12.10.07
What worries US executives most about investing in Europe?
At the German American Business Association of California (www.gaba-network.org) event this week (see previous post), the topic came up about what kept executives awake on the two continents. Gary Cole of Antares Partners pointed out a concern that I had heard about previously — the number one concern of US executives doing business with Europe is the relatively rigid system of laws around hiring and firing. The American executives hear horror stories about how it is impossible to reduce staff and fire underperforming employees. They hear stories about workers councils and panic that management would lost control to the workers.
My experience from working with US companies for nine years in Europe is that smart executives learn not only how to live with regulations but how to use them to their advantage. I haven’t come across one US company that ceased European operations because of the HR environment. To be sure, companies have shut down high-cost operations of which compensation was a major factor. Some of the most profitable operations in Europe are in high-regulation countries like France or Germany. A senior executive at Caterpillar (I spent a year on exchange from the State Department to Caterpillar’s finance company) remarked to me that his best overseas operation was in France. I asked him about the common perceptions of the employment laws and he replied that once you accept the framework, he found that the employees at the French subsidiary were hardworking and creative.
The takeaway from this discussion is that the key is accepting the system and finding good local employees who can carry your business forward. You have to understand the cross-cultural dimension and identify how you can motivate the employees in the other culture.
I invite you to post and tell about your experiences.
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