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Ceo survey belgium 2012 final

  1. 1. Delivering results Growth and value in a volatile world Country summary: BelgiumA Belgian perspective onPwC’s 15th Annual GlobalCEO Survey
  2. 2. IntroductionThe 15th Annual Global CEO Survey is based on a total of1,258 interviews with CEOs in 60 countries, carried out between22 September and 12 December 2011. 291 interviews were done inWestern Europe, of which 34 in Belgium, compared to 17 in France,38 in The Netherlands and 49 in Germany. None were carried outin Luxembourg. The Belgian CEO interviews were spread across arange of industries: asset management; banking and capitalmarkets; insurance; entertainment and media; healthcare;industrial products; retail and consumer products. Additionalinsight into what is underpinning CEOs’ outlook, quotes from theirinterviews and more extensive extracts, as well as responses bysector and location can be found at  PwC 15th Annual Global CEO Survey 
  3. 3. How is 2012 shaping up?The year 2012 is unfolding with wide But businesses are not on the Rather CEOs are manoeuvring todisparities in potential outcomes in defensive. Despite uncertainties, CEOs outpace: they are three times moremany economies, and little prospect are taking deliberate steps to stretch in confident in their own capacity tofor a coordinated turnaround: just markets they believe are most generate growth in their business than15% of CEOs believe the global important for their future. As a result, they are in global economic growth.economy will improve this year. close to 40% are ‘very confident’ in Here Belgian CEOs surveyed areBelgian top executives are significantly prospects for revenue growth in their surprisingly upbeat: they are fourmore pessimistic: only 3% believe in companies in the next 12 months. times more confident in their ownrecovery, whereas 62% of Belgian Again, Belgian CEOs are less bullish: growth potential than that of theCEOs think the global economy is set only 12% share this view. Strategies no world at large. Correspondingly,to decline further. Only the Dutch are longer rely on riding economic Belgian business leaders predict moremore pessimistic, with 68% expecting updrafts – or even riding out volatility. significant change to their strategiesa worsening economic climate. than others: 26% compared to 13% globally, and only 4% in Germany and The Netherlands respectively. The main drivers of strategic reorientation in Belgium are competitive threats, the “CEOs are very concerned about economic impact of government debt, changes in uncertainty and the pace of recovery. The risk tolerance and the availability of optimism that had been building talent. cautiously since 2008 has begun to recede.” The optimism among Belgian business leaders in their ability to generate Karel De Baere, growth also reflects the tough choices Chairman, PwC Belgium made and hard work done since the crisis began in 2008. With stronger balance sheets, improved cost structures, and a greater awareness of global risks, CEOs have a renewed sense of preparedness when facing today’s challenges. Belgian CEOs are focusing on innovation in products and services for growth in 2012, compared to their Dutch and German neighbours who are focusing more on M&A and increased market share respectively. Key findings in Belgium  1 
  4. 4. Difficult conditions in the near term However, this frugality shouldn’t Over the next three years, CEOs willhave CEOs paring down ambitions in suggest a lack of appetite for the right be reconfiguring their business modelsresponse to disappointing recoveries in investments. Operational for a world where risks andEurope and the US. Over two thirds of improvement remains on the agenda, opportunities are increasinglythe Belgian CEOs interviewed said the even after three years of crisis. 66% of interconnected, yet where sources ofongoing sovereign debt crisis in CEOs worldwide plan to implement a growth are often very much local andEurope has had a direct financial cost cutting initiative in 2012 – and in may be outside the familiar terrain.impact on their company. Many CEOs Belgium 85% plan to do so. Belgian The rise in investment and commerceare holding back their cash reserves as business leaders also plan more to and from emerging economies isa buffer against an economic outsourcing and divestment than their fundamentally altering approaches.contraction: fewer CEOs are planning neighbours in Germany and Thea ‘major change’ to capital investment Netherlands in 2012. In terms of In response, CEOs are concluding thatstrategies this year than in 2011, while investing directly in growth, over a their businesses need to pivot across38% are making no change at all. quarter of CEOs, both globally and at their priority markets, both developed Belgian level, anticipate a cross-border and emerging, to embrace acquisition this year. Belgian CEOs are opportunities in markets they may be focused on France and Germany as the less familiar with. They are facing countries they consider most several challenges in this regard. important for growth abroad, followed by China and Russia. Dutch CEOs are above all focused on Germany as their most important export market.Graphic 1: Do you believe the global economy will improve, stay the same, or decline over the next 12 months?Base: All respondents (1258; 49; 38; 34)2  PwC 15th Annual Global CEO Survey 
  5. 5. Making it happenIn past economic downturns, the world CEOs believe the forces of global How CEOs are able to succeed in thishas experienced rises in protectionism. integration will stay on track: 45% interconnected world, with aBut this time there has been progress believe the world will become more potentially slower and more volatileon bilateral and regional levels in open to free international trade (with global economy, will hinge on howfostering cross-border commerce and 31% dissenting) and 56% are well they master the three executioninvestment. Alliances continued to convinced cross-border capital flows challenges mentioned below.evolve into late 2011 with the US- will not come under new constraints.Korea free trade pact and the proposed The Belgian CEOs surveyed areTrans-Pacific Partnership. Free-trade similarly optimistic about capital flowspurists might argue that preferential (50%), but only 26% believe opennessdeals are a form of protectionism. But to free trade will increase.the reality is that trade and cross-border capital flows have reboundedsince the downturn began. BelgianCEOs are much less concerned aboutprotectionism, exchange rate volatilityand corruption than CEOs globally,perhaps due to their focus on growthin neighbouring France and Germany. The tax advantage Market opportunity, natural resources, talent – all of these factors matter when companies decide where and how to locate operations. But tax may be the most significant: 44% of CEOs worldwide (and 47% of Belgian CEOs) say tax policies are a ‘significant factor’ in their decision-making on cross-border locations. CEOs are paying close attention to changing tax conditions as a result of high debts and deficits in developed economies. Governments continue to reform their tax systems to help businesses grow. Over the past seven years more than 60% of economies made paying taxes easier with 244 reforms, according to Paying Taxes 2012. Globally, the total tax rate has fallen by 8.5% since 2006; the time required to comply with taxes declined by more than one day per year; and the number of tax payments required dropped by five.1 Belgian business leaders are much more concerned about the increasing tax burden than their colleagues in Germany and The Netherlands. 53% see increased taxes as a potential threat to the business, compared to 33% and 18% in Germany and The Netherlands respectively.1 Key findings in Belgium  3 
  6. 6. Build or buy? Acquisitions always have a role to play in growth plans. Responses indicate the potential of a modest pull-back on international deal-making over the next 12 months: 28% of CEOs globally plan to complete a cross-border deal in 2012 (29% for Belgian CEOs), a decline from the 34%1. Worldly wise, locally savvy last year. The pool of potential buyers Segmentation is at the centre. CEOs is becoming more diverse, however. place high importance on adapting toDeveloped and emerging economies Firms from China, India and elsewhere local customer preferences. Fouralike are considered destinations that have emerged as major international billion people live in countries whereCEOs believe are critical for their investors in recent years. Acquisitions the per capita income is US$ 1,000-organisations. Over 60 different are always risky. Yet, our research 4,000 per year, for example, aneconomies were named by CEOs as key suggests that acquisitions in emerging ‘emerging middle class’ that isoverseas markets, some adjacent to markets – exactly the type of prompting business leaders totheir home market and others on the acquisition that appears to be more fundamentally rethink businessother side of the world. A sensible popular today – are particularly risky, strategies. It’s not only products thatstrategy for globalisation today means with lower chances of success even for must be adapted or built anew, but alsomore than building cheaply in one proven deal-makers. Acquirers will production, distribution andlocation and selling in another. CEOs need to learn new post-merger marketing capabilities – entireare investing to build fully-fledged integration competences to make these business models. Success involvesoperations in their priority markets to deals work. understanding customer segmentationbuild relationships with their and the dynamics driving it.customers, innovate, take advantage of Less global export, more locallocal talent and brands, reduce risk, rapport. How businesses achieve the Innovating on multiple fronts.improve access to capital, and right mix to leverage global Improving the effectiveness ofstrengthen supply chains. Building capabilities while servicing distinct innovation continues to be a majormanufacturing capacity, for example, local needs is a defining question for strategic priority. Three out of fouris important for many CEOs in each of growing in dissimilar markets. The tilt CEOs – at both global and Belgian leveltheir key markets and China faces is towards decentralising, and creating – plan to change R&D and innovationincreasing competition as CEOs reach localised products. Substantial capacity in 2012. CEOs in insurance,further afield. CEOs are making deeper proportions of CEOs, between 20% asset management and retail are morecommitments to priority markets, and 36%, say they are designing new likely than those in other industries toguided by domestic customer demands. products specifically for local markets. emphasise innovation in new business models – often taking advantage of new technologies. Those in industries with a historical dependence on “ he good news is that the long cycle of the T innovation are among the most likely slowdown has given CEOs greater to change approaches. Pharma and life sciences, for example, has been in the experience of managing their businesses forefront in shifting some research with ever greater efficiencies. 59% of resources to faster-growing economies. Belgian CEOs are confident they can While primary RD is still largely conducted in home markets, deliver revenue growth despite the businesses are shifting capabilities to difficult conditions.” their priority markets, partly to seek footholds in fast-growing economies, Karel De Baere, but also because of improved scientific Chairman, PwC Belgium capabilities.4  PwC 15th Annual Global CEO Survey 
  7. 7. CEOs that were financially impacted by thesovereign debt crisis in Europe 56% Belgian CEOs 79% 2. Expect the unexpected Global risks often have local sources sheets have improved, cash reserves and last year was no exception. 56% of have been built up, and supply chains CEOs were financially impacted by the have added redundancies. These types sovereign debt crisis in Europe (79% of of solution – financial buffers, supply Belgian CEOs), another 29% by the chain redundancies – point towards earthquake and tsunami in Japan, and one way to approach risk: less 21% by the political upheaval in the emphasis on the probability of events, Middle East. Yet, CEOs report that they and more on how business can be are less likely to focus on risk disrupted. When the focus is preparing management than on areas ranging for consequences, discussions are more from technology investments to likely to occur across functions reorganisation. Significant defensive involved in strategy, operations, risk steps have already been taken: balance management and business continuity. Finding growth away from home With CEOs looking for growth outside of their home markets, risk practices will have to adapt. Companies cannot control or predict the economic, social and political risk factors influencing their operations in priority markets, but prudent risk managers are getting a better understanding of how these forces can help or hinder their plans. Ongoing risk monitoring and incorporation of new information into business models can allow savvy businesses to pivot away from known risks, plan for unknown risks, and capitalise on opportunities. Risk resilience involves constantly returning to the question, ‘What should my business model be, given the way the political, economic and social conditions are changing in this country?’ 56% of Belgian CEOs intend to change their approach to managing risk in the next 12 months, and 56% state that a change in risk tolerance is driving a change in their strategy (compared to only 34% at global level). Key findings in Belgium  5 
  8. 8. Graphic 2: How concerned are you about the following potential business threats to your growth prospects?Base: All respondents (1258; 49; 38; 34) - Respondents who stated ‘extremely’ or ‘somewhat concerned’6  PwC 15th Annual Global CEO Survey 
  9. 9. Regional concerns reveal regional • Western Europe: Outlook for • Latin America: Underdevelopedrisks. The risk of global economic taxes, sovereign debt crisis, infrastructurevolatility is a common threat for all financial market stabilityCEOs. Yet, comparing how CEOs • Middle East and Africa: Skillsperceive other threats to their business • North America: Constrained state shortages and corruptionoffers some insight into the risks that spending, skills mismatchesare top-of-mind in different regions. • Asia Pacific: Currency volatility, energy costsGraphic 3: How concerned are you about the following potential economic and policy threats to your business growth prospects?Base: All respondents (1258; 49; 38; 34) - Respondents who stated ‘extremely’ or ‘somewhat concerned’ Key findings in Belgium  7 
  10. 10. 3. The talent challenge The reality is far different. Shortages Hiring talent. Worldwide, 43% of are evident everywhere. More CEOs CEOs across industries say it’s becomeTheoretically, finding good candidates are changing talent management more difficult to hire. In Belgium 62%should be a near-frictionless exercise strategies than are adjusting of CEOs surveyed say the situation hastoday. There have never been as many approaches to risk: 23% expect ‘major worsened, 38% say growth at homeeducated people in the world, nor has change’ to the way they manage their was impacted by talent constraints,it ever been as easy for employers to talent. Skills shortages are seen as a and 59% said talent expenses rosetap this vast pool online. Highly- top threat to growth. And talent more than expected. The challengesskilled talent is also highly mobile but shortages are impacting profitability are acute in both knowledge industriesjust in case, networking advances now. One in four CEOs said they were such as pharmaceuticals and lifemean many more tasks can be handled unable to pursue a market opportunity sciences, and technology, and heavyremotely or outsourced. or have had to cancel or delay a industries such as industrial strategic initiative because of talent. manufacturing and automotive One in three is concerned that skills sectors. In Belgium increased difficulty shortages will constrain their in hiring is attributed to a deficit of company’s innovation. skilled candidates, in particular for production workers (according to 59% of Belgian CEOs surveyed). Even industries that have retrenched workers in large numbers like banking are still struggling to get the right people. Developed market banks are in “ EOs say they are having difficulty C competition with one another but also finding and retaining skilled people in with increasingly ambitious and their industries. Belgian CEOs think that well-capitalised local competitors in faster-growing economies.2 Twice as creating and fostering a skilled workforce many banking CEOs plan to expand should be a top priority for government.” workforces than to cut them in 2012. Strikingly, 32% of Belgian CEOs Karel De Baere, surveyed said they will move their Chairman, PwC Belgium operations within 3 years because of talent availability.2 PwC, “Securing the talent to succeed: Making the most of international mobility in financial services,” Nov. 20118  PwC 15th Annual Global CEO Survey 
  11. 11. Making talent strategic. CEOs are Developing talent. Frequent job- The Belgian CEOs surveyed are betterdetermined to take a more strategic hopping is endemic to many markets, informed but hungry for more: onlyapproach to how they manage their at all levels. This is a trend many CEOs 12% say the information they receiveworkforce today and plan for future would like to counter. Two-thirds say on the cost of employee turnover toneeds. A longer-term, strategic view is it’s more likely that senior talent will their organisations is not adequate butneeded if they want to close the gap come from promotions within their 56% want more information on top ofand map how talent needs will change. companies over the next three years. what they currently receive. To betterAs part of this effort, CEOs are closely While outsiders bring benefits, the develop talent, however, companiesintegrating HR with business planning loss in productivity and time when a will need to understand what works inat the highest levels of the company: valuable employee leaves, as well as one market might not work in another.79% of CEOs say the chief human the expense related to retraining, are Mentoring programmes, for example,resources officer is a direct report. better appreciated: 21% say the work in some countries but fail in information they receive on the cost others, because of how coaching isThey are also seeking a better of employee turnover to their received in different cultures.understanding of the scale and organisations is not adequate andeffectiveness of their investments in 47% receive some information buttalent. For many CEOs, the want more.information they receive tells themhow the business is performingtoday, but not how investments inemployees will generate futuregrowth. Such measurements can’t More comprehensive reporting on employee engagementisolate skills gaps and struggle toidentify the pivotal jobs that drive Employee engagement analysis can give business leaders a clear linkexponential value; they do not between engagement and improved performance measures like retentionmeasure employee engagement or and discretionary effort. Forward-looking businesses are coupling a clearteam performance. These are much view of the pivotal roles within their business – the roles that create (orharder to measure, which is one destroy) disproportionate business value – and applying data miningreason they’ve been neglected. and predictive modelling to gain insight into retention, recruiting or productivity analysis. For example: • a retention score for each employee, which measures the probability that an employee will leave in the next year; • use of engagement studies to identify barriers to high performance within specific groups of employees, as well as the tangible improvements that can drive both engagement and business performance; or • a focus on the direct market-facing impact employee engagement has on measures of business performance such as customer satisfaction or product quality. Key findings in Belgium  9 
  12. 12. Holding the organisation together. Moving talent. Across all industries, Foreign multinationals remainHigh-potential middle managers are more CEOs would rather local desirable employers, but top talent inthe employees more CEOs fear losing leadership run local business units. India and China, among otherthe most (53% at global level Today, 29% of senior managers are economies, has many more optionscompared to 38% in Belgium). These transferred from their headquarters with domestic multinationals today,operational managers are often the country to newer markets; in an ideal which can offer opportunities to runclosest to changing customer demands world, only 18% of CEOs said they growing, global businesses and canand the ones charged with executing would continue to move their senior increasingly match Westernthe strategic direction. This is one leaders from headquarters (12% in compensation packages. While 53% ofreason why formal succession Belgium). This is becoming CEOs expect to move experiencedplanning in some companies is starting increasingly hard to do in fast-growing people from the home market to newerto go deeper into the organisation. economies. markets to fill skills gaps (65% inEfforts to identify talented managers Belgium), reverse transfers involvingearlier in their careers, and to moving top performers in emergingspecifically devote development markets into developed markets for aresources to them, are being made in short period of time to gainmore organisations. ‘credentials’ can also be effective retention and development measures. Investing in workforce development Skills constraints are going away and governments are responding. India and China have invested heavily to upgrade skills and widen access to education, and are cultivating their substantial diaspora of students and entrepreneurs to encourage their return. Singapore and Malaysia are taking comprehensive, long-term approaches to attract highly-skilled foreigners to enhance their economies. In short, policy-makers are seeing the effects of talent mobility on economic competitiveness and acting to attract and retain talent. This is likely to encourage more global talent mobility, which will impact business talent management strategies. Leading companies take the long view and are partnering with their governments to invest in workforce development. Most CEOs believe business has a role upgrading skills outside of their own companies and 78% say they are making direct investments in workforce development. The Belgian CEOs surveyed are even more proactive, with 85% investing directly in workforce development. This is part of a wider trend of businesses reaching back further into the talent pool and seeking to ‘grow their own’ with employer-led universities.33 ‘Taking responsibility: Government and the Global CEO’, PwC Dec. 2011.10  PwC 15th Annual Global CEO Survey 
  13. 13. What’s nextThe following questions are distilled from CEOs’ many approaches to resolving the execution challenge, and their insights into theconstraints in 2012, and can help business leaders achieve the balance they’ll need to grow their businesses in these volatile times.1. How local is your global growth 2. How are you balancing 3. Is your talent strategy fit strategy? CEOs are shifting global capabilities with local for growth? Cost-focused away from an export mindset opportunities? CEOs are measurements around talent to respond more attentively to developing new capabilities in their strategy need to give way to local markets. Over 70% of CEOs important markets, and tailoring measurements around returns on are planning to grow domestic approaches to ensure that the best investment, as leaders increasingly customer bases in their important of their global expertise supports implement new approaches to solve markets. Competition will be tough, rather than imposes operational their talent shortage problems. particularly when operating in structures on the local business. Two-thirds of CEOs are seeking markets that are dissimilar and One in five plan to innovate locally better analysis to make and inform far afield. The traditional way of in their important markets; and investment decisions around setting a grand global strategy and over a third expect to expand people. Implementing strategic pushing it out to operations may internal service delivery. They’ll workforce planning will help need to give way to a more agile need to find the right scale to leaders look beyond the talent strategy that can be adapted at local bring the benefits of their global shortages today to align the talent level. organisation to the local level and needed to fulfil business plans. maintain profitability. “ ur strategy is all about O going local, because it is a market hundreds of times bigger than cross-border.” Lazaro Campos, CEO Swift Key findings in Belgium  11 
  14. 14. 4. Are your innovations creating 6. Are you responding to the 8. Does your governance model value for your customers – or needs and constraints of the account for the ways in which just novelty? When it comes to communities in which you organisations’ and people’s innovating in and for local markets, operate? CEOs recognise that expectations are changing? delivering the value customers in sustainable business growth The organisation of the future will those markets expect is paramount. requires working closely with local likely be accountable to a different Between a fifth and third of all populations, governments and mix of stakeholders from a different CEOs say they are creating products business partners, and investing in mix of markets. Governance models specifically for their important local communities. This can mean need to adapt, beginning with markets. It will be increasingly creating job training programmes, building a leadership pipeline that important to get segmentation helping to manage resource reflects potential future demands. right – at the regional, country, city constraints or contributing to It’s a key area of focus globally, or even neighbourhood level – and health solutions. Two-thirds plan with 53% of CEOs concerned to design operating models around to increase investments in the about recruiting and retaining serving those segments. That means next three years to help maintain high-potential middle managers looking beyond product design to the health of the workforce, for and a desire to build more diverse include factors such as production, example. leadership teams. Only 38% of distribution and marketing. Belgian CEOs surveyed shared 7. Where are the biggest this concern. They are more5. Do your strategic plans account opportunities for business preoccupied with recruiting for the macro impact of micro and government to coordinate and retaining skilled production risks? The range of CEO concerns better? Compliance with a workers (59% vs. 33% globally). reflects how diverse sources of risks growing body of regulations, are: 25% are ‘extremely concerned’ particularly when operating in instability in capital markets will disparate markets, is a complex impact business, for example. The task for most businesses, which number of potential risks and their is why CEOs consistently report inter-relationships makes it very over-regulation as a threat to their difficult to predict what will occur growth. However, the successes of where and when, but companies the private and public sectors are can better deal with uncertainty – increasingly intertwined. Half of and take a more strategic approach CEOs believe workforce skills and to risk – by focusing on the likely infrastructure developments are consequences, no matter the cause. top priorities for their governments. The Belgian CEOs surveyed are clearly more concerned about fostering a skilled workforce (74%), and much less worried about improving infrastructure (32% vs. 53% of CEOs globally). Eight in ten CEOs say their business has a role in workforce development, other than their own employees. Effective partnership models – better communication, improved coordination, and true collaboration – are emerging around the world.12  PwC 15th Annual Global CEO Survey 
  15. 15. Contact Karel De Baere Chairman Pwc Belgium +32 2 710 8241 Key findings in Belgium  13 
  16. 16. firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who arecommitted to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon theinformation contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracyor completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability,responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or forany decision based on it.© 2012 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopersInternational Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act asagent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of itsmember firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions ofany other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.