and tactical moves made at the Battle of Waterloo

Volume 22 • Number 11/12 Board Europe A NEWSLETTER FOR MEMBERS OF THE CONFERENCE BOARD IN EUROPE November/December 2007

Inside 3 The Conference Board Business Action on Climate Change names Gail Fosler President A Report of the Climate Change Forum By Marc Stegeman New Corporate Security Advisor The Conference Board Global climate change is now a generally accepted fact – a fact of science, a fact of business, and ECB Conference and a fact of daily life for a growing number of people throughout the world. A recent draft Green Paper from the European Commission stated: “The growing evidence of the cost of climate change points to one simple conclusion: we cannot afford to do nothing.” Council News 4 What practical steps can European business take to address the pressing challenges of • Corporate Communications • climate change? Speakers from government, regulatory bodies, industry and NGOs came • Learning, Leadership & together on 10-11 October to discuss the way forward at a Conference Board forum hosted Organisational Development by Belgacom. • Innovation • Hungarian Finance Carbon Trading and Taxation Executives In 2005, the European Union launched the Emissions Trading Scheme (ETS), the first • e-Procurement international trading system for CO2 emissions in the world. Despite a rocky start, there are • Compensation & Benefits signs that the “cap & trade” approach is gaining momentum.

“The great thing about the Emissions Trading Scheme and other types of cap and trade 8 CEOs’ Top 10 Challenges schemes is that it has put a price on carbon,” said Nick Robins, Head Climate Change Centre of Excellence, HSBC Holdings. “For the past 150 years we have been developing on the back of very plentiful fossil-fuel reserves without paying the environmental costs.….If carbon cost starts to be included in prices in the economy then we are going to see quite a transformation in the way that we use and consume energy.”

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Another option under consideration in Educating the Consumer emissions that have been put up into the Europe is carbon taxation, by which the Many companies are making huge efforts atmosphere over 150 years, so it really is end user pays the final tax. A carbon tax to develop environmentally responsible incumbent upon the Europeans and the would promote environmentally res- products but it is important to educate North Americans to make those changes ponsible behaviour at the consumer or the consumer to make the right choices in lifestyles and economic systems to end-user level, all the while providing for the right reasons. Procter & Gamble’s show that it is possible to have low- national governments with revenues that recent European marketing campaigns carbon affluence, so that these are then can be allocated to carbon-reduction for its laundry-detergent products, for the models that can then be adopted in programmes. example, highlight the energy that emerging markets.” consumers can save when they wash The Price Factor their clothes at lower temperatures. The It is a daunting task that requires Soaring energy prices have made campaign has been very successful, both concerted action – a partnership of efficiency a business imperative. But for P&G and for the environment. government, business and citizens. It is many companies are now finding that a up to each and every one of us to seize greener approach can do more than cut Andrew Fisk, Head of Fabric Care every opportunity to make a difference, costs. Offering environmentally res- External relations at P&G, underlined the no matter how small or incremental. ponsible products and services can also need to explain energy-saving benefits mean increased market share, improved to the consumer in language that they “If we wait for the new solutions of the brand awareness, stronger customer understand, in practical rather than future,” said Theo Walthie, Dow Chemical loyalty, and higher profits. Toyota Motor abstract terms. Like other speakers, he Senior Energy Advisor, “we won’t do Co.’s Prius hybrid car is a good example. stressed that there is no room for enough of what needs to be done today.” compromise: “You have to deliver a great General Motors Corp.’s Saab division in performance in your product and an Sweden is having similar success with the environmental benefit.” Saab 9-5 BioPower, a “flexfuel” model that can run both on petrol and ethanol A Developmental Challenge and provides substantially greater horse- China, India and the other emerging power with a smaller, more fuel-efficient markets are already feeling the impact of engine. The 9-5 BioPower is now the No 1 climate change, and they now see this environmental car in Sweden, and GM is issue as a fundamental part of their currently looking at ways to further future economic growth. As they develop capitalize on this technology in its other their climate change strategies, Europe markets. “The trick is not to compromise and North America still have a clear on performance,” said Kjell Bergström, guiding role to play. President and CEO of General Motors Powertrain – Sweden AB. “You have to “Climate change is a problem of stock,” Emmanuel Raskin, Senior Environment offer attractive products.” says Nick Robins. “It’s a problem of Manager, Belgacom, welcomes participants.

Climate Change Forum participants. Emmanuel Raskin and Concetta Fagard of Belgacom and Barbara Reno of The Conference Board open the forum.

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115513_news_11_12_nov_dec_07.indd5513_news_11_12_nov_dec_07.indd 2 99/11/07/11/07 11:22:3211:22:32 The Conference Board names Gail Fosler President

Gail D. Fosler has been named President key European and pan-Asian markets, of The Conference Board. The including China. Until her successor is appointment was announced by Jonathan named, she will continue as Chief Spector, President and CEO of The Economist. She will extend her Conference Board. Under the new responsibilities to the full scope of The structure, Fosler will report to Spector in Conference Board's knowledge creation his role as Chief Executive Officer. and will also lead the expansion and integration of the organisation's global The Conference Board. Her focus on Gail Fosler, who has served The presence. engaging the most senior executives Conference Board in a number of around the world on substantive issues capacities over the past 18 years, most Said Spector: "Since joining us 18 years makes her extremely well qualified to recently as Executive Vice President and ago, and in the short time I have been help lead us forward as we try to take The Chief Economist, will remain in charge of here, Gail has been an invaluable thought Conference Board to the next level of the organisation's global operations in partner in setting the future direction of performance."

New Corporate Security Advisor Economics Conference

How safe is your company from a with the European Central Bank and Banque de France terrorist attack? If a major crisis were to occur, would your company The Creation of Economic and Corporate be sufficiently prepared? Would it still be able to do business? Have Wealth in a Dynamic Economy your people been properly trained to identify risks at work, when , 16-17 January 2008 travelling or in their personal lives? Are any of the company’s facilities The Conference Board will join forces with the European especially vulnerable? What about Central Bank and Banque de France to present a high-level the corporate headquarters? conference on wealth creation in a dynamic economy.

To help answer such questions, Session topics include: Crispin Black MBE, Director, Corporate The Conference Board Europe • The economic policy environment: market structure Security Network has appointed Crispin Black MBE and productivity growth as Senior Advisor, Corporate • The role of financial markets in economic growth Security. A well-known • Facing the challenges of innovation and globalisation independent intelligence analyst • The creation of economic and corporate wealth in and expert in terrorism, with a distinguished background in the euro area the British army and intelligence services, Crispin will be Among the confirmed speakers are: Jean Claude Trichet, presenting in-house briefings for member companies, and Governor of the European Central Bank; José Manuel Barroso, will establish a Corporate Security Network as a private President of the European Commission; Josef Ackermann, forum for research and confidential exchange on critical Trustee of The Conference Board, Chairman of the security issues. Management Board and the Group Executive Committee, ; Gail Fosler, President and Chief Economist, During a webcast in September, Crispin Black elaborated on The Conference Board; and Martin Wolf CBE, Associate what business executives need to know about terrorism and Editor and Chief Economics Commentator, The Financial how they can prepare for a terrorist attack. He explained that Times. there is no need to spend vast amounts of money on security. Companies can make realistic, cost-effective responses to There will be a limited number of places for Associate the current uncertain security situation. companies. To receive a full agenda and apply for a place, contact Andrew Tank, Executive Director for European For more information, please contact Keith Holland, Senior Research and Communications, The Conference Board, Regional Director, The Conference Board Europe: keith. [email protected], [email protected], tel. +44 207 355 5039 tel. +32 2 675 5405

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115513_news_11_12_nov_dec_07.indd5513_news_11_12_nov_dec_07.indd 3 99/11/07/11/07 11:22:3511:22:35 Council News

Corporate Communications – Changing the Landscape of Corporate Communications Zurich, 19-20 September

Social media is the term used to internally. Sebastian Drews of IBM encompass the technology and and Andreas Parchmann of practices people use to share thoughts, Philips demonstrated how collaborative opinion, information and perspectives techniques such as blogs, forums and online. Blogs, Wikis, Podcasts, wikis encourage employees to contribute Facebook, YouTube and Second Life are their ideas and to feel more engaged, but Meeting host Francis Bouchard, Global just a few of the many social media stressed that clear guidelines must be Head of Corporate Communications, Zurich Financial Services. applications that are changing the put in place if security and regulatory landscape of corporate communications. risks are to be avoided. Serge Kochen of A generation gap has sprung up between Renault Trucks pointed out that on-line corporate communications executives conversations can help build bridges and younger web-users entering the when two distinct corporate cultures workforce. Companies are being urged come together, as in the merger with to embrace the full range of new and Volvo. rapidly evolving technologies known as Web 2.0 but many do not know where to Meeting host Francis Bouchard of start or how to find the social media Zurich Financial Services showed that strategyTitre that 1 best fits their organisation. on-line techniques can be successfully used in global talent management for At Titretheir September 2 meeting, Council communicators, helping to identify members exchanged experiences of specific skills, allocate resources and Serge Kochen, Sales & Communications usingplace the new technologies in corporate map careers in line with the company’s Manager, Renault Trucks.. communications. New media “guru” strategic objectives. Neville Hobson and David Brain, President of Edelman Europe, explained Sadly, this was the last meeting for Corporate Governance that social media represents both a Stefan Lorentzson of Volvo, who is change and an opportunity for cor- stepping down as Council Chairman to New Capital Market Issues porate communicators, who should take up a new post overseas. Sandra effectively combine new media tools Lester, Council Director, thanked him Frankfurt, 17-18 October with more traditional methods in a way and former Council Vice-Chair that best suits the organisation and the Katharina Auer of Shell for their Hosted by Deutsche Bank, the Council turned its job in hand. One thing was made very enthusiasm and support over the past attention to the role of private equity firms. clear. Companies no longer have a few years. Members were pleased to welcome Grant choice as to whether they use social Kirkpatrick, a Senior Economist from the OECD, media or not. Employees and who looked at the impact of private customers are already writing about equity in European capital markets them in the blogosphere and can harm and the implications for European corporate reputations by posting corporate financing. A German whistle-blowing video-clips on YouTube. perspective was provided by Britta The “command and control” approach Grauke, Partner in the international to corporate communications is no law firm Weil Gotshal & Manges, longer appro-priate, as message who spoke about how foreign control has shifted to the public investors are participating in private domain, effectively putting the “public” equity transactions. back into public relations. Dinner speaker Dr Christian Nor is the old top-down model relevant Strenger, Director, DWS Invest- to internal communications, as social ment, informed the Council about media drives a more open, transparent Sandra Lester, Council Director, with some of the key trends in European and democratic way of communicating David Brain, President, Edelman Europe. corporate governance and voting issues. The next day started with a Members continued th

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Learning, Leadership & Organisational Development Talent Management St Paul de Vence, 27-28 September

What drives executive success? Ettie McCormack, meeting host and Director, Development Systems, Unisys University, believes that decision styles – how managers use information and make decisions – are even more important than skills and experience. Styles are all about situational fit. They can and do Some members of the European Council on Learning, Leadership change and their effectiveness depends entirely on the and Organisational Development at their meeting in St Paul de situation. Ettie explained how Unisys is implementing a Vence. Meeting host Ettie McCormack, Director, Development Systems, Unisys University, is seated second from right. competency based approach to talent management, from workforce planning through to retention strategies. This If companies are to execute their business strategy success- includes looking closely at the leadership competencies that fully, they need to have the right people in the right place at the are now taking place. She emphasized that one universal right time and at the right price. Strategic workforce planning “leadership model” is not right. Different levels, cultures and (SWP) makes this possible, as it enables an organization to jobs demand different styles and the ability to evolve drives adjust and respond quickly to immediate and future changes personal success. to its business requirements. Dr Mary Young, Research Fellow, The Conference Board, presented highlights from research Looking closely at how styles change as executives progress findings into strategic workforce planning, underlining the up the organisation is part of Korn Ferry’s research into the demographic, economic and technological changes that are competencies of best-in-class. Clive Newton, the company’s turning it into a “hot topic” for companies. Common challenges Senior Client Partner, Leadership Development Solutions, said include developing a common language to catalogue skills and that top CEOs leave task focus to their subordinates and pay competencies, integrating SWP with business planning, and significantly more attention to developing social relationships developing HR capability in business strategy and quantitative and adopting highly participative styles. analysis.

panel discussion on shareholder voting policies, processes and procedures, moderated by Guy Jubb, Investment Director, Head of Corporate Finance, Standard Life Investments. Members were pleased to welcome John Wilcox, Head of International Corporate Governance from the Council Director Dr. Carolyn Brancato major US investor TIAA-CREF who travelled from Named to the Directorship 100 the to discuss voting issues as well as access to the proxy. Dr. Carolyn Kay Brancato, Director of the European Council on Corporate Governance and of The Conference Board Governance Centre and Directors' Institute, has been named to the Directorship 100, a list of the most influential individuals in corporate governance.

"Carolyn Brancato's ideas and contributions have added significantly to the corporate governance debate both at the policy level and in the boardroom itself," says Jeffrey M. Cunningham, CEO and Chairman of Directorship. "Her work as founder and director of The Conference Board Governance Centre continues to serve as a valued source of information for those of us who are committed to the improvement of our good corporate-governance practices."

Jon Spector, CEO of The Conference Board, comments "Carolyn Brancato's stewardship of corporate governance work at The Conference Board for nearly 15 years has brought our organisation to the forefront of research in this critical area. We are proud that she has chosen to do her important research with us and we congratulate her wholeheartedly for this honour inued their discussions over coffee. which she richly deserves."

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115513_news_11_12_nov_dec_07.indd5513_news_11_12_nov_dec_07.indd 5 99/11/07/11/07 11:22:3711:22:37 Council News Hungarian Finance Executives Hungary’s Economic Outlook Innovation Budapest, 21 September Innovation in a Cold September meeting of the Hungarian Climate Each September the Hungarian Council Council of Finance Executives of Finance Executives devotes a The real wage level is declining, and Helsinki, 27-28 September meeting to the evaluation of the Central this is affecting purchasing power. The and Eastern European (CEE) economy Hungarian currency (HUF) is still in order to help members with their volatile. Hungary has lost its leading Technology and innovation is a top priority in budgeting processes. Speakers from position within CEE and now is in the Finland – the country invests a massive 3.5% of GE Budapest Fund, ICEG European medium performers’ range. GDP in Research & Development. The Centre, and three separate banks September meeting offered members the agreed that Hungary is getting closer to Looking ahead, Council members opportunity to understand how a small country the Maastricht criteria of joining the expressed hope that a side-effect of has managed to develop global brands driven , thanks to last year’s the US mortgage crisis and its by technology. government spending cuts and the implications for the US economy might focused efforts of the so-called lead to increased investments in The meeting was hosted by Borealis, a leading, Convergence Programme. Participants emerging markets and in Hungary. All innovative provider of plastics solutions based believed that the beginning of 2008 will agreed that China is going to play an on polyethylene and polypropolene. Members herald a moderate improvement in the increasingly important economic role were privileged to visit the company’s Hungarian economy. On the minus side, and this will have an impact on global innovation centre at Porvoo and the catalyst the spending cuts had a negative growth, inflation and exchange rates, research laboratories. Another highlight was a impact on GDP growth and on inflation. also in Central & Eastern Europe. visit to Neste Oil’s new biofuel plant.

TEKES, the main public funding organisation for R&D in Finland, hosted the Council on the second day. TEKES aims to develop technology, but views the development of personal networks as equally important.

A special session looked in-depth at Council members’ needs. Dr Kai Engel, Vice President, A.T. Kearney set the scene with a presentation on good practice in innovation management. Members then split into three working groups, arranged by industry, to take part in a self-assessment exercise of their innovation management capabilities. The results of this benchmarking exercise will be consolidated by A.T. Kearney in time for the next meeting in February. The aim is to start building a future roadmap for the Council that will ensure relevant prioritisation of topics. The roadmap will become operational from the May 2008 meeting of the Innovation Council. Self-assessment, in working groups, of innovation management capabilities. Standing are Duncan Hine (left), Council Director, and Dr Kai Engel of A.T. Kearney.

Visiting Borealis’ Innovation Centre at Porvoo, Finland.

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115513_news_11_12_nov_dec_07.indd5513_news_11_12_nov_dec_07.indd 6 99/11/07/11/07 11:22:3911:22:39 Council News Compensation & Benefits e-Procurement Global Insights Supplier Performance , 11 October Management The first joint meeting of the Inter- expatriates and frequent business national and European Compensation travellers – experienced and/or expert Windlesham, Surrey, 17-18 October & Benefits Councils took place in employees who typically spend around October. This groundbreaking occasion six months of the year out of the office applies a single process worldwide to was attended by 44 council members on overseas assignments, each lasting measure supplier performance efficiently. – 30 based in Europe and 14 based in a few weeks. Martina Bauer, Sales Consultant to Siemens the United States – representing AG, explained to members of the organisations from a cross-section of The use of long-term incentives as a e-Procurement Council how suppliers are industries, including oil and chemicals, means of attracting and retaining evaluated and classified in order of automotive, communications, financial executives was also examined from US importance. If suppliers are given access to services, logistics, and information and European perspectives. It was the results, they can benchmark their own technology. agreed that differences exist in both results against competitors, thus driving grant levels (with US executives improvement programmes forward. Suppliers Discussions were wide-ranging, provid- generally being offered higher grants showing continued mediocre results are ing insights into issues, such as global than those in Europe) and in the mix of phased out in favour of competitors. rewards and long-term incentives, as incentives, with share options currently well as how to attract and retain talent being more popular in the United Paige Leidig of SAP presented a case-study on in China, Eastern Europe and the States than in Europe. However, in how Steelcase implemented a successful Middle East. Members also had an both cases the trend is to switch to strategy with supplier self-service portals, opportunity to highlight hot topics that other vehicles; in Europe to per- which are particularly important for included: the trend towards central- formance-vested restricted shares/ companies’ strategic suppliers. Finally, a isation of compensation and benefits performance shares, and in the United session on e-invoicing underlined the fact that functions in both Europe and the States to time-vested restricted the market of e-invoicing technology is United States as a way of focusing shares/share units. fragmented. Technology providers in this knowledge and of achieving a more space come from different angles, e.g. consistent and quality service around The debate continued with questions scanning, software providers, integrators, the world; the cost versus the value of about the effectiveness of long-term connectivity, and hence have different company cars; and the pros and cons incentives. One European member approaches. of harmonizing compensation and argued (with some support from his benefits following mergers and US counterparts) that these incentives acquisitions. have little effect on individual be- haviour, that their expected value is Two companies – one from Europe and rarely a good measure of employees’ the other from the United States – perceived value, and that they often discussed their expansion into fail to keep employees engaged with emerging markets and the challenges their employer. of managing these operations given the scarcity of local talent. In both cases, a need was expressed for more

Eli Lilly and Company was host to the European Council on e-Procurement in October

From left: Véronique Vidal, e-Procurement Manager, Total S.A.; Davide Ravazzoni, Head Global Procurement System, F. Hoffman-La The first joint meeting of the European and International Councils on Compensation & Roche Ltd; Paul Brackel, Council Director. Benefits in Brussels

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115513_news_11_12_nov_dec_07.indd5513_news_11_12_nov_dec_07.indd 7 99/11/07/11/07 11:22:4111:22:41 Regional Comparison Table European CEOs give Relative Cite challenge as being Ranking Top 10 challenges of “greatest concern” Asia N = 85 Priority to Excellence 1 Finding qualified managerial talent 38.6% 2 Sustained and steady top-line growth 37.3 3 Excellence in execution 36.1 of Execution 4 Seizing opportunities for expansion/growth in China 35.8 5 Profit growth 32.1 6 Corporate reputation 30.5 Execution is taking precedence over profit and top-line growth V 7 Customer loyalty/retention 28.0 as a focus for CEOs in Europe and around the world, according 8(t) Speed, flexibility, adaptability to change 26.5 to The Conference Board’s latest annual global survey of 769 8(t) Consistent execution of strategy by top management 26.5 global CEOs from 40 countries. When asked to rate their 10 Seizing opportunities for expansion/growth in India 22.5 greatest concerns from among 121 different challenges, chief Europe N = 170 executives participating in this year's survey chose excellence 1 Excellence in execution 39.6% of execution as their top challenge and keeping consistent 2 Sustained and steady top-line growth 38.3 execution of strategy by top management as their third greatest 3 Speed, flexibility, adaptability to change 32.9 concern. Sustained and steady top-line growth, which led the 4 Consistent execution of strategy by top management 30.5 pack last year, now ranks second, with profit growth fourth, 5 Profit growth 29.2 and finding qualified managerial talent fifth. 6 Finding qualified managerial talent 27.4 7 Customer loyalty/retention 26.6 "This year's overall top challenge shows that CEOs from around 8 Corporate reputation 26.5 the world are realizing that strong execution is a critical factor 9 Speed to market 22.6 10 Stimulating innovation/creativity/enabling in driving profits and revenues," says Jonathan Spector, entrepreneurship 22.3 President and CEO of The Conference Board. "These executives United States N = 409 are also becoming increasingly aware of the crucial role that 1 Sustained and steady top-line growth 41.3% people play in growing their companies." 2 Excellence in execution 39.6 3 Consistent execution of strategy by top management 38.5 The annual CEO Challenge Top 10 report from The Conference 4 Profit growth 29.9 Board details specific challenges that CEOs face across 5 Customer loyalty/retention 25.6 regions, as well as by the company's size, industry, and level of 6 Finding qualified managerial talent 20.9 success — all factors affecting the concerns of CEOs. 7 Top management succession 20.1 8 Corporate reputation 19.7 9 Stimulating innovation/creativity/ CEOs from Europe show a greater concern with getting new, enabling entrepreneurship 19.2 more responsive ideas out sooner, a finding that might be 10 Speed, flexibility, adaptability to change 18.2

based on the needs of companies operating in a more mature t = Tied for this ranking with at least one other challenge based on percent rating as being “my market. greatest concern(s).”

The CEO Challenge survey was conducted during the first quarter All findings and data in this report represent the accumulated of 2007. Respondents were asked to rate the magnitude that each experience of the senior executives surveyed. A subsequent challenge poses over the next 6-12 months on a scale of 0 (not report will explore the implications of this year's survey findings applicable) to 5 (my greatest concern). The following table shows as articulated by chairmen and CEOs of leading companies the top ten challenges identified by CEOs around the world. from a range of industries around the globe.

Top 10 Challenges Overall* N = 769 Relative Cite challenge as being Ranking of “greatest concern” citizenship/ sustainability

1 Excellence in execution 38.4% diversity

economics 2 Sustained and steady top-line growth 36.8 ethics governance CEO Challenge 2007 3 Consistent execution of strategy by top management 31.8 human resources Top 10 Challenges leadership research report R-1406-07-RR 4 Profit growth 28.4 marketing operations 5 Finding qualified managerial talent 27.2 risk management

6 Customer loyalty/retention 26.3 Excellence in Execution 7 Speed, flexibility, adaptability to change 25.4 8 Corporate reputation 23.7 9 Stimulating innovation/creativity/ enabling entrepreneurship 18.7 CEO Challenge 2007: Trusted 10 Speed to market 18.2 Insights for Top 10 Challenges. Business Report 1406-07-RR Worldwide * Weighted by regional representation in global GDP (Asia, 21.7 percent; Europe, 35.1 percent; the United States, 28 percent; and other, 15.2 percent). GDP data from the International Monetary Fund, World Economic Outlook Database, September 2006.

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 W the Board's European Associates. All rights reserved. Reproduction in whole or in part permitted subject to due acknowledgement.

United States: The Conference Board Inc., 845 Third Avenue, New York, NY 10022-6601, USA. Asia-Pacific: The Conference Board, 22/F, Shun Ho Tower, 24-30 Ice House Street, Central .

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