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The clash of the titans 23/02/2010

Posted by Corneel Maes in Uncategorized.
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Carrefour is hitting the front page of all Belgian newspapers like mad today: local Management is set to announce quite a hefty restructuring to the Works Council, probably carving out some 20 supermarkets and causing job losses for up to 1 out of 3 people. The Unions had already seen the dark cloud hanging over the company and pre-empted today’s announcement by … blocking one of Carrefour’s main distribution centers. They’re playing hard ball – following the example of AB InBev’s unions who succeeded in referring another major restructuring plan straight to the shredder machine only a couple of weeks ago. Carrefour Unions must have thought: “What a great victory that was! We can do it too!” A very worrying evolution. Especially in a country that has historically been thriving on stable, constructive social relationships for building shareholder value, customer loyalty and employee engagement. In today’s economic reality, employer/union relationships have completely diluted from what they used to be, say just one decade ago. The “constructive collaboration” has been swapped for “angry confrontation”. How come? The economic crisis has increased and emphasized the pace of an evolution that was kicked off when the decision centers in most Belgian companies moved abroad. Belgo-belgian Works Councils need to sit around the table now with senior managers that look at the business with a broader view, an open mind and an international background and experience. They talk a different kind of language. Unfortunately the Belgian Unions have missed out on that evolution as they kept holding on to their arguments “for old times’ sake”. It’s worrying, as it pollutes the whole socio-economic climate in our country , and our chances to move out of the crisis by rebuilding a strong entrepreneurial environment. Constructive dialogue is turning into the clash of the titans. Belgian Unions urgently need to rethink their license to operate. If not, more Opel Antwerp, AB InBev and Carrefour cases are bound to follow. And who will be the winners then, you think?

Boycott AB InBev 22/01/2010

Posted by Corneel Maes in Uncategorized.
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Never thought that, as former communications specialist of AB InBev, I would ever join a Facebook group that calls for a boycott on AB InBev. And yet, I did. Simply because I cannot agree with the communications strategy of the country’s largest brewer. The Brazilian management hasn’t learned a single thing from the communications issues of 2005, when they announced the closure of the Hoegaarden brewery. Already then, financial ratios were at the edge of their argumentation, as if AB InBev was being run by bankers, and not brewers. But the brewer eventually had to give in. In 2010, nothing has changed. They are making exactly the same mistake: they only think about their investors, and completely overlook the emotional aspect of their product. Beer is culture, beer is tradition, beer is all about pride, honor and loyalty. Beer is, unlike other sectors of industry, almost cultural legacy, and you simply keep your hands off it. A reorganization always has a financial aspect, but in my opinion it’s high time that AB InBev showed more empathy towards their employees. What they do now is look straight over their employees’ heads to please their investors. To Carlos Brito I would say: allow your employees their dignity. And show the rich Belgian brewing tradition the respect it deserves.  After two weeks of social unrest, AB InBev has just given in and is calling the reorganization off. But beware, history always repeats itself …

Corporate behavior: a new dimension to corporate compliance 16/10/2009

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As some careful signs of recovery from the economic crisis start to surface, the corporate world is diligently shaping up for revival and getting back to “business as usual”. Having said that, the question is whether business will ever get back to what it used to be before the Lehman collapse. Most probably not. As bankers are being accused and pursued for taking risks they didn’t even fully understand themselves while pocketing extravagant bonuses, the virus that spread through the financial sector has highlighted the interdependencies that ultimately undermined the whole global economic system. Commentators call it systemic risk: a new buzz word, these days often used and sometimes abused.

What did we learn, if anything? Do we understand what really caused the economic tsunami? How can we prevent this from happening again? Lots of theories have been developed, lots of measures proposed, discussed, adopted or rejected. Almost everybody seems to agree on three main conclusions. First and foremost: careless risk taking in banking should be made impossible. Second, good corporate governance and ethics should be the only drivers in business. And last but not least: it looks like the word “bonus” needs to be erased from corporate vocabulary. But how will we achieve that and turn around almost overnight? The remedy looks as obvious and straightforward as the analysis of the cause: we need more and better regulation, stronger control mechanisms, less loopholes – in other words: close the gap on systemic risk. Shareholders and clients need to have more transparency on what they get in return for their money. And we need to ban disproportionate remuneration packages for senior leadership.

Whilst all these ideas and objectives are very legitimate, I think we should not underestimate the risk in overregulation of the business and undervaluation of leadership capabilities. Rules and regulations are the foundation of every democratic and well functioning community, whether it’s social or business. But too many rules and too stringent regulations, as an overreaction to the financial industry meltdown and as an attempt to close each and every loophole, may well turn out to become an adverse effect. At the end of the day, what’s important now is to learn from experience, turn around and prepare for the post-crisis momentum. Business is bound to pick up sooner or later and smart companies are the ones that look ahead and take their own sustainability at hand.

In the post-crisis game, financial institutions – and by extension corporate companies in general – will need to work hard to regain and earn respect and credibility. That’s not an easy task. Especially in finance but in other sectors too, a lot of reputational damage has occurred and it will require years of hard work to get some brands back to where they stood 15 months ago. It’s a challenge, one that cannot be achieved by merely complying with the newly enforced regulation, not even if compliance were 200%.

The roadmap to earning confidence in the post-crisis world is walking the talk. By actually evidencing the “R” of responsibly taking  in CSR, by demonstrating ethical behavior in business dealings, by being transparent on corporate governance and decision making processes, by maintaining an intelligent dialogue with shareholders, customers and employees. Believe me, those companies that comply with the new rules and regulations will be good in class. Those who act upon them and live and breathe the substance of these rules will become best in class. Corporate behavior, as a new dimension to corporate compliance. Nice word play, I agree – but to me it’s the benchmark against which corporate brands and their leadership will be perceived, valued and rewarded in the post-crisis economic environment. Compliance is a  non negotiable, corporate behavior is what creates trust and differentiates companies that move ahead of the pack, in any given industry.

Easier said than done? Maybe, maybe not. It all depends on how effectively companies and their leadership communicate with their audiences – directly and indirectly, in speech and in behavior. In the current social media explosion, stakeholders – friends and foes – increasingly serve as multipliers of their own perception – good or bad – about the company. And perception is reality. The recent “hype” around Fortisgate is a good example of the damage that horizontal influencing can do to a company.

As we move out of the crisis, we need to make sure that the current regulatory groundwork serves as the solid foundation for reconstruction, but also as the fertile soil in which responsible behavior can grow and be cultivated. If you look at the financial services industry, the focus is very much on going “back to basics”. Retail banking – and savings banks – are bound to revive, whilst for decades they were considered second tier as compared to the “real”, more sophisticated banking practices. I just hope that back to basics doesn’t mean “back to the past”.  In itself there is nothing wrong with sophisticated bank products and financial services – what matters is how bankers deal with them: there lies a world of corporate responsibility between “over the counter hard selling” and “empathic face-to-face advisory”.

Coming back to remuneration packages – and bonuses – they have become such a sensitive topic lately, but shouldn’t we at least have the courage to reconsider going back to basics too? I just wonder. At the end of the day, what’s the harm in rewarding a handful of truly visionary leaders who think long term, act long term and inspire thrust and confidence through their responsible behavior? The share price (or perceived brand equity) of a company is the present price tag for its future (financial) value creation potential. Everybody will agree to that. I leave it as food for thought, but wouldn’t it be great if the post-crisis “management bonus” would be the price tag for transparency, ethics, sustainability, talent management and forward thinking?

Banking supervision needs to think out of the box 18/06/2009

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The Lamfalussy report and recommendations for the Belgian banking sector supervision are published. I guess that nobody will contradict that banking supervision needs to be strengthened, in order to provide more clearcut regulation and above all the necessary mechanics to increase transparency. More transparency is the only way for financial institutions to earn back credibility and trust from their clients. But transparency will also become the driver behind better informed Executive Committee and Board Room decisions. Let’s make sure that the banking industry learns from recent experience and acts upon the consequences. So, I find the report encouraging. When reading the recommendations I felt one disappointment though. The corrective measures proposed are said to have been formulated to be “politically credible”. I think it’s high time that regulators are allowed and have the courage to think out of the box and do what they think is the right thing. Politics are part of the game, for sure, but now is the time to make some really fundamental changes for the future. And isn’t it so that sometimes politically unpopular measures are the most effective ones? Challenging discussion. To be continued …