AREVA

Best in France Case StudyJanuary 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 company’s

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, let’s discover the best of HR practices acting as an engine for the company mid to long term policy and need for internationalization

AREVA

Number 1 in the world for nuclear energy

Number 3 for electricity transmission and distribution

Number 3 in connectors

We bring solutions for electricity

production and delivery

AREVA’s 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

AREVA’s 5 businesses

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

11 22 33 44 55FRONT END DIVISION

REACTORS & SERVICES DIVISION

BACK END DIVISION

TRANSMISSION & DISTRIBUTION DIVISION

CONNECTORS DIVISION

CCCCCC

CC

FF

FF

C/FC/F TT

TT

TT

FiFi

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

2 %19 %

21 %58 %

Europe & CEI

Americas

Asia-Pacific

Africa

Key Figures

Sales by activity (In millions of € )

2 683

24 %

2 124

19 %

2 023

19 %

2 859*

26 %

1 338

12 %

Front End Division

Reactors &Services Division

Back End Division

Transmission &Distibution Division

ConnectorsDivision

Sales by region

Sales Consolidated Net Income Workforce

11 109 M€428 M€71 590

8 265 M€240 M€50 147

2004 2003 2002

11 114 M€357 M€69 816

Workforce20 principaux pays (sur 70) = 94 % des effectifs

France

Who are the company’s clients?

Nuclear

ENERGY DIVISION

T&DIntegrated electric utilities

Transmission companies

Major consumers of electricity

Who are the company’s clients?

OEMs

EMS

Telecom Market IT MarketCONNECTORS DIVISION

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 Areva’s 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 Group’s consolidated sales revenue.

France still is, and will be, a key factor for AREVA’s core business.

Company values

AREVA’s values are the group’s 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.

Areva’s 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

Areva’s 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

Areva’s Regional HR Policy: challenges

Europe: shaping talent, talent building

Asia: talent development and retaining

USA: knowledge management, compensation and benefit

Areva’s 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 employee’s 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 Areva’s 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. Frédéric 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