Disclose 27, Focus piece 3: Fit for Growth – the smart way to cut costs, restructure and renew

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 3 gives you an insight into the topic Fit for Growth – the smart way to cut costs, restructure and renew

Companies across industries and geographies are realising that the only way to unleash profitable growth is to cut costs as rigorously as they concentrate on growing revenues. As with any living organism, there’s no profitable growth without equally robust pruning. To get fit enough to thrive in an increasingly tough environment, you need to focus on a small number of differentiating capabilities, align your cost structure to these capabilities, and organise for growth. In this article we look at how the world’s fittest companies have mastered these three components to achieve and maintain healthy, profitable growth – and at the principles that can enable companies in this country, to to prune their business for sustained success.

Read the full report here.

Contact

Niklas Hoppe
Partner, Strategy& Switzerland
+41 58 792 2875
n.hoppe@strategyand.ch.pwc.com

Swiss company leadership & the gender divide (2008-2018)

PwC supports major new Business-Monitor survey of all registered Swiss companies revealing true extent of gender inequality

To mark International Women’s Day on 8 March, PwC has joined forces with data insight company Business-Monitor to launch a major new gender parity analysis of all companies registered in Switzerland, designed to show the true state of gender inequality in this country. Drawing on state-of-the-art research, intelligence and data analytics technologies, it dispels some of the speculation to give a much more accurate snapshot of the status quo than was previously possible.

Sobering, but differentiated, findings
While some of the findings are sobering – in many cases confirming the generally slow pace of progress towards gender parity in Swiss business – the study also provides some intriguing new insights which the initiators hope will stimulate a much broader and informed conversation going forward. Particularly valuable is the granularity of the study, which yields a very differentiated picture: findings are broken down by type of company (limited company, limited liability company and sole proprietorship); by industry; by hierarchical level of executive and non-executive roles; and by canton and language region.

Despite the fact that the Swiss constitution itself prohibits any type of discrimination based on gender, and various legal measures have been implemented to foster equality at the workplace, the study suggests that current efforts are not enough. This report aims to make a constructive contribution by providing more detailed and objective insights, shedding light on some challenges that have gone unnoticed, and provoking thought and discussion of the issues.

Food for thought
First, some stark facts reported in the study emerging from the 2017 World Economic Forum’s Gender Gap Index:

  • Switzerland has fallen ten places to 21st in the latest ranking
  • Top countries in the ranking are making progress, but Switzerland has flatlined in terms of gender equality
  • Switzerland ranks only 43rd globally in terms of the proportion of leadership roles held by women (just 35.6%)

Inverse gender relations
Do you see a pattern?

Select study findings confirming existing perceptions:

  • The glass ceiling is still a reality at both executive and non-executive (director) levels – even in industries where women are better represented overall.
  • It’s easier for a woman to become a decision-maker in some industries than in others.
  • At the current rate it will take decades to achieve the goal of parity at decision-maker level.

Some new insights:

  • There is less gender diversity at top management levels in newly created companies than at established organisations.
  •  The proportion of female partners across all limited liability companies in Switzerland has declined steadily since 2008 – a worrying and completely unexpected observation. Simply put, it’s less common for women to start a business than it is for men.
  • Women are better represented at the decision-making level than in the general workforce in some traditionally ‘masculine’ industries such as the primary and construction sectors.

What next?
The author, Florent Schläppi, invites anyone interested in this subject to reach out to him for further discussion of the insights. Together with his co-authors from PwC, we hope that the important questions raised by Business-Monitor data will lead to further discoveries.

Some of the questions worth considering:

  • What’s behind the differences in gender parity between cantons and language areas?
  • How can the decline in women partners be reversed?
  • How can companies develop a culture supporting part-time work for both women and men and promote greater female boardroom presence?
  • Ultimately, how can we make a mentality of ‘think manager, think male’ a thing of the past?

Check out the full Swiss company leadership & the gender divide (2008-2018) report and contact Business-Monitor or us to continue the discussion. Let’s make International Women’s Day the start of something new!

F10 FinTech Incubator & Accelerator announces next selection of top-notch start-ups

For the third time since launching the scheme in September 2016, Switzerland’s leading FinTech space, F10 Incubator & Accelerator, has selected 15 promising new start-ups for its successful six-month “Prototype to Product (P2P)” program. Within the program the start-ups receive support and guidance in transforming their ideas into successful companies and in connecting with international finance organisations.

International start-up quality in Switzerland
The intense selection process for Batch III was again executed by founding member PwC Switzerland, together with its six fellow corporate partners SIX, Julius Bär, Generali Group Switzerland, Baloise Group, Zürcher Kantonalbank and Raiffeisen. Between September and December 2017 a total of 262 start-ups from over fifty countries worldwide applied for one of the coveted places in the upcoming program.

After an intensive five days, with 62 online interviews and two days of life pitches by the top 26 start-ups at the F10 facility in Zurich, the seven corporate partners agreed to officially invite the following 15 start-ups (including three corporate-internal teams) to the next Batch, starting on 5 March 2018:

  • Anansi insurance platform for high-growth SMEs with an international supply chain of physical goods
  • Baasis ID all-in-one identity verification (KYC) platform for FinTechs, crypto wallets and exchanges, and government agencies
  • BDEO streamlined operational processes for insurance claims for companies in Europe and South America
  • Borderless blockchain-powered international payment systems for businesses, governments and banks
  • C2SEC cyber risk analytics for insurance companies and enterprises
  • Dynametrics modernized credit processes for banks and credit institutions
  • eHyve centralised, consolidated financial overview for consumers
  • Qard data collection and insights for small online e-commerce
  • Luminant simplified reinsurance for the automotive insurance industry
  • Monday platform which enables small businesses to manage administrative tasks simply and efficiently
  • Safeside 3-click life insurance purchases for consumers
  • SIX IoT programmable eCommerce platform, neutral for suppliers, personalised for consumers
  • Susfinteq EU-China ESK risk assessment using AI for banks and financial institutions
  • Target Insights advanced analytics for wealth managers
  • Vestberry SaaS information management for the private equity industry

Involvement in the F10 FinTech Incubator & Accelerator is one of PwC Switzerland’s core initiatives to attract innovative and exciting new ideas to Zurich and the Swiss financial services industry. In these fast-changing, disruptive times, in which new business models are created and rolled out in ever shorter cycles, start-ups and their way of addressing challenges represent a source of inspiration no business should ignore. Active and close cooperation with these groups of entrepreneurs at an early stage enables PwC Switzerland not only to bring interesting, relevant ideas to our clients, but also ensures that our firm comes into contact with revolutionary technologies and stays ahead of the ongoing digital progress.

What it takes
Crucial for our selection is the start-up’s team and its configuration: a discordant team with the right idea will never succeed, but the right team, with an idea that is still developing and the right guidance, will achieve its objectives. A broad skillset, eagerness and willingness to accept advice or even pivot the idea if necessary, and the desire for a market-ready, adoptable solution: teams exhibiting these qualities are the ones we want to foster and support with our extensive industry and corporate knowledge.

PwC Digital has identified a number of potentially interesting solutions and great teams, which we intend to follow closely once the Batch starts in 2 weeks. We will introduce some of these start-ups and their ideas to you in more detail via this channel as the program evolves.

We are looking forward to an inspiring few months ahead and the delivery of exciting Minimal Viable Prototypes (MVPs) in August 2018.

If you have any questions please feel free to contact our F10 mentors Frederik Gregaard or Sandro Tarchini.

About F10
Based in Zurich, the F10 accelerator program was established by SIX Group in 2015 to promote Switzerland’s FinTech ecosystem, strengthen the innovative capacity of the Swiss finance and insurance sectors, and forge global links. It has been designed for financial firms that want to reach the next level of innovation, providing access to the most promising international FinTech start-ups, radically new technologies and business models. In September 2016, PwC Switzerland and Bank Julius Bär became joint corporate founding members of the association, with the overarching objective of providing a lasting contribution to the development of a state-of-the-art, future-fit Swiss financial sector.

 

Contacts:

Frederik Gregaard
Head of the PwC Switzerland Digital Accelerator
+41 58 792 24 81
frederik.gregaard@ch.pwc.com

Sandro Tarchini
Advisory Consulting Digital
+41 58 792 23 49
sandro.tarchini@ch.pwc.com

Disclose 27, Focus piece 2: Report on the lodging and tourism industry

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 2 gives you an insight into the report on the lodging and tourism industry:

Despite the strong franc, Switzerland has been able to maintain its reputation as a top destination in recent years. But for how much longer? To satisfy the high expectations of their guests, tourism providers have to offer them a lot for their money. This calls for clearly positioned offerings and high-quality service. With well-trained staff, intelligent big data tools and smart cooperation, operators can provide people with authentic experiences and gain loyal customers and new market share in lucrative segments. To do this they need to aspire to perfection but at the same time be willing to accept that you can’t make every guest segment happy at the same time.

Read the full report here.

Contact

Nicolas Olivier Mayer
Partner, EMEA Industry Leader Lodging & Tourism, PwC Switzerland
nicolas.mayer@ch.pwc.com
Tel. +41 58 792 21 91

Disclose 27, Focus piece 1: High-Performing Teams

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 1 gives you an insight into the topic High-Performing Teams:

High-Performing Teams: Teams bring out the best in everyone

If you want to make the pace you have to set yourself high standards and give your very best performance. Many business leaders wonder if it’s possible to achieve this with their current crew. We believe it is. There’s more to a good team than the abilities of its individual members. By building trust, bringing people closer together, introducing and promoting a healthy culture of debate, and ensuring that everyone clearly recognises the common objective and the contribution they can make towards it, you can exploit this potential – and harness the power of high-performing teams for the benefit of your business.

Read more about the topic High-Performing Teams.

Contact

Charles Donkor
Partner, People and Organisation, PwC Schweiz
charles.donkor@ch.pwc.com
Tel. +41 58 792 45 54

Executive Compensation & Corporate Governance Insights – Part 3

In this third and final part of this year’s ExCo Insights, we discuss new methods of pay design and communication with shareholders (and we clarify some misunderstandings regarding established “best” practices). Moreover, we recommend that board members and executives take a broad view of governance matters. We offer the following “Rethinks”:

1. Compensation design is fraught with “best practice” approaches that are actually often not appropriate. Companies should recognise the drawbacks of popular high-powered incentive systems with caps, should reflect on possible unintended side effects of the apparently intuitive use of “relative performance evaluation” (RPE, such as benchmarking to indices), should be wary of the risk-taking incentives of currently fashionable performance shares, and should consider using debt to complement standard equity-based incentives. Simplification – for example, granting straight-up shares rather than complex instruments such as performance shares – also has important advantages.

2. Ongoing communication with shareholders throughout the year, not just ahead of the Annual General Meeting (AGM), is essential to build trust and understanding regarding a company’s specific situation. This is particularly important given that a company also has to deal with powerful proxy advisors who sometimes use checklists and policies that management may regard as inadequate in the context of the concrete challenges a company needs to solve with incentive systems and governance choices.

3. We introduce the 5 Rs of value generation through effective governance: Recruit (select and retain the right board members, executives and employees), Reward (design and live incentives), Report (engage in value reporting and communication), Realise (execute value generation), and Rethink (reflect critically on practice of all four of the other Rs). An effective board has a holistic view of all of these matters. The weakest link of these five elements will determine the overall performance of the company.

Read the ExCo Insights 2017 – Part 3

We look forward to engaging in dialogue with you.

Dr. Robert Kuipers
Partner People & Organisation PwC
+41 58 792 45 30
robert.kuipers@ch.pwc.com

Remo Schmid
Partner People & Organisation, PwC
+41 58 792 46 08
remo.schmid@ch.pwc.com

Executive Compensation & Corporate Governance Insights – Part 2

The first part of ExCo Insights 2017 summarised the key highlights for the largest 100 Swiss listed companies regarding the level of compensation of CEOs and other executives, as well as chairmen and other board members. Then, it studied the much-discussed differences between financial-services (FS) and nonfinancial- services (non-FS) companies – and unearthed some arguably surprising patterns. Specifically, the overall rise in executive compensation since 2009 has mostly been driven by non-FS companies rather than FS companies.

PwC’s ExCo Insights 2017, part 2 now focuses on pay-for-performance in Switzerland. For an overall assessment of this challenging topic, one has to consider multiple perspectives.
We hope that this analysis provides useful background and benchmark information as companies, boards, managers, and policymakers reflect on the adequacy of incentive systems in Swiss companies. Based on the results presented in this part 2, ExCo Insights 2017, part 3 will discuss new methods of pay design and will offer an analysis of the demands of shareholders in the upcoming annual general meeting season.

Read the ExCo Insights 2017 – Part 2

We look forward to engaging in dialogue with you.

Dr. Robert Kuipers
Partner People & Organisation PwC
+41 58 792 45 30
robert.kuipers@ch.pwc.com

Remo Schmid
Partner People & Organisation, PwC
+41 58 792 46 08
remo.schmid@ch.pwc.com

The ethics of pay - striking the proper balance

With growing wealth disparity around the world (the eight richest people are worth as much as half the world’s population) and the erosion of the wealth of many families, executive compensation has come under serious scrutiny. A recent study by PwC in partnership with the London School of Economics, “The ethics of pay in a fair society — What do executives think?”, looks at how executives around the world consider principles of distributive justice as they apply to compensation in their organizations and society.

The key challenge in distributive justice is that some of the basic principles of fairness are mutually incompatible. Consider principles based on need, equality and contribution, for example. Only in the truly exceptional case where all people have the same exact needs and have performed exactly the same will the principles agree. Thus, as the researchers argue, achieving complete perceived fairness is an impossible task. An encouraging result of the PwC study is that executives have views of fairness that acknowledge this conundrum. They tend to show the strongest support for four very different principles:

It seems rather than thinking the market should decide, or that pay systems should ensure that individuals be able to live a dignified life, executives believe compensation at the organizational and societal levels should incorporate elements of both. This is heartening because in the perfect world there should always be some balance. Contribution-based principles provide an incentive for performance, need-based principles ensure basic dignity is met for most people and equality-based principles ensure some sense of shared identity. The trick is to find the right balance.

The authors identify four groups of people, or “tribes”, that address this question of balance in different ways, giving greater weight to a one or two principles over the others; one intriguing result is that older people would rather have the market decide, while younger people prefer protection on basic needs and dignity in our compensation systems. Moreover, in the case of both companies and society, respondents generally believe that we are failing, not only to meet standards for equality of opportunity, but also to provide compensation sufficient for basic human needs and a sense of dignity.

Why should we care? Given the growing concern over inequality in the world, it is incumbent upon us to create systems that ensure market success and performance for our firms, but also remember the lessons of Louis XVI and the Romanovs. If key principles of fairness are not met, societies tend to crumble and those on top find themselves in unhappy circumstances. As Will and Ariel Durant noted, when such an imbalance has existed historically, we’ve seen a correction either through “legislation redistributing wealth or by revolution distributing poverty”.

Read more

Contacts

Dr. Robert Kuipers
Partner People & Organisation PwC
+41 58 792 45 30
robert.kuipers@ch.pwc.com

Remo Schmid
Partner People & Organisation, PwC
+41 58 792 46 08
remo.schmid@ch.pwc.com

 

SECO directive on intra-group staff leasing: how does it affect companies from a global mobility perspective?

Read a related article

The State Secretariat for Economic Affairs (SECO) has published a new directive concerning intra-group staff leasing. The new directive states that staff leasing within a group of companies also falls under the federal law on recruitment and staff lending (AVG, LSE, LC) and is no longer automatically exempt from these regulations. The law restricts staff lending, forbids it in some cases, declares others permission free, and subjects it to authorisation or a staff lending licence in certain situations.

These restrictions affect companies operating globally in a variety of ways, depending on how they are set up with regard to their international workforce. There is no one-size-fits-all answer to the new directive. Some of the initial reactions to the new directive suggest that companies are extremely concerned that they will no longer be able to bring in the staff they need for their business. However, a closer look at the directive paints another picture. There are still categories of permissible secondments. For most companies these will cover the majority of cases. The attached set of slides will shed some light on the global mobility side of the SECO directive and the possible action points.

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Contact

Ingo Heymanns
Senior Manager
Tel. +41 58 792 45 43
E-mail: ingo.heymanns@ch.pwc.com

Intragroup staff leasing

Read a related article

In June of this year, the State Secretariat for Economic Affairs (SECO) issued a new directive on the permissibility of intragroup staff leasing. It clarified that intragroup staff leasing also generally requires the relevant licences – contrary to a previous directive dating back to 2003. To fully understand its impact, it is necessary to be familiar with the legal concept of staff leasing. Below, we will therefore provide you with more information on staff leasing in general before focusing on intragroup staff leasing, and on crossborder staff leasing in particular. To conclude, we will give our views on the consequences of the new SECO directive.

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Contacts

Legal/Immigration
Christine Bassanello
christine.bassanello@ch.pwc.com
Tel. +41 58 792 51 21

Immigration
Mirela Stoia
mirela.stoia@ch.pwc.com
Tel. +41 58 792 91 16

Global Mobility
Ingo Heymanns
ingo.heymanns@ch.pwc.com
Tel. +41 58 792 45 43