Case StudyFirm: Credit LyonnaisIndustry: BankingCountries: France, World-wideInternational HRM Issue: The internationalization of a bank & the cultural conflicts involved

1) IntroductionThis study of Credit Lyonnais, one of the world's largest bankswith offices in over 60 countries, examines the organisation andhuman resource management strategies thought necessary to survivethe rapid market changes in international banking. Credit Lyonnaisprovides a particularly good example of a large bank which isdetermined to succeed through growth in services offered inexisting markets and through extending into new markets.

Credit Lyonnais has offices on all continents, and in the countrieswhere it has operations, it applies one of two growth strategies:

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

ii) acquisitions / mergers (involving either take-overs orpurchase of minority interests in local banks).

Credit Lyonnais now has 610 offices outside Europe and these areeither subsidiaries (where the HRM has a majority shareholding) orassociated companies (where the HRM has a minority shareholding).The Credit Lyonnais Group has grown very rapidly over the past fewyears and will continue to grow with planned expansions on allContinents and in all areas of business.

Realizing at an early stage of its expansion that its service andmarket strategies required an equally strong human resourcestrategy Credit Lyonnais set out to implementing HRM policies toachieve its business goals.

2) An International CorporationThe Credit Lyonnais Group has grown very rapidly over the pastdecade principally by the acquisition of foreign banks throughoutEurope and in other markets around the world. To benefit from itsacquisitions many Credit Lyonnais managers believe they must now

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integrate their banking network in terms of common services andclient management.

One of the key challenges that face Credit Lyonnais is to fullyinternationalise its HRM policies and become a true multi-cultural,globalised, organisation. This task is made harder as many seniormanagers think that the bank is already international simplybecause it has a tradition of foreign operations and that it hasdoubled its size through the acquisition of foreign banks. Suchthoughts obscure the fact that Credit Lyonnais is still dominatedby French culture and French ways of doing businesses despite thefact that the bank now employs far more people outside of Francethan within.

3) French ContextTo have a good understanding of the cultural environment of thisHRM there is a need to consider the culture of France, particularlyits political & economic history and the style of management andorganisation often associated with French companies. In France theState plays a key role in the economy and in society: the Stateregulates economic development through economic planning over afive-year period. State ownership of services and industries isstill high compared to most other EU Member States and as one ofthe last large nationalised banks to be privatised, Credit Lyonnaisis still strongly influenced by government.

With a savings rate of 12.2% of disposable income, Francetraditionally represents a good market for banks although de-regulation of the banking industry and the privatisation of someState owned banks during the 1980s meant that banking profitsrapidly declined. However, from a HRM perspective, the Frenchgovernment, which always plays a primary role in defining thebasic terms of the relationship between employers and employees,insisted on the maintenance of workers` standard of living throughwage indexing (linking wage increases to the rate of inflation),increased social insurance provision and through dissuading banksfrom making staff redundant.

Although trade union membership in France is low (only about 10% ofthe working population are members), unions are powerful and

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strongly influence the government. Unions in France, as elsewhere,negotiate collective agreements but, unlike in many other countriessuch as the UK, these agreements, once negotiated with the employerbody in the relevant industry, then legally apply to all employeesin the industry. Terms and conditions of employment in the bankingindustry are generous because of these forces, which are: agovernment supportive of workers, and union negotiated collectiveagreements. However, today the banking sector is faced with newneeds and the collective agreements are considered by many bankmanagers as a block to competitiveness.

PART ONE: FRENCH HRM at Credit Lyonnais

4) The Nature of Management in FranceShort-comings in French management generally are noted: the elitistmanagement education system has been criticised by some for notproviding the right calibre of flexible, international managers,capable of responding quickly enough to shorter product / servicelife cycles. In fact the managerial class, cadre, is officiallyrecognised by tradition and law. This managerial status givesmanagers special pensions and social insurance and alsorepresentation privileges on HRM's Board of Directors. Thismanagement system rigidly links hierarchical status with graduationfrom the 'right' universities, the grandes ecoles, and ensures thatbusiness leaders are among some of the best educated in the world.However, the down-side to this French approach of only appointingmanagers who have been to these superior universities is that thesystem suppresses the aspirations of supervisory and lower-gradepersonnel who find it difficult to be promoted into managerialpositions. In spite of increased overseas investment, Frenchmanagement often lacks the international vision and experience oftheir counterparts in Germany, the Netherlands, the UK and the USA.As in some other Latin countries and Japan, there exists a steepeducational pyramid in France with the grandes ecoles at the top.These grandes ecoles select an elite corps of students through verydifficult entrance examinations. The exams test for analytical andreasoning capacity rather than interpersonal skills or professionalaptitude. The diploma of a grande ecole is sometimes considered an'entrance ticket' into the fast-track of a public or privatelyowned company. In effect the task of the grande ecoles is to select

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France’s future business leaders. The grande ecole provide over 50%of the top managers in French companies.

Thus in France, an individual’s self-education or entrepreneurialattitudes are less likely to contribute to success than his or herdiploma 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 widevariety of company positions gaining scope, sometimes at theexpense of depth.

5) Bureaucracy & Hierarchy in FranceThe traditional French model of organisation has been described asa combination of bureaucratic and aristocratic behaviour.Organisations generally have many hierarchical levels which, ofnecessity, restrict managers at each level to a narrow range ofresponsibilities and areas of action (that is, a narrow span ofcontrol - few employees to manage). Managers (and non-managerialworkers) aggressively guard their areas of responsibility fromencroachment. French organisations have been characterised associeties of castes, where each group tries to preserve its tradeor profession and its independence. Even though this implies thatorganisational structures and hierarchical relationships are likelyto remain relatively rigid, formalised work rules are frequentlyvague or absent (strong work rules do exist but these areinformal).

6) Attitudes to Work in FranceFrench workers influence organisational and managerial stylesthrough their attitudes toward work and family life. Perhapsbecause of their Catholic heritage, French employees havetraditionally considered work a simple necessity, rather than afocus for personal and collective fulfilment. During the 1970s therole of human resource managers consisted principally ofnegotiating the transfer of HRM profits to employees by way ofimproved remuneration, benefits and working conditions. Employeesgenerally had little concern for the future well-being of thecompany. During the 1980s, however, this separation betweenindividual's standard of living and the organisations long-termability to generate profits began to erode. Human Resource managers

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refocused on making employees aware of the linkage between theirindividual living standards and future job security and the firm'sfuture. This linkage appears now to be well established as Franceenters the new century and companies actively discuss the socialcontract and how individuals should contribute fully to their firm.

7) Employment in Banking in FranceHighly regulated, protected markets, such as that of the Frenchbanking industry before the 1990s, result in overstaffed, over-bureaucratic organisations. Because the services of the bankingindustry (savings accounts, personal cheque accounts, businessaccounts, life assurance, mortgages etc.) are remarkablyundifferentiated and almost instantaneously copied by competitors,the quality and effectiveness of a bank's employees is probably themost critical factor to its success. Banks cannot build distinctivequality into their service design and then turn on an automatedassembly line. Quality must be delivered by people who, asexperience has taught us, can be inconsistent, uncooperative,unmotivated, and sometimes work actively against the changesrequired for a firm to become dynamic, profitable organisation.

During the past decade banks throughout EU have seen regulatory,national, andinternational trade barriers fall; the EU's Second BankingDirective came into force about ten years ago allowing Europeanbanks to freely move into any other EU state and to also offer abroader range of financial services. This de-regulation hasencouraged many bank directors to expand the services offered bytheir companies into other, more lucrative, services and sectorssuch as insurance operations and underwriting corporate debt, tomention just two. Indeed one of the dominant competitive strategiesof the largest European banks in the late 1980s was to develop awide range of products offered in all the major European markets.This strategy, called the 'universal bank', usually involves themerger of banks both domestically and internationally with otherbanks and with other financial service providers (with insurancefirms for example). This diversification of banks' activities iscreating a number of significant HRM challenges.

8) New HRM Challenges5

One result of these changes, involving more 'products' beingoffered in more national markets, has been that the skills andattitudes of the banks' staff have failed to keep up. Bankers haveoften been characterised as conservative, reserved individuals whoare very attentive to detail. As banks move increasingly into other'product' lines, such as life insurance sales, some of theiremployees must emulate the enthusiastic personality profile of asalesperson. This transformation is particularly important as banksare 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 morecompetitive. Having the opportunity to expand into other marketsand countries is a double-edged sword in that banks from othercountries can expand into your market! This need for bank staff tobecome more competitively aware represents a real culture changeespecially for the French.

Both 'back office' computing technology and automatic cash machinetechnology combined with the growth of 24 hour telephone and inter-net banking has, in most parts of Europe, resulted in bothsignificant job losses and, at the same time, the creation ofnewer, but lower skilled, jobs in telephone call centres. Suchdecreases in staff numbers and de-skilling of staff have beenparticularly difficult to achieve in France given the government'ssupport for job security. A further change affecting employmentnumbers and types in traditional banks such as Credit Lyonnais, hasbeen the emergence of non-banking competitors offering traditionalbanking services such as some of the large French retail storegroups which offer customers personal cheque accounts and creditcards.

French banks have, however, responded to these sorts of challengesby improved training for bank staff particularly in the area ofcustomer relations and marketing and selling. Improving servicequality cannot, however, happen through training alone: bankemployees need to fundamentally change their attitudes toward thebank’s clients. As in all service oriented businesses, thedevelopment and maintenance of strong interpersonal relation-shipsis critical to the long-term success of the bank.

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9) Remaining HRM ProblemsCredit Lyonnais in the 1990s had essentially two types of humanresource problems:

1) having too many of the same type of employees with the wrongskills (people with traditional banking skills but not thenew, customer friendly, marketing and selling skills). Manyemployees not only had the wrong skills but also the wrongattitudes being reluctant to use computers, associatingcomputers with secretarial work, and being unfriendly withcustomers, regarding friendliness as inappropriate in theirprofession.With regard to managers, Credit Lyonnais had managers who wereunder-educated generalists in an increasingly specializedindustry. Managers were also unwilling to ‘let go’ of decisionmaking and, therefore, newer, younger, staff felt that theywere constantly being controlled and had no autonomy anddiscretion.

2) having too few of the type of employees needed: customerfriendly, highly computer literate, multi-lingual and salesorientated people.

Banking firms are reacting to the intensified competition and loweror negative profit margins by demanding more co-operation fromtheir employees requiring them to be flexible and responsive tochanging customer needs. These demands are difficult for older bankstaff to accept as they had become accustomed to high salaried,stable and secure jobs and as these staff have a strong union,bank’s managements are still struggling to implement change.

10) New banking Business StrategiesSuccess in the new banking environment is essentially based on fourstrategies:

i) Growth through acquisitions with the goal of dominatingniche markets across a range of countries such as personalbanking and investment for high income / wealth clients, orspecialist small business banking.ii) Becoming a universal bank, that offers all types offinancial services in the home country and in a range offoreign countries.iii) Defending domestic markets by creating or enhancing

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personal client relationships. iv) Selling more services and / or new products such asfinancial advice or insurance.

11) New HRM Strategies within FranceThere is widespread recognition throughout the European bankingindustry of the need for new human resource management strategiesto enable the achievement of these for new business goals. AtCredit Lyonnais changes in employment, the organisationalstructure, increased training, better performance appraisal,development of new remuneration systems, and attempts to modifyemployee attitudes are the HRM strategies that are now being usedto change the culture of the organisation within France.

11.1) Reducing EmploymentThe first HRM strategy targets excess employment but tries toreduce employment by avoiding compulsory redundancy: banks must tryto avoid the deteriorating morale which typically arises fromcompulsory redundancies. Banks, in their new market environment, depend more than ever onthe positive attitudes of staff in winning the loyalty of existingcustomers and persuading customers to purchase their new services.Banks around Europe are, therefore, trying to avoid compulsoryredundancies by focusing instead on reducing or freezing newrecruitment, on early retirement programmes, on re-training andredeployment (with protected salaries) to the new call centres andinternet-banking centres, and on voluntary departures. The firstmethod is problematic as the banks do actually need new,enthusiastic staff with the new computing, linguistic and customercentred skills which the existing staff often lacks.

Over the past few years early retirement programmes aimed at theleast competent workers have been widely used but sometimes themost competent employees took advantage of these programmes andwent on to prosper in other organisations.

11.2) PromotionsA move away from the traditional French hierarchical structure isnecessary if banks are to attract and retain young well-trainedmanagers. Turnover among this group can be high, especially in

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banks with top-heavy bureaucracies or, like Credit Lyonnais,'nationals only' promotion policies. Such structures do not offerthe rapid career development the best young managers expect.Therefore the reduction of highly centralized bureaucracies and theloosening of strict ethnocentric staffing and promotion policiesare important priorities. The bank recognizes the need to abandon its traditional internalpromotion policies and recruit at all levels directly from theexternal marketplace, especially from its non-French branches(discussed in more detail below), and to adopt performanceappraisal systems designed to allow 'high potential' employees ashortcut to the top.

11.3) New HRM DirectorCredit Lyonnais' Board of Directors accepted during the period1995-1999 that a bank's human resources are the most importantasset and therefore HRM policy should be at the centre of itsstrategic plans. A new post, Director of World-Wide HRM, wascreated in 1998 and a former Director of Personnel at VW wasappointed to this very senior post and given the target ofradically changing every aspect of HRM to enable the bank to becomea world leader in the C21.

11.4) De-centralisation - Increased Managerial ResponsibilityCredit Lyonnais has begun to re-design both its domestic andinternational structures away from the highly centralisedhistorical structure of the bank towards a de-centralised structurewith accountability and responsibility delegated to branches. Thetraditional centralised structure has, it is believed, hiddenproblems of variation in service quality (under-performing branchesand regions, and the responsible managers, have not been easilyidentifiable).

Reducing layers of hierarchy through de-centralisation not onlymakes good economic sense for recruiting high potential staff andfor the career advancement of such managers, it helps the bankmonitor its customer needs more directly. There is, of course, adownside arising from delayering for staff of average abilitybecause there are, now, fewer opportunities for up-ward careerprogress. The days when loan applications took weeks to be approvedmust be left behind if customer service is to receive greaterattention and de-centralisation and de-layering should help 'speed

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up' every aspect of the bank's operations.

11.5) TrainingRe-training is often the most viable strategy for dealing with theproblem of people with out of date skills. If offers the advantageof keeping employees who are already familiar with the bank and itreduces employee hostility concerning staffing reductions. Re-training is focusing on giving staff new skills but, mostimportantly, on changing employee attitudes with the aims of:

a) increase economic awareness especially of the new competitiveenvironment of European banking. Such training is largelyaimed at making staff aware of the new competitive challengesthe Bank faces

b) increasing marketing and selling skills c) increasing customer care skills, quality skills and language

skillsd) improving computing skills.

In 1989 training costs were 4.4% of the bank's total world-widesalary bill while in 1999 the costs were 8.1% of salaries which iswell above the French government’s requirement that firms spend1.9% of salary costs on employee training. Historically, Frenchstaff has enjoyed much more and much better quality staffdevelopment than foreign staff, and this has reinforced thedominance of French staff in all senior management jobs. It hasnow, however, been decided that access to advanced, French-basedtraining, for high-ranking foreign staff should be expanded:talented managers must be educated whatever nation they are basedin, and then be asked to move to wherever the bank needs them andwherever they can best develop their careers.

11.6) Appraisal and RewardCredit Lyonnais is also attempting to change its internal culturethrough developing performance appraisal systems and linking themto salary increases. It is recognised that the results ofmanagerial appraisal in the different national branches must bemade available to the head office HRM department in France so thatmanagers who score particularly highly can be identified forfurther development and for promotion either to head office inFrance or to elsewhere in the international network where theirtalents can be used to greatest effect in furthering thecompetitive success of Credit Lyonnais.

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Credit Lyonnais is moving away from the traditional corporatereward system, which merely rewarded length of service (after eachyear of employment the employee received an automatic salaryincrease), towards a performance reward system. In the traditionalapproach each job was graded and a salary was allotted to the jobregardless of the quality of individual job holder's performance.With the new Performance Related Pay system there are no automaticpay increases (even to cover inflation) and staff have to earn,through excellent performance, any pay increases (under-performingstaff get no increase and as the cost of living inflation in Franceis 4% per year such employees' living standards therefore decline);on the other hand, excellent staff are able to earn a salaryincrease of up to 35% each year.

It is believed that this new performance pay system issignificantly modifying outdated employee attitudes and will causeunderperforming employees to leave. This approach, however, willnot be immediately adopted in some countries such as Germany wheremerit pay systems are avoided. There are problems with thisdifferential treatment though, and already German Credit Lyonnaismanagers, who all continue to be on the old pay system, in talkingto French, British and US managers, feel annoyed that any specialefforts they make will go unrewarded and their German colleagueswho under-perform continue to get the same pay increase anyway.

11.7) Recruitment of New ManagersCredit Lyonnais is recruiting new managerial employees, with thenew 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 islinking this search for ‘new blood’ with a strategy of increasingthe number of cultural outsiders (that is, recruiting in managersfrom other organisations in France) who are given important rolesat all levels of the banks hierarchy.

In terms of general recruitment, the bank is trying to improve itsage and pre-employment qualification base and new, non-managerialrecruits increasingly have more academic training thantheir predecessors. Currently most new recruits have remained inschool until about the age of 20 and one-third have degrees from a

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university.

11.8) Employee Involvement in Strategic ManagementIt could be argued that employee involvement in the higher levelmanagement of CreditLyonnais is good compared to the low degree of ordinary employeeinvolvement in strategic decision making in companies in the UK andUSA. In accordance with the French law concerning thedemocratisation of the public sector, the Board of Directors ofCreditLyonnais is composed of 18 members:

- six representatives of the French government- six individuals selected for their expertise, theirknowledge 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 entirestaff. Major decisions concerning the company's economic, financial,social and technological policies are made only after deliberationand approval by this Board of Directors.

However, it is now recognised that employee involvement in ordinaryday to day, operational decision making has not been good and newsystems are being planned. The traditionally steep Frenchorganizational hierarchy has meant that managers expect to'command and control' and subordinates, in turn, simply expect tobe told what to do.

One new system to improve employee involvement will involve weeklyteam meetings for all staff in which newly appointed team leaderswill verbally brief staff using a weekly senior management briefingsheet as their guide. Team leaders will also gather employeeopinion and communicate this 'up' the organizational hierarchy totheir managers. Eventually, in this way, staff opinions andattitudes from branches around the world will be heard by thesenior management in Paris. Unions in France and other countriessuch as the UK and Italy, where there are traditionally formal,union, channels of communication from employees to senior managersare, however, concerned, that these new direct 'down-up’communication channels may simply mean that unions are by-passedand weakened.

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PART TWO: INTERNATIONAL HRM at Credit Lyonnais

12) From Ethnocentric to Geocentric HRMIn general, each country has had responsibility for its specifichuman resource management practices and therefore very differentrules and procedures for HRM are present across the company world-wide. However, the new HRM Director wants to change this diversityof practice and move towards a convergence in HRM. The new Directorrecognizes, however, that forcing foreign branches to converge ofthe French approach will not necessarily work and a 'third way’neither French nor that of a specific foreign country, will have toevolve combining the best of HRM practice wherever it is found.

The HRM Director is committed to finding 'best practice' within thecompany and within the banking industry world wide and adoptingthis as the 'third way' HRM policy for Credit Lyonnais. It isrecognised, however, that in some national contexts some HRMpolicies and practices will need to continue to diverge from eitherthis or the traditional French way of managing HR. The areas ofemployee communication, involvement and employee relations havebeen identified as areas where policy and practice may have tocontinue to be different (for example, getting the highlyindividualistic North Americans involved in management decisionmaking will involve very different techniques than getting thehighly collectivist Japanese involved). The overall aim of the HRDirector is, therefore, to move from polycentric HRM (with a strongelement of ethno-centricism applied to all Credit Lyonnaismanagers) directly to geo-centric HRM.

13) Current World-Wide EmploymentAt the beginning of 2000 Credit Lyonnais' French Division had 2,460offices and about 42,000 employees. The Credit Lyonnais Group had72,500 salaried staff outside of France in 1999 which representedan increase of nearly 35% over six years. The breakdown of itsglobal workforce is as follows:Europe: 54,300America: 5,500: of which 800 are in North America and 4,700 in

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South AmericaAsia: 1,100.Africa: nearly 3,000.

Credit Lyonnais international experienced a short burst of rapidemployment growth during the early 1970s and this period has leftCredit Lyonnais with a staff that is too concentrated in the 40-to50-year age group, thus creating a strong bias in the age pyramid.The average age of the domestic workforce has steadily risen andstood in 1999, at 39 years of age. There is also a bias againstfemale managers: 55% of the employees are women but they veryseldom have managerial positions. This lack of equilibrium in ageand gender has serious consequences for the development of careers.However, within the group as a whole the percentage of Frenchemployees has significantly decreased from 78% in the early 1980sto 57% now and this reflects that the HRM is becoming increasinglyinternational and thus opportunities for non-French staff areimproving.

14) Promotion to Head Quarters in FranceOnly staff consistently receiving the highest level of meritbonuses (those qualifying for bonuses of 25% of salary and above)will be eligible for promotion and the traditional approach ofpromotion based on seniority, and being a French national, will endthroughout the HRM. Promotion based on seniority, which has,historically, been the normal career route in the organisation isset to disappear and Credit Lyonnais' HR Director has noted thatmany older, long serving employees, will soon find themselves beingmanaged by younger people, that is people who have the skills andattitudes for today's world of banking and who have the rightapproach to expand the bank’s business in the future.

Head quarters staff in Paris have been overwhelmingly French (98%in 1990) and although talented foreign managers have been selectedto head office roles they have tended to be appointed to France ontemporary contracts and the bank has viewed their contribution asshort term believing that when their specific project is completethey should return to the regional office or branch in the countrythey came from. Head quarters staffing has, thus, been entirelyethnocentric. Credit Lyonnais' new HR Director has, however,

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recognised the vital importance of getting the most able managerspromoted into head office positions, regardless of theirnationality and wishes to move swiftly to a situation where perhaps50% of head office management consists of successful managers fromthe foreign regional and branch offices.

15) Promotion and Movement between Foreign Branches: From Ethno to Geo-CentricCredit Lyonnais has, historically, been managed ethnocentricallywith all importantmanagement jobs, wherever they occurred in the world, being takenby French expatriates.However, now, as the bank moves into the C21, there is increasingawareness of the need for global, geographic staffing, where themost appropriately qualified member of staff gets promoted regardless of their nationality.

16) The Dominance of French Expatriates in Regional Offices and ForeignBranchesHistorically Credit Lyonnais' organisational structure had beenbased on the requirements of managing a world-wide 'colonial' styleorganisation and therefore local bank directors had to be Frenchnationals and were delegated large amounts of power (their statuswas comparable to that of Diplomats of the French state). Theexistence of 'territories', which were geographical in the case ofbranches abroad, directed by virtually autonomous local managers,led to the creation of 'feudal-like fiefdoms' which often resultedin internal competition ("one doesn't give a customer to somebodyelse even if the same company name is over the door!")^Efforts arebeing made to reduce this isolation by restructuring theorganisation chart and increasing professional mobility.

The Paris-based senior managers of Credit Lyonnais have thus reliedheavily in the past onFrench expatriates to help facilitate or implement programmes whichthey have felt must be transferred to foreign units. Because of theimportant role played by French expatriates, most local employeesbelieved until recently that certain positions in their homecountries are, and always would be, reserved for French nationals.There are essentially four explanations for the traditional

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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 givencertain advantages in the course of their careers.

iv) The belief has been widespread among top managers inFrance that it is easier to solve the bank’s problems withexpatriates of French nationality than with foreigners.

17) The Move to Global, Geocentric, ManagementMulti-national corporations must balance the need to be able todifferentiate foreign subsidiaries while maintaining enoughintegration to provide the co-ordination and control necessary tofinancial success. Credit Lyonnais now realizes that thisintegration may be achieved more easily through the use ofgeographically mobile managers (not just French managers) andmanagement development programmes involving managers from aroundthe world. Such management development programmes can be used as a'glue' to maintain a tightly integrated network of geographicallydispersed and multi-ethnic branches and to develop a sense ofcorporate culture which might, for managers at least, over-ridenational culture.

No longer will French managers get any preferential access topromotion at head-quarters and when these vacancies occur they willbe advertised throughout the world-wide network of Credit Lyonnais.Similarly, French managers will no longer have the 'pick' of thebest jobs in foreign branches and Continental offices, these jobswill also be advertised throughout the world and selection panelswill consist of at least four people, no more than two of whom willbe French (ideally one will be from the country where the branch isbased, e.g. a German manager if the branch is in Germany, and onefrom another country, e.g. in this case perhaps from the USA).Generally, the international movement of staff, especially managersand technical experts, has increased and although there has been a13% increase in French expatriation, to some extent reinforcing thetradition of French dominance, there has also been a doubling of

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foreign expatriation (for example, an Italian manager working at aUK Credit Lyonnais branch) over the last four years. Increasinglytoo, highly competent local staff are winning promotion to head upCredit Lyonnais operations in their own countries or on theircontinent whereas ten years ago these top national and continentalpositions would only have been available to French staff.

18) Resistance from French Managers to Geo-centric StaffingFrench expatriates often found that expatriation could become agood career: about one-third of current expatriates have spentnearly all of their careers abroad, and will probably end themabroad. Being an expatriate provides financial and professionaladvantages and the French managers working in foreign locations arelikely to resist Credit Lyonnais’ head office attempts to reducethe number of such postings. Financially, expatriates receive asalary supplement and generally better living conditions than theywould have in France. Professionally, the work in the foreignbranches is often more interesting and challenging than what theywere doing in France and working abroad typically offers increasedresponsibilities and real autonomy in business and personnelmanagement, reinforced by geographical distance from the Paris headoffice. Above all there is often a sense of adventure reminiscentof the colonial spirit of conquest. Top foreign postings aresometimes considered as personal empires which have led to a kinglike managerial style.

19) Moves to Geocentric Staffing Result in Cultural ProblemsCredit Lyonnais has now made serious progress towards solvingproblem of the representation of the non-French staff in thesenior management of the organisation by promoting non-Frenchemployees to very high levels of the bank at its Paris head-quarters and by special programmes designed to identify andtrain high-potential managers from whichever country they come.

There is also a requirement for staff of Credit Lyonnaise indifferent nations to co-operate more. The HIRM Director has notedthat significant additional business could be secured for the bankif branches in different nations could integrate in terms of commonservices and management of their customers' accounts. As things are

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at the moment there is very little sense of international corporateunity and, for example, when the manager of an English branch ofCredit Lyonnais tries to deal with the manager of a Russian branchon behalf of an English customer who is trading with a Russian HRM,the English manager gets no better treatment from her Russiancounter-part than if she worked for a rival bank.

20) National Cultural Differences within the Credit Lyonnais GroupIt is recognised that national cultural differences persistbetween the nations in which Credit Lyonnaise operates and thatthe attempt to generate a common corporate culture throughoutthe Bank’s world-wide operations has yet to be successful. Afurther problem lies in the fact that the culture of CreditLyonnais' head office reflects that of France itself: thecompany, like the country, is positioned on Hofstede’sdimensions as follows:1) Individualism (1) -Collectivism (10):

mid-way at about 52) Low Power-Distance (1) - High PowerDistance (10):

at the High Power Distance end at 83) Low Uncertainty Avoidance (1) - High Uncertainty Avoidance(10):

at the High Uncertainty Avoidance end at 94) Masculinity (1) - Femininity (10):

at the Masculine end at 35) Short Term Orientation (1) - Long TermOrientation (10):

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

Credit Lyonnais has experienced particular problems in integratingmanagers from the countries listed below into internationalmanagement teams at the Paris head-quarters.

Scores of Credit Lyonnais Managers from different countries

Individualism

PowerDistance

Uncertainty Avoidance

Masculinity

TimeOrientatio

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Managers'countries

I=1C=10

Low=1 High=10

Low=1 High=10

Masc.=1Fern.=10

Short=1 Long=10

UK 2 2 1 9 1US 1 1 2 10 1Japan 9 9 8. 2 8Brazil 8 8 8 3 3Russia 7 8 5 5 2Algeria 2 8 7 1 7China 10 8 8 3 10

20.1) Cultural TrainingCredit Lyonnais has over the last three years worked with leadingFrench, UK, US andJapanese Business Schools to run cultural training programmes formanagerial staff newlyarrived for their senior jobs at the Paris head-quarters but thereare still many problems in:

a) integrating these foreign nationals with the local Frenchstaff

b) getting the foreign national managers to work together.One of major challenges for Credit Lyonnais over the next decade isto ensure that talented managers from around the world are enabledto work effectively at the French head-quarters and to work withmanagers from nations in geographically adjacent parts of theworld.

Questions:1. Why is HRM important for a modern bank? In other words, why do

banks in particular now need highly motivated, committed staffthat is willing to contribute to the success of their firm?

2. a) What are the main changes in HRM that are happening atCredit Lyonnais within France (there are at least 12 you shouldbe able to identify)?b) why are these changes happening?

3. Why should Credit Lyonnais be concerned aboutinternationalising its management (that is, reducing the number

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of French managers and increasing the number of foreignmanagers):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 ismore powerful than national culture? b) How is it possible to incorporate foreign ideas into CreditLyonnais' culture without it losing its identity?

5. a) Why might non-French managers, for example German, Britishand Russian managers, be interested in working in a foreigncountry? b) What kind of Human Resource Management policies (includingsocial and financial aspects) will provide the necessaryincentives to encourage geographical mobility among non-Frenchmanagers?

6. Choose one national group of managers from those identified inthe table in Section 20 of the Case Study (US, Japanese, Brazilian,Russian, Algerian, or Chinese) and identify the problems whichmanagers of this nationality are likely to have when working:

a) with French managersb) with managers from UK.

7. How is it possible to internationalise teams so they become co-operative rather than conflictual?

This case study has been extensively developed and up-dated from an original by Chevallier, F. & NI. Segalla inChevallier, F. & NI. Segalla, Eds., Organisational Behaviour & Change in Europe, London, Sage (1996). Although generallygrounded on the policies and circumstances of the named organization, this case study has been specificallydeveloped for teaching purposes and therefore the current veracity of any facts contained within the case cannot beguaranteed.

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