CAS E 6

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ter- There has been a noticeableincreaseover the past few years in the number
yes of companies traditionally trading within their home markets seeking to
nal expand their activities into other member states of the European
:hat Community. One way for organisations to achieve this objective is to
self acquire ownership of companiesbased in other member states.This trend
lew has been reinforced by the establishment of the Single European Market
with its resulting free flow of capital, goods, servicesand labour between
the 12 national states. However, this strategy has important operational
implications for organisations, particularly where it leads to employees
from different national cultures being recruited.
The following case deals with a German company operating in the
media industry which, among other activities, has taken a controlling inter-
est in a Frenchprinting firm. The issuesrelating to leadershiphave beena
significarit factor in the day-to-day running of the subsidiary company and,
when a replacementwas needed for a senior manager,the company head
e of office in Germany decided to fill the position with a German manager.
him Following the appointment, considerableproblems arosewhich were, to a
large part, attributed to a changein the style of leadership.
nily-
The caseprovides opportunities to consider the issues that may arise
Jany when different cultural styles of leadership (in this case French and
German) clash and how such a changein leadership might be managedin
order to limit the problems that can occur.

BACKGROUND

Media AG is a German company founded some 50 years ago as a small

printing operation. Over the past few years the company has, through skil-
ful management,expanded rapidly and now has interests in many other
areasof the media industry. As part of this strategy the company decided
in the early 1990sto take advantage of the opportunities provided by the
 ~~{~~:rl~t
11
._,..",~
Ii 72 Casesin Organisational Behaviour

, - Single European Market to expand its interests into other countries in

; ~

Europe.
A particUlar opportunity aroseto purchase a majority sharein a French
company which specialisesin security printing including the production of
chequesand banknotes. The French company operated exclusively in its
home market of which it had a significant share.It had beenbuilt up after
the SecondWorld War by a technically well qualified team and was finan-
cially sound. These factors led the German parent company to decide
initially that the subsidiary should operate autonomously and to limit its
involvement to long-term strategicdecisions.
The French company is headed by Monsieur Warner, the President
Directeur General(PGD). He graduated from one of the leading French
'GrandEcoles'and worked for ten years in the Ministry of Financein Paris.
During this time he developed a close working relationship with the
Frenchsubsidiary which had many national contractswith the Ministry for
the production of banknotesand other security work. When the position of
PGD becamevacant, M. Warner expressedan interest in the post which
provided him with the opportunity to move from the civil serviceand into
industry, a move which had been a long-term objectiveof his career.
French institutions are, regardless of their size, highly centralised. The
PGD managesthrough a strict hierarchy according to functional lines and
top-down communications;the matrix structures found in many enterprise
cultures are very rare in Franceand communication and authority lines run
vertically from, and to, the PGD. In taking up this position M. Warner
entered at the top of this formal hierarchy with no experienceof managing
in the private sector or of the detailed work going on in the company. He
thereforerelies heavily on the experienceof his senior managersin the day-
to-day managementof the company.
The responsibility for production matters within the company restswith
Monsieur Abel, the production director, who reports directly to the PGD.
~I He hasbeenwith the company for most of his working life and hasheld his
presentposition for 20 years.His background is very different to that of the

I PGD. He received no formal higher education and his careerprogression

has been achievedthrough his dedication and effectiveperformancewithin
the company.
M. Abel's leadership style reflects the typical behaviour of the French
'patron'; a style still found today in many medium-sized Frenchcompanies.
It can be characterisedas being highly task orientated with social relations
between the 'patron' and employees conducted on a paternalistic basis.
Abel has worked hard at improving the performanceof the company,rely-
ing on his lengthy experience of the business to make his decisions. His
detailed knowledge of the business,with which no one in the company can
compete, has led to his authority within the company being beyond dis-
pute. Consequentlyhe exerciseswhat he perceivesto be his right to make

~
 My greatest failure: A casestudy in leadership 73

decisionsindependently and without consultation. His colleaguesand sub-

in
ordinates are not therefore,involved in the decision making process,there
is limited delegation and subordinates are regularly required to seekM.
Abel's advice over production matters. This approach has led to the staff
having a high level of dependencybut it has equally createda high degree
of security for his employees.Abel's approach seemsto complement the
attitudes of the workforce, many of whom are middle-aged or older. These
employeesseemstrongly influenced by such traditional work ethic criteria
as duty, obedienceand following orders without criticism.
An important elementof Frenchbusinessculture is the 'cadre'. The term
,cadre' symbolises an independent and professional strata of employees
with its own accesscriteria and regulations. Membership reflects a degree
nch
of competenceand becomesa key recruitment criteria for companieswhen
lris.
hiring managers.Cadre personnel benefit from a special legal status with
the
, for additional periods of notice and enhanced pension rights. Accessto the
nof group of cadresis possiblethrough three different routes:
uch . Without any higher education qualifications, entry is restricted to those
who can demonstrate competenceover a period of a number of years
with one employer. This is the casewith M. Abel.
The . With a higher education qualification, taking up to two years study to
and obtain, additional relevant experienceof between five and ten years is
,rise
required.
,run :11 . Immediate accessto cadre status is given normally to graduates of the
mer
ging
I leading 'GrandEcoles'.This is the casewith M. Warner.

',He
day-

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~ 74 Casesin Organisational Behaviour
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. sharing - a comparison of American and German views and ethics/. His

educational careerhas placed a premium on the acquisition of intellectual
capability and the ability to solve problems systematically.During several
of his vacationsfrom collegehe undertook work placementsin Franceand
on his own initiative he took an intensive Frenchlanguagecoursein Paris.
Dr Bernard joined Media AG some five years ago as the personal assistant
to the chairman. While in this post he has successfullycompleteda number
of projects, some at his own initiative, in the areasof finance, sales and,
particularly / production. The combination of his academic training, lan-
guage skills and experience, together with his insights into the strategic
issuesat the parent company made him/ in the view of head office, an ideal
candidatefor the post.
Even though the French were not particularly in favour of Bernard/s
appointment (they would have preferred a Frenchman),they acceptedthe
decision, recognising that it would create stronger links between the two
companies.One of Abel's colleagues,commenting on the changeof leader-
ship said, I knew Abel 40 years ago when the company was being built
/

up. He started in charge of printing and worked himself up through the

I company. We often had arguments with him and he occasionally treated

the workers as if he was a dictator, but production ran smoothly and in the
caseof an emergency we all stood behind him. Dr Bernard is a sensible
/

guy has excellent qualifications, but is always so serious, somehow cold.

/

As a Germanhe will find it difficult here.'

Dr Bernard relished the challenge of his new position as Production
Dir~ctor in a foreign country and had developed firm ideas on how he
would tackle his managementrole. He had closely studied the featuresof
participative leadership styles and was determined to introduce them to
the company. Delegation wherever possible, teamwork and joint decision
making, if necessaryall the way down to the shop-floor, regular two-way
communication and the systematicenhancementof skills through training
were to be foundations of his approach. In particular he planned to intro-
r~r duce a managementby objectives schemesimilar to that operating in the
parent company. Beforetaking up his appointment he had discussedthese
matters with senior managementat Media AG and received their support
for his ideas.
Bernard had been told several times about M. Abel's leadership style
and realisedhow different it appearedto the approachhe planned to take.
He was sure, however, that the employees would like his style which
would develop the potential within the workforce, not least becauseof the
greater involvement and autonomy his way would provide for them. For
the first eight months Dr Bernard was satisfied with the way things were
going at the subsidiary. Productivity levels had beenmaintained while the
employeeshad adjusted to his style of management.Three employeeshad
resigned from the company during this period; two fully qualified opera-
is tors and one young technician. As was typical of his approach, Bernard
U examined their reasonsfor leaving very carefully and establishedthat all
al three had left for reasons unconnected with their jobs. In one case, the
.d employee's father-in-law had died and he had inherited the tobacconists
s. shop the relative had owned. Another had built his own house outside of
.1t the town and had found a similar job nearby and the technician had been
er offered a job which promised much faster progressionthan he could expect
ri. at the company.
n- Bernard is very s~rised, therefore, when, a couple of months later, he
;ic is called to Warner's office and handed a letter by the PGDwho says'read
.al this and tell me what you think'. He takes the letter and recognises the
author as being Andre Maillot, the head of production planning and one of
l's Bernard'simmediate subordinates.Maillot is a seriousperson,61 yearsold,
he a dedicated company employee and extremely competent in his job.
'/0 Bernard has a high regard for Maillot's work and has taken every opportu-
~r- nity to personally recognisehis contribution to the company.
ilt
he Maillot writes:
ed
Dear M. Warner,
he
Over the past few weeks I have asked myself many times whether I should
)le
write this letter. Pleasedo not misunderstandmy intentions in the criticism I am
ld.
about to make of the Production Director. I recognisethat he is technicallyvery
good in his field, but at presentthe production operation is not working as well
on as it used to. Soon,I~believe,there will be even greater difficulties and it is in
he order to prevent thesethat I am writing to you. I have explainedall the problem
of areasto Dr Bernardbut in vain. His way of working makesit difficult. for him to
tn understandwhat I and the rest of the staff are feeling. PerhapsI canbestexplain
.on our worries more clearlyby comparingDr Bernardwith M. Abel.
'ay When M. Abel had to deal with one of us on a production matter he would
mg call us i:n~o.'
his office, tell us the d~~s of the problem, the solution he required
ro- and what we were to do and by when. When we left the office we knew clearly
the what was expectedof us. With Dr Bernard it is very different. We frequently
ese
have meetings (I counted them in July - of 184 working hours 58 were spent in

'ort meetings called by him), where we would have long discussionsat the end of
which Dr Bernard did not come to a decision. What he repeatedly says is 'the
successof the company dependsupon us working together as a team to find a
yle solution with which we are all satisfied'. It sounds great and we are doing our
lke.
best to help but at the end of the day we are eachonly responsiblefor our own
ich areaof work.
the If we took a questionto Abel we would either get a straightansweror, if he felt
For we should know the answer,we would get a telling off. I rememberhim saying to
'ere me on more than one occasion,'After 24 years you should have learnt this by
the now'. Well, you certainly got an answer! We were all used to his way and
had realised that nothing personal was intended. Abel knew all there was to know
~ra- about printing and the decisionshe madealwaysworked.
~~ 76 Casesin Organisational Behaviour
~j:
~~ 1 1

Dr Bernard, on the other hand, always starts by asking us what the problem is
!f
]; , and we have to systematicallyexplain everything. Then he asks,'What would
you suggestas the solution?- What are the advantages?- Disadvantages?'and
'Do you want to discussthis with Mr X or Mr Y and seewhat he thinks?' At the
end of the meeting we are no wiser than we were at the start. The only thing
that hasbeenachievedis the time of another meeting a few days later to discuss
solutions.
Dr Bernardencouragesus to take responsibility for making our own decisions
and to use our initiative in work matters.But two years ago when, on my own
initiative, I gave the go-aheadto print an order for eurocheques,I nearly lost my
job as no one told me that the contract had beencancelledeight weeksprior to
the scheduledstart of production. The stressthat I felt asa result of this incident
forced me to take severalweeksoff work.
Also significant is JeanFleur, the print technician'sreasonfor resigning.He
pointed out a technical inadequacy on one of the machines to Dr Bernard.
Bernardwas very appreciativeand friendly and told him to comeup with a solu-
tion within the next three months.Fleur was so surprisedand concernedthat he
took a job in another company becausehe was afraid he could not solve the
problem and would be sacked.After this event the employeesfeel that it is better
not to makeany suggestionsto Dr Bernardif they want to keeptheir jobs.
Abel was frequently found in the production area;he talked to all the staff
and occasionallyjoked with them. He could spot when peoplewere not pulling
their weight and would tell them off there and then but he was always available
if people neededhelp. Dr Bernard goesthrough the production areaevery day
but becausevirtually everything is discussedin meetingspersonalcontactis rare
and he is like a stranger to most of the staff. They also believe that he has no
II
senseof humour. When he first started at the company someof the employees
tried to speakto him in the sameway as they had to Abel but he did not seem
interestedin conversationso now none of them speakto him anymoreexceptto

I sayAbel
'good morning'.
was, at the sametime, the most loved and the most hated personin the
. companybut we all kn~w where we stood with him. We are much lesssure of
Dr Bernard's managementstyle and his personality is alien to most of us. The
training courseson managementby objectiveswhich he set up were interesting
and we know that he wants to introduce this schemeinto the companyand so
changethe way it is managed.I am not alone in believing that theseideaswill
just not work in our company.We are all very worried about the future.
He doesnot take our concernsseriously.His standardreply is that we should
all want the companyto prosper and to makework more satisfyingfor everyone.

I At the moment,however,satisfactionhasdecreased.
(Following this there was another apology and a statementthat he would
inform Bernard of the contents of the letter if necessarybut preferred it to
remain confidential for the time being.)
Dr Bernard laid the letter down. The contentscameas a completeshock
to him. He felt that through his participative, reasoningapproach to man-
agement the staff would see the benefits it offered themselves and the
 My greatest failure: A casestudy in leadership 77

ls
company. Their reaction went against everything he had learnt about lead-
d ership and he is upset that they did not understand his managerial
d philosophy. He acceptshe is not good at socialconversationbut is hurt that
Le despite his politenessand inner belief in people his attitude was viewed so
19 negatively by the employees.
;s Bernard reflects upon the events that have occurred and thinks to him-
self 'This hasbeenmy greatestfailure'.
\S
'n
.Y
ACTIVITY BRIEF
to
nt
1 Analysehow the leadershipcrisisat the Frenchsubsidiaryhas developed.
Theanalysisshould take into accountnational cultural differencesand the
-Ie leadershipstylesof the keyparticipants.
'd.
2 What are the reasonsfor believing that a leadershipstyle similar to M.
u-
Abel's will not be appropriatefor the companyin the future.
he
he 3 After the events detailed in the case,M. Warner has discussedthe situation
rer with head office in Germany.He is advised that Dr Bernard should remain in
his position. Develop an action plan which would overcome the leadership
aft
difficulties in the French subsidiary.
ng
,Ie
tay RECOMMENDED READING
ire
no Schien, E. H. (1985).Organisational Culture and Leadership:A Dynamic View, San
ees Francisco:Josey-Bass.
em Hofstede,G. (1980).Culture'sConsequences:International Differences in Work Related
t to Values,Beverley
Hills: Sage.
Mullins, L. J. (1993).Managementand OrganisationalBehaviour,London: Pitman,
Chapters8, 12and 13.
~ of
rhe
ing
lso
Hill

,uld
)ne.

too
.ock

\an-
the