Studiu Credit Lyonnaise (2)

7/28/2019 Studiu Credit Lyonnaise (2)

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Case Study

Firm: Credit Lyonnais

Industry: Banking

Countries: France, World-wide

International HRM Issue: The internationalization of a bank & the cultural conflicts involved

1) Introduction

This study of Credit Lyonnais, one of the world's largest banks with offices in over 60 countries,

examines the organisation and human resource management strategies thought necessary to survive

the rapid market changes in international banking. Credit Lyonnais provides a particularly good

example of a large bank which is determined to succeed through growth in services offered in

existing markets and through extending into new markets.

Credit Lyonnais has offices on all continents, and in the countries where it has operations, it applies

one of two growth strategies:

i)organic growth (increasing the activity of its branches and subsidiaries, or opening new

branches)

ii) acquisitions / mergers (involving either take-overs or purchase of minority interests in local

banks).

Credit Lyonnais now has 610 offices outside Europe and these are either subsidiaries (where theHRM has a majority shareholding) or associated companies (where the HRM has a minority

shareholding). The Credit Lyonnais Group has grown very rapidly over the past few years and will

continue to grow with planned expansions on all Continents and in all areas of business.

Realizing at an early stage of its expansion that its service and market strategies required an equally

strong human resource strategy Credit Lyonnais set out to implementing HRM policies to achieve its

business goals.

2) An International Corporation

The Credit Lyonnais Group has grown very rapidly over the past decade principally by the

acquisition of foreign banks throughout Europe and in other markets around the world. To benefit

from its acquisitions many Credit Lyonnais managers believe they must now integrate their

banking network in terms of common services and client management.

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One of the key challenges that face Credit Lyonnais is to fully internationalise its HRM policies and

become a true multi-cultural, globalised, organisation. This task is made harder as many senior

managers think that the bank is already international simply because it has a tradition of foreign

operations and that it has doubled its size through the acquisition of foreign banks. Such thoughts

obscure the fact that Credit Lyonnais is still dominated by French culture and French ways of doingbusinesses despite the fact that the bank now employs far more people outside of France than within.

3) French Context

To have a good understanding of the cultural environment of this HRM there is a need to consider

the culture of France, particularly its political & economic history and the style of management and

organisation often associated with French companies. In France the State plays a key role in the

economy and in society: the State regulates economic development through economic planning over

a five-year period. State ownership of services and industries is still high compared to most other EU

Member States and as one of the last large nationalised banks to be privatised, Credit Lyonnais is

still strongly influenced by government.

With a savings rate of 12.2% of disposable income, France traditionally represents a good market for

banks although de-regulation of the banking industry and the privatisation of some State owned

banks during the 1980s meant that banking profits rapidly declined. However, from a HRM

perspective, the French government, which always plays a primary role in defining the basic terms

of the relationship between employers and employees, insisted on the maintenance of workers`

standard of living through wage indexing (linking wage increases to the rate of inflation), increased

social insurance provision and through dissuading banks from making staff redundant.

Although trade union membership in France is low (only about 10% of the working population are

members), unions are powerful and strongly influence the government. Unions in France, as

elsewhere, negotiate collective agreements but, unlike in many other countries such as the UK, these

agreements, once negotiated with the employer body in the relevant industry, then legally apply to all

employees in the industry. Terms and conditions of employment in the banking industry are

generous because of these forces, which are: a government supportive of workers, and union

negotiated collective agreements. However, today the banking sector is faced with new needs and the

collective agreements are considered by many bank managers as a block to competitiveness.

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PART ONE: FRENCH HRM at Credit Lyonnais

4) The Nature of Management in France

Short-comings in French management generally are noted: the elitist management education system

has been criticised by some for not providing the right calibre of flexible, international managers,

capable of responding quickly enough to shorter product / service life cycles. In fact the managerial

class, cadre, is officially recognised by tradition and law. This managerial status gives managers

special pensions and social insurance and also representation privileges on HRM's Board of

Directors. This management system rigidly links hierarchical status with graduation from the 'right'

universities, the grandes ecoles, and ensures that business leaders are among some of the best

educated in the world. However, the down-side to this French approach of only appointing managers

who have been to these superior universities is that the system suppresses the aspirations of

supervisory and lower-grade personnel who find it difficult to be promoted into managerial positions.

In spite of increased overseas investment, French management often lacks the international vision

and experience of their counterparts in Germany, the Netherlands, the UK and the USA.

As in some other Latin countries and Japan, there exists a steep educational pyramid in France with

the grandes ecoles at the top. These grandes ecoles select an elite corps of students through very

difficult entrance examinations. The exams test for analytical and reasoning capacity rather than

interpersonal skills or professional aptitude. The diploma of a grande ecole is sometimes considered

an 'entrance ticket' into the fast-track of a public or privately owned company. In effect the task of

the grande ecoles is to select Frances future business leaders. The grande ecole provide over 50% of

the top managers in French companies.

Thus in France, an individuals self-education or entrepreneurial attitudes are less likely to contribute

to success than his or her diploma and capacity to develop social / political relationships. Because

they are destined to rise rapidly up the career hierarchy, grande ecole graduates often rotate very

quickly through a wide variety of company positions gaining scope, sometimes at the expense of

depth.

5) Bureaucracy & Hierarchy in France

The traditional French model of organisation has been described as a combination of bureaucratic

and aristocratic behaviour. Organisations generally have many hierarchical levels which, of

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necessity, restrict managers at each level to a narrow range of responsibilities and areas of action

(that is, a narrow span of control - few employees to manage). Managers (and non-managerial

workers) aggressively guard their areas of responsibility from encroachment. French organisations

have been characterised as societies of castes, where each group tries to preserve its trade or

profession and its independence. Even though this implies that organisational structures andhierarchical relationships are likely to remain relatively rigid, formalised work rules are frequently

vague or absent (strong work rules do exist but these are informal).

6) Attitudes to Work in France

French workers influence organisational and managerial styles through their attitudes toward work

and family life. Perhaps because of their Catholic heritage, French employees have traditionally

considered work a simple necessity, rather than a focus for personal and collective fulfilment.

During the 1970s the role of human resource managers consisted principally of negotiating the

transfer of HRM profits to employees by way of improved remuneration, benefits and working

conditions. Employees generally had little concern for the future well-being of the company. During

the 1980s, however, this separation between individual's standard of living and the organisations

long-term ability to generate profits began to erode. Human Resource managers refocused on

making employees aware of the linkage between their individual living standards and future job

security and the firm's future. This linkage appears now to be well established as France enters the

new century and companies actively discuss the social contract and how individuals should

contribute fully to their firm.

7) Employment in Banking in France

Highly regulated, protected markets, such as that of the French banking industry before the 1990s,

result in overstaffed, over-bureaucratic organisations. Because the services of the banking industry

(savings accounts, personal cheque accounts, business accounts, life assurance, mortgages etc.) areremarkably undifferentiated and almost instantaneously copied by competitors, the quality and

effectiveness of a bank's employees is probably the most critical factor to its success. Banks cannot

build distinctive quality into their service design and then turn on an automated assembly line.

Quality must be delivered by people who, as experience has taught us, can be inconsistent,

uncooperative, unmotivated, and sometimes work actively against the changes required for a firm to

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become dynamic, profitable organisation.

During the past decade banks throughout EU have seen regulatory, national, and

international trade barriers fall; the EU's Second Banking Directive came into force about ten years

ago allowing European banks to freely move into any other EU state and to also offer a broader

range of financial services. This de-regulation has encouraged many bank directors to expand the

services offered by their companies into other, more lucrative, services and sectors such as insurance

operations and underwriting corporate debt, to mention just two. Indeed one of the dominant

competitive strategies of the largest European banks in the late 1980s was to develop a wide range of

products offered in all the major European markets. This strategy, called the 'universal bank', usually

involves the merger of banks both domestically and internationally with other banks and with other

financial service providers (with insurance firms for example). This diversification of banks'

activities is creating a number of significant HRM challenges.

8) New HRM Challenges

One result of these changes, involving more 'products' being offered in more national markets, has

been that the skills and attitudes of the banks' staff have failed to keep up. Bankers have often been

characterised as conservative, reserved individuals who are very attentive to detail. As banks move

increasingly into other 'product' lines, such as life insurance sales, some of their employees must

emulate the enthusiastic personality profile of a salesperson. This transformation is particularly

important as banks are finding that new services are providing higher margins and, therefore, an

increasingly greater share of their turnover.

The banking industry has also, of course, become much more competitive. Having the opportunity

to expand into other markets and countries is a double-edged sword in that banks from other

countries can expand into your market! This need for bank staff to become more competitively

aware represents a real culture change especially for the French.

Both 'back office' computing technology and automatic cash machine technology combined with the

growth of 24 hourtelephone and internet banking has, in most parts of Europe, resulted in both

significant job losses and, at the same time, the creation of newer, but lower skilled, jobs in

telephone call centres. Such decreases in staff numbers and de-skilling of staff have been

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particularly difficult to achieve in France given the government's support for job security. A further

change affecting employment numbers and types in traditional banks such as Credit Lyonnais, has

been the emergence of non-banking competitors offering traditional banking services such as some

of the large French retail store groups which offer customers personal cheque accounts and credit

cards.

French banks have, however, responded to these sorts of challenges by improved training for bank

staff particularly in the area of customer relations and marketing and selling. Improving service

quality cannot, however, happen through training alone: bank employees need to fundamentally

change their attitudes toward the banks clients. As in all service oriented businesses, the

development and maintenance of strong interpersonal relation-ships is critical to the long-term

success of the bank.

9) Remaining HRM Problems

Credit Lyonnais in the 1990s had essentially two types of human resource problems:

1) having too many of the same type of employees with the wrong skills (people with

traditional banking skills but not the new, customer friendly, marketing and selling skills).

Many employees not only had the wrong skills but also the wrong attitudes being reluctant

to use computers, associating computers with secretarial work, and being unfriendly with

customers, regarding friendliness as inappropriate in their profession.

With regard to managers, Credit Lyonnais had managers who were under-educated

generalists in an increasingly specialized industry. Managers were also unwilling to let go

of decision making and, therefore, newer, younger, staff felt that they were constantly being

controlled and had no autonomy and discretion.

2) having too few of the type of employees needed: customer friendly, highly computer literate,

multi-lingual and sales orientated people.

Banking firms are reacting to the intensified competition and lower or negative profit margins by

demanding more co-operation from their employees requiring them to be flexible and responsive to

changing customer needs. These demands are difficult for older bank staff to accept as they had

become accustomed to high salaried, stable and secure jobs and as these staff have a strong union,

banks managements are still struggling to implement change.

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10) New banking Business Strategies

Success in the new banking environment is essentially based on four strategies:

i) Growth through acquisitions with the goal of dominating niche markets across a range of

countries such as personal banking and investment for high income / wealth clients, or

specialist small business banking.

ii) Becoming a universal bank, that offers all types of financial services in the home country

and in a range of foreign countries.

iii) Defending domestic markets by creating or enhancing personal client relationships.

iv) Selling more services and / or new products such as financial advice or insurance.

11) New HRM Strategies within France

There is widespread recognition throughout the European banking industry of the need for new

human resource management strategies to enable the achievement of these for new business

goals. At Credit Lyonnais changes in employment, the organisational structure, increased

training, better performance appraisal, development of new remuneration systems, and attempts

to modify employee attitudes are the HRM strategies that are now being used to change the

culture of the organisation within France.

11.1) Reducing Employment

The first HRM strategy targets excess employment but tries to reduce employment by avoiding

compulsory redundancy: banks must try to avoid the deteriorating morale which typically arises from

compulsory redundancies.

Banks, in their new market environment, depend more than ever on the positive attitudes of staff in

winning the loyalty of existing customers and persuading customers to purchase their new services.

Banks around Europe are, therefore, trying to avoid compulsory redundancies by focusing instead onreducing or freezing new recruitment, on early retirement programmes, on re-training and

redeployment (with protected salaries) to the new call centres and internet-banking centres, and on

voluntary departures. The first method is problematic as the banks do actually need new, enthusiastic

staff with the new computing, linguistic and customer centred skills which the existing staff often

lacks.

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Over the past few years early retirement programmes aimed at the least competent workers have

been widely used but sometimes the most competent employees took advantage of these programmes

and went on to prosper in other organisations.

11.2) Promotions

A move away from the traditional French hierarchical structure is necessary if banks are to attract

and retain young well-trained managers. Turnover among this group can be high, especially in banks

with top-heavy bureaucracies or, like Credit Lyonnais, 'nationals only' promotion policies. Such

structures do not offer the rapid career development the best young managers expect. Therefore the

reduction of highly centralized bureaucracies and the loosening of strict ethnocentric staffing and

promotion policies are important priorities.

The bank recognizes the need to abandon its traditional internal promotion policies and recruit at all

levels directly from the external marketplace, especially from its non-French branches (discussed in

more detail below), and to adopt performance appraisal systems designed to allow 'high potential'

employees a shortcut to the top.

11.3) New HRM Director

Credit Lyonnais' Board of Directors accepted during the period 1995-1999 that a bank's human

resources are the most important asset and therefore HRM policy should be at the centre of its

strategic plans. A new post, Director of World-Wide HRM, was created in 1998 and a former

Director of Personnel at VW was appointed to this very senior post and given the target of radically

changing every aspect of HRM to enable the bank to become a world leader in the C21.

11.4) De-centralisation - Increased Managerial Responsibility

Credit Lyonnais has begun to re-design both its domestic and international structures away from the

highly centralised historical structure of the bank towards a de-centralised structure with

accountability and responsibility delegated to branches. The traditional centralised structure has, it is

believed, hidden problems of variation in service quality (under-performing branches and regions,

and the responsible managers, have not been easily identifiable).

Reducing layers of hierarchy through de-centralisation not only makes good economic sense for

recruiting high potential staff and for the career advancement of such managers, it helps the bank

monitor its customer needs more directly. There is, of course, a downside arising from delayering for

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staff of average ability because there are, now, fewer opportunities for up-ward career progress. The

days when loan applications took weeks to be approved must be left behind if customer service is to

receive greater attention and de-centralisation and de-layering should help 'speed up' every aspect of

the bank's operations.

11.5) Training

Re-training is often the most viable strategy for dealing with the problem of people with out of date

skills. If offers the advantage of keeping employees who are already familiar with the bank and it

reduces employee hostility concerning staffing reductions. Re-training is focusing on giving staff

new skills but, most importantly, on changing employee attitudes with the aims of:

a) increase economic awareness especially of the new competitive environment of European

banking. Such training is largely aimed at making staff aware of the new competitive

challenges the Bank faces

b) increasing marketing and selling skills

c) increasing customer care skills, quality skills and language skills

d) improving computing skills.

In 1989 training costs were 4.4% of the bank's total world-wide salary bill while in 1999 the costs

were 8.1% of salaries which is well above the French governments requirement that firms spend

1.9% of salary costs on employee training. Historically, French staff has enjoyed much more and

much better quality staff development than foreign staff, and this has reinforced the dominance of

French staff in all senior management jobs. It has now, however, been decided that access to

advanced, French-based training, for high-ranking foreign staff should be expanded: talented

managers must be educated whatever nation they are based in, and then be asked to move to

wherever the bank needs them and wherever they can best develop their careers.

11.6) Appraisal and Reward

Credit Lyonnais is also attempting to change its internal culture through developing performance

appraisal systems and linking them to salary increases. It is recognised that the results of managerial

appraisal in the different national branches must be made available to the head office HRM

department in France so that managers who score particularly highly can be identified for further

development and for promotion either to head office in France or to elsewhere in the international

network where their talents can be used to greatest effect in furthering the competitive success of

Credit Lyonnais.

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Credit Lyonnais is moving away from the traditional corporate reward system, which merely

rewarded length of service (after each year of employment the employee received an automatic

salary increase), towards a performance reward system. In the traditional approach each job was

graded and a salary was allotted to the job regardless of the quality of individual job holder's

performance. With the new Performance Related Pay system there are no automatic pay increases

(even to cover inflation) and staff have to earn, through excellent performance, any pay increases

(under-performing staff get no increase and as the cost of living inflation in France is 4% per year

such employees' living standards therefore decline); on the other hand, excellent staff are able to earn

a salary increase of up to 35% each year.

It is believed that this new performance pay system is significantly modifying outdated employee

attitudes and will cause underperforming employees to leave. This approach, however, will not be

immediately adopted in some countries such as Germany where merit pay systems are avoided.

There are problems with this differential treatment though, and already German Credit Lyonnais

managers, who all continue to be on the old pay system, in talking to French, British and US

managers, feel annoyed that any special efforts they make will go unrewarded and their German

colleagues who under-perform continue to get the same pay increase anyway.

11.7) Recruitment of New Managers

Credit Lyonnais is recruiting new managerial employees, with the new skills and attitudes, in an

attempt to create an elite cadre of new style managers. This strategy is even being pursued along-

side making some, old style managers redundant. Credit Lyonnais is linking this search for new

blood with a strategy of increasing the number of cultural outsiders (that is, recruiting in managers

from other organisations in France) who are given important roles at all levels of the banks

hierarchy.

In terms of general recruitment, the bank is trying to improve its age and pre-employment

qualification base and new, non-managerial recruits increasingly have more academic training

than their predecessors. Currently most new recruits have remained in school until about the age of

20 and one-third have degrees from a university.

11.8) Employee Involvement in Strategic Management

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It could be argued that employee involvement in the higher level management of Credit

Lyonnais is good compared to the low degree of ordinary employee involvement in strategic

decision making in companies in the UK and USA. In accordance with the French law concerning

the democratisation of the public sector, the Board of Directors of Credit

Lyonnais is composed of 18 members:- six representatives of the French government

- six individuals selected for their expertise, their knowledge of the different sectors of the

banking business, or their position as representatives of consumers or users

- six employee representatives who are elected by the entire staff.

Major decisions concerning the company's economic, financial, social and technological policies are

made only after deliberation and approval by this Board of Directors.

However, it is now recognised that employee involvement in ordinary day to day, operational

decision making has not been good and new systems are being planned. The traditionally steep

French organizational hierarchy has meant that managers expect to 'command and control' and

subordinates, in turn, simply expect to be told what to do.

One new system to improve employee involvement will involve weekly team meetings for all staff

in which newly appointed team leaders will verbally brief staff using a weekly senior management

briefing sheet as their guide. Team leaders will also gather employee opinion and communicate this

'up' the organizational hierarchy to their managers. Eventually, in this way, staff opinions and

attitudes from branches around the world will be heard by the senior management in Paris. Unions in

France and other countries such as the UK and Italy, where there are traditionally formal, union,

channels of communication from employees to senior managers are, however, concerned, that these

new direct 'down-up communication channels may simply mean that unions are by-passed and

weakened.

PART TWO:INTERNATIONAL HRM at Credit Lyonnais

12) From Ethnocentric to Geocentric HRM

In general, each country has had responsibility for its specific human resource management practices

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and therefore very different rules and procedures for HRM are present across the company world-

wide. However, the new HRM Director wants to change this diversity of practice and move towards

a convergence in HRM. The new Director recognizes, however, that forcing foreign branches to

converge of the French approach will not necessarily work and a 'third way neither French nor that

of a specific foreign country, will have to evolve combining the best of HRM practice wherever it isfound.

The HRM Director is committed to finding 'best practice' within the company and within the banking

industry world wide and adopting this as the 'third way' HRM policy for Credit Lyonnais. It is

recognised, however, that in some national contexts some HRM policies and practices will need to

continue to diverge from either this or the traditional French way of managing HR. The areas of

employee communication, involvement and employee relations have been identified as areas where

policy and practice may have to continue to be different (for example, getting the highly

individualistic North Americans involved in management decision making will involve very

different techniques than getting the highly collectivist Japanese involved). The overall aim of the

HR Director is, therefore, to move from polycentric HRM (with a strong element of ethno-centricism

applied to all Credit Lyonnais managers) directly to geo-centric HRM.

13) Current World-Wide Employment

At the beginning of 2000 Credit Lyonnais' French Division had 2,460 offices and about 42,000

employees. The Credit Lyonnais Group had 72,500 salaried staff outside of France in 1999 which

represented an increase of nearly 35% over six years. The breakdown of its global workforce is as

follows:

Europe: 54,300

America: 5,500: of which 800 are in North America and 4,700 in South America

Asia: 1,100.

Africa: nearly 3,000.

Credit Lyonnais international experienced a short burst of rapid employment growth during the early

1970s and this period has left Credit Lyonnais with a staff that is too concentrated in the 40-to 50-

year age group, thus creating a strong bias in the age pyramid. The average age of the domestic

workforce has steadily risen and stood in 1999, at 39 years of age. There is also a bias against female

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managers: 55% of the employees are women but they very seldom have managerial positions. This

lack of equilibrium in age and gender has serious consequences for the development of careers.

However, within the group as a whole the percentage of French employees has significantly

decreased from 78% in the early 1980s to 57% now and this reflects that the HRM is becoming

increasingly international and thus opportunities for non-French staff are improving.

14) Promotion to Head Quarters in France

Only staff consistently receiving the highest level of merit bonuses (those qualifying for bonuses of

25% of salary and above) will be eligible for promotion and the traditional approach of promotion

based on seniority, and being a French national, will end throughout the HRM. Promotion based on

seniority, which has, historically, been the normal career route in the organisation is set to disappear

and Credit Lyonnais' HR Director has noted that many older, long serving employees, will soon find

themselves being managed by younger people, that is people who have the skills and attitudes for

today's world of banking and who have the right approach to expand the banks business in the

future.

Head quarters staff in Paris have been overwhelmingly French (98% in 1990) and although talented

foreign managers have been selected to head office roles they have tended to be appointed to France

on temporary contracts and the bank has viewed their contribution as short term believing that when

their specific project is complete they should return to the regional office or branch in the country

they came from. Head quarters staffing has, thus, been entirely ethnocentric. Credit Lyonnais' new

HR Director has, however, recognised the vital importance of getting the most able managers

promoted into head office positions, regardless of their nationality and wishes to move swiftly to a

situation where perhaps 50% of head office management consists of successful managers from the

foreign regional and branch offices.

15) Promotion and Movement between Foreign Branches: From Ethno to Geo-Centric

Credit Lyonnais has, historically, been managed ethnocentrically with all important

management jobs, wherever they occurred in the world, being taken by French expatriates.

However, now, as the bank moves into the C21, there is increasing awareness of the need for global,

geographic staffing, where the most appropriately qualified member of staff gets

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promoted regardless of their nationality.

16) The Dominance of French Expatriates in Regional Offices and Foreign Branches

Historically Credit Lyonnais' organisational structure had been based on the requirements of

managing a world-wide 'colonial' style organisation and therefore local bank directors had to be

French nationals and were delegated large amounts of power (their status was comparable to that of

Diplomats of the French state). The existence of 'territories', which were geographical in the case of

branches abroad, directed by virtually autonomous local managers, led to the creation of 'feudal-like

fiefdoms' which often resulted in internal competition ("one doesn't give a customer to somebody

else even if the same company name is over the door!")^Efforts are being made to reduce this

isolation by restructuring the organisation chart and increasing professional mobility.

The Paris-based senior managers of Credit Lyonnais have thus relied heavily in the past on

French expatriates to help facilitate or implement programmes which they have felt must be

transferred to foreign units. Because of the important role played by French expatriates, most local

employees believed until recently that certain positions in their home countries are, and always

would be, reserved for French nationals. There are essentially four explanations for the traditional

dominance of French expatriate managers:

i) French managers were familiar with internal workings of Credit Lyonnais its

organisational culture.

ii) French managers have helped to preserve the supremacy of corporate interests over

local or personal interests.

iii) As the bank is French owned it has been assumed that French managers, members of

the family, should be given certain advantages in the course of their careers.

iv) The belief has been widespread among top managers in France that it is easier to solve

the banks problems with expatriates of French nationality than with foreigners.

17) The Move to Global, Geocentric, Management

Multi-national corporations must balance the need to be able to differentiate foreign subsidiaries

while maintaining enough integration to provide the co-ordination and control necessary to financial

success. Credit Lyonnais now realizes that this integration may be achieved more easily through the

use of geographically mobile managers (not just French managers) and management development

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programmes involving managers from around the world. Such management development

programmes can be used as a 'glue' to maintain a tightly integrated network of geographically

dispersed and multi-ethnic branches and to develop a sense of corporate culture which might, for

managers at least, over-ride national culture.

No longer will French managers get any preferential access to promotion at head-quarters and when

these vacancies occur they will be advertised throughout the world-wide network of Credit Lyonnais.

Similarly, French managers will no longer have the 'pick' of the best jobs in foreign branches and

Continental offices, these jobs will also be advertised throughout the world and selection panels will

consist of at least four people, no more than two of whom will be French (ideally one will be from

the country where the branch is based, e.g. a German manager if the branch is in Germany, and one

from another country, e.g. in this case perhaps from the USA). Generally, the international

movement of staff, especially managers and technical experts, has increased and although there has

been a 13% increase in French expatriation, to some extent reinforcing the tradition of French

dominance, there has also been a doubling of foreign expatriation (for example, an Italian manager

working at a UK Credit Lyonnais branch) over the last four years. Increasingly too, highly competent

local staff are winning promotion to head up Credit Lyonnais operations in their own countries or on

their continent whereas ten years ago these top national and continental positions would only have

been available to French staff.

18) Resistance from French Managers to Geo-centric Staffing

French expatriates often found that expatriation could become a good career: about one-third of

current expatriates have spent nearly all of their careers abroad, and will probably end them abroad.

Being an expatriate provides financial and professional advantages and the French managers

working in foreign locations are likely to resist Credit Lyonnais head office attempts to reduce the

number of such postings. Financially, expatriates receive a salary supplement and generally betterliving conditions than they would have in France. Professionally, the work in the foreign branches is

often more interesting and challenging than what they were doing in France and working abroad

typically offers increased responsibilities and real autonomy in business and personnel management,

reinforced by geographical distance from the Paris head office. Above all there is often a sense of

adventure reminiscent of the colonial spirit of conquest. Top foreign postings are sometimes

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considered as personal empires which have led to a king like managerial style.

19) Moves to Geocentric Staffing Result in Cultural Problems

Credit Lyonnais has now made serious progress towards solving problem of the representation

of the non-French staff in the senior management of the organisation by promoting non-French

employees to very high levels of the bank at its Paris head-quarters and by special programmes

designed to identify and train high-potential managers from whichever country they come.

There is also a requirement for staff of Credit Lyonnaise in different nations to co-operate more. The

HIRM Director has noted that significant additional business could be secured for the bank if

branches in different nations could integrate in terms of common services and management of their

customers' accounts. As things are at the moment there is very little sense of international corporate

unity and, for example, when the manager of an English branch of Credit Lyonnais tries to deal with

the manager of a Russian branch on behalf of an English customer who is trading with a Russian

HRM, the English manager gets no better treatment from her Russian counter-part than if she worked

for a rival bank.

20) National Cultural Differences within the Credit Lyonnais Group

It is recognised that national cultural differences persist between the nations in which Credit

Lyonnaise operates and that the attempt to generate a common corporate culture throughout the

Banks world-wide operations has yet to be successful. A further problem lies in the fact that the

culture of Credit Lyonnais' head office reflects that of France itself: the company, like the

country, is positioned on Hofstedes dimensions as follows:

1) Individualism (1) - Collectivism (10):

mid-way at about 5

2) Low Power-Distance (1) - High Power Distance (10):

at the High Power Distance end at 8

3) Low Uncertainty Avoidance (1) - High Uncertainty Avoidance (10):

at the High Uncertainty Avoidance end at 9

4) Masculinity (1) - Femininity (10):

at the Masculine end at 3

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5) Short Term Orientation (1) - Long Term Orientation (10):

at the Long Term end at 8 (in contrast with French society as a whole which is rated as 4).

Credit Lyonnais has experienced particular problems in integrating managers from the countries

listed below into international management teams at the Paris head-quarters.

Scores of Credit Lyonnais Managers from different countries

Individualism Power Uncertainty Masculinity Time

Managers' I=1 Low=1 Low=1 Masc.=1 Short=1

UK 2 2 1 9 1

US 1 1 2 10 1

Japan 9 9 8. 2 8

Brazil 8 8 8 3 3

Russia 7 8 5 5 2

Algeria 2 8 7 1 7

China 10 8 8 3 10

20.1) Cultural Training

Credit Lyonnais has over the last three years worked with leading French, UK, US and

Japanese Business Schools to run cultural training programmes for managerial staff newly

arrived for their senior jobs at the Paris head-quarters but there are still many problems in:

a) integrating these foreign nationals with the local French staff

b) getting the foreign national managers to work together.

One of major challenges for Credit Lyonnais over the next decade is to ensure that talented managers

from around the world are enabled to work effectively at the French head-quarters and to work with

managers from nations in geographically adjacent parts of the world.

Questions:

1. Why is HRM important for a modern bank? In other words, why do banks in particular now

need highly motivated, committed staff that is willing to contribute to the success of their firm?

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2. a) What are the main changes in HRM that are happening at Credit Lyonnais within France

(there are at least 12 you should be able to identify)?

b) why are these changes happening?

3. Why should Credit Lyonnais be concerned about internationalising its management (that is,reducing the number of French managers and increasing the number of foreign managers):

a) at head office?

b) among the foreign branches?

c) What are the advantages of diversifying the nationalities of head-office management?

d) What are the disadvantages that will have to be guarded against?

4. a) How is it possible to 'Credit Lyonnais' foreigners (that is, how is it possible) to create an

organisational culture that is more powerful than national culture?

b) How is it possible to incorporate foreign ideas into Credit Lyonnais' culture without it losing

its identity?

5. a) Why might non-French managers, for example German, British and Russian managers, be

interested in working in a foreign country?

b) What kind of Human Resource Management policies (including social and financial

aspects) will provide the necessary incentives to encourage geographical mobility among non-

French managers?

6. Choose one national group of managers from those identified in the table in Section 20 of the

Case Study (US, Japanese, Brazilian, Russian, Algerian, or Chinese) and identify the problems which

managers of this nationality are likely to have when working:

a) with French managers

b) with managers from UK.

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Studiu Credit Lyonnaise (2)

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