Consumo Nacional Aparente

Firms ’ internal power and control structures

The large French firm’s internal structures of power and control are characterised by a concentration of the power at the top of the organisation, likened to the country’s presidential system where the executive is all-powerful; very

hierarchical and segmented structures; dominated, as already explained, by a

technical management structure.

Decision-making is highly centralised in the hands of the CEO, who relies on a clique of entrusted managers, who have been co-opted and extensively socialised within the firm (Bauer and Cohen 1981). Top management exerts an autocratic control, and maintains its power through a detailed control system and by nominating ‘influential actors’ strategically throughout the group, in much the same way as the political elite in France is notorious for placing ‘their men’ after each round of

elections. In addition to enjoying unshared powers within the firm, not being

subjected to outside pressures from capital markets has meant that French CEOs have had largely unchallenged powers over their groups, more so than their US and UK counterparts, and this has been reflected in a stability in large French firms’ top management. This therefore makes the internal power structures of French groups highly characteristic, being very closed upon themselves, political and highly secretive, relying more than elsewhere on interpersonal rapport.

French m ultinationals in their dom estic business

Much has been written about the education and career background of those executives: they are systematically recruited from the most prestigious Grandes Ecoles or from the Grands Corps and from the outset at executive level, having often had a career spell as top civil servants (Suleiman 1978; Bauer and Mourot 1987). French elites’ common education and career background, which single them out from the rest of the firms’ management, has contributed to creating networks of trust within (and outside) the firm, but also served to widen the gap between the top and lower levels of the firm. Their passage through military Grandes Ecoles has with little

doubt influenced their autocratic management style. If practices of parachutage

whereby civil cervants are appointed as heads of companies by the Government especially in state-owned firms are resorted to, it remains that in many cases CEOs are selected by the firms themselves and then socialised for a long period of time to the group before accessing the top of the organisation, and therefore, they are men with an intimate knowledge of their group and its activities (Bauer and Cohen 1981).

Management Development

Firms’ employment practices are closely interrelated with the national education system and labour market structures. Three major factors at national level exert an influence on the French conception of employee development and, more specifically for our purposes, management development: first, the elitist nature of the

education system which has produced a single path to excellence, the so-called ‘Vole

Royale' via the Grandes Ecoles; secondly, as a result of the importance attached to

general education, the lesser role of the firm in training compared with the education system (Maurice 1993); and lastly, the predominance of internal labour markets, which place emphasis on internal career evolution and integration within the firm (C.E.C. 1990).

Qualifications play an essential role in management development in France and the education system is strongly elitist (Barsoux and Lawrence 1990). The path

via the Grandes Ecoles is considered as the single path to excellence, whilst other

I Tench multinationals in their domestic business system

routes (universities, technical training) are considered second-rate. The Grandes Ecoles provide a curriculum aimed at developing a ‘model’ manager, and a

homogeneous profile of management. Access to the Ecoles is achieved through

concours6 and is based exclusively on mathematical performance. Providing a

general and scientific education, as well as relying on teaching methods emphasising knowledge and theory rather than research-based methods, the system seeks to

develop an état d ’esprit, a certain kind of social and intellectual conformity, more

than diversity and individuality. French employers recruit their managers essentially

from the Ecoles, usually from a small number of preferred institutions with which

they develop close links.

The institutionalised rapport between the education system and the firm in France is such that the French system attaches a strong importance to qualifications gained compared with professional training, hence a lesser emphasis on training at firm level (Maurice 1993). French firms consider graduates, having been widely trained, to be sufficiently qualified and that they will be able to adapt to any challenges and be polyvalent. Thus, one finds that employers will even go to the point of asking for a specific school in their recruitment advertisements, and graduates from engineering schools are considered as being able to perform any type of functions whether engineering, finance or human resources. By expecting immediate operationality from graduates, employers seek to minimise their training costs. The 1971 Law on Vocational Training, which requires firms to spend a percentage of their total wage costs on employee training, has not enabled the establishment of an equitable, or strategic training system7: it is only from the late 1980s, that French firms’ awareness of training as an investment has developed under the heading ‘gestion des compétences’.

6 The exams are taken after two years of ‘écoles préparatoires', based on an intensive curriculum. 7 A huge total of 170md FF is spent per annum, but in 1998, a third of the workforce did not receive any training (20% of management and 60% of employees). L e M onde, 'Douze années. Douze Chantiers', 6 January 1999.

French firms’ employment practices are predominantly based on internal

labour markets (C.E.C. 1990). Statuts guaranteeing rights to security of employment,

as well as seniority-based promotions and remunerations, have been granted to employees in large public groups after the war, at a time of full employment, and as part of the national ‘Fordist compromise’ between management and unions, which aimed at providing social stability (Boyer 1985). Large private firms’ employment regimes have also been strongly influenced by public sector practices. Promotion is thus based on seniority, and other criteria including interalia qualifications, age and

technical competence, and leads to a specific position or status in a job classification

system, negotiated through industrial agreements. French managers’ ascension up through the hierarchy thus tends to be slow, continuous and predictable.

The management of ‘high potentials’ has to be understood in this context. It essentially concerns the population of executives, less emphasis being put on the development of lower managerial levels of the organisation (Roussillon and Boumois 1998). Managers are seen as having ‘high potential’ from the point of recruitment, on the basis of their initial qualifications. Linked to ‘employment for life’ policies and the resulting strong stability in employment, French firms have a long-term vision of management development: they will carefully and gradually construct the career of those considered as high potentials, through succession planning, with the view of building up a durable career within the firm. In our case studies, an average of more

than 80% of managers were coming through internal promotion. French

multinationals are known to resort little to formalised methods and practices of the Anglo-Saxon type, instead relying on highly subjective methods and criteria (Roussillon and Boumois 1998; Shackelton and Newell 1991).

The Role o f the Personnel Function

The still largely administrative character of the employment regime in France, as well as the extensively regulated employment domain (see below) largely dictated the role of the personnel function which has remained administrative, despite a

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growing awareness for a more professional approach in some firms from the 1980s

onwards (Maurice et al. 1986a; Galambaud 1993a). The low status of personnel

management has been further reinforced by the technical ethos of French firms: the human resources function is not uncommonly found to be staffed by engineers, who have tended to lack sensitivity to people-related issues.

As a result of the importance of internal labour markets in the face of weakly developed occupational markets and little active external labour markets, French firms have for a long time had little experience of inter-firm professional mobility and have known a strong stability of their emploment structures in particular at technical and managerial level, compared with countries such as the UK (47% of men were present in the same year for more than ten years in France, against 36% in the UK in 1986) (C.E.C. 1990). One of the implications is that employees are strongly attached to their firms.

Industrial Relations

French firms follow a social model dictated by the state. In the French IR scene, the state has traditionally played a central role both through regulation and the large public sector, in the face of constitutionally weak and ideologically divided

social partners (Goetschy and Rozenblatt 1992). Labour market regulation is

extensive, and sets wages and employment conditions (dismissal rules, working-time,

forms of employee representation at firm level - including the Comité d ’Entreprise,

shop stewards, vocational and continuous training).

The basis of the French social system was drawn up after the second world war and was aimed at maintaining social stability. It saw the development of a well- developed social welfare system co-managed by management and unions

(paritarisme), job security for employees, and union representation within the firm.

French managements are thus part of a corporatist institutional arrangement and are

I Tench multinationals in their domestic business system

forced, by law and by the state, to be ‘socially responsible’8, and as a result, face a more constraining social environment as compared with their UK and US counterparts who follow their own rules of efficiency, as employment practices are mainly set at firm level and union / employees’ interests have not been accommodated at national level.

Whether at national level where all attempts at tripartism have failed and the state has taken the lead, or at firm level, French employers and unions have never been able to develop a culture of negotiation, in contrast with their German counterparts (Hall 1986). The social climate, in its most extreme form, is tense and

based on a rapport de force, with, on the one hand, autocratic managements seeing

unions as their bête noire, and on the other, unions ideologically repelled by anything

nearing ‘co-management’. Durand (1990) captures the IR climate of a French car manufacturer:

‘Since 1982, union struggles have essentially concerned the defence of jobs and employment levels in the factory against the use of part-time and sub­ contract labour. (...) The unions and the workforce as a whole hardly participate at all in deciding on the organisation of work. Top managers or workshop directors inform the Comité d’Entreprise and shop stewards of any changes envisaged but there are not exchanges between the two sides on these crucial issues, simply expression of dissent or worker resistance when the changes seem to them to be unacceptable. In other words, there is no overt negotiation on work organisation but an informal power game of managerial proposal and worker acceptance or rejection.’ (Durand 1990 p. 409).

Because of entrenched militant traditions, a level of action which has traditionally been at political rather than firm level, fierce inter-union competition encouraging ‘point-scoring’ type of behaviour at the expense of the development of shared responsibilities9, French unions have shown less ability to deal with business- level efficiency issues, and have tended to oppose any major organisational reform

8 For example, since the 1980s, when unemployment exploded, the state has forced companies to recruit young people and maintain their employment levels. French firms have widely resorted to early retirement measures to minimise the social impact.

9 All large firms are faced with union pluralism represented on their Comités d’Entreprise.

(Groux 1998). In addition, conditioned by more than thirty years of growth where the

workforce has benefited from general social policies ( ‘les acquis’) and where

organisations have seen little change, French unions (in particular in the public sector) have mainly sought to preserve employees’ status and employment. The decentralisation trend in IR which took place in France from the mid-1980s onwards,

under the effect of Auroux Laws which imposed firm-level bargaining, remained over

issues set within the French legislative framework (wages and employment), rather than work organisation issues; with the firm level complementing rather than replacing the national and industry levels as the main spheres of IR governance (Hoan-Ngoc 1992).

Work Organisation

At workplace level, French firms are characterised by their rigid modes of

functioning (Maurice et al. 1986a; 1986b). The Taylorist / Fayol division of work has

been adopted more widely in the French context with structures being more hierarchical, more formalised, more segmented, with a greater distance between conception of tasks and their execution, further reinforced by the strong statutory

separations between occupation groups (the ouvriers - workers, techniciens, cadres).

This has tended to be created and reinforced by the broader societal context, the poor IR climate, and existing employment practices (such as job classification system, seniority-based promotion rules). Together these have impeded employees’ mobility and career progression, hence contributing to a strong stability in French companies employment structures.

Existing structural characteristics of organisations, partly influenced and reinforced by the broader socio-institutional context, have conditioned possibilities of

innovation as well as the strategic manoeuvrability of the firm. In France, the

evolution from a Taylorist model of organisation to a more functional / integrated model from the mid-1980s onwards has taken place within a more constraining framework than elsewhere, and firms have had great difficulties in extracting

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themselves from their entrenched patterns of work organisation (Maurice et al. 1986a;

Durand 1990; Linhart 1991). Overall, the French institutional context has tended to limit the possibilities of process innovation, by hampering fundamental structural change. French firms have as a result experienced strong inertia in their organisation structures. Unless forced to, French management, whilst investing in automation and upgrading technical equipment from the 1980s onwards, has long tended to avoid touching organisation structures and employment structures.