AREVA

Best in France Case Study

January 2005 June 2005

Jennifer Chuppe Miguel Diez-Blanco Chen Guo Alessandro Pagella Roger Pelaud

Executive Overview
The objective of this study is to understand how a major French public company adapts its domestic HR strategy to attract and retain talents abroad The focus is on the US and China The HR strategy is very much in line with the companys strategy Internationalization of the group operations is very much facilitated by HR strategy The purpose of this presentation is to detail the triggers that enable a major company to be more efficient abroad thanks to their HR approach and perspective In a nutshell, lets discover the best of HR practices acting as an engine for the company mid to long term policy and need for internationalization

AREVA
We bring solutions for electricity production and delivery
Number 1 in the world for nuclear energy
Number 3 for electricity transmission and distribution Number 3 in connectors

AREVAs Mission
Innovate to contribute to an ever cleaner, safer and economical way to produce and deliver electricity.

Basic principles :
Profitable growth : Client satisfaction, economic and financial performance, innovation and R&D. Socially responsible : Involvement, dialogue and consensus-building, community involvement. Respect for the environment : Risk management and prevention.

The AREVA Company

Simplified legal organizational chart

1
FRONT END DIVISION

AREVAs 5 businesses
3 4

5
CONNECTORS DIVISION

REACTORS & SERVICES DIVISION

BACK END DIVISION

TRANSMISSION & DISTRIBUTION DIVISION

C
C

Fi F
Communications Data Consumer, Automotive, Electrical power interconnect, Micro-connections

C/F T T

[C] COGEMA [F] Framatome ANP [T] AREVA T&D [Fi] FCI

Key Figures
Sales Consolidated Net Income Workforce Sales by activity
(In millions of )
Front End Division
1 338 12 % 2 859* 26 % 2 023 19 % 19 % 2 124 2 683 24 %

2004

2003

2002

11 109 M 428 M 71 59 Sales by region

Europe & CEI

Reactors & Services Division Back End Division

2% 19 % Americas

Transmission & 21 % Distibution Division Connectors Division

Asia-Pacific 58 % Africa

Workforce
20 principaux pays (sur 70) = 94 % des effectifs

Who are the companys clients?

ENERGY DIVISION Nuclear T&D
Integrated electric utilities

Transmission companies

Major consumers of electricity

Who are the companys clients?

CONNECTORS DIVISION Telecom Market IT Market OEMs

EMS

What are clients expectations?

Receive products, services and expertise enabling them to grow while meeting their responsibilities with regard to their own stakeholders

Receive what is promised

Respect for their culture and protect their image and their interests

Protect their data and know-how with the same degree of care as if they were Arevas own, to the fullest extent of the law and regulatory requirements.

The importance of France

France still represents 29% of their sales revenues.
The largest customer, EDF, represents less than 20% of the Groups consolidated sales revenue.

France still is, and will be, a key factor for AREVAs core business.

Company values
AREVAs values are the groups commitment to its customers, its employees, its shareowners and all of the communities in which AREVA plays a role, directly or indirectly. These values are:
CUSTOMER SATISFACTION PROFITABILITY RESPONSIBILITY INTEGRITY EXCELLENCE SINCERITY PARTNERSHIP

Company values
These values are rooted in the conviction that rigorous business ethics are integral to strong financial performance As a French company, Areva has no problems to encourage these values in France Globally, Areva ensures that these values are instilled by means of the AREVA values charter counting on every person belonging to the company, regardless of his/her duties, affiliate or country, to put the company values into practice, to defend them, and to promote them.

Arevas Global HR Policy

France still most employees French company
Government owned Unique culture

Hiring: 70% engineers No extraordinary high compensation, but

Opportunity to develop Talent cultivation Areva-University (focus on top-level management) Formal, both locally and internationally focused courses for each hierarchy level of management Training centers in France, U.S., France First time: expression of the HR policy in the annual report

Arevas Regional HR Policy

Most important countries Europe: France & Germany USA China ! France & Germany: steady/declining number of employees Germany: political climate unfavorable concerning nuclear plants USA: Trying to hire high-potentials, but difficult to compete with other companies (i.e. GE, Westinghouse) due to Salary offered by competitors Fact, that it is a French government-owned company: no stock options. Agreements with MIT: knowledge center

Arevas Regional HR Policy: challenges

Europe: shaping talent, talent building Asia: talent development and retaining USA: knowledge management, compensation and benefit

Arevas Regional HR Policy - China

Clear Focus on China Chinese Market seen as key-market, because of proximity to customers (note: not primarily because of lower labor costs!) Trying to attract mainly Chinese high-potentials, who have been studying abroad, preferably in France Key characteristics: well-known schools, international exposure, native Chinese speakers, mobility French language is an asset Problematic: high employee turnover rate! Compensation system very different in China Employees demand benefits apart from salary, such as pension plans for parents, housing assistance, etc.

Key Constraint Costs

Costs important for site and operational business movement towards low cost
HR will not be outsourced since it is important from a strategic standpoint for Areva to have a global HR policy as well as regional management to address specific cultural differences Tradeoff between cost and quality prefer to produce in low cost country, but must maintain a high level of quality complex tasks completed in France

Compensation varies by region to account for various cultural differences

Example: in China there is a movement to offer a benefit whereby the employees parent is offered retirement benefits (Areva has not implemented this as of yet)

Key Benefits
Areva wants to be close to their clients (i.e. Asia, Americas) while maintaining their roots as a French company Currently building expertise in Asia Operations in France and Germany are higher cost in comparison to other regions Company is owned by the French government but does not have assistance from local governments in the regional (international) locations Recruiting in France is easier in comparison to other region thanks to Arevas strong brand Striving to improve and educate other regions about the Areva brand

Key learnings and recommendations

Think global, act local applicable to HR Transition to become a global player driven by HR Learn about local nuances and competitive advantage, hence focus HR can tackle competition from the recruitment point of view

We Thank
For their contribution, support and trust Mr. Frdric Thoral, Vice President Human Resources and Managerial Communication Mr. Henry Dufourmantelle, corporate Campus Management Director Their input was exhaustive and acted as a trigger for further and deeper understanding of the HR strategic role