The biggest difference between running a company in the US and Europe

Today, Bill McDermott is the CEO of ServiceNow (NOW), a major cloud computing company headquartered in Santa Clara, California.

But the tech executive didn’t always run companies based in Silicon Valley. Between 2014 and 2019, he served as CEO of SAP (SAP), a global software giant based in Walldorf, Germany.

In a wide-ranging interview with Yahoo Finance’s editor-in-chief, Andy Serwer, the CEO highlighted the biggest difference between running an U.S. company and a European one — companies in the U.S., in his view, operate more efficiently.

“I think the big thing is speed. And to me, the greatest asset in business is speed,” McDermott told Yahoo Finance. Specifically, he said, “On a day-to-day basis, it’s just faster to operate in the U.S.”

‘More of a challenging structure’

McDermott explained that European companies are often less efficient because they must balance both employee representative interests and board members’ interests.

European countries tend to have more union representation than the United States. For instance, in the United States, roughly 10 percent of workers have unionized, as of 2021. Meanwhile, the most recent data from the Organization for Economic Cooperation and Development (OCED) places union membership in Germany at roughly 16%. In the rest of Europe, the rates can get as high as 26% in Ireland and a staggering 92% in Iceland.

“It is a little bit more of a challenging structure. When employees and external board members participate equally in the management of senior management, there is more protocol, there are more channels that have to be operated through to get stuff done,” McDermott says.

Yet, employee representatives can also serve a key role in protecting workers. For instance, unionized workers earn on average 11.2% more in wages than non-unionized peers, according to the Economic Policy Institute. While McDermott asserts that American companies are more efficient, he concedes that speed can come at the expense of workers.

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“So, I just think we move a little quicker. That’s not always good, by the way, sometimes more checks and balances [are] very positive,” McDermott said. “And I think employee representatives play a very important part in European companies, if management and the employees are on the same page.”

Though the U.S. has fewer unionized employees than Europe, the country has recently experienced a resurgence of unions. For instance, unions are forming at major companies including Apple, Starbucks, Trader Joe’s and REI. Nearly 70% of Americans approve of labor unions, according to a Gallup poll from 2021.

Despite any challenges McDermott might have faced, SAP grew under his leadership. As CEO of SAP — which has 107,415 total employees and offices in 180 countries — McDermott guided the company from $39 billion to $163 billion in market cap, TechCrunch reported in 2019, the year he joined ServiceNow.

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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