vendredi 1 février 2013

Work organization : France in logic of honor when USA in logic of contract

In the last post, I've discussed how the French Ancient Regime (period from the wake of last millenary to the French Revolution in 1789) is still shaping the way we're governed. I will pursue with those considerations on a more day-to-day illustration : the way French Ancient Regime society organization is still largely tainting today's french society and mostly work organization. It explains a lot of misunderstandings and failures when a US company manages a french subsidiary and vice-versa. This post is based upon a book that has been written in 1987 : sociologists have studied organization and behavior in 3 plants of the same industrial group (US, France, Netherlands). This was 25 years ago and mostly blue collars, but the lessons learned are curiously similar to what I've personally experienced when my company was taken over by a US company less than 5 years ago,  in a completely different sector (software manufacturer). 

Ancient Regime

France has lived for 6 or 7 centuries under what we're calling the "Ancient Regime". It was a very rigid "class system" with strong barriers to move from one class to another. You had the aristocracy (including kings and queens), not engaged in any business but fighting, forming alliances and marrying amongst themselves to keep power and estates. You had the nobility and gentry, some of them more a sub-aristocracy, some of them doing business which was considered something "dirty" and kept you under aristocracy (a real aristocrat could not make a living conducting business). You had a class of religious (monks, priests), and then you had a class of people that had access to a better class through heroic behavior in battles : cavalry was for example considered as a superior class. You had craft-makers and shop-owners with a perpetuation through master/apprentice relationship (and protection through syndication). And most people were poor farmers working for small gentry. They were not slaves but working on lands that were not their property. They were working for their lord.

Everybody was under a logic of 'honor'. Belonging to a class came with a list of rights and duties. Those lists evolved with time but the system kept on being the very same. When in a class, you cannot do something that is devoted to an inferior class (or stick your nose too much into the inferior class business), that would lead you to dishonor. This is still surviving : in France, a manager cannot dig too much into a team member's work without being considered as "breaking the rank". And the team member being too much controlled will find outrageous that his manager is going too much into his business devoted to 'its class'. Even the lower class was in this logic of honor. They were into domination but were very proud and jealous of their autonomy in some rights and were not in rebellion of the duties they found 'natural' to their rank. The whole society was working well provided everybody stayed 'in his rank', benefited from 'his rights' and ensured he properly respected his 'duties'. A lord had all powers over poor farmers but he was meant to use it with moderation according to his duties. If he did so, the farmers accepted the domination. If not, there was rebellion. Nevertheless, this domination was difficult to endure. That's why, in France, "working for someone" is still seen as a problem because it always refers to a master/servant relationship, not to a contractual relationship as it is in the USA.

French revolution and US model

The French Revolution which started in 1789 was meant to break all of this. The King was beheaded in 1793 and it's true that the whole system was shaken around. The whole "class system" was torn and the aristocracy barely exists today. But the class logic and the 'logic of honor' is still vivid. The classes are far more numerous come in many shades. But each group refers to a system of rights and duties, even if it's not consistent anymore with the current reality. Some strikes are starting just because the 'honor' of a group is endangered.French employees are ready to be utterly committed in their work but don't accept  that their manager is checking on their work too much. Some people say french people are lazy and don't care about their work. That's simply not true. The fact is, people are very disappointed by companies more than most other countries simply because they put too much expectation on work (polls show very clearly the over-commitment of french people in their job). Some also say french are unmanageable. That's more true because each group refers to its own code of honor rather than to orders. And we're still reluctant to management because of the memories of the master/servant relationship. Just like the defiance toward the riches could be interpreted as remains of the time where conducting a business was considered dirty (vs aristocracy).

At the other end, the US system is built on a very different basis. The burden of the past is way thinner. US can be seen as the aggregation of free men, meant to be peers, working together under a "logic of contract". The key word is "fairness". Of course, there are a lot of inequalities in US, much more than in France. But France refers since 1789 to "equality" when US refers to "fairness". It's more acceptable in US to "work for someone" because you're meant to have freely chosen and accepted the situation and it could be reversed one day. Hence the important figure of the "self-made-men". Therefore, the work organization relies much more on procedures (job description, management by objectives, performance review). Each level, from shareholders to blue collars, is giving objective performance expectations to the inferior level which can work, inside those orders, with a fairly good autonomy. And, unlike in France, it's not a dishonor for someone to be 'checked' : in France, it's seen as a lack of trust and defiant gesture. US can also rely on contracts because it's a lot supported by culture which is tainted by community and fairness values. This contract system does not work very well in France when people are still entrenched into honor.


Management and organization models, theories, books, seminar consultancy, it's a big business. Each country, each company, is trying to find best-of-breed models. Hence "copycat effects" and dramatic changes in model popularity. We have always been impressed in France by US economic power so we've always tried to import US management methods. This is still true even if it has a little bit faded away. We've had our "Japanese model" (community and inputs bottom-up) time and now the "German model" is in everybody's mouth (consensus). "Japanese model" was also very popular in the US when Japan automotive manufacturers began to gain huge market shares in the US in the 80s with a productivity that was way superior to the US.

We've been so involved in trying to copy US methods for 4 decades that some management methods very unnatural to the French have now become quite common and seems to have always been around. This is the case for job descriptions and management reviews (for white collars at least). It would seem very unprofessional in my line of business (IT service & software manufacturing) to hire an employee without a proper job description and to not have a yearly or biyearly performance review based on objectives measurements. Still, most of the time, it's just make-up, a travesty of what the reality is about.

I've myself written a bunch of job descriptions. Most of them were never respected (except maybe the core components) because the employee was going over or under its prescription. Most of the time, I did not expect myself employees to respect it and I was expecting them to act autonomously in the company's best interest. It's the same for performance reviews : I conducted a lot of them, having prepared metrics and formal reviews and finally found myself turn the review into an informal talk. That's a real advantage for small companies in France (I've always worked for small business) : you don't need formal procedures, people will do their best and know what they have to do whatever their job desc states. And they will spontaneously help their colleagues if they feel their 'honor' commands them to do so. Problem is what works perfectly in a 30-people company does not work that well in a 10,000-people company. And also explains why we do have in France a lot of "small wonders" that never turn into "huge champions" like Google or Apple.

My personal experience

I was CFO and General Manager for France for a software manufacturer (approx 75 employees). The CEO  was french but had moved to California to develop US business. We'd been acquired by a San Jose, CA based company. It was fairly easy to deal with my new boss (company's CFO) and "indirect bosses" (General Counsel and HR VP). But I experienced a lot of tensions, struggles and misunderstanding with "peers". Finally, after 10 months, I decided to quit. Partly because of those tensions and mostly because my position was making less and less sense as control was centralized in California.

Tensions were largely between me and the VP US controller (may be the wrong title - the person was just "under" the CFO). Let's call him John. John was a real nice guy, very pleasant to deal with outside work when I was on business travel in San Jose or when he was in Paris or Lyon. But I must admit John was bothering me. A lot. And I could easily feet it was reciprocal. So the company CFO was constantly forced to act as a referee, which he was reluctant to do because he was very busy with other things and he did not want to push back nor John nor me. I was feeling that John was stubborn and not dedicated to the company, being in a pattern when he was just doing "his job", no matter what the company needed. It was easy to understand that he was thinking (as well as the CFO, at least for a part) that I was unmanageable, constantly doing things I was not asked to do, challenging things not meant to be challenged and a factor of disorganization. I can't remember us arguing is San Jose. I had a big number in my balance sheet on €/$ conversion risks. In my eyes, it was something to address. In his eyes, it was not to be taken in account because company procedures did not mention it. I was under the impression he was pushing the dirt under the carpet, he was under the impression I was making a world of something not that important while I was not addressing issues I was meant to address.

We were purely in the cultural mismatch I was exposing in the first chapter. I was in a "logic of honor". I had a view of my CFO's job that was not based on my job description but on feelings. So I thought this forced me to address issues I felt were important for the company even out of my scope. I also thought I had not only the right but also the duty to address this issue and couldn't care less about the effects on the company organization or on my peer's feelings. And I really apologize to John (and the CFO) for that. Not addressing those issues would have meant losing honor to my eyes and that was not bearable. The same applies to my peer. John was in a pure 'logic of contract'. He had a job to be done, following his job description and company procedures. He was working hard and very efficiently pursuing this goal. For him, addressing other issues would have bring disorder in organization and less efficiency in 'real issues'.

We were both right, both eager to do the best for the company, willing to interact at best, yet we mostly failed because we were trapped in our cultural vision bias. I can see this now ... 4 years after. This is something to keep in mind for people managing other people on the other side of the Atlantic Ocean. And also for managers or governments. You can't just look at the Japanese, US, Scandics, or German model and copy/paste into your country. That does not work well. Taking good ideas in other countries ? Of course but you have to deal with your history and culture. The 1789 Revolution did not ban the Ancient Regime organization that still survives more than 2 centuries after. A CEO or a Republic President who'd think he can delete History would be foolish and would fail.

jeudi 24 janvier 2013

France : a modern democracy on top of an everlasting monarchy

I understand that talking about Monarchy for France may seem weird. Where several European countries had chosen to keep their kings and queens (with very limited powers indeed), we're the ones who beheaded our king Louis 16th on Jan, 21st 1793. Still, the Monarchy System and what we call the Ancient Regime (the one which prevailed before the French Revolution) is still shaping large part of our political system, our national organization and also our work relationships. Nobility, gentry, aristocracy had shaped the way we interact at work, our companies hierarchy and also inter-companies interactions. We're working based on a "logic of honor" that was typical of this time rather than a "logic of contract" that prevails in US. That's why work relationships are sometimes so complicated when a US company manages a french subsidiary (or the opposite). I'll develop this in an upcoming post. In the current one, I'll talk about the political implication of the Ancient Regime everlasting effects and also about centralization. US had been built as a federation of states. France is quite the opposite and is desperately trying to mitigate the over-centralization of Paris where 1 out of 5 french citizen live. The result is odd : an obese headquarter surrounded by overgrowing multi-layers subdivisions.

An Hyper-President ?

Our former president, Nicolas Sarkozy, had been nicknamed as "hyper-president". Fact is that the French President has huge powers. It had not always been the case but it really is since the beginning of our 5th Republic (1958). You must keep in mind that, since the French Revolution (1789), we change the major version of constitution 19 times and we're at the V5 of the Republic. Our constitution is much more bigger than the US one but we also change it much more often.

People are elected a first chamber, the National Assembly. A second one (the Senate) is elected by local representatives, mostly mayors. The Senate is more stable and supposed to be more conservative (although it's now dominated by Socialist Party). Both chambers are voting the law. President is elected by the people in a two-round direct election. Every citizen is voting for a candidate among a dozen (that's the average number) then, two weeks after, for one of the two runner-up (best scores in first round). The President is then nominating a "Prime Minister" in charge of leading the country. The "Prime Minister" is then nominating the government with Ministers (20 in the current one like Army, Economy, ...) and "Sub-ministers" (18 currently). The Prime Minister must be confirmed by National Assembly. If the President is conservative but the National Assembly is leftist, then the President will be forced to nominate a leftist Prime Minister, what we're calling "cohabitation". It happened several times in the last 3 decades. But the President keeps a lot of powers : total control on armies, capability to provoke new National Assembly election (last used in 1997), the right to nominate people to some high positions in Administration, to veto some Ministers decision, ... The mandate duration for Presidency and National Assembly and election date had been aligned so that the cohabitation risk (cause of policy blockade) is now limited.

In the 4th Republic, the President was elected by the chambers, not by the people. He was weak (no direct people legitimacy) and unstable (26 presidents changes in 12 years) due to alliances swap. The 5th republic and the very strong role of the President is a reaction to the weakness of the 4th Republic. This instability led to 4th Republic Collapse in a very tough time (Algeria War which was an equivalent of Vietnam for France). The question is now : is this very "strong President regimen" still needed ?

How much the Presidence costs ? A lot !

The French President is living and working at the "Elyseum Palace", the equivalent of the US "White House" (unlike the 10, Downing Street in England which is a living place only for the Prime Minister ; in France, the Prime Minister has its own place : Matignon's Place. Fortunately, Paris is packed with palaces ...). French President has his "Camp Davis", a fortified place on the French Riviera.  It's interesting to see, as a symbol, how those administrations are living. Not that long ago (10 years), President, Ministers and part of their staff were paid by "secret funds" (bank notes !) in a total opacity. Ministers are now paid with an official wage in a fairly good transparency. Staff wages and benefits are still opaque. The French Presidency has a budget since ... 2008. Before this date, the money was just spent. No budget, no accounting. The official budget of presidency is 32 M€ but that must be completed with money coming from other ministers. Altogether, the budget is approximately 130 M€ ($175M/year). After the "bank notes payment" had been banned, the official wage of President had been raised from 7 k€/month to 19 k€/month (this sharp increase had been made by Sarkozy and was used by its opponent as a symbol of Sarkozy's preference for luxury - a dishonor in France !). That makes $300k a year (before income tax), less that IMF president for instance ($550k/year). Note that the new president, François Hollande, had decided to cut 30% of his salary (same for the Ministers).

Operational costs of French presidency (without staff salaries and travel) was $25M in 2011 compared to $13M at US's White House, same for German's chancellor and $18M for Queen of England. In 2011, the Presidency was owning 74 vehicles and 31 more were lent by french manufacturers. At German's chancellery, it's 27 vehicles only.  The cost per citizen of Presidency is 3.5 times more than in Germany. The staff of "Elyseum Palace" is 882 employees. It's 527 at the Germany's Chancellery and 582 in White House. This makes look French Presidency more like a monarchy rather than a modern democracy. Note that this is not the President'privilege only . The National Assembly President (4th ranked in France's protocol) budget is roughly $1.3M a year. In 2011, it spends $52k for wines (was $91k in 2008) and $82k for flowers ($137k in 2008).

Un-concentration : a fierce need to reform

France is too much centralized. Out of 65 millions citizen, more or less 12 millions are living in Paris suburban area. All political & medias powers are in Paris. A lot of economic power too. Always had been. It also was necessary because french borders were not "meant to be" : France had to be unified by a strong central power and a common language. Unlike the US, France shares the same very law everywhere upon its territory. It admits only very small variation in application. Only 5% of France's taxes and social charges are decided (and withheld) at local level ; only 25% of public spending are. Therefore, this leaves few room to local entities.

Nevertheless, efforts had been made since 1982 toward an "unconcentration" : more local taxes, more local spending and budget flexibility, a little bit more independence. French had been divided into "towns",  and the current split had been decided a little bit more than 2 centuries ago. There are 36.000 "towns" in France which means a town is 6 square miles and 1.800 citizens lives in. That's small. 50% of towns have less than 500 inhabitants while only 50 have more than 100,000. A US county mean population is 25,000. But France has another scale : the "departement", also created more than 2 centuries ago. We have approximately 100 of them for a mean population of 520,000 people (and a surface of 2,000 square miles). On top of that, "departements" are gathered into "regions" (22 of them in metropolitan area, plus some "special regions" for overseas). Some regions have a "cultural meaning" (Auvergne, for example, may be more or less connected with territory of tribes living 2,000 years ago), some others are pure administrative creation. All those lawyers have elected people (different elections on different periods), budgets and spending (department are for example handling school buildings for kids 12-15 years old, regions for kids 16 - 18 old). To be honest, very few people know exactly which entity does what.

The concept of "towns" is still functional in the countryside but not in medium/large cities. Since the split had been made 2 centuries ago, all cities have gone way beyond their borders. I live in a town (population 4,900) in the outskirts of Lyon (population 440,000), 10 miles away from the City Center. I couldn't make my way to the Center while finding a gap larger than 100 yards between houses (except parks) : this is now all the same city. So an "intertown" organization had been setup regrouping 58 towns for an overall population of 1,200,000 (second biggest one in France). Managers of this "intertown" are not elected (nominated by town mayors) but they are voting (small) taxes, they're spending money for resources sharing (garbage disposal, school buses, ...), they have staffs, they are paid. More than 15,000 of "intertown" organization had been created. This may had been a tremendous way to find synergies and save money. But staff of intertown organizations (most of local or national governmental organization staff members are entitled to "job warranty for life" - 5,000,000 people in France are under this status on overall 25,000,000 workers and 3,000,000 unemployed)  had sharply increased (+221% between 1998 and 2008) and town's ones never decreased ! So we're just piling up and there are more duplicates than savings.

A lot of people are now asking for a simplification : more transparency, the right to easily know who is responsible for what, taxes transparency. The main split had been made two centuries ago and going on piling up is not the good way when we're trying to find an equilibrium on our budget. But here's the trick : politicians are very often multi-mandate. A National Assembly representative or a Senator is most of the time also mayor and President or Vice-President of an "intertown" organization. Since 2012, Ministers are not allowed to keep local mandate but it was often the case before. So it would be hard for representatives to vote a law that would undermine their powers and financial resources : they're allowed to get a wage for each of their mandate up to a ceiling.  They're also benefiting various advantages for each mandate : car (with chauffeur), credit card, ... like barons in a Monarchy.

samedi 5 janvier 2013

Religion, politics, money : french taboos or cornerstones of good manners ?

Christmas and New Year's Eve are over. This was good family time for me and I hope this was the same for you. Gathering with family members should always be a good time but sometimes it can degenerate into trenches battlefield. Because even if we're same blood, each one of us has his own opinions and beliefs. I've never been at an American Christmas or New Year's Eve, never been at a US family gathering either. But I did see a lot of American cars with political stickers, I've discussed with business acquaintances about politics, economy, religion, money. All things I cannot discuss in France with family and friends, even closest ones. Cause those subjects are taboo in France. Or is this just good manners ?

Politics, revenues, religion : French taboos

When I was young (8 years old), my father, a university researcher and teacher (thermodynamics) went for 4 months in Newark, Delaware to work at the university there. I joined him with my mother at the end of his stay and this was my first discovery of America (a few key memories : Airspace Museum in DC, Airforce planes in Dover, a lot of yellow cabs in New-York, endless firemen trucks). Then, the professor my father worked with came to France. I can remember him in a restaurant saying out loud "Mitterrand est con" ("French President is a jerk"). My father wanted to hide under the table and other clients were horrified, staring at us or acting like they had not heard which was quite impossible considering the loud voice of the Delaware professor.

In France, we speak a lot about politics. But saying who you vote for ? That's a taboo. I know who my mother voted for at the last election, but nothing about my father's vote. Among my best friends, I know for sure the vote of one of them. For the others, I can often guess. Since we speak a lot about politics and economic policy, I can infer who they voted for. But we can't say it outloud. That would be embarrassing for everyone and, moreover, rude, impolite. Having a sticker on your car stating you're pro-Sarkozy or pro-Hollande would lead other people to think of you as a weirdo. 

Revenues are one degree above politics. Talking about money is not really polite but talking about your revenues ? Well, you may as well get up, jump on the table and show your genitals. I don't know any of the revenues of my family or best friends. Again, considering their position, the way they live, the size the house they've bought, I can make a good guess. But asking ? I don't want to lose my friends. Don't ask, don't tell, that's the policy. Recently, I've told my mother my exact revenues and savings position. She was raised in different time and culture where, if you have a good working position, you keep your head low and keep it. I'm more the changing type, changing jobs every three years, therefore worrying her. So that was a way for me to tell her : look, I'm OK, you don't have to worry. But there was a silence on the phone because this display of numbers made her uncomfortable.

Religion was also a taboo but it's fading away. That's because religion itself fades away. Less and less people believe in God in France and only 5% people go to the mass on a regular basis. So the taboo is falling apart. You could note it's a lot easier to you to say you don't believe in God than the opposite. France has a long tradition of sarcasm, of being non-believer (I'm not talking of God) and maybe some cynicism.

California vs France : Freedom or bad manners

Now, let's talk about US. Most of experiences I had (except my 1980 small trip on the East Coast and some other short trips) were in California. And I'm aware that US is not the same depending on which part we're talking about. I've already spoken about the bumper stickers. I've also found that some people I worked with and barely knew were very open to talk to me about their political choices (Democrat or Republican), if they were liberal or not, if the Obamacare should be implemented or not. Asking them if they have faith or not wasn't rude at all. About the revenues, they may not tell me the exact numbers (especially when we worked for the same company) but it seemed not to be a problem.

The fact is Americans (or at least Californians) are speaking their minds where French choose to hide. A Freudian would say the American way is better. Hiding things into your brain will cause neurosis. Maybe French behavior will lead us to a collective neurosis (or are we already there ?). But the French attitude may also be seen as "good manners".

The CEO of the company I worked for a few years ago, an English (or Scottish maybe) fellow living in the Silicon Valley for 15 years, told me that he hated the relationship genuine Californians had with money. "If they could display their yearly revenues on a T-Shirt and wear it, they would do it", he said to me. Well, they actually could but don't. But they're doing it through "wealth displays" : the number of sports cars on the 101 or 405 (San Francisco / San Jose) is just amazing.

In France, especially in traditional countryside culture, you don't speak about politics, money or God. But you also don't show your money. Even if you have plenty of it. You don't buy a sports car, but you indulge in some leather inside because it's discreet. The very traditional culture was no good to me because we were hiding too much and it actually led to neurosis. But the modern culture is more balanced : the taboo still stands but you have more space, more freedom. Therefore, maybe it's a good thing to keep those taboos. That's part of "french style". And keeping some secrets, even to family and friends, is a good way to keep peace at home and abroad, and also to leave some secrecy and mystery in our lives.