Case Study

Firm: Credit Lyonnais Industry: Banking Countries: France, World-wide International HRM Issue: The internationalization of a bank & the cultural conflicts in ol ed
!" Introduction This study of Credit Lyonnais, one of the world's largest banks with offices in o er !" countries, e#a$ines the organisation and hu$an resource $anage$ent strategies thought necessary to sur i e the ra%id $arket changes in international banking& Credit Lyonnais %ro ides a %articularly good e#a$%le of a large bank which is deter$ined to succeed through growth in ser ices offered in e#isting $arkets and through e#tending into new $arkets& Credit Lyonnais has offices on all continents, and in the countries where it has o%erations, it a%%lies one of two growth strategies: i' organic growth (increasing the acti ity of its branches and subsidiaries, or o%ening new branches' ii' ac)uisitions * $ergers (in ol ing either take-o ers or %urchase of $inority interests in local banks'& Credit Lyonnais now has !+" offices outside ,uro%e and these are either subsidiaries (where the -./ has a $a0ority shareholding' or associated co$%anies (where the -./ has a $inority shareholding'& The Credit Lyonnais 1rou% has grown ery ra%idly o er the %ast few years and will continue to grow with %lanned e#%ansions on all Continents and in all areas of business& .eali2ing at an early stage of its e#%ansion that its ser ice and $arket strategies re)uired an e)ually strong hu$an resource strategy Credit Lyonnais set out to i$%le$enting -./ %olicies to achie e its business goals& #" $n International Cor%oration The Credit Lyonnais 1rou% has grown ery ra%idly o er the %ast decade %rinci%ally by the ac)uisition of foreign banks throughout ,uro%e and in other $arkets around the world& To benefit fro$ its ac)uisitions $any Credit Lyonnais $anagers belie e they $ust now integrate their banking network in ter$s of co$$on ser ices and client $anage$ent& 3ne of the key challenges that face Credit Lyonnais is to fully internationalise its -./ %olicies and beco$e a true $ulti-cultural, globalised, organisation& This task is $ade harder as $any senior $anagers think that the bank is already international si$%ly because it has a tradition of foreign o%erations and that it has doubled its si2e through the ac)uisition of foreign banks& 4uch thoughts obscure the fact that Credit Lyonnais is still do$inated by French culture and French ways of doing businesses des%ite the fact that the bank now e$%loys far $ore %eo%le outside of France than within&

and union negotiated collecti e agree$ents& -owe er. unlike in $any other countries such as the 6<. these agree$ents. the down-side to this French a%%roach of only a%%ointing $anagers who ha e been to these su%erior uni ersities is that the syste$ su%%resses the as%irations of su%er isory and lower-grade %ersonnel who find it difficult to be %ro$oted into $anagerial %ositions& In s%ite of increased o erseas in est$ent./ %ers%ecti e. negotiate collecti e agree$ents but./: FRENCH HRM at Credit Lyonnais 0" The . cadre. and ensures that business leaders are a$ong so$e of the best educated in the world& -owe er.&" French Conte't To ha e a good understanding of the cultural en iron$ent of this -. French $anage$ent often lacks the international ision and e#%erience of their counter%arts in 1er$any. unions are %owerful and strongly influence the go ern$ent& 6nions in France. the grandes ecoles./ there is a need to consider the culture of France.$RT -. the French go ern$ent. increased social insurance %ro ision and through dissuading banks fro$ $aking staff redundant& . %articularly its %olitical 5 econo$ic history and the style of $anage$ent and organisation often associated with French co$%anies& In France the 4tate %lays a key role in the econo$y and in society: the 4tate regulates econo$ic de elo%$ent through econo$ic %lanning o er a fi e-year %eriod& 4tate ownershi% of ser ices and industries is still high co$%ared to $ost other . France traditionally re%resents a good $arket for banks although de(re)ulation of the banking industry and the %ri atisation of so$e 4tate owned banks during the +9:"s $eant that banking %rofits ra%idly declined& -owe er. ca%able of res%onding )uickly enough to shorter %roduct * ser ice life cycles& In fact the $anagerial class. then legally a%%ly to all e$%loyees in the industry& Ter$s and conditions of e$%loy$ent in the banking industry are generous because of these forces.6 /e$ber 4tates and as one of the last large nationalised banks to be %ri atised. the >etherlands. once negotiated with the e$%loyer body in the rele ant industry. today the banking sector is faced with new needs and the collecti e agree$ents are considered by $any bank $anagers as a block to co$%etiti eness& . the 2 . which always %lays a %ri$ary role in defining the basic ter$s of the relationshi% between e$%loyers and e$%loyees.lthough trade union membershi% in France is low (only about +"8 of the working %o%ulation are $e$bers'. insisted on the maintenance of *orkers+ standard of li in) through wage inde#ing (linking wage increases to the rate of inflation'. fro$ a -. Credit Lyonnais is still strongly influenced by go ern$ent& With a sa ings rate of +7&78 of dis%osable inco$e. which are: a go ern$ent su%%orti e of workers. as elsewhere./'s Board of =irectors& This $anage$ent syste$ rigidly links hierarchical status with graduation fro$ the 'right' uni ersities.ature of Mana)ement in France 4hort-co$ings in French $anage$ent generally are noted: the elitist $anage$ent education syste$ has been criticised by so$e for not %ro iding the right calibre of fle#ible. is officially recognised by tradition and law& This $anagerial status gi es $anagers s%ecial %ensions and social insurance and also re%resentation %ri ileges on -. international $anagers.

%rotected $arkets. this se%aration between indi idual's standard of li ing and the organisations long-ter$ ability to generate %rofits began to erode& -u$an . howe er. a narrow s%an of control . there e#ists a stee% educational %yramid in France with the grandes ecoles at the to%& These grandes ecoles select an elite cor%s of students through ery difficult entrance e#a$inations& The e#a$s test for analytical and reasoning ca%acity rather than inter%ersonal skills or %rofessional a%titude& The di%lo$a of a grande ecole is so$eti$es considered an 'entrance ticket' into the fast-track of a %ublic or %ri ately owned co$%any& In effect the task of the grande ecoles is to select France@s future business leaders& The grande ecole %ro ide o er A"8 of the to% $anagers in French co$%anies& Thus in France./ %rofits to e$%loyees by way of i$%ro ed re$uneration.s in so$e other Latin countries and ?a%an.$%loyees generally had little concern for the future well-being of the co$%any& =uring the +9:"s. en though this i$%lies that organisational structures and hierarchical relationshi%s are likely to re$ain relati ely rigid. where each grou% tries to %reser e its trade or %rofession and its inde%endence& .& . rather than a focus for %ersonal and collecti e fulfil$ent& =uring the +9C"s the role of hu$an resource $anagers consisted %rinci%ally of negotiating the transfer of -. such as that of the French banking industry before the +99"s. an indi idual@s self-education or entre%reneurial attitudes are less likely to contribute to success than his or her di%lo$a and ca%acity to de elo% social * %olitical relationshi%s& Because they are destined to rise ra%idly u% the career hierarchy. formalised work rules are fre)uently ague or absent (strong work rules do e#ist but these are infor$al'& 3" $ttitudes to 4ork in France French workers influence organisational and $anagerial styles through their attitudes toward work and fa$ily life& Berha%s because of their Catholic heritage. of necessity. grande ecole graduates often rotate ery )uickly through a wide ariety of co$%any %ositions gaining sco%e. restrict $anagers at each le el to a narrow range of res%onsibilities and areas of action (that is.few e$%loyees to $anage'& /anagers (and non-$anagerial workers' aggressi ely guard their areas of res%onsibility fro$ encroach$ent& French organisations ha e been characterised as societies of castes. o er-bureaucratic organisations& Because the ser ices of the 3 . result in o erstaffed. so$eti$es at the e#%ense of de%th& 1" 2ureaucracy & Hierarchy in France The traditional French $odel of organisation has been described as a co$bination of bureaucratic and aristocratic beha iour& 3rganisations generally ha e many hierarchical le els which. French e$%loyees ha e traditionally considered work a si$%le necessity. benefits and working conditions& .6< and the 64.esource $anagers refocused on $aking e$%loyees aware of the linkage between their indi idual li ing standards and future 0ob security and the fir$'s future& This linkage a%%ears now to be well established as France enters the new century and co$%anies acti ely discuss the social contract and how indi iduals should contribute fully to their fir$& 5" /m%loyment in 2ankin) in France -ighly regulated.

%rofitable organisation& =uring the %ast decade banks throughout . at the sa$e ti$e. has been that the skills and attitudes of the banks' staff ha e failed to kee% u%& Bankers ha e often been characterised as conser ati e. therefore.6's 4econd Banking =irecti e ca$e into force about ten years ago allowing . so$e of their e$%loyees $ust e$ulate the enthusiastic %ersonality %rofile of a sales%erson& This transfor$ation is %articularly i$%ortant as banks are finding that new ser ices are %ro iding higher $argins and. further change affecting e$%loy$ent nu$bers and ty%es in traditional banks such as Credit Lyonnais. beco$e $uch $ore co$%etiti e& -a ing the o%%ortunity to e#%and into other $arkets and countries is a double-edged sword in that banks fro$ other countries can e#%and into your $arketF This need for bank staff to beco$e $ore co$%etiti ely aware re%resents a real culture change es%ecially for the French& Both 'back office' co$%uting technology and auto$atic cash $achine technology co$bined with the growth of 7G hour tele%hone and internet bankin) has. such as life insurance sales. called the 'uni ersal bank'.uro%ean $arkets& This strategy. the )uality and effecti eness of a bank6s em%loyees is %robably the $ost critical factor to its success& Banks cannot build distincti e )uality into their ser ice design and then turn on an auto$ated asse$bly line& Duality $ust be deli ered by %eo%le who. and international trade barriers fallE the . an increasingly greater share of their turno er& The banking industry has also. in $ost %arts of . resulted in both significant 0ob losses and.6 ha e seen regulatory. in ol ing $ore '%roducts' being offered in $ore national $arkets. life assurance.uro%ean banks in the late +9:"s was to de elo% a wide range of %roducts offered in all the $a0or . can be inconsistent. has been the e$ergence of nonbanking co$%etitors offering traditional banking ser ices such as so$e of the large French retail store grou%s which offer custo$ers %ersonal che)ue accounts and credit cards& 4 .6 state and to also offer a broader range of financial ser ices& This de-regulation has encouraged $any bank directors to e#%and the ser ices offered by their co$%anies into other.e* HRM Challen)es 3ne result of these changes. the creation of newer. but lower skilled. ser ices and sectors such as insurance o%erations and underwriting cor%orate debt. reser ed indi iduals who are ery attenti e to detail& . un$oti ated.uro%e. $ortgages etc&' are re$arkably undifferentiated and al$ost instantaneously co%ied by co$%etitors. uncoo%erati e. national. 0obs in tele%hone call centres& 4uch decreases in staff nu$bers and de-skilling of staff ha e been %articularly difficult to achie e in France gi en the go ern$ent's su%%ort for 0ob security& ./ challenges& 7" . business accounts. as e#%erience has taught us.uro%ean banks to freely $o e into any other . and so$eti$es work acti ely against the changes re)uired for a fir$ to beco$e dyna$ic. of course.banking industry (sa ings accounts.s banks $o e increasingly into other '%roduct' lines. %ersonal che)ue accounts. usually in ol es the $erger of banks both do$estically and internationally with other banks and with other financial ser ice %ro iders (with insurance fir$s for e#a$%le'& This di ersification of banks' acti ities is creating a nu$ber of significant -. $ore lucrati e. to $ention 0ust two& Indeed one of the do$inant co$%etiti e strategies of the largest .

de elo%$ent of new re$uneration syste$s.e* HRM Strate)ies *ithin France There is wides%read recognition throughout the . howe er. and being unfriendly with custo$ers. the de elo%$ent and $aintenance of strong inter%ersonal relationshi%s is critical to the long-ter$ success of the bank& 8" Remainin) HRM . increased training. the organisational structure. better %erfor$ance a%%raisal. custo$er friendly. res%onded to these sorts of challenges by i$%ro ed training for bank staff %articularly in the area of custo$er relations and $arketing and selling& I$%ro ing ser ice )uality cannot.roblems Credit Lyonnais in the +99"s had essentially two ty%es of hu$an resource %roble$s: +' ha ing too $any of the sa$e ty%e of e$%loyees with the *ron) skills (%eo%le with traditional banking skills but not the new. that offers all ty%es of financial ser ices in the ho$e country and in a range of foreign countries& iii' =efending do$estic $arkets by creating or enhancing %ersonal client relationshi%s& i ' 4elling $ore ser ices and * or new %roducts such as financial ad ice or insurance& !!" .uro%ean banking industry of the need for new hu$an resource $anage$ent strategies to enable the achie e$ent of these for new business goals& . staff felt that they were constantly being controlled and had no autono$y and discretion& 7' ha ing too few of the ty%e of e$%loyees needed: custo$er friendly. $ulti-lingual and sales orientated %eo%le& Banking fir$s are reacting to the intensified co$%etition and lower or negati e %rofit $argins by de$anding $ore co-o%eration fro$ their e$%loyees re)uiring the$ to be fle#ible and res%onsi e to changing custo$er needs& These de$ands are difficult for older bank staff to acce%t as they had beco$e accusto$ed to high salaried. newer.e* bankin) 2usiness Strate)ies 4uccess in the new banking en iron$ent is essentially based on four strategies: i' 1rowth through ac)uisitions with the goal of do$inating niche markets across a range of countries such as %ersonal banking and in est$ent for high inco$e * wealth clients./ 5 . associating co$%uters with secretarial work. or s%ecialist s$all business banking& ii' Beco$ing a uni ersal bank. howe er. highly co$%uter literate. regarding friendliness as ina%%ro%riate in their %rofession& With regard to $anagers. Credit Lyonnais had $anagers who were under-educated generalists in an increasingly s%eciali2ed industry& /anagers were also unwilling to Hlet go@ of decision $aking and. stable and secure 0obs and as these staff ha e a strong union. bank@s $anage$ents are still struggling to i$%le$ent change& !9" . $arketing and selling skills'& /any e$%loyees not only had the wrong skills but also the *ron) attitudes being reluctant to use co$%uters. younger.French banks ha e.s in all ser ice oriented businesses. therefore.t Credit Lyonnais changes in e$%loy$ent. ha%%en through training alone: bank e$%loyees need to funda$entally chan)e their attitudes toward the bank@s clients& . and atte$%ts to $odify e$%loyee attitudes are the -.

de%end $ore than e er on the %ositi e attitudes of staff in winning the loyalty of e#isting custo$ers and %ersuading custo$ers to %urchase their new ser ices& Banks around ./. hidden %roble$s of ariation in ser ice )uality (under-%erfor$ing branches and regions. in their new $arket en iron$ent. =irector of World-Wide -./ strategy targets e#cess e$%loy$ent but tries to reduce e$%loy$ent by a oiding co$%ulsory redundancy: banks $ust try to a oid the deteriorating $orale which ty%ically arises fro$ co$%ulsory redundancies& Banks./ to enable the bank to beco$e a world leader in the C7+& !!:0" . and the res%onsible $anagers. trying to a oid co$%ulsory redundancies by focusing instead on reducing or free2ing new recruit$ent. was created in +99: and a for$er =irector of Bersonnel at IW was a%%ointed to this ery senior %ost and gi en the target of radically changing e ery as%ect of -.strategies that are now being used to change the culture of the organisation within France& !!:!" Reducin) /m%loyment The first -.e(centralisation ( Increased Mana)erial Res%onsibility Credit Lyonnais has begun to re-design both its do$estic and international structures away fro$ the highly centralised historical structure of the bank towards a de-centralised structure with accountability and res%onsibility delegated to branches& The traditional centralised structure has. es%ecially fro$ its non-French branches (discussed in $ore detail below'. es%ecially in banks with to%-hea y bureaucracies or. new %ost. on early retire$ent %rogra$$es. linguistic and custo$er centred skills which the e#isting staff often lacks& 3 er the %ast few years early retire$ent %rogra$$es ai$ed at the least co$%etent workers ha e been widely used but so$eti$es the $ost co$%etent e$%loyees took ad antage of these %rogra$$es and went on to %ros%er in other organisations& !!:#" . $o e away fro$ the traditional French hierarchical structure is necessary if banks are to attract and retain young well-trained $anagers& Turno er a$ong this grou% can be high. ha e not been easily identifiable'& Reducin) layers of hierarchy through de-centralisation not only $akes good econo$ic 6 . it is belie ed. 'nationals only' %ro$otion %olicies& 4uch structures do not offer the ra%id career de elo%$ent the best young $anagers e#%ect& Therefore the reduction of highly centrali2ed bureaucracies and the loosening of strict ethnocentric staffing and %ro$otion %olicies are i$%ortant %riorities& The bank recogni2es the need to abandon its traditional internal %ro$otion %olicies and recruit at all le els directly fro$ the e#ternal $arket%lace. and to ado%t %erfor$ance a%%raisal syste$s designed to allow 'high %otential' e$%loyees a shortcut to the to%& !!:&" ./ %olicy should be at the centre of its strategic %lans& .romotions .e* HRM . and on oluntary de%artures& The first $ethod is %roble$atic as the banks do actually need new. therefore.irector Credit Lyonnais' Board of =irectors acce%ted during the %eriod +99A-+999 that a bank's hu$an resources are the most im%ortant asset and therefore -. enthusiastic staff with the new co$%uting. like Credit Lyonnais. on re-training and rede%loy$ent (with %rotected salaries' to the new call centres and internet-banking centres.uro%e are.

)uality skills and language skills d' i$%ro ing co$%uting skills& In +9:9 training costs were G&G8 of the bank's total world-wide salary bill while in +999 the costs were :&+8 of salaries which is well abo e the French go ern$ent@s re)uire$ent that fir$s s%end +&98 of salary costs on e$%loyee training& -istorically. French staff has en0oyed $uch $ore and $uch better )uality staff de elo%$ent than foreign staff. it hel%s the bank $onitor its custo$er needs $ore directly& There is. towards a %erformance re*ard syste$& In the traditional a%%roach each 0ob was graded and a salary was allotted to the 0ob regardless of the )uality of indi idual 0ob holder's %erfor$ance& With the new . fewer o%%ortunities for u%-ward career %rogress& The days when loan a%%lications took weeks to be a%%ro ed $ust be left behind if custo$er ser ice is to recei e greater attention and decentralisation and de-layering should hel% 's%eed u%' e ery as%ect of the bank's o%erations& !!:1" Trainin) . which $erely rewarded length of ser ice (after each year of e$%loy$ent the e$%loyee recei ed an auto$atic salary increase'.uro%ean banking& 4uch training is largely ai$ed at $aking staff aware of the new co$%etiti e challenges the Bank faces b' increasing $arketing and selling skills c' increasing custo$er care skills.erformance Related ./ de%art$ent in France so that $anagers who score %articularly highly can be identified for further de elo%$ent and for %ro$otion either to head office in France or to elsewhere in the international network where their talents can be used to greatest effect in furthering the co$%etiti e success of Credit Lyonnais& Credit Lyonnais is $o ing away fro$ the traditional cor%orate reward syste$. through e#cellent %erfor$ance. $ost i$%ortantly. French-based training.e-training is often the $ost iable strategy for dealing with the %roble$ of %eo%le with out of date skills& If offers the ad antage of kee%ing e$%loyees who are already fa$iliar with the bank and it reduces e$%loyee hostility concerning staffing reductions& .sense for recruiting high %otential staff and for the career ad ance$ent of such $anagers. on changing e$%loyee attitudes with the ai$s of: a' increase econo$ic awareness es%ecially of the new co$%etiti e en iron$ent of . been decided that access to ad anced. howe er. and then be asked to $o e to where er the bank needs the$ and where er they can best de elo% their careers& !!:3" $%%raisal and Re*ard Credit Lyonnais is also atte$%ting to change its internal culture through de elo%ing %erfor$ance a%%raisal syste$s and linking the$ to salary increases& It is recognised that the results of $anagerial a%%raisal in the different national branches $ust be $ade a ailable to the head office -. e#cellent staff are able to earn a salary increase of u% 7 . now. and this has reinforced the do$inance of French staff in all senior $anage$ent 0obs& It has now.e-training is focusing on gi ing staff new skills but.ay syste$ there are no auto$atic %ay increases (e en to co er inflation' and staff ha e to earn. a downside arising fro$ delayering for staff of a erage ability because there are. of course. any %ay increases (under-%erfor$ing staff get no increase and as the cost of li ing inflation in France is G8 %er year such e$%loyees' li ing standards therefore decline'E on the other hand. for high-ranking foreign staff should be e#%anded: talented $anagers $ust be educated whate er nation they are based in.

financial. the bank is trying to i$%ro e its age and %re-e$%loy$ent )ualification base and new. and already 1er$an Credit Lyonnais $anagers.e* Mana)ers Credit Lyonnais is recruiting new $anagerial e$%loyees. with the new skills and attitudes. in turn.& In accordance with the French law concerning the de$ocratisation of the %ublic sector. entually. British and 64 $anagers. channels of co$$unication 8 . it is now recognised that e$%loyee in ol e$ent in ordinary day to day. o%erational decision makin) has not been good and new syste$s are being %lanned& The traditionally stee% French organi2ational hierarchy has $eant that $anagers e#%ect to 'co$$and and control' and subordinates. will not be i$$ediately ado%ted in so$e countries such as 1er$any where $erit %ay syste$s are a oided& There are %roble$s with this differential treat$ent indi iduals selected for their e#%ertise. staff o%inions and attitudes fro$ branches around the world will be heard by the senior $anage$ent in Baris& 6nions in France and other countries such as the 6< and Italy. who all continue to be on the old %ay syste$. social and technological %olicies are $ade only after deliberation and a%%ro al by this Board of =irectors& -owe em%loyee re%resentati es who are elected by the entire staff& /a0or decisions concerning the co$%any's econo$ic. their knowledge of the different sectors of the banking business. feel annoyed that any s%ecial efforts they $ake will go unrewarded and their 1er$an colleagues who under-%erfor$ continue to get the sa$e %ay increase anyway& !!:5" Recruitment of . or their %osition as re%resentati es of consu$ers or users . recruiting in $anagers fro$ other organisations in France' who are gi en i$%ortant roles at all le els of the banks hierarchy& In ter$s of )eneral recruitment. non-$anagerial recruits increasingly ha e $ore acade$ic training than their %redecessors& Currently $ost new recruits ha e re$ained in school until about the age of 7" and one-third ha e degrees fro$ a uni ersity& !!:7" /m%loyee In ol ement in Strate)ic Mana)ement It could be argued that e$%loyee in ol e$ent in the higher le el $anage$ent of Credit Lyonnais is good co$%ared to the low degree of ordinary e$%loyee in ol e$ent in strategic decision $aking in co$%anies in the 6< and 64. union. in talking to French. the Board of =irectors of Credit Lyonnais is co$%osed of +: $e$bers: .si# re%resentati es of the French go ern$ent . old style $anagers redundant& Credit Lyonnais is linking this search for Hnew blood@ with a strategy of increasing the nu$ber of cultural outsiders (that JA8 each year& It is belie ed that this new %erfor$ance %ay syste$ is significantly $odifying outdated e$%loyee attitudes and will cause under%erfor$ing e$%loyees to lea e& This a%%roach. si$%ly e#%ect to be told what to do& 3ne new syste$ to i$%ro e e$%loyee in ol e$ent will in ol e weekly team meetin)s for all staff in which newly a%%ointed team leaders will erbally brief staff using a weekly senior $anage$ent briefing sheet as their guide& Tea$ leaders will also gather e$%loyee o%inion and co$$unicate this 'u%' the organi2ational hierarchy to their $anagers& . howe er. in this way. where there are traditionally for$al. in an atte$%t to create an elite cadre of Hnew style@ $anagers& This strategy is e en being %ursued along-side $aking so$e.

& The areas of e$%loyee co$$unication.sia: +./ %olicies and %ractices will need to continue to di erge fro$ either this or the traditional French way of $anaging -. each country has had res%onsibility for its s%ecific hu$an resource $anage$ent %ractices and therefore ery different rules and %rocedures for -./& !&" Current 4orld(4ide /m%loyment ./ %ractice where er it is found& The -. to $o e fro$ %olycentric -.$ericans in ol ed in $anage$ent decision $aking will in ol e ery different techni)ues than getting the highly collecti ist ?a%anese in ol ed'& The o erall ai$ of the -. the new -. will ha e to e ol e co$bining the best of -. concerned.G!" offices and about G7./ (with a strong ele$ent of ethno-centricis$ a%%lied to all Credit Lyonnais $anagers' directly to geo-centric -.uro%e: AG./ %olicy for Credit Lyonnais& It is recognised./ =irector wants to change this di ersity of %ractice and $o e towards a con er)ence in HRM& The new =irector recogni2es.""" e$%loyees& The Credit Lyonnais 1rou% had C7./ =irector is co$$itted to finding 'best %ractice' within the co$%any and within the banking industry world wide and ado%ting this as the 'third way' -. that these new direct 'downu%@ co$$unication channels $ay si$%ly $ean that unions are by-%assed and weakened& . howe er."""& Credit Lyonnais international e#%erienced a short burst of ra%id e$%loy$ent growth during the early +9C"s and this %eriod has left Credit Lyonnais with a staff that is too concentrated in the G"-to A"-year age grou%.+""& .frica: nearly J. in ol e$ent and e$%loyee relations ha e been identified as areas where %olicy and %ractice $ay ha e to continue to be different (for e#a$%le.A"": of which :"" are in >orth . getting the highly indi idualistic >orth . =irector is. howe er. that in so$e national conte#ts some -.J"" .$erica ./ are %resent across the co$%any world-wide& -owe er. at J9 years of age& There is also a bias against fe$ale $anagers: AA8 of the e$%loyees are wo$en but they ery seldo$ ha e $anagerial %ositions& This lack of e)uilibriu$ in age and gender has serious conse)uences for the de elo%$ent of careers& -owe er. that forcing foreign branches to con erge of the French a%%roach will not necessarily work and a 'third *ay@ neither French nor that of a s%ecific foreign country. therefore.C"" in 4outh .t the beginning of 7""" Credit Lyonnais' French =i ision had 7.$erica and G.fro$ e$%loyees to senior $anagers are.$erica: A.A"" salaried staff outside of France in +999 which re%resented an increase of nearly JA8 o er si# years& The breakdown of its global workforce is as follows: . within the grou% as a whole the %ercenta)e of French em%loyees has significantly decreased fro$ C:8 in the 9 .$RT T4-: INTERNATIONAL HRM at Credit Lyonnais !#" From /thnocentric to <eocentric HRM In general. howe er. thus creating a strong bias in the age %yra$id& The a erage age of the do$estic workforce has steadily risen and stood in +999.

will soon find the$sel es being $anaged by younger %eo%le. long ser ing e$%loyees. where the $ost a%%ro%riately )ualified $e$ber of staff gets %ro$oted regardless of their nationality& !3" The . there is increasing awareness of the need for global. regardless of their nationality and wishes to $o e swiftly to a situation where %erha%s A"8 of head office $anage$ent consists of successful $anagers fro$ the foreign regional and branch offices& !1" . as the bank $o es into the C7+.early +9:"s to AC8 now and this reflects that the -. being taken by French e#%atriates& -owe er. directed by irtually autono$ous local $anagers.romotion to Head =uarters in France 3nly staff consistently recei ing the highest le el of $erit bonuses (those )ualifying for bonuses of 7A8 of salary and abo e' will be eligible for %ro$otion and the traditional a%%roach of %ro$otion based on seniority. will end throughout the -. which has.romotion and Mo ement bet*een Forei)n 2ranches: From /thno to <eo(Centric Credit Lyonnais has. $ost local e$%loyees belie ed until recently that certain %ositions in their ho$e countries 10 . =irector has./ is beco$ing increasingly international and thus o%%ortunities for non-French staff are i$%ro ing& !0" . been entirely ethnocentric& Credit Lyonnais' new -. geogra%hic staffing. thus. historically. howe er. now. where er they occurred in the world. recognised the ital i$%ortance of getting the $ost able $anagers %ro$oted into head office %ositions. that is %eo%le who ha e the skills and attitudes for today's world of banking and who ha e the right a%%roach to e#%and the bank@s business in the future& -ead )uarters staff in Baris ha e been o erwhel$ingly French (9:8 in +99"' and although talented foreign $anagers ha e been selected to head office roles they ha e tended to be a%%ointed to France on te$%orary contracts and the bank has iewed their contribution as short ter$ belie ing that when their s%ecific %ro0ect is co$%lete they should return to the regional office or branch in the country they ca$e fro$& -ead )uarters staffing has. =irector has noted that $any older. and being a French national.ominance of French /'%atriates in Re)ional -ffices and Forei)n 2ranches -istorically Credit Lyonnais' organisational structure had been based on the re)uire$ents of $anaging a world-wide 'colonial' style organisation and therefore local bank directors had to be French nationals and were delegated large a$ounts of %ower (their status was co$%arable to that of =i%lo$ats of the French state'& The e#istence of 'territories'. which were geogra%hical in the case of branches abroad. led to the creation of 'feudal-like fiefdo$s' which often resulted in internal co$%etition (Kone doesn't gi e a custo$er to so$ebody else e en if the sa$e co$%any na$e is o er the doorFK'L. been $anaged ethnocentrically with all i$%ortant $anage$ent 0obs. been the nor$al career route in the organisation is set to disa%%ear and Credit Lyonnais' -./& Bro$otion based on seniority. historically.fforts are being $ade to reduce this isolation by restructuring the organisation chart and increasing %rofessional $obility& The Baris-based senior $anagers of Credit Lyonnais ha e thus relied hea ily in the %ast on French e'%atriates to hel% facilitate or i$%le$ent %rogra$$es which they ha e felt $ust be transferred to foreign units& Because of the i$%ortant role %layed by French e#%atriates.

reser ed for French nationals& There are essentially four e#%lanations for the traditional do$inance of French e#%atriate $anagers: i' French $anagers were fa$iliar with internal workings of Credit Lyonnais M its organisational culture& ii' French $anagers ha e hel%ed to %reser e the su%re$acy of cor%orate interests o er local or %ersonal interests& iii' . and one fro$ another country. an Italian $anager working at a 6< Credit Lyonnais branch' o er the last four years& Increasingly too. o er-ride national culture& >o longer will French $anagers get any %referential access to %ro$otion at head-)uarters and when these acancies occur they will be ad ertised throughout the world-wide network of Credit Lyonnais& 4i$ilarly. the international $o e$ent of staff.'& 1enerally. e. these 0obs will also be ad ertised throughout the world and selection %anels will consist of at least four %eo%le. French $anagers will no longer ha e the '%ick' of the best 0obs in foreign branches and Continental offices.g. in this case %erha%s fro$ the 64. to so$e e#tent reinforcing the tradition of French do$inance.s the bank is French owned it has been assu$ed that French $anagers. should be gi en certain ad antages in the course of their careers& i ' The belief has been wides%read a$ong to% $anagers in France that it is easier to sol e the bank@s %roble$s with e#%atriates of French nationality than with foreigners& !5" The Mo e to <lobal> <eocentric> Mana)ement /ulti-national cor%orations $ust balance the need to be able to differentiate foreign subsidiaries while $aintaining enough integration to %ro ide the co-ordination and control necessary to financial success& Credit Lyonnais now reali2es that this integration $ay be achie ed $ore easily through the use of geogra%hically $obile $anagers (not 0ust French $anagers' and $anage$ent de elo%$ent %rogra$$es in ol ing $anagers fro$ around the world& 4uch $anage$ent de elo%$ent %rogra$$es can be used as a 'glue' to $aintain a tightly integrated network of geogra%hically dis%ersed and $ulti-ethnic branches and to de elo% a sense of cor%orate culture which $ight. e. there has also been a doubling of foreign e#%atriation (for e#a$%le.g. has increased and although there has been a +J8 increase in French e#%atriation. no $ore than two of who$ will be French (ideally one will be fro$ the country where the branch is based. e#%atriates recei e a 11 . and always would be. H$e$bers of the fa$ily@. a 1er$an $anager if the branch is in 1er$any. for $anagers at least.are. es%ecially $anagers and technical e#%erts. highly co$%etent local staff are winning %ro$otion to head u% Credit Lyonnais o%erations in their own countries or on their continent whereas ten years ago these to% national and continental %ositions would only ha e been a ailable to French staff& !7" Resistance from French Mana)ers to <eo(centric Staffin) French e#%atriates often found that e#%atriation could beco$e a good career: about onethird of current e#%atriates ha e s%ent nearly all of their careers abroad. and will %robably end the$ abroad& Being an e#%atriate %ro ides financial and %rofessional ad antages and the French $anagers working in foreign locations are likely to resist Credit Lyonnais@ head office atte$%ts to reduce the nu$ber of such %ostings& Financially.

reinforced by geogra%hical distance fro$ the Baris head office& . oidance (+' . the .bo e all there is often a sense of ad enture re$iniscent of the colonial s%irit of con)uest& To% foreign %ostings are so$eti$es considered as %ersonal e$%ires which ha e led to a king like $anagerial style& !8" Mo es to <eocentric Staffin) Result in Cultural . when the $anager of an .Collecti is$ (+"': $id-way at about A 7' Low Bower-=istance (+' .ussian -./.nglish custo$er who is trading with a .Long Ter$ 3rientation (+"': at the Long Ter$ end at : (in contrast with French society as a whole which is rated as G'& Credit Lyonnais has e#%erienced %articular %roble$s in integrating $anagers fro$ the countries listed below into international $anage$ent tea$s at the Baris head-)uarters& 12 . oidance end at 9 G' /asculinity (+' .roblems Credit Lyonnais has now $ade serious %rogress towards sol ing %roble$ of the re%resentation of the non-French staff in the senior $anage$ent of the organisation by %ro$oting non-French e$%loyees to ery high le els of the bank at its Baris head)uarters and by s%ecial %rogra$$es designed to identify and train high-%otential $anagers fro$ whiche er country they co$e& There is also a re)uire$ent for staff of Credit Lyonnaise in different nations to co-o%erate $ore& The -I.-igh Bower =istance (+"': at the -igh Bower =istance end at : J' Low 6ncertainty .salary su%%le$ent and generally better li ing conditions than they would ha e in France& Brofessionally.s things are at the $o$ent there is ery little sense of international cor%orate unity and.-igh 6ncertainty . like the country./ =irector has noted that significant additional business could be secured for the bank if branches in different nations could inte)rate in ter$s of co$$on ser ices and $anage$ent of their custo$ers' accounts& .ussian branch on behalf of an . for e#a$%le. the work in the foreign branches is often $ore interesting and challenging than what they were doing in France and working abroad ty%ically offers increased res%onsibilities and real autono$y in business and %ersonnel $anage$ent. is %ositioned on -ofstede@s di$ensions as follows: +' Indi idualis$ (+' .nglish $anager gets no better treat$ent fro$ her .ifferences *ithin the Credit Lyonnais <rou% It is recognised that national cultural differences %ersist between the nations in which Credit Lyonnaise o%erates and that the atte$%t to generate a co$$on cor%orate culture throughout the Bank@s world-wide o%erations has yet to be successful& . further %roble$ lies in the fact that the culture of Credit Lyonnais' head office reflects that of France itself: the co$%any.nglish branch of Credit Lyonnais tries to deal with the $anager of a .ational Cultural .ussian counter-%art than if she worked for a ri al bank& #9" . oidance (+"': at the -igh 6ncertainty .Fe$ininity (+"': at the /asculine end at J A' 4hort Ter$ 3rientation (+' .

/ that are ha%%ening at Credit Lyonnais *ithin France (there are at least +7 you should be able to identify'N b' why are these changes ha%%eningN +& Why should Credit Lyonnais be concerned about internationalisin) its $anage$ent (that is. 64 and ?a%anese Business 4chools to run cultural training %rogra$$es for $anagerial staff newly arri ed for their senior 0obs at the Baris head-)uarters but there are still $any %roble$s in: a' integrating these foreign nationals with the local French staff b' getting the foreign national $anagers to work together& 3ne of $a0or challenges for Credit Lyonnais o er the ne#t decade is to ensure that talented $anagers fro$ around the world are enabled to work effecti ely at the French head)uarters and to work with $anagers fro$ nations in geogra%hically ad0acent %arts of the world& =uestions: !: Why is -./ i$%ortant for a $odern bankN In other words.=1 Fern. 6<. co$$itted staff that is willing to contribute to the success of their fir$N #: a' What are the $ain changes in -.Scores of Credit Lyonnais Mana)ers from different countries Indi idualism /anagers' countries ?@ ?S Aa%an 2razil Russia $l)eria China I=1 C=10 7 + 9 : C 7 +" .istance Low=1 High=10 7 + 9 : : : : ?ncertainty $ oidance Low=1 High=10 + 7 :& : A C : Masculinity Masc.o*er . why do banks in %articular now need highly $oti ated.=10 9 +" 7 J A + J Time -rientation Short=1 Long=10 + + : J 7 C +" #9:!" Cultural Trainin) Credit Lyonnais has o er the last three years worked with leading French. reducing the nu$ber of French $anagers and increasing the nu$ber of foreign $anagers': a' at head officeN b' a$ong the foreign branchesN c' What are the ad antages of di ersifying the nationalities of head-office $anage$entN d' What are the disad antages that will ha e to be guarded againstN 13 &: .

?a%anese.0: a' -ow is it %ossible to 'Credit Lyonnais' foreigners (that is. .esource /anage$ent %olicies (including social and financial as%ects' will %ro ide the necessary incenti es to encourage geogra%hical $obility a$ong non-French $anagersN 1: 3: Choose one national )rou% of $anagers fro$ those identified in the table in 4ection 7" of the Case 4tudy (64. for e#a$%le 1er$an.ussian. be interested in working in a foreign countryN b' What kind of -u$an . or Chinese' and identify the %roble$s which $anagers of this nationality are likely to ha e when working: a' with French $anagers b' with $anagers fro$ 6<& 14 .lgerian. how is it %ossible' to create an or)anisational culture that is $ore %owerful than national cultureN b' -ow is it %ossible to incor%orate foreign ideas into Credit Lyonnais' culture without it losing its identityN a' Why $ight non-French $anagers. Bra2ilian.ussian $anagers. British and . .