Organisation for globalisation
In order to become a worldwide leader, Lafarge, a French cement manufacturer, implemented a more differentiated organisation, moving away from its traditional administrative mindset to an organisation focusing more on autonomy.
The impetus for this French cement manufacturer’s organisational redesign was the competitive environment. Lafarge was faced with a couple of competitors (Holcim and CEMEX) engaged in worldwide expansion strategies. For the French firm, the alternative was to continue with its existing organisation and limit itself to being a major European player or to redesign for transformation into a worldwide leader. Its redesign, in Som’s analysis, is a classic case of differentiation with integration, that it is to say the attempt to give the parts of the group autonomy while ensuring that those parts serve the company’s overall goals and culture. Lafarge’s differentiation-and-integration model sets it apart from its two major rivals. Holcim, the Swiss cement firm, believed in maximising decentralisation, whereas the Mexican rival, CEMEX, believed in maximising centralisation and control through an exemplary information system network. In Lafarge’s case, the differentiation was provided by the creation of business units.
Each unit was responsible for its assets and returns and came under the supervision of a regional president. This differentiation made for higher responsiveness to local customer preferences and to differences in regulations and standards.Differentiation also meant moving away from the French administrative mindset of Lafarge. Somewhat like BPCL needed to move away from a protected public sector mindset, Lafarge needed to move away from an engineering and somewhat autocratic management style. The decision process which had been slow-moving, rule-bound and top-down needed to become more participative.
Following the redesign, the process can be described as a more participative one, involving all those who could contribute to a better decision, while recognising that top management has the responsibility for the ultimate decision.The integration mechanisms appear to have been easier to implement. For example, global coordination of different BUs became an annual exercise. The strategy department would collect data throughout the year on Lafarge’s regional markets and competitors and prepare a strategic review for each country with current position analyses as well as forecasts. These annual strategic reviews served as input for decisions on strategic investments, for five-year budgets and for communication among unit managers.On the HR side, uniform operating mechanisms were emphasised and communicated worldwide. This is crucial in a company which operates in 75 countries and employs over 70,000 people. It was a special division under the HR department that integrated acquired companies and incorporated Lafarge’s policies into theirs. So the successful integration of acquired companies (the source of Lafarge’s growth) is viewed as in no small part due to efficient and highly professional HR policies. Recruitment gained a new international momentum –various nationalities were recruited and international mobility in career paths was stepped up. Redeployment was linked to career development. Expatriation was now understood to be a career-oriented move, a means to gather international experience for future career growth.
