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

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, increased of job stress, deterioration of the working environment due to a climate of competition between employees. This kind of management with the context of privatization, competition, outsourcing and subcontracting has resulted in a wave of suicide among employees at

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France Telecom. In fact, on september 2008, the number of suicide was already at 58. But the suicide was not the only manifestation of the discomfort experienced by employees at work, indeed, we also have noticed a significant increase in sick leaves and employees who have submitted their resignations, giving reason to the policy setting up by the direction. With the mediatization of events, the image of France Telecom has been seriously dehorned and this penalize a lot the group. That’s why we can study the reason for this problem and try to give some solutions.

2- Analysis of the failure of management

2-1- Possible explanations of the social crisis

Firstly, the management of France Telecom was a failure because the timing was wrong, indeed, the next plan was set up between 2006 and 2008, so just before the economic crisis. If you want to apply this kind of management in order to reduce the number of employees, it’s better to do this in an economic period of growth. During the growth, a lot of companies wants to recruit people to meet the increasing needs, and so to assist to group’s growth. If people know that if they loose their jobs, the economic context is favourable for us and they can have more opportunity to find another job, they will accept easier the decision, and the atmosphere at work will probably be better. Unfortunately, the economic crisis contributed to create an atmosphere of fear for all the companies, and this feeling was even more felt in France Telecom because of the kind of management choosed by the direction. The fact of choosing a important policy change for the company in a period before a crisis is rarely a good choice, better anticipation of events would have avoid this failure. Moreover, the choice of management by fear may have been made in order to create a competitive environment among employees to ensure that only the best will remain. Create a context of competition in the company can increase the productivity of the group, employees are motivated and so more productive because they are affraid of loosing their jobs, they want to show that they

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are better than others. However, a context of high competition in the company combined with the deterioration of working conditions is harmful for the productivity of the group. It contributes to

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