Author: Max Messmer

As aggressive businesses—corporate giants as well as small and midsize firms—scramble to enter the newly opened Eastern Europe, they’re faced with many of the same challenges as companies entering other global markets. Most notable is the challenge of staffing the operation. Besides the usual difficulties of determining whether or not employees should be enlisted from the U.S. or the host country, Eastern Europe presents a host of different staffing complications. Barriers of language and culture are just the beginning. In addition, the biggest challenges include:

• Absence of an efficient business and communication infrastructure
• A lack of candidates with the combination of necessary skills
• Limited knowledge of the human resources profession as it’s understood in the West, because most hiring decisions historically have been made by the government
• Difficulty finding experienced managers willing to relocate.

Explains Martin Walter from the Economic Section of the Czech Embassy in Washington, D.C.: “Skills needed [in Eastern Europe] are the ones that our people didn’t have the opportunity to develop under the centralized economy.” As a result, he says, consulting firms often bring in experts from the West with specific expertise, such as marketing or accounting, on a temporary basis to get their enterprises up and running. Many of these are Eastern European emigres who aren’t willing to return to their former homelands for the rest of their careers, but are eager to help their native countries remove the remaining shackles of planned economies to adopt free-market principles.

For Moscow Cellular, a joint venture operation between Denver-based U.S. West and the Russian government, the use of temporary workers is a viable solution to its staffing problems. The 20-person firm, which is developing a cellular-phone system, recently needed a senior finance professional to implement a computer-based accounting system and to train local staff in Western accounting principles. Managers realized that few Muscovites had sufficient knowledge of U.S. computer accounting systems. And because the operation was a start-up, it didn’t have the time to train a local. In addition, Russian accounting principles are intended primarily to record statistics, a vast difference from those in the U.S., which are designed to measure performance.

Managers had difficulty finding someone in the U.S. who could speak Russian, was familiar with local Russian customs, knew both Russian and U.S. accounting and computer systems and was willing to relocate to Moscow. They found one candidate who came close and hired him as a permanent employee. He didn’t last long, because he didn’t fully realize what living in Moscow entailed—hours spent waiting in line for many of life’s basic necessities, for example.

At this point, U.S. West enlisted the help of Menlo Park, California-based Accountemps. As a worldwide temporary personnel services firm, we launched a multi-country search across Europe and America. We found Ukrainian-born Lana Basov, who had immigrated to the U.S. in 1978. She spoke Russian, had been educated in Russia and had worked in Chicago for several years as an assistant controller. Moscow Cellular hired her on a long-term temporary basis as director of finance.

The temporary nature of the placement was by mutual consent of both parties. Basov doesn’t wish to stay in Russia for the rest of her career. And Moscow Cellular’s experience with recruiting proved that such an arrangement would be necessary to get the combination of skills and experience they needed.

The company and Basov settled on a three-month temporary contract, with the option to renew every three months. By structuring a contract with constant options to renew, both parties achieved maximum flexibility with minimal risk. Flexibility was the key. Moscow Cellular wanted to avoid moving another employee to Moscow only for that person to have second thoughts.

Human resources managers can play a crucial role in making the contract fair and equitable. Even for a temporary assignment, it’s important that the candidate understands the nature of life in his or her new short-term home. Contracts that help provide for cultural, legal and financial differences will make for an employee who isn’t overwhelmed by new circumstances.

Operating in the new Europe will require companies to use every human resources tool available to them. Far from being a disadvantage, the complexity and diversity of European nations will give companies access to more and greater talent and skills with which to explore European opportunities.

Personnel Journal, April 1994, Vol.73, No. 4, p. 48.

Unlike the U.S., many countries in Western Europe restrict or even ban the use of temporary workers. But a growing acceptance of temporary hiring practices throughout the European Community (EC) has created a new flexibility for many national economies, corporations and individuals. Even in nations where temporary work is illegal or frowned upon, governments are recognizing the legitimate need to use all human resources available in their fight for global economic standing.

Europeans aren’t the only ones who can benefit. For example, when Minneapolis-based Medtronic Inc. received a rush of orders from its newly opened division in Brussels, it needed an additional accountant to handle the extra work—immediately. But the manufacturer of pacemakers, heart valves and various neurological products did not want to rush its hiring decision and make the wrong choice, so it hired a temporary.

“We were able to handle our rapidly growing workload and at the same time get an idea of how the candidate would best fit into the company before hiring permanently,” explains Barbara Dircx, a member of Medtronic’s European personnel department. “If the arrangement with a permanent employee hadn’t worked out, we would have had to cover significant severance costs.”

Nonetheless, what is relatively simple in the U.S. can be difficult or impossible elsewhere. While Ireland, the U.K., the Netherlands, Luxembourg and Denmark have open markets much like the United States, Greece, Italy and Spain still ban the practice. And Belgium, France, Portugal and Germany all have more stringent regulations. “Good human resources management is all about developing people and making them feel valuable in any country,” says Adrian New, vice president of human resources for Visa International in London. “But the technical part of labor laws vary significantly.”

In contrast to the U.K.’s laissez-faire system, for example, in Belgium an employer can use a temporary worker in only three situations: to replace an employee who is ill, on vacation or on leave; to complete specific projects; and to assist during exceptional increases in workloads.

Belgium has additional restrictions. For a specific-project temporary hire, the work and its duration must be reviewed and approved by the government, which sets standards for certain temporary jobs (for year-end inventory, for example, the temporary assignment is limited to seven days). If a firm needs help with transitory bursts of work, temporaries are limited to three-to-six-month assignments, and the work requires approval by a trade union or a representative of the National Labor Council. The government closely monitors staffing firms to ensure compliance with these rules.

France is one of the largest markets for temporary work in Europe, but it has both restrictive laws and a number of customs that have virtually the effect of law. It is legally required, for example, that the contract of the temporary employee be for a fixed period, called une mission, which is not to exceed 18 months. Temporaries can be used for the same three reasons specified by Belgian law as well as in certain sectors such as the tourist industry, cinema and overseas construction contracts where their usage is traditional or seasonal.

Some of the non-legislated French requirements reflect the years of socialist party rule. “There is a limit to the number of temporaries we can have working,” explains Robert Zrihen, director of finance and administration of Amdahl France. “As a general rule, when the number exceeds 10 percent of my staff, the Labor Department will recommend that we hire permanent employees.” There is no specific French law to mandate this, so it is something that only experience with the government can teach.

Vacations, bonuses and benefits vary.
In many EC countries, temporary employees are entitled to certain benefits, some stipulated by law, others by tradition. In Belgium, one month of vacation per year is standard for most temporaries. In France, temporary employees are eligible for five weeks vacation per year, and must be paid for days not used.

Requirements for bonuses and benefits also vary widely from country to country. In France, temporary work is seen as a way to help people stay out of unemployment lines, and so temporaries are given a 10 percent bonus each month by the staffing firm to help compensate for the uncertainty inherent in temporary employment.

Belgium requires a substantial contribution to health and social security costs for temporaries, a contribution that totals about 35 percent of the gross salary, payable by the temporary help firm. In contrast, the U.K. requires very few benefits for temporaries.

In addition, a “conversion”—the move of an employee from temporary to permanent employment status—is handled differently in Europe. In this country, temporary services usually collect a fee for this practice. By contrast, some European Community countries forbid firms from charging for conversions. In these countries, however, a common business practice has evolved in which companies agree to hire employees for a minimum duration in temporary capacities before converting them to permanent positions.

Another frequent use of temporaries in many EC countries is for temporary replacement of those on maternity leave. In much of Europe, maternity leave lasts significantly longer than in the U.S. Employees in Belgium take four-and-one-half months. In France, an employee stops work six weeks before her due date, and comes back to work eight weeks after. The employee’s job is guaranteed upon return.

Watch the bottom line.
The average European Community temporary labor billing rates are higher than those in the U.S. (but on par with hourly wage rates paid to permanent staff). There are two primary causes: the cost of fulfilling numerous mandated government regulations and the larger “coefficient,” or mark-up, European Community temporary services charge to arrive at the same level of gross margin realized by U.S. temporary firms.

A challenge for U.S. firms staffing in Europe involves careful structuring of the hiring contract. Hiring agreements tend to be highly structured and contractual in all of Europe anyway, and contracts for temporary work are mandated by law in many European countries. Some regulations specify the pay rate, contract termination conditions and other parameters. For example, in Germany, protections against “redundancy” or layoffs are written directly into employment contracts.

All of the above is subject to change. In the hopes of generating more jobs, many countries are now willing to work toward standardizing employment policies throughout the EC—including those for temporary employees. Efforts are under way to make consistent the definition, role and treatment of temporary employees.

In addition, policy makers once opposed to the use of temporaries are now seeing that temporary work can provide an avenue for full-time employment. A recent study by the Confederation Internationale des Entreprises de Travail Temporaire (CIETT), an international trade association for the temporary help industry, found that well over one-third of all temporaries find permanent employment through their temporary positions. Even countries that legally prohibit temporary work may change soon. “I think that within the next three years the situations we see in Germany, Italy, Spain and possibly Greece will be moving toward liberalization,” says Leonard Allen, CIETT secretary general. “The trend is toward acceptance and recognition of the temporary industry throughout the world.”

Personnel Journal, January 1994, Vol. 73, No. 1, pp. 100-101.