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Developing Green Power in Bhutan
Watch videoDennis Nally outlines the argument for making audits more relevant
Revenue by region Helping our clients to achieve sustainable growth and deliver value to their stakeholders is what PwC does best.
TelstraHelping our client embrace change in a competitive environment
It is a key strength of PwC – and a sign of the quality, depth and breadth of our services – that our client relationships span companies ranging from the largest global multinationals to many small and medium-sized enterprises. Our clients are also based in almost every country in the world, each with its own business environment and trends.
Yet, despite this huge diversity, we find that our clients across the globe often face very similar challenges in achieving sustainable growth and delivering value to their stakeholders. Helping companies rise to these challenges and find the growth they are seeking is what PwC does best.
Looking across our worldwide community of clients, we see them grappling with a handful of key issues:
- As increasing globalisation brings organisations closer together, collaboration between private enterprise, governments and NGOs becomes ever more important
- In a time of unprecedented volatility, organisations are addresing new ways to build competitive advantage
- One key to success is finding new ways to harness the talent to deliver growth
- Now that economic, political and environmental instability have become permanent facts of life, organisations are seeking to improve their own resilience and prepare for what’s around the next corner
- As expectations of the business community and its role in the development of society grow, companies are increasingly looking at how they can measure, build and sustain trust
We are working with our clients to meet each of these challenges and by doing so, helping them to achieve sustainable growth.
Collaborate to achieve stability
If the global financial crisis has shown us one thing, it’s how close the linkage now is between countries across the world. Local risks soon become global ones. Historic findings from our Annual Global CEO Survey show that CEOs’ confidence in the growth of their businesses moves in much the same way, whether they’re from developed or emerging countries. This year, the respondents globally named over 60 different countries as important for their companies’ future growth.
| Helping our clients to achieve sustainable growth and deliver value to their stakeholders is what PwC does best. | |
But as companies grow overseas, they face a complex patchwork of standards and varying political, tax and regulatory systems. This level of complexity is a major barrier. So, across industries, the need to bring together international standards and best practices – and to collaborate to tackle shared risks and seize mutual opportunities – is clear.
In many cases, this collaboration bridges not just industries but also the public and private sectors, as with our work on the Green Power Development Project in Bhutan.
As such case studies illustrate, collaboration is growing and yielding positive results. But it needs to go much further. And we believe it will – encouraged by the fact that priorities such as workforce development, financial sector stability and infrastructure improvement are important for both businesses and governments worldwide.
These shared needs will drive convergence in areas like accounting and auditing standards, anti-corruption practices, healthcare, international taxation and climate change. The era of convergence and collaboration has only just begun.
Build competitiveness in a time of change
| If the global financial crisis has shown us one thing, it’s how close the linkage now is between countries across the world. | |
As we scan the horizon beyond 2012, the outlook remains dominated by economic volatility and uncertainty. Factors ranging from the eurozone’s rumbling debt crisis to the long-term shift of economic power to emerging economies mean there’s little sign of an end to the current state of flux. A further impact is that the world is becoming an ever-more competitive place, with the internet enabling consumers and business customers to buy from all over the world, compare suppliers and share market knowledge.
So growth is at a premium. To find it, companies are embracing the sheer size of the potential in emerging markets, while keeping a close eye on costs and risks. But they also know they have to do things differently to compete more effectively in the new economy. So companies are putting the ‘local’ in their global growth strategies, building wider and deeper networks, and moving away from selling products towards creating personalised value for customers.
How can companies achieve all this amid such sweeping and radical change? By being ready to transform and innovate to get closer to their markets. This is precisely what we’re helping more and more companies to do. Assisting clients to handle the transition from state-owned entity to customer-centric private sector player, as with Australian telecommunications company, Telstra. Or helping them deal successfully with rapid growth from a small, domestically-focused operation into a major global enterprise, as with China-based Haier Group. Either way, building and sustaining competitiveness in a fast-moving environment provides the bedrock for future success.
Harness talent for future growth
| There have never been so many educated and mobile people in the world – yet businesses in all industries are finding it harder to recruit. | |
Over half the companies in our 2012 Global CEO Survey said that not being able to find key skills could hurt their ability to grow. This figure rises to 62% in Asia Pacific, home to the world’s largest workforce. The reason? Chronic skill gaps, and a mismatch between supply and demand.
The rise of emerging markets is creating jobs in places where it’s tough to find the right people. International and local competition for those who do have the right skills is intensifying by the day. And new kinds of jobs are being created – in old and new industries – that many unemployed people don’t have the skills for.
In response to such challenges, more companies are starting to take a longer-term, strategic approach to closing the gap between what they have, what they need and what’s out there. This includes making the most of their existing talent, a goal that we helped Swiss Re to achieve through its radical cultural and behavioural change programme in Finance.
And rather than treating resourcing as an afterthought to business planning, companies are putting in place succession plans, mobility strategies and diversity programmes. Overall, the message is clear: recruiting and retaining the right people today means making HR a truly strategic player.
Build resilience in tough times
The risk landscape is changing radically. Throughout the recent economic crisis, improving risk management was a key focus for many organisations. A positive outcome is that companies are now better prepared with their enterprise risk management (ERM) frameworks than before the crisis struck. But increasingly, ERM alone is not enough.
Why? Because the size, speed and nature of risks are changing beyond recognition. Global interconnectivity and communications mean local risks are snowballing rapidly and unpredictably into global ones – and from there into systemic shocks. Traditional ERM processes are geared towards identifying and predicting risk events as a basis for avoiding them or managing their impacts. In an environment where unpredictable events have equally unpredictable effects, this approach will no longer do.
To navigate through this new environment, companies need not just risk management, but risk resilience.
| Risk has changed: we believe businesses need to change with it – by expanding risk management into resilience. | |
This means accepting that disruptions will occur, and gaining the ability to adapt and evolve the organisation while keeping an even keel. That’s evidenced in the way that we helped global travel service company Kuoni to harness the momentum of its merger with Gullivers Travel Associates, to drive transformational change without damaging ‘business as usual’. And in another example, how we are helping one of the world’s leading crop protection companies to take a fresh look at its risk management and internal audit function.
Going forward, businesses can adapt ever more fully to the new risk landscape by integrating risk management with strategic planning, focusing on strategic and systemic risks to strengthen and expand their ERM frameworks, and building a risk-aware culture and behaviour throughout the business.
Risk has changed: we believe businesses need to change with it – by expanding risk management into resilience.
Rebuild and sustain trust
Recent high-profile events have highlighted just how important trust is to businesses today. As a key asset for any business, trust is an economic driver and a performance enhancer. It’s what legitimises business to do what it does, and it’s what gives business a future. Organisations need to actively build and sustain trust or risk going out of business.
During conversations with clients and stakeholder debates on this subject, it’s become clear that trust cannot be bought or enforced, but has to be earned through behaviours based on principles of honesty and integrity. The challenge is for businesses – starting with their leaders – to embed into their corporate culture the values and behaviours that are worthy of people’s trust. Organisations need to achieve authenticity, where what they do is aligned with what they say.
This is all the more critical today, since globalisation and the explosion in social media mean businesses now operate in a global fish bowl. So they have no choice but to be transparent and communicate clearly and openly, whether reporting on their social impact, financial results, or any other area.
Every year, PwC’s UK firm organises the Building Public Trust awards to help raise standards of transparency in measurement and reporting practices for businesses. Now in their tenth year, the awards recognise UK businesses and public sector organisations that have done a particularly good job in building transparency and trust into their reporting.
Today, no business can present one face to the outside world while behaving differently behind closed doors. In fact, there are no closed doors in the digital era. The only way to earn trust is through clarity, honesty – and authenticity.
“Building a new consensus around the positive role that business plays is critical to our ability to build trust. Key to achieving this is improving transparency – and this requires businesses to continue to improve the way they report."
