BEST IN FRANCE

January 2005

The American University of Paris

Presented By:Juan CastañedaFrançois HussenotJennifer MillerSimon Pickard

Executive Summary AUP as an Institution: History, Products & Services, Key

Figures, Clients

Human Resources Operations and Value Integration

Adaptation Initiatives

Key Costs, Constraints and Benefits

Essential Advice

Bibliography and Acknowledgements

AUP as an Institution:

History, Products & Services, Key Figures and Clients

AUP History in France Founded in 1962 as a private American higher education

college, only recognised in the States

Initial product was a 2-year-long education program readying students for return to college in the States

4-year-long undergraduate degree products introduced in 1964

Registered as French commercial employer in 1985

Officially entitled ‘Institut Supérieur d’Etudes Libérales’, as French law forbids privately-run institutions from using the word ‘Université’ in their name

AUP: Why in France? In 1962 Paris had the largest US expatriate community in

Europe (circa 75,000)

France is an ideal central location between Old and New Worlds for clients wanting American education in European setting

Location, infrastructure and unique resources of Paris support commercial and academic missions and are key elements in attracting desired clientele

Financial constraints prevent international expansion, so AUP has focused on creating international diversity among client base

AUP Key Business

Offers fully accredited US liberal arts undergraduate education in European context and setting

Two graduate degree programs to be inaugurated in 2005

In direct competition with French state institutions and domestic US colleges

Almost exclusive monopoly over English-speaking college-level education in France

AUP: Core Products I BA undergraduate degree programs offered in 12 fields

of concentration

BSc undergraduate degree programs offered in 2 fields of concentration

Clients can select from among 26 supplementary modules

Four year duration for majority of clients

Three year duration offered for those holding equivalent of European baccalaureate qualification

AUP: Core Products II

In 2005 AUP will launch two new products in a new sector:

MA graduate degree program in International Administration and Conflict Resolution: to be run jointly with the Institut Catholique de Paris and will unusually be accredited on both sides of the Atlantic

MSc graduate degree program in Finance: offered under the auspices of the recently-created AUP Graduate School of Business

AUP Clients and Expectations

Consumer insight: desire to have American education experience and valid qualification without the attendant costs and cultural obstacles of studying in the States.

Consumer expectation: international perspective, high academic product calibre, diversity of peer group, exposure and introduction to array of cultural resources

AUP Client Base

30%

15%26%

11%

18%

US France Europe Far East Other

AUP Key Human Figures

950 students from 90 nations

64 full-time faculty, 80 % holding PhDs and having earned degrees in 2 or more countries

40 teaching assistants

70-80 administrative staff

AUP Financial Data 2001-04

AUP Revenues in K Euros

1638516869 16840

10000

12000

14000

16000

18000

20000

2001-2002 2002-2003 2003-2004

Revenues

Source: Market Research

AUP Key Figures (in euros)

Year 2001-2002 2002-2003 2003-2004

Total Revenue 16,385,000 16,869,000 16,840,000

Base Tuition 16,500 18,500 19,240

Financial Aid 1,249,000 1,248,000 1,709,000

Net Margins -11,000 34,000 -16,000

Endowment 650,000 650,000 650,000

AUP in France Today:

Value Integration, HR Operations and Constraints

Core Values “The mission of The American University of Paris is to

educate generations of academic, social, political, intellectual and business citizens of the world and to enhance the advancement of scholarship in the arts and sciences in an international, multicultural and plural environment.”

HR Dept has recently concluded a 4-year-long General Education Orientation program to improve communication of core message and values to all employees

Communication carried out through written media, oral presentations from AUP President della Paolera or in individual review meetings

HR Constraints in France I

What are the principle HR constraints AUP foresaw before setting up in France? legal status of institution and lack of state benefits potency of unions CompBen policies for non-Europeans

What are currently the most serious it must deal with? work permit regulations for expatriates and families 35 hour working week French labour law

HR Constraints in France II

How do these constraints differ with operating elsewhere?

inability of employees to work according to a self-determined schedule, especially in research

level of bureaucracy surrounding work permit applications for France is extremely high

legislation regarding workforce management and outplacement is stricter than many other markets

the State bends the rules by applying more favourable rules to public university employees

HR Constraints in France III

Has AUP lost projects or employees as a direct result of these constraints?

occasional impact on clients (students) due to visa problems and inability to reside in France for the duration of degree programs

principal issue concerns new international (i.e., non-EEC) hires and the impact existing French immigration law has on relocating families/partners

Adaptation to the French Market:

Evolution, Initiatives and Improvement Within the Institution

Adaptation: Recruitment

Academic personnel largely recruited from overseas due to English-speaking demands of positions. This is the only category for which AUP will file work permit applications with the French State

Administrative personnel exclusively recruited from domestic market: French and other EU citizens, or foreigners with full residential rights through marriage or previous visa applications

Adaptation: CompBen

AUP salaries are positioned between two main rivals: on average lower than for equivalent positions in US but superior to those in French universities

Introduction of new legislation and evaluation process to improve compensation parity

Benefits packages for employees are mostly based on the state model. However, AUP offers improved death/disability insurance to many of its workers

Adaptation: Training

In accordance with French labour regulations, AUP must offer all full-time employees 20 hours of funded training or development per annum for 6 years. AUP’s financial obligation = 1.5% of individual’s gross salary

Half of training budget spent on IT courses for admin, half on faculty research projects and expenses

All training programs must by law be outsourced to licensed contractors who manage finances and all associated paperwork

Adaptation: Workforce Planning Perennially affected by annual budget constraints, as administration

is often first area obliged to cut costs.

Dependent on client enrolment in various programs and courses, which dictates number of full-time and part-time contract faculty to be hired in a given year

Prolonged duration and uncertain nature of work permit applications for expatriate employees is ongoing issue

Given all above factors, no formal planning process exists

Adaptation: Performance Appraisal Full-time employees are legally obliged to attend annual evaluation meeting with HR

Director

Significant initiatives under way to introduce Performance Appraisal throughout administration

Widespread absence of formal job descriptions is a major impediment to HR Dept creating and implementing evaluation processes

HR goals should be helped by greater transparency in recruitment, as demand for pre-defined job descriptions will permit better appraisal in future

Adaptation: Communication/Motivation

Extensive recent policies to upgrade effectiveness of internal communication using various media

Need to address traditional autonomy of faculty and their resistance to communication of policy change

External communication – above all job adverts – typically directed through local government offices

Motivation policies most necessary for employees with shortest tenure and transitional attitude to role

Key Costs, Constraints and Benefits

To Operating in France

Key Costs: Hiring and Compensation Travel costs and expenses paid to any expatriate

candidate invited to France for interviews, plus subsequent relocation costs if candidate is hired

Higher tax and social charges from 35 hour work week

Significant time costs associated with helping expatriate employees integrate into French social system (phones, residential contracts, local bureaucracy and paperwork)

Obligatory contribution to annual training programs

AUP spends 70% of total revenues on CompBen

Key Costs: Workforce and Downsizing

Long-term restrictions are created by contractual obligations to employees occupying a position for more than a year – job for life syndrome

State system for evaluating any downsizing plan can and often will generate sizeable time and legal costs

Employees targeted for outplacement remain in fully paid employment until end of legal process, with no guarantee that the State will allow their position to be eliminated

Key Costs: Dismissal

French judicial system is generally weighted in favour of the individual employee

As such the onus of responsibility is placed on an employer to prove merit of dismissal, which incurs considerable legal and administrative costs

Time costs of negotiations or conflicts with unions

Again, individuals affected by process remain in full-time employment until legal adjudication has occurred

Key Constraints: Other

Substantial Expansion of the physical organisation of AUP would be problematic given the premium for real estate in central Paris and its exorbitant cost

Relocation elsewhere in France or in Europe is unthinkable due to added value the current environment brings to AUP products

Communication presents a perennial issue for non-French speaking employees

Key Benefits

Product image is enhanced by association with surrounding environment and resources.

Willingness of clients to pay more for benefits of being in France translates into better salaries for employees and improved product quality.

Quality of local infrastructure superior to most other urban environments regardless of location.

AUP’s value of providing an American product in an international context gives it a strong position since inception of Lisbon Accords.

Essential Advice, Bibliography,

Acknowledgements and

Contact Information

Essential Advice What advice would AUP directors offer to other

companies in this sector considering France as a location? Focus on educational service provision, not creation

of new institutions (unless money is no object) as start-up costs for colleges and schools are huge

Ensure that extensive research is done into and counsel sought regarding French labour law, as it is major impediment to doing business

Look at central or eastern Europe as potential location instead for creation of new establishments

Bibliography

The European Higher Education Area Joint Declaration of the European Ministers of Education signed in Bologna, 19 June 1999

AUP Financial Records 2001-2004

AUP 2004/2005 catalogues and promotional literature

Our Sincere Thanks Go To: Mme. Margaret Alluin, Director of Human Resources

102 rue Ste. Dominique, 75006 Paris margaret.alluin@aup.fr, 01.40.62.06.63

Professor Celeste M. Schenck, Vice-President for Academics and Grant Planning102 rue Ste. Dominique, 75006 Paris celeste.schenck@aup.fr, 01.40.20.76.59

M. Douglas Inman, Vice President for Financial Development and Administration6 rue du Colonel Combes, 75006 Paris douglas.inman@aup.fr, 01.40.20.75.78

Our Team

Juan CASTANEDA

(Sept 2004 MBA Intake)

Residence Expansiel #147

1 rue de la Libération

78350 Jouy-en-Josas

Jennifer MILLER

(Sept 2004 MBA Intake)

Residence Expansiel #12

1 rue de la Libération

78350 Jouy-en-Josas

François HUSSENOT

(Sept 2004 MBA Intake)

Residence Expansiel #155

1 rue de la Libération

78350 Jouy-en-Josas

Simon PICKARD

(Sept 2004 MBA Intake)

Residence Expansiel #115

1 rue de la Libération

78350 Jouy-en-Josas