Best In France

An Introduction to OTIS France

Human Resource Management

December 2003
Team ES2 C
M. Burman, K. Huang, R. Lee, P. Monadjemi, R. Procknor

Who is Otis?

Otis is the worlds largest manufacturer of elevators,

escalators, and horizontal transport systems-

it sells

about 70k elevators and escalators each year.

Worldwide, roughly 1 of every 4 new elevators is an Otis.

Service contracts are crucial revenue sources.

Otis

services over 1.3 million elevators and escalators

annually.

Otis employs about 61,000 people. Roughly 87% work

outside the U.S.

Turnover was $6.8 billion in 02-

about 76% was

generated outside the U.S.

Otis has a truly global presence!

Otis Is An Important Division of United Technologies

UTC is a diversified company consisting of 6 major divisions:

Otis, Carrier, Chubb, Pratt & Whitney, Sikorsky, and
Hamilton Sundstrand.

UTCs turnover was $28.2 billion in 02. Worldwide, the

corporation employed 155,000 people. Roughly 51% of its
workforce is located outside the U.S.

Otis was responsible for 24% of UTCs revenues in 02.

Otis Has Been a Pioneer for Over 150 Years!

1853: Otis was founded by Elisha Graves Otis, in New York.
1884: Otis established sales offices in London & Paris.
1888: Otis won the Eiffel Tower contract.
1900: Otis unveiled the escalator at the Paris Worlds Fair.
1910: Otis established its first manufacturing plant in France.
1925: Otis developed the first automatic control system.
1976: Otis became a subsidiary of United Technologies Corp.
1996: Otis & Pomagalski formed a joint venture for people movers.
2001: Otis completed its modernization program for the Eiffel Tower.

Otis Has Strengthened Its French Presence Over Many Years

Annual turnover for Otis France in 02 was
roughly 899 million euros.
The company employs 5,800 people:
Approximately 85% of employees are field
representatives.
The remaining 15% are employed at 3
strategic

centers

Argenteuil, & Roissy.

in

France:

Gien,

Otis Facilities in France

Gien, Centre Mondial de Fabrication
A factory that produces cabs & door assemblies
for the Gen2, Otis 2000, Cargo 2000, and Crea
2000 elevators.
Argenteuil, Centre Produit Service
A full service operation that repairs components
and assists customers.
Roissy, Centre de Pieces de Rechange
A spare-parts distribution center that serves 130
countries.

Why Is Otis in France?

Otis manufactures, installs, and services elevators and
escalators in buildings all over Europe.
The nature of this business requires a presence in
France.
Otis has two engineering centers in Europe (Gien &
Berlin).
These centers offer three main benefits:
Professional expertise is shared, which optimizes
resource usage.
Talent can be developed on a worldwide basis.
Easier access to highly skilled French and German
workers.

Core Values of Otis France

Core values
Management permanent des process
Dveloppement constant des comptences
Croissance rentable du business
Communication
Satisfaction du Client
How are these ideals conveyed to employees?
Values codified in a manifesto or employee handbook.
Rigorous training.
Journees Portes Ouvertes is a new communication program
between regional management and executive management.

Human Resource Strategy

Goal
HR, as a business partner, must regularly contribute to Otis
financial performance.
Concerns
HR must unite Otis employees regardless of geographic
limitations.
Approach
Otis France utilizes internal benchmarking to share knowledge
& best practices with sister companies and UTC divisions.
Otis France uses external benchmarking for companies that are
recognized as first in their class, on a worldwide basis.

Organizational Structure & Policy Implementation

Otis France is a self-reliant, though integral, entity of OTIS:

None of its managers is American; tactical & strategic decisions

are made with a European perspective.

Otis France constantly adapts its workforce to ensure continued

competitiveness and performance:

Consequently, restructuring in France is motivated by similar

factors as elsewhere.

HR & Union negotiations are crucial to minimizing disruptions

to operations.

Employee Benefits
Compulsory

French employees have compulsory Social Security coverage

and additional union negotiated insurance.

In contrast, American employees must pay for their healthcare.

But, American employees may choose their level of coverage

from Health Maintenance Organizations (HMO).

Certain French employees are eligible for American-style

benefits, like stock options, in addition to the compulsory
benefits required by law.

Otis offers two retirement plans, ARCO & AGIRC. Americanstyle 401k retirement plans with corporate participation are not
available.

Employee Benefits
UTC
UTC offers a comprehensive employee scholar program (ESP):

All employees are eligible: hourly & salaried workers.

Tuition & textbook reimbursement.

Paid study time.

Stock option reward for successful completion.

French employees rarely take advantage of the ESP:

The educational system is less flexible (few night programs).

French employees are less willing to sacrifice their free-time for

academic pursuits.

French Labor Laws

The 35-hour work week has had little impact on the bottom line:
Excess

costs

were

absorbed

by

freezing

raises

and

renegotiating previous labor agreements.

But, this may have shifted the burden to employees.
The repeal of the Pentecost Holiday is being evaluated:
Executive management maintains a positive outlook.
It believes that Otis can benefit from the increased number of
productive hours.

French Union Labor Relations Differ

from those in North America
North America
Labor contracts are negotiated by a single union representing
the entire elevator industry.
Thus, an industry norm prevails from firm to firm.
Consequently, unionized employees do not identify as much
with their company.
France
Contracts are negotiated by national unions (CGT & CFDT).
These representatives are less business oriented than those in
America.
In addition, Otis France must negotiate with unions representing
salaried staff. This situation does not exist in America.

Employee Recruitment, Evaluation & Compensation

Differences in the labor market affect recruiting at Otis France:
Unemployment rate
Sourcing
Candidates
Performance evaluation in France is similar to that in America:
Employee and Supervisor establish goals for upcoming period.
Where possible, multiple viewpoints are considered. But a formal 360
system is not used.
HR functions are increasingly web-based.
Compensation methods in France differ from those in America:
Pay raises are negotiated in accordance with French law.
Generally, Otis France and its unions cannot settle their differences.
Raises are applied unilaterally by Otis and accepted by the unions.
Salaries for white collar workers are performance based.
Salaries for blue collar workers are 2/3 performance based.

Special Thanks
Monsieur Xavier Savigny
Directeur des Ressources Humaines
Otis France
4, place Victor Hugo
92400 Courbevoie
33.1.46.91.60.00
Xavier.Savigny@fr.otis.com

Our Team
ES2 C
Maloy.Burman@mailhec.net

Parissa.Monadjemi@mailhec.net
01.39.67.83.45

Keqing.Huang@mailhec.net
01.39.67.80.41

Renata.Procknor@mailhec.net
06.74.46.17.07

Robert.Lee@mailhec.net
01.39.67.81.99

References & Enclosures

Survey: The Adaptation of N.A. HRM to French Society & Culture.
otis.com
Otis Manifesto 2002-2004
Canetti, Charles. Otis 1983-1991: Eight Years to Change.
cole de Paris du management, 2000.