Drop that jargon: It’s time for new HR metaphors

„All the world’s a stage, And all the men and women merely players: They have their exits and their entrances; And one man in his time plays many parts.” – William Shakespeare 

Shakespeare has an invitation for us: “Imagine that we were all actors”, he asks. With his analogy between life and stage play, he chooses a lens through which the reader can look at the world. This makes it easy understand what he means; it also allows us to take the analogy further and to ask interesting questions: Are our possessions just props? Can we go “off stage”? Who is our audience?

The Power of Metaphors

Metaphors and analogies are an example of how language influences thinking in a subtle yet powerful way. On the one hand, they provide an easily accessible toolbox of mental models which ease thinking and communication. On the other hand, those very mental models rely on unspoken assumptions. Shakespeare’s analogy above suggest that there are two layers of reality (stage/audience), and that people play only one role at a time. Those assumptions remain unchallenged if we choose to use the metaphors.

Business contexts are not immune from language’s influence, as the abundance of jargons shows. Technical terms, abbreviations and buzzwords are an integral part of any discipline. Some of them cross boundaries and infect other areas. Young, conceptual disciplines such as HR are especially prone to borrowing jargon, as their language is still much more in flux as opposed to established areas such as chemistry. But if language influences thinking, wouldn’t the jargon we use influence (or bias) our decisions?

Talent Management: An Engineering Domain

Let’s take the example of Talent Management, where practitioners have become used to expressions such as “talent pipelines”, “platforms”, “lifecycles” or “recruiting”. All those terms are derived from other disciplines. In a quick and dirty text analysis of the most recent 25 articles from Harvard Business Review’s “Talent Management” category, I have found that 6 out of 10 jargon terms come from the engineering/physics area (e.g. “process”, “build”, “potential”, “system”), followed by military terms (“engage”, “recruit”, “strategy”). There are some, but only few terms from other areas.

When using these metaphors, we rely on assumptions from those very disciplines – be it a mechanistic engineering view that a “system” can be “built”, or the strategic military considerations that a “war for talent” can be “won”. But do we really want to accept those assumptions?

Where are the Other Metaphors?

Creativity techniques emphasize the importance of outside influence, stimulating “out of the box” thinking. How about using a different vocabulary for Talent Management? A change of language would introduce different mental models, challenge assumptions and help us find new approaches. Chemistry could help us find talent oxidation, free radicals and leadership crystallization; biology would introduce cross-pollination of skills, symbiotic development and talent spores; the arts might lead us to leadership genres, talent rituals and the right balance between skill expression and technique.

In the end, we might find out that the engineering language is still the best of all of those jargons – but borrowing a different toolbox for a project, workshop or strategy meeting might help you think differently about that well-worn hammer you’ve been using all those years.

What metaphors could help you rethink your talent strategy? Please contact me if you would like to discuss this topic.

PwC Actuarial Services Newsletter – July 2015

The PwC Actuarial Services Newsletter is a joint venture of three of our worldwide PwC actuarial practices. In recent years, there have been a number of collaborations on client projects, initiatives and content development between the three entities, Switzerland, Germany and the Netherlands. This newsletter will examine current topics of the industry from different regional and thematic perspectives, and is aimed at insurance professionals working in or closely with actuarial departments.

Topic 1: How do you eat an elephant?

IFRS 4 Phase 2 requires more from insurers than Solvency II. Insurers that are well advanced in their preparations for IFRS 4 Phase 2 estimate that the costs of implementation of IFRS range from around the same as for the implementation of Solvency II to costs that are three times as much.

Topic 2: What does phase 2 of IFRS 4 mean for general insurers?

IFRS 4 Phase 2 is expected to be finalised during 2016, however there is enough certainty around key elements of the standard to start thinking about what it will mean for general insurers. Many believe that the impact on standard general insurance contracts will be minimal, there is even a ‘simplified’ approach for short term contracts which suggests relatively low impact; we question, though, whether this conclusion is correct.

Topic 3: Need for quality in actuarial reserving GI

Getting loss reserves right is crucial. Not only to avoid major run-off losses when trends in the underlying claims are discovered too late, it is also obligatory for Solvency II and IFRS 4 Phase 2 to assure the quality and reliability of the calculation of best estimates and inherent uncertainty in technical provisions. In some heavy-tailed LoBs reserving is the most important driver for pricing the business correctly, e.g. in some areas of commercial liability books.

Interview on reserve quality with Dirk Grönke, new Director for Actuarial Services in Germany

On April 1st, Dirk Grönke started as a director with PwC Actuarial Services in Germany. His focus is on actuarial consultancy for non-life (re-)insurance undertakings and the quantitative areas of risk management. One of his main hobbies is soccer, the active as well as the passive part.

Read more

If you would like to discuss one of the topics, please contact me.

IFRS 9: all users affected

The new financial reporting standard for financial instruments doesn’t just impact banks. Implementing the expected loss impairment model involves time and investment, while the new hedge accounting rules give greater scope. Users should address IFRS 9 in good time.

Topics of this article

  • Classifying and measuring financial assets
  • Classifying and measuring financial liabilities
  • Impairment
  • Overview of financial assets
  • Hedge accounting

Read more here.

Summary

The implications of IFRS 9 can be summarised as follows:

  • IFRS 9 affects all types of entities.
  • Certain requirements, especially the introduction of the new expected loss impairment model for large portfolios, will require a great deal of effort.
  • The new hedge accounting rules offer attractive simplified approaches and new options for industrial companies.
  • Entities should begin to assess the implications of IFRS 9 for their organisation as soon as possible, as implementation can take a considerable amount of effort and resources, and changes to systems and processes.

Switzerland – Notification of More Favorable Terms

The U.S. Treasury has posted to its website a model letter that was sent under Article 6 of the Model 2 Intergovernmental Agreement implementing the Foreign Account Tax Compliance Act, notifying Switzerland of more favorable terms under Article 3 or Annex I of the IGA afforded to another partner jurisdiction.

In order to coordinate the retroactive application of the amendments notified by means of the MFN letter, Switzerland and the United States signed a mutual agreement in Bern on 28 July 2015.  A brief explanation of the process and the signed mutual agreement can be found on the website of the SIF.

In principle agreement on EU – Vietnam Free Trade Agreement

Yesterday, the EU agreed with Vietnam another FTA with an Asian country. The final legal text should be available after the summer break. It is the second FTA the EU concludes with an ASEAN (Association of Southeast Asian Nations) country after Singapore and will clearly increase its footprint in the region.

This is an important next step for EU exporters to expand trade activities in ASEAN, mainly in the field of machinery and appliances, motorcycles, car parts, textile fabric, pharmaceuticals and chemicals. Depending on the tariff lines, preferential treatment will be available for a large part of tariff lines. Some of the above-mentioned industries will get partial duty elimination over a period of 7 years for the EU and up to 10 years for Vietnam.

Aside from tariff elimination, reduction in non-tariff barriers to European exports, protection of European Geographical Indication, Government Procurement, Intellectual Property Rights, are topics of the agreement.

What does this mean for Switzerland? We are optimistic that the successful negotiations between the EU and Vietnam will boost the talks between Switzerland (EFTA) and Vietnam since both agreements should cover similar topics. It may also be an opportunity for Switzerland to leverage on the content of the EU – Vietnam FTA to be better placed for future discussions.

The EFTA-countries have finished their 12th round of negotiations with Vietnam about two months ago; the next round will take place in October 2015. The negotiations should have been concluded by the end of 2014.

Vietnam is an interesting entry point to ASEAN and its participation in the TPP (Trans-Pacific Partnership) negotiations will strengthen its position as a trading partner. However, it is important for Switzerland to increase its footprint in Asia / ASEAN, since it is not participating in the TPP talks. Negotiations with Malaysia is still in its starting phase, similar for the Philippines, with Thailand, the talks are suspended, and negotiations with Indonesia are on hold since the change in government.

Remember: Switzerland has currently FTAs with various partners in Asia, such as Japan, Hong Kong, Singapore, China and South Korea (some under the EFTA framework, some bilateral). It is therefore important for Switzerland to increase its FTA network to remain competitive and to raise business opportunities for Swiss companies.

Further details about EU-Vietnam FTA available here.

Link to blog

WTO members conclude expanded ITA agreement

Twenty-nine participants at the Singapore Ministerial Conference concluded the Ministerial Declaration on Trade in Information Technology Products (ITA) back in December 1996.

The ITA provides for participants to eliminate duties on IT products covered by the Agreement. Since 1996 and with the fast development of IT products in the last 19 years, the covered products by the ITA were outdated.

Yesterday, on the 24 July 2015, the WTO members concluded an expanded deal that eliminate tariffs on more than 200 IT products. After the Bali agreement, this is the second important agreement that the WTO delivers within the last 2 years.

More details…

Link to blog

Ordinance on excessive pay: lessons learned from daily practice

Implementation of the Ordinance against Excessive Compensation (VegüV/ORAb) is progressing well. Find out more about key experience in practice, and read how a balanced say-on-pay system can strengthen a company’s value creation.

Topics of the article

  • More work for AGMs
  • Election of compensation committees and say on pay
  • Information needs for say on pay

Read more here.

Summary

Compensation per se might be less important than issues such as capital structure and dividend policy (which for their part are closely tied to the organisation’s growth strategy), but we’re convinced that systematically implementing a balanced compensation system is a strategic factor in the success of a company.

The new regulatory environment places great demands on everyone involved. For the board of directors and management of listed companies, preparing for say-on-pay votes – in other words drawing up a meaningful compensation report, documentation and arguments for the motions for shareholders – requires a lot of work. Despite this, companies benefit if they adopt a holistic approach, involving human resources, legal, finance and the board of directors at an early stage of the proceedings. A successful say-on-pay system has to be grounded in value-based management and reflected in value reporting. That way it can help management, shareholders and other stakeholders get a uniform understanding of the challenges faced by the organisation and the factors in its success. Ultimately this consensus will result in better, value-creating decisions.

Indonesia increases import duties

Due to economic slowdown, Indonesia announced yesterday an increase of import duties in a range of consumer goods (meat from 5 to 30 per cent, coffee from 5 to 20 per cent, alcohol from $9.32 per liter to 150 per cent).

This comes in addition to the last month announcement of an increase of import duty on luxury goods from 7.5 per cent to 10 per cent.

More details

Link to Blog

Swiss Corporate Tax Reform III: how Switzerland will remain attractive

On 5 June 2015, the Swiss Federal Council published Corporate Tax Reform III for debate in parliament. The legislation is designed to boost trust in Switzerland and strengthen its position as a tax domicile. If parliament reinstates the notional interest deduction, Switzerland will be able to retain its place among the most attractive locations for doing business.

Topics of this article

  • Reform project: background and current status

  • Important reform for Switzerland

  • The reforms in detail 

Read more here.

Summary

Dating back more than thirty years, the current rules on corporate taxation – particularly the tax regimes that are due to be abolished – have been a major factor in Switzerland’s success. Plans to do away with these rules have created a great deal of legal uncertainty, raising the question of how competitive Switzerland will remain in terms of attracting international businesses.

This uncertainty came to an end when the CTR III reform package was released for parliamentary debate on 5 June 2015. Provided that parliament re-adopts the notional interest deduction, the package will contain the reform elements necessary to ensure Switzerland remains among the most attractive tax jurisdictions for corporations.

Given that Swiss public finances are in relatively good shape by international standards and that the will exists on the part of parliamentarians and the general public to adopt and implement CTR III, Switzerland will be able to preserve its reputation as a reliable, long-term, business-friendly location and an attractive tax jurisdiction for international companies. The new corporate tax legislation will help ensure the continuing success of the Swiss model in the coming decades.

 

A look at the present and future of customs and trade

To stay competitive in a global trade environment increasingly dominated by preferential trade, electronic customs clearance and export regulations, companies need a smart strategy integrating the entire range of customs and trade activities in their value chain − particularly on the IT side.

Take a look at our new article in the PwC online magazine Disclose regarding current big trends in the area of trade and customs, focusing on risks and suggesting solutions.

Read more in the Disclose Update July 2015.