, coal mining, gas, electricity and nuclear energy etc.) did a strong personnel function exist, building on its important role dating from the private ownership period. Employers showed a reluctance to combine across all sectors of economic activity until 1965, when the first truly national body (the Confederation of British Industry) was formed: its personnel and industrial relations role has been muted, being largely representative in public relations forums. Al-

United Kingdom

261

though industrial-sectoral bodies existed previously (notably the Engineering Employers' Federation), their extent of intervention in personnel matters was usually strictly limited to industrial relations issues, particularly the organization of national bargaining, and support in local disputes. Hence, little encouragement for personnel management was offered centrally from employers, dominated as they were until the 1980s by production, finance and marketing departments. Trade unions have displayed a persistent distrust and distaste for personnel management, seeing it as unwarranted management incursion in a field within which matters should be settled either unilaterally by unions, by statute (workers' protection and rights), joint regulation, or by collective bargaining. Even the academic world gave little encouragement to the creation of the "subject" of personnel management or industrial relations until the 1930s, or to the establishment of degree courses in the occupational area until the 1950s (Berridge, Goodman 1987). When such courses were founded, the perception often existed that personnel management was secondary in intellectual esteem to industrial relations. While the latter was based upon the more serious disciplinary bases of politics, economics and law, personnel management was felt to be pragmatically-rooted, or at best, drawing from the newer and less-reputed subjects of sociology and psychology. Four main stages can be identified in the formation of British HRM, as shown in Figure 1 (see page 265). Stage I: Origins up to the 1930s — welfarism and efficiency. The welfare and occupational health strand dates from the nineteenth century, and springs from the Protestant ethic of many leading employers, especially those of Quaker origin. It is one which represented a central influence in the formation of personnel management, and indeed one which the occupation subsequently made efforts to shake off (Torrington, Hall 1987). The employer's duty of care and charity often was carried out by the ladies of the employer's family: it combined a concern for the moral and physical well-being of employees with an underlying means of information and control over the workforce. The occupational health strand was primarily prompted by legislation over safety and working conditions, but also as by the contribution made to efficiency by such provisions. By the end of the nineteenth century, welfare officers began to be formally appointed, and the formalization of the activity had begun. The unitary labour relations element derived from employers' attempts in the mid- to late-nineteenth century to gain control of the basic industrial relations activities of recruitment, payment and discipline. At times this demonstrated itself in anti-union methods such as blacklists, piecework lists and arbitrary rules over behaviour, sanctions and termination. Those appointed to this nascent function often came from shopfloor supervision,

262

John Berridge

and lacked specialized training, owing their allegiance and knowledge largely to the employer. The third main strand at this period in the evolution of personnel management was that of labour efficiency, as represented by scientific management and its variations of work study, method study, organization and methods and industrial engineering. When the notions of Taylor flooded into Britain, especially from the 1920s onwards, they offered an alternative rationale to both unitary labour relations (which was characterized by conflict) and to welfarism and occupational health (which was perceived as redolent of a past era). The rationalized approach to issues such as job design, training, motivation and pay resulted in employers subsuming much of the people-management activities into production engineering and productivity services departments. So personnel management and workforce efficiency operated in parallel, often staffed by the same specialists, sharing internal training patterns and material, and having similar orientations. Stage II: 1930s to 1950s — bargaining and bureaucratization. During these decades three main changes occurred. First industrial relations greatly increased in importance as part of the personnel function. During the depression of the 1930s when trade union power was at a low ebb, collective bargaining virtually was dismantled in a number of industrial sectors, and had not yet been established in most white collar sectors. But, the need for the active cooperation of labour during the wartime period 1939-1945 resulted in trade unions growing greatly in numbers, density and power in relation to both employers and to the National government of 1940-1945. In the early postwar period, characterized by full employment and a need for output, the scenario was one of a growth of collective bargaining (both formal and informal), the widespread acceptance of pluralism in employment relations, the increasing influence of unions with governments of all parties, as well as the rising levels of industrial conflict and its salience in the national political agenda. All these contributed towards an enhanced role for industrial relations within the personnel function. Second, a widening of the scope of personnel roles and activities took place as techniques and good practice became more standardized and universally-applied across all sectors of organizations, not merely with the industrial workforce and entry level jobs in white-collar occupations. Personnel methods became more sophisticated, especially in areas such as recruitment and selection, training, job descriptions and person specifications as well as job evaluation. A lead was given by the influence of large firms, for instance ICI (chemicals) and Shell (oil) among British companies, or Procter and Gamble (soaps and detergents) and Mars (confectionery) among international companies, and by consultants, often drawn from such companies. In some cases, the personnel function became more

United Kingdom

263

bureaucratized, and the word "administration" became adopted by personnel staff to denote the impartiality and impersonality desired in the provision of the service. A third change during this stage was the gradual abandonment of the link with efficiency and with the productivity services elements. As the personnel function became more distinctive in its techniques, the training of staff became more specific, the people referent more pronounced, and personnel was separated from the increasingly-technical industrial engineering function. The new disciplinary bases for personnel training were academically sociology, psychology and sometimes social work, rather than in engineering, economics or other quantitative sciences. The fourth element of input was from the human relations movement and its subsequent manifestations as Behavioural Sciences. This provided a research base in the works of pioneers in the US (Mayo 1945; Roethlisberger, Dickson 1939; Barnard 1938; Maier 1946) who offered conceptual insights into group behaviour, leadership or the social system of the enterprise, transcending the previous commonsensical approaches of self-taught personnel practitioners. In Britain, a more philosophical tradition produced books on human relations in employment by managers such as Sheldon (1923). Leading employers with a social conscience promoted their beliefs in the systematic and documented humanism of employment practices — such as the chocolate manufacturers Cadburys (Smith et al. 1991). These were more than influences, and came to represent a credo and a basis for training of personnel specialists, starting to create a corpus of professional conduct and knowledge. Stage III: 1960s to 1970s — conflict and counteraction. This stage was dominated operationally by intense conflict in industrial relations and by the conceptual development of the behavioural sciences into an increasingly coherent set of practices and techniques for personnel management-led interventions at both individual and collective levels in organizations. In industrial relations, unions became accepted in the words of the then Prime Minister (Harold Wilson) in 1968 as the "fifth estate" of the realm, after the nobility, the gentry, the clergy and the press (Taylor 1980). Employers were showing growing disenchantment and resistance to pluralistic modes of regulation — resulting from the damage caused by some celebrated strikes in key industries and because of worsening labour productivity. Led by some major companies, and in a context of increasing (if not always effective) regulation of union-employer relations, industrial relations managers started to push back the frontier of control (Braverman 1974) over work practices, the introduction of new technology, communication with employees, and the motivation of the workforce. They sought to contractualize the employment relationship more tightly, through tougher collective agreements: more individually, they tried to weaken the influence

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John Berridge

of shop stewards by building up supervision's powers and introducing new technologies. The expression "employee relations" was developed to describe this modified and more directive role during this period. In the behavioural sciences, the individualization described above was reaffirmed by a new increased role for occupational psychology, especially in sectors of personnel practice like selection, motivation, leadership and organizational development. As techniques advanced, often driven by research and consultancy, there was questioning of the traditional hierarchical structures, with new theories and practices about work satisfaction, new approaches to job design, and innovative reformulations of the conceptual and practical bases of managerial development. The personnel administrator of the previous stage began to mutate into a more professionalized role — seeking to be considered equivalently with other business expert-specialists such as accountants or lawyers. This movement was given credence by the ever more advanced nature of personnel techniques, by the increasingly-lengthy and specific nature of training, and by the growth of the professional association, the Institute of Personnel Management (IPM). This latter influence is discussed more fully later in this article, but a major result was a trend among personnel specialists to owe their allegiance to their professional body, to its knowledge base, and to fellow practitioners rather than to the commercial and business objectives of their organization. In conditions of extreme environmental turbulence within industrial relations, it was not surprising that professionalization offered a safe haven of social acceptance, enhanced status, and independence from both sides in an ever more bitter conflict. A final evolution of this stage was the appearance of a significant legal dimension in personnel work. Until this era, statute law had played a minimal role in employment relations in Britain. As far as it existed, it was firstly designed to ensure that the balance of power between employers and unions remained relatively even, and secondly, it was substantially based on the empirical Anglo-Saxon legal tradition of case law and precedent. But from the start of the decade of the 1960s, legislation was seen by governments as the solution to Britain's industrial problems. Effective legislation was passed covering contracts of employment, training, health and safety, racial and gender-based discrimination, individual rights at work, union recognition — as well as the synoptic (but largely disregarded) Industrial Relations Act 1971. Added to statutory law was the increasing volume of case law, as well as the myriad judgements coming from industrial tribunals, notably relating to dismissal. In a context of uncodified labour law, the personnel specialist had to acquire new legal skills and knowledge, or at least develop the competence to assess where to obtain legal advice and how to understand it.

265

United Kingdom

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εo

J2 ra c 3

φ 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)a 2)

Labour force (1991) ('000) b b

EU

10,068

347,316

328

147

18.7% 66.1% 15.2% 51.3% 3,988

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%) Activity rates (labour force, persons over 13 years) Total Male Female

40.0%

40.6%

48.5% 67.1% 56.7%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)"

38.0 H

38.9 H

4)

Unemployment (November 1994)c 10.0% 6.9% 14.5%

10.7% 9.2% 12.8%

2,433 77.0%

75,929 70.0%

35.9% 50.2% 13.8%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

296

Statistical Data

Denmark and European Union Denmark 1)

Population (January 1st, 1993) ('000)" Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependancy (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) ('000) b b

EU

5,180

347,316

120

147

16.9% 67.5% 15.6% 48.1% 2,899

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%) Activity rates (labour force, persons over 13 years)b Total Male Female

46.6%

40.6%

67.1% 73.4% 61.1%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)b

35.1 H

38.9H

4)

Unemployment (November 1994)c 9.5% 10.6% 10.0%

10.7% 9.2% 12.8%

999 71.0%

75,929 70.0%

35.9% 48.9% 15.1%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24)d Percentage in levels of education Primary Secondary Higher

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force. The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

297

Statistical Data

France and European Union France 1)

Population (January 1st, 1993) ('000)" Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)'

2)

Labour force (1991) ('000) b

EU

57,529

347,316

105

147

20.0% 65.7% 14.3% 51.9% 24,347

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

44.3%

40.6%

54.5% 63.7% 46.2%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)"

39.1H

38.9 H

4)

Unemployment (November 1994)° 11.0% 9.4% 13.1%

10.7% 9.2% 12.8%

14,231 72.0%

75,929 70.0%

35.8% 49.5% 14.7%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24)d Percentage in levels of education Primary Secondary Higher

b

d

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the DLO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

298

Statistical Data

Germany and European Union Germany 1)

Population (January 1st, 1993) ('000)a Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)"

2)

Labour force (1991) ('000) b

EU

80,974

347,316

225

147

16.3% 68.7% 15.0% 45.6% 30,488

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

40.9%

40.6%

56.7% 70.1% 44.4%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)"

38.0 H

38.9 H

4)

Unemployment (November 1994)c 6.2% 5.9% 6.6%

10.7% 9.2% 12.8%

15.9%

10.7%

15,708 67.0%

75,929 70.0%

26.5% 57.5% 15.9%

34.1% 52.0% 13.8%

West Germany Total Male Female East Germany Totalc 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993. Bundesanstalt für Arbeit, Amtliche Nachrichten der Bundesanstalt fiir Arbeit, no. 11, Bonn, Bundesanstalt für Arbeit, 1993.

299

Statistical Data

Greece and European Union Greece 1)

Population (January 1st, 1993) ('000/ Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependancy (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) ('000) b Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

3)

Working hours (average usually worked per week in 1991)b

4)

Unemployment (November 1994)c Total Male Female

5)

10,346 78

147

18.1% 67.6% 14.3% 47.9% 3,935

18.0% 67.3% 14.7% 48.6% 146,763

35.8%

40.6%

47.4% 63.5% 32.6%

54.6% 67.5% 42.6%

43.8 H

38.9H

10.7% 4.8% 12.9%

10.7% 9.2% 12.8%

2,002 65.0%

75,929 70.0%

43.9% 45.5% 10.5%

34.1% 52.0% 13.8%

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

a

EU 347,316

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

Statistical Data

300

Ireland and European Union Ireland 1)

Population (January 1st, 1993) ('000)a Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) ('000) b

EU

3,560

347,316

51

147

26.3% 67.3% 11.4% 60.6% 1,347

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%) b Activity rates (labour force, persons over 13 years) Total Male Female

34.1%

40.6%

51.9% 68.8% 35.1%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)"

42.4 H

38.9 H

4)

Unemployment (November 1994)c 17.5% 16.4% 19.8%

10.7% 9.2% 12.8%

1,004 72.0%

75,929 70.0%

47.9% 41.6% 10.4%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

a

Eurostat, Demographic statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté: thème 3; série B, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid report no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

301

Statistical Data

Italy and European Union Italy 1)

Population (January 1st, 1993) (ΌΟΟ)" Density of population per km2 Population by age3 age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) ('000)b Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

3)

Working hours (average usually worked per week in 1991)b

4)

Unemployment (November 1994)c Total Male Female

5)

EU

59,960

347,316

188

147

15.8% 69.0% 15.2% 44.9% 23,947

18.0% 67.3% 14.7% 48.6% 146,763

37.1%

40.6%

49.9% 65.5% 35.5%

54.6% 67.5% 42.6%

39.8 H

38.9 H

12.0% 8.4% 18.1%

10.7% 9.2% 12.8%

11,185 61.0%

75,929 70.0%

31.7% 53.1% 15.1%

34.1% 52.0% 13.8%

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté. Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

302

Statistical Data

Luxembourg and European Union Luxembourg 1)

2)

EU

Population (January 1st, 1993) ('000)a

395

347,316

Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependancy (population under 15 and over 64 as % of population between 15 and 64)a

153

147

Labour force (1991) ('000) b

165

17.7% 68.8% 13.5% 45.3%

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%) b Activity rates (labour force, persons over 13 years)b Total Male Female

35.8%

40.6%

51.2% 67.9% 35.5%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)b

39.9 H

38.9 H

4)

Unemployment (November 1994)c 3.5% 2.7% 4.8%

10.7% 9.2% 12.8%

57 52.0%

75,929 70.0%

48.9% 48.9% 2.0%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

303

Statistical Data

Netherlands and European Union Netherlands 1)

Population (January 1st, 1993) ('000)

a

Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)" 2)

Labour force (1991) ('000) b Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

3)

Working hours (average usually worked per week in 1991)b

4)

Unemployment (November 1994)° Total Male Female

5)

b

347,316

366

147

18.3% 68.8% 12.9% 45.3% 6,928

18.0% 67.3% 14.7% 48.6% 146,763

39.5%

40.6%

56.9% 70.0% 44.3%

54.6% 67.5% 42.6%

38.2 H

38.9H

10.1% 7.8% 13.7%

10.7% 9.2% 12.8%

3,553 75.0%

75,929 70.0%

35.0% 49.3% 15.5%

34.1% 52.0% 13.8%

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

a

EU

15,239

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

304

Statistical Data

Portugal and European Union Portugal 1)

Population (January 1st, 1993) ('000)' Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) C000)b

EU

9,859

347,316

107

147

19.4% 66.7% 13.9% 49.9% 5,038

18.0% 67.3% 14.7% 48.6% 146,763

Of which female (%)b Activity rates (labour force, persons over 13 years) Total Male Female

43.8%

40.6%

59.5% 71.3% 49.1%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)b

42.4 H

38.9 H

4)

Unemployment (November 1994)c 6.2% 5.5% 7.1%

10.7% 9.2% 12.8%

2,057 63.0%

75,929 70.0%

51.7% 38.7% 9.4%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

" b

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

Statistical Data

305

Spain and European Union Spain 1)

Population (January 1st, 1993) ('000)a Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependancy (population under 15 and over 64 as % of population between 15 and 64)a

2)

Labour force (1991) ('000) b Of which female (%) b Activity rates (labour force, persons over 13 years)b Total Male Female

3)

Working hours (average usually worked per week in 1991)b

4)

Unemployment (November 1994)c Total Male Female

5)

347,316

77

147

18.7% 65.5% 13.8% 48.1% 15,014

18.0% 67.3% 14.7% 48.6% 146,763

35.3%

40.6%

47.2% 63.8% 31.9%

54.6% 67.5% 42.6%

41.1 H

38.9 H

22.1% 17.5% 30.3%

10.7% 9.2% 12.8%

10,019 74.0%

75,929 70.0%

31.3% 55.0% 13.6%

34.1% 52.0% 13.8%

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24) Percentage in levels of education Primary Secondary Higher

a

EU

39,114

Eurostat, Demographic Statistics 1994: Human Development Report 1994 UNDP, Luxerabourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dans la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

306

Statistical Data

United Kingdom and European Union UK 1)

Population (January 1st, 1993) ('000)a Density of population per km2 Population by age" age < 15 age < 65 age > 64 Demographic dependency (population under 15 and over 64 as % of population between 15 and 64)*

2)

Labour force (1991) ('000) b

EU

58,088

347,316

238

147

19.2% 65.0% 15.8% 53.4% 28,658

18.0% 67.3 % 14.7% 48.6% 146,763

Of which female (%) b Activity rates (labour force, persons over 13 years) Total Male Female

43.2%

40.6%

61.8% 72.2% 51.6%

54.6% 67.5% 42.6%

3)

Working hours (average usually worked per week in 1991)b

38.6 H

38.9 H

4)

Unemployment (November 1994)c 8.8% 10.2% 6.9%

10.7% 9.2% 12.8%

12,587 75.0%

75,929 70.0%

38.8% 50.4% 10.8%

34.1% 52.0% 13.8%

Total Male Female 5)

Education Pupils and students (1990/1991) ('000)d Participation rates in primary, secondary and higher education (population aged 5-24)d Percentage in levels of education Primary Secondary Higher

Eurostat, Demographie Statistics 1994: Human Development Report 1994 UNDP, Luxembourg, European Parliament/Statistical Service, 1994. Eurostat, Labour Force Survey 1991, Luxembourg, Eurostat, 1991. According to the definition given by the ILO, i.e. any person above the age of 14 actively looking for a job for which he or she is immediately available; the unemployment rate is to be understood as the number of unemployed persons as % of the work force, The work force comprises job holders and unemployed people. Source: Eurostat, Le chômage dam la communauté, Issue 3, Series Β, Luxembourg, Eurostat, January 4th, 1995. Population: Eurostat, Social Conditions, Rapid Report, no. 1993-9, Luxembourg, Eurostat, 1993; UNESCO, Statistical Yearbook 1993, Geneva, UNESCO, 1993.

Part III Summary

Europe and its Human Resources in the Context of Worldwide Competition: The Emergence of a Paradoxical Dilemma Ingrid Brunstein

The European community of nations and companies is suddenly confronted with interlocking logical evolutions that seem to rise up one against the other, the micro and the macroeconomic efficiency. The summary chapter will attempt to construct an explanatory model that reveals in six steps the outlines of this new paradox in Europe.

1

The Strategy of Evolution for the Life and Survival of the Firm

The end of the 20th century is increasingly marked by the internationalization of exchanges and the constitution of economic blocks in the face of exacerbated competition. In this new environment, Europe is by far the most integrated region where the intensification of economic exchanges both internally and externally has taken place on an exceptionally large scale. Through their overseas assets, large European multi-nationals represent the motors of this new situation of integrated world-wide competition: Royal Dutch Shell (NL) takes first position in the world with 69.2% of the market. Other trans-national groups of European origin can be quoted in this context and can be found amongst the leaders of the top twenty: British Petroleum (GB), Philips (NL), Unilever (GB/NL), Fiat (ITA), Siemens (GER), Volkswagen (GER), Elf Aquitaine (FRA) (Bilan économique et social 1994). Planetary economic interdependence (created by large groups today reinforced by goods and services coming from companies of all nature and sizes) is a fact in today's geo-political situation. It is essentially based on the market logic and shows, more and more significantly, the sign of a hard fight ahead. Competitiveness has become a fundamental principle of a strategy whereby each firm seeks to gain and defend both positions and competitive advantages. This struggle becomes the very essence of the company. It

310

Ingrid Brunstein

shines throughout the nation and society as a whole. Even the educational systems become integrated as they are asked to supply ever more productive human resources capable of overtaking efficiency levels reached in neighbouring countries, as has been demonstrated in the different national descriptions. This competitive confrontation is even more brutal in developed countries; potential productivity growth may be greater than the extension of the national or continental markets. In other words, today we produce increasing riches with less manpower. So the survival of some often occurs to the detriment of others. The market has imposed itself as an absolute legislator, omnipotent and unique since the fall of communism, quietly dictating the laws of all economic systems. In this situation where the apparently unique driving force is the market, different weapons allow firms to maximize their parts, to grow, or at least to survive. In this precise context, we will only quote those that have an effect on HRM: the remodelling of the organizational structure to maximize internal benefits, technological innovation to optimize production and finally derealization to minimize cost prices. The combination of these three evolutions seems to have a negative impact on the job market. Explanatory models proposed by economists on the one hand (e.g. Muet 1994) and futurologists on the other (e.g. de Jouvenel 1994) differ as to the reasons of this evolution. As far as derealization is concerned, the reports and studies agree. The future of European companies will need to include derealization as part of their survival strategy. The Arthuis report (1993) on the transfer of activities to low labour cost countries believes that 3 to 5 million jobs in Europe will be threatened as a result. The study undertaken by the German Chamber of Commerce and Industry (DIHK Frankfurter Allgemeine Zeitung 9/11/1993) indicates that 30 per cent of German industrial firms intend to transfer part of their production abroad over the next three years. Different reactions to these findings co-exist: - We cannot help but notice with satisfaction that derealization offers a chance to developing countries to really progress. - In the EU countries, the negative effects provoked by the derealization of mass production of consumer goods are at least partly counterbalanced by the exportation of home produced industrial equipment. In any case, the employment deficits are concentrated in unqualified jobs. - Derealization can be considered as a demonstration of the dynamics of capitalist internationalization: it can also be seen as a defensive weapon in the struggle for survival that firms are undertaking. - Derealization embodies the elementary theory of the international division of labour which states that countries need to specialize in the activities for which they have a competitive advantage. If the South East Asian countries, China and Central Europe have the advantage of cheap, low-

Human Resource Management in Europe: The Emergence of a Paradoxical Dilemma

311

skilled workforces (currently undergoing rapid upgrading), European countries on the other hand profit from the high productivity levels of their labour force due amongst other things to technological and organizational innovation. This is one of the offensive weapons largely used in European company strategy, as we have understood from the descriptions in the monographs and will come back to later. Let us keep in mind at this stage of our explicative model: what characterizes European companies as a whole is the omnipresent preoccupation of survival when constantly faced with economic competition. In the same time, the European Union as a whole, marked by the interdependency of its national economic systems, is progressively developing into a zone of mass unemployment (Muet 1994). Table 1:

Structural Characteristics of Unemployment (1992)

Country

Rate of unemployment

Germany 1990 France Italy United Kingdom Belgium 1991 Denmark 1991 Ireland 1991 Netherlands Portugal Spain United States

Overall

16-24 years old*

6.2 10.1 11.6 9.8 9.3 9.1 15.4 6.7 4.0 18.4 7.3

5.6 20.8 32.7 15.2 nd nd 23.3 10.2 9.4 34.4 13.7

long term unemployment** 45.5 36.1 67.1 28.1 61.6 31.2 60.3 43.0 38.3 47.4 11.2

* Overall = 100%. ** Unemployed more than one year. Overall = 100%. Source :

2

Muet (1994).

Opportunities and Constraints — The Influence of Internal and External Factors

In their efforts to develop a strategy, company decision-makers are forced to keep in mind opportunities and constraints emanating from both the environment (external factors) and from within the company itself (internal factors). We do not intend to produce a complete list of the different situations: they are each described in the national studies. We will, however, quote a few by means of an example, and concentrate on those factors which more or less

312

Ingrid Brunstein

facilitate sharing power and responsibility; i.e. we will highlight factors that ultimately influence the qualification of jobs and the introduction of participative methods.

2.1

External Factors

Some countries' political histories have allowed them to live for long periods of democracy (for example Denmark, Holland, France or Belgium), others were for a long time subjected, sometimes until recently, to totalitarian regimes (for example Germany, Portugal or Spain). The participative methods find themselves linked to the governmental ideology which may or may not favour their existence. European political systems distinguish themselves according to other criteria, such as centralism (in France) or federalism (in Germany): the first is mostly a man-made system as the result of determined political policies, whereas the second has emerged spontaneously from external constraints. If centralism presents a dense, almost Taylorist picture of state control with its distinctive strata and allocation systems, then federalism promotes diversity, a greater repartition of powers and an identification of these powers within regional areas of belonging. The effects on individual and organizational behaviour are real under each of these systems, because centralism and federalism are not only imposed from the top but also assumed and all the more accentuated from the bottom-up in all the different layers of society. The history of the two main religious faiths in Europe show that power may be related to the access to the word (of God) and/or to the ability to reply both directly and autonomously. For the Catholics there has been a certain distance and mediation with respect to the biblical texts of Vulgate which remained incomprehensible as long as they were not translated from Latin. The Protestants were invited individually to read the same texts translated into the language of the people and morally obliged to continually decide on their own responsibility in accordance with this message. The study by Hofstede mentioned by different authors (see more particularly the chapter on Portugal by Campos e Cunha and Alves Marques) which underlines the hierarchical distance, higher in Southern Europe and lower in the North, underlines this difference. The negligible impact of legislation, the reduced power of the institutions and the development of free arbitration in most Northern European countries are probably the prolongation of this same distinct religious past. Not only the global impact of law differs from one country to another but also the labour laws of the twelve countries each keep their specificity linked to their historical, social, cultural and economic contexts which have marked their creation and their evolution. Everywhere, social laws are characteristic

Human Resource Management in Europe: The Emergence of a Paradoxical Dilemma

313

imprints of more or less conflictual social relationships. They reflect the general relational culture which has developed through the centuries in the different countries: compromises and dialogue for some (e.g. the Netherlands and Germany), confrontations and institutionalization for others (e.g. France and Portugal). However, one procedural similarity is important: all the jurisdictions in Europe underline the attachment to conciliation procedures, a sign of confidence in a certain maturity of the social partners. State intervention in economic affairs also has a long history which is quite different depending on the country. The competitiveness of nations depends amongst other things on the links between the public and private sectors. Such a link, for it to be efficient, relies on the modernization of the public sector which, from the north to the south, is taking on an ever intensifying urgency. This is all the more crucial as many sectors which are considered public territory and therefore at least partly protected in European countries, are subject to unlimited competition beyond the EU frontiers (Mine 1994). In Europe, we come up against a conceptual deficit in the area of public management with its structural particularities both functional and bureaucratic. Corruption in the public sector is another dysfunction factor whose management is underdeveloped. Other external factors need to be discussed: such as the degree of openness in the market (for example a third of German GNP is exported), the size of firms (vigour and adaptability of the SME in Portugal, Italy, or Denmark, among others), the existence of industrial zones (Italy) or the creation of a new "agricultural industry" (southern Spain for the Common Market). When exploring the national studies the reader will be reminded of how important may be their influence on the company's strategy for development and survival.

2.2

Internal Factors

Internal opportunities and constraints are inevitably associated with the external environment. We are not going to make a comprehensive catalogue of them but instead give an insight into them using some examples that have an impact on a firm's human and organizational efficiency. What may be of interest here is hierarchy and the existence of clearly defined statutes with formally established privileges and legal rights. We can now ask the question: how is power formalized concisely and reinforced by a statutory framework at the top of the hierarchical pyramid? Bournois (1991) touches on this briefly in a diversified table to which the authors of this publication have each added their individual nuances: in some countries the legislation is almost inexistant when it comes to the attribution of directorial tides (in Greece and Holland). Elsewhere, however, extensive

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rights prove the importance attributed to the idea of the manager, coming from a higher education system characterized by elitism and exclusiveness (in France). In other cases there is a plethora of workers called managers of whom a third have no management training (in Great Britain); or still in other countries, the categorical distinctions practically ignore the idea of hierarchical levels (such as in Germany) as they are based on the difference between production staff (Arbeiter) and service staff (Angestellte) and not between the top and bottom of the ladder. The authors highlight the managerial and organizational consequences of this phenomenon: the existence of clearly delineated statutes formalize privileges and powers and accentuate the centralizing tendencies of the decision-making process. Within a relatively compartmentalized structure of a graded bureaucratic nature (France), individual strategies for the acquiring and maintaining of statutes (with their surrounding privileges and powers) may clash with the overall strategy. Whereas less formalized statutes encourage suppleness and adaptability of organic structures and move towards a common strategy of survival and development (Ireland). All teamwork, be it multi-disciplinary, transversal or autonomous, is intensified when there is a certain statutory flexibility. But the statutory framework is not the only determinant for the exercise of either personnel or shared power. When reading the chapters on Greece and France, it appears clearly that the very personal conception the director has of his relationship with the/his employees (paterfamilias in Greece; VIP in France) will determine the power structure. His strategic vision (or in a larger company, that of the board of directors), his personal view of men within the company can neutralize or accentuate the effect of the abovementioned statutory compartmentalization. If according to his strategy he considers human resources as the most important factor in a context of exacerbated competition, he will solicit them in a voluntarist and pro-active way, forgetting about formality. The company will be forced to base its sources of power, not in the statutes, but in skills and in the commitment of each person to the achievement of common objectives. It will not conceive the functioning of the company as a juxtaposition of local attributions, but more as a network of capacities and initiatives that improve performance many times over. The entrepreneurial vision strongly influences the existence, development, formalization and sophistication of HRM practices (Fabi, Garand, Petterson 1993). The way in which the union representatives see their own role in the firm is equally important in this context, and sometimes has nothing to do with the union's options at a national level. Are they personally engaged in opposition unionism that promotes solidarity against "the tyranny of profitability"; or on the contrary, do they opt for a negotional unionism centred, in spite of all the usual conflicts, on the solidarity for a shared project? Thus in

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many cases the trade union representatives in Germany will try to integrate the consensus-seeking and co-operation process between adversarial groups; tendencies of the same kind are observed in the Netherlands, Denmark and Greece. If they are capable of integrating objectives of survival from the firm's viewpoint into their own they become bearers of this strategy as well. The list of internal factors remains incomplete. What we have tried to illustrate above is the effect of certain contexts on the firm's strategy: the influence of external factors due to legislation and national conditions and the importance of internal factors depending equally on national and company characteristics. In conclusion, we could say that the analysis of external factors follows a cultural logic concentrating on national characteristics (Hofstede 1993). The problem is its determinisi side. Everything would then have set outcomes; whereas the efforts to change the organizational structures would clash with the potency of national culture. The firm, admittedly well-rooted in the national context, finds its strengths and weaknesses in its own particularities. It has many determinants among which internal factors have a strong influence, because over and above national characteristics, it rallies individuals around its own objectives.

3

Human and Organizational Efficiency — The Qualitative Strategy

It has already been underlined that Europe faces a common challenge: a great deal of permanent effort is necessary to reinforce companies' competitiveness. Two different strategies stand out (Liouville, Bayad 1994): - the quantitative strategy of HRM which concentrates on staffing and aims at aligning personnel with the needs of the firm according to outside markets (this may be partly the case in Spain, Greece and Portugal). Whenever market trends are detected they will be integrated in business plans that call for personnel planning. Alignment is the key concept from which competitive advantage is to be gained. This strategy considers human resources mainly as a cost factor to be minimized through downsizing and the substitution of labour by capital; - the quantitative strategy of HRM that tends to set off human resources to advantage so as to obtain optimal performance. It operates in a resourcebased perspective (Capelli, Singh 1992). We must bear in mind the co-existence of these two strategies when realizing that most articles on HRM in Europe concentrate on the qualitative methods. They reveal a certain positivism which we will not question at this

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point. With a few exceptions the authors share the optimism of their countries' consultants and economic decision makers. The qualitative strategy of evolution and survival is embodied in a triple belief: - globally managers have the capacity not only to develop winning scenarios but also to pass on the necessary enthusiasm to make them work (lack of managerial skills are however pinpointed in Portugal and Spain); - employees on the other hand can share this enthusiasm which becomes part of their inherent values and adopt the proposed objectives. They will then behave in such a way that even disadvantages could become opportunities; - employees represent a spring of competitive advantage further adding to the firm's evolution strategy. In the different monographs, two sets of key elements are at the basis of the strategy for survival: flexibility, individualization and autonomy; qualification, responsability and motivation. In the present context of strong world competition, a certain urgency is required. Decision-makers must not waste time nor be led astray. "Victories are won by the swift". The modifications required in a constantly changing market must be carried out with one single objective: productivity. This implies concentration to a degree that is almost bordering on the obsession, as the struggle for survival is never conclusively won. These two sets of ideas which we will try to outline according to the descriptions of HRM in twelve EU countries are considered to result in optimal performance and thus represent the ultimate competitive advantage. flexibility

qualification

w individualization

responsibility

V autonomy

Figure 1: The Qualitative Strategy

^

•

motivation

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317

Flexibility, Individualization and Autonomy

Flexibility together with its collaterals, individualization and autonomy, is above all dictated by the market. It is formulated, explored and actively introduced in all its forms in order to fulfil the following objectives: -

reduction of the production cycle of new products and services; diversification of products and services; quantities varying from mass production to small batch; rapid reaction to changes in marketing approaches.

Two kinds of flexibility are described by the authors. The first one might be called mechanical·. - Atypical time-tables, i.e. those which are different from the collective and usual ones, are introduced to make the machine usage time or the opening hours dependent on the level of demand. The different forms of flexible time management are already practiced in the vast majority of EU firms. - Other answers to the variations of work loads include fixed term contracts, as well as casual, temporary or part-time work. Under the pressure of the market situation legislations have been relaxed everywhere to allow such contracts (difficulties still arising in Spain). However, we are also warned against the increasing use of unprotected employment contracts which may lead to exploitation. That is the reason why they are still hardly used in Germany. - A sort of "geographical" flexibility exists in the telejob whereby the employee with the help of computers is allowed to work from different sites. The authors do not really tackle this subject even though it provokes major problems in areas as varied as physical working conditions, possibilities of identification, or payment of fixed costs (not by the firm but by the employee). - Logically mechanical flexibility should also cover the remuneration. Both individual implication and multiskilling should be taken into consideration. The employee moreover deserves to be paid for his personal and flexible investment when faced with the firm's changing objectives. However, wages, whether flexible or not, will have less weight in a truly qualitative strategy where, as in Denmark, a high level of participation and personal opportunities of self-actualization will prevail. Flexible pay is only one example of the shift from the model of mass treatment towards the individualization model as emphasized in Italy, for instance. It satisfies the demand for justice; but it may on the other hand create a twospeed system where financial marginalization of the less efficient is further accentuated. New forms of flexible pay structures appear under the pressure of the economic climate (as first demonstrated by Volks-

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wagen in Germany) where working hours and salaries have been reduced to avoid redundancies. Besides the above-mentioned mechanical aspects of flexibility, some sort of structural flexibility may also be required in order to obtain better performance. It implies that internal organizational barriers need to be questioned. Today the remodelling of a firm's structure is considered to be the primary weapon for obtaining an increase in production. Gunnigle (Ireland) may be considered as the spokesman of all the other contributors when he describes the general need of restructuring organizations and jobs to incorporate greater scope for intrinsic motivation and to facilitate employee involvement by developing broadly defined challenging jobs within a more organic flexible organization. Nearly all the authors describe the efforts undertaken with varying degrees of success to make structures more flexible through decentralization and the reduction of the many possible layers where decisions are taken. More individualistic approaches tend to replace traditional pluralism (Italy). Thus production units and functional services increase the speed of their reaction and their mobilization. - Structural flexibility is currently practiced in Denmark where, in many companies, the best employees may concentrate on precise, ad hoc projects. Their attribution is limited to the resolution of a problem, to an innovative order, or to carrying out an organizational change. They are equally responsible for the operational and the functional dimensions during the entire project. - New technology has brought about a large amount of substitution of capital for labour. In industry, yesterday's rigid automization has given way to programmable installations capable of continually adapting to the production needs, which themselves are dictated by the market. This new technology will also offer margins of flexibility to the firm if, and only if, a condition is fulfilled in exchange: participation. In so far as technology is not a determinant for work organization (von Behr, Brunstein 1991), a polyvalent organizational form, both participative and co-operative, must intentionally be introduced. The contributors of this book, sometimes by implication, show that this way of working tends to be adopted in most European countries. - Increasingly firms find answers to the complexity and uncertainty of production systems by creating cellular work styles whereby men work in teams to come up with suitable solutions. As in the Danish example of the Postal Delivery Service, the autonomous team is equally important as a framework for co-operation and for interactive polyvalence. Everybody, regardless of their hierarchical standing, is encouraged to anticipate the dysfunctions by personally implementing numerous micro interventions.

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- The approaches encompassing the idea of total quality (as attempted on a large scale in France) are supposed to create a sort of transversal flexibility permeating all the teams. It entails breaking the purely sequential character of tasks, aligning chronologically purchasing, production, distribution, sales and after-sales. This form of flexibility develops synergy and reduces both horizontal and vertical barriers, as there is a predominant concentration on the client. The market place and not the hierarchical structure is then considered as the driving force.

3.2

Qualification, Responsibility and Motivation

If flexibility, individualization and autonomy seem to be major assets for the best performance strategy the question arises how they may be obtained and strengthened in the long run. The above-mentioned flexibility has a strong influence on the degree of responsibility and the type of qualifications required by the operators who now play a key role on many production sites. They are called to intervene spontaneously in areas previously reserved for technicians and experts. The modularity of sophisticated equipment is accompanied by a certain fragility and a "natural tendency" to break down. It is therefore necessary that the highly specialized workers acquire skills and hold information that allows them to intervene efficiently so as to reduce the time of these interruptions. It is not their real and mainly physical intervention, but the mobilization of their know-how that can optimize the use of the equipment and ultimately improve the economic efficiency of the company. The firm's global performance greatly depends on the rapidity of judgement and the capacity of the operators to resolve the problem in record time (Laville 1992). The hierarchical structure will here again play an important part. The authority embedded in it may be accepted and recognized due to professional abilities (Germany) or on the contrary due to the institutional recognition (France) or otherwise due to relational networks (Greece) or because of seniority (now declining in Spain). The reason why authority is accepted will influence the employee's behaviour, either dynamic and flexible or on the contrary static and almost hostile. Working both ways between superiors and subordinates, the transfer of responsibility based on the recognition of professional abilities probably entails a real chance to model an efficient organization capable of reaching its strategic aims. It is then that the problem of qualifications comes to the fore as a major challenge for human resource managers. The increasing level of competence and the strengthening of multiskilled capacities develop into an important factor of the survival strategy. (Spain may be mentioned as a counterexample in so far as the low level of qualifications of a large number of the active population together

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with a deficit of managerial intitiative act as a brake to greater performance.) This step forward in the area of flexible work organization is not happening fast and easily. Taylor's principles still exist in Europe, so it seems in certain descriptions (France). They handicap firms in their effort to adapt to world competition rules. Rapidly changing markets and innovating production systems require new qualifications from employees all over Europe: - mutual comprehension and decompartmentalization are necessary; - rapid individual intervention has to be combined with the collective capacity to circulate and process information; - synchronization of these individual interventions is required; - integration of administrative and commercial aspects is necessary at all levels; - greater intellectual capabilities are indispensable for the analysis of critical situations. All these new competencies can only be acquired through education and intensive training. The acknowledgement of a general right to school and university education is a common feature in all EU countries where the educational system in spite of possible deficiencies invariably represents a national priority. The more detailed descriptions of HRM in the different European countries, however, reflect a great variety of situations. Apprenticeship according to the principle of a dual education appears satisfying to German managers, but is increasingly contested by the potential apprentices themselves. It loses part of its importance in the Netherlands and is timidly introduced in France in order to bridge the gap between the "production" of the national education system and the companies' needs. The educational basis is considered as inadequate in Portugal calling for special efforts in adult training. This is also the case in Spain where training is regrettably limited to the upper levels of the hierarchical ladder. Danish employees appear to be engaged more than others in organizational learning: in companies skills are no longer above all action-centred and acquired through slavish imitation but depend on linguistic communication; they are operationalized by interference from other knowledge. Often, new skills are "situated" in working teams up to a point where the whole company will be able to learn from its own functioning and become an overall learning organization. Work in general, whether at the production site or in the service departments, loses its predictability. The one-best-way approach decided upon by the hierarchy is therefore pilloried in much managerial rhetoric. But reality is often much more equivocal. When delineations disappear, finding one's identity becomes more difficult. The obligation of unhesitating promptness together with the principles of Total Quality Control create

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stress mainly because of their intrinsic contradiction. Ergonomiste concentrate on the recent apparition of "burn out". Its effects are undoubtedly accentuated by the simultaneous and contradictory demands of Taylorian reflexes and professional responsibility. The intellectual and psychological over-solicitation is not automatically favourable to employee motivation which, however, remains more than ever a necessity for the development and survival of companies. General managers, personnel managers and human resource researchers are worried by this difficulty and continue to try and understand how personnel motivation works and may be reinforced. What makes the employee use his margin of freedom to participate in the development of the firm? His or her implication often depends on moral and affective considerations: should HRM therefore transmit core values (Ireland)? What about the motivational effects of the multi-dimensional barter (Denmark)? What is the impact of the product, of the sector of activity and also of the remuneration in motivational terms? How can the employee be made to choose to invest more in the firm than in other areas of interest (France)? Is there a place for ethics where motivation for the best performance strategy is concerned (Belgium)? These questions are certainly not new; no monolithic satisfactory answers exist. They are, however, of utmost importance because the implementation of a survival and development strategy for the firm depends on the extreme motivation of each of its members and on the resulting collective performance.

Survival and development of the firm

External factors

Internal factor

Human and organizational performance of the firm

Figure 2: Survival and Development through Human and Organizational Performance

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The Best Performance and its Effects on Human Resources

Let us briefly recall that the globalization of the market forces the European countries, where labour costs are high, to compete with others where salaries are much lower and social benefits nearly inexistent. Most companies in the EU have developed a strategy of survival integrating HRM as an essential factor and source of competitive advantage. Until recently, companies have preferably opted for the qualitative HRM methods in order to achieve optimal performance. A relative consensus had formed around the idea that the quantitative non-voluntary strategy of alignment was less rewarding than the qualitative one. However, the recession has taught us that today this distinction is beside the point. The qualitative strategy aims at producing "more and better with less" and therefore integrates ipso facto the quantitative dimension: down-sizing is naturally inherent in the qualitative strategy. If we agree with the basic assumption that strategic management centres on "relating a company to its environment" (Porter 1980) we cannot but take into account that the resource-based strategy leads to an intersection point where changes in the society and in the economy as a whole reflect themselves on the firm. This has unforeseen consequences that may ultimately hamper both the company's competitiveness and society's survival. The ethical underpinnings of this dilemma will make us have a closer look at the human resources. The best performance strategy of the firm is at risk of creating the three following situations: the necessary redeployment of the "survivors"; the marginalization of employees who have difficulty adapting to this strategy; the redundancy of the people considered to be definitively "inadapted".

4.1

Survivors Have to be Redeployed

The pillars of the qualitative strategy are uniquely qualified and highly motivated staff members. Considered as invaluable, their knowledge and skills are constantly developed, because thanks to them management will be able to implement its performance-aimed strategy. As core people these employees benefit from an apparent job security. On the other hand this puts them in a delicate situation: as clinical studies seem to prove many suffer from a "fire-next-door" syndrome. Being a survivor of a catastrophe which affects close colleagues creates a feeling of undeniable guilt: lay-offs, to rid the company of overmanning, are partly due to the improvement of performance to which the survivors have greatly contributed.

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In so far as the struggle for the firm's survival is never definitely won, the employees have the constant feeling that they have been awarded a suspended sentence. Today they are apprehensive of tomorrow's lay-offs, as integration into another firm becomes even more hazardous. Thus the strategy of human and organizational efficiency, created under the constraints of a hyper-competitive market, generates a social degradation, the extent and consequences of which remain unknown. A lot of work must be done on the redeployment of workers to regain their confidence, so that the firm can once again count on their commitment. Management expects the surviving core people, more than all the others, to be able to internalize the culture and objectives of the firm. How are they supposed to implement this obligation of a symbiotic relationship with the firm, when its objectives include the danger of self-elimination? As witnessed by doctors in the workplace the gangrenous social degradation provoked by lean management has affected the physical and psychological health of many workers in general and of the core people in particular with illnesses ranging from stress to depression and from ulcers to suicide. Paradoxically this phenomenon could get worse if, after recession, we move into a more stable period without markedly increasing the workforce. How will the survivors accept stagnation or even further reduction in manpower when the economic results are improving? Apart from the negative effects upon the individuals' psychological and physical health the strategy created under the constraints of performance generates hidden costs for the firm. They are linked to the efforts of redeployment necessary in order to regain confidence and motivation from the core employees. The hidden cost of pressure on survivors has not yet been sufficiently explored in Europe by practitioners nor by researchers, whereas they seem to be considered as a key problem elsewhere (Noer 1993).

4.2

The Marginalized Call for Short-term Integration

In most cases people lacking in qualifications and those who suffer from high rates of absenteeism have already been eliminated. They will be taken into consideration in the third situation. In this category we shall rather include those that have difficulty in communicating, react slowly, are not autonomous and those who have strong interests outside the company's objectives. Supposedly employable because of their level of qualification, but often unemployed, they will be called upon according to the circumstances to complete internal flexibility. Employed on fixed term contracts, as casual workers, part time, or as homeworkers, these "inadapted" will allow the

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company itself to adapt rapidly to the short term opportunities and increase its competitiveness. Sometimes outside, sometimes inside, this category of "Just-in-time" workers will waver from periods of great demand without real prospects for the future to waiting periods governed by uncertainty. Given their disposable nature, the firm which employs them is rarely going to invest in training them and will only entrust to them jobs that require low levels of qualification and reduced levels of personal commitment. Changing from the permanent employees who will obligatorily be in symbiosis with the company's large projects, the "inadapted" will find themselves on the edge of a common destiny which, in the end, will not be theirs. Surrounding these situations, a certain number of unanswered questions remain. How are these passing employees, in spite of everything, to be motivated? Can, and should, the firm right from the provisional recruitment stage worry about their reinsertion elsewhere at the end of the project? Could that increase their productivity while they are with the company? What effect will be produced by the image that they convey to the younger generation of the world of work, given that they often see the work environment in terms of "last in, first out", that is rapidly being placed on the scrap heap? What are the side effects of the lack of job security on physical and moral well-being? Is it to be paid for by society while it is created and endured by the firm? Because of these questions that remain partially without answers, a deep preoccupation is appearing in Europe. It concerns the fact that the main cost of this marginalization and intermittent redundancy is the unemployment benefits allocated after the end of each contract. This cost is provoked by the company and is externalized, that is, handed over to the social security systems which are already on the verge of collapse.

4.3

Incapables are Excluded

Risks of economic and social redundancy in the longer term particularly concern groups that can be defined by socio-cultural criteria: age, sex, religion, social class, habitat (homeless or living in certain areas), nationality, political or union memberships, intellectual, mental or physical handicaps, drug taking and in the future AIDS. Recently latent unemployment demonstrations have appeared in areas of the population which had been spared up until now and who had felt that they belonged to the protected elite: young people with high level university backgrounds, managers, qualified employees belonging to the company headquarters. They are threatened with either never entering the labour market, with suffering from the obsolescence of their specialized knowledge or

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with being victims of take-overs, mergers or restructuring. The obligation of optimal efficiency puts them in danger of eviction from the most sensitive zones of the survival strategy. The majority of the unemployed avoid poverty with the help of benefit payments. Fundamentally that is what distinguishes European countries from other large regions with which they are in competition: these real threats to the health and subsistence of the marginalized and redundant are countered with means of easing, if not eliminating the risk of poverty through social protection. Since the Middle Ages, the social systems that have been based on Christian beliefs and workers' social traditions form the pillars of these institutions. Since the 19th century, the fear of a lack of protection against exploitation and decay represents a fundamental recurring value in European democracies. The efficiency of the social protection system to limit poverty seems as important as the efficiency and competitiveness of firms. However, suddenly the efficiency of the two systems which were mutually reinforcing has changed and they now find themselves in opposition. This threat touches European society with boomerang effects on the firm. At this point the interlocking logical evolution mentioned at the beginning flows over into the macro-economic field. If the link between efforts to increase productivity on the one hand and redundancy on the other appears clearly at company level, it is far from evident when macro-economic considerations and comparisons (i.e. EU, USA and Japan) prevail. The interrelationship between a well-established social protection system and mass unemployment, on the contrary, cannot be questioned (Muet 1994). Today the very quality of the social protection which is a common feature of all advanced European countries represents a cost that is much too high.

5

Performance and Survival of the Welfare State

For centuries now, Europe has wavered between a justification and a questioning of the state as a pivot where choices between economy and society, between the individual and the community are required. When examining the social protection of those who have been marginalized or who are unemployed on the one hand and the capacity for survival of the welfare state on the other, we do indeed move away from the company logic and approach macro-economic considerations. Everywhere in the EU, institutions that cover incidents at least partly provoked by HRM-performance strategies (like illness, redundancy and early retirement) suffer from economic strangulation. The best means to save them would be to augment the companies' contribution which is of

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course inconceivable at a time when companies do all they can to reduce costs because they hinder their competitiveness. Whatever their sources of financing, the problem of the social protection systems is the same everywhere: the blatant insufficiency of incomes compared to expenditures. No solution to this dilemma seems to present itself. If we look at recent analyses (Bilan économique et social 1994) the precise situations vary from one country to another: - In Holland, for example, the social security dilemma is considered of national importance: 21.3% of the nation's income is taken up by social payments, and it is invalidity payments that proportionately pose the largest problem. - In Great Britain, in spite of the perspective of years of growth ahead, the welfare state (covering health, education and social security) is in danger because the increase in the social security budget has reached levels which were never envisaged by Lord Beveridge. Its universality principle states that everybody, rich or poor, employed or not, has the same rights to the available resources. Services as fundamental as hospitalization are now being questioned, and invalidity benefits which before were available to people who had been off work ill, for a length of time, are no longer automatically available. - Portugal, that seemed relatively unaffected by unemployment problems, has recently seen Central European markets collapse and finds itself suddenly in a situation where the cost of unemployment is becoming an important preoccupation. - Germany, with probably the highest salaries in the world and correspondingly high obligatory deductions is confronted with the same problems as France: salaries and social costs endured by companies reduce their competitiveness. The rigidity of the welfare state principle has slowed down adaptations of the labour market and thus represents one of the main factors which indirectly provoke growing unemployment. - In France, the structural disequilibrium of the social security system is as worrying; the problem which is the most preoccupying is that of retirements, worsened by the principle of early retirement as a means to fight unemployment of the younger population. Given the demographic evolutions, employers' contributions to help cover the cost of old age would be due to more than double by 2045. Even though today they already seem too high. No solution to this dilemma seems to present itself. Whatever the precise national structure may be, the cost of social protection is increasing inexorably, mainly and paradoxically because of the companies' efforts to be competitive. Whereas the incomes to the system, coming mainly from taxes (in Denmark; as well as in Ireland, Greece and Luxembourg to a

Human Resource Management in Europe: The Emergence of a Paradoxical Dilemma Table 2:

Wages, Salaries and Labour Costs in Member States of the EU (1991) Hourly Labour Cost (HLC) (ecu)

European Union Belgium Denmark Germany Greece Spain France Ireland Italy Luxembourg Netherlands Portugal United Kingdo Sources:

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n.a. 20.53 18.07 21.37 5.35 12.38 15.27 12.29 14.24 14.48 18.08 4.20 13.57

Indirect cost (% of HLC) n.a. 30.4 3.8 23.7 20.0 25.1 32.0 17.8 30.0 17.4 26.4 25.8 13.0

Social security (% of indirect cost) n.a. 29.0 3.0 21.5 19.0 24.5 28.6 14.9 26.7 16.3 22.9 21.7 11.4

Eurostat (1994, 1992).

Figure 3: Europe's Paradoxical Dilemma

lesser degree) and from a combination of employee deductions and company contributions by the firms (the majority of EU countries) are threatened by the reduction of paid work (i.e. significant decrease of salaries and taxes). In the majority of European countries the contributions to the social protection system weigh heavily on the macro-economics amounting to 10 per

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cent and more of the GNP (Eurostat 1993). We therefore have to envisage the perspective that all things considered companies' human and organizational performance may endanger the nations' well-being and globally hinder the progress of the European Union. The title of this chapter reveals implicitly a fundamental worry: how can European countries outlive their companies' competitiveness?

6

Societal Learning as a Principle for the Survival and Development of the European Society Our vision of Europe, of its history, of its mission, and hence of the spirit, the project that it represents, must always be kept to the fore. There can be no Europe without a vision of Europe; there can be no vision of Europe without paying scrupulous attention to the facts (Jacques Delors, 1991, then President of the Commission of the European Communities).

6.1

In Search of a New Understanding of the Contradictions in Today's World

We have been brought to understand that the triptych (composed of human and organizational efficiency, the economic competitiveness that comes from it and the quality of social protection) could eventually pose a threat to the survival of European society. An incompatibility previously unsuspected separates companies and society. How can we break this cycle? The whole system is out of breath because the EU countries when engaging themselves in the competitive race without ever setting up clear barriers, have separated the social from the economic field. Thanks to streamlining, becoming lean and mean, right- and down-sizing, companies survive and some even thrive. New technologies and changes in organization further best practice and high performance; production costs continue to be reduced; market shares are enlarged. But all those improvements somehow augment society's morbidity. Governmental institutions appear to be helpless. It will probably not be the politicians who will find a solution. Through electoral constraints they are locked into a short term logic in front of a long term problem. Nor will the European technocrats be able to solve the problem and reduce the quantity of bureaucracy instead of multiplying it by 15. No harmonization of the various social protection systems helping to get out of the dilemma is in view.

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Help will probably not come from company decision makers either. Under the pressure of world competition they are not free to make choices other than those that have created the paradoxical situation. As all the traditional solutions seem to end up in the same one-way street of paradox, other scenarios and different approaches will have to be invented. It will probably become necessary to leave the well-known paths of mass solutions for mass problems. There are marks and signs, which seem to prove that new initiatives are already under way. Due to the fundamental dilemma described above, Europeans are becoming apprentices in a learning society. We propose to interpret these signs according to the concept of organizational learning (Senge 1990) and to develop societal learning or even societal self-learning along the same principles. Under the pressure of economic competition and technological innovation people have changed. They have more or less managed to develop at least some of the key qualifications demanded by firms. But at the same time they have produced qualifications that go beyond, seeking a new understanding of the inextricable arbitration to be negotiated between economic growth and human solidarity. The question "how do we want to live" emerges strongly in all surroundings and European countries. Today, more and more men and women are capable of and exercise the right to acknowledge that the efficiency logic inevitably engenders the opposite of its aims. We can only admit that the reflections into which we are delving here are full of discomfort: we are falling once again into a different area. After the description of human and organizational efficiency and the more macroeconomic considerations regarding institutional social protection, we will now concentrate on the societal dimension. We will also question the very model of the organization and of technical and social rationality contained implicitly in the monographic descriptions above. Moreover our prospective thoughts, even if they are based on reality, include a good deal of hypotheses. Not only do they lack solid scientific bases and statistical extrapolations, but they are also (and inevitably so) tinged with personal convictions. The reader will understand that they are based more on personal research than on the monographic analyses of HRM in the European countries. But\ - so strong is the paradoxical divergence between the utilitarian logic of the economic system on the one hand and the needs, doubts and sufferings of individuals who make up this system on the other, - so poor seems the abundant management literature when tackling the challenges which are contained in the economic and organizational realities and at the same time surpass their borders, - so fertile in potential is the European cultural heritage,

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that we may not have the right to limit our work to describing HRM practices. Moreover, nearly all the authors prove, even if we have to read between the lines, that this societal learning is actually happening.

6.2

Societal Learning — A Possibility to Sort out the Dilemma

Taking a closer look we discover that a new consciousness is surfacing. Journalists, researchers, individual managers, unionists, unemployed, representatives of women's associations, students, sociologists... air their opinion (Ducatte 1994, Morin 1994, Jouvenel 1994, Mine 1994). This new apprenticeship in which so many different people are participating helps to understand that the survival of the European Union does not depend on the choice between two axis, but includes a third equally relevant one which needs to be clarified: - a firm's economic efficiency and its remunerative principle; - institutionalized social efficiency and its distribution principle by the welfare state; and - inter-individual solidarity based on reciprocity. Companies: economic performance and remuneration

- > People: human performance and reciprocity

Social protection systems: social performance and redistribution Figure 4: Three Axis for the Survival of the European Society

When mentioning this last point of inter-individual solidarity we are indeed talking about societal learning: non-monetary exchanges, social activities with economic connotations, domestic and family vitality are learnt, not in school, nor in the workplace, but in every nook and cranny of society. These initiatives have always existed but the deteriorating state of un-

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employment has greatly increased their impact and has given them an almost official nature. Today they have become part of the social scenery and are recognized in an official context as individualized relays taking over when the government institutions only offer global and insufficient solutions. This third axis is borne by the community; the unemployed, the people taking early retirement and graduates seeking jobs find the energy to form self-help groups to re-balance the societal choices questioned. In all EU countries, there are new networks forming, associations that link people neither implicated nor solicited up until this point. It is through them that new alliances are formed which reshape the usage of skills unexploited in the past. Thus societal learning facilitates dialogue with previously unrecognized specialists in a market-driven society. There exists on the edge of this area of market logic a no man's land not yet explored and rich in sources of progress both human and economic.

Barter Benevolent activities Associations Collective suburban teams Consulting Neighbourhood assistance

Figure 5: Appearance of a Hybridized Area

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J.L. Laville (1992) reveals in his research that, in several European countries, we note the development of neighbourhood services: community organizations in Great Britain, kindergardens run by parents in France and Germany, self-assistance movements in Germany and social solidarity cooperatives in Italy. "From an impulse of mutuality, they reconstruct supplyand-demand theories, the consolidation of which occurs according to a combination of market principles and redistributive intervention" (Laville 1992, 353). In the image of organizational learning we can now say that there is true societal learning when the apprenticeship from these experiences becomes part of the social workings globally. This assumes: - recognition from the official institutions present, and - networking comprising this recognition These two are both already working to a certain degree on a regional and national scale in many European countries. Societal learning: hypothesis or fact? This will be asked by every thorough researcher. While waiting for the future to become the present, we will answer that it is a probable future situation that can be seen in existing associative sketches: newspapers written and sold by redundante, specialized book-fairs organized by amateur readers, neighbourhood networks for extracurricular lessons, networks favouring the exchange of knowledge, associations that train redundants to salvage and repair household electrical equipment, and many more not to mention the numerous groups working for the protection of the environment. These examples show that societal learning may not solve the purely economic side of the problem created by the best performance strategy for the social protection systems. But it produces positive effects that water down the urgency of the dilemma. It produces a shift from passive fear to active individual and collective self-help. In fact it allows among others to enact the evolution of values in the European society (described in the introductory chapter) from irresponsible individualism to autonomously assumed responsibility.

6.3

Characteristics of Societal Learning

Taking a closer look at those examples, we can see that societal learning indeed progresses in accordance with the evolution of the European values described in the introduction. It has intrinsic characteristics that neutralize the maiming effects of marginalization and unemployment: - the length of time between the idea and the realization is short;

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- the range of possible contribution is large: everyone can take part. The action makes sense as the results are concrete and can be seen; - societal learning is built around an apprenticeship from and with others which spontaneously integrates risks and errors. Therefore the "total quality" of the product, of great importance to any successful firm, is no longer of such an imperative: it is not necessarily the product but the fact of producing it together with others which is the object of this learning; - the construction of a collective identity allows everyone at whatever level of economic performance to find a feeling of belonging which entails many different dimensions because political, social, cultural, intellectual and sporting activities become vectors of socialization; - societal learning is not centred on individual excellence put to work in a remunerated job but engenders an unselective community solidarity. The most important thing, to be shared without any discrimination is the taking part; - societal learning develops individual social skills to actively participate in the resolution of collective problems. Possible levers may be the questioning of traditional reasoning, the revelation of contradictions, social creativity, individual or associative initiatives, self-organization and conviviality; - through these levers, people's representations evolve: from what we know of organizational learning (Chambrier 1993), compromises can be negotiated, a co-operation that is not necessarily consensual, allows the integration of a multitude of different rationalities. The principle of a cross-cultural web and reinforced intercomprehensions characterizes the process working in Europe. EU nationals are gradually changing, both individually and collectively, their vision of the world which they themselves are building. This all happens in an ambiguous context: it involves the contradictory conjunction of market forces, that are always present and necessary, with a non-economic social interaction. The questioning and transformation of the system will only come from the actors in the system.

6.4

Societal Learning — An Economic Factor for a Europe Reconciled with its Differences

Societal learning does not involve an opposition ideology or a political alternative movement (in the German meaning of the word "alternative"). It reinforces organizational learning in the firm in so far as certain criteria are valid for both, the firm and the society. Concepts such as multi-dimensional barter and the principle of the self-programming employee in Denmark or paradoxical communication in France are a proof of this cross-fertilization.

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Nor is societal learning diseconomie. In fact it is just the opposite. The firm remains one of society's chief motors and one possible area for learning, as it still finds itself at the heart of job sources and social security networks. It will benefit from its employees' increased learning capacity at society level. Economic growth, in spite of all the paradoxes that it involves, is indispensable in the fight against poverty and unemployment. Economic performance of each individual firm still remains the main source of financing of the social system: and that is the most striking paradox of our model.

Survival and development of the firm

Human and organizational performance of the firm

Social costs

Survival of society through societal learning

Social performance of the welfare state

Micro/Macro breaking point

Figure 6: Societal Learning for the Development of Both, the Firm and Society

Thus, the Single European market can and must form the receptacle of political and economic actions that imply strong social demands. It is at a continental level that the perverse secondary consequences of market internationalization and company efficiency need to be analyzed and reduced. Is the concept of European societal learning not merely a pipe-dream? What proof is there that Europeans are capable, perhaps even more than others, of progressing in this way? In our opinion, they possess a cultural asset which is highly favourable to this special learning: after a long history of painful fighting, they have succeeded, since the end of the Second World War, to overcome these ancestral animosities. Certain phobias will never definitively be eradicated, but the mishaps that do sometimes happen are judged serious to such a point that they illuminate, by way of contrast, the generalized consensus in favour of the acceptance of the individual who is different. We understand, in accordance with Enriquez (1992) that a harmonious society where the individuals would work together and "love

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others as they love themselves" remains utopie. At the same time, history teaches us that at certain times and in certain places, in spite of local counterexamples, people have managed to engage themselves in a civilizing process allowing them to tone down their aggressive feelings. The responsible understanding of others and the acceptance of an enlightened neighbourhood without barriers (as explained in the Declaration of Human Rights) reinforces the web between individual and collective values. Europeans are learning to accept the differences and should be capable of transcending other gaps such as between young and old, between the active population and the unemployed, between market logic and social interaction, between a job and voluntary work. Societal learning and, at its base, the emergence of a different societal model can only happen where a certain generosity exists towards those who are different. Europe seems to be a fertile ground where such a generosity can take place and where notions of otherness and of differences can take a constructive meaning.

6.5

Perspectives for HRM

Have we strayed too far from the subject of what HRM is in Europe? With Crozier (1991) and Morin (1994) we feel obliged to admit that modernization and progress resonate with modesty. "Progress exists thanks to modesty, and to the acceptance of complexity in organizational realities." What are the perspectives for HRM in this context? Are personnel managers concerned by these new domains bordering firms both inside and out? If their strong implication seems indispensable, we believe that the technical methods and tools available today are to be rethought. On the other hand, we also think that human resource managers have already developed in the past capabilities to deal with contradictory situations: the conciliation of economic and social factors, the arbitration between capital interests and salary requirements, the understanding of employers' and unions' behaviour, the consideration of the individual within the organization as a whole, all this may make them into promoters of a new human and societal rationality. The problem will consist less in denouncing the misdoings of world economic competition rather than to show the newly emerged requirement of this inescapable evolution and its appearance in other areas of human action (Perret, Roustang 1994). Human resource managers will need to show both wisdom and audacity in order to:

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- reap advantage from new competencies developed by societal learning, like the detection of social know-how in employees or the ability to support destabilized populations; - cleverly manage the coexistence of personnel of different categories and with various forms of contract; - think and build a hierarchy of closeness with respect to workers who are only there on a casual basis; - integrate the notion of fragmented work content when conceiving job definitions; - allow workers to imagine and create areas of interest other than that of paid work; - solicit the personnel's motivation for the organization while inventing along with them personal investment possibilities in other places; - find other relational networks and advocate non-market values to permit, if necessary, exit without becoming excluded from society; - be aware of the obvious signs of the societal metamorphosis that is happening, make it perceptible and try to interpret it for the economic decision-makers. These are the obligations of a new professionalism needed in the personnel function which will be more indispensable than ever in order to create and build a broader strategy of survival and development. The European society cannot be imagined without social cohesion.

References Arthuis J., Information sur les délocalisations, Report to the Premier Minister, Senate, Paris 1993. von Behr M., Brunstein I., Technologies nouvelles et organisation du travail — Des leçons d'outreRhin?, in: Cahiers du CESAG, No. 2, Strasbourg 1991. Bilan Economique et Social, in Le Monde, special issue, January 1994. Bosche M., Universalité et contingence dans la GRH — Les stéréotypes nationaux, médiateurs interculturels, in: Les Actes du Colloque AGRH, AGRH, Jouy-en-Josas 1993. Bournois F., La gestion des cadres en Europe, Eyrolles, Parisl991. Boyer R., Sans précédent — Un système institutionnel est en train de mourir, in: Le Monde des Débats, October 1993. Capelli P., Singh H., Integrating strategic human resources and strategic management; in: Lewin D., Mitchell O., Sherer P. (eds.), Research frontiers in industrial relations and human resources. Industrial Relations Research Association, University of Wisconsin Press, 1992. Chambrier L., L'apprentissage organisationnel, contingence et systèmes de représentation, in: Les Actes du Colloque AGRH, Jouy-en-Josas 1993. Crozier M., Etat moderne: état modeste, Fayard, Paris 1991. Enriquez E., L'organisation en analyse, PUF, Paris 1992. DIHK Deutsche Industrie- und Handelskammer in: Frankfurter Allgemeine Zeitung, 9 November 1993. Ducatte J.C., Après la crise, les nouveaux modes d'organisation du travail, Les Editions d'Organisation, Paris 1994.

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Eurostat, Net earnings of marmai workers in manufacturing industry in the European Union, Eurostat, Luxembourg 1994. Eurostat, Impôts et cotisations sociales (1980-1991), Office statistique des Communautés Européennes, Brussels, Eurostat, Luxembourg 1993. Eurostat, Labour costs: Updating 1989-1991, Eurostat, Luxembourg 1992. Fabi Β., Garand D., Petterson H., La gestion des ressources humaines: contingences davantage qu'universalité. Opérationalisation d'un modèle de contingences; in: Les Actes du Colloque AGRH, Jouy-en-Josas 1993. Hofstede G., Images of Europe, Valedictory address, Maastricht 1993. de Jouvenel H., La société française à l'horizon 2010, in: Futuribles, April 1994. Laville J.L., La création institutionnelle locale: l'exemple des services de proximité en Europe; in: Sociologie du Travail, 3, 1992. Liouville J., Bayad M., Stratégie de GRH dans les PME et performances: résultats d'une recherche exploratoire, Working paper, Strasbourg 1994. Mine Α., La France de l'an 2000, Report to the Premier Minister, La Documentation Française, Editions Odile Jacob, Paris 1994. Morin P., La grande mutation du travail et de l'emploi, Les Editions d'Organisation, Paris 1994. Muet P.A. (ed.), Le chômage persistant en Europe, Presses de la Fondation Nationale des Sciences Politiques, Paris 1994. Noer P., Healing the wounds — overcoming the trauma of layoffs and revitalizing downsized organizations, Jossey-Bass, San Francisco 1993. Perret Β., Roustang G., L'Economie contre la société — Affronter la crise de l'intégration sociale et culturelle, Le Seuil, Paris 1994. Porter M., Competitive Strategy, Free Press, New York 1980. Senge P.M., The 5th discipline — The art and practice of the learning organization, Doubleday, New York 1990.

Notes on Contributors

Manuel Alcaide-Castro (PhD Seville [Spain]) is Professor of Business Administration at the University of Seville. His main areas of interest cover the fields of human resource management and vocational training, on which he has conducted research and published several articles and books. Carlos Alves Marques (MA in Psychology at IPSA, Lisbon [Portugal]; DESS at Paris V [France]; PhD Tilburg University [Netherlands]) is professor in Management and Business Administration at the New University of Lisbon, the Portuguese Catholic University and at ISPA. He also acts as Director of the Research Unit on Organizational Behaviour Management. He has been Personnel Consultant in Chemical Enterprises for 10 years and is at present Consultant for the Portuguese Association of Banks and Insurances. He is currently member of the Board of Directors of the 3rd Portuguese Insurance Company. John Berridge (degrees in languages and commerce, industrial sociology and industrial relations from Southampton University [England] and the London School of Economics) is Director of International Management Programmes at the Manchester School of Management, University of Manchester Institute of Science and Technology (UMIST). The author of seven books and nearly 40 articles, since 1990 he has been the editor of the international journal Employee Relations. Frans Bévort (MA in English and Business Economy) has worked as a management consultant in the National Association of Local Authorities in Denmark and as HRM Consultant in a bank. He has written books and articles on HRM in private companies and town administrations. Ingrid Brunstein (MA in Philology, Bonn [Germany]; Doctor in Organizational Science, Paris IX-Dauphine [France]) exercised the responsibility of personnel manager in a French-German manufacturing company for five years. She is now Assistant Professor and Director of post graduate studies in human resource management at the IAE - University Robert Schuman in

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Strasbourg. She has been guest lecturer at the universities of Paris I-Sorbonne (France), Trier (Germany) and Innsbruck (Austria). She does research and has published books and numerous articles on crosscultural management as well as human resource management in France and other European countries. Rita Campos e Cunha (MA in Psychology at New York University [USA]; PhD candidate at UMIST Manchester [UK]) is Lecturer in human resource management at the School of Economics - Universidade Nova de Lisboa (Portugal). She is consultant at CEGE, responsible for projects in HRM, and has published a book and articles and given papers at conferences on problems of human resource management. Ignacio Flórez-Saborido (BA in Law; PhD in Economics and Business Administration, Seville [Spain]) is Assistant Professor of Business Administration at the University of Seville. He is the author of several publications on the fields of employment policy and regional development. Kieran Foley is a former Research Assistant at the University of Limerick and is currently employed as a senior Personnel Specialist in a leading multinational manufacturing company in Ireland. Manuel González-Rendón (MA in Economics, Northwestern University [USA]; PhD Seville [Spain]) is Assistant Professor of Business Administration at the University of Seville. His interests include the areas of industrial policy and labour economics. Patrick Gunnigle is Senior Lecturer in Industrial Relations and Personnel Management at the University of Limerick where he is also Head of the Department of Personnel and Employment Relations. He has written five major textbooks on aspects of industrial relations and personnel management in Ireland and has published numerous articles on industrial relations and human resource management in an Irish and European context. Marc Hees (Doctor in Law, Doctor in Applied Economics) is Professor at the Département d'Administration et Gestion and at the Centre des Sciences Hospitalières et Médico-sociales, Catholic University of Louvain-la-Neuve (Belgium). His main field of interest concerns human resource management. Ad van Iterson is Assistant Professor at the Department of Organizational Studies at the University of Limburg, Maastricht (Netherlands). His past research has included a study of aspects of labour control in early factory systems. His recent publications have focused mainly on aspects of business systems and human resource management, notably in the Netherlands and Belgium.

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Michael Morley is Lecturer in Human Resource Management at the University of Limerick. He has published extensively on developments in Irish and international human resource management and also has extensive business experience. Nancy Papalexandris (degree in Business Administration and Management, Athens [Greece], MA New York University [USA]; PhD Bath [UK]) teaches management, organizational behaviour, human resource management and public relations at the Athens University of Economics and Business. She has carried out extensive research in these fields and published articles in international journals. Carlo Alessandro Sirianni (Degree in Business Administration) is Assistant Professor at LUISS Guido Carli University in Rome. He is currendy doing research in organizational behaviour at the university of Salerno. He also acts as a consultant in organizational areas. Arndt Sorge (degrees in economics and sociology) has worked on the organization and management of industrial enterprises, vocational education and training, personnel policy and industrial relations. This has included international comparisons and a focus on technical change. He has held academic posts in Germany, England, France and the Netherlands, and is is at present Professor at Humboldt University in Berlin (Germany). Theo Stengelhofen (degrees in business economics, universities of Trier [Germany] and Loughborough [UK]) is Junior Lecturer and Research Assistant in personnel management and labour economics at the University of Trier. He is mainly interested in career management, education, recruitment, selection and promotion of managers in multinational companies. John Storm Pedersen (PhD.) is Associate Professor at Roskilde University and Director of West Zealand Business Development Centre (Denmark). He has worked as a consultant for large companies in Denmark. He has created incubators for UNDP and worked on organizational development and training programmes in Eastern Europe. Jon Sundbo (PhD. in sociology) is Associate Professor of Organization in the Department of Social Sciences at Roskilde University (Denmark). He is author and editor of a series of books on industrial relations and service organizations and has written articles on the service sector and organizational problems. He has been an HRM Consultant for enterprises and private organizations. Hartmut Waechter (degrees in business economics and sociology at the Universities of Hamburg, Göttingen [Germany] and UCLA [USA]) is professor

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of industrial relations and personnel management at the University of Trier. He has carried out research and published books in the fields of work design, German industrial relations, and manpower planning. He is increasingly interested in comparative aspects of industrial relations. In recent years he has been guest lecturer at Clark University, Mass. (USA), IAE Université Aix-Marseille III (France), and Aston Business School (UK).