CEO Insights

Forging a high performing culture

Author: Jörg Rüdiger Thews - Director, PwC UK

For the past 14 years, I’ve been helping insurers to reshape their cultures as part of their wider change programmes. At the beginning, it was very difficult to get boards interested in culture. It tended to be seen as an afterthought, especially in comparison to more seemingly tangible influences on the business such as acquisition or new systems.

Now, boards are coming to realise that you can’t transform a business without transforming its culture. The realisation that we’d come to a turning point came when I was in a routine audit committee meeting with the CEO and other senior board members from a leading international group. We moved swiftly through a standard agenda, but when we started to talk about the organisation’s culture, behaviours and ways of working, they suddenly became animated and we talked long beyond the scheduled end. To them, value comes from people and therefore the culture that shapes how their staff behave is the essence of success.

But what if the culture proves resistant to change? Boards know the client focus, readiness to innovate and other cultural attributes they want. But, most are only scratching the surface because their high level expectations tend to have very little influence on the way employees behave and make decisions – how things are actually done within the organisation.

As we explore in a new report, Unleashing the value from values, you can’t just tell employees what you want from them. To make a real difference, you have to identify their most telling habits and routines and seek to actively shape them. This includes making sure your vision and values are clear and tangible enough to be acted upon. Examples might include going beyond a vague statement about valuing the customer to a commitment to only selling products when it’s certain they understand what they’re buying and why. The report also looks at the importance of focusing changes in behaviour on the key interactions that win and keep business, such as when a customer submits a claim. You can’t change a culture overnight. But, by focusing on these ‘moments that matter’, you can make a real difference relatively quickly.

Getting these and other key aspects of a winning culture right is now a key competitive differentiator, allowing your business to keep pace with the accelerating shifts in technology, regulation and customer expectations. Allowing your culture to drift will leave you struggling to stay in the game.

Read the full report, Unleashing the value from values, to find out more.

 
Jörg is a Director in PwC’s Financial Services consulting practice where he specialises in people and organisational change, applying innovative and creative technical thinking to solve clients’ commercial, business and people issues.

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How global companies can lean in, too

Author: Bob Moritz -  Chairman and Senior Partner, PwC US

As chairman and senior partner of PwC US and a member of the global Network Leadership Team, I’ve closely followed the debate about Sheryl Sandberg’s new book Lean In. With her recent trips abroad, she’s brought renewed attention to the critical challenge of diversifying corporate leadership around the globe. While Sandberg focuses on inspiring women to embrace ambition, I believe business leaders have a responsibility to lean in as well. At PwC we’re leaning in because we recognise that women can’t solve the leadership gap by themselves.

There are many concrete steps CEOs, in particular, can take. The first is to create accountability for diversity. At PwC, our network Diversity Leader is a line partner who sits on our Network Executive Team and reports directly to Dennis Nally, Chairman of PricewaterhouseCoopers International Ltd. The role’s a rotation, rather than a destination, and is used to develop high-potential partners.

The issues and barriers to leadership are different globally and the role of our Diversity Leader is to merge the progress we’ve made and advise, along with our Diversity & Inclusion Council (a body of international partners and diversity champions), what steps we can take to do even better. Although this structure might not work for all organisations, at PwC it serves to elevate the function and drive change. Among other things, the Diversity Leader ensures that territories report annually on actions they’ve taken to promote greater leadership diversity. This includes results they’ve achieved across a number of indicators meaningful to our business strategy. Each territory has a different legal and cultural environment. While it isn’t always constructive to compare countries directly, at PwC we’ve found it useful to set aside time – as we would with any other business issue – to discuss these actions and results with our territory leaders. The goal of this exercise is to identify areas where we might be able to collaborate, as not all programmes translate globally.

The second step is to create an inclusive culture. Here, programmes matter. While the ultimate goal of any diversity initiative is cultural change, formal programmes send a powerful signal. For example, 'Full Circle' is a programme that allows PwC parents in the US to 'off-ramp' from their careers, stay connected while they’re gone, maintain their technical credentials, and then return to the firm. Formalising this option gives people permission to pursue non-linear career paths. 'Mentor Moms' is an effort to match women returning from maternity leave with experienced mothers who are successfully juggling family and careers. Our Women’s Networking Circles provide a forum to discuss career advancement, and our members are using Lean In’s educational videos to enrich that conversation. While we still have progress to make, these efforts have yielded results. Over the last decade the number of women partners in our US firm has increased considerably, and five members of our 15-person leadership team are women.

Diversity initiatives also set expectations. PwC Germany runs an 'Up Talk' programme, which pairs talented millennial women with senior male mentors. The resulting 'co-mentoring' establishes mutually-beneficial relationships, providing insight across gender, generation, and line of service. Breaking the cycle of people sponsoring those who are similar to themselves requires intentional effort. Although change takes time, the number of female graduates Germany hires has been increasing annually since 2009, and last month PwC Germany announced a female to its territory leadership team as the head of clients and markets.

The third step is to create awareness that people sometimes make unconscious assumptions. Sandberg’s book catalogues unconscious biases people still may hold about women leaders – and these tend to pervade around the world, regardless of culture. We have a responsibility as an organisation to address those stereotypes. The PwC network hosts interactive sessions for our leaders about how to identify potential 'blind spots' and better understand how they may influence decision making.

Finally, we need to create environments where people have the flexibility to lean forward or back at different points. Career paths have to be less rigid, in order to accommodate the diversity of today’s global workforce.

I hope more of our women around the world are inspired by the dialogue Sandberg has generated to lean in and aim even higher in their careers. My work, along with my fellow PwC Network Leaders, is to make sure PwC leans in to meet those ambitions with opportunities, flexibility, and sponsorship. Then together we can help close the leadership gap.

Bob Moritz

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Read about PwC Lean In experiences in our recent Gender Agenda post, Leaning in Together 

Leadership, resilience and integrity

Author: Dennis Chesley - Global Risk Consulting Leader

What do Winston Churchill, Steve Jobs, and Mahatma Gandhi share in common? Of course, they shine as exemplars of political, technological, and social progress over the past century. They also top the list of historical and literary figures most admired by today’s CEOs, according to PwC’s 16th Annual Global CEO Survey.

Their respective paths to leadership began in worlds markedly different from ours, and that change continues to accelerate. Today’s world is arguably more peaceful, technologically-advanced, and equitable than it was in the twentieth century. However, geopolitical conflict continues to threaten us, technology has introduced new problems alongside new solutions, and more than a billion people continue to live in extreme poverty. Today’s CEOs recognise that in a volatile and uncertain world, they have much to learn from Churchill’s resolve amid crisis, Jobs’ adaptation to change, and Gandhi’s unwavering commitment to justice. More than ever, the job description of a CEO is not confined to that of business person. CEOs today also at turns must be politicians, problem-solvers, and philanthropists, among many other roles. In short, today’s CEOs consider resilience and integrity to be critical qualities of the twenty-first century business leader.

That’s why we’ve launched a series of articles and conversations with innovators within PwC and thought leaders outside of PwC about the value of resilience and integrity in our world today. The pieces explore the personal, professional, and systemic importance of integrity to resilient business and society. I hope you’ll visit our site at www.pwc.com/resilience to join the conversation.


Dennis Chesley is the Global Leader for Risk Consulting Services.

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Tax: A new risk to corporate reputation

Author: Rick Stamm - Vice Chairman, Global Tax

Tax has moved up the agenda of business leaders around the world. This does not come as a surprise to me or, I suspect, to many in the C-Suite at multinational corporations worldwide.

In the past 12 months we have seen a sharp rise in public debate on how businesses pay their taxes and on how countries levy them, a topic that has engaged governments, the media, citizen advocacy groups, NGOs and multilateral bodies such as the OECD. Tax avoidance will be at the heart of next month’s G8 summit in Northern Ireland, the first time that it has taken on such prominence at the meeting. The tax debate is adding a new dimension to the uncertain global business environment that we face in 2013.

Corporations are certainly feeling the heat – especially those who have found themselves in the media spotlight due to their tax strategy – and justifiably are concerned about the reputational and strategic risks. However there seems to be a disconnect. Our new report, Tax Strategy and Corporate Reputation, shows that almost half of CEOs do not consider corporate reputation a priority area for investment in the year ahead.

This seems contrary to the environment in which we are operating. It is my belief that tax strategy and managing this link to corporate reputation should become a higher strategic focus for businesses in 2013. Business leaders need to acknowledge that tax and the link to corporate reputation creates new risks that they cannot afford to ignore.

Explore this issue in detail and download the report here on pwc.com: 16th Annual Global CEO Survey: A focus on tax.

Rick Stamm is PwC’s Vice Chairman for Global Tax. He is responsible for building the capabilities of Tax practices across the PwC network of firms, as well as for interacting on Tax and business issues with many of the firm's larger clients.

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Is your financial services talent model fit for growth in today’s business climate?

In our recent 16th Annual Global CEO Survey, CEOs of financial services organisations told us that talent shortages are one of the biggest threats to growth today.  Attracting talent has become more difficult given the negative perception of the industry following the financial crisis.  And while, historically, a key part of the employee value proposition within the industry has been built around financial reward, the funds needed to sustain the old levels of compensation are simply no longer there.

These people challenges come at a time when it’s critical for financial institutions to rebuild trust with disenchanted customers - and society as a whole - in order to strengthen customer loyalty, retention and growth. But before re-engaging your customers, you need to have your own people on board.

Our new report, Seizing back the people agenda, looks at the steps needed to move your people strategy forward in today’s business climate – from attracting and retaining the right people, to organising them in the most effective way, shaping the right culture and managing performance and reward.

A culture of integrity, customer focus and risk-awareness is key to re-engaging with customers and rebuilding confidence in the financial services industry. There are clear competitive advantages for getting this right including better targeting of products, stronger reputation and more effective retention of key people.

Pay is still important, but not at the expense of everything else. There needs to be a more viable balance between risk and capital demands, employee reward and the returns needed to attract investment and fund future growth.


Jon Terry
Global FS HR Consulting Leader
Email: Jon Terry 

Jon Terry is PwC’s global financial services HR consulting leader, based in London. Jon has over 25 years experience advising banks, insurers and asset managers on their people challenges, including assisting them address their recruitment, talent, retention, remuneration and employee communication issues

The year of the fox

In recent years, CEOs have needed to call on one characteristic over all others: resilience. They’ve needed to be agile and wily. They’ve needed to know when to be bold, when to take their chances and when to retreat from risk.

There’s some provenance to this. Isaiah Berlin in his 1953 essay, “The Hedgehog and the Fox”, says that people fall into one of two categories - hedgehogs or foxes. In business, hedgehogs can be great, visionary leaders. They’re focused, driven and resolute – “They know only one thing, but they know it well.”

Foxes are less fixed in their views - ever-shifting and comfortable with ambiguity. This pragmatism has been an essential characteristic for business leaders in recent times when grand ideas have been squeezed out by management challenges that may only stretch as far as the next quarter’s financial results.

When asked about the leader he most admired for PwC’s recent 16th Annual Global CEO Survey, one Canadian CEO went for Alaric, king of the Visigoths, because:

“He invaded Rome with an elite military force. He did it with a combination of planning execution and the inherent belief that the existence of a good plan was far superior to the search for the perfect one. His ability to act with sufficient information defined his leadership style.”

The tenets of Nassim Nicholas Taleb’s new book, Anti-fragile, are aligned with the survey’s findings. Resilience, he says, involves being thick-skinned, being able to learn quickly from mistakes and failures, and being flexible enough to bend to grasp new opportunities.

But we need hedgehogs too. As well as dealing with adversity, the role of a leader is to set long-term strategies in an environment where growth will require new ways of thinking and doing things. Pragmatism can help you survive but you need vision to thrive.

There are visionaries working in businesses everywhere. It’s time they came out of hibernation.


Andrew Smith
Thought Leadership, PwC UK
Contact: Andrew Smith

Andrew Smith is a member of PwC’s Thought Leadership team in the UK.

Read more about the leaders and leadership qualities CEOs most admire.

Leadership and the stories we tell

On Business Day at the Nobel Peace Prize Forum last month – which coincided with International Women's Day – Nina Easton of Fortune asked aloud whether the world might be more peaceful if there were more women in leadership positions. She went on to suggest that it might be a less risky place with more women in charge.

That’s one of the interesting issues on which PwC's 16th Annual Global CEO Survey question on CEOs' role models might shed some light. PwC asked over 1,000 global CEOs to name leaders from history and literature that they admired. The results showed that female CEOs were less likely to name a military or wartime role model than their male counterparts. However, military and/or wartime leaders were the most common type of leader identified overall. Are the mostly male CEOs who responded telling us that they see themselves as going to battle every day?

For the most part, CEOs told PwC that they admired more what leaders do (action) than who they are (character). Action-oriented traits were typically the reasons given for admiration, from pragmatism to persistence and from vision to innovation. But some CEOs suggested that character (from caring about people to demonstrating ethical values) is critical to the ability of business to make the world better in the long run. Interestingly, even though psychologists and philosophers tell us that we learn much of our character from stories, barely more than a handful of CEOs named literary figures as role models. Nearly all of them opted for historical role models instead. If CEOs read more stories, would they be more inclined to write more endings in which all of the characters lived happily ever after?

 

Christopher Michaelson
Strategy and Risk Institute Leader, PwC US
Email: Christopher Michaelson

Christopher leads PwC’s Strategy and Risk Institute, drawing on business practitioners’ experience and academic and NGO partners’ knowledge and analysis to understand risks and their strategic implications for business objectives and social well-being.

PwC ranks China as world’s #1 investment destination

The China Development Forum is an annual meeting that aims to promote a better understanding of the key economic and social issues faced by China. The CDF brings together an impressive group of academics, policymakers, and businesspeople from around the world all of whom bring to the event thought-provoking ideas concerning China’s way forward.

At this year’s CDF, which was held in Beijing on March 23-25, I had the opportunity to launch a PwC research report --- Choosing China: Insights from multinationals on the investment environment --- that provides compelling insights about how CEOs perceive investment opportunities in China; and the changes they believe the Chinese government should consider in order to enhance China’s standing as a destination for inbound investment.  The report is based on a survey of 227 CEOs and additional in-depth interviews with 11 others.

The CEOs have an interesting story to tell. More than half (56%) chose China above other developed and emerging economies --- including Brazil, Russia, India and the US --- as their first preference in terms of foreign investment. Moreover, over 70% of the CEOs with current operations in China plan to increase their investment over the next five years. So, it’s a safe bet that China’s attractive business environment --- including an expanding domestic market, a large pool of skilled workers, and favourable tax regulations --- will continue to make this remarkable country a magnet for cross-border investment.

But while it now ranks as the world's top destination for foreign investment generally, our research also reveals that in particular sectors, other countries are outpacing China. For instance, while most consumer and industrial product companies name China as their preferred investment destination, businesses in the technology and financial services sectors view Brazil more favourably. Clearly, with dynamic economies like Brazil close on its heels, China’s policymakers must take additional steps to maintain its attractiveness to foreign investors. Our research shows that among those steps are policies to improve government transparency and accountability and strengthen anti-corruption efforts. Chinese officials are well aware of the necessity of taking these sorts of actions in order to provide investors with greater certainty and a more level playing field in which to do business.

Most significantly, our study confirms that CEOs remain optimistic about China’s prospects and are ready to work in partnership with China’s businesspeople and policymakers to ensure that investments in that country deliver value to all parties. Read the full report, produced by PwC in support of the China Development Forum, to find out more. 


Dennis Nally
Chairman, PwC International Ltd. 

Dennis Nally leads the global network of PwC firms.

Resetting the compass

Since 2012 proved to be a less than impressive year for global deal flow, I know many people are looking closely at the markets for signs of an improvement. And I think we’ve spotted one, as an interesting trend of buyers from emerging markets acquiring developed market companies has started to emerge.

In 2012, high-growth markets invested over US$32.6 billion in mature market targets - almost three times the 2005 amount. Over the past five years, a total of US$161 billion has flowed west from China, India, the Gulf Region, Russia and Brazil - more than in the other direction.

I think this trend represents a huge opportunity for mature market companies. In our latest deals report, Resetting the compass: Navigating success in deal-making for mature market sellers and high growth market buyers, we explore what motivates emerging market companies to acquire developed market ones. For some, it’s to gain access to established market channels. Others are looking for brands, know-how or intellectual property that they can leverage at home. Certain emerging market companies feel that the time’s ripe to go global – and divestment and restructuring in some mature markets are providing them with particularly alluring deals.

Having advised on many such deals, it’s clear to me that buyers and sellers, unfamiliar with each other’s processes and corporate and cultural contexts, often need support. There’s no ‘one size fits all’ approach: differences in valuations, processes, decision-making, and completion timeframes, all need particular attention.

From the emergence of privately-owned Chinese companies as international investors and Indian companies going global, to the shifting patterns of outbound M&A by Russian, Gulf and Brazilian firms, it’s important that developed market sellers understand what these investors want - and get to grips with a new deal dynamic. For those of you who want to get a head start, take a look at our new report which offers guidance on how to make the most of the opportunities emerging market investors can offer.


Nick Page
Partner, PwC UK
Email: Nick Page

 

Nick leads the Financial Services team in Transaction Services in the UK, and is a member of the Global Financial Services Executive Team.  In these roles Nick advises banks, insurance companies and private equity investors on investments and disposals of financial services businesses and loan portfolios.  Nick also has considerable experience of deals involving businesses in and from emerging markets; he was seconded to PwC Russia in the mid-1990s and has led projects throughout the world.

Stop talking about diversity

Tomorrow, 8 March, marks International Women's Day. As we celebrate the achievements of women in the workforce and beyond, my advice for leaders may seem counterintuitive: Stop talking about diversity.

In this year’s Annual Global CEO Survey, CEOs cited their explicit focus on workforce diversity, including programmes to encourage diversity in the leadership pipeline. This is not surprising or new information. In our interdependent and volatile global economy, a variety of experiences and thinking styles are integral to success and provide some inoculation against uncertainty.

What I found compelling in this year’s survey is that CEOs have changed the conversation. They’ve framed diversity broadly using the vocabulary of growth and sustainability. I picked up three distinct themes in their responses that link business success with diversity, although they don’t explicitly mention diversity. I believe that discussing diversity implicitly — as an integral part of business and growth — will sustain momentum in the face of uncertain markets and help us to tap into the talent we desperately need.

Excise ‘diversity’ from your vocabulary

When we talk about diversity globally, word choice can impede progress. In mature markets, people are often tired of talking about it — they have ‘diversity fatigue.’ In emerging markets, they don’t always believe diversity is relevant, because they see it as an ‘imported’ concept.

When we take ‘diversity’ out of the conversation, the essence of its meaning as a business driver becomes clear. It’s intuitively seen as vital to global growth and sustainability.

As A.M. Naik, Executive Chairman of Larsen & Toubro Limited, India, observes, “Obviously, you need different types of orientation, organisation, structure and leadership to build international presence quickly. Being unable to do that is our biggest threat.”  Traditionally, I believe we’ve made the conversation too narrow, about only one or two facets of diversity; CEOs have started to discuss diversity in terms of its real power — a broad range of perspectives and experiences that bolster business.

Increase transparency with customers and employees

Trust and transparency emerged as strong trends in this year’s survey. Overwhelmingly, CEOs said customers, clients, local communities, and users of social media will significantly influence their business strategies.

Again, diversity is not mentioned explicitly, but it’s inherent in these statements. With a multifaceted customer base, businesses must adapt to their various needs — especially if they want to grow that base, which over half of CEOs say is a priority in 2013. Customers have increasing participation in the decision-making process, and companies that understand and respond with agility will stay relevant.

Transparency is equally pertinent to talent conversations. Alex Lo, President of Uni-President Enterprises Corporation, Taiwan, said, "If a company has a clear [staff development] framework and explicit objectives, everyone is able to understand what role to play, just like in a ballgame. And when people systematically do the right things in the right way, there’s an increase in productivity."

With transparency, talented professionals understand what it takes to rise to the top. Business will move away from a ‘who you know’ mentality that maintains the status quo. By creating transparency in leadership role competencies, leaders can increase objectivity and level the playing field.

Develop junior talent now

Many CEOs reported they develop their leadership pipelines by involving managers below board level in strategic decisions. Indeed, including the perspectives of different generations is another way to stay relevant with customers and connect meaningfully with employees.

The conversation about diversity has often been limited to senior women. Europe has implemented quotas for women on boards, and detractors lament the lack of qualified candidates. Although I’m not convinced that adopting a different mechanism of favouritism will help women in the long run, I do recognise gender imbalance exists today. Despite the influx of female talent, women have not organically risen to the top of organisations.

By shifting the conversation to include junior women, we have the opportunity to press the right lever for balanced leadership teams. We should put our energy behind something we can influence right now: grooming junior women for future leadership roles. This is a sustainable solution for a pipeline full of talented men and women.

As CEOs change the conversation about diversity, we raise the bar for talent and transparency. We enhance trust for increased quality, profitability, and sustainability. One CEO encapsulated this beautifully when he said that in uncertain times like these, balanced investment and leadership helps companies keep their performance on an even keel and take advantage of growth avenues, wherever they may be.

When talent rises to the top, everyone wins.

Find tools and information about developing millennial women now for future leadership roles at the PwC International Women's Day site.

 

Dennis Nally
Chairman, PwC International Ltd. 

Dennis Nally leads the global network of PwC firms. For more about how PwC is changing the conversation about diversity and talent, please visit pwc.com/women.