Allard epwn portugal


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Gayle Allard (Vice Rector of Research at IE Business School), brought to us an analysis of the causes behind the actual European crisis, drawing the attention to the enormous challenges ahead. Referring to the different factors that contribute to the satisfaction of women, Gayle Allard shared with the audience a research survey illustrating the lack of correlation between wealth increase (GDP) and happiness in general, inviting all the presents to reflect on the way society should be heading to.

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Allard epwn portugal

  1. 1. Recession, or renaissance? Thriving in the new era Gayle Allard IE Business School EPWN LISBON AND IE BUSINESS SCHOOL 3 NOVEMBER 2011
  3. 3. The financial crisis and recession have taken a heavy toll on developed countries...
  4. 4. …and it isn’t over yet.Governments (Ireland, Greece, Portugal, Spain, UK, US)are cutting deficits and implementing austerity; othersparalyzed by indecision (US, EZ)Global banking is still dysfunctionalBusinesses are finding stiff international competition(hence mini-currency wars)Consumers are unsure of their jobs, savings, pensionsand future incomes and are afraid to spendAll of these factors will continue to dampen employment,incomes and consumer spending and could pull us into asecond recession in coming months
  5. 5. Why was the periphery hit so hard? Economies were not prepared for the euroAverage 1982-2010. Source: OECD.
  6. 6. Solving the euro/debt crisis is one of the keys to global growth The EFSF is too small to protect peripheral borrowers (€440bn); Greece alone may need €444bn, according to a recent study* Italy and Spain are both too big to fail and too big to be bailed out The cost of a euro breakup could be 40-50% of GDP for a peripheral country and 20-25% for a core country (UBS estimates); much higher than the cost of a bailout. Germany: soaring new currency would devastate manufacturing, require bailout of banks with old euro assets Greece: plummeting new drachma, crippling new debt and collapse of financial system (“mother of all financial crises”)
  7. 7. Some countries, like Portugal, may soon be making a comeback after harsh austeritySome governments slashed spending, raised taxesand adopted painful reformsIreland and Portugal are starting to see a surge inexports, as they have brought costs under controland become more competitiveThis is a painful “internal devaluation” which may bethe only way out for eurozone countries
  8. 8. The crisis has broken down our growthmodel, and no one is sure what will replace itBefore, fast growth driven by “big spending” US (aswell as overconsuming peripheral countries)What will the new world look like? More multilateral and more balanced Different currencies rather than a hugely dominant reserve currency More balance between developed and emerging economies More rapid return to automatic adjustment on external accounts New engine of growth in the new global economy? Slower global growth, concentrated in emerging economies Continuing pressure on labor costs in developed nations, as hundreds of millions of workers join the global labor market Could we see a backlash against globalization and our present capitalist model?
  9. 9. Who will be the G20 in 2050? Some projections
  10. 10. For developed countries: the specter of “Japanization”?Japan was supposed to be the world´s largest economyby 2010; it was the model for managementThe bursting of the asset bubbles in Japan andelsewhere in Asia in the late 90s sent it into a decade ofcrisisPoor leadership aggravated the crisisChina is now larger than Japan, and the most likelyoutlook for Japan is a steady and possibly irreversibleeconomic declineWhat do we have in common with Japan? Aging population Heavy government debt burden Slow growth Uncertain political leadership
  12. 12. Demography was moving our world to a “new normal” even before the crisis
  13. 13. Portugal´s population pyramids
  14. 14. Aging will slow growth everywhere Fast growing population of workers and consumers stimulates growth A large dependent population –old and young– harms growth because They do not work They make claims on a country´s income without contributing to it They depress savings, which slows capital growth and productivity growth
  15. 15. Slow or negative population growth will have some great benefitsWe will need major pension reform and an overhaulof our public services, BUTThe pressure on the environment may be alleviatedA scarcity of workers will produce fiercercompetition for talentUnemployment may recede as a problem
  16. 16. How is globalization transforming our future ?Globalization has brought huge benefits indeclining prices, rising efficiency, higher realincomesBut for developed countries, it poses profoundissues: Higher prices for raw materials as demand from emerging economies surges Competition in labor markets is generating Lower real labor costs (and rising structural unemployment) We may have to work harder, longer, for less in the future Globalization has brought greater wealth equality among nations, but greater inequality within nations Rising debt in some nations could be a “cascading” effect to compensate for inequality and stagnant incomes
  17. 17. There could be benefits both from more globalization AND from an end to globalization If we keep globalizing If we stop globalizing× Pressure on labor costs Higher prices, lower real will continue and jobs in incomes, lower growth traditional sectors will Preservation of keep disappearing traditional patterns of Countries that find a life and cultural competitive niche in high identities value added sectors will End to treadmill of world generate excellent jobs for competition a huge market More equality at home Better chance for emerging nations to develop
  18. 18. Environmental pressures will change our world If the world´s GDP expands six- or sevenfold by 2050, the planet will be unimaginably stressed The earth´s regenerative capacity has already been passed If China and India used as much energy per capita as the Americans, their total power consumption would be 14x the U.S. If China, India, other emerging countries reach Western levels of car ownership, the world would have 3bn cars (4x current total) Asia and West must make growth more sustainable: Carbon and resource taxes that will provide incentives to produce in a much less material- and energy-intensive way Draconian rules on consumption of fossil fuels, fisheries, forest products Massive investments in public infrastructure Different models of production and consumption
  19. 19. A more environmentally friendly world would have huge benefitsGrowth would be slower and real incomes lower, BUTWe could avoid the tragedies of destruction of species,wilderness, natural spacesMany new jobs would emerge in low-carbon, alternativeenergy, recycling, repair, cleaner industries, research anddevelopment, organic farming, socially responsibleproduction, etc.Countries that move first to protect the environment willhave a competitive edge
  20. 20. But maybe our world needs changing... because it isn’t giving us what we really wantSurveys asking people how happy they are indicate that the average level ofhappiness has not increased over several decades, despite large increases inincome per capita in the United States, Japan, the UK, and continental Europe.
  21. 21. So what DOES make us happier?Economic research demonstrates that past certainlevels, higher income does not lead to greaterhappiness or life satisfactionRecent research focuses on spending rather thanincome and concludes:If money doesn´t make you happy then maybe you aren´t using it right.What kind of spending makes people happier? Spending on leisure or experiences with other people (nights at home with family or “staycations”) Giving money away
  22. 22. What makes us happy/unhappy? happiness indexIncome Family income up 50% relative to average +1 Family income down 33% relative to average -1Freedom Quality of government improves (Hungary vs Belarus 1995) +2.5Religion “God is important in my life” (“Yes”, all else constant) +2Trust “In general, people can be trusted” (“Yes”; all else constant) +1Morality “Cheating on taxes is never justifiable” (“Yes”; all else +1 constant)Work Unemployed (rather than employed) -3 Job is insecure (rather than secure) -1.5Family Divorced (rather than married) -2.5 Widowed (rather than married) -2Health Subjective health down 1 point on 5-point scale -3
  23. 23. Slower growth in the “new normal” may actually move us in the right directionThe crisis has reawakened many people to the limits ofobsessive consumptionThe “100 things challenge” invites people with moneyNOT to buy everything they can; rather, to limit theirpossessions to a minimumIf we rearranged our priorities away from consumption,there would be a sea change in behavior in the developedcountriesThis could have remarkable results for human satisfaction…and for the environment.People are finding that their homes are full of stuff, but their lives are littered with unfulfilled promises.
  25. 25. Female workers have transformed the postwar worldExpanding economic opportunities for women hasdrawn many into the work forceFemale labor force participation rate has growndramatically since 1960Delayed childbearing, better education hasaccelerated this changeMen´s participation rate has fallen while women´shas soared: the difference is now only 26 percentagepoints, compared to 32 in 1980
  26. 26. Women have prepared themselves for better careers
  27. 27. Gender equality is an important indication of true democracyHillary Clinton, U.S. Secretary of State
  28. 28. Gaps between men and women persist in the workplaceGender gaps persist in earnings and productivityacross the world, at every income levelWomen are overrepresented in informal work andin part-time and temporary jobsNumber of female bosses of large firms is still small No female CEOs on France´s CAC 40 share index or Germany´s DAX index US: 15 executives of Fortune 500 companies are women; in Britain: 5 of FTSE-100 Indra Nooyi, Pepsico
  29. 29. r Christine Lagarde, IMF
  30. 30. Why does more diversity make good economic sense?Women are more likely to understand the largest group ofconsumers in the worldThey represent an “underfished” pool of talentThey bring unique strengths: More collaborative than men Better at multitaskingSome evidence that companies with more women in top jobsperform better than those run only by men McKinsey studied 89 companies in Europe with a high proportion of women in senior management posts, showed higher return on equity, higher operating profits and better share prices than the industry average Clearly, this minority of women is excellent Patricia Woertz, Archer Daniels Midland
  31. 31. Why do women continue to lag behind?Women do as well as men in university and areoverrepresented in MBA programsThey hold more than half of the entry-level jobs in topcompaniesBut they quickly fall behind: Less aggressive when negotiating salary and raises In the US, women are 37% of middle managers, 28% of senior managers, 14% of executive committee members Irene Rosenfeld, Kraft Foods
  32. 32. Why do women continue to lag behind? Oprah Winfrey, Harper and OWNIs it discrimination? Are legal, financial systems discriminating againstwomen? Do men consistently underestimate women?Patronage does not work in favor of women Women may not have as many powerful backers asmen They may also be reluctant to call in favorsBalancing act: women struggle to balance work and family, where they still have the main responsibility“ Women look at the top and don’t see anyone they want toemulate… They become weary of what they often describe asgame-playing, as they discover a greater level of jockeying andcompetition.”
  33. 33. How does family responsibility compromise women´s careers? European women devote at least twice as much time as men to domestic tasks Nordic: men spend 2.3 hours/day; women 3.4 Latin countries are much worse: men spend 1.3; women 5.2 How do women cope with home responsibilities? Choose jobs with flexibility, predictability Take time off In the US in 2009, 31% of women had taken a career break (avg. 2.7 years) 66% had switched to part-time or flex-time work Once on the “mommy track”, they may find it hard to get back on the fast track Many have decided to avoid family responsibilities by not marrying or not having children
  34. 34. Women are having few or no children and (in Asia) many flee marriage…About 1/3 of Japanese women in their early 30s are unmarriedWhy? Being both employed and married is tough in Asia: Men do 3 hours of housework a week vs 30 for women Financial independence and education contribute to decline of marriage
  35. 35. Can women be helped to balance work and family? Government responses: Parental leave for both parents, with job guarantees on return Part-time work Child care Holiday scheduling (work and school) Company responses Child care on site Teleworking (nearly 20% of American workers telecommute) Understand family demands Ginny Rometti, IBM
  36. 36. Are quotas the solution to greater equality?Norway: all publicly listed firms must reserve 40% ofseats on boards for womenSpain, France have passed similar laws; Holland willsoon; Germany considering itEuropean Parliament passed in 2011 a resolutionrequiring that 40% of seats on listedcompanies´ supervisory boards will bereserved for women by 2020But quotas may elevate women whowould not otherwise get onto the board Ann Livermore, Hewlett Packard
  37. 37. Women also need to be creativeNew generation of female entrepreneurs starting upbusiness from home during a break from theworkforce to have children (Australia: 15% of womenwith small children are “mumpreneurs”)Technology helpsControl own destinyGive high priority to flexibility Sheryl Sandberg, Facebook
  38. 38. Bottom line: our own priorities and doing what´s important What is success? What do I want to do with the time I’m given? What will outlive me? Just as our mothers or grandmothers had to buck trends and think outside the box to get into the working world, we need to do the same to seek true satisfaction Melanie Healey, Proctor & Gamble
  39. 39. Don´t be trapped by dogma, which is living with the results of other people´s thinking. Don´t let the noise of others´ opinions drown out your owninner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Steve Jobs, 2005
  40. 40. THANK YOU!