Caso Michelin China

CB0190
June 04, 2022
KATHERINE XIN
JIN ZHONG
Michelin China: Transforming the Personnel

Function
Frowning in front of his office computer screen one early spring morning in 2019, Michel Default,
Director of Michelin China’s Personnel Department, was reading another email requesting a
promotion. It was from a key account manager who insisted that he should move up the ladder due to
his great contributions to the company’s transformation of its personnel function.
These days, everyone seemed to be asking for a promotion, thought Michel, and the issue had
clearly emerged as one of the biggest challenges since he came to China. He well understood the
aspiration of employees for promotion, hence salary increase, which was indeed affected by the
slowdown of China’s growth and this, in turn, influenced market demand for tires and reduced the
growth dynamic of almost all companies in the market. He also understood Michelin’s policy of always
providing career development opportunities to employees. Facing a new normal and the
organization’s maturity, Michelin China had to find a suitable way of maintaining employees’
motivation.
Michel came to Shanghai, China, in August 2014 as head of recruitment and career management at
the headquarters, and five months later, he became Michelin China’s Director of Personnel. Since 2017,
he had been responsible for leading Michelin China’s transformation of its personnel function. Still
ongoing, the move sought to optimize the personnel function to align with the outside business
environment as well as the needs of internal employees. One goal was to help better manage people’s
careers at Michelin. As a matter of fact, Michelin’s career-development program had been a huge
success in terms of creating employee loyalty. From 2009 to 2015, only 3-12% of employees quit
depending on the location and the job role, showed company information.
In 2018, however, the turnover rate of the whole Group, including Michelin China, was increasing.
Michel would not like to lose the key account manager asking for promotion and hinting at possibly
quitting if he could not get a convincing explanation. Before considering how to explain to the manager,
Michel thought that he had better give a reexamination of Michelin China’s campaign of transforming
the personnel function.
Professor Katherine Xin and Research Associate Jin Zhong of China Europe International Business School prepared this case. It was reviewed and
approved before publication by a company designate. Funding for the development of this case was provided by China Europe International
Business School and not by the company. CEIBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2022 China Europe International Business School. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied,
or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
This document is authorized for use only in Juan Guillermo Perez Villegas's Transformación Organizacional_2024-1 at CESA - Colegio de Estudios Superiores de Administracion from Feb
2024 to Aug 2024.
Michelin China: Transforming the Personnel Function CB0190
Michelin China
Founded in 1889 by brothers André and Edouard Michelin in France, Michelin grew into a
multinational tiremaker. Ranked among the Fortune 500, Michelin became one of the world’s leading
names in tires and mobility. Headquartered in Clermont-Ferrand, France, Michelin Group operated 70
production facilities in 17 countries, with a presence in 171 countries, and with a 14% share of the global
tire market. Producing around 190 million tires in 2017, Michelin owed its success to its tire technology
and innovation.
With its business growing fast in China, Michelin established a WFOE (Wholly Foreign-Owned
Enterprise) in Shenyang back in 1988, as well as a Marketing & Sales Centre in Beijing, a joint venture,
a Research & Development Centre, and a head office in Shanghai. It also operated sales offices in Xi’an,
Guangzhou, Chengdu, Shenyang, and Shanghai, and as well as a representative office in Hong Kong.
Moving all key China functions to Shanghai later, Michelin saw China becoming one of its fastest-
growing markets and an important manufacturing site.
For a company with a unique corporate culture, Michelin usually paid more attention to global
consistency, that is, how to transplant systems, processes, and policies to other countries, and inject
Michelin genes into the employees there. Michelin China had been putting efforts into bringing
Michelin’s business philosophy and corporate culture to China while making itself more and more like
Michelin but still localizing some practices. With 6,618 employees in China by 2018, Michelin ranked
as one of the best employers and human resources management models in the country.
The P-Transformation
To boost growth in a volatile and uncertain world, Michelin Group launched a worldwide
restructuring project in June 2017 to adapt its operations to the changing business environment and
meet the evolving demands of customers and employees. The new organization (see Exhibit 1) was
designed to improve the company’s reactivity and maintain competitiveness, enabling it to tackle
future challenges quickly. The company aimed to continually improve customer satisfaction, empower
teams, streamline the way they worked, while embracing digital technology. The new leaner, more
agile, and truly customer-centric organization was expected to bring Michelin closer to its customers
and get its employees more engaged in decision-making processes.
Michelin expected to transform its organization successfully while supporting each employee
during this evolution. For the restructuring to achieve its goals of customer centricity, digital
transformation, empowerment, and simplification, Michelin Group decided to transform its personnel
function in each region. The reason for the P Function Transformation, in which P stood for personnel,
was quite simple. As Michel knew, it was the Personnel Department that interacted with employees,
and employees, as well as their teams, were key players in the bigger transformation.
Also in 2017, Michelin China launched its P-transformation. It revised the mission of the P function,
starting with the fact that the personnel function was not merely a function of the Personnel
Department. Instead, it was the function of many people, including managers, teams, employees, and
the Personnel Department, all of whom had roles to play. The new mission of the personnel function
was to create the conditions that enable people to be engaged, to flourish, and to develop valuable
competencies; enable teams to be empowered, competent, and to drive Michelin’s performance; and
enable the company to achieve its economic, social, and corporate citizen ambitions. As a matter of fact,
people, teams, and Michelin that the company cared about were three pillars of the company’s actions.
And obviously, Michelin was putting more focus on teams than before. (see Exhibit 2)
2024 to Aug 2024.
A New Triangle of Roles

The P-transformation required a team to be in charge of its performance. The team would encourage
everyone’s development by looking for versatility, complementarity, and the cultivation of
competencies and by making new competencies emerge. It could also contribute to the recruitment of
team members. Strengthening the role of the team, particularly when managing performance and
developing skills, the transformation resulted in a new triangle of roles among the employee, the
manager, and the proximity development partner. (see Exhibit 3)
In the so-called golden triangle, the employee took the lead in his development—he was a driving
force for the development of his skills and the evolution of his professional career. He made his
development plan together with the manager and steered his development himself. He was proactive
in developing his competencies and in looking for his next position. Moreover, he was empowered to
access high-quality data and learning offered in InTouch, a digital information system.
The manager’s role in developing people and teams was reinforced in the triangle. He was actually
the first companion of the employee, and could use the personnel lever in his perimeter. He was fully
engaged in the development of his teammates and maintained the team’s health as a whole. He was
also responsible for the internal recruitment of his team. On top of that, the manager should know and
respect company personnel policies and ensure that they were obeyed and properly implemented.
The proximity development partner (PDP), or the local development partner, became a supporter
and advisor to everyone, including the employee, the manager, and the teams, and played the role of
guarantor regarding respecting personnel policies. He advised employees when requested,
accompanied the managers and their teams. In a proactive way, the PDP accompanied employees on
critical positions or with specific talents. He would make a decision in external recruitment.
In Michel’s view, “What’s new in this triangle is that we have integrated the team into it, for whether you
talk about empowerment or performance, it’s not about individual empowerment or individual performance, but
it’s about the team.”
The Proximity Development Partner

The uniqueness of Michelin’s Personnel Department had been that its core function lay in the career
managers of the department. In fact, in each of Michelin’s business units, there had been a full-time
career manager. However, during the transformation of Michelin’s personnel function, the original
career manager was transformed into the proximity development partner.
As with the career manager in the past, Michelin requested that the PDP should know the company,
understand its values, have the right level, and know the domains they were in. The PDP should
possess the right ability to influence managers as well as to coach managers and teams. More than ever,
Michelin would request PDPs act as team coaches and manager coaches. This role was different from
that of the career manager. In the past, the relationship had been between the career manager and the
employee.
Compared with the career manager, the PDP had a different mission, function, and role. In a region
or a team, the PDP would act as a personnel expert, providing managers and teams with support for
processes that were related to personnel management, and more importantly, they would accompany
managers and teams to support capability development and performance improvement of both
employees and teams. With broad areas of support, they could provide advice and support for
competency assessment, the direction of development, and career development opportunities. At
2024 to Aug 2024.
Michelin, each team had a PDP who would give every employee a fair and equal opportunity for
development. For example, for employee promotions, line managers would have more or less
subjective opinions when evaluating talents. Even if professional evaluation tools were used, they
would be somewhat subjective because of their assumptions. The PDP would play an important role
by balancing managers’ views and decisions from the perspective of the company to make the results
more objective and fair.
In transforming the career manager into the proximity development partner, Michelin China faced
two issues. One was that not every career manager could qualify to assume the new position to
influence and coach managers. It was difficult for the Personnel Department to request some team
members to leave to make sure it had the right people for the position. The department had to work
with those people to find other positions in the company, helping them return to the business from
which they had come. But if their background was pure HR, then it would be more difficult because of
fewer potential positions offered to them. The second issue was how to make plans to get them
equipped through training with the right skills to discuss with managers in a coaching mode, and to
look at and coach teams as a whole since the company had new expectations about team and manager
coaching.
The First Changes

In 2017, after sharing its vision for the personnel transformation, Michelin China started
implementing several new functions.
The company started with Frequent Feedback, a regular and transparent exchange between
manager and employee for the development of people. It was implemented to replace the APR (Annual
Performance Review) and GPR (Global Performance Review), both taking place once a year.
Considering the period of twelve months taken for performance reviews was too long, Michelin
wanted managers to have more regular feedback—at least four times a year—and focus not only on
results but also on competencies that employees needed to perform, develop, or achieve better results.
Michelin China also worked on Salary Evolution. The company had had regular salary review in
place, but it had given managers quite limited power in their roles. Besides, it had not spent enough
time educating them on “how does it work?” or “how do we apply this to the market?” Now, managers
had more freedom to recognize team members and distinguish their salary evolution based on
performance. As part of the transparency process, Michelin China spent more time than before
educating managers, explaining how Salary Evolution worked to ensure that they could explain to
employees why they had or had not received a salary increase or commission. They could decide on a
bigger range, according to budgeting.
Another new practice Michelin introduced was People Review, which replaced the previous PDR
(Periodic Development Review). Taking place at least once a year, it was a review done by the direct
manager with other managers and the PDP to enhance the assessment of each employee’s performance,
development, and career perspectives. The People Review also looked into the future development of
an employee, but it was not a discussion just between a manager and his employee: First, a panel of
managers—all the managers that worked on a regular basis with the employee—had a discussion
together, reviewing the employee’s performance, competencies and the potential now and future. Only
then did the managers hold a discussion with the employee, sharing the outcome of the panel
discussion. The review results were not achieved by one manager alone. Instead, it was a group effort
by all managers, so it tended to be more robust and more balanced. It went down well with employees.
As Michel said, “it targets improving how to give the relevant input or relevant feedback to employees, so they
2024 to Aug 2024.
can understand where they are and will find ways to develop themselves.” For the time being, Michelin China
planned to do it once a year for each employee.
In 2018, Michelin China began implementing other changes. The company equipped each team with
one PDP. It also began implementing a new approach to developing employees’ professional and
behavioral competencies. The competency system would allow employees to assess their competencies
by themselves. If there were gaps, they could be easily accessible to various learning or development
offering, partly online. Michelin China also introduced a job posting system. Every open position in
the company would be posted, and employees could apply for it if they wanted. The system would
provide employees with greater autonomy and simultaneously empower managers.
In early 2019, Michelin China launched inTouch, a digital space dedicated to the management and
development of people. With this digital system in place, information would be available both on
laptop and mobile. Employees could easily access information about job postings and directly apply
for the positions on their mobiles.
Innovating to Develop Talent

Michelin had constantly been innovating its talent management practices. In recruitment, it greatly
streamlined its interview process and improved its recruitment efficiency. For example, when a
candidate reached the second interview stage, Michelin would arrange for interviewers, including the
PDP, to meet with him or her within one day or even half a day. In addition to considering the
candidate’s professional capability, the PDP would discuss future career development with the
candidate, not just the current position. And the Personnel Department would inform the candidate of
the interview result on the very day, instead of keeping him or her waiting a few days.
In learning and development, Michelin had constantly been innovating. Michelin China had a very
professional learning and development team, providing a learning-management platform for
employees at different levels and in various positions, as well as comprehensive training services to
meet employees’ diversified and personalized needs. By 2018, Michelin China had 105 full-time
trainers, responsible for staff training to ensure that each employee received 12 days per year of training
on average.
In the era of digitalization and big data, the new generation of employees was more willing to try
digital learning. Michelin explored a training approach more suitable for the current work rhythm and
staff needs, and thus the Micro-classroom was created. The Micro-classroom had two formats: offline
and online. The Offline Micro-classroom aimed to help employees quickly solve practical problems in
their work. Instructors were not professional trainers but experts from various departments. Micro-
classroom 1.0 launched in 2016, combining functions of WeChat workgroups with teaching via voice
messages and imagery. The Online Micro-classroom was updated to version 3.0, making it easier for
employees to take advantage of their fragmented time on the way to and from work. The courses could
be directly accessed from the WeChat applet, and employees could study at any time. This way of
learning was called “learning on the wheel”.
The Resistance
As Michel expected, unavoidable resistance would emerge as Michelin China’s transformation of
the personnel function entered full swing. As a change leader, he found that the resistance was not that
people were unwilling to change, but it would take time for them to change mindset and switch from
2024 to Aug 2024.
old practices to the new ones. Michel knew that the company needed to make sure that managers
understood what was expected of them, knew how to play their new role, and took action.
The new Frequent Feedback practice required managers to give feedback to every employee four
times each year, while the old practice had required them to provide only once. Managers’ first reaction
was: It was extra work, so why should they do it? What were they going to talk about each time? They
concluded that once a year was enough. Michel said, “We have to educate managers, for the Frequent
Feedback is not only about talking of results but also about talking of developing people. If you look into it, it’s
not so much work, and you don’t spend much additional time. We provided them with some coaching training
because what we want is for them to play a role in giving the frequent feedback.”
Michelin wanted managers to play the role of performance coach to help an employee identify his
biggest challenge in his job and discuss how to overcome it. Michel felt like he needed to have a good
talk with the account manager who had complained about giving more frequent feedback to
employees.
The Promotion Issue

As for the promotion issue, Michel thought Michelin was, above all, committed to offering each
employee a personalized career development plan, reflecting his or her individual competencies,
potential, and experience with the company. Michelin’s people development policies were
implemented with a long-term view, considering each person’s professional development to enable
them to advance according to their abilities and the company’s needs.
At Michelin China, career development was managed as well as possible, with a constant eye on
achieving the right balance between employee satisfaction and company needs. From the company’s
perspective, if it continued growing after the transformation, the employees would certainly have more
opportunities. From the perspective of the key account manager who had written to complain about
his lack of promotion, if he and the team he coached had performed better than before, he would have
a better chance of advancing his career and earn more on a higher level of responsibility.
Above all, Michelin’s unique way of retaining employees was to hire for a career and help
employees manage their professional development and career path. This was still consistent despite
the transformation of the personnel function.
Still at his office desk, Michel wondered whether his logic would be persuasive to the account
manager, a high-performer who was nearly 40 years old and had been with the company for some
eight years.
2024 to Aug 2024.
Exhibit 1: A Customer-Centric Organization
By constantly adapting to the expectations of its customers and employees, Michelin Group’s
objective is to constantly improve customers’ satisfaction, develop team empowerment, simplify its
operating methods and accelerate the Group’s digitalization.
Central functions have been streamlined, hierarchical levels tightened, and corporate departments
refocused on their strategic missions. This organization also frees up energy, stimulates collective
intelligence, and provides the freedom to maneuver that is essential in the uncertain and complex
world in which Michelin operates.
Source: Michelin official website.
2024 to Aug 2024.
Exhibit 2: The Major Objectives of Michelin’s P-transformation
Michelin’s P-transformation had four major objectives:
1. Empowering managers, employees and teams to work on the personnel function related
activities such as training and changing jobs. All of them worked as a team with the Personnel
Department. Not everything should go through the Personnel Department, since the
Personnel Department had given managers and employees more power and more means to
play their roles. Thus, this was an additional leverage for the manager and his team in the
service of performance as well as employees’ development.
2. Allowing the Personnel Department to have more proximity with teams. The transformation
would not only bring the Personnel Department to individuals but also to teams. In previous
years, a career manager had played a role of building a one-on-one relationship with an
employee. Michelin would try to maintain that because it had been one of the key success
factors for the personnel function, but knowing that the performance of the company would
come not only from individuals, but more and more from teams, Michelin wanted to the
career manager, now turned into “the proximity development partner” (PDP), to play a role
in supporting teams more than ever before to secure the performance. Fully assuming his
role as a guarantor nearby, a PDP would support the manager, the employees and the teams
on a daily basis.
3. Making personnel policies or processes simpler and transparent via accessible information.
Michelin wanted to take this opportunity to simplify its personnel policies, and to make
information more accessible than it was in the past by leveraging digital technologies.
4. Having the Personnel Department become a supporter, advisor and guarantor. Michelin
positioned the Personnel Department in the three roles to make sure that the core values and
key principles of the company would be respected.
Source: Michelin China.
2024 to Aug 2024.
Exhibit 3: The New Triangle of Career Management
Source: Michelin China.
2024 to Aug 2024.

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CB0190

June 04, 2022

Michelin China: Transforming the Personnel

A New Triangle of Roles

The Proximity Development Partner

The First Changes

Innovating to Develop Talent

The Promotion Issue

Exhibit 1: A Customer-Centric Organization

Source: Michelin official website.

Exhibit 2: The Major Objectives of Michelin’s P-transformation

Michelin’s P-transformation had four major objectives:

Source: Michelin China.

Exhibit 3: The New Triangle of Career Management

Source: Michelin China.

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