Orange SA (Formerly France Telecom): A case study about restructuring

Written Analysis and Communication Assignment

By Dr Mary Ann P. Malimas
Group 10 (Sec A)
Name Roll No Task

Ankurita Debnath PGP13030 Step 6

Arnav Gupta PGP13042 Step 2

Aryan Bokde PGP13043 Step 3

Ayush Raut PGP13049 Step 5

Ayushi Jain PGP13050 Step 1

Bhagyashree Jain PGP13053 Step 4

Mayank Bhatt IPM01038 Presentation and

Compiling

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Step 1: Relevant information

1. France Telecom switched to Orange Pvt. Ltd which was followed by the entering of private players and
an increase in operational costs due to increasing competition.

2. Employee dissatisfaction and unhappiness grew as the wages were lowered, lack of civil servant tag, and
an abrupt change in work culture.

3. The two CEOs, Michael Bon and Thierry Breton stepped in to lead the company during the crisis.

4. Employee dissatisfaction persisted, with 93% of workers believing that work conditions had worsened,
91% believing that their efforts went unappreciated, 88% believing that the company's ideals were no
longer valid, and 83% believing that their positions had no future. Moreover, 19 France Telecom
employees committed suicide, and eight suffered from depression for work-related reasons.

Step 2: Case problem.

Problems identified:

1. Employees no longer felt like "civil servants" but rather as private employees. So, the "prestige" tag was
no longer there for them.

2. No increase in wage. The employees expected an increase in quality of work environment and salary as a
means of compensation for working as a private firm employee, however no such measures by the senior
management.

3. Increase in operational costs due to external competition from other private players. As more players
entered the market, financial costs rose to stay relevant in the market. As France Telecom switched to
Orange Pvt. Ltd, there loomed a big question regarding its operational efficiency. After the company
switched to a private profile, it opened doors to many other competitors who couldn’t enter the market
previously under the monopolistic regime.

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4. Abrupt change in the work culture. As senior management in the company changed from a public to a
private player, there were many internal changes in terms of work ethic and employee expectations.

Problem Statement:

As CEO, your company is facing a high employee turnover, multiple cases of suicides, and a dwindling
market share and revenue.

What strategy should the senior management adopt that can ensure the company's revival in these areas?

Step 3: Facts and underlying assumptions

1. The corporation was dealing with multiple major issues at the same time. A shift from a public to a
private corporation, from a monopoly to a strongly contested competitive market, with a staff far
too vast and outmoded for the responsibilities ahead.
2. The company failed to understand the value of intangible incentives. The recent instance,
emphasizes the need of evaluating all sources of employee motivation, not only extrinsic rewards
such as money.
3. Civil servants made up 77 percent of the workforce, and they received lifetime job security and
hefty pensions, among other advantages. Employees in the public sector at France Telecom are
closely associated with the aim of their jobs. Serving their nation gave them a feeling of fulfilment
and pride, and they were not always driven by good pay.
4. The employees were paid less than the French average at the time. Instead, given France's high
unemployment rate, their source of extrinsic pleasure was the psychological comfort that their work
gave. Employees at France Telecom similarly endured low compensation, limited opportunities for
growth in return for job stability, and satisfaction in helping to create the French telephone network.
5. The first CEO began by offering an early retirement option, which 40,000 employees joined. He
also pursued an ambitious worldwide expansion plan. As part of this, he bought the British wireless
carrier Orange from Vodafone, as well as a Dutch data network operator, a German fixed and
mobile operator, a Polish state telephone company, and numerous others. In addition, he, like other
telecom corporations, offered extraordinary amounts for 3G wireless licenses.

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 6. The first CEO announced his "15 plus 15 plus 15 plan" to effectively salvage the firm. That
included getting a 15-billion-euro capital boost, with the French government contributing 9 billion.
He restructured 15 billion in debt by extending its average maturity, and he devised a plan to
generate 15 billion in operating savings over three years.
7. The French government decided that the company's civil servants, who made up nearly 77% of the
workforce at the time, would keep their civil servant status. He certainly righted the ship, although
he had only been there for about two years.
8. The firm returned to profitability, the stock price recovered a significant amount of ground, and
Breton himself was hired to work for France's finance minister.
9. Data from a survey of 4,800 employees at the time revealed that 93 percent thought work
conditions had deteriorated. 91 percent of respondents thought their job was unappreciated. 88
percent had lost faith in the firm's ideals. And 83 percent said their occupations had no future.
10. 19 France Telecom employees committed themselves, 12 attempted suicides, and eight suffered
from work-related depression.

Step 4: Alternative solutions proposed

1) Propose a 15 plus 15 plus 15 plan - securing a 15-billion-euro capital increase, restructuring 15

billion in debt & developing a plan to generate 15 billion over three years in operating savings.
2) Appropriate kind of leadership - Employees have virtually no escape from the mounting pressures
at work and at home, which emphasizes the need of having the appropriate kind of leadership in
organizations, especially in competitive, fast-paced industries.
3) Restructuring procedure - To accomplish this, they needed communication, mission, and purpose
clarity to preserve equity in the connections among the organization's members. Processes and
controls are crucial, but they should work to empower people rather than impose restrictions on
them. Focusing on doing the "Right Things Right" (RTR) required that they align everyone.
Although it can seem simple, this is frequently a lot trickier than it seems.
4) Encouraging frequent and open communication between management and the rest of the
organization.
5) Ensuring that staff members are well-informed and ready for any upcoming adjustments.

Step 5: Solution

1. We recommend France Telecom propose a 15 plus 15 plus 15 plan to essentially save the company,
which would call for securing a 15-billion-euro capital increase, 9 billion of which will come from

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 the French government, restructuring 15 billion in debt by lengthening its average maturity, and
developing a plan to generate 15 billion over three years in operating savings.
2. To curb the rising operational costs due to external competition from other private players, it is
recommended to train & edify the existing employees in technical work and reduce the dependence
on external players.
3. The top 15% best performing employees would be given greater salary hikes and additional perks
and benefits, for instance, job security and a pension scheme, which would ensure healthy
competition and high morale among the employees.

Step 6: Execution of the solution.

1. The 15 plus 15 plus 15 restructuring plan can be accomplished by enrolling in various skill enhancement
courses and workshops which will increase work efficiency and productivity, as a result, dependency on
external sources will decrease and the employees will get proper renounce for their hard work.

2. To boost employee confidence, Performance linked incentives can be adopted by the company where the
top 10% of employees will be facilitated and rewarded

3. Through the 15 plus 15 plus 15 restructuring plan, the former French Telecom will get sustainable
growth and a stable economy.

4. The salary hike, pension benefits, and job security will strengthen empathy and employee-employers
relationship in the formerly French Telecom so that the communication gap will decrease and transparency
will increase.

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