PERFORMANCE AND CAREER REVIEWGUIDE 2017

CHANTAL GAEMPERLEGroup Executive Vice-PresidentHuman Resources and Synergies, LVMH

INTRODUCTION BY CHANTAL GAEMPERLE

THE ESSENTIALS

PERFORMANCE APPRAISAL

SETTINGOBJECTIVES

BEINGLVMH

CAREER

Performance and Career Review

defi nition PCR is the « once a year » result of an ongoing feed-

back process…

The art of assessment

Employees and Managers exchange

their respective expectations, observations,

and assessments…

Setting the scene for the coming year

The Employee may pro-pose up to six objectives,

including 1 for “Talent and Organization Development”…

Enhancing Being LVMH

Employees and Managers may link objectives with LVMH

core belief & values and its related behaviours

Career aspirations & perspectives

within the Maison & LVMH Group

The career discussion should be open, giving different perspectives

and options…

1

Dear All,Time has come to reflect on our performance, set objectives for the forthcoming year and discuss career ambitions and personal development.

This year, the Being LVMH framework is embedded into the PCR: we have derived eight behaviours from our core belief “People make the difference” and our three values “Be Creative and Innovative”, “Deliver Excellence”, “Cultivate an Entrepreneurial spirit” that you will use to review your performance.

This framework is a result of a bottom up approach from 67 workshops in 15 countries cross Regions and Functions.

Being LVMH is speaking about us, what makes us unique and what allows us to grow, translating values into behaviours.

All Employees and Managers are invited to consider how the Being LVMH framework can guide day to day activities, behaviours and support objectives achievement.

Nothing will replace a constructive dialogue and regular feedback to adjust performance and support business objectives.

I wish you all a fruitful PCR campaign.

PERFORMANCE & CAREER REVIEW

PCR is the "once a year" result of an ongoing feedback, process between Managers & Em-ployees, to review & assess perfomance, set objectives & discuss of career development

Performance& Career

Review IS:

Performance& Career

Review IS NOT:

AN ASSESSMENT- Of the previous year objectives- Of the potential for the year to come- Of the most relevant competencies

A DISCUSSION- On the objectives for the year to come- On Career Development

& Perspectives

A MANAGERIAL TOOL- To reinforce messages,

reward & develop- To motivate & retain employees

A BUSINESS REVIEWPerformance has to be assessed but career is equally fundamental in the dis-cussion: Concentrate on the Person!

A SALARY NEGOCIATIONEven though your performance impacts your salary review

A MONOLOGUENor for the Manager nor the Employee: Listen!

THE ESSENTIALS

2

OBJECTIVES

Should there be a gap between the view of the Employee and the Mana-ger during the PCR discussion, make sure the divergence is discussed to reach a common view. Moreover, we remind you the importance of constructive dialogue and regular practice of feedback.

When self-evaluating/evaluating the actions taken and the results delivered during the year:

→ Consider the RESULTS, the WAY in which those results were produced/delivered as well as the CONTEXT.

→ Base your assessment on FACTS and not on opinions and check for cohe-rence with the feedback shared/received during the year.Assessment is not a one-off event; it is the result of a coherent and continuous FEEDBACK with the Manager and the Employee.

→ Bear in mind that sometimes, even if the business objective is not achieved due to external causes, the Employee may have performed in a valuable and appropriate way.

OUTSTANDINGPerformance is clearly exceptional. Performance reflects competence, reliability and the capability

to exceed the objectives with a high degree of autonomy and an examplary behaviour.

PARTIALLY ACHIEVES OBJECTIVESPerformance does not fully meet expec-tations. Some objectives have not been

achieved. Improvement is needed in certain competency areas. Supervision required

remains important.

DOES NOT MEET EXPECTATIONSPerformance is quite insufficient. Most objectives have not been achieved. Improvement is strongly required virtually in all areas. Degree of supervision required is very high.

ACHIEVES OBJECTIVESPerformance is entirely satisfactory. Set objectives are achieved. Work is performed with a minimum of difficulties and errors. Some supervision is required.

EXCEEDS OBJECTIVESPerformance is over and above what is required. The results exceed most of set objectives. Performance level demonstrates the capability to identify problems and to provide solutions with little supervision.

PERFORMANCE APPRAISAL

THE ART OF ASSESSMENTManagers and Employees exchange their respective expectations, observations, and assessments.

3

SETTING THE SCENE FOR THE COMING YEAR

REALLY SMART

THE TALENT AND ORGANIZATION DEVELOPMENT OBJECTIVE

SETTING OBJECTIVES

The Employee may PROPOSE up to six objectives, including 1 for Talent and Organization Development.

The Manager REVIEWS and AMENDS the objectives submitted by the em-ployee, and if necessary, DEFINES others.

The 6 objectives, including the Talent and Organization development, must be:

♦ In line with the business strategy♦ Demanding for the position♦ Challenging for the person and more ambitious than the year before♦ S.M.A.R.T

CAREER DEVELOPMENT such as enlarged responsibilities offered to team members, support to team members mobility, definition of action plans for succession.

DEVELOPMENT OPPORTUNITIES such as offering/ proposing to people in your teams coaching, mentoring, training programs or exposure opportunities.

MAXIMIZE & MEASURE ENGAGEMENT of your team members for ins-tance through: -analysis of ratio of regretted resignations-actions taken to proactively manage retention risk.

CONTRIBUTE TO THE AGILITY AND ATTRACTIVENESS of your organization & LVMH (contributing to the onboarding of colleagues, LVMH campus actions, mentoring & training opportunities).

To make sure an objective is S.M.A.R.T., ask yourself:

SPECIFIC: what is exactly expected to be achieved?

MEASURABLE: What are the success measures and / or key performance indicators (KPIs) to evaluate the level of achievement of the objective?

AMBITIOUS: Is the objective considering the Employee profile and why?

REALISTIC: Can the objective be achieved with the available means/re-sources/competencies, and in the given context?

TIME RELATED: When should the objective be achieved? Is there a target date to guide your objective to successful and timely completion?

All LVMH Employees are expected to contribute to the development of the Group and its talents. As any other business objective, this objective has to be as much as possible S.M.A.R.T. and its evaluation will impact the global rating of the year.

♦2

♦3

♦4

♦1

The talent and organization objective should be focused on one of the following topics:

4

This year, it is important to use Being LVMH to leverage the objectives setting discussion of the Performance and Career Review (PCR). Through the PCR conversation we want everyone to consider the importance and the benefi ts of our values and behaviours in how they set, achieve and evaluate their objectives:

→ Employees and Managers are invited: - to discuss how to connect 2018 objectives with the Being LVMH values and expected behaviours- and to link each objective (the What we need to attain) with one of the Being LVMH values and related behaviours (the How to achieve the objective). (See Appendix 1/a; 1/b, 2 & 3)

→ To make the most of the discussion, the Employee and his/her Manager may want to reflect on:1. What Being LVMH values and behaviours will positively and directly in-fluence performance?2. What behaviours does the employee need to demonstrate and/or develop to be successful?

BEING LVMH

ADOPT, DEVELOP & EMBRACE POSITIVE BEHAVIOURS THROUGH BEING LVMHThis section introduces you to Being LVMH core belief, values and underlying behaviours.

Being LVMH:Our core belief

Be Creative& Innovative

DeliverExcellence

Cultivate anEntrepreneurial Spirit

Our Values

People Make the DifferencePeople Make the Difference

5

CAREER DEVELOPMENT IS a professional step that meets both the interests of the Maison/LVMH and the Employee.

→ For instance, new assignment or increased responsibility within the current job, vertical and lateral moves, functional/geographical moves…

→ It should focus on career development opportunities including -but not limited to- career moves.

To be ELIGIBLE FOR A NEXT CAREER MOVE, the Employee must have:

Development actions should:- maximize your strengths, - help you address the areas of improvement, - prepare for the career plans you have set for yourself on the basis of your

motivations, capabilities and business opportunities.

CARREER

CAREER ASPIRATIONS& PERSPECTIVES WITHIN THE MAISON& LVMH GROUP

DEVELOPMENT ACTIONS

The career discussion should be an open exchange on feasible and potential perspec-tives and options.

♦ a consistent and good performance

♦ a solid experience in his/her current position; it takes usually at least 3 years, or longer for senior or more complex positions

♦ a clear and realistic career development plan

The result of this exchange, as well as of any discussion happening along the year on career prospect vs development, could be integrated in the “career aspiration” feature in the renewed LVMHtalent system.

of professional development comes from the experience “on the job” (challenging assignments projects, Cross Departments/Maisons projects).

of professional development comes from Peers and Managers (feedback, coaching, mentoring).

of professional development comes from formal training.10%

20%

70%

6

• BE CREATIVE AND INNOVATIVECreativity and innovation are part of our DNA. Over the years, they have ensured our Houses’ success and established their legitimacy. This combination of creativity and innova-tion is the foundation of our Houses and figures at the heart of the delicate balance required to continually renew our offer while resolutely looking to the future, always respecting our unique heritage.

• CULTIVATE AN ENTREPRENEURIAL SPIRIT LVMH has an agile and decentralized organization that encourages efficien-cy and responsiveness. It stimulates

BEING LVMH NEW FRAMEWORK

BEING LVMH BEHAVIOURS

THREE VALUES:

APPENDIX1/a:

PEOPLE MAKE THE DIFFERENCEEstablish a compelling vision, set ambitious professional goals and inspire people to higher perfor-mance.

Recognise individual and team contributions, develop people and transmit savoir-faire.

THREE VALUES:

♦1

♦2

♦7

♦8

BE CREATIVE AND INNOVATIVEEncourage and promote curio-sity, diversity and collaboration so the unexpected and different can flourish.

Be a disruptor and open to dis-ruptive ideas, always ensuring our Houses create desirability built on their distinctive heritage.

DELIVER EXCELLENCEPositively challenge ourselves and our teams to deliver and execute with precision, lear-ning from setbacks as well as success.

♦3

♦4

♦6

♦5

PEOPLE MAKE THE DIFFERENCEPeople and Teams in LVMH fuel and sustain the success of the Group, the Regions and our Houses delivering our fundamental values which constitute the pillars of our performance and long-term success. They operate in many different contexts, in environments of complexity and ambiguity, continuously learning and challenging themselves and the teams they work in to innovate to deliver growth. Our Executives and Managers create the environment for talents to succeed in our ecosystem.

APPENDIX1/b:

individual initiative by entrusting each person with significant responsibili-ties. Our entrepreneurial spirit encou-rages both risk-taking and perseve-rance. It requires pragmatic thinking and an ability to motivate teams, leading them to achieve ambitious objectives.

• DELIVER EXCELLENCEAt LVMH, we never compromise on quality. Because we embody the wor-ld of craftsmanship in its most noble and accomplished form, we pay meticulous attention to detail and to perfection. From products to service, we cultivate our difference through this constant quest for excellence.

Demonstrate passion and em-pathy for all our clients, conti-nuously anticipate and exceed future desires.

CULTIVATE AN ENTREPRENEURIAL SPIRIT

Empower others and consistent-ly support risk taking.

Actively embrace change, pioneer ambitious new oppor-tunities and stretch the boun-daries of our thinking, while remaining true to the DNA of our Houses.

ONE CORE BELIEF

ONE CORE BELIEF

7

BEING LVMH EXAMPLES

Establish a compelling vision, set ambitious professio-nal goals and inspire people to higher performance :

Encourage and promote curiosity, diversity and collaboration so the unexpected and different can flourish :

Positively challenge ourselves and our teams to deliver and execute with precision, learning from setbacks as well as successes :

Demonstrate passion and empathy for all our clients, continuously anticipate and exceed future desires :

Be a disruptor and open to disruptive ideas, always ensuring our Houses create desirability built on their distinctive heritage :

Recognise individual and team contributions, develop people and transmit savoir-faire :

• communicates a compelling vision - talks beyond today• creates stretching goals and milestone to deliver the

vision • makes the vision sharable by everyone to motivate the

team• creates a climate in which people want to do their best

• highlights wins and celebrates the team’s successes • shares responsibility, accountability and visibility • coaches and mobilizes self and others to achieve results• invites input to increase personal and team know-how

• frequently comes up with new, unique ideas• brings the creative ideas of others to market• effectively facilitates brainstorming to harness others’

creativity• seeks input from a range of direct reports, teams and

projects

• creates competitive breakthrough strategies and plans• bottom-line oriented and consistently exceeds goals• leads regular, focused discussions about the detail of

how we deliver• reviews progress to identify improvements, benefits and

best practices

• passionate and committed to getting things right • acts with internal and external customers in mind to

meet expectations• establishes and maintains excellent customer rela-

tionships• ‘stands in the customer’s shoes’ to understand current

and future needs

• challenges self and others to remain open to feedback from external sources

• stays abreast of current and future trends and innova-tions in related and non-related industries

• thinks "outside the box" and brings diverse insights to enhance desirability

• brings a disruptive thinking mindset to widen the possi-bilities

PEOPLE MAKE THE DIFFERENCE

BE CREATIVE AND INNOVATIVE

DELIVER EXCELLENCE

APPENDIX2:

Empower others and consistently support risk taking : Actively embrace change, pioneer ambitious new op-portunities and stretch the boundaries of our thinking, while remaining true to the DNA of our Houses :• clearly delegates routine and important tasks as well as

decisions• lets people finish and be responsible for their work• encourages others to take calculated risks and learn from experience• gives people room and opportunity to perform

• can decide and act without having the total picture• successfully handles risk and uncertainty • uses "What if?" thinking to help seek out change• promotes learning from the results of change

CULTIVATE AN ENTREPRENEURIAL SPIRIT

8

BEING LVMH ILLUSTRATIONS

APPENDIX3:

Giving meaning to LVMH values in the day-to-day work During the PCR discussion, employees and managers connect one Being LVMH value to each 2018 goal (What) and specify how the related behaviours help them achieve their objectives (How).

Our core belief

Three Values

Be Creative & Innovative

Deliver Excellence

Cultivate an Entrepreneurial Spirit

Annual Goal

Annual Goal

Values Associated

to the Goals

Illustrations of related

behaviour

Ensure a high quality team by developing individual and team productivity.

Enhance communication around sustainability and environment protection.

Understanding of the business in LATAM and Europe, tailor global strategy and budgets locally and fol-low-up business results.

Supervise the new product launch as part of the “ABC” Project.

Deliver excellence: Posi-tively challenge ourselves and our teams to deliver and execute with precision, lear-ning from setbacks as well as success.

Continuously demonstrate intellectual curiosity, recognize trends, practices, and informa-tion affecting the business in LATAM and Europe, in order to be able to anticipate risks, dis-tribute the budget accordingly and better adapt the business strategy locally.

People make the difference: Recognize individual and team contributions, develop people and transmit savoir-faire.

Be creative and innovative: Encourage and promote cu-riosity, diversity and collabo-ration so the unexpected and different can flourish.

Cultivate an entrepreneurial spirit: Actively embrace change, pioneer ambitious new opportunities and stretch the boundaries of our thinking, while remaining true to the DNA of our Houses.

• Actively seek out and identify characteristics of the product that are innovative and bring value to the final customer.• Initiate actions that may involve risk taking in order to achieve competitive advantage.• Federate teams around the project, work in great collaboration specifically with marketing and merchandising teams.

Set up a team with some of my direct reports to work on key messages around environ-ment protection to ensure col-lective ideation and to identify new ways of communicating around those topics (digital newsletters; communities, intranet…)

Concretely, give ongoing feedback to my team to help them im-prove their performance;Ensure they are participating in at least one training during the year, relating to their specific development needs.

Illustration of related behaviour

Core Belief Associated to the Goal

People Make the Difference

9