© 2007 Hay Group. All rights reserved. What Makes the Most Admired Companies Great Board Governance...

© 2007 Hay Group. All rights reserved.

What Makes the Most Admired Companies Great

Board Governance and Effective Human Capital Management


Welcome

Richard Hardwick, Managing Director, Hay Group (Pacific)

© 2007 Hay Group. All rights reserved.3

WELCOME

The World’s Most Admired 2007

Carlo Cataldo, Head of Risk, GE Money – Working for the World’s Most Admired

Board governance and Human Capital: a key differentiator

Cheryl Batagol, Chair, Melbourne Water– The journey of a local board

Questions & Comments 9.15am close


The World’s Most Admired Companies 2007

Denise Girdlestone, Senior Consultant, Hay Group


Fortune Survey of Most Admired Companies

What is it?

Study of corporate reputations

Candidates: Fortune 1,000 and Global 500 companies

Companies rated both overall (All Stars) and relative to their industry peers (Industry)


Fortune Survey of Most Admired Companies

Attributes:1. Ability to attract and retain talented people2. Quality of management3. Quality of products or services4. Innovativeness5. Long-term investment value6. Financial soundness7. Wise use of corporate assets8. Social responsibility to the community and the environment9. Effectiveness in conducting business globally


Why Study the Most Admired Companies?

Most Admired Companies outperform industry peers and the market as a whole, on total shareholder returns

Most Admired

19.6%19.6%

S&P 500

7.1%7.1%


“All Stars” for 2007

* Company also included in Top 10 list in 2006.

1. General Electric*

2. Toyota Motor*

3. Procter & Gamble*

4. Johnson & Johnson*

5. Apple*

6. Berkshire Hathaway*

7. FedEx*

8. Microsoft*

9. BMW

10. PepsiCo

1. General Electric*

2. Toyota Motor*

3. Procter & Gamble*

4. Johnson & Johnson*

5. Apple*

6. Berkshire Hathaway*

7. FedEx*

8. Microsoft*

9. BMW

10. PepsiCo

World’s Most Admired


A Different Perspective on the All Stars

Top Per European Raters

1. Toyota Motor

2. BMW

3. Singapore Airlines

4. Nokia

5. Honda Motor

6. Nestlé

7. Toyota Industries

8. Tesco

9. Samsung Electronics

10. BP

1. Toyota Motor

2. BMW

3. Singapore Airlines

4. Nokia

5. Honda Motor

6. Nestlé

7. Toyota Industries

8. Tesco

9. Samsung Electronics

10. BP

Top Non-U.S. Companies


TheBest of...

Computers

Entertainment

Food and Drug Stores

Household and Personal Products

Motor Vehicles

Petroleum Refining

IBM

Walt Disney

Tesco

Procter & Gamble

BMW

Exxon Mobil

The 2007 WMAC Industry Honor Roll


Working for the World’s Most Admired Company:Carlo Cataldo, Head of Risk, GE Money


The increasing role of Boards in Human Capital governancePaul Meijer, Consultant, Hay Group


And then there was…..


Life on the Board has changed

Sarbanes-Oxley-Higgs-ASX-CLERP9

Liability of the Chair (Greaves Precedent)

Committees

Time


So what do the Board of the World’s Most Admired do?

They are more directly focused on human capital issues




% Agree

Peer GroupMost Admired

Human capital strategy has been reviewed and approved by the board. 69

82

0 10 20 30 40 50 60 70 80 90 100




% Agree


Human capital strategy has been reviewed and approved by the board.

Board is regularly given information and metrics related to human capital management

67

69

82

82

0 10 20 30 40 50 60 70 80 90 100




% Agree

The CEO and management regularly draw on expertise of the board on human capital issues.


Human capital strategy has been reviewed and approved by the board

Board is regularly given information and metrics related to human capital management

65

67

69

77

82

82

0 10 20 30 40 50 60 70 80 90 100


Boards of the World’s Most Admired evaluate their CEOs differently

They look beyond strategy and finance




In evaluating CEO performance, board focuses on financial success.

In evaluating CEO performance, board focuses on strategy implementation.

% Agree


91

92

95

97

0 10 20 30 40 50 60 70 80 90 100




In evaluating CEO performance, board focuses on financial success.

In evaluating CEO performance, board focuses on strategy implementation.

In evaluating CEO performance, board focuses on success in developing human capital.

% Agree


66

91

92

81

95

97

0 10 20 30 40 50 60 70 80 90 100


By being better prepared for the loss of top executives

WMA Boards manage CEO and Executive succession differently




% Agree

We have a well defined plan to cover the emergency loss of the CEO.


65

91

0 10 20 30 40 50 60 70 80 90 100




% Agree

We have a well defined plan to cover the emergency loss of the CEO.

We have a well defined plan to cover the emergency loss of other top corporate executives.



So, a small checklist

Are you up to speed with the status of Human Capital in your organisation?

Is your CEO’s performance measured in regards to leadership development?

Do you know who your next CEO will be?

Do you have an emergency succession plan?


Cheryl Batagol, Chair, Melbourne Water

A Local Perspective: The Journey of Melbourne Water


Questions & Comments


Thank you

© 2007 Hay Group. All rights reserved. What Makes the Most Admired Companies Great Board Governance...

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