New Challenges for European Human Resource Management

This book is about developments in the area of Human Resource Management (HRM) in public and private organisations in European countries. The basic data used for the chapters in this book were collected within the Cranfield Network on European Human Resource Management (Cranet-E). What was originally called the Price Water-house Cranfield Project and began in 1989 with five countries is now a research network consisting of 20 European and five non-European countries trying to analyse HRM issues in a national, cross-national and (quasi-)longitudinal way. The network, which is co-ordinated by the Centre for European Human Resource Management at Cranfield School of Management in the UK, consists of HRM experts from a leading business school or university department in each of the participating countries. Further details can be found at the web-page of Cranet-E (http ://www.tu-dresden.de/wwbwlpew/cranfield/index.htm). These colleagues work together to collect comparable data from the senior Human Resources (HR) person in a representative cross section of organisations in each country in order to analyse and understand the similarities and differences they identify in that data. So far there have been four major rounds of the survey with more countries involved in each round: over 20 000 responses have been collected including over 6000 in the latest round. Full details of this research are given in Part VI on ‘Research in Comparative Human Resource Management’ and we have avoided repeating these details here or in any of the other chapters. Table 1.1 highlights the history and the development of Cranet-E.

For some time now Europe or, more precisely, the European Union has been heatedly discussing the reasons for its loss of competitiveness on the world economic scene. Many diagnosticians agree that the lack of labour flexibility is one of the basic causes. But despite numerous studies on the subject, one continues to wonder whether ‘labour flexibility’ means the same thing to everyone and what is the true purpose of all this discussion.

In this chapter the topic of job rotation will be dealt with in three steps. It is first necessary to give an introduction to the field of labour flexibility, define the term job rotation, and distinguish it from other forms of flexibility. Secondly, the relevance of job rotation in European companies will be looked at. The third step will be a statistical analysis of whether job rotation in European enterprises tends more to represent a solitary short-term instrument or whether on the other hand the implementation of job rotation is accompanied by a more long-term oriented integration of personnel strategies.

Flexible working patterns have been the focus of considerable comment and much controversy for some years. The spread of what the European Union refers to as ‘atypical’ working patterns is now widely recognised and is a key issue for personnel specialists across Europe. It is a subject which has also been attracting the attention of senior line managers, trade unions, national governments and the European Commission, as well as academics. Much of this discussion has focused on the issue of managerial policies: whether the growth in flexible working mainly reflects structural changes and is a by-product of changes in the labour market or is the result of purposeful managerial choice, an aspect of strategic approaches towards HRM.

Various authors suggest that with reference to the organisation of labour a new era has come (Bridges, 1994; Gamst, 1995; Halcrow, 1997; Handy, 1995 Lefever and Broecks, 1997). In the past organisations could only deal with variations in demand using technical unemployment and temporary employment. Nowadays, organisations have a lot more flexibility to deal with these fluctuations. As the environment is getting more complex and changes are occuring more rapidly, organisations are faced with the issue of how to cope effectively with those changes and in which manner personnel management can stimulate flexibility. Flexibility can take so many shapes. Talking about flexibility is talking about atypical working arrangements, which means labour that is different from labour based on an employment contract for an indefinite period of time, full time, in the day-time, and on the usual working days. It seems that the traditional employment contract or the traditional full-time, long-term job in which the employee has to work a fixed amount of days a week or a fixed amount of hours a day a month, doing a well-defined job for an indefinite period of time, is under review again. Hence, it is being argued that flexible working practices could make organisations more versatile. Flexibility is regarded as one of the most important tools in the tough worldwide competition.

The purpose of this chapter is to broaden our understanding of those factors which condition the use firms make of HR strategies aimed at enhancing their ability to respond flexibly to an increasingly changing environment. In particular, we will focus on the variations made by firms in their pursuit of greater levels of numerical flexibility. The main thrust of our argument is that such pursuits will not simply be a rational, firm-based response to market conditions, but will not least be a product of the institutional context within which firms are embedded. In order to test this proposition, developments in Norwegian and British firms will be compared.

In the past decade, especially in Northern countries of the European Union, some major changes have occurred regarding labour matters. The conventional and legal framework regulating employment has become more flexible as new patterns of employment have gained popularity. Part-time work, one of the oldest and most common forms of flexibility, has shifted from involving unqualified women to qualified men and women, while a number of other flexible working patterns involving contract, place and pay flexibility have emerged.

An organisation’s human resource development (HRD) system is a key mechanism for enabling the achievement of business goals through what has been argued to be one of the few remaining sources of competitive advantage (Pedler et al., 1988) — namely, people. It is also closely linked to national contextual factors. As such, the political and educational system play an important role in determining the types and levels of skills available in the labour market as well as in shaping national values and approaches to training and development issues. National context can therefore be considered a key predictor of organisational HRD practice. However, globalisation has introduced many changes, one of which has been the increasing presence of foreign multinationals (or MNEs) in host countries. Under such conditions, there is a need to compare the role of the host-national context to that of the parent in shaping MNE management practice.

The last decade — with its emphasis on organisational culture, experiential learning, managerial competence, strategic HRM, the learning organisation, etc. — has changed the demands and expectations to management development, as well as the methods and techniques by which these demands and expectations are met. This has a great impact on the role and effectiveness of so-called high-flyer programmes in organisations, as these programmes are anchored in the organisational setting. New developments have appeared in the following areas:

As far back as 1960, Kerr et al. argued that there was a logic to industrialism which would lead to greater convergence, with, in particular, technological and economic forces bringing about greater similarities in industrial relations systems. This debate on the transformation of the industrial relations systems of different countries in response to the internationalisation of markets, technological innovations and increased workforce diversity has been the focus of much research in industrial relations in the last decade (Locke et al., 1995). In Europe in particular, according to Gunnigle and Roche (1995), the analysis of industrial relations practices and policies has never been so closely tied to an appreciation of commercial, national and international political pressures. The challenges to traditional or established industrial relations arise from such major forces as intensified international competition, changes to the structure of product and service markets, European integration and new approaches to the management of manufacturing technologies. However, the response to these pressures is not the same in every country. Rather, according to Locke et al., (1995, p. 158) employment relations ‘are shaped in systematic and predictable ways by institutions which filter these external pressures and the [decisions] of the key actors. Patterns of adjustment in countries that have a history of strong centralised industrial relations institutions tend to follow an incremental, negotiated pattern and aim to achieve results that balance the interests of different social groups and economic interests’.

Early discussions of management gave little emphasis to communication. Although it was implicit in the management function of command and the structural principle of hierarchy, Luthans (1992) argues that the early theorists never fully appreciated its significance or fully developed or integrated it into management. More recently, since the concept first came to prominence in the early 1980s, communication and consultation with employees has held a central place in the discussion and practice of human resource management. The European Union’s Work Councils Directive has brought the debate on communication and consultation into even sharper focus. It requires the establishment of employee work councils in organisations with 1000 employees or more in any member state and with 150 employees or more in each of at least two member states. As we write, the European Commission is exploring the notion of national works councils being made mandatory in all countries of the EU. Today, the popular literature promulgates the notion that in the high performance organisation, information is a tool, not a privilege. The overarching philosophy is that everyone in the organisation must have access to the maximum amount of information that is reasonable for them to assimilate, understand and utilise.

The aim of this contribution is the analysis of HR policies in European organisations. It will pursue the question of whether organisationspecific variables have a major influence on the formulation of HR policies or whether country-specific circumstances bear more responsibility.

This chapter examines some of the key challenges faced by Bulgarian organisations in the HRM area during the transition from a centralised planned economy to a market one. It therefore offers an analysis of the changing nature of HRM which is accompanying the other major social and economic changes characteristic of Bulgaria.

There are extensive reports of major changes in methods of management and employment policies throughout industrialised countries during the 1980s and the 1990s. Intense international competition and the internationalization of labour markets have reportedly encouraged innovations in the way work is organized and the way people are deployed and managed (Sisson, 1989; Blyton and Turnbull, 1992; Storey, 1992; Sparrow et al., 1994; Kitay and Lansbury, 1995; Locke, et al., 1995; Centre for European Human Resource Management, 1997). It has been argued these changes constitute a new approach to the management of labour. This approach has been labelled ‘human resource management’ and it is said to have replaced a ‘personnel management’ and /or an industrial relations approach to management (Mahoney and Deckop 1986; Dowling, 1990; Beaumont, 1991; Guest, 1991; Storey, 1992).

The management of an international research network covers all areas that are well known in cross-border activities in the business field. Handling diversity, making use of economies of scale, dealing with cultural differences, working in multicultural teams, or balancing overall goals and local needs are some of the typical issues. However, international research networks cannot be equated with multinational companies. The networks differ in multiple ways: they have little or no formal and legal structure, less clear goals, and no profit orientation; their members have a greater degree of personal freedom due to a lesser degree of economic dependence (on the network) and the lack of position hierarchies, their members also work in small local units often consisting of only one or two persons and have to divide their attention between this and other activities such as teaching or additional research projects.