TABLE OF CONTENTS
CHAPTER
I. REVIEW
OF LITERATURE
German Work
Attitudes and Hofstede’s Five Dimensions
German Work Attitudes and
Robbins’ Three Levels
German Culture and Work Attitudes
II. HUMAN
RESOURCE PLAN
Assumptions
Business Structure and Description
Motivation, Involvement, and
Recognition Theories
Recruitment, Selection,
Training, and Performance
Compensation, Incentives,
Benefits, and Safety
Work Organization and Design
Quality and Workspace Design
Employee Rights and Discipline
Power, Politics, and Organizational
Culture
Timeline for Implementation
APPENDICES
APPENDIX A: Organizational Chart and Employee Benefits
APPENDIX B: Floor Plan
REVIEW OF LITERATURE
German Work Attitudes and Hofstede’s Five Dimensions [top]
Germany has a small power distance. Personal independence would be considered an ideal component of adult behavior. Germans would prefer to work for decentralized companies with flat hierarchical lines and few supervisors. They would prefer narrow top to bottom salary ranges and appreciate younger bosses more than older ones. “Subordinates [would] expect to be consulted before a decision is made that affects their work, but they [would] accept that the boss is the one who finally decides” (Hofstede, 1997, p. 36). Excessive privileges and status symbols for managers would be frowned upon and high-skilled manual work would carry more status than low-skilled office work.
Germany has strong uncertainty avoidance. Germans would resist change, since anything different would be viewed as dangerous. They would take time to process requests and directions, get permission from as many people as possible, and issue formal documents for everything. They would need to be busy, work hard, and have rules for emotional structure. They would be naturally precise and punctual. Their culture would be one of implementing rather than innovating, because innovation would require too much change of their finely tuned methods. Thus, Germans would suppress ideas that would “rock the boat.” They would be motivated by security, esteem, and a sense of belonging.
Germany is an individualist society. In order for work to be meaningful the organization’s interests would have to match the employee’s self-interests. Germans would expect to undergo regular performance appraisals and would prefer informal, face-to-face, ongoing reviews. They would be very good at mass production because they would work efficiently together and everyone would be extremely quality-conscious.
Germany is a masculine society. Men and women would be equal and tough, but men would generally be the leaders. “Organizations [would] stress results, and…reward it on the basis of equity” (Hofstede, 1997, p. 93). Managers would be assertive and decisive. They would gather facts and suggestions but make decisions on their own rather than being “group discussion leader[s]” (Hofstede, 1997, p. 94).
Germany has a short-term orientation. Germans would feel strong pressure to “keep up with the Joneses” even if it meant overspending. They would save and invest very little. They would emphasize the past and present, have a strong respect for tradition and fulfilling social obligation, and be distressed if publicly humiliated.
German Work Attitudes and
Robbins’ Three Levels
German workers would be highly specialized and autonomous. They would want to be consulted in decision-making but would prefer that a formal leader had the final say. They would prefer specific directions, seek the most efficient means of accomplishing their job objectives, and be motivated by meaningful rewards linked directly to their performance and expertise. They would have low absenteeism and turnover rates because of their need to work hard and tendency to stay in their chosen profession.
Work teams would be effective if each member was able to maintain individual identity and not sublimate that identity to that of the team. Rewards would take the form of pay raises, bonuses, promotions, and increased vacation time. Vroom and Yetton’s Consultative II management style would probably be most effective, and managers would fulfill four basic roles: liaison with top management, troubleshooter, conflict manager, and mentor. Training would be necessary, especially in team concepts and change management, because those would be weaknesses for many Germans.
The simple business structure would be the most effective organizational model, given the proposed size of the subsidiary. Germans would prefer work areas that provide a sense of containment without being completely compartmentalized. They would desire job enrichment opportunities, flexible work schedules, and flexible benefits. They would expect formal and informal evaluations of individual and team performance. An effective organization would utilize the flexible manufacturing system so that the highest skilled workers could be hired and the highest level of technology utilized in the design and production process. Germans would function best in an organizational culture that is quality-conscious, production-oriented, and that maintains substantial written rules (needed for emotional structure but not necessarily to be followed).
German Culture and Work Attitudes [top]
Hill (1994) notes Germans are driven to perfection, which often inhibits the development of their creative and social skills. An international consultant states “’People don’t question their manager, they just do it!’” (Hill, 1994, p. 35).
Hill suggests four practical ways to minimize cultural faux pas:
- Address them formally until given permission to use first names
- Do not patronize or tell them what their objectives should be
- Give specific directions and let them process it without requiring a rapid response
- Expect them to be aloof until a solid relationship has been established
A consultant explains the German culture: “’You have a discussion, agree to a solution, and that’s it! It’s set in concrete. There’s no further discussion, they go away and do it’” (Hill, 1994, p. 165).
Peterson (1993) notes “German society places a strong value on the rights of workers and the guarantee of certain social benefits for the workers” (Peterson, 1993, p. 97). Germans tend to stay in their chosen profession, placing great emphasis on quality and professional expertise. Most are skilled artisans and have studied both the theoretical and practical aspects of their work. Most enter long apprenticeships so mentoring would appeal to them. Formal performance appraisals are conducted every three to five years, which explains why Germans consider face-to-face informal appraisals more meaningful. They are accustomed to receiving annual bonuses. Employees are recruited through newspaper advertisements, professors’ recommendations, and universities and vocational schools. Interviews are the preferred means of selection and are usually supplemented by letters of recommendation, school records, and telephone references. Most training takes place on-the-job through both company- and INSEAD-sponsored training programs.
Harzig and Ruysseveldt (1995) suggest that German managers appear to be more motivated to achieve objectives than obtain power. Hierarchical lines of authority are usually followed. Sherman et al (1998) state that German workers average 33 - 55 DM ($15 - $25 US) per hour, including benefits. These figures are substantially higher than in other European countries and denote the German professional expertise. Large, powerful labor unions in Germany control employee rights and compensation. The writer will have to identify the implications of the European Union and labor unions upon hiring practices and human resource management.
HUMAN RESOURCE PLAN
The Greenfield Start method of international expansion will be utilized in the organization of German Handmade. The company will be privately held and will be unique in that it will not be tied to any national bank. The company’s culture will become a combination of German values and Awesome Crafts’ practices. Company resources will be substantial and readily available. The Human Resources Director will have the freedom to offer highly competitive salaries and unusual benefit packages to attract and retain employees. German Handmade will hire the highest skilled employees (union and/or non-union) and will practice fair and consistent treatment of employees, respect their rights, and compensate them well above the national average. A charismatic, task-oriented German CEO will have already been hired to oversee German Handmade. The HR Director and the other American Directors will have established close relationships with the CEO and will already be learning much about German culture from her.
Business Structure and Description [top]
The German Handmade facility will be located in Munich. The company’s mission will be to produce five lines of exceptional handcrafted gifts for international export. The company will be modeled after the simple organization structure. It will have a flat hierarchical system, be fairly decentralized, and have a single chain of command, high work specialization, wide control spans, and low departmentalization. It will be substantially formalized, but the rules will act as emotional structure for the employees rather than stringent impositions upon their behavior. Policy manuals relating to employee rights, behavior, and production will be put in place.
German Handmade will be managed by a host-country CEO and American Directors of Human Resources, Marketing, and Operations. The workforce will consist of 75 host-country managers, specialists, and artisans. The CEO will employ an assistant. The Marketing Department will employ an e-marketing specialist and a public relations specialist. The Human Resources department will employ a benefits specialist and a hiring specialist. The Operations department will employ five managers, who will each facilitate a 13-member work team. The company organizational chart can be found in the Appendix A on page 17.
Motivation, Involvement, and Recognition Theories [top]
German Handmade will utilize a combination of Vroom’s Expectancy Theory and Locke’s Goal-Setting Theory to motivate its employees. The reason for utilizing aspects from both theories is that Germans are independent workers who need to have rewards tied to their own performances and that the process of setting and achieving goals is natural for them. The combination of the two theories will provide maximum motivation. Management by objectives (MBO) will also be utilized because it relates closely to Locke’s Goal-Setting Theory. One exception is that managers will not arbitrarily set the artisans’ goals, because doing so would be counterproductive as Germans prefer to set their own objectives.
Employee involvement will be fostered through participative management. German workers are highly skilled and very capable of understanding production issues. They will be able to contribute effectively to organizational decision-making, especially as it applies to processes. Managers will function primarily as mentors and coordinators of their team’s functions and will ensure limited social loafing. In its use of participative management, German Handmade will intentionally rub against the cultural grain of German managerial style.
Spot bonuses, performance reviews, and the “beat the performance goal” program will be the primary means of recognizing employees. Spot bonuses and the “beat the performance goal” program will be defined in the next section.
Recruitment, Selection, Training, and Performance [top]
German Handmade will recruit employees through advertisements in national newspapers, professors’ recommendations, and on-campus university recruiting. The HR Director and her staff will locate and hire highly educated, skilled workers who possess both German drive and unusual creativity. The interview will be the main method of selecting high quality employees and recommendations from professors or managers will be required, as will school records and telephone references. Every candidate’s first interview meeting will be with the CEO and Directors to gather information, tour the facility, and sense the German Handmade culture.
The assistant to the CEO will be hired first, followed by Human Resource specialists and Marketing specialists. Candidates for these positions will be selected from the resume pool and will take the Myers-Briggs Type Indicator (MBTI) at an off-site assessment center with which German Handmade contracts its pre-hiring assessment. Candidates possessing appropriate personalities for the respective positions will be invited to attend an additional meeting. The second will be with the HR Director and the appropriate department Director, and will include the actual interview. The two Directors will make a hiring decision at the conclusion of the second meeting.
Operations managers will be hired next. Candidates for these positions will be selected from the resume pool and will take the MBTI as well as the American Management Association’s (AMA) Management & Leadership Profile (MLP). They will also undergo a technology familiarity assessment at the off-site assessment center. The HR Director and her staff will attempt to, without discriminating, hire male and female managers in their 30s and 40s who possess the patience to share information, the ability to trust others and give up authority, and an understanding of when to intervene in conflict. Candidates possessing the appropriate personality, style, and skills will be invited to attend two additional meetings. The second will be with the three Directors, participating in a group discussion of management practices. The final meeting will be with the HR Director, Operations Director, and hiring specialist, and will include the actual interview. The two Directors and hiring specialist will make a hiring decision at the conclusion of the third meeting.
Artisans will be hired last. Candidates will be selected from the resume pool and will take the MBTI and undergo a skills assessment at the off-site assessment center. Candidates with the appropriate personality and skills will be invited to attend an additional meeting. The second will be with the HR Director, Operations Director, hiring specialist, and managers, and will include the actual interview. The two Directors, hiring specialist, and managers will make a hiring decision at the conclusion of the second meeting.
Employees will participate in on-site INSEAD-sponsored training programs that will address identified areas of improvement. Managers will be trained in the areas of teambuilding, creativity, leadership methods, mentoring, and technology familiarity. Specialists and artisans will be trained in the areas of teamwork, creativity, and technology familiarity. Experienced artisans will mentor young artisans on their team.
Careful selection practices, above average pay, pleasant working conditions, individual and group empowerment, flexible no-cost benefits, and outstanding incentives should produce satisfied, productive employees. Fair practices, pleasant working conditions, and frequent demonstrations of employees’ value to management should produce high performance and satisfaction along with low absenteeism and turnover.
Formal individual reviews will be conducted every two years, utilizing the 360° approach. Informal, face-to-face reviews will be conducted continuously in accordance with the HR Director’s belief that mistakes should be corrected when they occur and praise should be given immediately when spectacular performance is witnessed.
Employees will be encouraged to work together through the implementation of the HR Director’s “beat the performance goal” program. It is an employee recognition program that repeats itself each fiscal quarter. Managers work with their teams to facilitate the setting of group performance goals. When the team achieves those goals, the manager and team members receive one paid day off during the next quarter. The program operates four times annually and is intended to combat the German tendency toward highly specialized independence.
A positive performance review will result in a pay increase, promotion, and personal technology products. A negative review will initiate a three-step approach to improving performance:
- Face-to-face confrontation and assessment of the low performer,
- Immediate, individualized goal-setting session with his/her manager, then
- Re-evaluation after two weeks.
If performance has not increased, the employee will be warned. Steps 1 through 3 will be repeated, if the evaluation is still negative the employee will be terminated.
Compensation, Incentives, Benefits, and Safety [top]
Directors’ annual salaries will range from 382,000 – 545,800 DM ($175,000 - $250,000 US), managers’ annual salaries will range from 174,600 – 262,000 DM ($80,000 - $120,000 US), specialists’ annual salaries will range from 98,200 – 163,700 DM ($45,000 - $75,000 US), and artisans’ annual salaries will range from 65,500 – 109,100 DM ($30,000 - $50,000 US). Pay will be based upon education, experience, education, skill, and performance. There will be no hourly employees and piece-rate pay will not be used because German Handmade reinforces quality over quantity. All employees will receive a variable Christmas bonus along with an annual salary-based bonus (usually at least one month’s pay) tied directly to their performance. Managers will have discretionary use of 55, 110, and 220 DM ($25, $50, $100 US) spot bonuses to reward superior team behavior, performance, or quality.
All employees will use the same parking lot, cafeteria, and restroom facilities in order to promote accessibility to top management. Directors and managers will not be provided company cars but will receive auto allowances. A list of the outstanding incentives available to employees can be found in the Appendix A on page 17.
Flexible benefits will be offered to employees free of charge, with minimal cost for family coverage. Insurance options will include medical, dental, vision, life, and disability. The company will match moneys invested in 401(K) retirement plans. The German Handmade benefits program will be an important factor in the successful recruitment and retention of outstanding employees.
Work Organization and Design [top]
Jobs will be grouped functionally by department. The largest department will be Operations because the company exists primarily to manufacture and produce handcrafted gifts. Managers and team members will be encouraged to rotate jobs one month every year to gain additional expertise and understanding of company practices. 13-member work teams will be responsible for completely manufacturing, producing, and shipping one German Handmade product line. Teams will be relatively self-directed; members will be encouraged to retain their identities and will be cross-trained to perform multiple roles within the team structure.
Managers will be the formal team leaders but their daily actions will be more like those of a facilitator. They will seek team input but retain the final say in conflict management and decision-making. They will troubleshoot, mentor, ensure that team members are well matched to their roles, and see that the members are adequately rewarded for their performance.
Managers will designate one team member to coordinate the team’s work schedules. Teams will choose between flextime and shorter workweek options. The only condition placed upon the teams will be that all team members must utilize the same option. In the case of flextime, the core hours will be from 10:00 AM to 4:00 PM, and surrounding hours will be chosen based on current production needs. The goal of the work teams is to generate an efficient production system where each member’s unique contributions produce an exceptional team result.
Quality and Workspace Design [top]
Teams will have built-in Total Quality Management (TQM) concepts, but the need for a quality manager will be eliminated as a result of the natural German tendency toward quality-consciousness.
The German Handmade facility will be built in the shape of a hexagon with its floor plan resembling the spokes of a wheel (see Appendix B on page 18). Each work team will have its own workroom that will include open workspace for the entire team, separated from other workrooms by ¾ height walls with openings for added light flow and visibility. The cafeteria and restroom facilities will be easily accessible to all employees. A sophisticated conveyor system will encircle the perimeter of the facility, transporting and leaving packages at the shipping portal. As a result, a centralized point of export will be identified and packages will be transported with maximum ease. All packages will be placed on the belt ready to ship.
Strong non-fluorescent overhead and individual task lighting will supplement natural light from the windows. Temperature controls will be available in each workroom as well as the central office hub to provide maximum climate control. Ceiling acoustic panels and carpeted floors will minimize noise levels, and a centralized air filtration system will ensure quality air within the facility. Smoking will be permitted only in designated areas outside the facility.
Office furniture in workrooms will be mobile so that workspaces can be moved to the most convenient location. The workroom and office décor will be an eclectic mix of traditional and contemporary furnishings in primary colors to facilitate a happy, energetic atmosphere. Each office and conference room will have a glass door and walls with installed privacy blinds.
Team members will have access to company networked computers so that they can adjust order schedules and inventories. All employees will have access to the internet and corporate intranet. Email will serve as a secondary channel of communication and online forums will be available to allow anonymous suggestions.
Employee Rights and Discipline [top]
The parent company will provide policy manuals outlining employee rights, including due process guidelines, employment contracts, discharge procedures, substance abuse and drug testing, employee access to personnel files, just cause disciplinary procedures, and facility closing notification procedures. The CEO and Directors will tweak these manuals to make them pertinent to German culture.
The predominant organizational rules (and consequences of breaking those rules) will be written as unambiguously as possible in a policy handbook and will be disseminated company-wide. Employees will sign a statement that they have read and understand the rules. These rules will be reviewed annually to fine-tune their application. Management will utilize the hot-stove approach to employee discipline. Sherman et al best explain it as “a hot stove gives warning that it should not be touched. Those who ignore the warning and touch it are assured of being burned. The punishment is an immediate and direct consequence of breaking the rule...Likewise, a work rule should apply to all employees and should be enforced consistently and in an…unbiased way. Employees should know the consequences of violating the rule, so that it has preventative value” (Sherman et al, 1998, p. 528).
Power, Politics, and Organizational Culture [top]
Since most German managers will be more motivated to achieve objectives than obtain power, politics should have a small role in this company. Status symbols are looked down upon in Germany and thus the motivation to achieve power will be much less than in the United States.
The organizational culture of German Handmade will reflect the personalities and behaviors of the CEO and Directors. The goal will be to establish and maintain an organizational culture that respects the German culture and balances their tendencies toward groupthink. The end product will be a culture that is quality-conscious and production-oriented, that recognizes individual contribution to team efforts, that empowers employees, and enables them to abolish their need for emotional structure.
Timeline for Implementation
The writer anticipates that 75% of the workforce will be installed and that the above plan will be ready to implement well before production begins. The entire plan coincides with Awesome Craft’s objectives for its subsidiary, and will be provided any necessary assistance. The writer estimates that the first year of production will not be nearly as profitable or efficient as that of succeeding years, but that the extra attention given to hiring and implementing policies will produce long-term success.
CONCLUSION
In conclusion, it is the writer’s opinion that Germany is the ideal location for this business because it requires highly accurate and precise production. Germany is considered to be a “well-oiled machine” (Hofstede, 1997, p. 141) and so a mass-production craft organization perfectly matches their national culture profile.
However, it is imperative that the following four concepts be undertaken if German Handmade is to survive beyond its first year. First, Americans and Germans will have to work hard to understand and minimize cultural differences at work. Second, management will have to exercise patience and flexibility in the organization and likely slow start of German Handmade. Third, intercultural teamwork will be necessary in order to successfully implement this plan. Finally, Americans and Germans will have to establish mutual trust so that unanticipated cultural issues can be resolved without disrupting production. The company’s focus on continual evaluation and improvement will fashion an efficient manufacturing organization operated by exceptional employees.
APPENDICES
| All Employees | Managers and Directors |
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| Note: While at first glance the number of days allowed away from work may seem excessive, it is important to remember that Germans are extremely efficient people and thus production will not be inhibited. | |
GERMAN HANDMADE FLOOR PLAN
Alderson, W. T. & McDonnell, N. A. (1994). Theory R management. Nashville: Thomas Nelson Publishers.