International Survey: key factors for a successful economic growth

Time for change: Solutions & Value are taking over

leaving products & technology behind

•Study about Key Success Factors for a sustainable growth

•SME-companies, Western Europe, 844 resp.

2

1 Sample's features

Executive summary / Synthesis2

3

Overview

4

Evaluation of the economic changes

5

Perception of the key success factors for growth

Action plan evaluation

3

Sample's features

Total EuropeN= 844

Industry Service

1- 50 employees

51-1000 employees

> 1000

Total EuropeN= 844

Size of the company

Total EuropeN= 844

[DEF]

CEO / Directors Manager

From October to December 2009, online research

[E] - Italy[E] - Italy[E] - Italy

1- 50 employees

51-1000 employees

> 1000

20%

16%

64%

[E] - Italy

Automotive and industrial sectors

Pharmaceuticals/ Medical Care

Insurance/ Bank & Finance

EDP - consultancy Information and

technology

FMCG - Food FMCG – Non-Food

Transport

Electronic components/

Electrical products

Sample's features / most mentioned sectors

[A] - Belgium [B] - Denmark [C] - France

[D] - Germany [E] - Italy[F] - Holland

[G] – Switzerland

Total EuropeN= 844

Automotive and industrial sectors

Pharmaceuticals/ Medical Care

Insurance/ Bank & Finance

EDP - consultancy Information and

technology

FMCG - Food FMCG – Non-Food

TransportElectronic

components/ Electrical products

Automotive and industrial sectors: Automotive industry + Technical service - Other + Machinery & Tools + Office MachineryPharmaceuticals/Medical care: Pharmaceuticals / Medical care /medical device + Health & Medical careInsurance/Bank & Finance: Bank & finance + insurance FMCG: Food and non foodElectrical and electronic products: Electronic components + Electrical products (high-tension)Transport: Transport equipment + Transport & Forwarding

Q1 In which industry do you currently work?

4

5

Executive summary – Western Europe

8 of 10 Managers see the crisis as an opportunity to change managerial practices

The success in the future comes from client orientation:• From listening, inventing new services, increasing value, better

customer service and mobilization of the intellectual and human capital• Management ability to lead to customer orientation• Sales ability to increase value, sell solutions• R&D’s ability of out-side in understanding together with development

speed.

Companies have mostly completed traditional recession actions

Highest prioritized actions for a sustainable growth are:• Strengthening human capital• Developing real quality of services• Improving ability to listen to the client• Increasing employee motivation, involvement• Earning new markets

6

Synthesis: Key success factors for growthAs the financial crisis engenders an economical recession, the levers for a durable growth are mostly based on the return to financial and commercial profitability. The crisis has every signal from a recession: hence, the directors and managers’ levers are

logically centered on a stronger customer/market orientation and strengthened core competencies.

2)- Core competencies: as the economy is subject to the competition from the emerging countries’ costs, the European industries have understood the key role of the innovation – its rhythm must be accelerated. Two other levers allow to complete the available assets: the quality of service and the mobilization of the intellectual and human assets.

1)- Market orientation: the conquest of new customers is the main priority. Some of the countries nuance it with the investment in the customer’s loyalty. The European economies have realized that the customer’s loyalty implies to invest in a strong service policy (the product is no longer enough).

3)- Internal management : the crisis engendered the erosion of the employees’ motivation. That preoccupation is particularly strong in Southern Europe (Italy) where the employees’ demotivation may engender a degradation of the social climate (hence a more pronounced preoccupation towards salary grids management). In Northern Europe, that fear also applies to the managers and directors. Their demotivation leads to the implementation of revisited management methods (project management, network/collaborative organization, etc.).

4) Financial management : the crisis engendered an erosion of profitability due a lower level of activity.Hence, the financial crisis also endered an economical crisis. Thus, the return to profitability implies to increase the activity and control the customers’ financial health. Some of the countries (Italy) are more affected by a liquidity crisis.

7

Synthesis: Action plans’ evaluationWhereas the urgent action plans have been promptly set up, the HR action plans still need to be implemented in most of the countriesAs a whole, the European companies have quickly faced the economic changes (less quickly in

Switzerland). Emergency plans are mostly ongoing or achieved.

1)- The market/customer orientation: the accent has been put on strengthening the orders portfolio. Facing the lower activity (and for some of the countries the degradation of the orders portfolio), European managers have implemented action plans in order to improve orders portfolio, the quality of service (customers’ loyalty), while the internationalization and openess to new markets seems to be a less urgent priority.

2)- Core competencies: in order to improve the service to the client, the action plans are mainly focused on improving the quality of service, accelerating the innovations’ rythm and prioritizing the organic growth vs. the external growth.

3)- Internal management: the whole considered action plans towards internal management are more recessed (ongoing or achieved in less than 6 companies out of 10), even on the three most important factors – employees’ remobilization and remotivation.

4)- Financial management: emergency plans have consisted in classic “recipes” in order to find profitability and manage liquidity issues: skills insourcing, reduction of the outsourcing expenses, process strengthening, etc.

Most of the European directors and upper managers consider that the current economic changes constitue an opportunity in order to develop new managerial practices, while the external (clients) and internal (employees) publics are meant to have active role. That reflexion fits a highly liberal trend (with some nuances though!), as the whole country plead for the market’s self-regulation.

The economic changes’ context is favorable to organizational and managerial changes.

Synthesis:Key factors vs. actions: overall results

Key factors+

Completed or ongoing +

1

2

3 4

56

8

10

11

12

13

14

15

16

18

20

21

22

23

24

2526

27

28 29

30

31

32

3334

35

36

3738

39

40

41

42

4344

46

47

4849

51

52

(Ongoing: 79%)

(Ongoing: 85%)

(Ongoing: 71%)(Ongoing: 73%)

(Ongoing: 79%)

Profitability

Acquiring new clients

Innovation frequency

Quality of services

Client retention/ loyalty

8

1

2

3

4

5

6

8

10

11

12

13

14

15

16

18

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

3839

40

41

42

43

44

46

47

484951

52

Key factors+

Completed or ongoing+

(Ongoing: 80%)

Italy confirms the trends that have been observed in the other countries, prioritizing the consolidation of the market/client orientation (acquisition of new customers, detection of new expectations). The cash crisis explains the specific attention that is brought towards the customers’ financial health and the return to solvability. Still, Italy also bets on a permanent innovation policy and on the investment in the employees and executive’ mobilization.

Client Retention

Profitability


Employees' level of

motivation

Intellectual - human capital

Financial health of clients


Synthesis:Key factors vs. actions: Italy

10

Evaluation of the economic changesCurrent situation per country

Completely unaffected

Rather unaffected

Rather affected

Very much affected

27%

21%

41%

7%24%

41%

28%

73% 79% 59%

93% 76% 59%72%

Xx% Unaffected: completely + rather unaffected

Affected: rather affected + very much affectedXx%

Completely unaffected

Rather unaffected

Rather affected

Very much affected

27%

73%


[D] - Germany [E] - Italy [F] - Holland [G] -Switzerland

Total EuropeN= 844

Q04- How would you say your company's situation has been affected so far by the current economic change? Would you say it has been...

Evaluation of the economic changesCurrent situation of the most mentioned sectorsQ04- How would you say your company's situation has been affected so far by the current economic change? Would you say it has been...

[C] Insurance/ Bank & Finance

N = 41

[G] Electronic components +

Electrical ProductsN= 29

[D] EDP Consultancy Information &

technologyN= 48

[E] FMCG food and Non Food

N= 42

[A] Automotive and industrial sectors

N= 125

[B]Pharmaceuticals/ Medical Care

N= 73

[F] TransportsN= 31

Xx% Unaffected: completely + rather unaffected

Affected: rather affected + very much affectedXx%

11

12

Evaluation of the economic changesForecast of the situation per country

Xx% Better than today: better + slightly better

Worse than today: slightly worse + worseXx%

61%

12%

Better

Slightly betterNeither better nor

woseSlightly worse

WorseI can't tell / I don't

know

68%

8%

78%

7%

49%

13%

59%

15%

54%

19%

71%

5%

62%

14%

Better

Slightly betterNeither better nor

woseSlightly worse

WorseI can't tell / I don't

know

[A] - Belgium [B] – Denmark [C] - France


Total EuropeN= 844

Q07- How do you expect the health of your company to evolve over the next 12 months? Would you say it will be…

Evaluation of the economic changesForecast situation of the most mentioned sectorsQ07- How do you expect the health of your company to evolve over the next 12 months? Would you say it will be…

Xx%

Xx%

Better than today: better + slightly better

Worse than today: slightly worse + worse

[C] Insurance/ Bank & Finance

N = 41

[G] Electronic components +

Electrical ProductsN= 29

[D] EDP Consultancy Information &

technologyN= 48

[E] FMCG food and Non Food

N= 42

[A] Automotive and industrial sectors

N= 125

[B]Pharmaceuticals/ Medical Care

N= 73[F] Transports

N= 31

13

Xx% Difference: I can’t tell / neither better nor worse

14

Evaluation of the economic changes impactINFORMATION sources per country



(1): Information provided by Upper Management + Analysis by external consultants + management indicators + accounting and financial audits + Internal management meetings (2): Discussions with colleagues in the company+ Discussions with employees from other companies+ Facts of which I have knowledge internally +My intuition (3): Information from economic publications + Information from internal newsletters / communications

Total EuropeN= 812

(1) Formal information

(2) Informal information

(3) Economical press

83%

73%

36%

79%

81%

45%

(1) Formal information

(2) Informal information

(3) Economical press

Q08- You indicated that your company's health will be …..over the next 12 months. What are the sources of information that lead you to believe this? Please select the three primary sources..

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Perception of the key success factors for growthImportance of the key success factors for growth per country

Client / market orientation

Core competencies

Internal management

Financial management

More important

Client / market orientation

Core competencies

Internal management

Financial management

As important Less important

[A] - Belgium [B] - Denmark [C] - FranceTotal EuropeN= 844


[DG]

Q26- Assess the importance of these 4 categories AFTER the current economic change in terms of maintaining sustainable growth.

16

Perception of the key success factors for growthFocus on the CLIENT/ MARKET ORIENTATION per country

Total Europe (N = 844)

Belgium

Denmark

France

Germany

Italy

Holland

Switzerland

76%52%

Q16- In your opinion, which key factors of success must your company improve in order to take the opportunity of growth in the near future?

2 13

61% 39%

[E] - Italy

Acquiring new

clientsClient

retention / loyalty

Openness to new

markets

61%

17

Perception of the key success factors for growth

Focus on the CORE COMPETENCIES per country

Switzerland


Belgium

Denmark

France

Germany

Italy

Holland

21

3

82%63% 45%

[E] - Italy


Intellectual / human capital

Quality of service


18

Perception of the key success factors for growthFocus on the INTERNAL MANAGEMENT per country



Denmark

France

Germany

Italy

HollandSwitzerland

21

3

77%52% 48%

Skills / profiles

management

[E] - Italy

Employees' level of motivation

Middle management's

level of motivation


Belgium

19

Perception of the key success factors for growthFocus on the FINANCIAL MANAGEMENT per countryQ24- In your opinion, which key factors of success must your company improve in order to take the opportunity of growth in the near future?


Belgium

Denmark

France

Germany

Italy

HollandSwitzerland

[E] - Italy

21

3

77%61% 45%

Profitability

Cash reserves / liquidity

management

Financial health of clients

20

Perception of the key success factors for growthTop 3 of the key success factors for growth whatever the PILLAR

21

3

71%66% 63%

[A] - Belgium [B] - Denmark [C] - FranceTotal EuropeN= 844


21

3

73%70% 65%

21

3

73%68% 61%

21

3

72%71% 69%

21

3

77%60% 55%

21

82%77%

21

3

72%71% 68%

21

3

76%65% 57%


ProfitabilityInnovation frequency

Quality of

service

Employees’ level of motivation

Client retention / loyalty



Profitability



Innovation frequencyEmployee

s’ level of motivation

Profitability

Profitability


Employees’ level of motivation



Profitability


ProfitabilityQuality

of service


77%

3

21

Action plan evaluationLessons learnt from the economic changes


[D] - Germany [E] - Italy [F] - Holland [G] - Switzerland

Total EuropeN= 844

a wonderful opportunity to reflect

on and deploy new management

practices

is similar to all the others….

The economic changes is…

81%

19%

65%

35%

a wonderful opportunity to reflect

on and deploy new management

practices

is similar to all the others….

The economic changes is…

Q33- Which of these statements best describes your opinion as of today?

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Action plan evaluationHiGHEST PRIORITIES for your company

% high priority

Q34- We'd like to know your opinion on potential levers of sustainable growth. For each, please indicate how much of a priority it represents for your company


Belgium

Denmark France

Germany

Italy Holland

Switzerland

[E] - Italy

21

3

88%84% 68%

strengthening human capital

increasing employee

motivation, involvement

improving ability to listen to the client

23

92%

93%

82%

89%

67%

83%

62%

91%

85%

74%55%

8%

7%

15%

9%

25%

17%

38%

9%

15%

24%45%

Action plan evaluationACTION PRIORITY for the CLIENT / MARKET ORIENTATION per country

Acquiring new clients Business

internationalization Customer service

Client retention / loyalty Quality of orders portfolio Openness to new markets

Level of orders portfolio Responsiveness / ability to

deliver Quality of client portfolio

Identifying new expectations

Ease / difficulty in negotiating

Acquiring new clients Business

internationalization Customer service

Client retention / loyalty Quality of orders portfolio Openness to new markets

Level of orders portfolio Responsiveness / ability to

deliver Quality of client portfolio

Identifying new expectations

Ease / difficulty in negotiating


[D] - Germany [E] - Italy [ [F] - Netherlands

Total Europe

[G] - Switzerland

Considered: Ongoing + Completed Not considered: Not being considered + under consideration but not yet begun

1 1 1 1

1 1 1 1

3 3

33

2 2 3 2

2 2 2 2

2

3

3

3

Q27- For each area listed below, please indicate whether an action plan is currently considered or not

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Action plan evaluationACTION PRIORITY for the CORE COMPETENCIES per country



Total Europe

Quality of services

Organic growth

Quality of offering


Staff turnover rate

Investment frequency

Quality of recruitment


Quality of training

External growth

Material / technological capital


Quality of services

Organic growth

Quality of offering


Staff turnover rate

Investment frequency

Quality of recruitment


Quality of training

External growth

Material / technological capital

[G] - Switzerland

[DEG]1

2

3

1

3

2

1

2

3 1

2

3

1

2

3

1

2

3

1

2

3 1

2

3


25

Action plan evaluationACTION PRIORITY for the INTERNAL MANAGEMENT per country

Internal advancement

Schedule flexibility

Skills / profiles managementMiddle management's

motivationEmployees' level of motivation

Project management

Social climate

Executives' level of motivationNetwork / collaborative

managementDelegation

Career management

Salary grid management

Career internationalization

Internal advancement

Schedule flexibility

Skills / profiles managementMiddle management's

motivationEmployees' level of motivation

Project management

Social climate

Executives' level of motivationNetwork / collaborative

managementDelegation

Career management

Salary grid management

Career internationalization



Total Europe

[G] - Switzerland


1 1 1 1

1111

2 2 3

3 3 2 2

3 3 3

2 2

2

2 3 3


26

Action plan evaluationACTION PRIORITY for the FINANCIAL MANAGEMENT per country



Total Europe

Working capitalCash flow

Cash reserves management

ProfitabilityWorking capital needs

Debt controlControl over the stock price

Financial analysis / ratingFinancial health of clients

Dividend paid to shareholders

Financial health of suppliers

92%81%

95%

92%

92%

96%

100%

80%

82%

100%85%

4%13%

5%

8%

8%

4%

0%

20%

16%

0%15%

[G] - Switzerland

Working capitalCash flow

Cash reserves management

ProfitabilityWorking capital needs

Debt controlControl over the stock

priceFinancial analysis /

ratingFinancial health of

clientsDividend paid to

shareholdersFinancial health of

suppliers

1


1 1 1

1 1 1 1

2 2 3

3 2 3

3 3 2 2

2322

3

3


International Survey: key factors for a successful economic growth

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