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Introduction
The underlying distinctions between the Anglo-American and German or Nordic labor systems and the many forms of capitalistic theory can be considered a substantial field of research. Economic historians aim to address the greatest financial regulations, their reliance on historical identity, and other variables that influence economic performance differences between states. The common opinion is that liberal economic systems, such as the United States, produce results based on demand and supply, making them more inventive in the short term but causing unfairness in the long run. The coordinated economic systems, including Germany, as it can be concluded from the term coordinated, encompass decisions that are compiled of both competitive interactions and governmental policies, which provide social benefits. What concerns the analysis of theoretical aspects, it is essential to examine the topic considering the concepts of Human Resource Management, or HRM. The Anglo-American work system inherently generates higher rewards for productive and innovative individuals at the expense of rising inequalities compared to the Nordic or German work system.
Historical Perspective
Human Resource Management Theory
Management of human resources, or HRM, is a systematic approach to managing people in a commercial entity or organization in a way that they assist the corporation in obtaining a competitive edge. Companies in a variety of industries are being confronted with complicated issues and trends, including demographic shifts, internationalization, and high-performance demands (Aboramadan et al., 2020). To acquire a competitive edge and to thrive in the market, these problems have produced a significant necessity to oversee human capital (Aboramadan et al., 2020). These changes necessitate effective human resource management in a variety of areas, notably job satisfaction, engagement, dedication, and business success (Aboramadan et al., 2020). The objective of HRM is to optimize staff performance in support of a companys vision and mission.
Human resource management focuses on guidelines and methods and is necessary for the supervision of people inside businesses. Staff benefits planning, employee recruiting, education and training, performance assessment, compensation and benefits, as well as administering payment and employee-benefits networks, are responsibilities of HRM departments. Firms require human resources with excellent levels of enthusiasm, productivity, and devotion in the workplace to gain a competitive edge since employees with good attitudes may help the company succeed (Aboramadan et al., 2020). The overarching objective of human resources is to guarantee that a firms success and value are based on its people. HRM specialists are in charge of an organizations human resources and are responsible for putting rules and procedures in place. They may concentrate on staff recruitment, selection, coaching, and development, as well as employee engagement and incentives.
Employee education and training are the responsibility of learning and growth HRM experts. This is accomplished through teaching, performance reviews, and incentive schemes. Employee involvement addresses staff issues when regulations are violated, such as in situations of harassment and bullying. HRM generalists or business associates might serve in a variety of capacities or as labor relations agents for unionized workers. Despite the assessment of the working systems in these regions from the point of view of the HR function, it is necessary to analyze the historical and economic conditions of the emergence of inequalities. In addition, it is essential to emphasize the differences in approaches to work.
The First and the Second Industrial Revolution
Referring to comparing different economic systems, it is sensible to start with an examination of the emergence of various forms of capitalism since Englands Industrial Revolution. It was a pivotal moment in human history, a so-called crucial juncture with long-term economic and social implications for every country. As a result, the origins of liberal market economies may be traced back to that period, as a large number of inventions emerged in the United Kingdom.
Industrialization in coordinated economic systems had its own characteristics, although it is worth noting that it varied greatly amongst nations. Despite the fact that Germany adopted Englands technology and methods, it did not accept its mindset. This aspect is explained by the originally limited size of the capital goods sector in the nations, and the coincidence of the first phase of industrialization and the first phase of globalization (Pfister, 2020). Through diverse ideological and cultural prisms, it explains the difference between two nations on the same economic course.
In turn, there was no Industrial Revolution in the traditional meaning of the term, fast structural changes, in Nordic countries. On the other hand, certain gradual changes occurred, mostly as a result of increased worldwide demand. The region of Nordic countries is vulnerable to environmental alterations, since it is under a high degree of human strain and is seeing some of the fastest rates of climate change (Zhou et al., 2021). As can be seen, geographical elements have a significant impact on the establishment of the Scandinavian republics and can influence the internal processes. The Nordic nations are believed to be connected to their natural resources, which are both origins of economic profit and environmental drawbacks. As a result, the effect of political institutions on economic development is similar in Germany and Scandinavian countries. It might be considered one of the historical characteristics of coordinated market economies, as opposed to liberal ones, during the early phases of industrialization.
The Third Industrial Revolution
The primary tendencies brought about by industrialization began to wane in the second part of the twentieth century. One of the most notable instances is the collapse of American automakers and Fordism in general, which aided in the creation of new concepts in response to the obstacles. Some fundamental assumptions, such as the manufacture of small batches rather than huge pieces to minimize overproduction, were revisited, as was the case with Fordism (Bednarek and Parkes, 2021). Furthermore, unique cultural characteristics such as long-term work relationships were applied, resulting in the industrys leadership position.
This period is closely associated with the establishment of corporatism in coordinated market economies, which led to the further development of civil society and the welfare state. The rise of social movements and interest groups, particularly those associated with labor, paralleled the evolution of industrial relations. As a result, in the second half of the twentieth century, a legal framework for resolving specific societal challenges was developed and implemented. This tendency was visible among Nordic nations that highly depend on natural resources and forests. In the case of Germany, it is important to note that the industrialization process differed in the West and East owing to postwar events. According to Stewart, Durand, and Richea (2019), the industrial order in West Germany was similar to that of the liberal economies. Nonetheless, due to the forced acceleration, the unique model emerged after the reunification.
Conclusion
Management of human resources, or HRM, is a systematic approach to managing people in a commercial entity or organization in a way that they assist the corporation in obtaining a competitive edge. The historical perspective demonstrates the origin of the different economic paths of the states and is helpful for the further analysis of the systems. Initially, the Industrial Revolution, alongside the significant number of inventions that took place in England, triggered the mass production-mass consumption economies and conditioned the predisposition for innovations. The coordinated market economies reconsidered these principles, not least because of certain cultural and geographical features. For instance, the specific Weltanschauung in Germany or the impact of Enlightenment and economic specialization of Nordic states were of great importance (Midttun and Witoszek, 2020). Therefore, despite the unpopularity of such explanations, in this case, culture and geography influenced the states development. In addition, considering the HRM perspective, it is important to analyze both working systems in accordance with concrete concepts.
Comparative Perspective
HRM in America, Germany, and Nordic Countries
In order to consider the issue of the economic systems of the Anglo-American, German and Nordic models, it is necessary to pay sufficient attention to the comparison of personnel management systems in these countries. Germanys labor market is distinguished by a large initial dual occupational system that results in highly standardized skills (Hauff, Alewell and Hansen, 2018). In Germany, firm-specific abilities are very highly valued and more preferred (Hauff, Alewell and Hansen, 2018). As a result, most jobs are long-term, and employees are given a lot of independence and flexibility in order to encourage and facilitate the engagement in and transmission of firm-specific skills (Hauff, Alewell and Hansen, 2018). As for the German model, thanks to the economic system, where there is coordination, this system is more focused on collective processes and procedures rather than highlighting individual value.
Salaries and work schedules are exclusively the domain of labor unions under a regional, industry-wide negotiating structure in Germany and the Nordic nations. As a consequence, the human resource departments major goal is to create highly codified and standardized processes. In Germany, for instance, personnel supervisors and departments must deal with the weight of a complex and precise legal framework. It leads to a hyper-operational emphasis, which is predicted to stifle collaborative activities.
The Anglo-American model of personnel management differs from the above-mentioned one since it contains the factor of assessing individual criteria in the first place in comparison with the collective component. The Anglo-American HRM approach, in general, places a greater focus on independence and flexible working habits. With regard to this form of work in the field of management and work with personnel, it is possible to emphasize a significant focus on an individual approach rather than building group mechanisms and teams. Therefore, according to this concept, the systems of remuneration, fines, as well as assessing the productivity and efficiency of an employee are based on his personal results and initiatives. In addition, considering the Anglo-American economic structure from an HRM perspective, a low degree of state engagement and governmental supervision can be highlighted. In contrast to Germany and Nordic countries, the Anglo-American model encompasses more flexible and private operational guidelines.
The German and Nordic personnel management system focuses on a voluminous and large-scale field of work. In this sphere, in order to replenish all costs, it is necessary to create a common single working mechanism in which every detail is important. Consequently, due to the fact that sufficient attention is paid to all participants in the process, this working system has less chances and prerequisites for the occurrence of inequalities. In addition, government administration and state regulation should be mentioned, as this control policy creates conditions for tracking and verifying all kinds of data, which reduces the likelihood of a difference. Praising individual merit, good productivity and innovation are considerably different from the collective approach in German and Nordic HRM systems.
The Anglo-American system of personnel management does not have a strong influence on the state apparatus and focuses on individualism, which, on the contrary, increases the chances of inequality. In general, despite the emphasis on these processes from the point of view of personnel management, it is necessary to consider and compare the liberal economic system and the coordination of the economic system. This need is explained by the fact that personnel management is a concept that is based on economic and business principles, which requires a more detailed analysis within the framework of economic indicators.
HRM Concepts
The HR life cycle, commonly referred to as the HR cycle, is a continuous process that involves several HR operations. The HR life cycle combines HR strategies with the employment life cycle. Attraction, employment, engagement, development, commitment, and separation are the six main stages of the life cycle (Cattermole, 2019). This implies that the cycle starts with the companys strategy and continues with HR strategy, organizational structure, and HR activities, such as recruiting, education, and progression, until the employee quits. With regard to the comparison of these concepts in work with personnel in the Anglo-American, German, and Nordic economic models, based on the above differences, the stage of engagement and reward should be emphasized. This stage in the HR cycle is one of the last before career development and the direct dismissal of an employee from the organization. Considering a more collective approach to these processes among the German and Nordic implementors of the model, the Anglo-American structure is most different at this stage, where involvement and encouragement occur on an individual basis.
Work engagement is an HRM term that refers to a workers degree of passion and commitment to their job. One of the elements thought to have a role in the association between HRM methodologies and positive job-related behaviors is employee engagement (Aboramadan et al., 2020). Individuals that are engaged care about their job and the companys success, and they believe that their efforts matter. Companies may design successful HR strategies to reenergize engagement and employee happiness if they can predict when an individual will become disengaged, want an advancement, or search for work elsewhere (Cattermole, 2019). HR departments may save thousands of dollars on recruiting, training, and promotion while also retaining skills and expertise within the firm with proper management (Cattermole, 2019). Employers may drive employee involvement in a variety of methods, including properly stating requirements, rewarding and promoting outstanding performance, keeping employees informed about the companys success, and providing frequent feedback. With regard to the impact of this factor on HR systems in the Anglo-American, German, and Nordic economic models, the differences in approaches to employee involvement in the life of the company should be emphasized. The Anglo-American version advocates employee engagement through a personal approach that emphasizes individual privileges, merit, and possible rewards.
The Macro-Institutional Indicators
When comparing the two working systems, liberal economies frequently use the stock market to fund themselves, whereas coordinated economies rely on long-term bank financing. In contrast to extended employee tenure and council bargaining in a business in coordinated economies, industrial relations consist of short-term employment, minimal security, and individual negotiations. As a result, competition is the primary driver of growth in American businesses, whereas collaboration is the primary driver of growth in German businesses (Walker, Zhang and Ni, 2019). The liberal economies competitive advantage is seen to be radical innovation, as opposed to gradual novelty in specialized markets in coordinated markets.
The Microeconomic Indicators
Microeconomic indicators in these sorts of economies are concerned with technology, worker skills, and HRM. Because of their fast-changing market, liberal systems are known for their radical high-tech advancements. Investment in the military sector plays a big role in the United States, which is partially explained by the countrys Cold War history. There is a spillover impact to the industry as a result of the increased R&D for new projects, which adds to improved technical breakthroughs (Malik, 2017). Although empirical data may seem to support this proclivity for innovation, the general tendency in liberal market economies is subjugated to technology, and in coordinated economies, social policy is the driver (Krlev et al., 2020). As a result, when it comes to social innovations, the Nordic states are far ahead of the Anglo-American systems in terms of encouraging them.
In terms of worker credentials, it is often assumed that in liberal models, generic skills are necessary, but in coordinated systems, highly educated employees are required. Skill mismatches, according to Wheelahan and Moodie (2017), are a common occurrence in the Anglophone world, implying that non-qualified persons can hold top-management roles. This is owing to the broad academic skills that this form of the economy produces. Germany, on the other hand, invests in vocational education to improve the qualifications of some employees, notably those in the top tier, due to the markets coordinated nature. As a result, these abilities are relatively firm-specific, varying from one business to the next even if the level remains the same.
Finally, because it determines who finally becomes an employee, HR should be regarded an important component of the work systems. Considering the application of management style matrix, Nordic nations try to stay away from extreme interpretations of management styles and instead want to find a middle ground. These strategies appear to be beneficial because workers who are actively participating in a companys decision-making process feel as if they are making a difference and are thus more ready to spend their time and knowledge in the business (Johansen and Sowa, 2019). At the same time, due to severe rivalry and demanding shareholders, similar tactics are rarely used in British workplaces. Furthermore, path dependence has an effect. Consequently, HRM underlines the social justice and engagement in the coordinated models compared to the pressing for production in the liberal market economies.
The Disadvantages of Both Work Systems
Although coordinated market economies appear to be excellent in many situations, they have drawbacks in other areas. Innovations are still more common in the Anglo-American globe, and venture capital markets in the US are far stronger than in coordinated models, as Rahman and Thelen (2019) noted. As a result, most tech behemoths like Amazon, Google, and Apple got their start there. Moreover, according to research presented by Kinderman (2017), German and Swedish employers are dissatisfied with the current markets coordination and desire institutional liberalization. Even if they do not wish to fully deconstruct them, the impetus to reassess the guiding principles is very considerable, owing to the numerous free-market advantages liberal economies may provide.
Overall, although being very effective in their own right, both the Anglo-American and Nordic or German labor systems have certain drawbacks. The fundamental characteristics of liberal models are their competitive nature, finance from shareholders, and short-term work relationships (Zartaloudis and Kornelakis, 2017). Successful inventions and quick technical growth are the key beneficial effects of this system. The systems drawbacks, on the other hand, include workers insufficient qualifications, even for third-tier employment, wealth disparity, and a lack of personal ties in the workplace. Coordinated models are socially oriented, centered on collaboration and long-term relationships. The broad application of specific HRM practices adds to the successful engagement of employees in the daily operations of a firm. Nonetheless, this system does not enjoy complete acceptance, and some employers appear to seek more openness. Furthermore, if the inventions are not social novelties, they are rarely seen in coordinated markets. As a result, various aspects should be considered while analyzing different labor systems, as neither the coordinated nor the liberal market are universal.
Conclusion
Considering the Anglo-American economic structure from an HRM perspective, a low degree of state engagement and governmental supervision can be highlighted. In contrast to Germany and Nordic countries, the Anglo-American model encompasses more flexible and private operational guidelines. Nowadays, two capitalistic systems tend to find common ground in their policies when facing severe exogenous shocks. It becomes more and more complicated to differentiate the employees between two strict types of work systems proposed at the beginning of the 21st century, which brings their pros and cons into question. The assumption that Anglo-American models generate a higher reward for productive and innovative individuals alongside rising inequalities in contrast to the Nordic states or Germany can be relevant.
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