France Télécom: crise sociale, symbole d'une mauvaise gestion (document en anglais)

France Telecom : the

social crisis, symbol of a

wrong management

Basics of management 02/12/2012

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Table of contents

1- France Telecom, general presentation and actual situation.......................................................3

1-1- Presentation of the group........................................................................................3

1-2- The Next plan, new choice of management............................................................4

2- Analysis of the failure of management.........................................................................................5

2-1- Possible explanations of the social crisis.................................................................5

2-2- A change in management style, a need to resolve the social crisis.........................7

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1- France Telecom, general presentation and actual situation

1-1 Presentation of the group

France Telecom S.A is a French multinational telecommunications corporation in France,

the largest in Europe and the second largest in the world. Actually, it employs about 180 000 people,

which slightly less than half are working abroad and has more than 220 million customers in the

world. France Telecom is actually present at the four corners of the world, in Europe of course, with

United Kingdom, Spain or Poland, in the United States also, and in many other countries like in

Africa or in Asia with for example India. The group’s current revenues amount to 45,27 billion €

(2011). The current CEO of the company is Stephane Richard, he replaces Didier Lombard,

following the wave of suicide between 2007 and 2010. The main commercial brand of the group is

Orange, the group bought the vast majority of Orange plc in 2000 and the totality in 2003. Orange

is for mobile and landline telephone services as well as its fixed (ISP), mobile internet services and

IP television. Orange is also intented to ultimately becoming the name of the group as a whole.

The State created in 1878 a Ministry of Posts and Telegraphes which became in 1923 the

PTT (Post, Telephone and Telegraph). In order to meet a European directive telecommunications

services (fixed telephony mainly), the Director General of Telecommunications becomes France

Telecom on 1st January 1988. To prepare for the opening up to competition on 1 January 1998, a

law was passed in July 1996 transforming the public operator into a company with the French State

in only shareholder. However, 115 years after its nationalization, telephone will become again

private in France. Indeed, in 2004, the French State sells part of its shares to go below 50% of

France Telecom’s capital. France Telecom becomes a private company, thus leading to a series of

changes in term of structure, strategy and management that we’ll analyse a little further.

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1-2 The Next plan, new choice of management

Concerning the choice of development for the goup, France Telecom choose the way of

expansion. Indeed, in order to ensure a sustainable growth policy, the France Telecom Group

expands its activities in the sale of content (music, movies, download ...), e-commerce, online

advertising, M2M solutions, home automation and telecare to patients. It also develops a strong

geographical scope of its activities, by investing heavily in the country called "emerging". In the

competitive field of telecommunications, France Telecom, through its NExT plan (2006-2008),

initiated a sales and marketing policy convergence (access to services from landline, mobile,

internet, single billing ...). Policy tends to extend to all telephone operators.

The NExT plan (2006-2008) is the turnaround plan for France Telecom which aims inter alia

to reduce costs - especially labor - of the company, a policy of convergent products and services,

and consolidate all brands group under a single brand (Orange), except for fixed telephony activities

that remain under the name France Telecom. This therefore leads to the disappearance of many

brands (Wanadoo, Equant ...). It is expected to reduce the workforce by 10%, or 22 000 employees.

To achieve their objectives, France Telecom has introduced a new style of management, a kind of

‘management by fear’, the main idea was to deteriorate the working conditions to push

psychologically part of voluntary redundancy, for reducing redundancy payments. Before the

privatization of the company, France Telecom offered its employees a safety, both in employment

and in their public service mission. Actually, with the economic crisis and increasing competition,

employees feel more threatened and that’s why managers take advantage of this insecurity and fear

to be more demanding with employees. All means are good to push people towards the exit:

unrealistic business objectives, humiliation, restructuring, transfers ... The consequences were

immediate,

...