Reorganizations in France: beyond the law

20 December 2021
Jacques Perotto and Maxime Hermes

Reorganizations, and particularly collective dismissal plans, are often complex and can be quite long projects in France, which may come as a surprise for people familiar with jurisdictions where the process is relatively quick and smooth.

However, as technical as the legal aspects can be, the main issues often arise from strategical, practical and communication aspects. In this regard, it is essential to ensure that the internal and external communication is managed properly.

The involvement of staff representatives (for consultation purposes and the negotiation of the collective dismissal plan) and in particular the French Administration, (to approve the collective dismissal plan at the end of the process) can mean that some last-minute twists in the plot cannot be ruled out.

The purpose of this article is, for once, to set aside the legal aspects and draw attention to a few red flags.

Train for a marathon

When it comes to preparation (i.e. before entering the phase of consultation of staff representatives), the best advice is to “take your time”.

While it is paramount to maintain momentum and to move forward swiftly, experience has proven that rushing the preparation phase most often results in jeopardizing the credibility of the dismissal plan and in wasting time later.

When building the foundations of the project, the persons involved should be limited to an inner circle of decision makers, accompanied by an employment lawyer and/or a reorganization consultant if need be.

The preparation phase includes numerous and rather time-consuming tasks such as defining the economic rationale, scaling the project, preparing a budget, establishing a timeline, defining the future organization and the transfer of workload, drafting the (extensive) documentation, anticipating communication (both internal and external) and contingency plans…

For the sake of consistency, it is strongly recommended that the same person (or group of people) draft all the documentation and the content transmitted by all the appropriate stakeholders.

A vision and a leadership

Reorganization should not be reduced to just an exercise in cutting off jobs.. Of course, the financial situation may be critical, and cutting expenses and positions is a matter of survival, but savings and dismissals should in most cases be the consequence of a financial and organizational project, and not its starting point.

Promoting a credible business vision to address the economic ground (economic difficulties or need to safeguard the competitiveness of the group) is therefore paramount to ensure successful reorganization.

The project should be promoted and managed by a team leader, who has the capacity and the legitimacy to make the final decision on various matters: finance, legal, HR…

The country manager or the group HR manager are natural choices, bearing in mind the task is time consuming and most of the working time of the team leader will be dedicated to the project for a few months. In this regard, a country HR Director / Financial Director / Operation Director may be the right choice.

Gather your A team

As well as the team leader, a fully dedicated PMO (either external or internal) is required to organize the work, to ensure project team alignment and to manage and meet deadlines.

Internally, most of the functions will be solicited at some point. Local HR (including Labor relations), Finance, Operations and Legal teams will be at the heart of the decision-making process and the preparation, but global teams, Health and Safety and communication teams will certainly be involved as well.

The appreciation by each internal stakeholder of the opportunity of the project may differ. In international groups, this may be particularly true between global divisions and local teams, which may have a different agenda and a different vision: don’t underestimate a possible cultural gap. Taking time to onboard everyone will never be a waste!

Externally, multiple consultants may come to assist throughout the process. The needs will depend on the nature of your activity, of the project, and of the internal resources you can mobilize: an external PMO may be relevant; the local HR Manager may be excellent for running day-to-day activity, but not necessarily experienced when it comes to crisis situations.

Employment lawyers and/or reorganizations consultants are the “must have” in the team. Consultant firms usually propose a range of skillsets for you to pick from: finance, strategy, organization, project management, application of “Florange” law (obligation to search for a buyer in some situations of site closure)…

A redeployment/outplacement firm will be also required, and in sensitive projects, a Public relations / Communication firm is often recommended.

Organization: the importance of being earnest

It is paramount to define everyone’s role and avoid multiplying meetings with all stakeholders: while it is important to have a 360° vision on the project, multiplying the meetings will result in diluting the decision-making process and wasting a lot of people’s time during a rather time-sensitive period.

While divergent point of views, and even pushback, may result in useful debates, the decision process should be clear at the very beginning to avoid stressful situations and wasting time. Keep in mind that some topics may be more important than others: in particular, as the main purpose of the process is to have a collective dismissal plan approved by the administration, legal issues regarding the validity of the procedure should prevail most of the time.

It is therefore recommended to define different type of meetings:

– Decision-making meetings, limited to the core project team;

– Regular alignment meetings for sharing information and decisions, which is crucial for the core team to take decisions with a transversal vision and for the stakeholders to be updated of the state of the project. These meetings will also be the occasion to check that the schedule is being respected;

– Day-to-day meetings to manage administrative topics (especially during the course of the consultation and the implementation of the plan);

– Thematic meetings to build up the collective dismissal plan, with the appropriate stakeholders.

Avoid working in silos: regular communication is once again essential. The approach should be iterative with daily reports of the progress made during alignment meetings.

Embrace the roleplaying game

Before starting the staff representative consultation process, the Administration and politics (either local and/or national, depending on the nature and the impact of the project) should be informed of the imminence of the procedure.

And this is where the roleplaying game begins…

A big project will be in the media and politicical spotlight, especially if it impacts an area with a high unemployment rate.

Spoiler alert: even if the project is built to limit the number of job cuts and ensure the sustainability of the company and the remaining jobs it offers, the management will become the target in the communication from the Unions, the speeches from politicians and the media.

All stakeholders will have different agendas, and their behavior and communication will be determined by it. Those who have a straightforward approach to social and public relations may face a cultural gap when confronted to some deceiving moves.

– The company’s target is to cut costs and ensure the long-term sustainability of the company through the reorganization.

– Unions and employees will either try saving the jobs at all costs (which may include attempts to undermine the project to delay it as much as possible) or maximize the level of the social measures. The project team will most likely face a mix of both approaches, which may lead to dissension between Unions.

– The role of the administration (ahead of the official inspection and approval of the plan) is to encourage social dialogue with Trade unions, to suggest improvements to the plan, to try limiting the number of redundancies, and to mitigate the long-term impact on employment in the area. In this context, the administration’s agenda, may be summarized as “the less fuss, the better”: beware of the possible inconsistencies between what is said to the company’s directors, what is said to the Unions and what is said officially!

Stay On Track in spite of turbulence

Ultimately, if the project is implemented seriously and sufficiently funded, its success will depend on the capacity of the team leader and decision makers to stay focused on the initial target, even when challenged by the other parties.

While being able to be agile and make some adaptations to the strategy in the course of the process, it is critical for the team leader and decision makers to remain aligned and consistent with the decisions taken despite the pressure from all sides.

Jacques Perotto, Partner, and Maxime Hermes, Associate