HR in European Union

OCTOBER 23, 2010

in HUMAN RESOURCE MANAGEMENT

Over the past two decades the separate countries of the former
European Community (EC) were unified into a common market for
goods, service capital and even labor called the European Union (EU)
Tariffs for goods moving across borders from one EU country to another
generally disappeared and employees (with some exceptions) now find it
easy to move freely between jobs in the EU countries. The introduction
of a single currency – the Euro has further blurred many of these
differences.

Companies doing business in Europe must adjust their human resource

policies and practices to both European Union (EU) directives as well as
to country specific employment laws. The directives are basically EU
laws the objectives of which are binding on all member countries
(although each member country can implement the directives as they so
choose). For example, the EU directive on conformation of employment
requires employers to provide employees with written terms and
conditions of their employment but these terms vary from country to
country. In England a detailed written statement is required, including
things like rate of pay date employment began, and hours of work.
Germany doesn’t require a written contract, but it’s still customary to
have on specifying most particulars should the job and conditions of
work.

The interplay off directives and country laws means that human
resources practices must vary from country to country.

Minimum EU wages: Most EU countries have minimum wage systems in

place. Some set national limits. Others allow employers and unions to
work out their own minimum wages.
Working hours: The EU sets the workweek at 48 hours, but most
countries set it at 40 hours a week; and some like France, implemented
a 35 hours workweek

Employee representation: Europe has many levels of employee

representation. In France for instance employers with 50 or more
employers must consult with their employees’ representatives on matters
including working conditions, training, and profit sharing plans and
layoffs. In Italy all employers with 15 or more employees must consult
with their work councils on internal work rules and the working
environment. By 2008most companies – including all those with 50 or
more employees in the EU – must inform and consult employers about
employee related actions, even if firms don’t operate outside their own
countries borders .And the consultation will then be ongoing rather than
just or major, strategic decisions.

Termination of employment: There are a wide range of required notice

periods when dismissing employees in Europe. They range form none in
Spain to two months in Italy.

HR abroad: China

All terms in China must deal with national issues including relatively
scarce employment services and an increasingly active union
movement. However, how they deal with these issues depends to a
large extent on the ownership of the firm. State owned enterprises use
fewer modern human resources management tools than do giant
Chinese multinationals like Lenova, for instance. There are therefore
wide variations in HR management practices among companies in China
and between Chinese and Western firms. For example

Recruiting

Because of governmental migration and other constraints it is

surprisingly difficult to recruit, hire, and retain good employees. Sporadic
labor shortages are fairly widespread.
In recruiting in China, employers should know that recruiting
effectiveness depends to a great extent on non-recruitment human
resource management issues. Employees are highly career oriented and
gravitate toward employers than can provide the best career
advancement training and opportunities. Firms like Siemens China, with
impressive training and development programs have the least difficulty
attracting good candidates. Poaching employees is a serious matter in
China. The employer must verify that the applicant is free t sign a new
employment agreement.

Selection

The dominant employee selection method involves analyzing the

applicant’s resume and then interviewing him or her.

Appraising

Employee appraisal is particularly sensitive to the cultural realities in

China.

Compensation

Although many managers endorse performance based pay in China,

many employers to preserve group harmony make incentive pay a small
part of the pay package. And as in other parts of Asia, team incentives
are advisable.

Human resources management practices tend to differ from country to country. One long term study helps to illustrate
this. Beginning in the 1990s human resources management scholars from 13 countries and regions used the Best
international Human Resources management practices surveys to assess human resource management practices
around the world , the results provide a snapshot of the differences ad similarities in a wide range of countries. We’ll
look at some of the next:

Personnel Selection Procedures:

Employers around the world tend to use similar criteria and methods for selecting employees. As in the United States,
employers around the world usually rank personal interviews. The person’s ability to perform the technical
requirements of the job and proven work experiences in a similar job at or near the top of the criteria or methods they
use. The top rankings were the same or similar in the United States. Australia and Latin America for instance,
Cultural differences did have some impact across countries; however In Mexico having the right connections was a
top consideration in being hired. Employees tests were one of the three top selection practices the People’s Republic
of China, Indonesia and Korea but not in the United States. And the person’s ability to get along well with others
already working here was one of the three personnel selection criteria in Japan and Taiwan but not in other countries.

The Purpose of the performance appraisal

There tend to be more variation in how employers in different countries use performance appraisals.

For example employers in Taiwan, the United States and Canada rank to determine pay as one of the top three
reasons for appraising performance, while that purpose is of relatively little significance in Korea and Mexico
.Employers in the United States , Taiwan, and Australia emphasize using the appraisal to document the employee’s
performance while in Mexico and the People’s Republic of China this purposes is far down the list .To recognize
subordinate was main purposes for appraisals in Japan and Mexico but nowhere else.

Training and Development Practices

The amount of training firms provide varies substantially from country to country. For example, training expenditures
per employee range form a low of $241 per employee in Asia (outside Japan) to $359 in Japan and $724 in the
United States .Similarly the total hours of training per eligible employees per year ranges from 26 total training hours
in Asia up to just over 49 total hours of training per year in Europe.

However when it comes to the purposes of training there are usually more similarities than differences across
countries employers just above everywhere rank to improve technical abilities is the main reason for providing
employees with training.

The use of pay incentives

Findings regarding the use of financial incentives were somewhat counterintuitive. Given the People’s Republic of
China’s communist roots, and the traditional US emphasis on pay for performance one might have expected US
managers to stress incentives more heavily than their Chinese peers. However, that was not the case. Based on this
survey in terms of their use, incentives play an only moderate role in US pay packages. In the People’s Republic of
China, Japan, and Taiwan incentives play a relatively important role.

Owners of small businesses are not immune to global differences lie these. The When you’re on Your Own feature
illustrates this.

How to implement global HR systems

Given such cross cultural differences in human resource management practices, one could reasonably ask Is it
realistic for a company to try to institute a standardized human resource management system in all or most of its
facilities around the world. ? A study suggests that the answer is yes. In brief the study‘s results show that employers
may have to defer to local managers on some specific human resource management policy issues. However, in
general findings also suggest that big inter-country policy differences are often not necessary or even advisable. The
important thing is that the employer needs to understand how to install its preferred human resource policies a
practice globally.