HR across Europe is slowly becoming more like its UK counterpart, and shares many of the same people challenges. But there remain stark differences, both cultural and legal, as Scott Beagrie reports.
One of the things that attracted Suzanne Deery to her role as human capital leader of central and eastern Europe at professional services firm PricewaterhouseCoopers (PwC) was that she could make a difference.
“While you feel you can make a difference in a UK firm, it’s actually quite hard as an individual to do so,” she says. “But I’ve been in this region for four years now and I can see the difference both in terms of the appetite for change and what we’ve been able to achieve.”
Deery certainly can’t complain that her job lacks challenge. PwC has one executive board for the whole region, so when a decision is made it has to be implemented across more than 26 countries. “It is a hugely culturally diverse region, with some countries having a history of conflict: Russia and Georgia, for instance, were fighting against each other not so long ago.”
As you might expect, HR practices are more developed in western Europe than in some eastern European countries, where the profession is still establishing itself, but moving steadily away from HR positions being held by individuals in administrative roles to a need for real professionals.
Deery adds that the global recession is helping to elevate the function because of the focus on people-related issues, such as the use of flexible options to retain staff, as well as getting fit for the future upturn. “HR is really playing its part in that and helping explore what options are available,” she says.
HR managers across Europe are dealing with many of the same issues as their peers in the UK. As well as improving retention, performance management, career development and employee engagement are high on the agenda. A decade ago, the big issue for HR was the war for talent and how organisations could attract and retain people. The recession has shifted the focus to finding the right people.
“Where to access talent is probably the biggest single HR issue that happens to exist across the whole of Europe, and the talent pool is increasingly coming from different places,” says Paul Wesley, HR director of psychometric testing firm SHL, which has local offices throughout most of western Europe and also in eastern Europe.
He adds that in eastern and southern Europe, the access to talent is changing “very quickly”, and the challenge for HR is to understand where the talent pools are and “really lock into them”.
“The ability to differentiate between people is more important now as businesses haven’t the luxury of recruiting people who are not going to perform. We don’t have an issue in attracting people – we have an issue in attracting the right people and making decisions about which of those people are going to perform.”
The eastern territories of Europe have several unusual challenges, not least because of the legacy of the former socialist approach in many of those countries. Deery and her team are currently working on a reward strategy across the region and, as she explains, not all the countries are familiar or comfortable with the concept of variable pay, preferring certainty.
“They’re a little bit wary of promises but this is something that we feel can be really beneficial for us as a region,” she says. “We need to adopt a different approach, but with a lot of consultation and explaining we will hopefully achieve a positive end result for the business and for our people. If I was operating in the UK, people would tend to be more familiar with these kinds of things.”
There are inevitably a huge amount of cultural challenges that vary from country to country, and even company to company. Wesley highlights the differences between multinational and local companies, and says the culture of the former is often driven by the business itself as opposed to local cultures. He adds that HR in multinationals tends to be more globally developed and well-developed, whereas HR in local businesses can be variable.
“Some of it can be good, but some of it can be pretty bad,” he says. He also notes other variations as you travel through Europe. “In the Nordic region, people are far more willing to talk about HR issues – people issues are much more interesting to them,” he says. “In southern Europe, people issues are lower down the agenda. This is often because HR is not a particularly well-developed function and line managers tend to manage a lot of the people issues themselves.”
Another rationale for this is that as many European countries have paternalistic societies; managers, therefore, are more used to dealing with people issues.
Overall, though, Wesley feels businesses can place too much emphasis on the variations between people management practices here and in Europe, and suggests the chief differences stem more from a legal perspective than an HR one. He nevertheless acknowledges that HR in the UK is far more developed. And perhaps as a mark of this, he says, the function in the UK will most commonly have a seat on the board. While this is also common in France and Spain, it rare in Germany, where typically HR would report to the financial director, and rarer still across eastern Europe.
As far as employment legislation goes, logically there should be a high degree of convergence of issues and themes right across the EU member states, as a great deal of legislation has common roots, but the way it is implemented in each country can make it appear quite different.
Suzanne Horne, associate at law firm Morrison & Foerster, has been involved in policy harmonisation exercises across Europe and says it is always advisable to get country-by-country advice rather than try to interpret yourself. “This is because how the directives have been implemented can result in quite a variation in terms of approach,” she says, citing maternity leave as one example. “In the UK, if you qualify, you have the potential for a woman to be off for 52 weeks, whereas if you go to Germany they are only entitled to maternity leave for 14 weeks. I don’t think people would necessarily be aware of the gross difference in approach.”
Horne adds that HR professionals working across Europe also need to be aware of the emphasis on collective bargaining and, in countries such as Germany, the importance of the role of works councils. If a company has five employees or more, then they must consult with the works council. Moreover, if it has more than 100 employees and is making changes or involved in the transfer of undertakings and hasn’t consulted with a works council, any termination of employment could be declared void.
“Whereas in the UK what tends to happen is that the company makes up its mind and goes through the information and consultation exercise with whoever is the elected representative, but that decision still stands,” says Horne. She adds that in countries such as France and Germany in particular, you can’t assume the ‘contract is king’. “If you are doing business or trying to be compliant with employment laws in France and Germany, you need to have an eye on not just the contract but the relevant collective bargaining agreement, because quite often that will set at least the minimum entitlement that someone will have.”
Also be alert to legal idiosyncrasies that are difficult to foresee, advises Wesley: “We were looking to dismiss a person in Germany recently, and we did everything absolutely to the letter of the law, but the signature of the financial director who signed the letter was not the same length as her name when it was written out, so the dismissal was invalid.”
It might be easy to assume that the system of employment rights and benefits in eastern Europe is not as developed as the UK, but Horne says that Poland, for instance, has extensive rules and regulations and advises UK HR practitioners working in these countries not to underestimate this fact. “The perception that we in the UK are legally sophisticated compared to everywhere else is wrong,” she says.
Similarly, Deery warns against giving the impression that UK HR always leads the way. When she first arrived in eastern Europe, she found herself slipping into using phrases such as “in the UK we did this” – an alienating approach that she describes as the “kiss of death”. In reality, this was more down to the knowledge and best practice-sharing culture that exists in PwC.
“I hate reinventing the wheel, and if we were starting a major project it would be normal to find out what is happening elsewhere in the firm and look at best practices in Europe, the UK, the US and Australia, for example,” she explains.
And it seems sharing works both ways, as the firm’s central and eastern Europe division was first to implement a consistent approach to performance and talent management. “We have sometimes managed to do things before others because we have the advantage of having one regional board firmly committed to a one strategy and the achievement of a high performance culture,” she says. “We’ve managed to put an approach to performance management across the whole region that is consistent. The UK is also doing that now across all its businesses.”
European working hours: a snapshot
According to the UBS Prices and Earnings Survey 2009, cities across Europe enjoy the shortest annual working hours of anywhere in the world. On average, employees work 1,745 hours a year in western Europe and 1,834 hours in eastern Europe. The global comparison indicates that people in Lyon and Paris spend the least amount of time at work: 1,582 and 1,594 hours per year respectively. The most working hours in western Europe are in the Swiss cities and in Athens.
Employees are entitled to a statutory minimum of 25 days’ annual leave per year and 13 public holidays. Paid maternity leave is 16 weeks at 100%, rising to 26 weeks for a third child. The minimum wage, set by government, is €8.82 (£7.93) an hour or €1,189 (£1,069) per month.
Employees are entitled to a statutory minimum of 24 days’ annual leave per year and 10 public holidays. Paid maternity leave is 16 weeks at 100%. There is no minimum wage but workers are protected by collective agreements.
Employees are entitled to a statutory minimum of 20 days’ annual leave per year and 11 public holidays. Paid maternity leave is 28 weeks at 69%. The minimum wage, set by government following negotiation with social partners, is €443 (£398.42) a month.
Employees are entitled to a statutory minimum of 25 days’ annual leave per year and 11 public holidays. Paid maternity leave is 480 days at 80% followed by a flat rate for 90 days. As with Norway, Finland and Denmark there is no minimum wage but the countries are heavily unionised and agreements are reached collectively.
HR earning power: UK v Europe
HR directors can earn a maximum of €180,000 a year, while HR managers or business partners can earn up to €120,000, according to 2009 survey by recruitment consultancy Robert Walters. HR advisers with three to five years’ experience can earn €40,000-€55,000.
The same survey shows that HR directors can earn a maximum of €180,000, while HR administrative officers can earn up to €85,000. Specialists in compensation and benefits and training and development can earn maximums of €150,000 and €120,000 respectively.
The minimum earnings for HR directors is upwards of €85,000, while HR managers can earn up to €120,000.
Benchmark HR salaries in the UK with Celre salary data, part of the XpertHR group, at www.xperthr.co.uk/job-pricing/price-a-job