Driving growth: Delivering global ambitions at GEFCO

Founded in France and acquired by Russian Railways in 2012, global manufacturing logistics company GEFCO aims to double its turnover by 2020. Ruth Holmes talks to HR director Stephane Milhet, to find out how the company’s transformational approach to HR and general management will be vital to success.

Driving growth
Transformational, business-partnering approaches to HR and global mobility support the wider company to develop and grow. At GEFCO, the global manufacturing logistics company, the task for its HR leadership within this is an ambitious one: to help the business to increase its turnover significantly by 2020.Founded by PSA Peugeot just after the Second World War, and originally the sole logistics supplier to the car manufacturer, GEFCO has deep roots, an impressive pedigree, and a firm future focus grounded in the 21st-century world of advanced manufacturing.As a world-leading supplier of innovative logistics solutions, GEFCO turns over €4 billion annually and employs more than 11,000 people worldwide, with a presence across 150 countries and 38 subsidiaries. "GEFCO is very present in the automotive industry and able to manage and design very complex supply chains," explains Stephane Milhet, the company's human resources VP."Basically, what we do for some of our automotive clients is take up any logistics flow, just before the assembly lines and just after the assembly lines. Sometimes, we are even in the assembly lines, so on the finishing lines as well. This is mainly how we are known, and it is probably one of our key differentiators: our ability to manage any supply chains, flows and movements for the industry."

All change

A new chapter in GEFCO's history began in December 2012. PSA Peugeot Citroen sold a 75-per-cent stake to JSC Russian Railways (RZD). The acquisition was an important strategic move for both companies. It added GEFCO's expertise to the railway group's ambition of making Russia an important strategic land bridge between Asia and Europe, in a mutually beneficial partnership.Since the acquisition, GEFCO has continued to optimise supply chains globally, helping to deliver a very significant profit boost to its parent company in the process. The company's leadership has also focused on integrating reporting and governance, technical systems, and further developing commercial synergies.This is all based on a commitment to corporate social responsibility and respecting the people and environments in which GEFCO operates, based on the company's values of "commitment to rising to challenges, passion for service, solidarity to share and stand together, innovation and transparency".Announcing GEFCO's first set of post-acquisition results in 2014, Luc Nadal, executive board chairman, said that the company would achieve its goal by "accelerating our geographical and cross-sector diversification and through external growth initiatives". In line with these goals, GEFCO is now launching new operations every year in anything from two to four countries, primarily in high-growth economies like central Europe, China, India and across Asia. "We opened in Thailand, Indonesia and the US in 2014, and in Greece and Serbia in 2015," says Stephane Milhet.Getting the people aspect right in this growing and increasingly global company is, therefore, a significant challenge – and an opportunity. Mr Milhet says, "You have to realise that, before the acquisition in 2012, our main client was also our main shareholder. So many things are changing in our company. Basically, our challenge is to ensure we have the right competencies in the right locations to support the activities of our business units. This is very different from country to country."

People first

GEFCO's worldwide expansion pivots on its people strategy. "The point is to have the right skills in the right place," says Stephane Milhet. "So with the help of HR, we can better address mobility wishes. For example, our Central Europe organisation is becoming more and more integrated, so we get the advantage of the cultural differences to manage the international dimension of our business."The people strategy is moving with the times in this globally-minded organisation. Part of GEFCO's support for employees is that 3 per cent of its annual budget is ring-fenced for staff training. Its central training platform is moving increasingly towards massive open online courses (MOOC) – free online distance learning courses open to the public and often run by universities and colleges. The company is also committed to valuing the diversity of all its employees – for example, innovating ways of limiting the impact of maternity and parental leave on individuals across its territories.The organisation's leadership is also changing, to reflect the corporate culture and aspirations more accurately. Among the approaches here is that GEFCO seeks to have more local directors on its boards, where previously these roles would have been likely to be filled by European, principally French, expatriates. "The old model of expansion out of France was mainly driven by expatriation of French people. GEFCO today is more global, as we have operations all over the world, and we have gained enough maturity to have the capacity to develop local talent for management positions, or to attract and integrate 'glocal' professionals."As for the Eurozone, the expatriation scheme is now out of date. Legal and administrative enhancements in the EU guide us to a more commuting way of working. Overall, our driver is to offer our managers roles and missions according to their potential and expectations and the company's needs, versus possible national country silos."We are also moving into other elements which probably seem a bit trivial but are important," continues Stephane Milhet. "Before the acquisition by Russian Railways, the official language in the company was French. We are now moving to French, English and Russian, and say that people in leadership positions must speak English. This wasn't the case four or five years ago, although we were a very international company then, and we still are."

Talent logistics

These overarching corporate values around company culture, social responsibility, business language and developing talent locally, coupled with GEFCO's 2020 vision and its expansion plans, are also affecting its approach to global mobility. On the rise at GEFCO in support of its wider global expansion programmes, mobility is managed centrally from the company's French HQ directly under the HR remit, ensuring that HR and mobility are in alignment with the company's goals.As a company known throughout the industry for super-efficient logistics processes, it is no surprise that GEFCO is adopting high-performance people, mobility and talent management practices as part of its developing culture. Here, the focus is moving towards strategic skills deployment, which means more local skills development."We are currently recruiting more locally, or looking to fuel mobility between other – for us non-traditional – countries," says Stephane Milhet. "For example, we're moving people from Ukraine to Slovenia, and from Croatia to the UK. We are moving Italian people to China. We are moving – it's obvious really, but it hasn't happened before – Portuguese people to Brazil, and so on. In the past, two to four years ago, this would not have happened; the talent pool for those positions would have been based in France."In some of the other countries, it is difficult, because, in a way, you need to 'prime the pump' first. Although some competencies exist, leadership competencies need to be built up. Thailand is a good example of this, and Russia. But these competencies are going to come quickly, and we have plans for that."

Developing the next generation

Acknowledging as much the financial and cultural challenges of encouraging some Europeans to work at locations globally as the corporate responsibility aspect, GEFCO is looking to build support and develop talent locally, and build on the wanderlust said to characterise the millennial generation of new leaders. The company offers internships, new graduate schemes and developmental assignments, and actively looks to employ people who are happy to move around. Opportunities are publicised in recruitment materials.Being headquartered in France, GEFCO is participating in the French government's VIE exchange programme. Its VIE pipeline of 30 is in addition to the roughly 100 people in leadership and expertise roles on assignment from all over the world on a variety of expat, local-plus, project and short-term-assignment contracts."VIE is a great mechanism," says Stephane Milhet. "At the moment, we have about 30 people, half men and half women, with engineering degrees and MBAs. They work 100 per cent for us on a two-year contract. They get two years' corporate experience, and we get a future talent pool. The programme was extended two or three years ago to include non-French nationals from the EEC who have studied in France for at least a year. I wish we had similar things in other countries, but you have to be headquartered in France to benefit."GEFCO has recruited a number of young graduates into Russia on the Ministry of Foreign Affairs and Ministry of Commerce scheme. This has given it access to a pool of educated people, who in return have an overseas commercial development assignment for a flat-rate base salary plus cost-of-living allowance (COLA).In the UK, where GEFCO employs more than 400 people across 13 locations, there is also an emphasis on building the next generation of talent through the UK subsidiary's support for the UK Apprenticeship scheme, underlining the company's commitment to creating talent pipelines globally.

People, places and profit margins

GEFCO's growth plans and its partnership with Russian Railways are coming to fruition. While the acquisition by Russian Railways is relatively recent, GEFCO's parent company boosted its revenue by 14 per cent year on year from 2013 to 2014. GEFCO itself reported an 11 per cent revenue rise over the same period. This led Luc Nadal to note that the company was "pursuing the right strategy for geographical and cross-sector diversification".Newly announced results for 2014 show that growth is continuing across the business, despite challenging conditions. While overall turnover was up by 1.5 per cent in 2014, GEFCO increased its turnover by 10 per cent from 2013 (14 per cent at constant exchange rates) from its non-core industrial clients.Reinforcing the importance of effective people strategies to the business, and the role of global mobility in creating them, Luc Nadal commented, "At a time when control over the entire supply chain is becoming a key component in manufacturers' competitiveness, GEFCO offers its customers unique expertise that allows them to add value at each stage of their logistics chain."In the Summer 2015 issue of Re:locate magazine, Ruth Holmes's case study GEFCO: Getting on track with Russian Railways looks at how GEFCO is building the practical and cultural competencies to deliver high-profile projects in Russia.For more Re:locate news and features about leadership and management, click here

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