GE in France

1. GE in France Best in France Project Case Study 15 December 2003 By: Ms. Candida Barbato, Mr. Juan Rodriguez Alvarez, Mr. Jan Sorensen, Mr. Carlos Ojeda

2. When did GE come to France? 1950’s GE and GE Medical Systems about 20 years ago. What's GE’s business in France and Overseas? GE is a major international player in several different activity sectors: GE Aircraft Engines GE Consumer Products GE Financial Services GE Industrial Systems GE Medical Systems Key figures World sales: 135 Billion USD French sales: 3 Billion USD Profits: 15 Billion USD Employees World wide: 360.000 Employees France: 9.500 Sector of activity: Conglomerates Competitors: Siemens, Philips, Toshiba, Alstom and others depending on the Business. GE & GE Medical Systems Division: Key figures • GE Medical Systems • GE Plastics • GE Power Systems • GE Transportation Systems • CNBC

3. GE’s approach to international growth Profiting new strategic or economic opportunities in new locations in terms of Technical leadership that expands margins and grows the installed base. Services acceleration that improves returns, competitiveness and customer’s satisfaction. Enduring customer relationships that are unbreakable Resource reallocation to build positions in new markets. Where else did GE (or will GE) consider going Germany (R&D), Belgium (lobbying opportunities) in Brussels, Low Cost Countries (LCC), China (5 x 5 plan) Part of the production has been moved to Hungary (diversified services, technology and manufacturing). This led to a decrease in the work force in France. Why was France a key target location? Growth step towards the European market. Rationalize Engineering and Production for GEMS Partnership with Snecma (CFM International) Acquisition of Thompson Medical Division (Thompson CGR Diagnostic Imaging division) Why did GE come to France?

4. GE Corporate Values (1/2) Company values are a key variable in the management of GE work force Respecting Always the Three Traditions of GE: Unyielding Integrity, Commitment to Performance and Thirst for Change. Passion for Our Customers Measuring our success by that of our customers…always driven by Six Sigma quality and a spirit of innovation Meritocracy Creating opportunities for the best people from around the world to grow and live their dreams Growth Driven, Globally Oriented Growing our people, markets and businesses around the world Every Person, Every Idea Counts Respecting the individual and valuing contributions of each employee Playing Offense Using the advantages of size to take risks and try new things…never allowing size to be a disadvantage Embracing Speed and Excellence Using the benefits of a digital age to accelerate our success and build a faster and smarter GE Living the Hallmarks of GE Leadership Passion for learning and sharing ideas Committed to delivering results in every environment Ability to energize and inspire diverse global teams Connected to workplace, customers and communities…in touch with the world

5. Core values of the company that may not fit with French values? Values as “passion for customers”, “attitude towards change” and “6 Sigma”. More in detail Six Sigma is the most well known implementation success story. Action oriented vs Analysis oriented culture The latest communication slogan is “Imagination at Work” How did the company manage to instill its values in the French unit? Clear communication policy and explicit corporate values A selective recruitment is a very important component to assure the expected behavior of the French unit employees. The appraisal system assures the implementation of the corporate values on a on going basis. GE Corporate Values (2/2)

6. What products are produced in France? Global Product Company strategy GE Energy: Gas turbines 40 – 126 MW (Belfort & Bourogne) GE Medical Systems: Medical Imaging including the Vascular – Mammography and X-Rays (Buc) GE Plastics: ABS (Beauvais) GE Capital Bank: Credit Services And the other GE branches are also represented in France or can be contacted by local representatives. Why are these products produced in France (and not elsewhere for example)? Association nature of CFM (gas turbines JV) GEMS branch result of the acquisition of the Thompson CGR Diagnostic Imaging division Are there expansion/reduction plans for these product lines? There are some expansion plans for the world within the “GE Globalization” plan. GE is facing the new century with a totally committed attitude towards Europe. No production expansions plan in France have been considered for the future. GE’s Products

7. Who are the company's clients of the Imported or exported products? Very diverse clients for each one of GE’s division’s products. Global Product system and GE France distributes the products produced worldwide to the airplane manufacturers, to the medical institutions and to the plastic manufacturing firms. What are their expectations? GE’s clients expect the best technology and service in the world and they receive it in 99% of the cases (Six Sigma). GE has also extended its values to the “Six Sigma Partnering Strategy” where the values of GE are linked to client's needs and strategy. GE’s strategy is based on long term client satisfaction and business partnership. French presence help or hurt the company's ability to satisfy client demands? It helps the ability of GE to sell its products locally: “patriotic reflex” Extra when selling to French people. GE's clients

8. What are the principle constraints that GE foresaw before coming to France? Related to the consolidation of the acquisition / transition Different attitude (Financial Driven vs Technical Driven Attitudes). Implementation of a less hierarchical organization. Related to the French location: Adoption of GE values by local employees Work force regulation and management procedures Did GE discover any others after the implantation? Difficulty to handle two different locations. Example: Engineering in GEMS Division had two offices, on e in the US and one in France that at some point were competing. How do these constraints differ with their other locations? There are very different economic and social challenges in other locations. Constraints in France

9. Adaptations to its people management systems? No specific adaptation has been introduced for the French branch. GE’s people management system is oriented to assure that the local employees are as much as possible in line with the company expectations in terms of values and results. Listed below there are the main tools used: Exchange programs integrating people from different divisions and trans-divisional career concept Recruitment/Selection: Challenge & Review, Position Authorization Request, Local talent policy Compensation: According to the country and competitiveness in the industry Workforce Planning: Operational & strategic need Based International Transfers: they are used only when strictly necessary. Local talent policy that uses as much as possible local people in order to minimize costs and take profit of the local advantages of each location. Appraisal system and continual stimuli to make personnel reach the best possible performance. Adaptation to France (1/2)

10. Job Design, Job Assignment Clear job design provided by each one of the positions available. Assigned on a per need basis depending on the people available Training programs There is an internal training course catalog provided by HR. Also there is a website for publishing of these courses. GE invests worldwide $1 billion per year in people’s training. Management Development: Executive Coaching, leadership programs (CLP), (EEDP), (FMP), (IMLP), (HRLP), (OMLP) as well as several internal training programs for managers. workshops, e-learning, on/off the job training, internal networking organizations. What are the key costs to coming to France that are more or less than operating in other locations? Investment cost in Production, Operation and Engineering facilities. High costs due to the intensive capital nature of the business and the technology involved. Adaptation to France (2/2)

11. Key costs to coming to France that are different from other locations? Difficult to compare with other locations due to the Joint Venture - M&A nature of France’s operation. Any or all HR type costs (hiring, paying, training, dismissing, etc.) High cost of personnel, social security and redundancy plan High opportunity cost related to long regulated procedure of dismissing Communication contraints GE’s language is English - Bilingual local basis Integration of French managers into global organization (does it cost more to use French managers than managers from other cultures)? It is not necessarily more expensive to use French managers than people from other cultures. Key Constraint Costs

12. What are the key benefits / disadvantages of being in France? ( + ) Central position in Europe, Infrastructure, Labor education ( - ) Rigid labor market, language skills, cultural constraints (analysis oriented and change “averse”). Product quality All the production and services are based on the 6-Sigma policy. Location benefits The average provided by the industry (multinationals) Government assistance? N/A Market Potential There is very little need for cultural adaptation of the major products since they are designed for very specific or very general needs. Key Benefits

13. What advice do you offer to other companies in this sector concerning use of France as a location? Implement effective people management tools in order to assure the respect of the company culture Development of specific HR policy is necessary when the cultural match between local work force and company culture is very difficult to obtain Take advantage of a unique opportunity to enrich the global work force with high technical skilled individuals. Assure “employability” is more and more becoming a key motivation tools in France. Implementation of high quality training programs for employees, high potential individuals and managers is one of the most effective motivation tools with high investment returns for the company because complete the employees’ overall set of skills (languages, international mind set, attitude towards change…) GE’s Essential Advice

14. Benjamin De Porte , General Manager Multi Vendor Services DI Europe, Benjamin.Deporte@med.ge.com We Thank

15. Bibliography References • General Electric Annual Report 2002 • GE Graduate Opportunities Brochure • www.ge.com/europe

16. Candida Barbato (barbatoc@hec.fr) Jan Sorensen (sorensenj@hec.fr) Juan Rodriguez Alvarez (rodriguezalvarezj@hec.fr) Carlos Ojeda (ojedac@hec.fr) Our Team