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Aerospace MBA
November 28th, 2014
Aerospace MBA
November 28th, 2014

Mona Chaibi-Darouez
Karima Guetarni
Younes Djerrari
Mona Chaibi-Darouez
Karima Guetarni
Younes Djerrari
HRM Challenge
France working environment
HRM Challenge
France working environment
Lecturer: C BARZANTNI; R KASE; A ALEXANDROU
Lecturer: C BARZANTNI; R KASE; A ALEXANDROU

Contents Introduction 2 What are the HRM problems you identify 3 a) in the overall professional environment today 3 b) In this company in particular? 4 What will be, according to your perception and experience, the challenges for the future of HRM? 6 a) In general 6 b) In our company 7 Solutions to meet these HRM Challenges 10 a) Improving Performance Management 10 b) Employee Empowerment 11 c) Vocational Training 12 d) Postgraduate program design and updates 13 Conclusion 14

Executive Summary

HRM is a key pillar of organization’s strategy aimed to improve overall performance and enhance work conditions. Nowadays and specially after the economic crisis, HR managers are facing several problems affecting the companies performance and thus their competitivity. In our study, we identify that the main problems are: Hiring the right persons, retaining performing employees, manage performance, monitor turnover and the lack of communication. The second part is about raising HR managers’ challenges. Among them, enhancing employee engagement, reduce absenteeism, managing talents, enhance branding, avoid brain drain and improve collaboration between academic institutes and companies.
The key solution to these challenges is to adapt the education system to the labor market needs. To achieve this goal, we propose to align the French ministries (Finance, tax, industry, education) policies toward a common goal that is to decrease the unemployment rate by lowering employers’ contributions and providing them with individuals holding the right skills.

Introduction

HR management is one of the main challenging functions. The performance of companies is highly related to their HR strategies. In this work, we raised some problems faced by HR managers generally and with a focus of the French government. Indeed, we have chosen the French government because of the diversity of issues and challenges it is facing.
We studied the French government according to three different perspectives: 1. As an employer (of civil servant) 2. As a trainer (national education) 3. Policy maker (Impacting private/public companies)
In the first part of this work, we will discuss about the main problems raised for HR managers in general and for the case of the French government.
Secondly, we will describe challenges faced by HR managers for our company like branding, brain drain or absenteeism reduction.
Finally, we will propose some solutions in order to tackle these problems.

What are the HRM problems you identify

a) in the overall professional environment today
Nowadays, HRM is a key pillar of organization’s strategy aimed to improve overall performance and enhance work conditions. However we notice there still have room for improvement in this area. Indeed, we have identified the following problems: * Inflation of diploma in a highly competitive labor market that led to a drop in status (44% of graduates from University in France in 2006) meaning that graduates with a Master have to accept jobs that only require a Bachelor degree. Thousands of Master’s degree graduates have to accept less qualified jobs, leading necessarily to a lack of motivation while in job.

* Hiring the right persons in a highly competitive market where supply exceeds demand in France. It can be done by preparing efficient interviews: target the right audience, identify the main skills to be assessed during the interview and assess candidates in a way that results can be comparable from an interviewee to another.

* Retaining performing employees in order to avoid them to leave with the know-how. This might be both costly for the company to hire and train new people and harmful due to the loss of knowledge. We consider that companies do not consider those leverages: * Empowerment * Freedom and autonomy at work * Positive organizational climate and working environment * Corporate Social Responsibility (CSR) * Training: vocational and traditional education * Rewards: trade-off between individual / group performance reward * Benefits (paid holidays, maternity leave) find the appropriate “mix” beneficial either for the company and the employee in a competitive environment * Motivation

* Manage performance properly by setting SMARTS goals, putting in place a transparent and fair tool to assess people’s performance. This tool has a cost and in the current depressed economy it might not be seen as a vital/strategic investment for top management. Indeed, it represents both HR and IT project for the company. Do the necessary resources have enough “spare” time to work on a project in top of their daily job? Can the company afford to hire Consultants to handle the project? Is performance appraisal part of the company’s culture?

* Monitor turnover levels in order to take the necessary preventive actions.

* Lack of communication between levels which could be due to: * Multiple layers of hierarchy inducing power distance * Physical distance between mother company and subsidiaries * Loss of credibility of the management in place.

b) In this company in particular?

The main problems French government is facing in the HRM field are:

* The decrease of the budget of several ministries leading to:

* Non-replacement of retiring people or termination of fixed-term contract employees * Lack of resources leading to the demotivation and/or exhaustion of civil servants

Indeed, civil servants had to make more with less resource in some areas such as the Police and Education due to the economic turmoil. This led to demoralization of the workforce (suicides), increase of absenteeism and thus a decrease of productivity. Voted in 2001 the aim of LOLF (Loi Organique relative aux lois de Finance) should enable to tackle these issues. Indeed, the aim of this law is to introduce modernity into the State’s bodies: transparency, culture of performance and accountability. It also aims at decreasing the number of performance indicators to only keep the more relevant.
To support this new strategy a huge Finance information system (IS) program (Chorus) was launched by the French government in 2010. This project is a huge costly failure that still needs to make its proof.

* Lack of return on investment of the expenditures made by the government on Research, Training and Education. This last statement is verified by the following: * High unemployment rate in France: 10.5 % whereas the average rate is 7.2% among the OECD countries

The French government spendings in Education represent 6.1% of the GDP in 2013 (144.8 billion of euros¹), it is 1 point ahead Germany (5.1%). However, unemployment rate in France is 10.5% of the active population whereas it is 5% in Germany (OECD unemployment rate, Sept. 2014).
Moreover, company’s expenditures in trainings have increased by 43.6% from 2001 to 2011. In the meantime, unemployment rate has increased from 8.5% to 10.5%.

We already know that German companies are more competitive than French one on several aspects. First, there is no minimum salary in Germany that makes companies more flexible. Then, German companies products are perceived are more robust and with a higher quality so the consumers are willing to pay higher prices to acquire them. As a matter of fact, German industry does not compete on prices. Therefore their industry is stronger to survive in a depressed economy environment.

Nevertheless, even if German industry is less vulnerable than the French one – what could explain a lower unemployment rate there - we can also wonder if education and training are more adequate to the labor market than they are in France? Indeed, if we analyze the differences between both educational systems, it is clear that the German one is more focused on vocational education. The so-called dual system proposed to pupils is designed to bring both academicals and professional teaching. * Continuation of the “brain drain” as we will see it in more detail below

Indeed, another huge loss of the investments made in the area of Education and Research is shown by the growing number of French graduates going abroad.
Actually, as highlighted by the study published by the “Chambre de Commerce et d’Industrie de Paris” this year (Les Français a l’etranger: l’expatriation des Francais, quelle realite? Mars 2014) the French are going abroad because there is less discrimination (School or university ranking, ethnical origins) and they find more attractive salaries. Same assessment can be done for PhD holders who prefer to go abroad to do their “post-doctorate” because they can expect higher salaries and because experiences abroad can be careers accelerators.
Moreover, every year 140 000 young people quite school with neither the baccalaureate nor any professionally oriented diploma. The estimated cost for the society is 230 000€ per individual throughout his life. That represents 30 billion of debts taken out every year.

* “Pantouflage”, costly for French government (to a minor extend)

The phenomenon of pantouflage consists for a student of certain subsidized schools such as Polytechnique not to work for the government upon graduation. The government pays these students 900€ per month during their education and in exchange the Polytechnician must work 10 years for the government after he/she graduates. As a matter of fact 80% of Polytechnician do not work for the government upon graduation and they do not refund the government (pantoufle). This reportedly cost 300 000€ to the school and hence to the government every year.

What will be, according to your perception and experience, the challenges for the future of HRM?

After exposing the main problems faced by the French government, especially the increase of the unemployment rate, we will focus on an additional pillar that affects highly the brand of government: Tertiary Education.
Indeed, the quality of the education at universities is deterministic for the success and the development of a society either at a short or a long run. Actually, in this government we have diagnosed a dysfunction in the education system compared to other developed European countries. In figure 1, we exhibit the education spending as a percentage of GNP. We clearly notice that compared to the United Kingdom, French government spending is close. However, university rankings are very far from one another.

a) In general

* Enhance employee engagement (Public function) Nowadays, the main problem faced in most public organisms is demotivation of employees. Hence, measures have been taken in some countries in order to remedy to this kind of issues. For example, Quebec (Canada), where a new approach called “High Performance Work System” has been implemented. This latter is known as a high involvement or high commitment organization where empowered employees feel responsible for its success. Its aim is to optimize flexibility and firm performance by promoting skills development, motivation and performance through employee engagement.
This management model acts on employee commitment through two separate mechanisms: practices related to information sharing and employee participation in management. It also rely on HR practices like results-based management and training related to job.
This approach has been implemented in Canada in order to modernize the Quebec public service intended to improve its management framework to increase both productivity and the service quality of the population.

* Reduce absenteeism
The absenteeism is a real issue faced by several companies in France especially in the public sector where it increased by 18% between 2007 and 2013[www.ifrap.org]. In this case, knowing what is motivating employee to come to work is very important, and we can use it to develop the right plan of the company. However, what is very challenging for the HR managers is to know the reasons leading to employees’ absenteeism and how to avoid it. * Managing talents
All organizations define strategic objectives and try to achieve them. To reach sustainable competitive advantage they should link these strategic goals to their capabilities: Non-contingent and differentiating capabilities. In most companies, HR managers aim to develop the non-contingent capabilities that are the basics allowing them to be at the same level as their competitors but are not sufficient to enable competitive advantage. By cons, few of them focus on the differentiating capabilities that distinguish companies from their competitors and provide them a real competitive advantage. Indeed, identify and create such differentiating capabilities is very challenging for the HR managers.

b) In our company
In this part, we will emphasize the main challenges met by the HR managers in the French government. As explained previously, we will consider tertiary education where we will highlight the major challenges met by HR managers (professors, supervisors…etc) * Branding (University/Laboratory) In fact, most of companies have made branding as a core element in their business strategy. In this case, the image of the company is very important and is built through every interaction consumers have with them. Branding can make or break a company. Furthermore, the estimation of the value creation is measured through tangible assets (property, equipment, stock…etc) that count for 25%of the value that investors place in them and the intangible assets (employees skills, systems and brands) that account for 75%. Similarly, even if the combination between university and brand may seem like uncomfortable bedfellows, branding remains extremely important competing in the modern global education market. Nowadays, it plays a big role for companies when hiring freshly graduated people. Thus, in the case of absence of experience, the only criterion for performances assessment relies on to the quality of training estimated by the brand of the university.

* Brain Drain (PhDs) One of the most important and costly issue faced by the French government is the brain drain. Recent studies have been performed. They confirm the increase of expatriation especially of the young high graduated students. In total, nearly 2 million French citizens are living abroad. Figure 2 shows that half of these "exiles" have a minimum level of Master degree. This is considered as a loss of the French government at any point. Both financially and intellectually. One of the HR management job is to attract these high skilled young people and retain them.

* Collaboration with companies and sponsorship
One of the major challenges of HR managers is to encourage and develop a good collaboration between the French universities, industrial and services companies. This is already implemented in Germany (Bundesministerium fur Bildung und Forschung and Bundesministerium für Wirtschaft und Energie). This alliance could be considered as a solution of several problems: * Increase of unemployment rate due to the lack of experience, * Tertiary education quality * Lack of adaptation of universities programs to industry needs, * Deficiency of vocational education * Scarcity of entrepreneurship programs
Nowadays, the issues discussed in the previous paragraph are highly linked to a lack of communication between universities and companies. One of the main consequences is the increase of unemployment rate (C.f. Figure 3).

The unemployment rate is highly related to the inadequation between training and labor market needs (Cf. Figure 1).
This cooperation could lead to a mutual interest. Universities need more funding to carry out their research projects, buy equipment and hire interns and PhD students. This would allow them to improve research and development in France and get the required skills at the end of their education. In addition, thanks to this collaboration with companies, young students might interact directly with industrials. They would benefit from their experience and have a real view of the industrial world. So, they could target their training to business needs to allow them to work on up to date projects.
In addition, thanks to collaboration, companies provide fundings. This induces the improvement of the quality of tertiary education by enabling students to participate to conferences for example.
Throughout conferences, the efficiency of these students and researchers will increase. Their willingness to get results will be improved since the funding company looks for tangible outputs. By sharing this knowledge with the other universities and industrials working on the same field, they also can exchange the know-how and enhance their performance. Here again, the brand of French academic institutes will be developed.
Moreover, due to the lack of budget and time, companies are willing to recruit immediately operational candidates. To remedy to this problem, collaboration should be a good solution to encourage vocational trainings. Students gain knowledge and experience and could be operational since their graduation.
Finally, thanks to these proposals, public, private sectors and government will grow. It’s a win-win strategy and a feedback loop. If the companies invest in universities they will reap the rewards and it's going to reflect on the economy of the country. If the job is well done at the university level, they’ll gain industries trust and later get more support and funding. The quality of education correlated to the firms needs is improved and the unemployment rate might decrease.
Solutions to meet these HRM Challenges

We consider four main evolutions or improvement axis, which could be a way to answer to the HRM challenges faced on French territories. Over the last fifteen years, French government had tried to answer and develop the HRM challenges to increase competitiveness and create a climate for growth (in conjunction with the MEDEF, governmental and non-governmental agencies).
As we are facing economic crisis since 2008, it is more than strategic for France to recover growth. Create attractiveness for the foreign companies, maintain and improve the economic environment are major challenges. The HRM is a key tool to work in that direction providing a profitable and sustainable working environment to create wealth.

a) Improving Performance Management

Maintain performance management and improve in that field is one of the evolution axis to answer to HRM challenges. Performance management is a corner stone for the French economic environment and also worldwide. Indeed, companies all over the world have to reach high objectives, to be performing globally.
Performance management is one of the tools used nowadays to insure that our companies are well driven, profitable, and competitive. It is a key to fit the specific needs of financial markets. Even governmental companies are asked to reach higher goals because they have an impact on the country GDP.
Performance management can mainly help to achieve five main goals: * Objective alignment help to insure consistency between strategic, tactic and operational objectives. * 360⁰ evaluation to have a better global vision. * Performance calibration to evaluate and compare employee’s performance based on real facts, achievements and objectives. * Talent identification, which in our point, is one of the highest created value process to develop companies’ competitiveness. * Better communication to achieve goals, create a good working environment and reach profitability.
French governments had tried to develop performance management over its territories. During the last few years, the government had analyzed and audited the private companies to have a better understanding of the specific needs in terms of performance management.
Agencies such as EUREVAL (Centre in pluridisciplinary research for the public policy evaluation) had published reports in 2010 over 154 French companies with 50 interviews on “quality and performance”. Those reports had led to politic actions trying to develop and help companies to enhance their performance by using LEAN, 6Sigma, SMED, JIT, ISO certifications.
But those actions were not concentrated enough on human resources and there is still a significant possibility of improvement in those fields.
Contrary to public sector, private companies have a better understanding of the necessity to work on human resources as a performance leverage tool. b) Employee Empowerment

According to Marshall Goldsmith, from the Harvard Business review, a good way to answer to the HRM’s challenges could be for leaders to empower employees.
The aim is to make them accountable, good decision makers and insure their involvement on-board. For this purpose, four managerial strategies are used: * Define clearly the strategy * Provide management trainings * Use 360⁰ reviews * Develop appropriate KPI’s
As we have seen in the previous part, to contribute to develop a better working environment, we have to be transparent with the human resources. Communication is also a corner stone to develop employee’s empowerment and help organization achieving goals. Clear understanding of the company strategy is the first step to motivate people within an organization.
We need to have a clear view of our organization abilities by knowing precisely our resources’ knowledge and competences. To help people manage their challenges and lead their team, we have to motivate them via empowerment and giving them more responsibilities.
According to Marshall Goldsmith, such responsibilities should be given to high managerial skilled people. Those skills will help them to be trusted by their lower hierarchical colleagues and lead directly to efficiency. This is aimed to avoid any drifting risks and achieve organization goals in line with the defined strategy.
Using 360⁰ reviews and developing appropriate KPI’s is a perfect way to reach organization goals and create a motivating work environment.

c) Vocational Training

Indeed, provide efficient resources and attribute them the right position is one of the most difficult HRM challenges faced by organizations.
Companies have to make valuable trade-off by developing and investing in vocational training.
Indeed, the number of vocational students only increased by 1% last year. This trade-off was held by many countries to give efficient answer to the organization needs.
In France, 56% of those 430000 vocational students will get a long-term contract after the training. However this is still insufficient to remedy to young people unemployment as shown by the graph below.

Source: IFRAP, unemployment rate in France is around 25%.

The highly competitive environment, in which organization are involved is putting more and more pressure on the human resources, and HRM is now an important part of the strategy.
Public organization and governments had understood how it is important to participate and develop such framework to provide a competitive work environment.
During the last ten years, French government had made significant efforts to develop and design programs helping companies to hire qualified students (Taxe d’apprentissage).
The last PLF “Projet de loi de Finance 2015” in France was developed in order to provide to the French economy more means and support. However these actions are not sufficient to develop and provide to French companies a highly competitive labor market (Charges patronales).
To go further more in that direction, the government should reduce the employer’s contribution.

d) Postgraduate program design and updates

As it was said in the previous part, vocational training must be combined to a more efficient and well-designed postgraduate traditional program.
The most efficient way to train people in a country is to develop programs that fit in the best way as possible the economy needs.
France is among the leaders in international graduate education. French universities are designing and offering more and more masters in many different fields with more exchange programs with the European countries (Erasmus).
Those postgraduate studies tend to be more adapted to the market needs, offering high levels in foreign languages and especially in international business studies, Marketing, Law, Finance, Engineering and specialized MBA and DBA. However, we see that those diplomas have not managed to get the expected international ranking.
Nevertheless, programs are well designed, changing every five years, but public organisations (“ministere de l’education, agencies”) need to adapt and provide highly competitive diploma and training to answer to the specific needs of the labor market (increase international visibility via research and publication). However, we have to keep in mind that French university is really affordable (500€/year) compared to Anglo-Saxon universities.
The evolution of companies and society are getting faster from year to year.
Therefore, institution must acknowledge their important responsibilities and mission in designing and updating more frequently the content of the programs.

Conclusion

To conclude, we have risen in this work the main issues faced by the French government HR managers. To tackle these problems we considered several solutions. One of the main problems is the high employment rate among young people specially the fresh graduates. For this, we propose to enhance vocational training and improve the interaction between universities and companies. The aim being that graduate skills better fit the labor market needs.
Also, in order to avoid the brain drain in France, Research needs more funding. Indeed, performance is highly correlated to funding, that’s the reason why improved collaboration between universities and companies is crucial. As a consequence, the brand and attractiveness (ranking) of the universities estimated by their results (publications) and performance will be enhanced. Furthermore, as a new source of funding, we propose to increase fees paid by international students.
Moreover, to increase the competitivity of French companies, we consider that it is important to reduce the employers’ contributions.
In a nutshell, we consider that the French ministries (Finance, tax, industry, education) policies must be align toward a common goal that is to decrease the unemployment rate by lowering employers’ contributions and providing them with individuals holding the right skills.