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There has been a noticeable increase over the past few years in the numberof companies traditionally trading within their home markets seeking toexpand their activities into other member states of the EuropeanCommunity. One way for organisations to achieve this objective is toacquire ownership of companies based in other member states. This trendhas been reinforced by the establishment of the Single European Marketwith its resulting free flow of capital, goods, services and labour betweenthe 12 national states. However, this strategy has important operationalimplications for organisations, particularly where it leads to employeesfrom different national cultures being recruited.

The following case deals with a German company operating in themedia industry which, among other activities, has taken a controlling inter-est in a French printing firm. The issues relating to leadership have been asignificarit factor in the day-to-day running of the subsidiary company and,when a replacement was needed for a senior manager, the company headoffice in Germany decided to fill the position with a German manager.Following the appointment, considerable problems arose which were, to alarge part, attributed to a change in the style of leadership.

The case provides opportunities to consider the issues that may arisewhen different cultural styles of leadership (in this case French andGerman) clash and how such a change in leadership might be managed inorder to limit the problems that can occur.

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BACKGROUND

Media AG is a German company founded some 50 years ago as a smallprinting operation. Over the past few years the company has, through skil-ful management, expanded rapidly and now has interests in many otherareas of the media industry. As part of this strategy the company decidedin the early 1990s to take advantage of the opportunities provided by the

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Single European Market to expand its interests into other countries in

Europe.A particUlar opportunity arose to purchase a majority share in a Frenchcompany which specialises in security printing including the production ofcheques and banknotes. The French company operated exclusively in itshome market of which it had a significant share. It had been built up afterthe Second World War by a technically well qualified team and was finan-cially sound. These factors led the German parent company to decideinitially that the subsidiary should operate autonomously and to limit its

involvement to long-term strategic decisions.The French company is headed by Monsieur Warner, the President

Directeur General (PGD). He graduated from one of the leading French'Grand Ecoles' and worked for ten years in the Ministry of Finance in Paris.During this time he developed a close working relationship with theFrench subsidiary which had many national contracts with the Ministry forthe production of banknotes and other security work. When the position ofPGD became vacant, M. Warner expressed an interest in the post whichprovided him with the opportunity to move from the civil service and intoindustry, a move which had been a long-term objective of his career.

French institutions are, regardless of their size, highly centralised. ThePGD manages through a strict hierarchy according to functional lines andtop-down communications; the matrix structures found in many enterprisecultures are very rare in France and communication and authority lines runvertically from, and to, the PGD. In taking up this position M. Warnerentered at the top of this formal hierarchy with no experience of managingin the private sector or of the detailed work going on in the company. Hetherefore relies heavily on the experience of his senior managers in the day-

to-day management of the company.The responsibility for production matters within the company rests with

Monsieur Abel, the production director, who reports directly to the PGD.He has been with the company for most of his working life and has held hispresent position for 20 years. His background is very different to that of thePGD. He received no formal higher education and his career progressionhas been achieved through his dedication and effective performance within

the company.M. Abel's leadership style reflects the typical behaviour of the French

'patron'; a style still found today in many medium-sized French companies.It can be characterised as being highly task orientated with social relationsbetween the 'patron' and employees conducted on a paternalistic basis.Abel has worked hard at improving the performance of the company, rely-ing on his lengthy experience of the business to make his decisions. Hisdetailed knowledge of the business, with which no one in the company cancompete, has led to his authority within the company being beyond dis-pute. Consequently he exercises what he perceives to be his right to make

My greatest failure: A case study in leadership 73

indecisions independently and without consultation. His colleagues and sub-ordinates are not therefore, involved in the decision making process, thereis limited delegation and subordinates are regularly required to seek M.Abel's advice over production matters. This approach has led to the staffhaving a high level of dependency but it has equally created a high degreeof security for his employees. Abel's approach seems to complement theattitudes of the workforce, many of whom are middle-aged or older. Theseemployees seem strongly influenced by such traditional work ethic criteriaas duty, obedience and following orders without criticism.

An important element of French business culture is the 'cadre'. The term, cadre' symbolises an independent and professional strata of employeeswith its own access criteria and regulations. Membership reflects a degreeof competence and becomes a key recruitment criteria for companies whenhiring managers. Cadre personnel benefit from a special legal status withadditional periods of notice and enhanced pension rights. Access to thegroup of cadres is possible through three different routes:

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. Without any higher education qualifications, entry is restricted to thosewho can demonstrate competence over a period of a number of yearswith one employer. This is the case with M. Abel.

. With a higher education qualification, taking up to two years study toobtain, additional relevant experience of between five and ten years is

required.. Immediate access to cadre status is given normally to graduates of the

leading 'Grand Ecoles'. This is the case with M. Warner.I

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sharing - a comparison of American and German views and ethics/. Hiseducational career has placed a premium on the acquisition of intellectualcapability and the ability to solve problems systematically. During severalof his vacations from college he undertook work placements in France andon his own initiative he took an intensive French language course in Paris.Dr Bernard joined Media AG some five years ago as the personal assistantto the chairman. While in this post he has successfully completed a numberof projects, some at his own initiative, in the areas of finance, sales and,particularly / production. The combination of his academic training, lan-guage skills and experience, together with his insights into the strategicissues at the parent company made him/ in the view of head office, an idealcandidate for the post.

Even though the French were not particularly in favour of Bernard/sappointment (they would have preferred a Frenchman), they accepted thedecision, recognising that it would create stronger links between the twocompanies. One of Abel's colleagues, commenting on the change of 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 thecompany. We often had arguments with him and he occasionally treatedthe workers as if he was a dictator, but production ran smoothly and in thecase of an emergency / we all stood behind him. Dr Bernard is a sensibleguy / has excellent qualifications, but is always so serious, somehow cold.As a German he will find it difficult here.'

Dr Bernard relished the challenge of his new position as ProductionDir~ctor in a foreign country and had developed firm ideas on how hewould tackle his management role. He had closely studied the features ofparticipative leadership styles and was determined to introduce them tothe company. Delegation wherever possible, teamwork and joint decisionmaking, if necessary all the way down to the shop-floor, regular two-waycommunication and the systematic enhancement of skills through trainingwere to be foundations of his approach. In particular he planned to intro-duce a management by objectives scheme similar to that operating in theparent company. Before taking up his appointment he had discussed thesematters with senior management at Media AG and received their supportfor his ideas.

Bernard had been told several times about M. Abel's leadership styleand realised how different it appeared to the approach he planned to take.He was sure, however, that the employees would like his style whichwould develop the potential within the workforce, not least because of thegreater involvement and autonomy his way would provide for them. Forthe first eight months Dr Bernard was satisfied with the way things weregoing at the subsidiary. Productivity levels had been maintained while theemployees had adjusted to his style of management. Three employees hadresigned from the company during this period; two fully qualified opera-

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tors and one young technician. As was typical of his approach, Bernardexamined their reasons for leaving very carefully and established that allthree had left for reasons unconnected with their jobs. In one case, theemployee's father-in-law had died and he had inherited the tobacconistsshop the relative had owned. Another had built his own house outside ofthe town and had found a similar job nearby and the technician had beenoffered a job which promised much faster progression than he could expectat the company.

Bernard is very s~rised, therefore, when, a couple of months later, heis called to Warner's office and handed a letter by the PGDwho says 'readthis and tell me what you think'. He takes the letter and recognises theauthor as being Andre Maillot, the head of production planning and one ofBernard's immediate subordinates. Maillot is a serious person, 61 years old,a dedicated company employee and extremely competent in his job.Bernard has a high regard for Maillot's work and has taken every opportu-nity to personally recognise his contribution to the company.

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Dear M. Warner,Over the past few weeks I have asked myself many times whether I should

write this letter. Please do not misunderstand my intentions in the criticism I amabout to make of the Production Director. I recognise that he is technically verygood in his field, but at present the production operation is not working as wellas it used to. Soon, I~believe, there will be even greater difficulties and it is inorder to prevent these that I am writing to you. I have explained all the problemareas to Dr Bernard but in vain. His way of working makes it difficult. for him tounderstand what I and the rest of the staff are feeling. Perhaps I can best explainour worries more clearly by comparing Dr Bernard with M. Abel.

When M. Abel had to deal with one of us on a production matter he wouldcall us i:n~o.' his office, tell us the d~~s of the problem, the solution he requiredand what we were to do and by when. When we left the office we knew clearlywhat was expected of us. With Dr Bernard it is very different. We frequentlyhave meetings (I counted them in July - of 184 working hours 58 were spent in

meetings called by him), where we would have long discussions at the end ofwhich Dr Bernard did not come to a decision. What he repeatedly says is 'thesuccess of the company depends upon us working together as a team to find asolution with which we are all satisfied'. It sounds great and we are doing ourbest to help but at the end of the day we are each only responsible for our ownarea of work.

If we took a question to Abel we would either get a straight answer or, if he feltwe should know the answer, we would get a telling off. I remember him saying tome on more than one occasion, 'After 24 years you should have learnt this bynow'. Well, you certainly got an answer! We were all used to his way andrealised that nothing personal was intended. Abel knew all there was to knowabout printing and the decisions he made always worked.

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Dr Bernard, on the other hand, always starts by asking us what the problem isand we have to systematically explain everything. Then he asks, 'What wouldyou suggest as the solution? - What are the advantages? - Disadvantages?' and'Do you want to discuss this with Mr X or Mr Y and see what he thinks?' At theend of the meeting we are no wiser than we were at the start. The only thingthat has been achieved is the time of another meeting a few days later to discuss

solutions.Dr Bernard encourages us to take responsibility for making our own decisionsand to use our initiative in work matters. But two years ago when, on my owninitiative, I gave the go-ahead to print an order for eurocheques, I nearly lost myjob as no one told me that the contract had been cancelled eight weeks prior tothe scheduled start of production. The stress that I felt as a result of this incident

forced me to take several weeks off work.Also significant is Jean Fleur, the print technician's reason for resigning. He

pointed out a technical inadequacy on one of the machines to Dr Bernard.Bernard was very appreciative and friendly and told him to come up with a solu-tion within the next three months. Fleur was so surprised and concerned that hetook a job in another company because he was afraid he could not solve theproblem and would be sacked. After this event the employees feel that it is betternot to make any suggestions to Dr Bernard if they want to keep their jobs.

Abel was frequently found in the production area; he talked to all the staffand occasionally joked with them. He could spot when people were not pullingtheir weight and would tell them off there and then but he was always availableif people needed help. Dr Bernard goes through the production area every daybut because virtually everything is discussed in meetings personal contact is rareand he is like a stranger to most of the staff. They also believe that he has nosense of humour. When he first started at the company some of the employeestried to speak to him in the same way as they had to Abel but he did not seeminterested in conversation so now none of them speak to him anymore except to

say 'good morning'.Abel was, at the same time, the most loved and the most hated person in thecompany but we all kn~w where we stood with him. We are much less sure ofDr Bernard's management style and his personality is alien to most of us. Thetraining courses on management by objectives which he set up were interestingand we know that he wants to introduce this scheme into the company and sochange the way it is managed. I am not alone in believing that these ideas willjust not work in our company. We are all very worried about the future.

He does not take our concerns seriously. His standard reply is that we shouldall want the company to prosper and to make work more satisfying for everyone.

At the moment, however, satisfaction has decreased.I(Following this there was another apology and a statement that he wouldinform Bernard of the contents of the letter if necessary but preferred it to

remain confidential for the time being.)Dr Bernard laid the letter down. The contents came as a complete shock

to him. He felt that through his participative, reasoning approach to man-agement the staff would see the benefits it offered themselves and the

My greatest failure: A case study in leadership 77

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company. Their reaction went against everything he had learnt about lead-ership and he is upset that they did not understand his managerialphilosophy. He accepts he is not good at social conversation but is hurt thatdespite his politeness and inner belief in people his attitude was viewed sonegatively by the employees.

Bernard reflects upon the events that have occurred and thinks to him-self 'This has been my greatest failure'.

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ACTIVITY BRIEF

1 Analyse how the leadership crisis at the French subsidiary has developed.The analysis should take into account national cultural differences and theleadership styles of the key participants.-Ie

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2 What are the reasons for believing that a leadership style similar to M.Abel's will not be appropriate for the company in the future.

3 After the events detailed in the case, M. Warner has discussed the situationwith head office in Germany. He is advised that Dr Bernard should remain inhis position. Develop an action plan which would overcome the leadershipdifficulties in the French subsidiary.

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RECOMMENDED READING

Schien, E. H. (1985). Organisational Culture and Leadership: A Dynamic View, SanFrancisco: Josey-Bass.

Hofstede, G. (1980). Culture's Consequences: International Differences in Work Related

Values, Beverley Hills: Sage.Mullins, L. J. (1993). Management and Organisational Behaviour, London: Pitman,

Chapters 8, 12 and 13.

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