A blueprint for Europe

first_imgRelated posts:No related photos. Previous Article Next Article A blueprint for EuropeOn 18 Feb 2003 in Personnel Today Comments are closed. If you think your job is difficult, spare a thought for Jussi Itavuori, whois having to harmonise the work cultures, pay structures and HR practices ofmultiple businesses around the world. But the whole of European business couldend up benefiting from his labours. DeeDee Doke reportsJussi Itavuori knows all too well the challenges of harmonising national andcorporate cultures, laws and work practices into a single, cohesive,co-operative universe. As the first group HR director of the multinational,multi-company conglomerate, the European Aeronautic Defence and Space Company(EADS), Itavuori’s responsibility could be likened to that of creating a HRstrategy for a united Europe. A decade ago, Itavuori saw the harmonisation of European social legislationas “a threat and a straitjacket – more of a straitjacket for business thana positive development for Europe”. Now, however, as he leads HR forEurope’s largest aerospace and defence group, he admits to a new perspective. “My problem is that we [EADS] are much further in European integrationthan Europe or European legislation.” With more than 100,000 employees worldwide, with most based in France,Germany, Spain and the UK, EADS may not yet be a familiar name to the public atlarge, but its aerospace brands certainly are – companies in which it is eitherthe major partner or the sole owner include Airbus, Eurofighter and Eurocopter.In the UK, EADS formally agreed on 30 January 2003 to fully acquire BAESystems’ 25 per cent share in space technology company Astrium, adding 2,000employees to its existing UK workforce of 10,000. In 2002 EADS’s turnover was£19.8bn. A Finn, Itavuori joined EADS from lift manufacturer KONE in September 2001,14 months after its formation through the merger-integration of a triumvirateof leading European aerospace companies: France’s Aerospatiale Matra, Germany’sDaimlerChrysler Aerospace (Dasa) and Spain’s CASA. A vision for the futurecorporate culture had already been set, and the merger teams had steadily beenputting into place prescribed measures to build a new operational framework. Onjoining, Itavuori realised he had at least a four-pronged mission: – defining and implementing a concept of HR as a function within EADS – defining and organising the original companies’ corporate businessacademies – developing and establishing the new European industrial relations practice– harmonising managerial compensation and benefits. The top two alone would be enough to keep HR teams employed full-time in acompany based in one country, but the latter pair are proving to beparticularly challenging, considering EADS’ transnational, transcompany nature,as well as the passionate loyalty to each member company and the products theycreated. For HR especially, Itvuori believes the process of becoming a truly Europeancompany has many depths and layers, “and I don’t think people alwaysrecognise what it really means”, he says. As EADS steadily cuts through the jungle-like foliage of issues andbureaucracy that blocks the path to corporate harmonisation, he easilyidentifies the European social legislative issues he wishes were resolved:taxes, labour law, pensions and benefits such as profit sharing. The typical multinational does not have as deep a need for harmonisation, asit will not have been built on the premise of integrating such a great varietyof different individual cultures, in terms of nations, corporate and products,he says. “We have to question the level to which we harmonise our ways ofworking, our ways of compensating people and things like that. We must alsorecognise that Europe is still made up of national countries and legislations.Being a truly European company means you need to deal with that.” He compares the challenges of harmonising industrial relations within anEuropean company to the mind-churning folly of trying to match up themulti-coloured layers of blocks on a Rubik’s Cube. “It is aheadache,” he admits. “We have the new layer, which is the Europeanlayer, and then you try to change it, and then everything else changes.” Nevertheless, progress is being made. And one example is the establishmentof a European work council within EADS. Describing the pan-national council as “very active”, Itavuorisays that, so far, the organisation is following in the path of theconstructive relationships enjoyed with various unions in France and Germany byEADS forebears. In addition, sub-committees have been formed that serve as workcouncils for various business units such as Airbus and Eurocopter. “We have the European, national, business unit, and local levels,”Itavuori says. Further, in France and Spain, for instance, five trade unions arerepresented throughout EADS enterprises. “So you can draw a rather complexmatrix on these things,” he says. “Germany is a bit easier becauseyou have more or less one major trade union which takes care of quite a lot.The UK is a different ballgame because the industrial relations tradition isvery different from continental Europe. In the UK, it’s much less formal andless guided by the system of work councils that operate in continentalEurope.” One of the latest efforts involves organising a work council for Astrium.”This involves organisational restructuring as well,” Itavuori says,”but we probably will have the work council before we have the legalstructure for the companies, which is actually part of the process in thatrespect. We want to establish these platforms to discuss issues with our tradeunions on the European level and we do them either through the legal structuresor set them up informally.” “The most important thing,” he continues, “is that we havethe platforms to discuss; we have full agreement with the trade unions onthis.” Harmonising pay and benefits Under Itavuori’s leadership, the fourth key area of early HR priorities – harmonisingcompensation and benefits – has also moved on. One is element is theharmonisation of the contractual structure for the company’s top 1,000executives and managers, meaning that all enjoy, for instance, the same salarystructure of variable and base pay. “The pay is not necessarilyharmonised, but the structure of the pay is,” he says. The top people are classified in three categories with varying percentagesof variable pay per category and by country, with a “very aggressive”focus on achieving that predates Itavuori’s arrival and is linked to EADS’ambitious profit goal (see box opposite). “It’s very resultsorientated,” says Itavuori. “Variable pay has been pushed strongly,and it has been pushed by a harmonised structure.” Describing the intricacies of introducing such a performance managementculture to a multicultural environment is a separate story altogether, he says.”There are deep cultural differences between French and Germanperformance management,” he says, “and pay philosophies wheresometimes people are paid because of the individual, and elsewhere because oftheir status or job.” Since 1 January, Itavuori has taken a seat on EADS’s executive committee – amove described by the company’s joint chief executives as “highlighting thestrategic importance” of HR. It’s nothing new to Itavuori, who was thelongest-serving member of KONE’s executive committee before joining EADS.Still, he believes a growing recognition of HR’s strategic importance isespecially welcome at EADS, where the company histories could have produced adifferent result. “It has happened, but I am also saying that it is not finished,”he says. “For a lot of HR people who have spent most of their careers with anadministrative and industrial relations focus, this is a big change. The newdemands for HR are more business-orientated, and that’s a challenge.” www.eads.comaEADS’s Company CVCreated in July 2000 throughthe merger-integration of Germany’s DaimlerChrysler Aerospace (Dasa), France’sAerospatiale Matra and Spain’s CASA.Dual corporate headquarters in Munich and ParisEmployees Nearly 110,000employees worldwide                                                                                                          Locations Most in France, Germany, Spain and the UKOfficial language English2002 turnover £19.8bnProfit goal 10 per cent for EADS as a whole and for eachbusiness unit before 2007 (Originally targeted for by the end of 2004, butamended because of the downturn in the aerospace market)last_img read more