2 Different types and levels of context
Differences between the following contexts cause variation in HR practice:
- clusters of countries
- industry sectors
- organisations within the same sector
- parts of organisations.
Differences between clusters of countries
Analysts have noted patterns which show similarities of employment policies and practices among Mediterranean countries, which differ from Scandinavian countries, which in turn differ from Rhineland countries (Germany and related northern European countries) which are different again from Anglo-Saxon countries.
A striking example of differences in employment practices across countries is found in the vibrancy of the small- and medium-sized German companies known as Mittelstand. These companies, many of them family owned, invest for the long term, are export-oriented and invest in their workers and their machinery. They are often contrasted with Anglo-Saxon practices which seem more short term in their outlook and which rely on City finance.
Activity 4: The strength of the Mittelstand companies
Watch the short video ‘Mittelstand’ and then listen to the radio clip ‘Lessons from Germany’s Mittelstand’. From both sources make notes on your own thoughts about what lessons managers from other countries might draw from these cases.
Transcript: Lessons from Germany’s Mittelstand
What do you think drives the differences between German and UK approaches?
Now listen to the interview which takes place in the studio and compare your answers to the points made by the expert guest.
Transcript: The differences in approach between German and UK mid-sized companies
The answer is indicative of the complexity of content explored in this course. The drivers include a mix of industrial policy, culture, the way companies find the finance, employment laws, the apprenticeship system and other factors. There is also some uncertainty about the extent to which it is possible to cherry-pick selective elements without adopting the full package. This reflects the point discussed earlier about the interplay between contextual variables.
Differences between countries
Within the clusters there are also differences between countries. For example, within the Anglo-Saxon cluster, there are differences between American HR practices and those in the UK. Both in turn differ from the practices in Australia.
Labour laws and the ways in which they are enforced or ignored are one important example of differences between countries. These laws are not static, they are also subject to change with industrial policy and in response to changes such as membership of trade areas like the European Union. A shift to a more open, free labour market in the UK, along with complex and prevalent outsourcing and sub-contracting arrangements, led to tensions such as those described in the video below, which discusses the use of contract workers at Total Oil refinery.
Transcript: Total Oil refinery
The lack of training and the reliance on an opportunistic use of highly mobile, temporary, contracted labour forces illustrated by this video shows a marked contrast with the long-term employment system characteristic of the Mittelstand companies described above.
Differences between industry sectors
Employment and HR policies and practices are usually very different in professional service firms when compared with manufacturing firms or public sector employment. For example, levels of unionisation tend to be much higher in the public sector compared with private sector organisations.
Differences between organisations in the same sector
Even in the same industry sectors, although there are often some similar patterns, different firms may pursue different HR policies. Often this reflects different HR strategies matching different business strategies. So, a company in engineering or in customer services, which seeks to position itself at the high-value added end of the market, will often invest in its staff and take care in their recruitment, training and development, engagement and reward. Conversely, a company in the same industry competing on low cost is likely to adopt very different HR policies and practices and may adopt a low-pay and low-employment security approach to its labour management and offer little, if any, training.
Differences between parts of organisations
Even within the same organisation, the context for the HR practitioner to consider may vary considerably. For example, the employment policies such as recruitment criteria, reward systems and performance management regimes vary dramatically between the investment banking divisions of the major banks and their retail divisions.