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2 Summer SPECIAL SECTION ALSACE-LORRAINE American Chamber of Commerce in France COMMERCE IN FRANCE Human Resources

3 Air Liquide and you With 43,000 employees in 75 different countries, the Air Liquide group relies on its teams know-how and motivation to support growth and ensure its performance in the long run. Our HR policy plays a vital role in the success of the Group s growth strategy through our worldwide activity branches, geographic zones and transversal functions. HR principles In the countries in which it is present, the Group continually ensures that its employees benefit from standard and unified principles that are in line with its operational practices. To this end, the Group has defined the following Human Resources Principles. Provide a safe and ethical work environment, Select the right people and assign them to the right positions, Encourage diversity, Measure performance against consistent standards, Develop people based on a long-term vision, Identify, develop and recognize expertise, Regularly train people to improve our performance, Pay for performance and contributions. Diversity in all its forms Convinced that diversity is a strategic business issue, as source of creativity and dynamism, Air Liquide encourages it in all its forms such as nationalities, education, experience, ethnicity and gender. Senior Group management decided to put diversity firmly in the sportlight, in the form of action plan specifically aimed at women. Through its diversity policy, the Group wishes to strengthen the position of women and allow them to get the most out of their development. The efforts Air Liquide has introduced over the last years are beginning to bear fruit: women represent 22% of engineers and executives worldwide and in six years (2003 to 2008) the percentage of women engineers and managers hired in the Group increased from 24 to 29%. Careers spanning the globe Programs such as START, TCL (Technical Career Ladder), Know-AL (international skill transfer) and Development Programs with key Universities around the world offer Group employees unique advancement opportunities and dynamic career paths. Since 2001, the START program helps to recruit professionals newly graduated from the world s top universities who seek to start their careers on an international note. Upon entering the program, each new employee is assigned an international job corresponding to their skills and meeting the Group s local developments needs. Our ambition: be the recognized leader in our industry. That's why we are opening up to booming markets, providing innovative solutions to our customers and continuously attracting new talent. Competence and motivation are bywords for integrating our teams and taking part in the challenge of growth and competitiveness. Ole Hoefelmann Air Liquide Deputy Director HR Air Liquide is the world leader in gases for industry, health and the environment. Oxygen, nitrogen, hydrogen and rare gases have been at the core of Air Liquide s activities since its creation in Air Liquide continuously reinvents its business, anticipating the needs of current and future markets using innovative technologies that curb polluting emissions, lower industry s energy use, recover and reuse natural resources or develop the energies of tomorrow, such as hydrogen, biofuels or photovoltaic energy Oxygen for hospitals, homecare, fighting nosocomial infections Air Liquide combines many products and technologies to develop valuable applications and services not only for its customers but also for society.

4 Summer SPECIAL SECTION AlsACE-lORRAINE American Chamber of Commerce in France COMMERCE IN FRANCE A merican Chamber of Commerce in France COMMERCE IN FRANCE n 72 Summer 2009 Contents Yuri Arcurs - Fotolia.com Human Resources Commerce in France is published four times yearly by the American Chamber of Commerce in France, 156 boulevard Haussmann, Paris. amchamfrance@amchamfrance.org Web site: Ph: +33/ Fax: +33/ Directeur de la publication : Oliver Griffith Editor: Shari Leslie Segall Numéro de Commission Paritaire Subscription: Yearly,.60. Per copy,.15 4 The View from Washington Oliver Griffith Human Resources 6 Change Is a Given: Now What? Chris Blauth and Craig Perrin 8 Comment transformer son entreprise vers l agilité pour résister à la turbulence Jérôme Barrand 10 Retaining Key Employees During Tough Economic Times Philip Berkowitz and Christian D. Hancey 14 The Importance of Being a Socially Responsible Employer in Times of Crisis Roselyn S. Sands and Paule Welter 41 Trois questions à Alain Daumas, Directeur France d ETS Global, concepteur des tests TOEIC et TOEFL 42 Learn How to Learn! Professor Fernando Salvetti 44 International Employee Benefits: Some Dos and Don ts. A Guide for Successful International Benefits Managers Gilles Fréchet and Karine Liegard 48 Attention au principe «à travail égal, salaire égal» Pascal Guinot 50 La prévention du stress au travail, une obligation pour toutes les entreprises Mikaël Pelan Régie publicitaire : F.F.E. 18 Avenue Parmentier PARIS Tél. : Fax : Responsable de la publicité : Paul Chiche Tél Fax : paul.chiche@ffe.fr Responsable technique : Virginie Simao Tél. : v.simao@ffe.fr Conception & réalisation maquette : Valérie Mounier The views expressed in the articles in Commerce in France represent those of their authors and not necessarily those of the Chamber. They have been edited to meet the publication s house style. Reproduction rights available on simple request. 19 Quel type de management pour la crise? Anne Gaillard 20 People, Places, Purpose: Core Values For All Times Rupprecht Queitsch and Nathalie Delplanque 24 Mobilités et parcours choisis Véronique Staat et Caroline Dalqué-Marty 52 La gestion de l emploi des seniors : une question pour notre âge Christine Pellissier 54 L emploi des seniors : comment gérer l avenir? Stéphane Kanovitch 56 Community Through Technology: A New Dimension for Internal Communications Anne Fleming and Egle Karalyte Les informations fournies dans cette publication ne peuvent en aucune manière engager notre responsabilité. Au cas où une erreur se serait glissée dans notre présentation, nous remercions nos lecteurs de nous en faire part, de façon à ce que nous puissions émettre un rectificatif lors de notre prochain numéro. Oliver Griffith Managing Director +33/ oliver.griffith@amchamfrance.org Monika Masuhr-Elis Membership and Development Manager +33/ monika.masuhr-elis@amchamfrance.org Vancheng Khou Events Manager +33/ vancheng.khou@amchamfrance.org Michelle Barton Marketing and Communications Assistant +33/ michelle.barton@amchamfrance.org Shari Leslie Segall Editor +33/ foreignaffairs@wanadoo.fr 26 Team Management Without the Trench Warfare James Dillon 30 On Becoming a Manager Denis Cristol 32 Amérique-France : une différence liée à l histoire Maurice Contal 37 Cultural Differences: To Queue or Not to Queue? That is the Question. A Personal View Nick Hirst 38 Comment devenir un manager interculturel? Expertise en langues et management interculturel : la compétence «invisible» Valentine Galtier France members are indicated throughout in bold. 59 Les outils Web 2.0 : aubaine ou banalisation? Eric Bachellereau Alsace-Lorraine 60 Bas-Rhin : Révolution tranquille au bord du Rhin Vincent Froehlicher 62 Dynamisme et compétitivité internationale au rendez-vous en Sud Alsace Jean Simon Echoes from the Chamber 64 President's Council 70 Regional Chapters 73 Events 78 In the AmCham Archives Commerce in France N 72 Summer

5 Human Resources Editorial Director s Corner The View from Washington I n early June I attended the annual European Council of American Chambers of Commerce (ECACC) conference in Washington D.C. This event, attended by 23 AmCham directors, was co-hosted by the U.S. Chamber of Commerce (USC), AmChams' parent, and the European American Business Council (EABC), an AmCham partner. It was an excellent opportunity to "get the pulse" of Washington, which is certainly beating dynamically. The city is energized by Obama, and everyone in and around government is working in overdrive for or against his many initiatives. Oliver Griffith Managing Director, France The private sector is no exception, with the USC, the EABC, the Business Roundtable, and many other organizations, working for business-friendly policies. High on everyone's agenda is the proposal to eliminate tax deferrals for U.S. firms' overseas income. This well-intentioned but ill-conceived plan has caused such uproar that it seems likely to fade. Commerce Secretary Locke told us point blank that it has little support from Congress, although most agree that loopholes in corporate tax rules should be plugged. "Buy America" and trade protectionism, although garnering support from Congressmen in concerned states, is also confronted by solid opposition. While it could temporarily preserve employment in some sectors, the negatives far outweigh the positives. Two other issues climate change and health care divide the business community more evenly. Almost all agree that something must be done, but no one wants to pay for it. On health care, USC President Donohue proved pessimistic, since the U.S. population is aging. John Castellani, head of the Business Roundtable, characterized it as an uncontrolled, variable cost for firms, especially when competing with companies from countries with national health plans. On climate change, USC speakers praised the U.S. voluntary approach, which has led to substantial investments in alternative energy. "Cap and trade" for carbon seems to be stalled, and some call for a split approach between this and a carbon tax. USC President Donohue worried that Obama is doing and spending too much, which will ultimately lead to higher taxes, and emphasized that his personal popularity does not translate into approval for all his programs. The USC is firmly opposed to the Buy America provisions of the stimulus plan, and will continue to fight for free trade, from supporting FTA's with Panama, Colombia and South Korea, to taking the message to rural areas. Donohue warned that 17 of the G-20 countries have already taken some protectionist measures, and that U.S. states, not bound by WTO government-procurement rules, are doing likewise. Support for the car industry and other bailout beneficiaries is trickier for the USC, since it has members on both sides of the argument. In any case, the government should not micro-manage recovery or economic sectors. On the tax-deferral question, which was definitely the talk of the town, Donohue warned that it would make U.S. firms less competitive. Castellani pointed out that companies would compensate for elimination of the deferral by moving operations overseas, costing U.S. jobs. He emphasized that, at 35%, the U.S. already has the second-highest corporate tax rate in the OECD. On the crucial question of financial-sector reform, the USC promotes a flexible approach. Efforts such as the G-20 Financial Stability Forum, enhanced international coordination, and interoperable regulation are necessary. And in the U.S., a unified approach to regulatoryagency enforcement of securities, banking, futures and insurance rules is advisable, with strong consumer and investor protections from fraud and malfeasance. However, regulations should not stifle financial-sector innovation, and risk should be transferred back from taxpayers and the government to the private sector as quickly as possible. Donohue and other speakers insisted that the trans-atlantic economic relationship remains crucial for the world economy and recovery, in spite of the rise of Asia. The EABC, for one, is working on several practical trans-atlantic priorities, such as work visas and intra-company transfers, digital health-care coordination, data protection, IPR and copyright, Internet governance, global accounting standards and of course, taxes. On political issues, former congressman Tom Davis pointed out that Obama's election proves that cultural and societal issues now dominate economic issues in voting patterns, with old geographic and blue/white-collar divisions fading. Nonetheless, although only 8% of the U.S. private sector is unionized, Democrats in certain states are still beholden to the unions. Overall, politics as usual prevails in the U.S. capital. Organized minorities will still outgun silent majorities, and the Republicans will not help the Democrats, except when parochial interests prevail. 4 Commerce in France N 72 Summer 2009

6 Human Resources

7 Human Resources Change Is a Given: Now What? by Chris Blauth and Craig Perrin Economic turmoil. Credit freeze. Housing crisis. It seems every financial woe has hit business at once, leaving us in a frenzy, and not knowing what to expect next. O ne thing is guaranteed: our businesses will change. Restructuring, downsizing, new go-tomarket strategies these are just some of the possible responses to the turbulent environment. Over half of the leaders in an AchieveGlobal study agreed that "change capability is a company s greatest competitive advantage." Yet, as we weather a global economic downturn, we should remember that, historically, up to 85 of 100 change efforts falter or fail. Next sobering question: Why would that rate improve because times are bad? Here s a brighter note. Our study found little support for in-born human resistance to change. "People aren t stupid," said a respondent. "They see how fast the world is moving. They feel it in their own lives." So what are the challenges of executing a coherent response to tectonic shifts in the macro-economy? Our study of 400 successful change leaders in seven countries found change today to be far-reaching, overlapping and open-ended. Real change, these leaders said, takes more than a process or series of projects. It takes a changecapable culture from C-suite to shop floor to overcome these challenges: Awareness, solutions, change Failure to tell. Focused on the big picture, executives may fail to tell employees what they need to know. Said one respondent, "Messages at the vision level have no impact on day-to-day activity." Failure to listen. While workers are well qualified to offer improvements, said a U.K. leader, "senior management doesn t listen to frontline staff. They listen to consultants who know little or nothing of our operations" and who may fail to leverage this in-house resource. Hell hath no fury. A mid-manager scorned rarely buys into a change. If they feel ignored, "middle managers think they can wait out the CEO and not change," said one respondent. At the very least, this behavior deflates employee morale and effort. Blizzard of irrelevance. Every living change breathes timely data. Still, number-crunching alone won t give people what they need to move forward. More to the point, it distracts leaders from the critical human aspects of change. Wisdom of the 400 The seasoned leaders in our study, from a cross-section of industries, offered this summary advice: Rethink the rules. Every big change requires leaders to re-align systems with goals. "We consolidated processes across departments," said one manager. Said another, "We added reps, which improved customer satisfaction and retention." Beware of change fatigue. One change after another can leave employees disengaged even hostile. To reduce this problem, executives continue to clarify new expectations. One leader, for example, "went to a matrix organization. Key directors now report directly to corporate." Keep the numbers simple. People need to know how they re doing in terms they understand. "We re making processes understandable," said a manager. Another respondent said her global company selected simple metrics "from different cultures, to bring us together." Communicate often. With their evolving questions, employees need a stream of information about any major change. Many, many respondents advised "communication at all levels," "constant communication with employees," "consistent communication of the goal," and so on. 6 Commerce in France N 72 Summer 2009

8 Human Resources Encourage people to speak up. A chance to talk about change not only surfaces concerns, it "brings greater creative force and energy," said one leader. In contrast, "employees whose ideas were shot down by previous management only wanted to stay with the tried and true." Address the mundane reality of change. More to do, less time to do it, and peripheral tasks can weigh down progress. A manager described his response: "With a budget reduction we had to be more efficient with resources. This was only possible by reducing everyone s workload." Demonstrate commitment. People watch executives to decide how serious the organization is about change. Initiatives tend to succeed, in the words of a respondent, when "executives express, model, and reinforce the need for change." Practice, practice, practice 5. Provide information others need. Information and explanation, mitigates the shock of change. "The VP related the change to everything," said a manager. "We needed to know it was the right direction." 6. Encourage candid feedback. In direct dialogue, leaders find out what employees think and feel. But sincerity is vital: "People can tell if you re really interested or just want their buy-in." 7. Make progress clear to all. Effective change leaders develop the simple metrics needed for course correction, and provide opportunities for people to say what s working and what s not. 8. Coordinate resources. As needs evolve during a change, re-negotiating and redirecting scarce resources is critical to progress and morale. People know when a leader fails to support them. Real change takes more than a process or series of projects. It takes a changecapable culture." progress. They need to live the change, so employees realize how important it is for the change to pay off." Taken together, our findings confirm a major shift in how organizations today are managing change: No longer do leaders expect long periods of stability; constant change is the new landscape. No longer is change linear or confined; leaders now wrestle with overlapping changes, stoking energy despite competing demands. No longer can leaders follow a standard process for every change; they must tailor each initiative to prevailing conditions. No longer can leaders earn widespread buy-in with the bare-bones business case; now they must create a deep sense of ownership in change. No longer can organizations rely solely on existing strengths; now they cultivate change capability in every employee. Reviewing our data, we began to see the engine of change not in a process, but in the sum of behaviors in precisely 10 leadership practices that build change capability: 1. Expand awareness of business realities. "You need to let employees in on what you re worried or excited about," said a respondent, exactly on point. "That s the basis for everything else that happens." 2. Spotlight strengths and successes. Instead of focusing on the few who resist, seasoned leaders showcase the people who support a change. "If you let it," said one, "success will speak for itself." 3. Embrace experimentation. Anyone can learn a complex new activity if he or she can learn from mistakes. Leaders build confidence as they help employees draw lessons from small-scale tests. 4. Encourage meaningful involvement. You measure overall change capability in the quality of individual contributions. Leaders must decide who to involve, when, and how to leverage their unique talents and aspirations. 9. Revisit systems, practices, and policies. People seek security by reverting to established processes a serious issue if the past undercuts the future. Change leaders adjust or remove any process that slows progress. 10. Respond to resistance. Over time, showcasing success helps to reduce resistance. Still, change leaders attend to early signs and address resistance with firmness and compassion. Landscape of change Executives, of course, establish the direction and climate for change both with a decisive impact on outcomes. To frame the change and promote organizational change capability, our study found, executives must communicate the reasons for change, as well as the risks and likely rewards. Like managers, executives need to follow the 10 practices to promote change capability and coach their direct reports through more or less constant change. Said an HR leader, "Executives have to do more than make plans and track While our study outlines a practicebased rather than a phased-based approach to change, its findings in fact support any established process. The study highlights key leadership practices that encourage individual involvement and multiply the impact of any phase approach. Developing the 21 st Century Workforce TM 2008 AchieveGlobal, Inc. No M01243 (12/2008) Chris Blauth, active in the research, development, testing, and marketing of AchieveGlobal s leadership and salestraining product systems, was responsible for launching Genuine Leadership, AchieveGlobal s flagship leadershiptraining system. Craig Perrin, Director of AchieveGlobal s Solution Development, works cross-functionally and with clients to guide creation of a range of responses to market needs. ( France Member since 2007) Commerce in France N 72 Summer

9 Ressources humaines Comment transformer son entreprise vers l agilité pour résister à la turbulence Par Jérôme Barrand Notre société vit des changements structurels forts et ne peut continuer à fonctionner sur les seuls principes établis depuis la 1 ère révolution industrielle et portés depuis par ce qu on appelle couramment le taylorisme. C es changements sont principalement l émergence de la société de l information, la mondialisation, la saturation rapide des marchés, la turbulence constante de notre environnement politique, économique, écologique, technologique ou règlementaire Le taylorisme, fait de hiérarchie, d obéissance, de planification et de procédures ne saurait survivre tel quel à ces changements. Ainsi, la performance immédiate quantitative plie devant la performance pérenne qualitative et quantitative. Les logiques de maximum (de taille, de CA, de rentabilité) ne peuvent que progressivement disparaître au profit de logiques d optimum (multi critères et multi acteurs). La quête de la richesse et du pouvoir laisse la place à une quête de satisfaction et de sens. L individualisme cèdera face à la montée de l altruisme. Plus que la technologie, l Homme devient la vraie source de création de valeur dans notre société devenue relationnelle. Telles sont les tendances qui vont permettre la pérennité des organisations face à la turbulence. Telles sont les bases fondatrices d un management dit agile 1. Les entreprises sont de plus en plus nombreuses à tenir compte de ce grand bouleversement sociétal. Le monde change et les entreprises sont contraintes aussi de changer, vers l agilité. L agilité est une perpétuelle recherche d équilibre entre une dimension active (faire et prouver que l on sait faire), une dimension réactive (être opportuniste face aux changements observés pour fidéliser) et une dimension proactive (création de valeur). Il faut savoir reconnaître dans l instant chaque situation et adopter spontanément le bon fonctionnement. L agilité, qui repose donc sur la capacité humain à reconnaître une situation, ne saurait donc être un état stable et définitif, mais une propension, une aptitude, un cadre général à maintenir et alimenter constamment. L agilité comme capacité à bouger en permanence L agilité nécessaire à nos entreprises pour perdurer dans notre monde économique devenu si instable et turbulent implique donc un recentrage fort sur les compétences, savoir faire et savoir être du personnel des entreprises. En effet, comme le dit O. Badot 2, «les hommes et les femmes de l entreprise sont - par leur connaissance intime des clients et de l environnement, par leurs savoir faire en permanence affûtés, par leur imagination et par les initiatives qu ils sont autorisés à prendre pour satisfaire de façon originale le client la principale source de différenciation et de performance commerciale de l entreprise». Ce centrage des organisations marchandes, de la technologie vers les Hommes, est nouveau et fort. Il se traduit notamment par l apparition de nouvelles fonctions dont la mission est la transformation culturelle et managériale des entreprises : direction du e-networking chez l une, direction de la transformation managériale chez une autre, mutation vers l agilité assumée et portée par le P-DG chez une autre encore. La multiplication des démarche de coaching individuel ou collectif ces dernières années 3, y compris centrés autour de l agilité, participe de ce phénomène. 1. Voir «Le manager agile», Jérôme Barrand, Dunod 2006, Prix Mutations et Travail Voir «Théorie de l entreprise agile», O. Badot, L Harmattan, Voir la certification de coaching agile de Grenoble Ecole de Management 8 Commerce in France N 72 Summer 2009

10 Ressources humaines Des approches différentes Mais le choix de management de la transformation n est pas neutre. Nous avons rencontré ou accompagné ces différentes approches de la transformation des entreprises, ce qui nous amène au constat suivant: 1. Passer par la DRH, c est-à-dire créer une fonction «transformation managériale» au sein de la DRH, sous la responsabilité du DRH, impose à cette fonction de vivre une forte contradiction interne la DRH représente en effet une logique d obéissance descendante et l agilité une logique participative horizontale et verticale, interne et externe simultanément. Des conflits d influence entre le porteur de l orthodoxie managériale et de la nouveauté émergent, les premiers freinant les seconds, les seconds stigmatisant les premiers! 2. Passer par une direction de la transformation, quelque soit son nom mais en dehors de la DRH, est perturbante pour les collaborateurs qui ne savent plus très bien qui ils doivent suivre. Deux directions dans une entreprise pour s occuper en même temps, parallèlement et dans des logiques différentes de l ensemble des collaborateurs est un choix troublant pour le personnel. Le conflit potentiel soulevé dans le point 1 se trouve déplacé au niveau du personnel plutôt qu à celui des directeurs! 3. Passer par la DSI pose un risque de compréhension : comment faire porter en effet une transformation comportementale, anti technologique, par une entité symboliquement technologique et dont les opérateurs ne sont pas préparés à la «chose humaniste»? En effet, les SI sont vécus par le personnel comme une contrainte technologique et leurs ambassadeurs sont étiquetés «ingénieurs». Ceux-ci, de fait, n ont pas été préparés pendant leurs études à traiter des problèmes humains, comportementaux ou émotionnels. Comme Comme d habitude, il n y a pas de solution complète, simple, évidente et recommandable à toutes les entreprises." ils ne sont pas perçus a priori comme préparés en la matière, il y a assez systématiquement rejet de leur proposition de transformation et focalisation sur les fonctionnalités techniques! 4. Passer par la présidence de la société est certainement plus moteur mais cela impose que le principal manager prenne conscience de devoir passer du temps à créer du lien et à superviser ses collaborateurs et à leur faire porter cette nouvelle culture. Notre constat est que la propension des dirigeants à faire ce choix de changement culturel et managérial est faible au plus haut niveau dans les grands groupes du fait de ce que nous nommons la «dictature du CAC 40». Au contraire, à un niveau intermédiaire dans les grands groupes ou dans les PME-PMI, les responsables semblent avoir massivement fait ce virage, en argumentant que c est pour eux la seule façon de survivre. La nécessité de réussir pour les premiers et la théorie de l agence 4 pour les seconds s appliquent! 5. Passer enfin par le biais de tiers, des coachs ou consultants, sous-entend la diffusion de l agilité, non plus de manière officielle mais de manière virale. Cela nécessite beaucoup de courage personnel. En effet, dans ce scénario l agilité entre dans l entreprise sur décision individuelle et non sur volonté stratégique. Pour une transformation réussie Comme d habitude, il n y a pas de solution complète, simple, évidente et recommandable à toutes les entreprises. Nous nous risquerons donc juste à trois conseils pour que la transformation soit réussie : une volonté claire et affirmée au plus haut niveau, car l agilité est un mode de fonctionnement de l ensemble du système. Le souci de cohérence impose que l entrée en agilité soit un choix stratégique, ne pas faire fi de l histoire et de la culture de l entreprise, car l agilité n est pas un modèle managérial, elle est un cadre de principes et valeurs dont la mise en œuvre est propre à chaque organisation, choisir son mode de «transformance» compatible avec la structure et l organisation. Ainsi, si le partage de bonnes pratiques est souhaitable entre deux organisations, le processus de transformation comme le résultat souhaité doit être propre à chaque entreprise et développé dans des groupes projets constitués des membres de l entreprise. Le point commun Mais par-dessus tout, il existe une posture portée par toutes les entreprises qui ont réussi ou sont en cours de réussite de leur transformation vers un mode de fonctionnement agile : l exemplarité des managers. En effet, si l entrée en agilité peut se décider, si elle peut s accompagner, son développement viral à partir du comportement exemplaire des agents porteurs de sens de l entreprise est un gage de succès pour cette démarche de transformation. Le piège principal à éviter est donc le syndrome du «faites ce que je dis et pas ce que je fais», à savoir le piège de la sincérité et de la cohérence. Professeur Jérôme Barrand est Directeur de l Institut d Agilité des Organisations, Grenoble Ecole de Management (Membre France depuis 2004) 4. Théorie de l agence : une entreprise ne peut fonctionner de manière cohérente et durable que si l actionnaire et le gestionnaire partage le même but Commerce in France N 72 Summer

11 Human Resources Retaining Key Employees During Tough Economic Times By Philip Berkowitz and Christian D. Hancey These tough economic times present considerable challenges for multinational companies human resource managers and the attorneys (internal or external) who work with them. R etaining key employees especially employees on overseas assignments can be difficult at a time when many companies are undergoing restructurings, laying off employees and freezing salaries and benefits. In the current economic climate, companies must consider effective retention strategies and compensation techniques, and the host of issues they raise. Companies cannot wait until they start losing employees before they begin to update their retention programs. New economic conditions, New retention strategies A recent survey on hiring trends shows that 47% of high performers are actively seeking to leave their current jobs. This job mobility among high performers may be exacerbated by the economic downturn, if they believe that their current employer is losing its footing in the marketplace or that their future compensation opportunities will be limited. Employers need to recall what employees like about their companies, and to reinforce those traits. They need to be respectful of, and fair to, employees." levels. Also, companies that are facing mandates to reduce payroll costs are considering ways to reduce the amount of the bonus opportunity. Companies need to be advised, however, about the legal risks associated with changing the "rules of the game" during the middle of a bonus-performance period. An attempt to change the terms of the bonus program in a way that could be viewed as disadvantaging the employee during the current performance period may very well constitute a breach of contract or violate the wage-payment laws in the relevant jurisdiction. Naturally, the analysis of those issues will depend largely on the phrasing and terms of the written bonus program. Also, if the client is a public company in the United States, an attempt to change the bonus or other incentive compensation for the highest-paid officers must take into account the restrictions under Section 162(m) of the U.S. Tax Code. Not only are key employees thinking of jumping ship, but some retention programs that worked in the past have significantly eroded in value. A recent compensation study by Deloitte shows that annual bonuses and other incentive payments are down because many companies are missing their earnings targets. Likewise, falling share prices mean that many stock options are underwater, and other forms of equity compensation have also declined in value. Annual performance bonuses Many companies are revamping their bonus programs to reflect changed business conditions, and these changes can present legal risks. A common change is to modify the performance targets that must be met to earn a bonus. For example, a company that used stock price as a performance target may switch to an earnings target, which could provide for a more realistic bonus opportunity even if the stock price remains at depressed 10 Commerce in France N 72 Summer 2009

12 Human Resources Deferred payment of bonuses Paying bonuses on a deferred basis may better serve the company s retention goals. For example, cash bonuses could be paid in 1/3 installments on the first three anniversaries of the bonus-payment date, provided the employee is actively employed on the deferred-payment date. During the deferral period, deferred bonuses are typically credited with interest, which can range from a simple interest rate to more sophisticated earnings techniques, such as tracking the company s earnings growth or stock price. Another deferral technique would be to pay bonuses in the form of restricted stock, which likewise vests over a specified service period if the employee remains actively employed. Each of these deferral techniques creates economic incentives for a key employee to weather the storm and continue building the company through the vesting period. These techniques may also help alleviate any short-term cash-flow concerns. For example, the Swiss bank UBS AG, which has been battered by the credit crunch, recently announced that it was not planning to pay bonuses to its U.S. investment banking executives in cash, and would instead make a deferred payment in cash or stock, so long as the bank was making a profit in the year of the scheduled payment. Deferred-bonus techniques are common among Wall Street brokerage firms and other companies that compete for highly mobile talent. The rationale is that if an employee always has some portion of deferred bonus "at risk," it is harder for the employee to justify quitting. Also, it raises the costs for competing firms to recruit such employees because the competing firm often feels it must replace the forfeited bonus with an equivalent (or greater) signing bonus. Any deferral technique that covers an employee subject to U.S. income taxes must be structured to comply with the deferred-compensation rules under Section 409A of the U.S. Tax Code. For example, Code Section 409A generally prohibits a company (or employee) from electing to defer the payment of compensation if the employee has already started providing services during the performance period to which the compensation relates. This generally means that a deferred-bonus program adopted this year can t apply until the following year. Certain types of performance-based compensation are afforded greater flexibility, however, and may be deferred up to six months prior to the end of the performance period. Golden handcuffs It s time to look again at so-called "golden handcuffs." Retention bonuses and other deferred-compensation arrangements can be a very effective way to retain critical employees during a business downturn or other transition period when the company may be particularly vulnerable to departures. Retention bonuses are also commonly used when a company is actively seeking a sale or merger opportunity, and the shareholders want to be sure that key employees remain with the company to see the sale consummated. In its simplest form, a retention bonus pays a cash bonus if an employee remains actively employed through a target service date. But a retention-bonus program can be developed to align the pay-out level with the achievement, during the service period, of business goals, such as earnings growth, obtaining additional financing, or the achievement of a specified sale price for the company. Retention bonuses can also be paid in the form of company stock, which may provide additional long-term incentives. As with any deferred-compensation arrangement in the United States, I.R.S. Code Section 409A issues must be considered, particularly if the deferred-compensation program gives the employee accelerated vesting rights if the employee terminates employment under certain circumstances. A new look at equity compensation Equity compensation is getting a lot of attention right now, and for good reason. As share prices have tumbled, so too have the values of the stock options and other stock awards held by key employees. "Underwater" stock options are not a strong inducement for key employees to remain at a company in fact, they can be downright demoralizing and therefore companies are concerned that Commerce in France N 72 Summer

13 Human Resources new stock awards will be necessary to replace the lost value of prior awards. Also, companies are exploring ways to provide enhanced equity awards in lieu of increases in salary and bonuses. When cash is tight, pay in stock. Stock awards also provide a long-term incentive for the employee to help the company work out of a business downturn and thereby increase the value of his or her stock awards. Stock options revisited Stock options may be a uniquely attractive form of equity award in light of current market conditions. Over the past five years or so, many companies have switched from the once almighty stock option to restricted-stock units as the equity award de jure. Stock options will likely rebound in popularity, however. If stock options are granted at the depressed stock prices now prevailing, the option holders will have a unique opportunity to ride the upside of a market recovery. For example, the stock options that Citigroup issued in 2007 with exercise prices in excess of $50 are now worthless. But the prospect of a Citigroup option at under $4 (the current stock price at the time this article was written) may be a powerful incentive for employees. Repricing underwater stock options What to do with those underwater stock options? The Internet search giant Google recently announced that it would exchange stock options whose exercise price was above the current stock price for new options, on a one-to-one basis. Option exchanges have been on the up-tick this past year, and compensation experts expect that trend will increase through Option exchanges present a host of regulatory and accounting concerns. For publicly-traded companies, an optionexchange program may require shareholder approval, depending on the rules of the applicable stock exchange. Also, option exchanges are generally voluntary programs and may be subject to the tender offer rules of the relevant stock exchange. Moreover, replacing underwater options with new options may create additional accounting expenses for the company, which may be recognized over the vesting period for the new options. For new options issued to U.S. employees, the option must have an exercise price that is equal to (or higher than) the fair market value of the stock on the date of grant, to avoid adverse tax consequences under Code Section 409A. There are alternative strategies to repricing underwater stock options. The company can agree to extend the exercise period of the underwater option, so as to allow for additional time for the share price to bounce back. (Such an extension can generally be structured to comply with Code Section 409A.) Or, the company could agree to exchange the underwater option for cash or restricted stock. Option-exchange programs can be controversial, however. Proxy-advisor firms and many institutional shareholders have taken strong positions opposing optionexchange or repricing programs. Labor unions generally oppose them. And the perceptions of rank-and-file employees may also be a concern. For example, it may be difficult for management to successfully communicate a company-wide salary freeze if the key managers have just exchanged all their underwater stock options. Whenever the economy takes a dip, there seems to be a backlash against executive-pay practices, and both companies and their advisors should be mindful of these public-perception issues whenever changes are made. Conclusion Retaining key employees presents a greater challenge than ever. This is a particular challenge for multinational companies who in large measure rely on the ability to transfer employees from the home country to overseas locations. Communication is all-important and corporate culture is communicated from the top down. If the employer has to eliminate or cut back a benefit its employees have come to expect, it should tell them why. Employers need to recall what employees like about their companies, and to reinforce those traits. They need to be respectful of, and fair to, employees. If things must get leaner, don t let them get meaner. Philip Berkowitz is an employment-law partner in Nixon Peabody LLP s New York City office, and chair of the firm s international-employment law team. Christian D. Hancey is a partner in Nixon Peabody LLP, where he specializes in employee benefits and pension issues. He is located in the firm s Rochester, New York office. ( France Member since 2008) 12 Commerce in France N 72 Summer 2009

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15 Human Resources The Importance of Being a Socially Responsible Employer in Times of Crisis By Roselyn S. Sands and Paule Welter By all standards, the current economic and financial global crisis has no precedent, and has significant effects on companies and their shareholders, suppliers, consumers and, last but certainly not least, employees. I n these turbulent times, companies must rely on all of the stakeholders with whom they have established a relationship of trust. In this respect, it is essential to realize the importance of being and remaining a socially responsible employer. During these times of crisis, companies are more than ever looking at reducing their operating costs while being more efficient, not only as it concerns the downturn but also for when the economy recovers. In this respect, people are the greatest asset of a company, but also one of its most significant costs in terms of cash as well as efficiency, risk, reputation and image. In this regard, companies that see the economic crisis as an opportunity to maintain or set up a sustainable business model, based on a long-term vision of "doing well, by doing good", business will not only survive the downturn, but also emerge stronger and in the best position to take advantage of the new growth opportunities as the economy recovers. Applied to HR, being a socially responsible employer means "doing well, by doing good" with respect to one s human capital. This socially responsible approach is critical in optimizing HR costs while controlling HR legal risks and securing talent retention, maintaining employee motivation and creativity, maximizing long-term profits and ensuring corporate sustainability. But, how does being a socially responsible employer actually impact daily HR policies in times of crisis? First, being a socially responsible employer requires legal compliance with local regulations. Therefore, companies must ensure compliance with labor and employment laws in all jurisdictions in which they operate. But, this is not all. Being a socially responsible employer also means adopting a proactive approach on significant issues such as: Applied to HR, being a socially responsible employer means "doing well, by doing good" with respect to one s human capital." Lifelong Training and Retraining: This is necessary to ensure the employability of workers, especially older workers, and their potential redeployment in times of economic difficulties. Responsible companies should anticipate the evolution of their business and ensure that their work forces have the appropriate skills to face an evolving environment, even more so in times of economic difficulties. Indeed, despite the 13 million Americans out of work, there are 3 million available jobs; yet, corporations are having difficulties finding the required skill sets. Thus, the importance of life-long training and retraining cannot be overemphasized. Equal Treatment of Employees: The categories of protected groups under French law go way beyond what is covered by the United States. Companies need to be aware of this and ensure nondiscrimination based on origin; gender, lifestyle, sexual orientation, age, family situation or pregnancy, genetic characteristics, belonging to a particular ethnic group, nation or race, political opinions, trade union activities, religion or belief, physical appearance, family name, physical condition or disability (Art. L of the French Labor code). Indeed, any direct or indirect discrimination should be prohibited in companies. A socially responsible employer should adopt proactive behavior in combating every form of discrimination and promoting diversity and equality of chance at each step of the employment relationship, from recruitment to retirement or termination. Such behavior notably means hiring workers from various origins; hiring disabled persons and adapting their work environments; promoting them as readily as other employees, and paying equal wages to workers in a comparable situation, despite their gender, their origin or their handicap, for example. It also means performing HR audits to ensure that the processes to detect discrimination, such as in recruitment or promotions, are reliable. Work-Life Balance: Employers can see to the well-being of employees in the workplace by combating prejudice related to private life and family and promoting flexibility at work. In this 14 Commerce in France N 72 Summer 2009

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17 Human Resources respect, employees should be able to benefit from adjustments in their working times and working places depending on their needs as concerns their family responsibilities or their personal constraints or interests, such as sports or leisure practices. In this respect, flexible working hours can be implemented and home-working can be encouraged, as can part-time work or unpaid sabbatical leave for personal reasons. Health and Safety at Work: Ensuring health and safety at work is important for a productive workforce. In this respect, responsible employers should notably fight against harassment and bullying and deal with stress issues, especially in times of crisis. Maximum duration of work, as well as rest time, should be respected in order to limit absenteeism, work accidents and organizational problems due to unpredictable absences. In any event, under French law, employers have an affirmative duty to take all necessary actions in order to prevent harassment, and to ensure a safe working environment for employees. Here again, relevant HR risk audits are more and more common. Social Dialogue and Employee Communications: Communication is essential in times of crisis and all stakeholders, including employees and their representatives, should be involved as part of socially responsible management. Transparency should be a priority in order to maintain employees trust and prevent rumors, which can become very unproductive. Indeed, companies should pay attention to the social climate, which is even more important during an economic crisis. It should be obvious to anyone in France that social unrest and conflictual relations between management and employees could create significant interference with business operations, and even create consumer backlash and damage to reputation. Equitable Balance of Remuneration: As French President Nicolas Sarkozy said last February, when asking for a study on better sharing of wealth during times of crisis, "we should be able to restructure our social and economic model on ethics, the ethics of work and of a sharing of wealth more fair and efficient." In order not to create a feeling of unfairness and so as to satisfy employees legitimate expectations and maintain their motivation, responsible employers should try to share, in the best possible way, the profits generated by their activity. They could notably implement profit-sharing agreements, concluded with unions and/or employee representatives. Transparency should underlie the remuneration policy, with employees perfectly aware of the conditions for being eligible for a bonus or a salary increase. Applying a clear remuneration policy would also protect the company by avoiding claims based on unfair treatment, which are costly and have a negative impact on the company s public brand image. In addition to the matters set forth above, managing HR cost reduction in a responsible fashion is also key. Managing HR cost reduction as a socially responsible employer Companies that must reduce their HR costs in dealing with the economic crisis should not abandon the notion of social responsibility. Indeed, short of redundancies, there are many temporary alternatives to headcount reduction, which are not only more socially acceptable for employees but also better for business. This coincides with French regulatory constraints, which require employers to use best efforts to reduce HR costs through less drastic means first, before resorting to headcount reduction. Creative HR cost-reduction solutions include: deferral of job offers made to graduates; changes to working-time arrangements, including reduction in hours or days worked (temporarily or permanently, individually or collectively); renegotiation of compensation packages or reduction in salary and benefits; intra-group transfers of employees; proposal of unpaid sabbatical leave for personal reasons, etc. As most of these measures require employees consent, other measures, which can be unilaterally decided by the employer, may be preferred, such as: temporary unemployment (chômage technique), which entitles a company to temporarily close or reduce its activities under certain conditions, including via a Works Council consultation process; hiring freezes; layoffs of temporary workers, and payroll-tax optimization. These alternative solutions are good for business insofar as they allow for temporary reduction in HR costs while ensuring "day-one readiness" when the economy recovers. Moreover, employees will "judge" their employers after the crisis, deciding whether to stay and the degree of their personal investment and motivation at work based on how the employer dealt with these difficult times. Employers viewed as having correctly and humanely handled the crisis may expect their employees to remain loyal and motivated, as opposed to those who look only to short-term, quantitative data for decision making. Besides, as noted by Kenneth W. Freeman in "The Right Way to Close an Operation" (Harvard Business Review, May 2009, p. 45) "if employees who lose their jobs are treated impersonally, unfairly, or without respect, the productivity and loyalty of their remaining colleagues will suffer." Therefore, companies should not choose the easy way to deal with the crisis, which consists of focusing on only figures. A crisis is an opportunity for change and the "real survivors" will be those who realize that human resources are essential. The involvement and the motivation of employees are the keys to success and survival within the current economic context and hereafter. Moreover, consumers and the public at large will also be watching how companies behave in turbulent times. Roselyn S. Sands, a Paris-based partner at Ernst & Young and its principal attorney for international HR/labor and employment law, is a member of AmCham s HR Task Force. Paule Welter is an attorney specializing in employment law in the Lille Ernst & Young office. Ernst and Young s Mathilde Truchot and Laurent-Paul Tour contributed to this article. ( France Member since 1924) 16 Commerce in France N 72 Summer 2009

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19 L Communiqué presse:a4_maquette_port 15/06/ :24 Page European attractiveness survey Reinventing European Growth European Inward investment stalls as recession looms Inward investment into Europe was flat in The 7th Ernst & Young European attractiveness survey - which examines both actual inward investment and attitudes of global investors regarding their plans - revealed that in 2008 Europe secured 3,718 investment announcements, six more projects than in The number of projects remained steady but the impact of the impending recession on new employment was severe. The number of jobs created fell 16% to 148,333, accelerating a downward trend underway since Five years of sustained inward investment growth in Europe came to an end in 2008, said Marc Lhermitte, Partner at Ernst & Young and author of the report. As revenues fell and operating costs soared, projects were scaled back and some were halted. Many companies have suspended geographical and market expansion and acquisitions. Winners and losers Some industries are so far weathering the recession better than others. Machinery and equipment saw a 19% increase in FDI projects due to a surge of projects to supply wind turbines, solar components, fuel cells. Marc Lhermitte said: One of the biggest winners has been the renewable industries due to new green market opportunities, with almost 6,000 new FDI jobs in Astute businesses will be positioning themselves to take market share and gain access this sector. IT outsourcing, financial and business services were early victims of the downturn as their clients struggled, especially in the UK, France and Spain. New jobs from these sectors and countries slumped by 33% in Former FDI hotspots such as the Czech Republic, Slovakia or Turkey, saw numbers fall dramatically especially in automotive and electronics. Where the investment is coming from Europe's inward investment market remains mostly fueled by European (German, British and French mostly) and US investors (51% and 25% respectively). BRIC investors contributed to a relatively small number of projects into Europe (6%), but the trend is rising fast: projects from China and India have jumped from 118 to 182 projects. This has particularly benefited the UK. Europe as a refuge - emerging economies lose favour in short-term According to the survey, which interviewed 809 global investors in February 2009, Western (40%) and Central and Eastern Europe (39%) were neck-and-neck as the safest regions for being the most attractive regions in which to establish or expand operations. Marc Lhermitte said: High-growth markets from the emerging eastern economies are not providing the absolutely safe ground international investors are looking for. Europe is seen as predictable and safe. Investors are showing greater loyalty to their countries of origin and historical markets, launching fewer projects in Emerging Europe. And that s why - for the moment - at least they d sooner stay at home than venture abroad. But longer term the eastern transition is inevitable However as Mark Otty comments, The economic downturn will not keep the global centre of economic gravity from moving West to East and from North to South. Companies are completely right to still believe in the opportunities of the emerging markets. A recent Ernst & Young report highlighted that Brazil, Russia, India and China will contribute 40% of global economic growth between 2009 and FOCUS Alsace Lorraine Luc Julien-Saint-Amand, Partner and Regional Director at Ernst & Young and AmCham Executive Committee Member (Chapter Alsace- Lorraine), highlights regional results: thanks to some large-scale industrial projects, Alsace and Lorraine benefit from a remarkable growth by 35 % in terms of job creation (vs. -11% in France), with a steady number of projects. The US investors rank second behind German investors in our regions, with 15 projects enabling 123 job creations over the past two years (among which: Viskase Companies Inc., PolyPeptide Laboratories Inc., Phoenix Pharmaceuticals Inc. and RainDance Technologies Inc. in 2008). About the survey: The Ernst & Young s European attractiveness 2009 survey is based on a twofold, original methodology that reflects: The real attractiveness of Europe for foreign investors. Our evaluation of the reality of FDI in Europe is based on Ernst & Young s EIM. This unique database tracks FDI projects that have resulted in new facilities and/or the creation of new jobs. The perceived attractiveness of Europe and its competitors by foreign investors. We define the attractiveness of a location as a combination of image, investors confidence and the perception of a country or area s ability to provide the most competitive benefits for FDI. The field research was conducted by Institut CSA in February and March 2009, via telephone interviews, based on a representative panel of 806 international decision-makers. Contact : Daniel Gross, Business Development Ernst & Young Region Est (Strasbourg) (Nancy)

20 Ressources humaines Quel type de management pour la crise? Par Anne Gaillard Traditionnellement le management s appuie sur des «success stories», par exemple : Henry Ford, Jack Welsh, Bill Gates. A utant de réussites autant de «business models»! Néanmoins, le «benchmarking» a ses limites et aujourd hui il ne suffit plus de reproduire. Face à la crise le management requière de plus en plus d innovation et d audace. Le management est une activité humaine qui se doit d évoluer, tant sur le plan individuel que collectif. La qualité du management naît de la diversité, de l équilibre entre continuité et changement, de la faculté à donner du sens au quotidien, à s interroger sur la finalité du travail, de la vie économique, de l entreprise et à être plus que jamais proche de ses équipes : clarifier et renforcer les rôles de chacun et les respecter, être à l écoute, gérer le stress, s engager, être plus que jamais impliqué et responsable. Réussir à manager en période de crise n est pas la même chose qu en période de croissance." De nos jours les managers sont confrontés à de nombreux challenges et les bases du management sont remises en cause pour faire face à de perpétuels changements et s adapter à de nouvelles situations qu ils n ont jamais expérimentées jusqu à maintenant. Le manager ne possède plus de certitudes ni de repères. Il doit être de plus en plus performant mais il ne sait pas comment. Il n a plus de perspectives, le présent est bouleversé et le futur trouble. Il doit agir différemment, de manière transversale en mutualisant les services et en réduisant les coûts. En outre, il se doit d être exemplaire et solidaire. Il lui faut anticiper la sortie de crise, notamment en encourageant la mobilité interne et le développement de carrières, en redéployant en interne plutôt qu en recrutant. C est en effet lors des périodes de crise et de grande difficulté que se révèlent les potentiels. Au service des personnes Du fait de la crise les Ressources Humaines se retrouvent davantage au service des personnes plus que du business : maintenir le climat social, garder la cohérence, s accrocher aux valeurs en exerçant un management responsable. Exemplaire et solidaire Réussir à manager en période de crise n est pas la même chose qu en période de croissance. La crise peut ainsi s avérer une opportunité pour revenir à un management plus fondamental et authentique. Anne Gaillard, Co-Chair du HR Taskforce de l AmCham, est Consultant Associé au sein du Cabinet M&R Conseil (recrutement, mobilité professionnelle, outplacement, coaching) et membre dirigeant du Réseau Oudinot, partenaire de l AmCham. Commerce in France N 72 Summer