The Schneider Corporate Culture

Plus - The American (Modicon) View

With annual revenue about $14bn, and 80,000 employees in 130 countries, Schneider Electric is high on the world list of major automation companies. Here we discuss the Corporate Culture of this unusual, acquisition-orientated France-based company.

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With 80,000 employees in 130 countries, France based Schneider Electric is high on the world list of major automation companies. 2004 revenue was $13.8B, with growth of 18% (organic growth 8.5%) - significant growth in a flat world economy.

Schneider has an interesting history, dating back to 1836. The company became one of Europe's leading manufacturers, evolving as a financial conglomerate with the name Groupe Schneider until the 1980s, when it changed focus through a series of major acquisitions.

Here is a list of major acquisitions dating back to 1984. Several other smaller acquisitions have not been listed.

1984 Magrini Galileo
1987 Federal Pacific
1988 Telemechanique
1991 Square D, Federal Pioneer
1993 Merlin Gerin
1996 AEG Schneider Automation, Modicon
1999 Lexel, Veris Industries, MITA, Infra+
2000 Crouzet, Bergher Lahr, Crompton Greaves, Conlog, Nu-Lec
2001 Prosyst, WA Brown, Inari, Think & Do, PDL
2002 Digital Electronics
2003 Clipsal, TAC, MGE-UPS, Hyde Park
2004 Andover Controls, Kavlico, Elau, Abacus, Magnecraft, Dinel

Schneider has an ambitious corporate mission to support a strategy of faster, more competitive growth, beyond its own geographic and cultural limits. To stay competitive, R&D percentage is above 5%, relatively high for an automation company (most typically invest only 2%-3%).

Schneider operates in three sales regions: Europe (52%), North America (24%) and International (rest-of-world, which includes Japan and China) generates 24%. Electrical Distribution 63%; Automation 26%; Growth platforms 11%

According to senior managers, here is what makes Schneider's business culture different:

  • Diverse culture
    Schneider is very open to any type of culture. This is probably due to the fact that the group was built on acquisitions over the past 20 years. One way or another, all companies in the group share a common beginning - they were all acquired by Schneider. As a consequence, there is not such a thing as a predominant culture. It is very difficult to spot a real true Schneider original employee, there are not more than a handfull. The diverse cultures have probably been helpfull in successful integration of very diverse companies such as Digital in Japan, and Clipsal in Asia.
  • Local cultures
    Because of the many acquisitions, Schneider is very respectful of the local cultures of the countries where they work. They have far fewer "expats" (French transplants) than any similar companies, and rely more on the growth of local people in the operations. Schneider prides itself on being very "local".
  • Brand names
    Schneider recognizes the value of the business acquired. When it makes sense, they keep the brands in the company portfolio - there are 70 different brand names, unusual for any company.
  • Sales Channels
    Schneider is more partner and distributor orientated than most of their competitors.
  • Corporate focus
    Schneider is focused on Automation and Electrical distribution, by choice. It does not diversify into businesses such as Medical, Telecom, or Financial services.
  • Management team
    Schneider's 11-member executive management team includes 4 non-French members. Of the industrial automation majors, perhaps only ABB is more internationalized at the top. The corporate management program is designed by top management (about 100 people in various companies).
  • New product development
    The R&D budget is decided at the corporate level. New products come from R&D centers located in France, US, UK, Singapore, China, Sweden, Japan etc.
  • Incentive plans
    There are good bonuses for the management (approximately 40% of staff level employees), and stock options for the top managers.
Schneider is a focused, well-managed, growth-orientated, global corporation. Look for continued aggressive acquisitions of large and small companies that fit its focused strategy in target markets.

The American (Modicon) view

We have had many responses to the "Schneider Corporate Culture". Many people are surprised at how so many acquisitions have not only survived, but thrived, as part of this giant French company. There was the usual sprinkling of cynics, who felt I was "too nice".

Well, here is the view from a well-known major US subsidiary - Modicon. Paul Hamilton [] from North Andover, MA, USA provided this feedback:

    "Jim, I have to say your assessment is pretty good. The thing that I think is missing is a sense of the people and the environment at Schneider. It's important to understand how the company manages toward the future.

    "Every 3 years the company organizes around a growth and productivity initiative that drives the behavior and objectives of all groups and divisions for the following 3 years. We are just starting the 4th such program that I am aware of. This one is a 4 year program as opposed to the previous 3 year programs.

    "As this is the 4th generation of this type of program the company is becoming more efficient and more organized around developing and implementing goals and objectives. It is well organized and it strongly drives focused behavior and results. You can find this NEW2 program on the Schneider web site, finance section under new company program.

    "Relative to the people and environment: Yes the 12 member executive team includes 4 non-French personnel as you mentioned. However, what is not so obvious is: 9 of these members are new to their positions in the last 1 to 2 years thus highly energized and motivated to achieve results. 8 have held senior expatriate positions in other countries prior to joining the staff. These assignments include China, USA, Africa, and other Asian and Europeans countries. This is a team with a real global view from personal experience as opposed to the typical fly-in-fly-out experience of many senior management teams.

    "Moving a large company forward is about change. As you recognize, change is disruptive and creates some amount of discontent. I am sure, like every big company, we will have our share of people that are not happy as the company finds it way to the next level of results. However, there is a difference at Schneider.

    "Management is engaged with the business and encourages people to express and act on their opinions if it brings real benefit to the company objectives. You can be an entrepreneur and you can make a difference if you choose. People are rewarded for this behavior.

    "Management is clear and goal driven. NEW2 describes a simple set of objectives around people, growth, and efficiency that everyone in the company understands and has integrated into their own goals at a department or group level. These goals were not developed in a vacuum but developed with strong participation from the top 100 global managers.

    "In 1Q05 NEW2 was cascaded to 600 top managers and subsequently to every employee in the company. The results, progress and issues are reviewed every month by the COO and cascaded down throughout the company. All this creates an environment of clear performance minded people focused on achieving results consistent with company goals.

    "The company cares about people, the environment, and the community. Seldom have I seen a company that consistently encourages everyone to always try to make a difference in the places they live and in the world. Community programs are always in the highest level goals of the company.

    "Schneider Electric employees expect this and respond to this though local programs or corporate programs such as our recent tsunami relief efforts. The company is always striving and driving to be at the forefront of Environmentally friendly behavior such as RoHS (reduction of hazardous substances) and Eco design programs.

    "In summary: Schneider is a diverse company that thrives on and encourages local cultures to develop and grow in their own way in each country. Yet, at the same time, and without destroying this value, Schneider has been able to create an environment where everyone understands and is focused on the same goals for global growth and efficiency. This is the real value and culture of Schneider Electric. And that is why we will continue to succeed."

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Copyright 2000 : Jim Pinto, San Diego, CA, USA