Beyond business reason

Abb corporate social responsibility

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01-02 Tnt, some employees during Tnt operation convention and “Trofeo Tnt”, the company’s football tournament in 2008. 03 Abb, italian headquarters based in Sesto San Giovanni, Milan. CSR Abb is a firm that keeps on demonstrating engagement and values sharing, with employees, a range of community goals that extend beyond closely business-linked reasons.

Beyond business reason

Tnt Human Resource Objectives

• Build a consistent approach to people management throughout the division; • Provide aligned, business relevant and timely Hr management information at all levels; • Improve effectiveness, efficiency and consistency of learning and development in the division; • Develop express capability and competency at all levels of the division; • Monitor and improve people management measurement and performance; • Review and align compen sation and benefits; • Support the implementation of the key central Hr projects as required. “The economic crisis won’t stop Abb’s attention towards corporate social responsibility.” This is what Nicoletta Chiucchi, the firm’s Training and Csr Manager for Italy, said when Twsm spoke to her. Abb has consolidated its Csr budget from mark up activities on Christmas card and corporate calendar sales, which it guarantees every year to its non profit partners. Internally, Abb also aims to transform its key values and create a solidarity culture centred on corporate volunteering and activities in specific field projects. “In this way the company seeks to encourage contact with diversity and to create an open and multicultural working environment,” Nicoletta Chiucchi further emphasises. “Charity work is a strong way of motivating staff to affirm their values of social responsibility and community engagement.” The company has created a portal completely devoted to sustainability with a section dedicated to social activities. It also has a newsletter dedicated to these projects, publishes news throughout its in-house communication vehicles, and organises internal corporate events such as the Volunteering Day. Moreover, in the lead up to and during these events, Abb provides space for its nonprofit partners to raise funds. “All the employees who took part in one project, for example, received distance-learning material prepared by Aism (Associazione Italiana Sclerosi Multipla) which planned and organized activities in partnership with Abb. In this way we offer everyone the chance to get in contact with the association and gain direct knowledge of this disability’s harsh realities”, Chiucci further adds. Abb’s employees have chosen all the non-profit organizations supported. The company also conducted a survey of its corporate climate, Abbiamo Voce (‘we have voices’). In 2006, 64% of staff supported the programs while by 2007 this figure had risen to 71%. The survey also found high levels of participation and pride in the program and willing• ness by staff to invest their own professional futures with the program.

Internally, Abb aims to transform its key values and create a solidarity culture centred on corporate volunteering and activities in specific field projects.

Culture integration Mergers

By ROD BAILEY

MERGERS AND ACQUISITIONS Searching for the perfect synergy takes time, especially when differences threaten the partners being brought together. The success of mergers is not to be taken for granted and more often than not, many have proven unsuccessful. With Fiat and Chrysler, Sergio Marchionne faces both challenges and opportunities.

Connected through values

“Many managements apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad’s body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of Company T(arget). [...] We’ve observed many kisses but very few miracles. Nevertheless, many managerial princesses remain serenely confident about the future potency of their kisses.” As Warren Buffett depicts in this 1982 letter to Berkshire’s shareholders, mergers are likely to destroy value. But for carmakers, they seem now to be the only strategic option to accelerate growth. In the past, mergers have proven to be highly unsuccessful. BMW-Rover is a case in point. The merger burnt £2b and ended up with the break up of Rover. Some deals were luckier than others: Renault-Nissan, for example, struck in 1999 on the principle that each company would retain its own identity while sharing resources. On the contrary, the Daimler Benz-Chrysler merger was a failure. In the case of the recently announced Fiat-Chrysler, and potentially Opel, merger, things just might be different. The successful turnaround of the Italian carmaker led by Sergio Marchionne is seen by most executives as the promise of further success. According to Matteo Camesasca, Ceo of Maserati West Europe, headquartered in Paris, “since Marchionne arrived, everything at Fiat has been much more reactive: processes are faster and the overriding principle is quality and teamwork.” “Marchionne completed a so-called mission impossible”, says a senior executive at one of the leading manufacturers. “But his war-room approach could also be a limit when managing a global, more complex corporation.” The main obstacle on Marchionne’s way to success could be a cultural one. Language and organizational background can hamper progress. Chrysler, in particular, which is another big failure of private equity funds (it had been taken over by Cerberus in 2007), experienced the imperial management style of Bob Nardelli. Stories of Nardelli’s blunt communication and dictatorial ways are legendary. However, according to an anonymous source who is well placed to get inside knowledge of the deal, “the major difference in organizational styles exist between Fiat and Chrysler on the one side, and Opel on the other. Chrysler and Fiat are stand-alone operations whereas Opel, as part of the Gm matrix organisation, has never been operating on a stand-alone basis.” According to Nicole Graf, Vice President in charge of Berufsakademie Campus at Bad Mergentheim, who worked fifteen years at Daimler and came across four generations of German leadership at Fiat in Heilbronn, “the organisational styles couldn’t be more different. At Daimler Chrysler the main lesson we learnt was that mergers generally fail.” From the insider’s point of view “Fiat has demonstrated in the past from its engagement in the agricultural engines business with New Holland, that cross border mergers can be a success story.” Marchionne’s international experience could minimize the cultural clash, as Camesasca points out. “Marchionne understands both cultures. With Daimler Chrysler there was always the doubt that Chrysler was receiving old technology from Mercedes. Fiat’s policy is the opposite. They’re looking to share their latest technology especially with regard to low emissions. They’re not interested in simply making a Us Fiat.” A manager in after sales operations agrees that “the biggest organizational issue is the profound cultural gap that poisoned the Daimler Chrysler deal. The Germans attempted, without success, to colonize Chrysler. As it now emerges from Chapter 11, Chrysler should now be more reasonable, but we shouldn’t forget that no one has much experience in managing a company where unions own 55% of the shares.” In any case Fiat will need to retain the Chrysler management to handle the US market where it hasn’t had a presence for more than 20 years. A critical issue will also be the global support available and Fiat’s capability to deploy its leadership in a multinational environment. Fiat has the most centralized and probably most powerful management, which is a strength when it comes to decision making and a weakness given the sudden growth of the organisation and the increased

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demand for management presence. The Ceo of Maserati West Europe points out that “according to Marchionne the challenge starts now. His Hr style of people empowerment will not be threatened by the merger. It is, after all, an American style. The real challenge for Fiat is to become global. For the company, this is a tremendous learning opportunity.” Nicole Graf sees more risks than opportunities. “If the main reason is that each of the three is too small to survive as an independent,” she says • “it sounds a bit like sending the Hindenburg to rescue the Titanic.”

Rod Bailey, Ceo of ExecutiveSurf. Rod has spent most of his career creating or investing in innovation in the executive search field.

01 Luca Cordero di Montezemolo Fiat Chairman. 02 Sergio Marchionne Fiat Ceo. 03 The economy car Fiat 500. 04 Chrysler multi-purpose vehicle Pt Cruiser. 05 Chrysler off-roader jp008. 06-07 Chrysler Llc. Headquarter Auburn Hills, Detroit, Michigan.

Culture integration The business case

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People Commentary

By ROBERT LEVERING

Should companies care?

Why should a company try to be a great place to work these days in the midst of the worst economic crisis in three generations? This is an obvious question if one thinks that a good working environment is optional-like flying first class instead of economy. When times are tough, one does away with options. And in these tough times, companies are responding by cutting back nonessentials and laying off staff. Aren’t employees happy just having a job? Why bother trying to create a great workplace? This line of thinking mistakenly assumes that a great place to work means paying higher salaries or offering extra benefits. It’s true that great workplaces often have special perks like the free meals in gourmet cafeterias at Google’s headquarters in Silicon Valley. Certainly when journalists write articles about the best workplaces, they usually focus on their unusual benefits and cultural practices.

Aren’t employees happy just having a job? Why bother trying to create a great workplace? This line of thinking mistakenly assumes that a great place to work means paying higher salaries or offering extra benefits...The defining characteristic of a great place to work is trust between management and employees. The companies that survive and become stronger in this economic crisis will be those that offer customers better solutions. Innovations occur best when there is an environment of trust. People simply do not offer their best ideas to people they don’t trust.

But based on the tens of thousands of employees in great workplaces that our Institute has interviewed or surveyed over the past 25 years throughout the world, we have learned that the defining characteristic of a great place to work is trust between management and employees. In the very best workplaces, employees insist that what they most appreciate about their firms is that they can believe and have faith in the integrity of the management, are respected by them and feel that they are treated fairly. Having a high level of trust is essential in a time of crisis for several reasons. First, employees are understandably concerned about the future of their companies and their own job security in difficult times. In the best workplaces, the leadership goes to great lengths to share information as openly and transparently as possible with employees. This is especially important if the company is forced to lay off people. We have found that the morale of an organization can remain high even when layoffs occur so long as management has been honest about the situation. A second reason why trust matters is that cooperation requires that people trust each other. Because of the complexity of today’s business organizations, cooperation among people in different parts of an organization is the key to increasing productivity. Finally, the companies that survive and become stronger in this economic crisis will be those that offer customers better solutions. Innovations occur best when there is an environment of trust. People simply do not offer their best ideas to people they don’t trust. That is, employees are more likely to be creative in a work environment where they feel respected and trust the people they are working for. For these reasons, we can expect that the best workplaces will have an advantage during this crisis. •

Robert Levering is cofounder of Great Place to Work® Institute which produces lists of the Best Workplaces in 40 countries throughout the world.

Economic downturn A lesson of patience

FOCUS The Great Place to Work® Institute has 40 affiliate offices throughout the world. It has listened to employees and has evaluated employers since 1980 to understand what makes a workplace great.

The slower pace of life

Though the current economic crisis is being felt across the world, the nature of its impact varies, as are the responses by companies and governments within these disparate global locations. In Colombia, Gptw experts Juan Carlos Carrillo and Sandra Estupiñán report that companies are adopting the ‘business-as-usual’ approach to Hr management. In Finland, Asta Rossi from Gptw notes a distinction between those firms that are simply focussed on cost-cutting, and those more engaged with their employees for more creative solutions. David Plink from Crf stresses the continued importance of communication by management to employees of their restructuring plans. Alia Malhotra from Gptw India outlines the various cost-saving measures taking place amongst Mumbai’s IT and service outsourcing firms. Gptw Switzerland also reports on the outcomes of a recent survey which provides an insight on Swiss workers’ and management’s responses to the current economic crisis. Muli Ravina, Ceo of Credit Suisse, also provides his assessment of the regional cooperative opportunities for Israel. Finally, Marco Gentili and Saro Capozzoli provide an overview of the enormous but diverse Chinese economic landscape where economic regions and sec• tors are being impacted on in different ways.

It is sinister. It is subtle. It has come into the work-place environment of Indian companies like the fine dust that seeps in through closed windows and doors. Some who have not encountered the ghost scoff at it. Others who have been touched by its cold stranglehold on banks and easy loans are really scared. The most visible sign is lack of new employee hires and the freezes on existing salaries. Managements are reluctant to expand. All new projects are on hold. Money is scarce. Banks are flush with funds but are afraid to lend.

Contributors Alia Malhotra, Great Place to Work® Institute India. Asta Rossi. Great Place To Work® Institute, Finland. Juan Carlos Carrillo and Sandra Estupiñán, Great Place to Work® Institute Colombia. Surviving the crisis through human capital

“Many organizations are cutting back on resources and this is impacting on studies of the work environment. Despite everything organizations know about attracting and retaining human capital, the main thing is surviving the work market these days”. This is the conviction of Juan Carlos Carrillo and Sandra Estupiñán, respectively, the Great Place to Work® Institute Colombia Director, and the Institute’s Development Department Manager. Human resource managers continue to promote the implementation of practices and politics, which not only attract talent but also their retention. In Colombia, the current crisis is being met with a business-as-usual approach in Hr management “These strategies imply continued structural changes within organizations and the reassessing of paradigms.” continues Carrillo and Estupiñán. “Although Colombian organizations are experiencing difficult times, they agree that if companies pay attention to the work environment, productivity will continue to increase and so will the commitment of people towards their work,” they conclude.

The polarised approach to insecurity

“In times of crisis, there seem to be two different approaches that are taken by management.” This is what Asta Rossi, from the Great Place To Work® Finland, notices. “Management in most, especially larger companies is focused on finding savings.” At the other end of the spectrum Ceo’s and managers are reaching out to discuss with employees, asking their ideas for savings and are working together to boost sales. According to Rossi, the best approach would be for managers to be available for employees, do rounds, organise opportunities for discussion, answer questions and thank employees for their efforts. “If management simply disappears, employees will create their own interpretations of the situation and act accordingly”, she says. “Sacrifices’ too could be more acceptable to workers, this way”. Rosi further notes that in some companies’ agreements have been reached where everyone is out of the office one week every month, replacing lay offs with extra unpaid vacation time.

Simplicity and economy

In the workplace employees are bemused at the sudden disappearance of free pens, pencils and writing pads. One company has gone to the extent of putting a ration on toilet paper rolls. Petrol quotas are being reduced. The food in company canteens is taking a sudden turn towards simplicity and economy. India is on hold, with its IT manpower not being as much in demand as before. BPOs are vanishing back to the foreign shores they came from due to the Obama decree of providing jobs for US citizens and a tight leash on H1B visas. IT budgets have been slashed. There is no demand for new software because big spenders like giant banks and car manufacturers have either folded or are on a downward spiral and trying to keep their heads above water. Under these circumstances the more adventurous and enterprising workers are thinking of abandoning ship and starting their own projects. Many young entrepreneurs have turned to the internet to start their own online ventures in education and web retail. A visible example of cost cutting in Mumbai is the move towards the suburbs by a number of large securities and brokerage companies. Hdfc Securities has relocated a large chunk of its workers in retail from downtown Parel to suburban Kanjurmarg. Another brokerage house (Motilal Oswal) has moved a large number of its employees to Malad. Such companies are only retaining downtown offices which are necessary to service the large institutional financial hubs, while other components are being shunted to the suburbs. This move is a blessing in disguise for some workers living in the suburbs who were earlier commuting for hours to their downtown destinations. Others suddenly find their bosses more receptive to the idea of working from home and having flexible hours. Repairing the ‘broken part’ of economy, Hr bosses are working out new strategies to retain the talent they have working for them. Good workers are being handled with kid gloves. Companies like Adobe and Hewlett Packard in India are encouraging their employees to come up with innovative ideas forwarded to the global headquarters. The cause of the sudden squeeze is the exit of massive institutional financial investing in India. Suddenly the call to sell more loans has halted. Lending has become unfashionable but the brunt of this credit squeeze is being felt by genuine businesses with profitable ventures which are now on hold because of the shortage of funds. This has also served to put a throttle hold on the necks of office workers.