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KRAFT FOODS INC.
in FRANCE
HUMAN RESOURCES
Prof. Michael Segalla
Best in France Project 2004
Group ES1-B
Abdulrahman Alrefai
Igor Babichev
Juan Cortes-Funes
Thomas Coudry
OVERVIEW
1. Introduction
2. Kraft Foods Inc.
– Global Organizational Structure
3. Kraft Foods, France
– Brief History
– Products
– Why France is an important location
4. Company Values
5. French vs. American Values
6. What the Company does to instill its values in the French
unit.
7. Constraints in France
8. Adaptation to France
–
–
–
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Recruitment and Selection
Compensation
Management Development and Workforce Planning
Job Design
9. Key Cost of Operating in France
10. Advice
Note: Words in inverted comas are the quotes of interviewees
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INTRODUCTION
• Kraft Foods France is a branch of Kraft Foods Inc,
world #2 in the food and drinks industry
• Kraft Foods France is a leader on the coffee and
chocolate markets with a portfolio of prestigious and
complimentary brands
• Head office in France:
13, avenue Morane Saulnier,
78942 Vélizy-Villacoublay
• Manufacturing units in Havre and Strasbourg
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KRAFT FOODS INC.
• Kraft Foods is a global leader in branded foods and
beverages with 2003 net revenues of more than $31
billion
• Built on more than 100 years of quality and
innovation, Kraft has grown from modest beginnings
to become the largest food and beverage company
headquartered in North America and second largest
in the world, marketing many popular brands in
more than 150 countries
• Since 2000 the company is a part of Altria Group
together with Philip Morris
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KRAFT FOODS INC.
Company’s vision
– Helping people around the world eat and live better
Employees
– More than 100,000 employees operating in 68 countries
worldwide
Facilities
– Worldwide headquarters located in Northfield, IL.
– Five key research & development centers in:
• Banbury, UK;
• East Hanover, NJ;
• Glenview, IL;
• Munich, Germany;
• Tarrytown, NY.
– 197 manufacturing facilities worldwide (end of 2003)
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KRAFT FOODS INC.
Global Organizational Structure
Kraft Foods Inc.
Kraft North America
Commercial
US Beverages &
Grocery
US Snacks
Kraft International
Commercial
Western Europe
Kraft Foods France
West Central Europe
US Cheese & Dairy
US Convenient
Meals
Other Divisions
Central & Eastern Europe,
Middle East & Africa
Latin America
Asia Pacific
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KRAFT FOODS INC.
• Company structure encourages Best of Global, Best of Local
• To achieve a synergy of a global company Kraft Foods Inc. centralized a
number of global functions. Kraft's eight global functions are strongly
aligned and linked to the Global Marketing & Category Development group
and the two commercial units. The functions are centers for excellence,
with responsibility for identifying and sharing best practices and using
their global scale to best advantage:
–
–
–
–
–
–
–
–
Global
Global
Global
Global
Global
Global
Global
Global
Supply Chain
Strategy & Business Development
Technology & Quality
Finance
Human Resources
Law
Information Systems
Corporate Affairs
• Kraft Foods Inc. gave an autonomy
to county based units in some
local functions:
–
–
–
–
–
Local
Local
Local
Local
Local
Marketing Execution
Sales
Supply Chain
Human Resources
Law
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KRAFT FOODS, FRANCE
- BRIEF HISTORY
• The history of Kraft Foods is marked by heritage of
its famous brands, most of which originate from
Switzerland, Belgium and Germany
1963: First time the group appears in France under the
name of General Foods Corporation.
1985: Philip Morris buys General Foods Corp.
1988: Philip Morris buys Kraft Inc.
1989: Kraft General Foods is created.
1990: Philip Morris buys Jacobs Suchard, producer of
Tobleron, Milka, Cote d’Or, coffee Jacobs, Carte
Noire et Jacques Vabre.
1993: Kraft General Foods and Jacobs Suchard merge to
form Kraft Jacobs Suchard.
2000: Kraft Jacobs Suchard is renamed Kraft Foods
• The current setup in Velizy was opened in 1995.
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KRAFT FOODS, FRANCE
• 1,500 employees
• Turnover in 2003: € 1.01 milliard
• As a part of a global company, Kraft Foods France
has to follow a global strategy designed in the US
headquarters, but it has a large scope of autonomy
in question concerning local operations and it
functions as an independent profit center responsible
for driving strong results
• An ambition: To be the leading group of food brands
in France by uniting quality products, staff and
services
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KRAFT FOODS, FRANCE
PRODUCTS
• Kraft Foods Inc. has a great number of products all
over the world but its main assets are the brands,
and the range of the brands can be different for
different countries
• Kraft Foods France has 10 leading brands and 180
references
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KRAFT FOODS, FRANCE
• France is an important location for Kraft Foods Inc,
for it has:
–
–
–
–
–
Large market with wealthy customers
High educational level
High quality, trained employees
Excellent infrastructure
Central location in Europe
• Kraft Foods Inc. plans to expand product lines in
France and increase its market share
• France is the second largest European contributor of
revenues to the group after the UK
• Kraft Foods France owns manufacturing units in
Havre and Strasburg, but has no plans to increase
its manufacturing capacity in France. Probable
location of new plants might be in the Eastern
Europe
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KRAFT FOODS INC.
- COMPANY VALUES
•Innovation
-
Satisfying real-life needs with unique
ideas
•Quality
-
Fulfilling a promise to deliver the best
-
Ensuring high standards in everything we
make
•Respect
-
Caring for people, communities and the
environment
•Integrity
-
Doing the right thing
•Openness
-
Listening to the ideas of others and
encouraging an open dialogue
•Safety
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COMPANY VALUES
• Because KF, France is a branch of an American
company, the culture of mother company is very
dominant. The company is well structured, it uses
integrity policy which means that the corporate
values and rules are set and controlled from the US
in the form of instructions, guidelines, requirements
etc. and must be implemented in all KF offices all
over the world without exception
• As a feature of American business culture the French
employees perceive a strong emphasis on a shortterm performance
• Since the company has been in France for a long
time, it has largely integrated American culture.
Some cultural values are well adaptable and
welcomed by the French. Example: informal dress,
less formalities, simple procedures, tu vs. vous.
However there are some differences which reflect
local cultural specifics
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FRENCH vs. AMERICAN VALUES
• American culture is very specific about what common sense and
proper behaviour are; therefore many of the instructions
designed in the US and required to be directly implemented in
the French unit may sound pathetic and are not taken seriously
by the staff. Europeans are more reasonable in their judgments
and more often rely on common sense rather than on
instructions. Examples: The Conduct Code, Sexual Harassment
• French employees do not like precise instructions, but prefer a
broader definition of their duties, goals and objectives
• Money incentives are not as effective in France as in the US.
Example: Copied after successful experience in the US a new
bonus for innovation was introduced and then cancelled few
years later as ineffective
• French employees are more individualistic. They need more
autonomy and less control
• French employees are more concerned with overall quality of life,
i.e. balance of work/family/leisure. Their American peers are
more career/job focused
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FRENCH vs. AMERICAN VALUES
• American culture is very vocal, aggressive, it is confidence and
ability. It is fine to boast of yourself and your own achievements,
in Europe one has to be more modest
• In America it is good to admit a mistake in Europe there is more
formality, you should not explicitly talk about what you have
done wrong, it takes more creativity and diplomacy to speak
about mistakes
• Americans immediately go to the bottom line with results and
recommendations. How you did this nobody is interested as long
as you can justify your findings. For the French the process is
more important. They tend to provide large volume of supportive
information. Example: this difference can be seen in American
and French presentations
• American peers often meet outside work for other social
activities. French culture does not support this tradition
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What does KRAFT FOODS do to
instill its values in France’s unit?
•
As a multinational, the company provides multicultural training to its
managers through Internal Mobility Program. In frames of this program
the managers are transferred horizontally and vertically within the unit
as well as to the foreign branches. Example: According to Ms. Martine
Steinkuler, Directeur Rémunérations & Avantages Sociaux , in 4 years
1/3 of the company change their jobs by moving within KF
•
Values workshops are designed to facilitate understanding of different
cultures by organizing conference calls among managers of international
KF’s branches to solve real life business problems. These workshops also
provide training in inter-cultural communication, conflict management,
teach how to resolve different situations, build action plans etc
•
The role of expatriates is not just to fulfill professional duties but also to
be cultural mediators. Example: Mr. Adrew Victa, Finance Director, US
expat, interprets instructions from the US to better explain them to the
French employees. He often has to explain a cultural background of an
issue
•
The Young talent program. Attract young talent from all the countries.
Many of the young work in different countries during the first several
years of their career in KF as a part of motivation program as well as for
adaptation to the multi-cultural environment
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CONSTRAINTS IN FRANCE
• Most of the company locations have some constraints,
which are different in every country. As to France,
however many benefits the company gets here, it has to
face few constraints and most of them are related to the
government policy
– Strict labour laws not favouring business.
– Strong unionism among employees. “…in some cases even
white collar employees are unionized”
– Too many regulations, complicated procedures, formalities.
“…even employee training program is formalized”
– Notoriously known bureaucracy
– Non-cooperative government, not flexible for strategic
decisions, without vision. “…do not think what is good for the
economy, how to facilitate employment etc., more concerned
with protecting the status-quo”
• Although France is a very important location for KF, the
Company is very cautious when it concerns plans of
expanding business in France. The above listed
constraints translate into “a lot of lost opportunities for
France”. The country is often losing projects to other
countries
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ADAPTATIONS TO FRANCE
Recruitment and Selection
•
Most of the employees in the France’s unit are French nationals. The
company recruits the majority of its people inside the country. Very few
expatriates have jobs here and only in the senior managerial positions.
The reasons are:
1. Expatriates are very expensive. Hiring an expatriate usually involves both
direct (salary, usually double) and indirect (family accommodation) costs
2. Local employees better understand the market and local culture
3. Qualified employees are available in France
•
The recruitment decision for staff and low managerial level is taken in
France. Senior managers must also be approved by Kraft Western
Europe and/or Kraft International Commercial (depends on the level of a
manager)
•
Most of the vacancies are closed by promoting people within the
company. Entry level vacancies attract most of the people through The
Young Talent Program. Every year only 3-4 managers are hired from
outside. The company is concerned about bringing up managers from
within. As a result, the employees’ loyalty to the company is high and
the Seniority Level (the average number of years in the company) is 9
years (very significant)
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ADAPTATIONS TO FRANCE
Compensation
• The salary level in each position is comparable with the average
in the industry in France and must be within the 3rd quartile. The
situation in the competing companies is constantly benchmarked
• All employees are ranked according to the level of responsibility
and quality of their performance. Above 80% of them receive
“good” ranks. Very few are ranked as “outstanding” or “low”.
This system fits into the perception of equality i.e. equal
contribution to the overall results
• To better motivate and retain top managers the company has a
Profit share policy. About 50 managers receive % of the
company profit.
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ADAPTATIONS TO FRANCE
Management Development & Workforce Planning
• The French employment system is highly appraised by
expatriates for its high integration with education. “…education is
driven into the system”. Internship programs for students are
very common. They allow to replenish qualified workforce in the
local market very quickly
• Internal Mobility Program allow managers to work in different
functional areas and introduce local employees to other cultures
and mentalities
• Each employee has KPI’s and a career development plan. As a
result, everyone knows what he/she should do to get promoted
and what are his/her career prospects. As a job security is very
important in France, this policy motivates people and increase
their loyalty to the company. (Annual workforce turnover <3%)
• HR department has a long-term plan for every employee,
including his/her abroad posting, promotion etc. The plan is
constantly monitored and updated.
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ADAPTATIONS TO FRANCE
Job Design
• Job descriptions in the French unit are made broader in order to
address the issue of higher autonomy and less control. According
to Ms.Martine Steinkuler a broader job design helps to overcome
a fear of the lack of creativity and the feeling of total control in
workspace
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KEY COST OF OPERATING
IN FRANCE
• Although tax burden in France is mentioned to be higher
than in many other countries where KF is present, it is not
reported as a serious constraint. According to
interviewees the key operating costs are:
1. Social costs. It is extremely expensive to obey all the labour
laws and especially to lay off people
2. Salaries. As high as in many other European countries but
with lower productivity of labour
3. Manufacturing. It is becoming more and more expensive and
less efficient to produce goods in France
4. Availability of skilled labour. Better than in many other
countries due to the high education and qualification of
employees
5. Organization structure cost. Comparable with other
European countries
• Communication barrier is not mentioned as a constraint.
The company uses French as working language in France,
but most of the employees know English, which is a
business language among KF units
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ADVICE FOR THOSE COMING TO
DO BUSINESS IN FRANCE
• Most of the interviewees agreed that France is not a
good place to open a new business, especially for a
low value-added products. The best idea would be to
benefit from France’s large market without running
business operations here. Ideal place for knowledgeoriented industry or just headquarters.
• “We realize that the government is trying to change
the situation for better but it is not consistent and
obviously doing not enough… the situation does not
seem to be changing in the near future.”
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ADVICE FOR THOSE COMING TO
DO BUSINESS IN FRANCE
• “France is a great country for its people, culture and
quality of life, but not for business”
• For those who still decided to come to France the
advice is to be prepared to face bureaucracy and
bear a high social cost
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WE THANK
1. Mr. Andrew Vikta
Finance Director. American.
Tel. 01 34 88 70 22 (secretary),
[email protected] (secretary)
2. Ms. Martine Steinkuhler-Hettena
Directeur Rémunérations & Avantages Sociaux. German.
Tél.: 01 34 88 71 20
[email protected]
3. Ms. Sylvie Vergne
Finance Tax Commercial Risks and Accounting Manager. French.
[email protected]
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