Magazine article Workforce

The Euro-It's No Small Change

Magazine article Workforce

The Euro-It's No Small Change

Article excerpt

Over the next few weeks, we'll witness the introduction of a new single currency in Europe: the euro. While most managers at multinational companies appear to recognize the impact the euro will have on the mechanics of their global HR systems, they must take care not to overlook the strategic HR opportunities that the introduction of the euro represents.

A recent survey by Arthur Andersen's Human Capital Services practice in London revealed that HR directors and professionals from major European multinational companies believe that, on the whole, companies are not actively considering the strategic opportunities that the single currency may offer in HR management terms. In fact, 51 percent of more than 40 survey respondents believe the European Economic and Monetary Union (EMU) could offer their companies strategic HR opportunities. But only 31 percent of the companies have any specific HRrelated EMU strategy in place to take advantage of them.

When does the change take place? The introduction of monetary unification is not intended to happen instantly. On January 4, however, the euro becomes a currency in its own right. The exchange rates of the 11 states (Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, the Netherlands, Portugal and Spain) participating in the first wave are irrevocably fixed to the euro. And the European Central Bank (ECB) assumes responsibility for the monetary policy of these member states. Then the first six months of 2002 will see the mandatory replacement of national notes and coins with the euro.

Companies are well aware that the introduction of the currency provides considerable challenges for their financial and IT departments. Steps are also being taken to update computer systems and accounting procedures. The transition period also represents operational problems across all business functions from procurement and marketing to legal and taxation issues. The euro will also influence how businesses operate and how they deploy resources.

Which are the best strategies to deal with the changes is still an unresolved question at this stage. With the general introduction of the currency still three years away-and the success of the euro still unknown-HR strategy remains a function of corporate strategy. And this, in turn, will be affected by the move toward European market unification. As companies speculate and react to changes in the European marketplace in the years ahead, opportunities to introduce major changes in HR strategy will arise. It's vital you're aware of them.

Communicate changes.

The immediate role of the HR professional of a multinational company is to ensure that current, correct information is communicated to employees and pensioners. Rainer Goldammer, director of human resources and administration for 3M Europe, says the company distributed a brochure several months ago called "3M and the Euro-A Guide for 3M Employees." He explains, "This approach was made in response to employees' concerns about how the euro would affect them personally in terms of the way they will be paid, the benefits they'll receive and how it will affect the business they do." Goldammer believes providing employees with this information hasn't only relaxed their concerns, but it has enabled them to do better business because they can educate clients on euro-related issues.

Upgrade payroll.

Companies also should be rapidly upgrading their payroll systems to accommodate the introduction of the euro so they're capable of delivering compensation and providing social security benefits in dual currencies. …

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