1. Best in France Project Case Study 15 December 2003
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. GE & GE Medical Systems Division: Key figures
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:
Employees France: 9.500
Sector of activity: Conglomerates
Competitors: Siemens, Philips, Toshiba, Alstom and others depending on the Business.
GE Medical Systems
GE Plastics
GE Power Systems
GE Transportation Systems
CNBC
When did it come to France
GE came to France 50 years ago and has insured its growth by the number of investments in sectors involving health, energy, financial services, industrial fluids treatment, measurement instruments and electronic security systems. GE Medical Systems that was the business unit that we looked closely at.
What's its business in France and Overseas
GE is a major player in several different activity sectors: GE Aircraft Engines, GE Consumer Products, GE Financial Services, GE Industrial Systems, GE Medical Systems, GE Plastics, GE Power Systems, GE Transportation Systems and CNBC. The most profitable Divisions are Power systems, Commercial and Consumer Finance and Aircraft Engines that accounted for 2/3 of total profit in In France all the products and services are provided since GE has a global reach in most of its divisions.
Key figures
World sales: in more than 100 countries
French sales: 3 Billion USD (world sales of 135 Billion USD)
Profits: 15 Billion USD
Market share: GE is number one or number two in all its markets.
Employees World wide:
Employees France: 9.500
Revenue/profit (revenue/profit per French employee):
Sector(s) of activity: Conglomerates Competitors: Siemens, Philips, Toshiba, Alstom, ABB and many others depending on the Business Unit.

3. Why did GE come to France?
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)
Company approach to international growth
Growth is assured on a case per case basis profiting new strategic or economic opportunities of new locations. Hungary is a good example, located in central Europe it is a successful location with good performance and the perception of people working there is very good.
Beyond that GE’s strategy is based in 5 key elements:
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 because we win together on the long term.
Globalization as a way to grow faster and be more competitive.
Resource reallocation to build positions in new markets where we can achieve superior growth and returns.
Where else did it (will it) consider going
Some other locations that might have been analyzed and still are:
-Germany, due to its people highly trained seems to be a good location for R&D, but competition with local Siemens doesn’t seem very easy.
-Belgium is another location that is increasingly more interesting due to its central location and due to the lobbying opportunities in Brussels. GE sees Europe as an opportunity due to the fact that the company has still opportunity to grow in this region (GE’s market share in Europe is half of the one is the US).
-Hungary: Part of the production has been already moved to Hungary (diversified services, technology and manufacturing). This led to a decrease in the work force in France. The company invested around MEuro and it is one of the 40 multinationals that decide to directly invest in Hungary.
GE has reduced its France Workforce
Part of the production has been moved to Hungary
European HQ still in France
Has no plans for expansion in France’
There is also a tendency to go to the Low Cost Countries (LCC) to implement production and engineering facilities. China seems as a very interesting opportunity due to its growth and infrastructure need. 5 x 5 policy that means that GE expects to have 5 billion in revenues in 2005 from China alone.
Why was France a key target location?
France was a strategic location chosen as a necessary growth step towards the European market. In France there was the opportunity to rationalize Engineering and Production for GEMS. Also the parte with Snecma (CFM International) for development of plane engines was another important issue to consolidate as a leader in that market. France is a good platform to expand in Europe that today accounts for 50% of the revenues of the firm outside of the US, which in 2002 represented 40% of the total GE revenue.

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
Company’s value are a key variable in the management of GE Business. In the above slide the official values of the company are indicated. This values are fundamental for the management of employees in all HR policy (recruitment, appraisal, promotion, rewarding…)

5. GE Corporate Values (2/2)
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.
What are the core values of the company that may or may not fit with perceived French values?
Values as “passion”, “attitude towards change” (French people is in general “change averse”) and “6 Sigma” are difficult to implement in France due to the difference between the general differences in culture. GE’s culture is more of an action oriented firm, while the French attitude is on the other hand more analysis oriented and waits a little more before acting.
There is a difference in the “speed” of work attitude and in some occasions it might be difficult to have the French culture to get to internalize the diversity understanding and the meritocracy.
The latest communication slogan was “Imagination at Work”, in order to say to the employees “what we can imagine, we can make happen”. Also a very selective recruitment is a very important component to complete the expected behavior of the French unit.
How did company manage to instill its values in the French unit?
This values where transmitted through a clear communication policy which explicit corporate values, as well as with the appraisal system. In particular the appraisal system is set up in order to evaluate the employees not only on the base of the results achieved but also on the base of “how they achieve the result”. In other words the attitude, behavior ad respect of the corporate values is an important component of the overall evaluation.

6. GE’s Products 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.
What products are produced in France?
The GE production is based on a Global Product Company strategy Controlled from Milwaukee.
GE Energy: Gas turbines 40 – 126 MW (Belfort) , Energy Services (Bourogne )
GE Medical Systems: Medical Imaging including the Vascular – Mammography and X-Rays (Buc)
GE Plastics: ABS (Beauvais)
GE Capital Bank: Credit Services
Why are these products produced in France (and not elsewhere for example)?
Due to the association nature of CFM (Joint Venture society for Gas Turbine production in Belfort) and due also to the fact that the GEMS branch was in big part the result of the acquisition of the Thompson CGR Diagnostic Imaging division.
Are there expansion/reduction plans for these product lines?
Not worldwide but yes in France….
Low cost countries

7. GE's clients
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.
Who are the company's clients of the Imported or exported products?
Clients are very diverse clients for each one of GE’s division’s products. GE uses a Global Product system and France distributes the products produced worldwide to the plane 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. That is why GE is the world’s most respected firm according to the Financial Times.
How will a French presence help or hurt the company's ability to satisfy client demands?
It helps the ability of GE to sell its products locally due to the “patriotic reflex” that potential French customers might have. After all it is an extra sales argument to say that a product is produced in France when selling to French people.

8. Constraints in France
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.
What are the principle constraints that the company foresaw before coming to France?
GE foresaw problems with the consolidation of the acquisition of the Thompson Medical Division and the transition was a rough era in the newly implemented society. The main problems were:
-different attitude towards the business management: GE has more of a Financial Driven attitude, while the French (and in particular the management of the acquired business had a more Technical attitude)
-different organizational models: there is less hierarchy in the GE system
Therefore 2 major social plans were put in place with the reduction of the old employees base.
Other constraints are more related to the French location. They are:
-the need of developing the GE culture within the old base and the new employees. As previously said the difficult was for values such as “passion for customers”, “attitude towards change” and “6 Sigma” and Action oriented vs Analysis oriented culture.
-Workforce regulation and management procedures don’t allows company to have a flexible access to the job market.
Did they discover any others after the implantation?
Yes. The difficulty to handle two different locations competing in the same thing. The example was the Engineering in GEMS Division had two offices, on e in the US and one in France that at some point were competing. Afterwards, management solved this issue by personnel exchanges between the two countries and with the Global X-Ray engineering program integrating both engineering departments.
How do these constraints differ with their other locations?
There are very different economic and social challenges in other locations.

9. Adaptation to France (1/2)
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.
For the constraints related to the specific issue of integrating the new acquisition (Thompson Medical Division) the main adaptation was:
-screening of the current employees base and selection of the people that better responded to the GE Values
-redundancy plan.
No specific adaptation have been introduced for the French branch regarding the other constraints. GE’s people management system is focused in assuring that the local employees are as much as possible in line with the company expectations in terms of values and results. Listed below are the main tools used on an on going basis:
1) Exchange programs integrating people from different divisions and trans-divisional career concept
2) Recruitment/Selection: Operating divisions inform the need of a person and there is a Challenge/Review phase after which there is a Position Authorization Request that goes to HR where the person search starts. GE looks for people who are fitted for each position. For example: Strategy People need Strategic thinking, innovation, communication skills, proactive learning, flexibility, listening and flexibility. People Oriented are collaborative, sensitive to interpersonal relationships, approachable, motivating and inspiring, coaching skills and moral building capabilities. Results Oriented: Self-assuredness, intensity, assertiveness, goal accountability, executing priorities, decisiveness, tactical planning, process management, analytical thinking
3) Compensation and Motivation: According to the country and competitiveness in the industry. However there are other motivation tools:
-The enterprise’s culture is one of the most attractive items of the GE Culture.
- Salaries are competitive within the industrial range and there are variable plans, stock options and the basic benefits generally offered by global players. GE is well known for being an open organization willing to accept new good ideas with a relatively fast flow of information. Also GE is known for having interesting job environment and shared values. There is GE people management system that is a guarantee of employability, a crucial factur in the current job market.
4) Management Development: There are different development opportunities trough: workshops, e-learning, on/off the job training, internal networking organizations, professional associations, councils and HR. There are specific leadership programs in place for different functions: Commercial Leadership (CLP), Engineering Leadership (EEDP), Financial Leadership (FMP), Information Technology Leadership (IMLP), Human Resources Leadership (HRLP), Operations Management Leadership (OMLP) as well as several internal training programs for managers. There are at this point Executive Coaching programs for managers where an upcoming manager receives coaching from a coach on a case per case basis.
5) Workforce Planning: Each operational division is in charge of its personnel planning and HR centralizes the information for career development and performance appraisals.
6) 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.
7) Performance Appraisal. There are basically two evaluation systems:
one is the 360 evaluation (Manager, customer, supplier, peers, direct reports)
the other is the “C” session. The main goal of the performance appraisal is to evaluate the performance / values mix of an employee in order to compare him with the expectations of GE. The EMS (Employee Management System) that is a the on line system that is used to manage the 360 evaluation and the “C” session. It is based on a detailed digitalized individual profile which is developed as a part of the evaluation form and used within the company to apply to internal open positions and to network
The main characteristics of the GE career development system are the following.
-It is used as a concrete resource management tool. It is designed to evaluate management performance and provide employees with personalized feedback in order to improve weaknesses and develop a middle career plan which is reviewed periodically. Therefore it is also used to select talents for special leadership programs. The feedback is based on two different comparisons. The first evaluates the results against objectives (hard side) and the second evaluates the behavior against the company’s values (soft side, cultural match).
-It is seen by all levels of the organization as the formal tool to transform strategies into team’s goals and individual objectives. It requires the involvement of all levels of the organization.
-It is designed to be an on going process which implies a continuous improvement

10. Adaptation to France (2/2)
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.
8) Job Design, Job Assignment. There is a clear job design provided by each one of the positions available. This design is provided by HR and assigned on a per need basis depending on the people available to fill in the position.
Communication Policies: Clear & explicit values
9) 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.

11. Key Constraint Costs
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.
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. Are high costs due to the intensive capital nature of the business and the technology involved. It is 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.). There are two kind of HR cost which are related to constraints in the French location:
High cost of personnel, social security and redundancy plan. Salaries are not much higher than in other European locations and certainly lower than USA (a new GE employee at is first experience in USA can earn more than a GE French manager). However the comparison doesn't give the same result with, of course, low cost country in Eastern Europe and Asia. Social Security is however very high in France (and this make the total employees cost in France higher then in other European location. Redundancy regulations make France a not very attractive location for several reasons:
Cost and time of implementation – No information disclosed
Social limits are imposed on the implementation of the redundancy plan that can effect the quality of the work force.

12. Key Benefits
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.
What are the key benefits / disadvantages of being in France?
( + ) Central position in Europe, Infrastructure, Labor education
( - ) Labor market rigid, not many bilingual French people in general, cultural constraints already explained previously. In particular local work force seems more analysis oriented that action oriented and shows a strong resistance to change. Obviously some of this constraints can be overcome by the implementation of a specific company policy. Other such us the Labor market regulation is a constraint that can’t simply overcome by the adoption of company policy, but rather depends on who decide the country law.
Product quality (defect rate, product cost, productivity, design, customer image, etc.)
All the production and services are based on the 6-Sigma policy.
Location benefits (transport, time zone, quality of life, employee satisfaction with France, etc.)
The average provided by the industry in a local basis.
Government assistance?
N/A
Market Potential (product penetration or growth potential, customer demands for cultural adaptation of product(s), launch platform for other European countries, etc.)
There is very little need for cultural adaptation of the major products since they are designed for very specific or general needs. The international nature of GE is a big advantage when trying to penetrate new markets in a very competitive activity sector.

13. GE’s Essential Advice
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…)

14. We Thank
Benjamin De Porte , General Manager Multi Vendor Services DI Europe,

15. Bibliography References General Electric Annual Report 2002
GE Graduate Opportunities Brochure

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