American and European Models of HRM

Medical Precision System (MPS) which is American based company, opened its subsidiaries in three countries of Europe, the U.K, France, and Sweden. After reading the case we can see that there were many similarities and as well as dissimilarities in managing human resources between the subsidiaries and the HQ based in the U.S. As far as the resemblance of the American and European models of managing human resources are concerned, the elements such as communication, unions, pension scheme, and the Total Quality Management (TQM) approach are included.

Both the HQ and its subsidiaries focus on the key element and that is communication. MPS is proud of its strong culture and communicates its value, vision, and mission statement. A mission statement is printed on all pay packets and slips and communication bulletins. Secondly, MPS believes in compensating its employees well to maintain their loyalty and retain them. Profit-sharing plans are introduced in both the HQ and its subsidiaries. Total Quality Management (TQM) is another aspect that is applied by MPS. It has been active for the past 15 years, and the group of employees selects a leader who is responsible and watchful of the quality of medical precision tools. The leader also organizes feedback sessions and reports to the production managers.

Talking about the dissimilarities in the American and European models, many issues arise when it comes to managing human resources. Firstly, the concept of keeping the unions in the U.S is negligible; whereas, in Europe, the concept of keeping unions is common. In the United States, (Chris Brewster, 1995) the meaning and reliability of union membership figures vary across countries, however, it is quite clear that the European countries like Sweden and United Kingdom with 85% and 40% are more heavily unionized than the United States. From the case, we come to know that when the suggestion was made in the U.K subsidiary to have one union for negotiating purposes, there was a mass walk-out and union officials became obstructive. The second issue is of work councils. American model does not support the concept of work councils; whereas, in the European model, it has a significant value. In Europe, countries such as France and Germany, the establishment (Chris Brewster, 1995) of workers’ councils is necessary and required by law. Whereas in the U.S., managers adopt the theories of “management’s right to manage”. They usually are not in favor of setting up work councils in their country. As in the case, MPS set up a work council in its French subsidiary according to the French law, but in the eyes of most of the French workforce, it did not operate very effectively. Similarly, in Sweden, the work councils had to be set up under the laws, but the Americans resented these meetings and tended to treat them with less enthusiasm.

Another issue is feedback mechanisms. Although regular feedbacks are given both in the HQ along with their subsidiaries, however, this feedbacks are implemented by the United States HQ. As a result, the French workforce could not see the point of the cellular feedback mechanisms and preferred to have a line manager with an authoritative air.

Target setting also faces confrontation in Europe despite it has been strongly implemented for the past 20 years in the HQ. Since the working style differs between both models, so all three countries mentioned in the case, U.K, France, and Sweden, balked at the targets that were set under the performance management scheme. They felt that they have negligible control and little to say. Not only this, the cultural aspects of the American and the European differ. In the U.S, (Harzing & Ruysseveldt, 2004) the culture is considered to be more individualistic and more achievement-oriented than most other cultures. The Americans prefer more performance or achievement-based criteria as compared to some European countries who prefer relationship or interpersonal skills to recruit the personnel. Moreover, in the U.S, the promotion and perks are awarded based on individual achievements; whereas other cultures prefer teamwork and group achievements. Employee incentives in the American model (Pudelko & Harzing, 2007) are primarily material based unlike those in other cultures who have mixed material and immaterial incentives; moreover, the superior-subordinate relationship is characterized by regulations in the U.S as compared to common values in other cultures. Furthermore, superiors in the U.S are concerned only with the performance of the subordinate than the well-being of the subordinate.

Another concern is Training. In the HQ of MPS, training is taken seriously and all employees attend the sessions in team-working and people skills and as well as technical skills. But in the subsidiaries in the U.K, France, and Sweden, the people are not impressed by the attempts of American management to engender a ‘gung ho’ culture through culture training and attitudinal orientation sessions.

Features of HRM in the U.S.A and Europe

Yes, there is a European model of managing human resources. There is no doubt that the HRM policies did transfer from America to Europe, but it does not mean that Europe does not have its own HRM policies. It is widely accepted that HRM was initially popularised in the United States of America; they were the first who got into the field not only of management but also of human resource management and have developed hegemony in what the subject involves and what is good practice (Harzing & Ruysseveldt, 2004, pg. 172). HR is a rational process of managing people so people are of course managed within a context, for example, cultural, social, educational, political, religious, geographical, legal, and historical. Therefore, the process cannot be neutral everywhere; it is surrounded by cultural, social, and other norms characteristic of human behavior.

As we discussed the dissimilarities in the previous answer, we know that there are certain preferences, likes, dislikes, values, and socially accepted regulations and laws that tend to compel the attitudinal and behavioral patterns of the people living in their respective regions. There is economic integration of South-Eastern Europe into the European Union. Many countries (Wood et al., 2000) of the region are either in, or aspiring to join, the European Union; hence this process has conflicts with issues and growing pains related to moving from ‘old style’ / communistic forms of management processes into ‘modernized’ ones.

Since there is still a lot of work going on within the European Union (Harzing & Ruysseveldt, 2004) to co-ordinate practice, so it indicates that there lays a deep-rooted nature of the diversity which is the key element of Europe and HRM in Europe.

Despite the diversity of national management models up to the 1990s already existing forces pushing towards universal management standards; there was also a distinctly European perspective (Pudelko & Harzing, 2007) among the Western European countries to adopt the best practices that were in line with the particular European context.

No doubt that this is the era of globalization, so along with the cultural values and traditions, the management practices are also transferred from one place to another. Companies want to achieve their targets and goals, and for that, they adopt different strategies whether they are from their own country or culture or any other region around the world. The European Union, particularly through the European Social Charter and its associated Social Action Programme is having an increasing legislative influence on HRM (Brewster, 1995). Moreover, as compared to the United States, the governmental involvement in Europe is higher in social security provision.

No doubt that from region to region, there occur many differences in managing organizations. Although the differences raise many issues and hinder the organization to flourish and prosper, they must be coped up to make the most of the globalization process. Organizations have to contend with growing diversity in their managerial and professional ranks, both cross-nationally and intra-nationally (Tung, 2006).

The business trends of globalization and increasing ethnic and gender diversity are forcing managers’ attention to the management of cultural differences; (Cox & Blake, 1991) the management literature has suggested that organizations should value diversity to enhance organizational effectiveness. To manage the cross-national differences, there can be a culturalist approach or an institutionalist approach.

Talking about the culturalist approach, it is the researching and explaining the differences in organizations and human resources; whether they are rooted in the strong values, beliefs, attitudes, perceptions, or behavior of the people. Cultural values are deep-seated and enduring. They vary systematically (Warner & Joynt, 2002) among different societies; they depict what is acceptable in the organization and what is not; moreover, they predict inter-societal differences in economic performance.

Adopting this approach would be a great strategy to minimize the cross-national differences in the organizations. Since different countries have different cultures, and in those cultures they have different elements such as beliefs, values, assumptions, language, stories, rituals and ceremonies, and physical structures, so obviously it is not easy for MPS to flourish in the European countries as strongly as it is prospering the U.S. Assumptions represent the key part of the organizational culture because they are unconscious and taken for granted (McShane & Travaglione, 2003). MPS should adopt certain strategies such as organizational stories and legends that are most effective at communicating cultural values when they describe real people; in other words, role models must be developed and communicated to motivate the employees to imitate from them and act accordingly to achieve the goals.

Secondly, MPS should not coerce its American cultural values to the subsidiaries that are working in a different cultural environment in Europe. MPS should try to mingle and absorb the European countries’ atmosphere in its subsidiaries and act accordingly to the rules, regulations, laws, values, and ethics. It is very difficult to make other organizational cultures overwhelmed by our own, and it often results in unwanted consequences. The differences in the culture of the U.S and European countries must be mentioned clearly to avoid misconceptions and biases among the people. Culture should be made so strong that each and everyone would love to work and cooperate; moreover, culture is like social glue, (McShane & Travaglione, 2003) which bonds the people together and makes them feel part of the organizational experience.

Talking about the institutionalist approach, which is to comply with the norms because a wider formal system of laws, agreements, standards, and codes exists (Harzing & Ruysseveldt, 2004); moreover, people are forced either directly or subtly to follow such standards. It is a learned explanation of how actors and systems constitute each other reciprocally. The multiplicity is rooted in the institutions of vocational and general education and training, standard organizing practice, industrial relations, labor markets, social stratification and mobility, occupational profiles, relations between men and women. MPS has a weak hold in the European countries because the original norms are American so they are not as prevalent in Europe as in the U.S. It is because the formal laws, rules, regulations, and norms are quite different in the countries such as Sweden, France, and the U.K as compared to the U.S. They have their working environment, union relationships, language, appraisal systems, award systems, holidays, and market.

The institutionalist approach would be a difficult strategy for MPS to follow even if they use coercion against the subsidiaries. Jim Grant, in his report, tells the issues and problems in which he tells that the diversity of conditions in the subsidiaries result in the poor translation of the practices that are followed in the U.S. These include expatriate managers, industrial relations, management style, and the degree of control that the subsidiaries believe is being exerted over them. Working practices, languages, and degree of difficulty are also included. It is because the European countries have their own culture and laws, so if the expatriates would go and work there, they would face a lot of difficulties because neither they would agree to follow the European style nor their style can be implemented there completely. Expatriate failure seems to be regarded as something negative, mostly referring to issues relating to the expatriate himself/herself, and as well as the organizational inability to select the right candidate, (Christensen & Harzing, 2004). Moreover, the presence of expatriates enables the diffusion of standardized MNC practices because they act as cultural carriers, (Myloni, Harzing & Mirza, 2006).

After reading the case and above mentioned answers, we know that what policy Jim Grant has adopted is not working very well for MPS, especially in the European countries. Since the cultural norms, rules, and laws do matter for any person or any entity who is living overseas or conducting its business operations, so Jim Grant must understand the significance of the Culturalist approach and Institutionalist approach. By adopting the culturalist approach, MPS could define and explain the cultural differences to the subsidiaries and ask them to reduce them; but again it’s not easy because MPS is working in a different environment and it would take time to do so. But it can be done passively and slowly, through organizing rituals, ceremonies, developing role models, and signs and symbols. The actions of leaders are very important and they must be in line with their sayings. As we read in the case, the people of France, the U.K, and Sweden refused to comply with the cultural training and attitudinal sessions, so MPS must adopt a passive strategy mentioned above. MPS could also minimize the cultural differences in the working conditions by introducing culturally consistent rewards. Reward systems strengthen corporate culture when they are consistent with cultural values, (McShane & Travaglione, 2003). Organizational socialization is the concept that must be implemented to make the employees assume their role in the organization.

As far as the institutionalist approach is concerned, MPS should decrease the number of expatriates in the European subsidiaries. It is because the expatriates would face difficulty in adopting and obeying the laws, norms, codes, and standards of the European region. So if the number of expatriates decreases, MPS could run swiftly and smoothly because the new employees would not have difficulty in absorbing their culture; moreover, the violation of the laws and regulations would be avoided in those regions. Not only this, the institutional differences would be minimized along with the national traditions, and MPS could also build up sound industrial relationships with its competitors, suppliers, buyers, shareholders, etc. The recruitment process would be much easier because the expertise would know the strategies to recruit suitable and competent personnel who can benefit the organization and abide by the rights and regulations of both the region and the organization. In short, every organization must adopt the culture, rules, laws, and standards of the region where it is operating the business; without doing so, it would be a hard nut to crack and gain success.

Bibliograophy

1. Anne-Wil Harzing and Joris Van Ruysseveldt. 2004. International Human Resource Management.
2. Barbara Myloni, Anne-Wil Harzing, Hafiz Mirza. 2006. The effect of corporate-level organisational factors on the transfer of human resource management practices: European and US MNCs and their Greek subsidiaries. Accepted for The International Journal of Human Resource Management.
3. Brewster, Chris. 1995. Towards a ‘European’ model of human resource management. Journal of International Business Studies; First Quarter 1995; 26, 1.
4. Claus Christensen and Anne-Wil Harzing. 2004. Expatriate failure: Time to abandon the concept? Accepted for Career Development International.
5. Geoffrey Wood, Adrian Wilkinson, Alexandros Psychogios, Leslie T. Szamosi. Human Resource Management in the European Periphery The Situation in South-Eastern Europe. The International Journal of Human Resource Management.
6. Malcolm Warner and Pat Joynt. 2002. Managing across cultures: issues and perspectives. Edition 2.
7. Markus Pudelko and Anne-Wil Harzing. 2007. How European is management in Europe? An analysis of past, present and future management practices in Europe. Accepted for European Journal of International Management.
8. Markus Pudelko and Anne-Wil Harzing. 2007. The Golden Triangle for MNCs: Standardization towards Headquarters Practices, Standardization towards Global Best Practices and Localization. Accepted for Organizational Dynamics.
9. Rosalie L. Tung. 2006. Managing cross-national and intra-national diversity. Human Resource Management. Volume 32 Issue 4. Pages 461-477.
10. Steven McShane and Tony Travaglione. 2003. Organisational behaviour on the Pacific Rim. Australia. McGraw-Hill Australia Pty Limited.
11. Taylor H. Cox and Stacy Blake. 1991. Managing Cultural Diversity: Implications for organizational competitiveness. Academy of Management Executive. 1991 Vol. 5. No.3.