Trade Union and International Labor Relations “Do It the Wal-Mart Way”

1. Trade Union and International Labor Relations “Do It the Wal-Mart Way” Presented by group 5: Shady Ismail Michael Shumyater Michelle Robertson Ann-Kristin Hocke Fanny Voluer

2. Agenda • US Country Profile • Germany Country Analysis Social Political Cultural Economic Labor regulations Expatriation • Wal-Mart Case • Recommendations

3. The US Industrial Relations • Not as politically entrenched as in Germany • 15.5 million labor members • Men more likely to join than women • The public sector has higher members than the private sector

4. The US Labor Union Membership Source: Adapted from data obtained from the Bureau of labor and Statistics; www.bls.gov

5. The US Labor Union Demographic Source: Adapted from data obtained from the Bureau of labor and Statistic; www.bls.gov

6. Germany Country Analysis

7. Social Structure • Population peak at 82 million • Various cultures • Diverse religions

8. Social Structure (Cont’d) • The Elite • The Self-employed • Salaried employee • The Workers

9. Political Stages • Federal Republic • Parliamentary system based on constitution • Three bodies to check and balance

10. Culture • Entrepreneurship and open competition is not encouraged • Labor unions are extremely powerful • Capitalism is not favored

11. Culture (Cont’d) • Open competition is crucial for economic growth • Cooperative economy • Use of consensual business model

12. Culture (Cont’d) • No capitalism – social market economy instead • No strong CEO • Job security and stability for years • Protection Against Dismissal Act

13. Economy • One of world’s most important economic powers • Fluctuation in GNP • Heavily export oriented

14. Industrial Relations • Organized at the industry-level • Forbid “employment at will” • Require at least 1 labor representative or work council per company • German culture more rigid than the American culture

15. Trade Unions • Constitute a political force • Union density: 42% • Most unionized: employees in the public sector manual workers white-collar workers • Largest unions: ver.di (3 million members) IG Metall (2.4 million members)

16. Expatriate Profile • American PCN • Working within the company in Germany • Staying in the host country for 2 years

17. Becoming an Expatriate • Apply for Visa • Residence visa • Obtain a Work Permit • Self-Employed • Employee of a Company • Apply for Insurance

18. Adjusting in Germany • Applying for housing • Obtaining a driver’s license • Understanding the language • Creating social networks

19. Americans Strong work ethics Impersonal employer-employee relationship Informal communication Work importance Germans Strong work ethics Good employer-employee relationship Formal communication Family importance American vs. German: Work Ethics

20. US Responsibilities for Expatriates • US Taxes • Voter Rights • Social Security

21. Repatriate Issues • Emotional • Social • Occupational

22. Wal-Mart

23. Wal-Mart Enters Germany • 1997: acquisition of Wertkauf • 1998:take over of Interspar • Appointment of US citizen, Rob Tiarks, as CEO • Ethnocentric approach unsuccessful • Turnover rate of $ 2.3 billion

24. “Do It the Wal-Mart Way” • Failure in the expatriation process • No adaptation to the German culture • No pre-departure training • Denial of differences between Germany and the United States

25. Why Wal-Mart failed • Low price strategies did not work • Poor product qualities • Dirty stores • Disrespecting employees • Weak service Wal-Mart in Berlin

26. Wal-Mart and Labor Unions • Refuses to have labor unions • Does not comply with local labor laws • Faces huge strikes • Ver.di forced Wal-Mart to respect the collective agreements for commerce

27. Can Wal-Mart Recover? • 2001: appointment of German CEO Kai Hafner • Management tries to make efforts to satisfy employees • New ethics code • Ban on sexual relationships between staff • Creation of an informer hotline

28. Recommendations • Recognize the cross-cultural ability of the expatriate • Learn the host-country language • Common assumption: ‘"Don't worry," the departing employee is told, "they all speak English over there!“’ (Schmidt, 2004, p.3)

29. Recommendations (Cont’d) • Provide pre-departure training (Dowling & Welch, 2005, p. 122)

30. Concluding Comments • Wal-Mart’s ethnocentric approach was a failure • Human resources failed to recognize cultural differences • Wal-Mart survival only possible if labor is allowed to organized in Germany • Good employee-employer relationship is the key to success

31. References www.bls.gov http://ssa-custhelp.ssa.gov http://www.irs.gov/businesses/international/ http://www.overseasdigest.com/country/germany.htm www.eurofund.gov.int www.expatexchange.com Dowling, P. J.& Welch, D. E. (2005). International human resource management (4th ed.). Mason, OH: Thomson/ South Western. htt://www.ebusinessforum.com/index.asp?doc_id=4968&layout=rich_story http://www.commondreams.org/views04/0615-10.htm http://geogate.geographie.unimarburg.de/vgt/english/brd/module/m1/u10.htm http://www.sietareuropa.org/about_us/Newsletter/Jun04/BridgingtheInterculturalGap.html http://www.usembassy.de/germany/working_in_germany.html http://www.germany-info.org/relaunch/business/trends/basics_system.html

32. Thank You For Your Attention Questions?