UNIVERSITY OF ABERTAY DUNDEE BREAKING BARRIERS Managing Across

UNIVERSITY OF ABERTAY DUNDEE : BREAKING BARRIERS Managing Across Cultures Managing in European Countries – Germany and the Netherlands 1/15/2022 1

Hofstede – Germany u u u Among the lower power distance countries Direct and participative communication style, dislike of control, leadership is challenged Individualistic Masculine – driven by competition, achievement and success Slight preference for uncertainty avoidance Pragmatic country – ability to adapt to changing conditions 2

Hofstede – The Netherlands u Low power distance – employees expect to be consulted u Individualist society u Femininity – supportive management, decision making achieved through involvement u Preference for avoiding uncertainty u High long term orientation score pragmatism 3

PART 4 B 4. 2. The Germanic Approach (Germany and the Netherlands) 4. 2. 1. Introduction u u The Germanic approach incorporates the management system and employment policies that are practiced in Germany and the countries around it, including the Netherlands, parts of Belgium and Switzerland even parts of Turkey because of historical, economic and labour relations factors. Germany and the Netherlands have common management policies and practice despite some of their socio-economic and political differences. Historically, especially in the Middle ages, there was no difference between the Dutch and the Germans as they were all part of the Pennsylvania Dutch. The word ‘Netherlands’ or the ‘low countries’ (Les Pays Bas) was known as ‘low Germany’ and was referred to as ‘Nederland’. The English word for German was 4

4. 2. 2. The Socio-Economic and Political Context u u u Economically, both are industrialised countries with advanced economies. Both have limited natural resources – heavily dependent on the importation of raw materials from non-European countries. Both - dominant international presence through their international trade relations and the high volume of investment by their multinational companies in the world market. Both – highly sensitive to international trade, changes in world markets and international competitive forces German economy is dominated by large industrial organizations but the majority of the workforce is employed by a fast growing number of small and medium sized enterprises (SMEs). The Netherlands is one of the major producers and exporters of agricultural products in the world. It is the third in the world in the export of agricultural products, after the USA and France. 5

4. 2. 2. The Socio-Economic and Political Context u Politically, both Germany and the Netherlands have u Culturally democratically elected governments. Germany - has an elected president and a Chancellor and all policies and laws are made by the two chambers of elected representatives. Consists of 16 federal states. The Netherlands is a democratic constitutional monarchy, similar to a great extent to the Kingdom of Belgium. - Both share distinctive norms, values and codes of behaviour - Both countries people are known for being very well organized ordering their time, punctual and have very high respect of time. - Known for their religious and social tolerance, and for their emphasis on self-realization, high moral values and freedom of expression. u The Dutch in particular are known for their liberal and 6

4. 2. 3. Labour Market Trends u u u Germany is the most populated country in Western Europe with more than 82 m inhabitants and has a workforce of more than 43 m workers (Eurostat, 2009) The Netherlands is a small country with a population of about 17 m people and a workforce of about 8 m workers. In overall, the labour markets of both countries are characterized by: l l l A significant level of employment in the industrial sector; A well educated and skilled workforce; A relatively low level of unemployment in general – Germany 09/15 – 4. 5%, Netherlands – 09/15 – 6. 8% Both countries – increased youth unemployment A rise in youth unemployment particularly in the Netherlands due to lack of skills and lack of opportunities for vocational training and apprenticeships Germany – provision of subsidies to employers to hire unemployed people 7

4. 2. 3. Labour Market Trends (cont. ) l l l Equal opportunities and diversity in employment. In both countries – discrimination is forbidden by law. A comparatively low level of women participation in employment [Until the 20 th century the role of women in German society was confined to three Ks: Kinder (children), Küche (kitchen) and Kirche (church)] Germany - Govt has introduced incentives to employers for promoting work life balance and family friendly employment policies. This has resulted in an increase in the number of women working part time Netherlands – implemented a plan to promote the participation of women in the labour market. Promotes equal pay Netherlands – female participation in the labour market is one of the highest in Europe 8

4. 2. 4. Management and Organization u u The Germanic approach to management is more of a production model and is described by Eichenberg and Wiskemann (1997: 125) as an integrated model where ‘each manager has responsibility for the personnel function and obtains advice specifically related to a particular situation, should the need arise’. In overall, the Germanic approach to management, which includes the Dutch employment policies and practices, is characterized by: l l l A shared responsibility for people management; 80% of HR departments involve line managers in their activities NB. HR manager does not have a prominent role on the Board of Directors Line managers – responsible for training Middle managers – run day to day operations and implement strategic decisions A strategic awareness of the needs of employees and the organization – links to company led continuous training and promotion of flexible working practices 9 to

4. 2. 4. Management and Organisation (cont. ) l l l Participative and empowering approach to management Employee involvement in decision making (codetermination) through works councils A production oriented approach; Formalized relationships Legally binding agreements; Quality improvement initiatives 10

4. 2. 5. Recruitment and Selection u u u The process of recruitment and selection in Germany and the Netherlands is more regulated than that of the Anglo. Saxon countries. STATE CONTROL - In Germany, the Federal Labour Department exercises a monopoly on the allocation of labour and is responsible for the labour market policies at the federal level while the local labour offices of the individual states are responsible for employment at the local level. However, since 1994, private employment agencies have been allowed to help companies to recruit employees externally and this has reduced the labour market monopoly of the federal labour agencies. In the Netherlands, all employers are obliged to comply with the Privacy Code of Conduct for Recruitment and Selection which was introduced in 2004. Job analysis and human resource planning is carried out by most of the large organizations of both countries. 11

4. 2. 5. Recruitment and Selection RECRUITMENT u u The works councils play a significant role in the recruitment process. Recruiting from external sources is considered only when internal recruitment or transfer are neither viable nor available. Jobs are normally advertised in targeted newspapers and the internet. Many companies recruit directly from universities and colleges. SELECTION u u u A number of tests such as aptitude, intelligence and personality tests as well as interviews and assessment centres are used but the most commonly used method is the interview. The works councils have the right to decide on the content of the tests or the interview questions. – ELEMENT OF CONTROL Most of the German companies restrict themselves to a two-step selection procedure that starts with the evaluation of application and then interviewing the 12

4. 2. 6. Training and Development u u u u Both countries – employers expected to have training plans and provide training opportunities – linked to skills improvement Long and short term official leaves of absence are provided for employees training Germany spends more than 70 billion euros per annum on education Netherlands – spend between 3% and 5% of their annual wage bills on training and development Germans and Dutch are highly educated and literate. In Germany, for example, more than 80 % of the population had completed at least upper secondary education by 2000 (Eurostat, 2002). The Germans value both general and vocational education and pay serious attention to the development of transferable skills from the education system. Germany and the Netherlands – vocational training is part of the general education system 13

4. 2. 6. Training and Development (cont. ) u u In both countries vocational training is part of the general education system. It is a joint venture between the employer and the state, and comprises of a combination of on-the-job training and theoretical back up in the classroom, leading to the award of nationally recognized certificates. In Germany when employees are recruited, they sign a training contract as apprentices. A significant number of apprentice-trained employees get the chance to be trained for higher-level positions as supervisors or technicians (Finegold, Wagner and Mason, 2000). Management development in Germany and the Netherlands, as in Japan, unlike the USA, does not require managers to have an MBA Availability of MBA programmes in both countries is limited 14

4. 2. 7. Rewards and remuneration u u u In both countries, rewards and remuneration are normally based on national/federal and local collective agreements. Both countries have a compressed wage distribution where the ratio between the top and the low levels of pay is around 2. 5 percent which is low in comparison with other industrialized countries such as the UK with 3. 4, the USA with 4. 5 and France with 3. 08 (OECD, 2001). Germany – statutory minimum wage introduced in January 2015 In the Netherlands there is a statutory minimum wage that is set through collective agreements each year in line with inflation. In both countries, employees enjoy a variety of benefits and allowances that are becoming more performance related than collectively agreed. Performance related pay increasingly used in both countries. Used in Germany for clerical staff. The 15

4. 2. 8. Employee Relations u u Employee relations in both countries are characterized by social partnership. All employee relations’ issues are dealt with in line with the EU regulations and agreed collectively between the social partners – MUTUAL BENEFIT. Trade unions take a more cooperative approach with management and tend to focus on employee welfare and working conditions issues. Their objectives go beyond the workplace to include activities such as economic planning, technological change & adult education activities. Works councils - Most American companies sceptical of work councils Germany and Netherlands – Use of collective bargaining 16

4. 2. 8. Employee Relations (cont. ) u u Industrial action (strikes) is permitted by law but restricted to issues of employee relations only. Unlike France and the UK strike action in Germany and the Netherlands is very low. The settlement of industrial disputes depends on whether the dispute is one of interest or one of right. Disputes of interest are referred to voluntary mediation (Schlichtungsverfahren). Dispute of right is through negotiation and arbitration, then by resorting to industrial action, the case is referred to the labour courts. 17

4. 2. 9. Conclusion The labour markets of both countries are characterized by a significant level of employment in the industrial sector, a well educated and skilled workforce, a relatively low level of unemployment in general, a rise in youth unemployment, equal opportunities and diversity in employment, a comparatively low level of women participation in employment, an ageing population of employees, and an increasing population of immigrant workers. Management in both countries is characterized by a shared responsibility for people management, a strategic awareness of the needs of employees and the organization, a production oriented approach, formalized relationships, legally binding agreements, quality improvement initiatives, and employee involvement in decision making (codetermination) through works councils. 18

4. 3. 10. Selected Reading u u u u u Bernstein, R. (2006), ‘A quiz for would be citizens tests Germans’ attitudes’, New York Times, March 29, 2006). Destatis (Federal Statistical Office) (2004), in http: //www. destatis. de/presse/deutsch/pm 2004/p 0940042. htm, visited 13 February 2007 Dietz, B. , Hoogendoorn, J. , Kabst, R. and Schmelter, A. (2004), ‘The Netherlands and Germany: Flexibility or Rigidity? ’, in Brewster, C. , Mayrhofer, W. and Morley, M. (eds. ), Human Resource Management in Europe: Evidence of Convergence? , Elsevier-Butterworth/Heinemann: London Eichenberg, S. and Wiskemann, G. (1997), ‘Personnel management’ in Neeves, N. and Kelly-Holmes, H. (eds. ), The European Business Environment -Germany’, Thomson Business Press: London Eurostat (2007), Europe in Figures – Eurostat yearbook 2006 -07, The EC Federal Statistical Office (2004) in http: //www. eiro. eurofound. europa. eu/2004/06/feature/de 0406107 f. html, accessed on 26/10/2006). Fürstenberg, F. (1998), ‘Employment relations in Germany’ in Bamber, G. J. and Lansbury, R. D. (eds. ), International and Comparative Employment Relations, Third edition, Sage: London, Chapter 8, pp. 201 -223 Muller, M. (1999 a), ‘Enthusiastic Embrace or Critical Reception? The German HRM Debate’, Journal of Management Studies, Vol. 36, no. 4, pp. 465 -482 Muller, M. (1999 b), ‘Human Resource Management under Institutional Constraints: The Case of Germany’, British Journal of Management, Vol. 10, No. 3, pp. 31 -44 UNPF (United Nations Population Fund) (2006), State of the World Population 2006. 19