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Understanding Thierry Breton: “Mister Cash” Arrives at France Télécom



Overview





Understanding Thierry Breton



Further parts pending review and research




France Télécom and Breton
The "turnaround king" takes over as CEO at the troubled France Télécom (2002)



Summary: The psychological harassment of the France Télécom workforce led the "suicide wave" after Breton had left France Télécom

By 2002 Breton had acquired a reputation as an aggressive high-octane manager who was known for ruthless "cost-killing" and ambitious sales targets and who liked to say that he was putting his staff "under pressure" to get results.



According to the Wall Street Journal, one of his favorite sayings was, "Anything but results is philosophy".

At the time France Télécom, Europe's second-largest phone company, was carrying one of the largest debt loads in the world. Its $ 76 billion debt burden meant that all of its cash was being eaten up by interest payments, with nothing left over to reduce the principals on its loans.

Within weeks of Breton's appointment as CEO, investors demonstrated their faith in the new leader of France Télécom by driving stock prices up to double the rock-bottom low. The French finance ministry's level of trust was evident in the code name Breton was given during hiring negotiations: "Mister Cash".

"At the time France Télécom, Europe's second-largest phone company, was carrying one of the largest debt loads in the world. Its $ 76 billion debt burden meant that all of its cash was being eaten up by interest payments, with nothing left over to reduce the principals on its loans."Just two months after taking over, Breton produced his rescue plan to France Télécom's board of directors. The three-tiered plan called for slashing costs to increase cash flow, refinancing debt, and generating $16 billion from shareholders through a capital increase, all in efforts to save $30 billion over three years.

As soon as the board gave its approval, Breton put out a message to the company's 50 top managers asking them to immediately join a conference call - it was eleven o'clock at night in Paris. Breton wanted to brief the managers to start implementing his plan the very next morning and, characteristically, he wanted to make them feel challenged rather than comfortable.

After only 18 months on the job at France Télécom, business was looking up. In that span of time Breton increased 2003 revenues 3.4 percent over the previous year to $58 billion, chiefly on gains in wireless and broadband Internet technologies. He boosted 2003 operating income to $12 billion—a 45 percent increase—through tighter financial controls and cost cutting. The company's $76 billion debt fell to $53 billion.

The blueprint which Breton applied to France Télécom bears similarities to the overhaul he engineered at Thomson but there is a darker side to this success story.

It's no secret that France Télécom started making headlines for all the wrong reasons under the management of Didier Lombard who took over the reins as CEO from Breton in February 2005 when the latter was appointed as Minister of the Economy, Finance and Industry.

"This reorganization was imposed unilaterally in the absence of consultation with trade unions and was accompanied by a "suicide wave" of France Télécom employees (more than 60 between 2006 and 2009)."Lombard continued the group reorganization policy initiated by Breton and implemented a plan which foresaw the suppression of 22000 posts and the mobility of 10000 workers over three years between 2006 and 200). This reorganization was imposed unilaterally in the absence of consultation with trade unions and was accompanied by a "suicide wave" of France Télécom employees (more than 60 between 2006 and 2009).

Didier Lombard resigned as CEO in February 2011, a few months before the planned end of his term, but he remained on the France Télécom payroll as a "special advisor" until he left the company entirely in March 2011 due the controversy surrounding him and his € 500,000 annual "retainer" as an advisor.

French tribunal
In May 2019 Didier Lombard and six other former France Télécom executives went on trial accused of moral harassment linked to a spate of suicides among employees.



Lombard's management of France Télécom came under judicial investigation from July 2012 onwards and together with six other former executives he went on trial in Paris in May 2019 accused of psychological harassment of the France Télécom workforce in connection with the "suicide wave" which accompanied the restructuring.

"...psychological harassment of the France Télécom workforce in connection with the "suicide wave" which accompanied the restructuring."Although the "suicide wave" happened after Thierry Breton had moved on from France Télécom, some commentators have claimed that he bears a "moral responsibility" for laying the foundation of the toxic management practices pursued by Lombard and his colleagues.

In Parts 3 and 4 we will examine these matters in more detail.

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