A blueprint for Europe

If you think your job is difficult, spare a thought for Jussi Itavuori, who
is having to harmonise the work cultures, pay structures and HR practices of
multiple businesses around the world. But the whole of European business could
end up benefiting from his labours. DeeDee Doke reports

Jussi Itavuori knows all too well the challenges of harmonising national and
corporate cultures, laws and work practices into a single, cohesive,
co-operative universe. As the first group HR director of the multinational,
multi-company conglomerate, the European Aeronautic Defence and Space Company
(EADS), Itavuori’s responsibility could be likened to that of creating a HR
strategy for a united Europe.

A decade ago, Itavuori saw the harmonisation of European social legislation
as "a threat and a straitjacket – more of a straitjacket for business than
a positive development for Europe". Now, however, as he leads HR for
Europe’s largest aerospace and defence group, he admits to a new perspective.

"My problem is that we [EADS] are much further in European integration
than Europe or European legislation."

With more than 100,000 employees worldwide, with most based in France,
Germany, Spain and the UK, EADS may not yet be a familiar name to the public at
large, but its aerospace brands certainly are – companies in which it is either
the major partner or the sole owner include Airbus, Eurofighter and Eurocopter.
In the UK, EADS formally agreed on 30 January 2003 to fully acquire BAE
Systems’ 25 per cent share in space technology company Astrium, adding 2,000
employees to its existing UK workforce of 10,000. In 2002 EADS’s turnover was
£19.8bn.

A Finn, Itavuori joined EADS from lift manufacturer KONE in September 2001,
14 months after its formation through the merger-integration of a triumvirate
of leading European aerospace companies: France’s Aerospatiale Matra, Germany’s
DaimlerChrysler Aerospace (Dasa) and Spain’s CASA. A vision for the future
corporate culture had already been set, and the merger teams had steadily been
putting into place prescribed measures to build a new operational framework. On
joining, Itavuori realised he had at least a four-pronged mission:

– defining and implementing a concept of HR as a function within EADS

– defining and organising the original companies’ corporate business
academies

– developing and establishing the new European industrial relations practice

– harmonising managerial compensation and benefits.

The top two alone would be enough to keep HR teams employed full-time in a
company based in one country, but the latter pair are proving to be
particularly challenging, considering EADS’ transnational, transcompany nature,
as well as the passionate loyalty to each member company and the products they
created.

For HR especially, Itvuori believes the process of becoming a truly European
company has many depths and layers, "and I don’t think people always
recognise what it really means", he says.

As EADS steadily cuts through the jungle-like foliage of issues and
bureaucracy that blocks the path to corporate harmonisation, he easily
identifies the European social legislative issues he wishes were resolved:
taxes, labour law, pensions and benefits such as profit sharing.

The typical multinational does not have as deep a need for harmonisation, as
it will not have been built on the premise of integrating such a great variety
of different individual cultures, in terms of nations, corporate and products,
he says. "We have to question the level to which we harmonise our ways of
working, our ways of compensating people and things like that. We must also
recognise that Europe is still made up of national countries and legislations.
Being a truly European company means you need to deal with that."

He compares the challenges of harmonising industrial relations within an
European company to the mind-churning folly of trying to match up the
multi-coloured layers of blocks on a Rubik’s Cube. "It is a
headache," he admits. "We have the new layer, which is the European
layer, and then you try to change it, and then everything else changes."

Nevertheless, progress is being made. And one example is the establishment
of a European work council within EADS.

Describing the pan-national council as "very active", Itavuori
says that, so far, the organisation is following in the path of the
constructive relationships enjoyed with various unions in France and Germany by
EADS forebears. In addition, sub-committees have been formed that serve as work
councils for various business units such as Airbus and Eurocopter.

"We have the European, national, business unit, and local levels,"
Itavuori says.

Further, in France and Spain, for instance, five trade unions are
represented throughout EADS enterprises. "So you can draw a rather complex
matrix on these things," he says. "Germany is a bit easier because
you have more or less one major trade union which takes care of quite a lot.
The UK is a different ballgame because the industrial relations tradition is
very different from continental Europe. In the UK, it’s much less formal and
less guided by the system of work councils that operate in continental
Europe."

One of the latest efforts involves organising a work council for Astrium.
"This involves organisational restructuring as well," Itavuori says,
"but we probably will have the work council before we have the legal
structure for the companies, which is actually part of the process in that
respect. We want to establish these platforms to discuss issues with our trade
unions on the European level and we do them either through the legal structures
or set them up informally."

"The most important thing," he continues, "is that we have
the platforms to discuss; we have full agreement with the trade unions on
this."

Harmonising pay and benefits

Under Itavuori’s leadership, the fourth key area of early HR priorities – harmonising
compensation and benefits – has also moved on. One is element is the
harmonisation of the contractual structure for the company’s top 1,000
executives and managers, meaning that all enjoy, for instance, the same salary
structure of variable and base pay. "The pay is not necessarily
harmonised, but the structure of the pay is," he says.

The top people are classified in three categories with varying percentages
of variable pay per category and by country, with a "very aggressive"
focus on achieving that predates Itavuori’s arrival and is linked to EADS’
ambitious profit goal (see box opposite). "It’s very results
orientated," says Itavuori. "Variable pay has been pushed strongly,
and it has been pushed by a harmonised structure."

Describing the intricacies of introducing such a performance management
culture to a multicultural environment is a separate story altogether, he says.

"There are deep cultural differences between French and German
performance management," he says, "and pay philosophies where
sometimes people are paid because of the individual, and elsewhere because of
their status or job."

Since 1 January, Itavuori has taken a seat on EADS’s executive committee – a
move described by the company’s joint chief executives as "highlighting the
strategic importance" of HR. It’s nothing new to Itavuori, who was the
longest-serving member of KONE’s executive committee before joining EADS.
Still, he believes a growing recognition of HR’s strategic importance is
especially welcome at EADS, where the company histories could have produced a
different result.

"It has happened, but I am also saying that it is not finished,"
he says.

"For a lot of HR people who have spent most of their careers with an
administrative and industrial relations focus, this is a big change. The new
demands for HR are more business-orientated, and that’s a challenge."

www.eads.coma

EADS’s Company CV

Created in July 2000 through
the merger-integration of Germany’s DaimlerChrysler Aerospace (Dasa), France’s
Aerospatiale Matra and Spain’s CASA.

Dual corporate headquarters in Munich and Paris

Employees Nearly 110,000
employees worldwide                                                                                                         

Locations Most in France, Germany, Spain and the UK

Official language English

2002 turnover £19.8bn

Profit goal 10 per cent for EADS as a whole and for each
business unit before 2007 (Originally targeted for by the end of 2004, but
amended because of the downturn in the aerospace market)

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