HRM in Germany

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In Germany, wages and working hours are the exclusive territory of the labor unions in a system of regional, industry-wide bargaining. Although unionization in German worklife has dropped considerably since the 1970s, and in 1994 was down to 30 percent, over 90 percent of the workforce is covered by collective bargaining agreements (Economist, 1997; see also Scholz, 1996). In addition, attention should be drawn to the elaborate German system of co-determination, which is regulated at the plant level by the Works Constitution Act of 1972 and at the enterprise level by the Works Constitution Act of 1952, which was extended in 1976 (cf. Hollingsworth, 1997). As a consequence of this legislation, employers need to maintain positive relations with the works councils. These are powerful, employee-elected bodies that are legally entitled to co-determination, consultation, and access to important information, and hence restrict the degree of managerial autonomy (Wachter and Stengelhofen, 1995; Scholz, 1996).

The generally substantial size of German personnel departments is primarily a response to the detailed legal rights enjoyed by the works councils, which at any time can demand written information on any aspect of personnel policy and veto changes in working hours, training agreements, recruitment of personnel, and disciplinary procedures (Bennett, 1997). The role of the personnel department is in general largely restricted to providing such information and to ensuring that the firm is not in breach of any of the numerous regulations that constitute national employment law and agreements.

Hence, the primary task of the personnel department is to engineer highly formalized and standardized procedures as well as to supervise and implement the comprehensive collective bargaining agreements with the unions. Thus, in the case of Germany, personnel managers and departments have to cope with the burden of a comprehensive and detailed legislative regime, which in turn leads to a highly operative focus that is expected to inhibit the use of collaborative practices.

It is this narrow, operative focus, Wachter and Stengelhofen (1995) argued, that largely prevents any large-scale adoption of more recent international human resource management practices in Germany. As they pointed out, a German parallel to or a direct translation of the term
human resource management does not even exist. This is not to say that various calculative techniques associated with the rational HRM model are completely absent, but their potential use has invariably been subject to the critical eye of the works councils (Lane, 1994; Marginson and Sisson, 1994). In large measure, these councils have also sought to preserve the strong traditions of social welfare that have characterized employers’ treatment of their human resources. Thus, for example, numerical flexibility is largely alien to the German context. Firms seeking such flexibility have tended to shift labor- intensive operations to foreign locations, with 25 percent of manufacturing companies having relocated production abroad in the period between 1993 and 1996 (Financial Times, 1996b).

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