strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: July 1, 1996

 
 

"Negotiating Competitiveness" by Kirsten Wever

Negotiating Competitiveness: Employment Relations and Organizational Innovation in Germany and the United States by Kirsten S. Wever (236 pages, Harvard Business School Press, 1995)

When it comes to the inner workings of other countries, Americans are probably the least informed of citizenries. Yet we seem to be taking a great amount of pleasure lately in faint indications that countries such as Germany and France are moving away from the collectivized work arrangements and employee-welfare commitments that have long distinguished the advanced industrial economies of Europe from the United States, with its every-employee-for-him-or-herself model.

In her excellent, evenhanded comparison of work relationships, Negotiating Competitiveness: Employment Relations and Organizational Innovation in Germany and the United States, Kirsten S. Wever tells a more complicated story that should interest anyone involved in organizational change. While she doesn't expect either country simply to import the other's organizational philosophies, she does believe the two countries could learn a thing or two from each other and, miracle of miracles, she describes how, in clear, uninflated prose.

As Ms. Wever, a fellow at the Radcliffe Public Policy Institute in Cambridge, Mass., notes, the German and American employment systems are radically different. Americans tend to view "labor" purely as an economic issue and business as discontinuous with the rest of society. Business, labor and government interests typically have suspicious, even hostile, relationships. In German society, the centrality of labor and workers is reflected in the many high-level linkages between business, government and labor. Germany operates in the milieu of a social market economy, with extensive regulation, worker involvement and links to the private sector; Americans worship at the little church of the free market, chafing at "anti-market intrusions" by government and labor unions.

Naturally, these macrolevel differences in philosophy play out at the company level in distinctive ways, for good and ill. American companies, says Ms. Wever, who did fieldwork in the United States and Germany for the study, tend to excel at devising solutions to immediate problems, but have little institutional patience for the long term. The German emphasis on connections between institutions and stakeholders guarantees a stable economy, but leaves little room for flexibility that encourages innovation. Americans are free, in a way Germans are not because of their extensive hierarchy of work rules, to devise new forms of organization, as they have at General Motors' Saturn experiment. Germans can actually expect their political system to help forge a social consensus, as Americans, bedeviled by interest-group politics and a fractured polity, cannot.

Ms. Wever is not naïve about trying to take what works in one country and plopping it down unmodified in another, but she does believe country-specific policies can be adapted. Germany, of course, must cope with significant challenges in both the near and long term. The socioeconomic ramifications of reunification weigh heavily on the immediate future and European integration lurks contentiously in the distance. Like the United States, Germany is only slowly waking up to competition in a global economy, one that increasingly requires the kind of nimbleness the German system does not favor.

For its part, Ms. Wever argues, the United States needs to pump up the volume on cooperation between employers and employees. Employee involvement programs have become something of a management cliché, but, actually, only a third of American companies have adopted the employer-employee cooperation model, and most of them have done it piecemeal. Ms. Wever is critical of labor laws, such as the Wagner Act, which encourage adversarial labor relationships, and of the labor law reform strategy of the labor movement, which focuses on extending bargaining strength, but not in transforming the basic labor-management relationship.

The most problematic aspect of the lack of business-government-society integration in the United States, Ms. Wever contends, is that companies don't want to pay the "public good" cost of training workers. That is, they don't want to spend money educating employees who may get lured away to other employers. Thus, the United States has a relatively poorly trained labor force, while Germany's labor force, with state/corporate-subsidized training, is one of the best in the world. Poor skills and lack of investment in training lead to the kind of lag in international competitiveness about which executives and politicians complain.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

 
Close
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.

Close