Thales in France Best in France Case Study May 2004 HEC MBA Group 6: Mr. Adam, Mr. Kim, Mr. Loukil, Mr. Ortiz, Mr. Ouyang,

Thales Overview Turnover of 3.6 bn €, divided in 3 businesses: –Aerospace 17% –Defense 63% –Information Technology & Systems 20% A matrix organization, mixing Countries & Business groups employees worldwide Thales is present in 20 countries in the world, 50% of its workforce being in France

Thales has 3 main Business units, with the following products & customers: –Defense (63%) Products: airborne systems, communication systems, optronics, air defense Customers: STATES & ARMIES –Information Technology & Systems (20%) Products: network & communications security, payment and electronic transaction security, personal, document and site security as well as transport and environmental security Customers: ALCATEL, ERICSSON, NOKIA, SAMSUNG, GENERAL ELECTRIC – Aerospace (17%) Products: from onboard electronics to air traffic management and crew training Customers: EADS, AIRBUS INDUSTRIE, DASSAULT AVIATION, BOEING … Company products and clients

Company values 1.Focusing on customers 2.Developing people 3.Behave as entrepreneurs & innovators 4.Performing through teaming 5.Sharing knowledge While these values are declined worldwide, the group still doesn’t have a strong corporate culture (people are not “thalesiens”) There is a lack of diversity in the profiles hired: too many engineers, not enough business people that could bring new ideas

Global HR policy Thales: not really “international” but “multi-domestic” –It is indeed mostly French (only 50% abroad, which means that France has a huge weight) –Clients related to security business are local players (often states or local agencies). Therefore, local presence is fundamental (proximity to the State). ew expatriates –Consequences: there are relatively few expatriates and there is a strong decentralization culture “People First”The official HR policy (“People First”) is developed on a global basis, but with strong local adaptations : Personal development: Coaching, Training, 360° Performance management No “pré-retraite” –In France, such a global policy is indeed not so well perceived: it sounds too “American”. –The development of “people first” worldwide will take time.

HR Policy: 35h / retirement 35h: –Impact for Thales: annualization = more holidays (not less week hours). Main effect: increase productivity. –Yves Barou VP-HR of Thales, participated in the drafting of the 35h law in France. Retirement: –Thales started to stop its “pré-retraite” plan in 2000, in order to anticipate the demographic evolution of the coming years.

Constraints in France (1) The perceived main constraints in France are the Cultural ones: –High resistance to change –Problematic relationship with money: strong constraint to the flexibility of labor –HR perceived as an administrative function, not as a partner for development –Social issues: very common in France, need to be comfortable in dealing with them –Too much laws. However, these laws are not sufficiently applied (this creates confusion) Understanding cultural constraints takes a lot of time (many years: it is a long term issue). A newcomer company can get some results in the short- term but it will absolutely need to adapt for the long-term.

Constraints in France (2) Why those cultural constraints arise? –Difference in the educational systems: the French educational system is the place where the resistance to change arises: at 15 years old, by choosing a field, kids already orient their career! There is not the flexibility that exists in the US, where studying history doesn’t forbid to do business after! –The very elitist system creates corporations that protect themselves and that crystallize the rigidity of the whole social system –At Thales, the Grande Ecole culture is a constraint. Other profiles/more diversity would be welcomed.

Constraints in France (3) Judiciary constraints & social relationships: –The “Firing process” is very long: in the UK, a reorganization is effective in 1 day / in France it takes 3 months (at least) –This induces a lack of flexibility & reactivity of the business Costs: –Social charges are the highest in Europe. It is a big handicap for Frances’ competitiveness

Benefits in France Main benefit: the market is huge. –The main reason for foreign companies to come to France is the access to the market. –No other important attractiveness, indeed. Secondary benefit: the culture is creative –The thinking is not rigid –This helps for the reconversion of people, which could be useful in case of demographic issues. –The workforce is very adaptable. Individual competencies exist. But France does not valorize this advantage (ex: an initiative like Sophia-Antipolis has not reached the level of the Silicon Valley success).

Conclusions The main constraints for Thales in France are the Cultural ones, on the top: high resistance to change The biggest advantage of France is its market (huge). Thales makes global HR policies (people 1st), but gives a large freedom to local adaptations. Thales HR approach is indeed “multi-domestic”.

We Thank Mr Cathelineau: Strategy Executive - Thales Mrs Bastoni: Compen & Ben Manager - Thales

Our Team (#6) Sikander ADAM Joon Yong Kim Selim LOUKIL Valentin ORTIZ Yun OUYANG