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SCANNING THE ENVIRONMENT OF HUMAN
RESOURCES MANAGEMENT IN EUROPE AND IN
THE U.S.: SO FAR AND YET SO CLOSE
Juan I. Sanchez
Florida International University
Handan Kepir-Sinangil
Marmara University
Common and unique themes representing the social, economic, political, and legislative
environment affecting the practice of human resources management in Europe in the
next five years were compared and contrasted to those affecting the U.S. Members of the
professional associations of industrial and organizational psychologists in the U.S. and
in Europe were asked to scan their environment. Although trends such as the incorporation of e-tools into human resource management and an increasingly diverse workforce were expected by both European and American respondents, the specific impact
of these and other factors was markedly different in these two areas. A primary factor
accounting for these differences between the U.S. and Europe was the drastic change
provoked by the integration of the current and future members of the European Community.
According to the emerging strategic role ascribed to the Human Resource (HR) function (Becker,
Huselid, & Ulrich, 2001; Ulrich, 1987), HR management practices should leverage organizational
capabilities in line with strategic objectives and environmental opportunities. One approach to identifying potential threats and opportunities is environmental scanning, which involves analyzing
social, economic, political, regulatory, and technological trends that can help anticipate sources of
threats and opportunities (Wright & Snell, 1991).
We describe herein a qualitative study of the environmental trends that would probably affect
HR management in Europe and in the U.S. in the next few years. Several authors have written about
the future trends that shall impact HRM (Cascio, 1995; Kraut & Korman, 1999; Pearlman & Barney,
• Direct all correspondence to: Juan I. Sanchez, Department of Management and International Business, Florida International University, University Park, Miami, FL 33199, E-mail: sanchezj@fiu.edu; Handan Kepir Sinangil, Marmara University, Faculty of Business Administration, Dept of Management, Göztepe, 80140 Istanbul (Turkey). E-mail:
sinangil@hamlin.cc.boun.edu.tr
The International Journal of Organizational Analysis, Vol 11, No. 2, 2003, pp. 153–160
ISSN 1055-3185
Copyright © 2003 Information Age Publishing, Inc.
All rights of reproduction in any form reserved.
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2000; Sanchez, 1994). However, the extent to which such trends converge across the Atlantic Ocean
remains virtually unexplored (Rubach & Sebora, 1998).
There has been a reciprocal influence between Europe and the U.S. in the field of HR management. For instance, corporate practices such as sensitivity training in the U.S. were highly influenced by Europeans scientists like Kurt Lewin; many U.S. corporations have patterned their
flex-time programs after the German model. The U.S. returned such influences to Europe when the
boom of the U.S. economy in the aftermath of WW II caught the attention of Western Europe, who
looked at the U.S. for innovative business practices.
Despite their mutual influences in their distant past, HR management in Europe appears to
have taken a separate path from HR management in the U.S. Due to a long-standing history of social
conflict, European HR management has focused on issues typical of cultures high on caring or
“feminine” dimensions such as employee welfare (Hofstede, 1984). In contrast, comparatively low
levels of unemployment and a highly mobile workforce have dictated a focus on employee performance in contemporary American HR management (Gannon, 1994). We argue here that globalization has leveled the playing field of HR issues facing both Europe and the U.S., which now share
similar environments in their role of leaders of the developed world in their respective geographical
areas. Our goal is to offer a blueprint for collaboration across the Atlantic by identifying mutual as
well as unique factors likely to affect the practice of HR management in the immediate future.
We asked HR experts to scan their environment in search of the factors that they deemed most
likely to influence the practice of HR management in the next five years. We relied on the membership of two professional associations of HR practitioners and academics, namely the Society for
Industrial and Organizational Psychology (SIOP) and its European counterpart, the European Association of Work and Organizational Psychology (EAWOP). Our results do not represent the views
of individuals affiliated with the many groups representing HR professionals, but they provide useful insights on the expert opinions of two major professional groups that, together, comprise approximately 8,000 members.
METHOD
Participants
A total of 150 SIOP members were randomly selected from the SIOP membership directory
as subject matter experts (SMEs) or potential respondents to our survey. A similar sample of 100
members of the EAWOP were asked to serve as SMEs. The response rate was 23% among SIOP
members and 35% for EAWOP members, thereby resulting in a final sample of 35 SIOP and 31
EAWOP members. The higher response rate for EAWOP members might be explained by the fact
that EAWOP has still fewer members than SIOP and, therefore, its members still maintain relatively
close ties with each other.
The SIOP sample covered members from a variety of States within the American Union, with
about 40% of the respondents from the East Coast, 20% from the Mid-West, 15% from the South,
15% from the Pacific Coast, and 10% from the Western-Rocky Mountains area . These figures were
in line with the percentages of members from these geographical areas in the U.S. as listed by the
1999 SIOP membership directory. The breakdown of EAWOP respondents by country was as follows (numbers of respondents are included in parentheses): Germany (2), The Netherlands (4),
Spain (4), Italy (3), U.K. (3), Croatia (1), Georgia-Tblizi (1), Finland (1), Turkey (10), Switzerland
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(1), Czech Republic (1). Thus, about 55% of the responses came from Western Europe, whereas the
remaining came from Eastern Europe, with a majority of those (about 29% of the EAWOP sample)
coming from Turkey. Overall, these two samples are obviously too small to be perfectly representative of their intended populations, and are even less representative of potential differences between
specific strata within these populations, such as Western vs. Eastern and Northern vs. Southern
Europeans.
A comparison of the U.S. vs. Europe was deemed appropriate because, in spite of the many
cultural differences that still separate European countries, the European Union (EU) is standardizing
the socio-economic environment across Europe. These homogeneous effects are being felt even
among Eastern European nations which, despite their not being Union members yet, are rapidly
adopting EU normative to pave their entry into the EU.
Procedure
Every individual in our sample frame was contacted via e-mail and asked to participate in the
survey. Responses were received from January to April, 2000. Respondents were encouraged to use
the reply option in their e-mail system. The specific text of the e-mail message was as follows:
Please describe up to five (or more if you wish) important social and economic factors affecting the practice
of human resources management in your country or region in the next five years. These factors may involve
demographic and population changes, inflation rate, trade, competition, technology, political and legislative
changes, and others (please briefly explain why you expect each one of the factors to impact the practice of
our profession).
RESULTS AND DISCUSSION
All answers were content-analyzed by the authors to identify trends impacting the HR profession in
the next five years. As expected, themes differed somewhat between the European and the American sample, but many common themes were observed as well. We decided to classify the themes as
follows:
1.
2.
3.
common themes that were brought up in Europe and in the U.S.,
themes that, despite being observed in both continents, took a different shape in each one,
and
unique themes that emerged in only one of the two continents.
Table 1 presents a list of the themes as well as the number and proportion of respondents who
brought them up. Because of the small sample sizes and the qualitative nature of this study, we simply eyeballed the responses from Europe versus those from the U.S. instead of computing significance tests.
Common Themes
Globalization. Respondents from both continents opined that globalization would continue
to put pressure on organizations to remain competitive. However, Europeans seemed more concerned about competition from abroad than Americans, judging from the number of times that they
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Table 1
Themes Impacting HRM in the 2001-2005 Period
U.S.A.
Freq1.
p2
Europe
Freq.1
p2
13
10
.42
.32
2
.06
3
8
.10
.26
5
.16
10
5
3
5
.32
.16
.10
.16
Common Themes
Globalization & competition
Information/communications
technology
Full economy & low
unemployment
Customer orientation
Mergers/acquisitions & joint
ventures
Flexible work & telecommuting
9
20
.26
.57
7
.20
1
1
.03
.03
1
.03
Globalization & competition
Information/communications
technology
Full economy & low unemployment
Customer orientation
Mergers/acquisitions &
joint ventures
Flexible work &
tele-commuting
Common Themes with Different Shapes
Diverse work force
Aging work force
HRM as an unknown field
Basic skills & economic
disparities
Electronic recruitment &
selection
11
5
2
8
.31
.14
.06
.23
Diverse work force
Increasing no. of women at work
Younger work force
HRM as an emerging field
13
.37
Marginalization & social breakdown
2
.06
Impact of electronic HR
3
.10
5
.16
10
2
.32
.06
2
.06
2
.06
Unique themes
Commitment & “new
employment contract”
Healthcare cost
7
.20
Privatization
2
.06
European integration
Organizational obedience & and
indoctrination
Organizational religious, political, &
ethnic identity
High inflation
1Frequency or number of respondents who brought up the theme.
2
Proportion of respondents within Europe or within the U.S. who brought up the theme. n = 35 and 31 for U.S.A. and Europe, respectively.
brought up this issue. Eastern Europeans often brought up the need to be customer-oriented, probably owing to the still novel free markets in that part of the world.
Eight European respondents brought up mergers, acquisitions, and joint ventures, whereas
only one American respondent mentioned them. HR practitioners in the U.S. have complained about
being excluded from the planning of mergers and acquisitions, and therefore it is possible that this
issue is not as salient to them as it is for their European counterparts. Whether European corporations are more amenable than U.S. corporations to include the HR function in the planning and execution of mergers and acquisitions warrants further study. A different kind of change in corporate
governance was envisioned by Western vs. Eastern Europeans; whereas Western Europeans
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expected local companies to merge and become larger entities, Eastern Europeans expected that
many of the large companies previously associated with a socialist state will split into smaller and
“leaner” corporations.
Impact of Technology. The U.S. has been accused of being a country obsessed with technology. Our data appeared to confirm this impression because Americans brought up the theme of
information technology twice the number of times than did Europeans. Of special concern was the
impact of e-commerce and electronic communications on HR practices (e.g., virtual teams, access
to knowledge, changes in the manner in which employees are trained, privacy issues). A European
respondent suggested that coaching via electronic media may become a growing field for which HR
practitioners need to prepare.
Labor Markets. Respondents indicated that a situation of virtual full-employment like the
one that the U.S. recently went through calls for training instead of selection, which is unlikely to be
effective when selection ratios are close to unity (i.e., the number of applicants is almost equal to the
number of openings). In addition, respondents in both Europe and the U.S. noted that a shortage of
qualified workers demands additional recruitment efforts. One American respondent said “The job
market in developed countries is all but dried up.” Concerns about wage escalation and retention of
key talent were brought up by Americans. Interestingly, only Western Europeans in highly developed countries like the Netherlands seem to be concerned about the consequences of full-employment, probably due to the fact that full-employment is far from being a reality in many Eastern and
Southern European countries.
Flexible Work. Tele-commuting and flexible work were themes brought up more often by
Europeans than by Americans. It appears that recent legislative changes freeing the restrictions on
temporary work are still shocking Europeans, who are used to more stable forms of employment.
One of the European respondents expressed concern about how temporary work “reduces HR practices traditionally devoted to worker improvement and career development.”
Common Themes with Different Shapes
Workforce Diversity. Diversity within and between nations was deemed important in both
the U.S. and Europe. Several respondents noted that the study of cultural influences on organizational behavior, including qualitative studies, will become a critical issue world-wide. American
respondents opined that diversity management needs to be redefined beyond gender and ethnicity,
including diversity of clients and linguistic diversity. The “simple one-shot training course” that
characterizes many diversity interventions fails to address the problem, according to an American
respondent.
Europeans saw diversity as directly related to profound differences among European nations
in terms of not only culture, but also religion and national identity. As noted by a respondent, the
flux of non-European immigrants in the labor market is radically changing the demographic landscape of Europe’s workforce.
Turkish respondents pointed out that the increasing number of women entering the workforce
at professional and upper-level management jobs might clash with Muslim traditionalism. Interestingly, one of these respondents noted that privatization of government enterprises may be counterproductive for top-level females, who used to find a relatively discrimination-free environment in
the public sector.
The concerns about an aging workforce expressed by respondents in the U.S. contrasted with
the projections about a younger workforce in Turkey. One of the Turkish participants noted that,
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with a limited number of jobs available and unemployment on the rise, whether or not the younger
generation can be fruitfully incorporated into the economy remains to be seen.
Professional Identity. The frustration of American HR professionals (e.g., “nobody knows
what we can do for them”) had a contrast in the raise of HR in Europe. A respondent from Spain
noted that many bridges of cooperation have been built among HR professionals throughout Europe
in the last two decades. Most of the comments characterizing HR as an emerging field came from
Eastern Europe, where organizations appear eager to adapt their human resources to a competitive
environment. A respondent from one of the former soviet republics noted the pressing needs for culturally-sensitive human resources instruments and procedures such as selection systems. The same
person echoed the concern about the potentially deterring role of managers socialized in the
old-school of communism that has been expressed elsewhere (Luthans, Peterson, & Ibrayeva, 1998;
Luthans, Stajkovic, & Ibrayeva, 2000; McCarthy, Puffer, & Naumov, 2000).
Compensation and Marginalization. Americans expressed more concern about economic
disparities than did Europeans. Specifically, Americans emphasized differences in compensation
packages between top executives and other employees, because the latter are being asked to become
cross-functional and do more for less. Americans tended to express concerns about the “skills gap”
between job demands and available applicants, whereas Western Europeans were more likely to
refer to cultural marginalization (probably due to the influx of immigrants). A European respondent
suggested that unskilled workers were more employable in the post-industrial economies of the past
than in today’s high-tech environment.
Electronic HR. Americans highlighted the role of technology in HR practices more often
than did Europeans. Most responses referred to the use of electronic media in selection and recruitment, and some mentioned e-tools in the context of gathering survey data, performance information,
and feedback. Associated with this trend were concerns about security and privacy of information.
Europeans, in contrast, referred to the impact of the Internet on virtual teams. It is conceivable that
pan-European electronic selection faces an important obstacle in the different employment practices
and employment laws that still separate European nations.
Unique Themes
Employee Benefits. Americans noted that increasing healthcare costs will impact human
resources policies, especially with an aging population. Europeans on the other hand did not seem
overly concerned with healthcare costs, probably because healthcare is nationalized in virtually all
European countries. Echoing a concern expressed by American participants, a respondent from Finland suggested that the Scandinavian countries would struggle to support the pensions of increasing
numbers of elders in their population.
Employee Loyalty. Americans brought up the issue of commitment and the “new employment contract.” A respondent indicated that, with decreased job security, workers will become more
interested in maintaining employability through on-the-job training and self-improvement. It was
also noted that the physical distance separating workers in virtual teams will foster a “free-lancer”
mentality, thereby diminishing feelings of commitment and identification with the organization.
Although Europeans seemed equally concerned about today’s rapid pace of change at work, their
preoccupation referred to management changes due to primarily the privatization of state-owned
enterprises (e.g., Dutch railways). These drastic changes were especially salient to Eastern Europeans, who expected modern human resources practices to play an increasingly important role in
post-socialist countries. Whether these economies will go through with their planned transitions to
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free-markets or perhaps retreat to statization remains to be seen (McCarthy, Puffer, & Naumov,
2000).
Job Security. Downsizing seemed to preoccupy Americans more than it did Europeans,
who were in turn more concerned about high unemployment and inflation rates (especially in Eastern Europe). Although legislative changes in Europe are relaxing the ease with which employers
may engage in massive lay-offs, it appears that employed Europeans still feel a relatively high
degree of job security, notwithstanding their concerns about job creation. Legislative changes were
also expected in the area of hiring and dismissing employees, which would be made easier in an EC
that appears willing to relax the provisions of the welfare state so that it can remain globally competitive.
European Integration and Cultural Identity. A uniquely European theme was the issue
of integration into the European Community (EC). This trend was particularly important for Eastern
Europeans aspiring to join the EC. Several European respondents noted how the development of
Euro-standards and norms will affect not only human resource practices, but also the education and
certification of human resource professionals.
Turkish respondents expressed concerns about the extent to which local corporations will
have to renounce to their religious and ethnic identities in the face of pressure from western companies. Giving up to foreign investors was also thought to pose a threat to the environment. Turkish
respondents foresaw a potential conflict due to the clash between western practices and fundamentalist religious movements with harsh attitudes towards females and ethnic minorities. This kind of
religious conflict may also appear in other European nations with large Muslim populations such as
Albania and Kosovo, and in Western European countries with large numbers of Muslim immigrants
such as France, Germany, and Spain. Conflict need not originate from Muslim fundamentalists; in
fact, it may be instigated by the anti-immigrant feelings towards newcomers of the prevailing
non-Muslim population. When adapted to these European idiosyncracies, diversity awareness programs such as those employed in the U.S. may yield fruitful results.
Two European respondents expressed concerns about what they labeled "organizational
indoctrination," the organization as a cult, and organizational obedience and control. Such “brainwashing” was said to follow from increasingly popular business practices that include high barriers
to entry, “campus-like” employment sites that include accommodation provisions, and humiliation
for anyone who fails to toe the company line.
CONCLUSIONS
As expected, our survey suggested that globalization is bringing similar challenges to the HR profession in Europe and in the U.S. Respondents from both sides of the Atlantic Ocean believed that
globalization and information technology would continue to increase competitive pressure. Not surprisingly, several of the issues raised by U.S. respondents were also raised by respondents in the
most highly developed countries of Western Europe, such as the disparities between social classes
and between natives and immigrants, and the shortage of qualified workers.
Each region also faced unique challenges. For instance, Eastern Europeans were primarily
concerned with the obstacles that interfere with the need to adjust their HR practices to free markets
(e.g., “old-school” managers trained under communism, a workforce lacking in customer orientation). Nevertheless, perhaps the most insightful responses to our survey came from Eastern Europe,
thereby suggesting that HRM professionals in that area are ready to face the challenge. Respondents
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in the U.S. foresaw rapid changes in HR practices due to e-business practices. On the other hand,
both Western and Eastern Europeans saw the European integration process as a major issue affecting HR. We hope that the trends uncovered here will help clarify the common and the unique challenges faced by HR professionals in Europe and in the U.S., thereby facilitating a mutually
beneficial cross-fertilization of ideas across the Atlantic.
Acknowledgment: The authors wish to acknowledge Hildur E. Bjorgvinsdottie for her assistance
with the e-mail survey.
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