Thales in France

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

2. 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 • 60 000 employees worldwide • Thales is present in 20 countries in the world, 50% of its workforce being in France

3. Company products and clients • 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 …

4. Company values • Focusing on customers • Developing people • Behave as entrepreneurs & innovators • Performing through teaming • 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

5. 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). • Consequences: there are relatively few expatriates and there is a strong decentralization culture • 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.

6. 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.

7. 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.

8. 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.

9. 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

10. 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).

11. 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”.

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

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