France Télécom…the Morale Implications

As someone who has lived, studied and worked in France, I have a great affection for the country and its people, unlike some of my more vocal adopted countrymen and women in the US.  This is a pity because it is a country with a wonderful culture which has added so much to the world and continues to do so. In the business world, especially on the people side of business, its reputation has been shaped in part by the introduction some years ago of the 35 hour work week (now less prevalent) and for its famous long vacations and the seeming inability to fire people.  This in turn has led to the myth that France is somehow “easy-going” when it comes to business, which is far from the truth.  While it has a unique culture driven by its history and values, which inevitably effects business life in that country, France is in fact one of the most productive countries in the industrialized world.

Recently the news that one of its major companies, France Télécom, had suffered the absolute tragedy of multiple suicides of its workers has made headlines around the world, and as one of those who care about this situation and the underlying reasons for it, I have been following the developments.  As most of you will know FT is one the largest telecom companies in the world, with over 100,000 employees in France alone, and international wireless telecom operations known as Orange.  Formerly wholly state-owned, like most European telecoms, the company has had to become majority shareholder owned because of European law, although the French state continues to hold a significant ownership (27%) and can call the shots when it comes to major moves made by the company.  When the news emerged that more than 20 people employed by FT had committed suicide (Agence France-Presse on October 16, 2009 updated the number at 25 in the last 20 months), some of whom had left notes indicating troubles and changes at FT as the reason for their despair, the French state stepped in with demands for an investigation.  This lead to the resignation of the deputy CEO, a former consultant who had been reported as being a hard-charging individual responsible for bringing the company into a more competitive era.  Recently announced was a comprehensive program which will cost the company more than 1 billion Euros, to counter this alarming trend.  This includes the hiring of an independent consulting company, specializing in morale, to examine the situation and make recommendations for steps to prevent any more instances of what seems to be a very sad epidemic.

So what is happening here?  Some early newspaper reports mentioned the fact that France has a fairly high rate of suicide and that with such a large employee population, FT’s suicides were not out of the ordinary.  From a purely cold statistical point of view, this is probably false: teenagers, older people and the unemployed likely have higher suicide rates than those not in those groups, none of which by definition work for FT, whose suicide rate for employed individuals aged between 19-60 might be higher than the French average for that demographic. Having said that, I don’t think this statistical approach says enough about the situation, and offers no solution in the case of a finding that FT’s actions have indeed contributed to the employees taking their own lives; or to look at it another way, there is a possibility that FT may not have had the high morale which could have prevented these tragedies, regardless of the underlying suicide rate in France. The role of the FT employees themselves must also be considered, not in any negative way of “blaming” them, but from a sympathetic point of view;  and we need to look at the role of the French public, FT’s customers.

Over the last decade or so, millions and millions of FT’s customers have deserted the company, especially younger ones.  The advent of services like Skype, which routes calls through the Internet, have devastated old, fixed line telecoms around the industrialized world.  Many young people now would not dream of having a fixed line phone, but instead rely on their mobile or “handy” and Skype, which gives them free worldwide audio and video calling when they are in touch with another Skype user, and extremely cheap calls (around 2 Euro cents a minute) when they are not. Clearly FT’s cost structure and its staffing levels were created at a time before Skype and other VOIP calling services came along;  Internet calling makes this cost structure unsustainable, unless the French public chooses to ignore it and stay with FT’s more expensive fixed line system, which they clearly do not, any more than German consumers have stayed with Deutsche Telekom.

As for the employees’ role, lets go back to when a person decided to join France Télécom. Was this a random event?  It was not: this person chose to go there based on his or her needs and especially, values.  Time and again I and my colleagues have surveyed employees around the world and asked them what they look for in a job.  In many cases where that employee works for a public utility like a telecom, electric or gas, water or other such company, they have said that job security and good pay are top of the list.  While some readers may think this is universal, it is not at all true for those who choose other types of industry.  Technology workers often have values which list challenge, a chance to learn new things and other such items well above job security. So we have what I call a group of “self selected” employees in a given company or industry, and at first this might work well:  their values and needs are met by the organization and in return they give that organization their loyalty and hard work. The problem comes when, for reasons of deregulation or other change in the market environment, the rules of the game change, and the long established, safe utility is stripped of government ownership or protection, and thrown into a fiercely competitive situation.  Faced with this, the company has to respond with a complete change in its culture and often, with cuts in staffing levels to meet the cost structure of its new-found competition. Those who thought they were “safe” until retirement suddenly find that they are as vulnerable as those who joined very different industries when they entered the workforce.  This can cause almost unbearable stress.  Of course this is not their fault, things changed around them;  at the same time, change is everywhere at all times, and the idea that we can stop the clock and “keep things as they are” is impossible in life.

This is not to say that resistance, failure or inability to adapt are universal in this situation: there are those who will thrive in a new competitive environment and enjoy the new challenges; they might even experience a sense of freedom from the old way of doing things and the rigidities of that style of management which often comes with government-run or heavily regulated utilities.  They might enjoy the opportunities which open up to them.  This happened in many of the US utilities which have been deregulated over the last decades. Other employees will not respond so favorably, they will not make it and the stress level will build up to intense levels.  They simply cannot let go of what they thought was lifetime job security and safety and a certain work lifestyle…witness Japan and the “lost decade”  of the 1990s when decades of such a “safe” corporate culture were wiped out: Japanese employee morale slumped to unprecedented low levels and seems to not have yet recovered.  The key is that the company going through this wrenching change has to be sensitive to employee needs and have an understanding and a plan to deal with what I have described in the paragraphs above, and some do not.  This is also about corporate values, and about morale: some of my former clients have also gone through huge change and (while significantly smaller, which does not have to be the main issue) avoided the tragic outcome of FT;  they did this by having a strong culture of “putting people first”,  not as an empty slogan but as a living, breathing part of their culture.  This was communicated and trained relentlessly and lived in the organization without exception. Their organizational morale was constantly improving, which “inoculated” them against the worst, most negative outcomes of change.  If a cut in staffing levels seemed necessary, for example, they bent over backwards to spread the pain by cutting work hours for all, rather than individuals.  I have no inside information on FT but it seems that with the new and widespread intervention, the company will have the opportunity to focus on these issues in a way that they did not do before.  It is not the employees’ fault that such wrenching change happens;  at the same time, neither the government nor an individual company can protect everyone from change, such as the Skype example, any more than King Canute could stop the tide from coming in on the English shoreline.  Its how we help people understand it and adapt to it, how we build the high morale culture which can cushion its worst effects, that is important, and we ignore this at our…and the employees’…peril.

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