Management Style Differs in the Dutch Banking World; Workers' Councils, Job Longevity Mark Approach

By Fleischer, Stuart L.; Fanning, James J. | American Banker, May 25, 1984 | Go to article overview

Management Style Differs in the Dutch Banking World; Workers' Councils, Job Longevity Mark Approach


Fleischer, Stuart L., Fanning, James J., American Banker


Heirs to a long and distinguished mercantile tradition, Dutch bankers are known for their entrepreneurial spirit and expertise. Looking at management styles in Dutch and American banks, we observed some significant differences in approach.

To explore these differences more closely, we talked with a number of Dutch bankers. Among those interviewed were the heads of the New York branches of the "Big Four" Dutch banks: Hans Brinckmann of Amsterdam-Rotterdam Bank (Amro), Ton de Boer of Algemene Bank Nederland (ABN), Hugo Steensma of Rabobank Nederland (Rabo), and Lane Grijns of Nederlandsche Middenstandsbank (NMB).

The management styles of the major Dutch banks tend to differ substantially from those of their American counterparts in three major areas: management structure, labor practices, and career paths. All these differences are deeply rooted in Dutch culture and history; however, many practices are changing rapidly as we write. Management Structure

Most Dutch banks are run by an executive committee (Raad van Bestuur) that reports to a supervisory board of directors (Raad van Commissarissen). The supervisory board, unlike an American-style board of directors, consists of outside people only and can have substantial powers. The executive committee, normally consisting of five to ten salaried employees, makes decisions in a committee fashion. Its chairman, in addition to handling an array of management tasks, usually acts as the spokesperson for the group. This system makes Dutch organization charts look like flat-topped pyramids.

Because of the system, the names of corporate presidents have been virtually unknown to the public in the Netherlands -- at least until recently, when articles about them have begun appearing in the press.

Shared responsibility can be rather complicated in practice, since key decisions are made collectively. Yet the system has definite advantages. Risks are reduced because decisions have to satisfy a number of individuals. The Dutch system also allows problems to surface more easily, as managers have the option of discussing them with any of the members of a committee.

This is consistent with the point of view of Peter Drucker, an American management theorist who maintains that autocratic companies do less well. When Henry Ford became a one-man top management team in the New Deal days, claims Mr. Drucker, the company began to go downhill. Impact of Labor Practices

another area of difference between Dutch and American banks is in labor practices. The Netherlands has relatively stringent labor laws that restrict employers' dismissal options. They also mandate the establishment of workers' councils (Ondernemingsraad) that must be consulted on certain major decisions.

The effect of the labor laws is profound. For one thing, workers and management tend to spend their entire working lives at one company, a practice that enhances company loyalty.

And, especially in the banking industry, relations between government, management, and workers tend to be much more cordial and cooperative than they are in many other countries. This is because of stability on the job and regular interaction with management by means of workers' councils. And, not least, it is by virtue of a time-honored corporatist tradition.

This triangular approach to collective bargaining -- government, management, and workers -- has long helped to promote social harmony. Each side listens to the other and they resolve issues collectively. …

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