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THE IMPORTANCE OF ENVIRONMENT IN FOSTERING CORPORATE ENTREPRENEURSHIP. A Management Report.

Posted on June 21, 2019 at 10:45 AM



Thierry MOUELLE

International Business Strategist

MD -IM Consulting Paris__________________________________________________

NB : This report is now publishable as the bank does no longer exist. It could serve to nurture the research fields.:P

EXECUTIVE SUMMARY

This report was prepared for the Chief Executive Officer of Groupama Banque. It covers a series of issues related to the importance of the environment in fostering corporate entrepreneurship. It highlights the role of Human Resource Management (HRM) in the process of changing a classic company into a successful profit-seeking organization through Intrapreneurial culture. Highlighting creative behavior as a trigger mechanism, aimed at sustaining the company’s expansion perspectives, the first part of the report (noted as PART I) leans on my personal inspection. It hands over key factors influencing the company’s environmental depiction, including corporate structure, corporate culture, control mechanisms, workforce profile, the offerings, and the clients. I used the Management by Walking Around method – MBWA – while identifying Groupama Banque’s environmental patterns. The second part of this report (noted as PART II) weighs up – amongst a range of other possibilities existing within the firm – the incidences of “ideology” in a related corporate entrepreneurship (Hong Chung & Gibbons, 1997) as well as “inversing the pyramid” (Barlett & Goshal, 1996) as alternative to hierarchal hostility to change. This final part, preceding my conclusion, also provides a briefing on the urgency of becoming an entrepreneurial organization.

1 Bernard Pouy was appointed Groupama Banque CEO mid-2007. He replaced Michel Labastie, Chairman of the board of management since the beginning of the venture in September, 2002. His nomination to this post marks a decisive turn in the strategic direction of the bank all the more so as Bernard Pouy comes from Groupama Holding where he runs concomitantly Finama Bank specialized in institutional customers, and Asset Management. Michel Labastie came from Société Générale; he was Credit Risk expert.

However, this approach, to be pertinent, has to lean on the internal environment factor as it is, given its core function as a corporate development driver. It has to constitute the platform par excellence on which the creative energies of the organization are built. One would be wrong to consider a corporate environment only as a set of physical apparatuses located somewhere – with acceptable hygienic conditions – put at the workforce’s disposal to optimize their production. The corporate environment appears to be more complex. It is a combination of human and material factors; whose conjunction produces a context underpinning the organization’s activities. Corporate environment is, in fact, the atmosphere in which workers do their job. The purpose of this report is to glean various points identifying the state of Groupama Banque corporate environment and distinguish the tools that can be deployed to encourage initiative and creativity, five years after the creation of the company.

Timmons (1999), quoted by Morris and Kuratko (2002), assesses that modern companies are mostly concerned with lifecycle demands, where values and corporate behaviors required to be successful have to take into account that growth is not endless; that the perpetuation of the earning trends lies in a business model tightly linked to the efficiency of the teams and a relevant corporate culture. As such, the philosophy of innovation must be a key value in the company as well as its adaptability and capacity for forecasting future needs of the customers; scanning the competitive environment and the monitoring product trends must, too, be the keys to success. Thus, every stage of the company’s lifecycle calls for exhaustive polling of strategic and operational assets which otherwise would be mistakenly considered irremovable trumps. In this management report, our comments on the firm’s structure, control mechanisms, Human Resource Management and culture will nurture various options available to the company for improving its corporate environment.

PART I -ANALYZING THE IMPACT OF GROUPAMA BANQUE’S CORPORATE ENVIRONMENT ON ITS CORPORATE ENTREPRENEURSHIP

1- BRIEF COMPANY OVERVIEW.

Groupama Banque is a Paris, France-based financial institution brought into being in 2002 as a joint venture of Société Générale and Groupama Insurance. Its economic model leaned merely on providing Groupama Insurance’s clients with banking offers adapted to their needs. The France Big Four leader, listed on CAC 40 Paris stock exchange, Société Générale contributed 40% of Groupama Banque’s capital – mostly evaluated from its technical expertise – against 60% for Groupama Insurance. The exhibit 1 below shows the new venture’s corporate structure. Groupama Insurance, originator of the venture, brought financial means and its customer’s database. Thus, the new venture’s clients were not prospective customers, although they had a more insurance-oriented appetence than for banking.

2- CORPORATE STRUCTURE

A typical corporation’s structure consists of three main groups: directors, officers, and shareholders. The roles and responsibilities of these groups are often described in a company as distinct from one another. Groupama Banque offers no specificity. Its corporate structure is made up of :

a- THE BOARD OF DIRECTORS

The Board of directors of Groupama Banque comprises of three groups of persons:

— Groupama Insurance, represented by top managers from the main regional branches. As the majority shareholder with 60 percent of total shares, they rightfully hold the Chairman of the Directorate. Structurally, the Chairman leads the bank and is responsible for the rules and law compliancy within the firm. They are elected from among their peers on the board before whom they are also responsible for the smooth running and quorum during proceedings. They constitute the unavoidable bridge between the Chief Executive Officer (CEO) and the top bank managers concerning the adoption and the implementation of corporate strategy, as well as the preservation of corporate reliability.

— Société Générale, represented by its core business interrelation divisions, mainly departments of Strategy and Mergers and Acquisitions. With 40 percent of the constitutive capital, this partner occupies positions that fall to both inside and outside the directors within the board. As inside directors, Société Générale representatives are high-level managers, assigned temporally to technically handle the Groupama Banque venture, notably the Chief Financial Officer (CFO), the Secretary General, the Head of Banking Operations, and the Human Resource Director. They are still on Société Générale’s payroll even if they work for Groupama Banque. As outside directors, Société Générale representatives are of three persons, the Head of Corporate Strategy, the Special Adviser for the president of the group and a simple member.

— Groupama Banque, notably the CEO, who is since mid-2007 from Groupama Holding, the Head of Operational Risks, and an auxiliary member, the Head of Sales and Marketing.

— Are tolerated as observers, two staff representatives from the works council or quite other employees’ nominees.

• COMMENTS

The shape of Groupama Banque’s board of directors shows that both shareholders – in terms of quality of the people involved – are represented well, but in a disproportional number due to the size of their respective shares. These circumstances give absolute majority to one partner without obstructing the power of the other. Thus, theoretically, Groupama Insurance, as the majority shareholder, has the absolute power to pursue its chosen strategy within the new entity. I say theoretically because, and this is the issue, as an insurer, retail banking is not its job. The question is to know if – epistemologically speaking – it is possible to imagine an expansion strategy or an entry strategy in a professional field in which we lack basic business knowledge as well as modes of functioning. In other words, can they build an efficient strategy in a playing field they know nothing about? The group certainly holds some financial institutions, notably Finama Bank and Groupama Asset Management, but they specialize in institutional customers and management of asset portfolios. None deal with retail banking. Thus, it is up to the minority partner, who knows and leads the retail banking in France, to drive the new venture’s expansion strategy.

However, in transforming the majority shareholder's power in quasi fictive authority, the functioning of the board raises the question of Groupama Banque’s cultural identity. The question becomes more crucial as Groupama Banque top decision-makers are Société Générale’s employees in the majority. The new venture exposes a culture shock as the corporate culture of Groupama Insurance – which normally would inspire Groupama Banque – emanates from a mutualistic ideology that made its destiny in the rural regions, since the period of the European reconstruction after World War II. It is these mutualistic values that the insurer had put forward to sell the idea of retail banking to its members and traditional customers. These values are not that of Société Générale, whose managers run the bank; it deals with a rigid “banking ideology” which will suffer no alterations in process deliveries.

b- THE BOARD OF MANAGEMENT

As the executive organ, Groupama Banque’s board of management is a collegial decision-making structure that defines the strategy of the firm. It assays the quarterly stock of the situation. It issues reports and yearly financial statements for Groupama Banque and makes staff arrangements and reorganizations. The Board of Management also makes certain that supervisory authorities and shareholders receive regular, appropriate and complete information on all issues involving Groupama Banque’s business development. The Chairman, Bernard Pouy, coordinates the corporate guiding principles.

• COMMENTS

By its proximity with the workforce, Groupama Banque’s board of management is the place par excellence to elaborate on the cultural policy of the firm. It is also here that the feedback on the state of the firm’s social environment could have its first and more efficacious impact. However, its constitution is the emanation of that of the directorate. Much like the latter, it exposes structural discrepancies between the will of Groupama Insurance to achieve a faultless move from the Insurance Industry to a hybrid concept of “Insurbanking”, and the reality of the traditional banking culture. As a result, CEO Bernard Pouy is encircled with the majority of Société Générale’s managers, which exert an irrefutably potent influence on the strategic direction of the bank. As proceedings are made by consensus within the organ, it most often happens that the decisions are those of Société Générale’s managers and not of the Chairman of the Board. This ends with the consideration that, in practice, Groupama Banque is much more Société Générale’s branch than that of Groupama Insurance’s. Unless deep changes occur, the company’s corporate culture will keep being in search of an identity of which nobody has found – to date – the structuring mold.

3- HUMAN RESOURCE MANAGEMENT

Human Resource Management (HRM) is a vast concept referring to a series of corporate duties related to talent attraction, job evaluation, performance measurements, training, personnel incentives and rewards policy, manpower planning, workforce support and motivation, amongst various other tasks, including maintaining employees within the organization. Yet, Groupama Banque’s HRM has not taken a critical form nurtured by a steady organization, underpinned by an explicit business identity. However, this situation is globally characteristic of companies that are still at their embryonic stage.

• COMMENTS

HRM specialists and practitioners agree on one thing: HRM is the concrete disarticulation of a firm’s strategy into various activities and functional parameters, dispersed by a managerial style. As demonstrated in the section above, related to the directorate and to the board of directors, Groupama Banque is still in search of its corporate identity and cultural reliability. Its HRM system therefore reflects the nature of its structural instability. Principally due to its few years of existence and the several core structural issues analyzed above, Groupama Banque HRM operates more like a recruitment system that strives to achieve day-to-day management tasks based on a few cultural foundations, such as the centralization of decision-making and descriptive tasks for employees. But in general, to evoke but the fewer, most employees experience difficulty in identifying their career paths. Women, back from their maternity leave, systematically lose their positions. Instead, what they are offered has fewer responsibilities. It happened (2004-2006) that four female middle managers lost their position so as to become simple employees. Moreover, those of African and Arabic descent always occupy subordinate positions in the flowchart of services, despite their high-level competence and education. There are, to date, no Black managers or middle-managers in the firm; there is only one Arabic middle-manager, while four persons of these origins, several years ago, received banking certificates from the Institute of French Banking (ITB) which is often requested for managerial position in the banking industry. As for the promotion system, posts are not subjected to internal competition and promotions are systematically discretionary.

Trade Union representatives said all their negotiations efforts with HR directors yielded little success. They are proposing of a series of measures to promote transparency at the managerial level, in the business model, within the promotion procedures, and above all in the social system of the firm hostile to maternity. They also find that the low level of wages and compensations does not help encourage entrepreneurial behavior. People don’t feel valued in their work. No one could even imagine what tomorrow may look like. This environmental uncertainty freezes corporate initiatives, as people spend most of their time on the Internet in search of job vacancies.

HR officers acknowledged that the system is not perfect, saying it will improve as the company intends to increase its profitability in a few years. But they provided no reflection track which could, according to them, embolden and invigorate the internal environment of the firm. Therefore, the question is: could Groupama Banque prove able in creating an entrepreneurial environment that is so indispensable for the economic growth? In other words, given the difficulty the firm feels in setting up a long-term oriented managerial policy, what of the HRM system or of the corporate culture will dominate while creating the unavoidable entrepreneurial values within the firm? Would it be a mix of both? I mean, “What strategy to set up rather than that of simply broadcasting the idea of the sustainability of Groupama Banque venture?” There could not be an efficient HRM system which does not integrate employees’ involvement in the process of building a clear idea of the future. In the comments ending this report, I will gather – as a whole – all the factors underpinning a sustainable and growth-oriented system preceding the implementation an entrepreneurial work environment.

4- CORPORATE CULTURE

Groupama Banque corporate culture is a top-down type. Decision-making is centralized. The board of director is the ultimate decision-maker. HRM policy, financial products, service prices, credit rates, commercial campaigns and design charters are approved at the top.

• COMMENTS

Amongst a range of authors who studied culture, Deal & Kennedy (2000) have identified a few cultural prototypes, whose dominant ideologies help measure influence of the latter on groups and/or individuals’ deeds. Within the four-indexed typology of culture they proposed, including “The Process Culture”, “The Tough-Guy/Macho Culture”, “Work Hard/Play Hard”, and “Bet the Company”, only “The Process Culture” fits Groupama Banque's behavioral system. As a Process Culture company, Groupama Banque deals with “low risk” taking; it bears the “cover your tail” mentality; its system is based on employees’ strict respect for the hierarchic channels. What the manager does not ask for cannot be undertaken by the employee. My personal observations and discussions with various types of managers in the firm and among some key competitors have ended with the conclusion that centralizing decisions and low risk undertaking as well as discouraging individual creativity are characteristic of several financial institutions in France, whose industrial profile is generally recognized as conformist. Defenders of this situation argue that this inertia context is mostly due to the necessity of measuring and controlling operational risks, which is strongly recommended by regulation authorities. As such, uncontrolled individual undertakings could foster uncertainty in the business model and hamper the company’s risk position in the market. Managers said their maneuvering margins are as tiny as their means to generate any meaningful process modification. “Even if we wanted to change, we could hardly succeed; it is like nobody in the industry aspired to freeing people’s mentality and encourage uncontrolled initiatives”, acknowledged Olivier Benevento, former Groupama Banque’s Customer Service manager headhunted by Allianz, the European leader in insurance and financial services. “As part of a large network, nobody wants to be isolated. Some people think that innovation doesn’t go that far when managing other people’s assets and money. All what you can do is to manage in such a way to enlarge your profits; you hardly care about the internal environment or employees’ moods. You keep doing what everyone does; you don’t go out of the ranks”. What Olivier does not unveil is that he spent four years in the same position with no wage amelioration, no compensation for his commitment to the results. Moreover, he had no perspective of evolution to a C-level management position in the company. He replied positively to headhunter proposals and now holds a C-level management position at Allianz. Inertia is not fatality. Groupama Banque certainly pays little attention to employee initiatives and proposals. Nonetheless, despite Olivier’s cynical opinions, there are several ameliorative paths to explore in order to transform the bank’s bureaucratic system into an entrepreneurial one. I will list them further in this report, in the recommendation section (Part II) of this report.

5- THE OFFERING

Groupama Banque first specialized in consumer credits – cars, household appliances, motorbikes, revolving credits, personal loans, and the housework financing. It then added securitization in its portfolio, notably money market mutual funds and open-end investment companies. In 2004, it stepped into the real estate business in technical partnership with Crédit Foncier de France, a French local land bank.

• COMMENTS

These different undertakings required high level banking expertise only the expert partner, Société Générale, could handle and backup.

6- THE CLIENTS

Groupama Banque clients principally consist of farmers who are very close to their local insurance advisers, with whom they had developed relations of confidence based on the oral word, without written document, identification, letter of commitment, or reciprocity contract, etc. The company has 46, 700 clients; 30, 100 current accounts. To date, it has granted 7 800 credit lines. You can access the services free by telephone, Internet and Minitel.

2 Minitel is a technology of view data communication developed by the French General management of telecommunications (Postal and Telecommunications ministry) and used in France, principally in 1980 and on 1990, before being supplanted by Internet.

• COMMENTS

This “natural” commitment in rural areas between a company and its customers is warmly safeguarded from one generation to the next. It is nurtured by “the ideology of Rurality” which leans on individual values and the social proximity channel. People think and behave as a community which prosperity depends on everyone’s respects of common rules. Société Générale’s managers, as urban classical bankers leading the new venture, are currently finding it difficult to read the rural culture of Groupama Banque clients. Moreover, employees, trained to follow the banking processes, confront difficulties they could hardly solve, especially in the Front and the Back Offices. The situation is equally critical in front-sale located in the rural areas where insurance customer representatives, called in to “sell” banking products and services, are ignorant of the basics of what makes a bank salesperson.

Moreover, the same customers’ advisers, who had sold insurance without being very careful on documentary evidence for decades on end, are obliged to claim overnight documents customers considered of “higher intimacy” such as marriage contracts, notarized signature of spouses, monthly bank statements. Unable to analyze the pertinence of their contents from the point of view of credit risk, they wrap everything and send it to the bank headquarters, whose operational divisions are collapsing under the mass of the documents, sometimes wrong or without legal weight. Most of the time, clients are threatening to close all life insurance accounts, if they are not granted loans. This critical situation always ends in a true culture shock. Several bank accounts are hurriedly closed by their owners, who said they had opened banking accounts “to support their baby”, meaning the bank, their bank; “it wasn’t to be humiliated”, some emphasized after they were refused loans.

It is however necessary to say that many of these people with high quality exigencies were already put on file as defaulters by Banque de France. Thus, in installing high skilled personnel from its ranks in all top management positions – notably the Director of Banking Transactions, the Head of Credit Risk, Commitments, except the Board of Directors, which is handled by a Groupama Head of Regional Unit – Société Générale intended to operate totally as a banker in the newly established financial institution. But it really sounded like a good dose of imagination without real power, as the two-headed system could hardly engage in free initiatives

7- THE WORKFORCE

The company employs 600 people, amongst which 20% are managers, which is an average of one manager for a four-people team.

• COMMENTS

Like the company itself, Groupama Banque employees are young. Their age average is 27; this fits to the dot.com profile the company assumes to be. The bank leans on a large range of young, talented and ambitious Information Technology consultants and corporate organization specialists who continuously strive to update its high-tech profile. They are located on the fifth floor with the managing directors. The rest of workforce, accounting for 65 percent of the workforce, is made of heteroclite profiles, principally youngsters. They are willful and hardworking people, but with insufficient skills at banking. They were hired and installed at the fourth floor, colloquially called “the electronic farm”. Most of these fourth-floor workers, meaning more than 60 percent, learned the trade on the job. The most promoted are those working at the front office, including customer service representatives scotch-taped on their telephone all day long with the single hour of official pause at midday. Because of reverberation on the surrounding walls, they very often suffer from violent headaches.

People working in the Back Office, compared to others were recruited at the lowest prices, for some with a plan to be trained and to benefit from a promising career in the banking industry. Those who had strong technical skills were taken from a merger operation in the group and integrated as supervisors at the new financial institution. They hold a particular status in the firm to have been able to negotiate their wages and advantages up to 25 percent higher than the rest. A third category was hired from competitors, as they were credited with a strong value added in term of competence; they form almost 5 percent enrolments of the fourth floor. As a result, the internal social landscape of Groupama Banque is atypical as well as a bearer of a strong human potential and economic enhancement.

8- CONTROL MECHANISMS

Control mechanisms are often set up within for-profit organizations to measure the efficiency and profitability of the economic model as well as its deployment. They can also deal with management strategies as well as financial outcomes, as they could monitor the business model and the workforce performance.

On the basis of several possibilities, Groupama Banque opted for the Value-Based Management Systems (VBM). They consist of providing “an integrated management strategy and financial control system intended to increase shareholder value by mitigating agency conflicts” (Ryan and Trahan, 2003). Four key factors were in favor of this choice: VBM systems diminish intermediation conflicts between employees and managers as well as between managers and the board of directors; they allow value-added decisions to be taken by employees; they help review and question managers’ decisions while providing the company with a system which allows them to link financial compensation to corporate results.

• COMMENTS

The VBM system adapted to Groupama Banque does not allow for handling the firm’s operational and corporate spectrums as a whole. It certainly puts forward the system of financial reward resulting from the performance of the employees, but in practice it favors rewarding the group and minimizes individual compensation. This situation creates frustrations linked to the fact that some employees of weak contribution in corporate money-making process are rewarded at the same rate and volume as their high-performance coworkers, because allocated compensations are divided equally, based on the number of employees involved and not on the degree of individual involvement. Instead of being a system favoring individual merits, as it was conceived, Groupama Banque’s adaptation of VBM reinforced social strife and became a mechanism unreceptive to entrepreneurial behavior. Moreover, not all of VBM characteristics were retained by the company. The company avoided applying the principle of value-added decisions to be undertaken by employees, as retained by the VBM systems. This would have contradicted its corporate culture type, which is top-down and centric-oriented.

PART II -DISCUSSING OPTIONS AVAILABLE TO GROUPAMA BANQUE IN IMPROVING ITS CORPORATE ENVIRONMENT

1- BREAKING THE VISE

The corporate environment is often neglected as a key factor while conceiving and implementing the firm’s strategy. This proves to be more pertinent when it is about a young firm of less than ten years, operating in a high competition field, such as banking. Priorities are hardly linked to job design, long-term career orientation, objective criteria underpinning promotions, merits and incentives basis. Managers are mostly focused on production figures, putting pressure on employees; it is even a question of raising some employees against others instead of creating an environment of emulation and of excellence. Groupama Banque’s structural shape and different decision-making layers face huge difficulties in harmonizing their functions in order to give force and value to entrepreneurial imagination through a related corporate identity. This situation, with its snowballing effect, generates a succession of dysfunctions resulting in entrepreneurial inertia and lack of growth. The company’s HRM policy, caught in the structural vise which oscillates between Société Générale’s system and the mutualistic culture of Groupama Insurance, is unable to locate a clean, self-defining horizon. It has remained a simple recruitment service with a few extended powers. The management style is unbending. Orders and/or initiatives come from the summit of hierarchy and never from employees. By losing fifty million euro a year for five years, and by constantly reviewing its break-even point, the bank implicitly confirms that its business model must be reviewed. Academics as well as practitioners are convinced that one of the best ways to reformulating a business model is to lean on those who know the most, its strengths and weaknesses: the employees.

In Groupama Banque’s context, this implies setting up a system capable of “inversing the pyramid” (Barlett & Goshal, 1996 b) as an alternative to hierarchal hostility to change. As such, proposals from the workforce will gain vitality and efficiency, and their implementation will be simplified, since change originators will be the same as its beneficiaries and its implementers.

2- SETTING UP THE CHANGE

This Intrapreneurial environment can only be set up through a global corporate strategy, encompassing a corporate entrepreneurial orientation, which means banishing social and ethnic discriminations within the corporation. This Intrapreneurial orientation will nurture the corporate culture and industry’s best practices will be used as an efficiency tracker. HRM, operating as a control lever, will be responsible for the staffing choices, the creation and planning of long-term career orientations. It will focus on “whom to hire to be entrepreneurial, and how to hire them, incentivize them, help them recognize their entrepreneurial potential, develop their skills to best capitalize on that potential” (Morris and Kuratko, 2002). The new system will lean on process flexibility, creative behavior, and preferences for bearing individual responsibility. Prior to this valuable stage, the company has to monitor its strengths and weaknesses through a comprehensive and up to date SWOT analysis.

GROUPAMA BANQUE SWOT ANALYSIS

• STRENGTHS

External factors

1. Groupama Banque benefits from an extremely favorable context nationally, with the spread of the banking industry into the Internet. This opens up huge opportunities to capture distant clients located throughout France.

2. The widening of European Union brings new opportunities, extending the frontiers to the Far East.

3. The company’s image is widely accepted around Europe through its parent company, Groupama Insurance.

4. The company benefits from a dedicated website within its parent company portal.

Internal factors

1. Groupama Banque is a daughter company of the second European leader in Insurance and financial industries, Groupama Insurance.

2. It has sufficient resources and capabilities that it can use as a basis for developing a competitive advantage.

3. Its Chief Executive Officer is from Groupama Holding and can initiate dynamic changes that can be sustained by the shareholder majority.

4. Groupama Banque holds strong, competitive financial products in its portfolio, including consumer credits (with rate starting from 3.5% annualized percentage rate) securitization (money market mutual funds and open-end investment companies), real estate business in technical partnership with Crédit Foncier de France.

5. The company employs 600 people.

• WEAKNESSES

External factor

1. Groupama Banque’s challenge is to always be on the lookout for new financial products and the central bank rates.

2. Its banking agreement depends upon Société Générale’s guarantees given to financial market regulation authorities.

3. Its expertise as a financial institution is not yet recognized.

4. It’s a new comer to a high rivalrous industry.

Internal factors

1. Lack of steady corporate structure.

2. Lack of established corporate culture.

3. Lack of efficient HRM policy.

4. Lack of entrepreneurship-oriented corporate environment.

5. Groupama Banque values day-to-day production over a long-term productivity strategy.

6. The company always values managers’ proposals and neglect employees’ deeds and undertakings.

• OPPORTUNITY

Lean on the fact that for the first time in its history, the company is led by a CEO from within, to change its hybrid corporate culture into one identified as its own. This will lead to new HRM practices for a sustainable growth.

• THREATS

Groupama Banque could face shifts of consumer tastes away from its products and the emergence of substitute products from competitors. Because of its HR policy, the company could lose its most talented employees. The company could face changes in internal market rules or the increase in barriers from monetary authorities. Any of its competitors or a newcomer in the market could overtake its leadership in Internet direct banking.

CONCLUSION AND RECOMMENDATIONS

Groupama Banque has been registered as a direct banking company. An industrial choice, motivated by the Internet boom and the fascination of the users with managing their banking accounts by themselves, directly from a dedicated Internet profile. As such, they could handle operations without moving, including making bank transfers, which was a great time gain in the fast-moving electronics-centric society. But as this economic model was based on a corporate structure resulting from a joint venture between two giants of the France economy, Groupama Insurance and Société Générale, it generated culture shocks that ended in a bureaucratic system hostile to individual initiative.

From the point of view of the customers, the difficulty for them to have a devoted interlocutor, as it is the case in any brick and mortar bank, created discrepancies between their expectations and what the bank was offering. Customer Representatives on the telephone were never the same during calls. The time gained by customers in doing their operations online, was half of what was lost to explaining difficulties they faced with their bank accounts.

From the point of view of internal functions, satisfying these customers requires the deployment of a new environment, which in turn leads to the following recommendations:

- Change the corporate structure from 60 percent to 80 percent total shares for Groupama Insurance.

- Reduce the influence of Société Générale from 40% total shares to 20%

- Use the new CEO as the management lever to implement a new corporate culture

- Create a Change Management Division responsible for implementing the new corporate culture

- Change the board of management, including the Head of HRM, the CFO, and Banking Operations, and Operating Risks

- Hire new C-level managers with an entrepreneurial mentality

- Train the workforce and reward them

- Free initiatives

- Use the Management by Walking Around style to get close to the people and share their preoccupations

- Apply the real forms of the Value-Based Management mechanism

- Set up a Knowledge Management Department to disseminate relevant knowledge and information throughout the company

- Communicate internally and externally on the changes, stressing the fact that a person should not be refused work, training or promotion or treated less favorably because of their sex, ethnic group, disability, religion, sexual orientation or age.

- Issue the contents of the new management style, wages and compensations criteria.

These key elements could help Groupama Banque foster corporate entrepreneurship in its internal environment and gain a competitive advantage. This is how it could “build to last” (Collins and Porras, 1994).

------

REFERENCES

Chung, Lai Hong and Gibbons, Patrick T. 1997. Corporate entrepreneurship: The roles of ideology and social capital. Group & Organization Management; Mar 1997; 22, 1; ABI/INFORM Global pg.10

Morris, M.H. and Kuratko, D.F. 2002. Corporate Entrepreneurship – Entrepreneurial Development within Organizations, Thomson South-Western

Timmons, J. 1999. New venture creation. Burr Ridge: Irwin McGraw-Hill, quoted by Michael H. Morris and Donald F. Kuratko, Corporate Entrepreneurship – Entrepreneurial Development Within Organizations, Thomson South-Western, 2002

Rayan, H. E. and Trahan E. A. 2003. “Corporate Control Mechanisms and Firm Performance: The Case of Value-Based Management Systems”. http//www.bus.lsu.edu/academics.

JEL classifications: M41; J33; G34

Deal, T., and A. Kennedy.2000. Corporate Cultures. Reading: Perseus Publishing, quoted by Morris and Kuratko

Ghoshal, S. and Bartlett, C. A. 1996. Rebuilding Behavioral Context: A Blueprint for Corporate Renewal, Sloan Management Review.

Collins, J.C. and J.I. Porras. 1994. Built to Last. New York: Harper Business.

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