The French companies “united in their inside to fight” have been able to deal gracefully with these two years of economic crisis, not without carefully calibrated energies and efforts.
Economy in France. France is among the countries in the euro area which has fared the best out of the crisis, despite having a high public fiscal deficit (-8.2% of GDP in 2010), and will call for a significant reorganization of the system in 2011. This deficit has been caused particularly by the highly structured social system, protecting the unemployed who continue to receive a salary. “In 2010-2011, private consumption will grow thanks to the slow improvement of employment and social buffers that support the purchasing power. The GDP will grow 1.3% in 2010 and 1.6% in 2011”, says François Letondu, Department of Economic Studies of Societe Generale.
A strong recovery in business investment will not occur before the end of 2010. France will have a comparatively strong 2010 – 2011, with a 6,5% in 2010 and 5,25% in 2011 growth, due especially to the strong recovery in emerging markets. The weakness of the euro against the dollar since the start of the year is expected to continue throughout this year, and it will allow French companies to take part in this rebound with increased exports by 6.7% and 4.3% in 2010 and 2011 respectively. The industry still has significant excess production capacity to meet this increased demand in the short term. “Non-financial companies have started to invest again only very gradually during 2010”says Frédéric Duponchel Chairman and General manager of Accuracy. In the last 15 years, the number of exporting companies in France has fallen from 100.000 to 90.000, and regularly losing portions of the market. The government ran for cover, drawing up strategies for companies such as the tax credit research or the business tax. “In 2008 we created a specialized agency ‘Ubifrance’ to accompany the SME exporting in 44 countries. The result was excellent, then between 2008 and 2010 the activity was duplicated,” affirms Christine Lagarde, Minister of economy in France.
But in terms of employment, there has been a 10% increase, especially among young people and those over 50. Recent research sponsored by APEC shows that 52% of the companies surveyed in the search ‘Barometer Apec’ have recruited at least one manager in the second quarter of 2010, five points higher than last year. For Eric Verhaeghe, President of Apec, “This result reflects a marked improvement in business sentiment, especially in two key sectors of the labor market framework: Information Technology and Engineering, Recherche & Development.”
Conversely, the construction sector continues to suffer and recruitment in 3 out of 4 companies is stable or falling.
With a particularly attractive economy, France since the beginning of the economic crisis has maintained its place as among the first countries receiving foreign direct investment. The Unctad (United Nations Conference on Trade and Development) ranked France second behind the United States in 2008, and ranked third behind China in 2009. This past year, Ide (International Development Enterprises) have declined by 39% worldwide and 41% in developed countries. France was less affected by the decline in 2009 than its main European neighbours (UK: – 93%, Germany: – 41%, France: – 35%).
The winning sectors
The niche markets such as treatment and prevention are those that have less suffered the crisis less. But “there are areas such as medical research, aerospace, military (eg where there have been fewer cuts in an important market),” as Edouard Frignet, Associate of W. Gore & Associates, states. “The leading sectors today are those that focus on health, environment and energy saving and innovation” adds Mr. Frignet. During the last two years, the niche companies have been able to withstand the crisis period also thanks to the relocation of the production to Asia.
Quality of Life
The public system in France provides quality access to a range of free services, particularly in education and health. France ranked first in the international ranking of quality of life and health care proposed by ‘International Living’. This index is based on variables related to cost of living, environment, culture and leisure, degree of political freedom, quality of health, infrastructures, risk and security and climate. The unequal distribution of income is significantly lower in France than in Germany, the United Kingdom or the United States. During the last twenty years, income inequality increased in most Oecd countries, while it decreased in France and Spain. The analysis of social protection expenditure – covering disability, families, children, housing, social exclusion, old age, sickness and health care, welfare benefits, unemployment benefits – highlights the size of the aid and measures in France.The financing of these expenditures by the public sector is particularly high in France: 80% of health expenditures and more than 90% of education spending.
Points of excellence
According to the Ministry of Economy, (with Industry and Employment)in 2008, domestic spending Research & Development (Gerd), amounted to 42.8 billion USD (Ppp), making France 5th in the world behind the United States, Japan, China and Germany. With over 11.000 km of high ways and more than 31.000 km of railway lines, France has a particularly dense network of transport infrastructure. It is the first European country to have a network of high speed trains, linking the country to major European capitals. The terrestrial network is complemented by an extensive air network: 65 airports with over 15,000 passenger movements per year, 6 of which are international. Lastly, with 96 million metric tons of cargo, the port of Marseille is the fourth largest port in Europe for the transport of goods, after Rotterdam (Netherlands), Antwerp (Belgium) and Hamburg (Germany). France is the second European producer of primary energy derived from renewable energy (13%), behind Germany (16.5%), and before the United Kingdom and Italy (about 12%). Thus, the production of electricity and heat contributes the low 15% of CO2 emissions in France, against 45% in Germany. In France, the transport sector occupies the 1st place in emissions (with 35% of CO2 emissions). Before the crisis, we used to think about the success of companies in concrete terms. In order for a ‘good’ company to stand out from the crowd, the determining factor could have been the name recognition, the innovation, the price leadership or any number of other attributes. Today, are these the elements that still dictate the success of a company? Or has the crisis created an opportunity to bring out other, perhaps intangible, factors? We wanted to check the current situation in France which, like other nations in the world, has continued to suffer from the consequences of these past two years of economic uncertainty. We discovered five new dimensions, which companies aim for to get a better connection to the market.
Stress management or “wellbeing care” as Jean-Charles Castellano, Head of HR at Ricard affirms, is one of the issues that companies emphasize more. For example Camille Desmarres, RHR at Novo Nordisk France, tells us that health in their company focuses on three aspects: addiction to smoking, practice of sport and healthy eating. “We also care about the use of biodegradable material,” she adds. Yves Grandmontagne, Human Resources Director at Microsoft, states that his company avoids checking mail during the weekend. As well, he states that their meetings are not organized before 9:30. “We organize sports sessions in all our meetings in which general management also participates in. It is a good way to relax” affirms Fabien Mulliez, Communication Director at Décathlon. Companies use also ‘fun at work’ as a tool to motivate employees to generate more revenue. “We give our employees the possibility to spend a week vacation at our holiday resort for 50 euros a week all inclusive for the whole family”, says Castellano. PepsiCo France offers its employees cycles of seminars on various topics such as singing, theater, and writing. “We have great hopes of ensuring a good balance between the private and professional lives of our employees,” says Delphine Dupuis, DHR at PepsiCo France.
Strict hierarchy belongs to the past. Today, managers seek to have continuous contact with their own internal stakeholders. Companies become neighborhoods and departments become families. Frédéric Duponchel, Chairman and General Manager of Accuracy, explains that one of their “10 commandments” is “share contacts, share knowledge, share engagements – and this is only possible thanks to a good relationship between people.” Edouard Frignet W&Gore associates says, “Our hierarchy is flat, leaders are created and naturally recognized by members of the group.” In FedEx and National Instruments, it is important to become aware of the difficulties of others and encourage cooperation. There is the opportunity to visit the other Departments and share information. “Much importance is given to internal mobility. Often a shop general manager has started as being responsible of a department. This allows you to acquire a good understanding of different situations, and individuals feel free to express themselves because they feel understood,”says Mulliez. While in Carglass, the mobility doesn’t have limitations due to the type of diploma.
Private events celebrating the employees as well as the successes of the team help to increase motivation and the sense of belonging to the group.All companies surveyed undertake different formulas of celebration. Whether it’s a cocktail every two weeks as at Accuracy, the employee of the week as in National Instruments, or the courier of the year at FedEx, there are many diverse forms of celebration. “We have a hymn to optimism, so every year we make a worldwide survey to check the satisfaction rate, so you can possibly intervene and make improvements,” affirms Frignet.
Employees are involved in the decision making process, rather than simply acting on orders. And this is part of a process of empowerment in the workplace: team members are encouraged to make decisions for themselves in line with guidelines and frameworks established in self-managed teams. This key motivational tool is also referred to as ‘employee involvement’. “Through seminars we collect the opinions of employees, such as the vision of the company in 5 years, the presentation of the services to the customers, etc.” says Duponchel of Accuracy. In other cases, managers act as a stimulus for the head office. “We have a ‘Think Tank’ team composed of eight managers whose role is to stimulate ideas and shake the steering committee,” says Dupuis of PepsiCo France. In some cases, employees are the ones who decide the structure of the work spaces: “We are renovating the offices and employees can choose how to structure space in order to work better,” affirms Marc Montiel, General Manager of NetApp. In these companies, all the employees (with no limit on roles) are ambassadors of the corporate culture. “We give a diploma to those who embody the values of the company,” says Montiel of NetApp. Castellano (Ricard) adds that “each employee carries the values of the company and has the responsibility to share them with colleagues.”
Dedicating time to employees means sharing decisions, increasing their skills and then allowing them to make decisions, reveals Mulliez (Décathlon). “Once a month, each employee meets with his supervisor with the aim to analyze the working period that just ended; and if necessary make some corrections. Every decision never falls down on others only from above. It is important that everyone takes the time to explain the reasons behind decisions to his internal employee,” he adds. Alexis Fyros, Head of HR at FedEx Express explains, “devoting time also means offering the tools to allow one to manage the teams. On our site there are over 50 training modules that each employee can choose to attend during working hours. These different modules allow him to evolve within the company.” In these cases, the training comes from traditional areas. “Our training leads to reflect on the attitude towards work, it is a work on emotions, our business is above all contact with customers so we can not be cold and detached,” says Paul Olivier Raymond Lacroze, Head of HR at Carglass.
These actions create results such as greater agility in the market, increased proximity to consumers, high levels of individual motivation, the development of competences and the higher responsibility of single employees. Essentially, an excellent work environment contributes to generating happiness among employees. Can we deduce that positive emotions are the major drivers in these companies? We know that emotions have a collective existence. What this means for managers is that their actions can influence the internal emotional health of a company.
Published in the hard-copy of Work Style Magazine, Fall 2010