Human Resource Management (HRM):

Creating a Learning Organization through HRM

A German-Czech Joint Venture

(April 2001)

Introduction and external environment

For almost a generation, Czech industry and the Czech labour market, had been subject to ‘Communist influence and a centrally planned economy’ (Cyr & Schneider 1994), ‘where the best was to be an average employee and the management did not show their leadership qualities’ (Cyr & Schneider 1994). Under the centrally planned regime, managers were typically given detailed instructions ‘on what to produce, what resources to use, how much to pay for the resources, how much to pay employees and where to sell the products.’ (Csath 1990). Managers were likely to have been appointed as much for their political ideals as their technical ability but not for managerial skill or entrepreneurial flair. As a state-owned factory, Karnovac would probably be producing vehicles that were distributed by another state controlled ‘monolith’. The selection of product would also probably be limited by the state.

Although economic reform had begun in Hungary in 1968, the Czech automobile industry by 1990 had not had the luxury of this learning curve. At the factory, which started operating in 1894, only employees over 60 would have experienced a market economy. Karnovac would probably be the major employer in the town, where a job would have been a ‘job for life’ under the Communist regime and possibly the lifeblood of the local economy. The break up of the Eastern-bloc, the division of Czechoslovakia into the Czech Republic and Slovakia, and the subsequent economic reforms of the late 1980’s and 90’s meant that Karnovac had to become a viable company to survive.

At the time of our involvement ‘Volkswagen, the top selling auto group in Western Europe’ (Financial Times) was on course to become the market leader in the eastern-bloc and already had factories in Hungary along with their executive brand Audi. Volvo was manufacturing in Poland and Ford was establishing the commercial office in Austria, handling Central and Eastern European markets. Karnovac’s survival could hopefully be secured through a joint venture with a major auto group, which would require Karnovac’s privatization.

Conclusion

Bremen and Karnovac entered into the JV for very different reasons. Bremen, looking for access to the Eastern European market and an inexpensive workforce. Karnovac needed technological and financial investment to survive. From this perspective the two partners made a success of their venture, but the partnership was not perfect. HRM must be given a higher profile and significant priority to ensure greater effectiveness. As the lifeblood and success of an organization is dependent upon its people, HRM needs to be a priority consideration from the outset. Both partners need to understand the background and culture of the other, where they are coming from, the concerns and priorities of the workforce and their expectations. It cannot be assumed that these will be aligned at the outset and both parties need to be as sensitive to their differences as they are to their similarities.

References

Magdolna Csath, Human Resource Management, Corporate Culture and Entrepreneurship, 1990.

Jone Pearce, From Socialism to Capitalism, 1991

Vladimir Pucik, Strategic Alliances, Organizational Learning and Competitive Advantage, 1988.

Dianne Cyr & Susan Schneider, Implications for Learning, 1996.

Pierre-Xavier Meschi / Alain Roger, Cultural Context and Social Effectiveness, 1994

Arvind Parkhe, Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances, 1991.

Magda Csath, Strategic Alliances: Joint Venturing in Central and Eastern Europe, 1992.

Dr Elena Antonacopoulou, HRM, A strategic introduction course handouts, 2001

Richard Daft, Organization Theory and Design, 2000

Financial Times 2000.

Further information, strategy and implementation available from; paul@paulbrianblack.com