Board EuropeA newsletter for members of The Conference Board in Europe Volume 18 • Number 9/10 • September/October 2003

“Don’t try to develop male strengths just when female WWomenomen inin LeadershipLeadership strengths may be in the ascent” ConferenceConference 1 1 Niall FitzGerald, KBE, Chairman of Unilever and Vice-Chairman of The Conference Board Changing perceptions

“In most European countries”, states the European Commission, “the numbers In this issue of female graduates are proportionately higher than those of male graduates.” 4 Council News However, the boardrooms of most European companies continue to be • Compensation and Benefits male–dominated. There is still a significant gender gap in salaries and a visible • lack of women in the top jobs. • Finance • Plant Managers Economic research from The Conference Board (see article on page 6) reveals • Digital Solutions/IT that productivity growth in Europe is still lagging behind the US. Rectifying that Governance and Strategy situation means making the best possible use of all the available talent, and • Mergers & Acquisitions removing the obstacles that hinder women’s progress, for the benefit of the European economy and society as a whole.

6 Productivity Briefings Speakers at the second annual “Women in Leadership” conference, held this year in Geneva on 17 and 18 June, agreed that women are making slow progress 6 Trustees meeting when it comes to the top jobs in global corporations, even in companies that support inclusion and diversity. 7 Shared Services Conference For women to be given equal opportunities to succeed in the corporate world, 8 HR at Corporate Headquarters male attitudes have to change, starting with the CEO and top managers. Although few senior managers openly deride women’s corporate ambitions, many, either consciously or unconsciously, undermine them. This was one of the findings that emerged from a pan-European study completed last year by The Conference Board and Catalyst, the North American-based non-profit research and advisory organisation working to advance women in business. Latest updates and a comparison of the experiences of US and European executives were presented at this year’s Geneva event. ( ➢ 2) www.conference-board.org 1 WWomenomen inin LeadershipLeadership ConferenceConference

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“Grow your people and you grow IBM’s mindset initiative of the senior executives to chart the your business” - Cultural Change In 1995, IBM’s then chairman and progress of the action plans. at Unilever CEO, Lou Gerstner, set up a Addressing an audience of senior worldwide task force to focus on “With the mindset initiative, we executives, both men and women, advancement of women. The task have directly involved top business from all over Europe, Niall force proposed a global women’s leaders in Europe and made them FitzGerald, KBE, Chairman of leadership council to promote partners and prime movers in our Unilever and Vice-Chairman of The initiatives to advance women which, efforts to change the perceptions Conference Board, referred to a in turn, led to the formation of a that were impacting our behaviour,” study completed 25 years ago which network of regional and country- said Amparo Moraleda, IBM’s listed several feminine qualities that based councils. Judged purely on Country General Manager, served as “barriers” to women’s the increase in the number of and Portugal. advancement: women managers in IBM, the ■ Women do not behave in an programme was a success. authoritarian way ■ Women feel responsible But at the beginning of 2000, one of ■ Women are available: their door is the women’s leadership councils always open raised the issue of the managerial ■ Women get personally involved, mindset within IBM. It was felt that relationships are important managers lacked true commitment ■ Women share their success with to advancement of women – that others. they did not believe it was a business imperative. In Europe, “Amazingly”, he continued, “these IBM’s approach was to drag the are the same qualities we need to subject into the open and talk about transform today’s organisations. In it. Workshops, each led by a senior order to transform organisations, European executive, were set up in drive change, challenge conventions, which men and women discussed leaders need to inspire people and their perceptions, their experiences that is only possible if you connect and their problems in the emotionally and spiritually with workplace. your followers; that you show self awareness and openness; integrity Action plans were then developed and authenticity. You need to be with the ultimate aim of creating a generous in your listening; prepared more favourable work environment 22 Amparo Moraleda, IBM’s Country General to show and share your own for women. It was the responsibility Manager, Spain and Portugal. vulnerability.” He feels it important that women should stop feeling that they have to behave like men. “Don’t try to develop male strengths just when female strengths may be in the ascent”, he advised. “For Unilever, it is clear that women are essential for the cultural change that we need on our path to growth.”

2 1 Delegates at the Women in Leadership Conference, Geneva, 17-18 June 2003.

Setting Realistic Goals at ING Kist, who at that time had just been problem and quickly announced that Ewald Kist, Chairman of the appointed chairman, went ahead he intended to bring about change, Executive Board of ING, is more regardless. The council was formed not through quotas but by appointing optimistic than some women in and consists of senior leaders (not the best people for the job. believing that, in another generation, HR people) from diverse women will have equality with men backgrounds. It has been in the corporate world. “I’m responsible for implementing many convinced about this,” he said. diversity initiatives.

Among the most far-reaching is a requirement for all ING’s business units to include concrete diversity plans – incorporating both qualitative and quantitative targets – in their medium term strategic plans. What’s more, the success of these diversity plans is reflected in managers’ compensation and in the company’s new leadership award 4 scheme. 4 Larry Weinbach, Chairman and CEO of Unisys “For managers, I think quantitative goals are better than a few soft words, although I don’t like them His next obstacle was getting the 3 3 Ewald Kist, Chairman of the Executive and you have to make sure they are message across in a company that Board of ING realistic,” explained Kist. In Europe, had no formal means of 25-30% female general managers in communicating with employees. In the meantime, he is eager to three years is ING’s rough target. Weinbach started by sending an speed up the process at ING, e-mailed letter to employees each believing that it makes business “Ask Larry”– Communicating month. This was followed by an sense to use all available talent. His the Message at Unisys initiative called ‘Ask Larry’ in which first move, in 2000, was a proposal Another long-time proponent of employees can ask Weinbach to set up a diversity council to diversity is Larry Weinbach, questions via e-mail. Replies appear advise and support ING’s leaders in Chairman and CEO of Unisys, but on the company’s intranet which is meeting diversity objectives. More his stumbling block when he joined now accessed by 94% of employees than half of the company’s top 200 the company in late 1997 was more each day. managers (most white males) were fundamental than ING’s. Unisys initially resistant to the idea. was close to bankruptcy. An Executive Action report of this Weinbach’s immediate priority was conference’s highlights, “Women advance turning the company around. A few slowly but surely in top Management months later, however, his thoughts Ranks,” can be downloaded via the turned to diversity. With a top Members Only website: management team of 12 white www.conference-board.org/ males, Weinbach knew he had a membersonly.htm

3 Council News

Compensation and Benefits

The June meeting of the European

Council on Compensation and 1 9 Benefits was hosted by Donald 1 Donald Watson, Council Vice Chairman and meeting host, Watson of Norsk Hydro at the welcomes members to Norsk Hydro. company’s office locations in Oslo. The meeting featured a pre- speed, from defined benefit to on all national agendas. The French sentation by Neil McPherson, defined contribution company government currently wants its civil Director, Standard Life investments, schemes, is becoming increasingly servants to work 40 years (not 37.5 a member of the Council, apparent, with the as now) for a full . Elsewhere on “The Changing Pattern of Pension leading in this field. Almost every- discussion, but no action as yet, Schemes in Western Europe”. where, governments are concerned about prolonging working life is Pensions (both company and with the cost of state schemes particularly marked in government) were of concern to leading to possible increases in and the United Kingdom. most of the companies and working age. No clear-cut data is countries represented at the available, but many members The group will next meet in meeting. The move, at varying thought the subject would soon be Budapest on 16-17 October.

the large number of institutional for the major shareholders them- Corporate investor guests in attendance selves, over and above corporate including representatives from The governance rules for corporations Governance Association of British Insurers, The that have a dispersed shareholding. National Association of Pension Discussion revolved around the The role of major shareholders in Funds, ISIS Asset Management, following issues: European companies was the Railpen Investments, Schroder theme of the June meeting of the Investment Management and The • Investor trading patterns European Council on Corporate Universities Superannuation • The role of the strategic investor and Governance and Board Effectiv- Scheme (USS). protection of minority shareowner eness. It was hosted by Hermes rights in the presence of large block Investment Management Ltd in Members debated whether there owners London. should be specific governance rules • Communicating the value of a Council chairman Folkert Schukken for the behaviour of companies that “good” strategic investor to the opened the meeting by welcoming have a major shareholder, and also other investors

The Spanish economy came under ment, which is very variable across Finance the spotlight with a presentation the Spanish regions, remains very from Joán Elias Boada, Director of high but is declining a little. For its June meeting in Barcelona, Economic and Monetary Research, Consumer price increases are the European Council of Financial La Caixa. He described the above the average for the Executives was hosted by exceptional growth of Spanish GDP and above the USA, and whilst Wolfgang Scheffler, Head of over the last eight years, and underlying inflation is improving it Finance, Freudenberg & Co. indicated that it is still growing. remains one of the highest rates in Welcoming the group, he explained the European Union. As a that the company is a privately Car sales, construction, industrial concluding piece of good news, Joán owned limited partnership that has output, employment and numbers indicated that the Spanish Stock its origins in leather products as far of registered workers are all Exchange is also beginning to back as 1849. The agenda included improving, as is productivity, despite improve a little. a tour of the Freudenberg site being at a level below the eurozone facility. countries as a whole. Unemploy-

4 Council News Mergers & Acquisitions Plant Managers The European Council on The launch meeting of the European challenges. The organisational Mergers & Acquisitions joined Council for Plant Managers was model and the results shared in the with the US Council of Business hosted by member Herbert Stillings meeting indicated how well the Development and Integration at the Bayer Chemical Park in Bayer Model works. Executives for its June meeting in Leverkusen, a huge site with shared New York. This was a useful facilities and co-producing plants. The next meeting will take place in opportunity to compare practices Highlights were the visit to the Leipzig/Halle on 23-24 October, at on both sides of the Atlantic and Emergency Response Centre and the former East German chemical some of the key issues that Bayer’s world class Pharma facility now owned by Dow companies face when negotiating packaging operations. Chemicals. The central topic will be and planning cross-border deals. plant transformations/re-structures Issues on the agenda were: The professionalism of the Bayer and closures, and Dow will show the Central Site Services Organisation group the transformation work it • Corporate governance - Members was very impressive. To manage has accomplished at this facility. of both Councils discussed the such a huge and complex chemical impact of recent regulatory park represents very special changes in the US (Sarbanes- Oxley and NYSE listing guidelines) and EU governance practices that influence acquisition decisions. • Regulatory and Anti-Trust issues that companies face when working Digital Solutions/IT Governance to expand their geographic reach to other areas of the world. and Strategy • Managing cross-border integrations – pitfalls and lessons learned. • Human Resources issues – When “Succeeding through Innovation” M&A deals fall apart, it is mainly on was the overall theme of the joint the human side of the equation. meeting of the European Councils Members shared experiences of on Digital Solutions and on IT local HR issues, such as German Governance and Strategy, 16-17 Workers’ Councils, and some of June in Helsinki. Members’ current the differences in European and issues and concerns were - not US jurisdictions relating to HR. surprisingly in the current climate - 2 nearly all focused on costs. 2 Members of the European Councils on Digital Solutions and IT Governance and Strategy, meeting in Helsinki on 16-17 June. Nokia hosted this joint Council meeting. Marko Suojasto, the company’s Senior Alliance Manager, control all benefits and income from the new and sustainable medium for gave a fascinating insight into voice services, the market was communication across devices and emerging innovations and develop- opening up for revenue sharing on into databases. ments in mobile communications, new data and business type activities. with an emphasis on Nokia research Markku Rajaniemi, Director, and development. It was note- David Nasky of Microsoft, Industrial Systems Architecture, Nokia, worthy that out of 50,000 Manager, Automotive at Microsoft, talked about the contribution of employees at Nokia, over 20,000 EMEA spoke on “Convergence in IT to supply chain management in are employed in R&D. The group Mobile Communications”, and Nokia, which had to cope was particularly interested in “Pervasive Computing”, namely with annual compound growth of business applications, and heard having information available any- 47% over the period 1992-2002. Nokia quote that some 27% of the time anywhere on any device. He He illustrated the importance market for equipment was now for described future business scenarios of effective design and re-design business use. Nokia had identified in mobile communications and of business processes and of “enabling the mobile workforce” as emphasised that speed of infor- building effective relationships a significant area. Whilst the mation was likely to be the new with suppliers, distributors and Telecoms companies, some 200 in competitive weapon. David stressed customers, prior to implementing the world dominated and wanted to the development of web services as the IT innovations.

5 Productivity growth in Europe and the : Two different stories

ollowing the success of their and Income in the World’s Europe, however, it was another Madrid briefing in March, Economies, the two economists story – productivity growth slowed FConference Board econo- pointed out that, as the United substantially. The EU-US growth mists Dr Robert McGuckin and Dr States began to emerge from reces- gap is strongly linked, in their Bart Van Ark continued their sion, labour productivity growth view, to differences in the use and European series of briefings in rebounded sharply in 2002. In production of Information and June, addressing audiences in Communications Technology Essen, Rotterdam, and (ICT). This is accounted for by a Paris. Audiences of senior execu- combination of institutional and tives, economic experts and jour- structural differences and histori- nalists were invited by the cal factors. Yet their forecast was Rheinisch-Westfälisches Institut an optimistic one. With structural für Wirtschaftsforschung, Robeco changes beginning to take place in and NIVE, the Federation of Europe, the long-term potential Enterprises in and the for closing the productivity growth Paris Chamber of Commerce and gap looks promising. Industry. 1 Dr Robert McGuckin, Director of Economic Research, The Conference Referring to the findings of their Board, addressing an audience invited by latest research report, Performance the Federation of Enterprises in Belgium 2002: Productivity, Employment 1 on 25 June.

Trustees meeting in Amsterdam

The Changing Environment of Global Corporate Governance was the topic of Arthur W.H. Docters van Leeuwen, guest speaker at the annual dinner in Europe for Trustees of The Conference Board, hosted by ABN AMRO Bank in Amsterdam on 17 June. He argued the case for pluralism rather than convergence of corporate governance systems around the world.

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2 3 1 Rijkman Groenink (left), Chairman of the Managing Board, ABN AMRO Bank, Trustee and Global Counsellor, The Conference Board, thanks Arthur W.H. Docters van Leeuwen for his presentation. 2P. Jan Kalff (left), Member of the Supervisory Board, ABN AMRO Bank, and Global Counsellor, The Conference Board, in conversation with Richard Cavanagh, President and CEO, The Conference Board Inc. 3 Exchanging views over dinner. Paul Volcker, centre left, former Chairman of the Federal Reserve System, talks to Malcolm Brooks (centre right), Managing Director, The Conference Board Europe.

6 Shared Services New Approaches to Leveraging

he annual Shared Services intangible benefits. The relation- in Costa Rica, Newcastle and conference, which this year ship allows GM to manage a pro- Manila to provide services in account- Twas held on 12-13 June in fessional workforce that can focus ing, business information, IT pro- Amsterdam, looked at new on selling cars and trucks and on curement, facilities management and approaches to leveraging services. making strategic decisions, rather employee services. Leland Forst, than having to manage a large chairman of the clerical workforce busy with trans- Financial savings opening session actions. amounted to $500 and director of million in three the European years, surpassing the Council on target period of five Shared Services, years, and the quality stressed that of service offered was there was no in most cases better conflict between than before. The business process next step to be outsourcing and considered was a tran- shared services. sition from internal 1 Companies need 2 service provider to 3 not choose commercial enter- between them but could gain bene- Moving from internal to external prise. After much consideration, fits and advantages from both. service provision P&G took the decision not to pur- Peter Adye, Vice President, sue this. “We found out the hard In the first session, “Leveraging Europe, Global Business Services way that moving towards a funda- through Outsourcing”, Delle (GBS) for Procter and Gamble, mentally different shared services ZurSchmiede, Executive Director, spoke about his company’s experi- model involving commercialisation Global Financial Shared Services, ences in moving its shared service is far from easy. It needs an General Motors Corporation, organisation from internal to in-depth understanding of the described the “hands-on partner- external service provision. The market, the opportunities, and of ship” with Affiliated Computer decision to create GBS was taken what future customers will Services (ACS) for the outsourcing in1999, coinciding with the change require.” of finance and accounting process- in P&G’s corporate structure and es. This has resulted in major cost reorganisation into global business savings for GM, but there are also centres. Three centres were set up

1 Session chairman Leland Forst, President and Chief Executive Officer, The Amherst Group 2 Lisa Carlson, Global Business Development and Customer Relationship Manager, Shell International. in conversation with Mike Hampson, Managing Director, ABN AMRO Bank. 3 Peter Adye, Vice President, Europe, Global Business Services (GBS), Procter and Gamble, explaining the challenges of transforming from internal to external service provider. 4 The Annual Shared Services Conference, Amsterdam, 12-13 June.

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7 HR Practices at Company Headquarters

uman resources practices at meeting customer needs, reducing today’s corporate head- costs, and improving efficiency. Hquarters are focusing on Executive development, performance leadership and competency systems, internal consulting, and development, global HR, talent recruitment are among some of the management, and cost reduction, functions being centralised as according to a new report, Human human resources and headquarters Resources at Corporate Headquarters. restructures. Also, 62% of the 43 companies surveyed report a shift in human Key challenges facing HR@HQ, resources’ value equation, noting, according to survey participants, are for example, HR’s movement improving existing computer-based Human Resources toward becoming a strategic partner and communications systems, at Corporate Headquarters with businesses. demonstrating how HR@HQ adds Report 1331-03-RR value, and becoming a more visible “Common themes emerging from presence within the company. Staff corporate interviews include functions have changed significantly implementing an agenda of change since the early 1990s. Prominent under the leadership of a new examples of the shifting role of While shared services operations corporate head of HR and creating a functions include the development are included within the HR@HQ context of collaboration between of shared services and centres of of almost two thirds of survey HR@HQ and HR in the business excellence and the use of external participants, 47% of them believe units,” says Robert J. Kramer, suppliers and distributed providers. their shared services operate only Principal Researcher at The Functional heads have initiated moderately well or poorly. Among Conference Board and author of the these changes in an effort to ensure the company profiles included in report. “The role of HR@HQ their activities demonstrate value to this report are: Koninklijke Philips alternates between centralisation the enterprise and continuously Electronic, Johnson & Johnson, Cable and decentralisation and reflects the elevate their level of performance and Wireless and the BT Group. overall changing context of and professionalism. Overall, companies due to environmental functions are moving from a and internal forces.” position that is now part of industrial history and repositioning The most frequent reasons themselves to meet the challenges of underlying changes in HR@HQ are the present and future.

The newsletter Board Europe is published six times a year by The Conference Board Europe, 130 Chaussée de La Hulpe, box 11, 1000 Brussels, Belgium (Tel. 32/2 675 54 05, Fax 32/2 675 03 95, e-mail: [email protected]) and is edited by Sandra Lester. Opinions published in Board Europe shall not be construed as representing those of the Board's European Associates. All rights reserved. Reproduction in whole or in part permitted subject to due acknowledgement. 8