01578_ceo pulse 2009_bd&m_final for web with links_mar09

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First for business. First for people.

C

EO

Pulse2009

Thev

iewsofbusinessle

adersinIreland
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Contents

Section 1 Executive summary 1

Section 2 Business barometer 8

Section 3 Managing in a downturn 11

Section 4 Inward and outward investment 17

Section 5 Sustainability 21

Section 6 Managing and developing people 25

Appendix About the PricewaterhouseCoopers CEO Pulse Survey 32


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Executive summary

As the turmoil in the global and Irish economies continues, our 2009CEO Pulse Survey aims to provide a snapshot of the views of Irish Chief

Executives on the current operating environment and the challenges and

opportunities for corporate Ireland. It comprises the following key areas:

Business barometer

Managing in a downturn

Inward and outward investment

Sustainability

Managing and developing people

The survey was undertaken in January/February 2009. A total of 220

CEOs from Irelands top companies participated, with just under a

third (30%) representing Irish indigenous companies and the remainder

being multinational (MNC) CEOs. Sectoral representation included 40%

Services; 23% Financial Services; 13% Manufacturing; 13% Consumer

Products and 11% Technology.

Confi

dence at an all time lowThe global position

Battered by the recession, the 2009 PwC Global CEO Survey reveals

confidence about the future prospects for business to have plummeted

with an expected slow, gradual recovery over the next three years.

More than a quarter of global CEOs said they were pessimistic about

prospects for the coming year. In addition, only one in five global CEOs

(21%) expect revenues to grow.

The Irish position

Similarly in Ireland, short-term confidence about the future prospects for

the Irish economy amongst Irish business leaders has been shattered.

According to the PwC Ireland 2009 CEO Pulse Survey only 3% of

business leaders rate the overall outlook for the Irish economy to befavourable, a drop from 14% in 2008 and 74% in 2007 (see Figure 1.0).

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Figure 1.0Percentage of respondents indicating that the outlook for

the Irish economy is favourable in the next 12 months

(% of respondents)

Growth expectations severely impacted

Recognising the full impact of the credit crisis, growth expectations

have been severely impacted. For example, over half (55%) of Irish

business leaders expect revenues and net profits to fall (See Table 1.0).

Three quarters (75%) of Irish CEOs expect costs will either decline or

remain unchanged indicating that cost control is a major focus for Irish

businesses (See Section 3 for further highlights on costs).

Table 1.0Overall anticipated performance of Irish operations

(% of respondents)

Cost overhaul needed to restore competitiveness

The survey shows that an overwhelming majority (84%) of business

leaders are unsatisfied with the overall cost of doing business in Ireland

(See Section 2 : Business barometer). This reflects an urgent need to

get the overall costs of doing business in Ireland under control in order

to restore Irelands competitiveness.

For example, the cost of labour continues to be an issue with four out of

every five Irish business leaders indicating they are not getting value for

money. However, over three quarters of participating CEOs are satisfied

with the availability (90%) and quality (80%) of this labour.

2009 2008 2007

CEOs of indigenous firms CEOs of MNC subsidiaries All CEOs0%

10%

20%

30%

40%

50%

60%

70%

80%

Overall anticipated performance of Irish operations (% ofrespondents)

Indicator Growth Decline No Change

2009 2008 2009 2008 2009 2008

Revenues 29% 71% 55% 21% 16% 8%

Costs 25% 83% 50% 9% 25% 8%

Net profit 23% 60% 55% 27% 22% 13%

Employment 19% 36% 29% 28% 52% 36%

Capital investment 18% 54% 46% 14% 36% 32%

2CEOPulse 2009

78%

12%2

%

69%

17%8

%

74%

14%

3%


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The level of satisfaction with the corporate tax regime remains high at

77%, albeit this is a decline from 88% last year. This indicates that

Irelands 12.5% corporate tax remains crucial in continuing to attract and

retain foreign direct investment. The stability of Irelands low corporation

tax rate and our open and transparent tax system remains an important

advantage for rebuilding Irelands competitiveness in the long term.

The survey also confirms that the turmoil in the capital markets will have

a very significant impact on Irish businesses in the year ahead with the

majority of respondents saying that investment plans (58%) and access

to finance (55%) will be the hardest hit. Unlocking capital will, therefore,

be critical for future investment.

Business leaders are tackling the challenges of the

downturn head-on

As the economic downturn continues, the survey highlights a refocusing

of the mindset of Irish CEOs, rebalancing short term survival with long

term ambitions. The CEO Pulse survey suggests that businesses are

responding by making plans to control and reduce their cost base and

restructure their operations so as to keep their businesses on-track.

For example, Figure 1.1 over demonstrates that Irish businesses have

taken, and continue to take, decisive action in order to reduce their cost

base and manage the impact of the tough trading conditions. Combining

the actions already taken in 2008 with those planned for 2009,

participating CEOs indicate that they will have overhauled their business

model by the time we reach the end of this year.

For example, over three quarters expect to have undertaken cost

appraisals, reviewed their procurement arrangements while also having

restructured their operations. Some 60% expect to have introduced

workforce reduction initiatives.

Figure 1.1Actions expected to be taken, in response to the current

environment, by the end of 2009

Will haveundertakenroot-and-

branch costappraisal

0%

20%

40%

60%

80%

100%

Will havereviewed

procurementarrangements

Will haverestructured

the firm

Will haveintroducedworkforcereductioninitiatives

Will haveundertakenend-to-end

supply chainreview

Will haveundertakenzero-basedbudgeting

8

6%

79%

75%

60%

54%

48%

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Despite the ongoing uncertainties, the survey suggests that Irish

business leaders are responding to the challenges and will emerge in a

strong position to secure long term sustainable growth and prosperity.

Ireland remains a location of choice

CEOs remain positive that Ireland continues to be a location of choice

for investment. For example, over three quarters (78%) of participating

CEOs of Irish headquartered companies indicated that Ireland forms part

of their future expansion plans. Furthermore, 85% of these CEOs are

not considering relocating Irish activities overseas. Both of these results

represent an improvement on last year.

It is also notable that just under three quarters (71%) of MNC CEOs

who were surveyed believe that Ireland remains well placed to attract

certain type of investments going forward. However, only one third

(32%) of MNC CEOs said that they are currently considering additional

investment in Ireland, down from just under two-thirds (61%) last year.

This may be indicative of the overall low global investment sentiment

generally. (See Figure 1.2)

Figure 1.2Investment in Ireland CEOs of MNC subsidiaries

(% of respondents who agree)

0% 10% 20% 30% 40% 50% 60% 70% 80%

2009 2008 2007 2006

4CEOPulse 2009

80%

71%

71%

77%

70%

63%

61%

32%

Ireland capable ofattracting certainforms of FDI

MNC parentconsidering additionalinvestment in Ireland


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The future suggested key actionsWhile CEOs are taking the strategic action

to restructure their cost base, the survey

suggests a number of key areas of focus in

order to rebuild Irelands prosperity. These are:

As an economy, more work needs to be

done on our overall cost base, especially

labour costs, in order to restore our

competitiveness;

The survey shows that more needs to be

done if Ireland wants to realise its vision as

a knowledge economy. Much progress has

been made with incentives for R&D, but

we now need to put in place appropriatemeasures to own and hold intellectual

property. For example, half of survey

participants said that introducing more

favourable intellectual property rules would

further promote Ireland as a place to do

business;

With the turmoil in the capital markets

expected to have the greatest impact on

investment plans and access to finance, a

clear focus needs to be directed towards

unlocking capital for future investment;

Sustainability is clearly moving up the

corporate agenda, but companies need to

work on turning aspirations into reality;

Managing and motivating staff is critical

amidst the current doom and gloom;

With people management being a greater

challenge, peer support provided through

executive coaching and mentoring, will

play a bigger role in supporting business

leaders as they make their hard decisions;

As a small open economy, it will be critical

that we continue to foster our international

connections.

In doing so, we will rebuild our economy as

a strong and attractive place to do business

offering sustainable growth opportunities. It

is vital that our tax, legal, regulatory and cost

environment as well as our infrastructure

systems remain key competitive factors in

securing Ireland as a business-friendly and

transparent location for investment. And with

Irish business leaders taking decisive action,

the 2009 CEO Pulse Survey suggests that

Ireland is well placed to secure the benefits

from the eventual recovery in the global

economy and is well positioned for sustainable

future growth.

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Business barometer

Business confi

dence is at an all time lowThis section of our report aims to obtain a snapshot of business

confidence levels amongst Irish CEOs. The CEO Pulse Survey reveals

that confidence about the prospects for the Irish economy is at an all

time low. Over three quarters of respondents expect net profits to either

decline or remain unchanged.

Business leaders have a major focus on cost control as they deal with

the economic slowdown in order to build the future sustainability of their

operations.

Outlook for the Irish economy

Overall, only 3% of Irish CEOs rate the outlook for the economy as being

favourable, down from 14% last year and 74% in 2007. When looking at

MNCs versus their Irish indigenous counterparts, Figure 2.0 shows that,similar to last year, CEOs of MNC companies were slightly (6%) more

optimistic about the outlook for the Irish economy.

Figure 2.0Favourable outlook for the Irish economy 2007-2009

(% of respondents)

Greater focus on cost controlTable 2.0 overleaf indicates that falling confidence has had a very real

effect on the business plans of Irish CEOs with over half (55%) expecting

both revenues and net profits to decline in 2009. This is significantly

higher compared to 2008 and 2007. The results also indicate that Irish

businesses are placing a greater focus on cost reduction with three

quarters expecting cost levels in the next 12 months to either decline or

remain unchanged.

0%

10%

20%

30%

40%

50%

60%

70%

80%

2009 2008 2007

CEOs of indigenous firms CEOs of MNC subsidiaries All CEOs

69%

74%

14%1

7%

8%

78%

12%2

% 3%

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Capital investment is also expected to stagnate with an overwhelming

mjority (82%) of respondents saying this investment will either decline or

remain unchanged. This is a considerable turnaround compared to last

year when more than half were planning to increase this investment.

In relation to employment growth, Table 2.0 above shows that the

majority (52%) of respondents will be freezing recruitment activity.

Nearly a third (29%) indicated that they would be reducing their

headcount. Section 6 of our report looks further at how companies are

managing and developing their people in these uncertain economic

times.

More work to be done on labour costs

As the competitiveness of our economy continues to suffer it is not

surprising that an overwhelming majority (84%) of Irish business leaders

are not happy with the overall cost of doing business in Ireland. As in

previous years, CEOs of MNCs are more satisfied with the cost of doing

business in Ireland (22%) when compared with their Irish counterparts

(14%). See Figure 2.1 below.

Figure 2.1Satisfaction with the overall cost of doing business in

Ireland (% of respondents satisfied)

0%

5%

10%

15%

20%

25%

30%

35%

Table 2.0 Overall anticipated performance of Irish operations (% of respondents)Indicator Growth Decline No Change

2009 2008 2007 2009 2008 2007 2009 2008 2007

Revenues 29% 71% 86% 55% 21% 8% 16% 8% 6%

Costs 25% 83% 89% 50% 9% 4% 25% 8% 7%

Net profit 23% 60% 72% 55% 27% 14% 22% 13% 14%

Employment 19% 36% 47% 29% 28% 24% 52% 36% 29%

Capital investment 18% 54% 61% 46% 14% 8% 36% 32% 31%

2009 2008 2007

CEOs of indigenous firms CEOs of MNC subsidiaries All CEOs

14%

24%

34%

22%

26%

22%

16%

25%

29%

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An overwhelming majority (90%) of survey

respondents are satisfied with the availability

of labour, up from 74% last year. The majority

(80%) are also satisfied with the quality of

labour. However, the cost of this labour

continues to be an issue with over three

quarters (81%) of respondents saying they are

not obtaining value-for-money in this area. See

Figure 2.2.

Coporate tax regime is jewel in thecrown

Over three quarters (77%) of Irish CEOs

are satisfied with the current corporate tax

regime, albeit a decline from 88% last year.Additionally, Irelands favourable tax regime

was cited as the most influencial factor in the

decision to operate in Ireland. Our 12.5%

corporate tax rate continues to be crucial

in attracting and retaining foreign direct

investment.

Figure 2.2Satisfaction with the business environment (% of respondents)

0%

20%

40%

60%

80%

100%

2009 2008 2007

Availability oflabour

Quality oflabour

Corporate taxregime

Telecoms Transportinfrastructure

Cost of labour

90%

74%

69%

80%

76%

77%

88%

95%

40%

37% 4

1%

33%

10%

28%

19% 2

3%

25%

78%

10CEOPulse 2009

According to survey respondents, the overall level of satisfaction with the telecoms and transport

infrastructure has improved in the year. Our survey reveals that CEOs are suffering a confidence

crisis at this time which has impacted expectations for growth in revenue, net profit and capital

investment. However, they are also taking decisive action to control their cost base in order to

protect their short term survival and position their businesses for long term sustainable growth.


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The current very difficult market conditions are threatening the

financial stability of many companies. As the impact of the global

financial crisis ripples through the wider economy, our 2009 CEO

Pulse confirms that many of those surveyed are rising to the

challenges. With no time for complacency, many businesses are

taking the decisive actions which are essential to respond to the

significant challenges facing them. In doing so, their focus is to

withstand the short term difficulties that are facing virtually every

business and, where necessary, to define a new business model to

ensure their future sustainability.

Controlling cost is single greatest challenge

The survey suggests that businesses recognise the need to improve

competitiveness by eliminating cost. This reflects the significant

growth which the Irish economy and its component businesses have

experienced in recent years. The focus during this period was on

putting capacity in place to meet demand. In many cases this was

done without a focus on efficiency and with a consequent significant

increase in operating costs. 0% 10% 20% 30% 40% 50% 60% 70% 80%

Controlling cost

Growing/retaining

market share

Financing the business

Figure 3.0Top 3 key challenges in 2009

(% of respondents)

11CEOPulse 2009

39%

63%

75%

by Paul TuiteAdvisory Leader

As Figure 3.0 shows, an overwhelming majority (75%) of Irish CEOs

confirmed that controlling costs will be their single most important

challenge in the year ahead. This was closely followed by growing or

retaining market share (63%) and securing availability of finance for the

business (39%).
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As noted in Figure 3.1, the survey also confirms that the turmoil in the

capital markets will have a very significant impact on Irish businesses

in the year ahead. For example, over half (58%) of Irish CEOs said

that it will delay investment plans while a similar proportion said it will

restrict access to finance (55%). Furthermore, just under half (46%) of

survey respondents confirmed that they expect an increase in the cost

of finance while a similar proportion said it will slow the development of

new products or services.

Interestingly, CEOs of Irish indigenous companies expect the impact

will be more severe where access to finance and the cost of finance

are concerned compared to their MNC counterparts. However, CEOs

of MNC subsidiaries expect the delay in investment plans and the

slowdown in the development of new products, services or markets will

have a greater impact on their businesses compared to their indigenous

counterparts.

Figure 3.1Impact of turmoil in capital markets in the year ahead

(% of respondents)

0% 10% 20% 30% 40% 50% 60% 70%

Increase the cost of finance

Slow the development ofnew products or services

Prevent entry to newmarkets

Restrict access to finance

Delay investment plans

CEOs of indigenous firms

CEOs of MNC subsidiaries

All CEOs

12CEOPulse 2009

27%

40%

22%

46%52%

44%

46%

37%

50%

55%

40%

61%

58%

60%

57%


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Decisive action continues

The 2009 CEO Pulse Survey demonstrates that Irish businesses

started to take decisive action in 2008 to manage the impact of the

tough trading conditions and that plans are in place to do more (see

Figures 3.2 and 3.3). With costs being a prime focus, almost three

quarters (69%) of responding CEOs said that they undertook root-

and-branch cost appraisals. And closely aligned to the cost agenda,

over a third of Irish business leaders said that they had reviewedthe supply chain and introduced zero-based budgeting. Over two-

thirds (67%) said that they reviewed their procurement arrangements

while over half (53%) indicated that they had already restructured

their organisations. Just under half (49%) said that they introduced

workforce reduction initiatives.

Figure 3.2Actions taken over the last 12 months(% of respondents)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Undertook

root-and-branchappraisal ofcost base

Reviewed

procurementarrangements

Restructured

thefirm

Introduced

workforcereductioninitiatives

Introduced

zero-basedbudgeting

Undertook an

end-to-endsupply chainreview

Outsourced

one or morenon-coreactivities

Disposed of

one or morenon-coreactivities

13CEOPulse 2009

69%

67%

53

%

49%

38%

37%

27%

20%


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The survey confirms that CEOs plan to continue with this decisive action

into 2009. For example, (see Figure 3.3) a further 22% will restructure

their organisations while a further 11% will look at workforce reduction

initiatives. Key in all of these actions, whether started in 2008 or 2009,

is effective implementation of the structural and other changes identified

as a result of the initial reviews undertaken. Careful planning and project

management are required to ensure that the necessary actions do not

impact adversely on the business, as to do so would simply compound

the existing problems.

When we look at 2008 and 2009 on a combined basis we see some

interesting results. For example, by the end of 2009 an overwhelming

majority (86%) of Irish CEOs will have undertaken extensive cost

appraisals in their organisations; 79% will have reviewed procurement

arrangements; three quarters (75%) will have restructured their

businesses and 60% will have undertaken workforce reductioninitiatives. Thus, by the end of this year our survey suggests we will see

substantially reformed business models across all industry sectors.

Figure 3.3Planned actions over the next 12 months (% of respondents)

Willrestructure

0%

5%

10%

15%

20%

25%

Willundertakeroot-and-

branchappraisal of

cost base

Willundertakean end-to-end supply

chain

review

Will reviewprocurementarrangements

Willintroduceworkforcereductioninitiatives

Willintroduce

zero-basedbudgeting

Willdisposeof one

or morenon-core

activities

Willoutsource

one ormore

non-core

activities

14CEOPulse 2009

22%

17%

17%

12%

11%

10%

8%

6%


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Seizing the opportunities

There are several actions that companies can take to effectively manage

the downturn and these include managing their funding positions by

disposing of non-core businesses. Nearly a third (28%) of CEOs said

that they had either engaged in, or planned in 2009 to commence, asset

disposal processes. This demonstrates that for businesses which have

funding available and which are prepared to pursue acquisitions there

will be plenty of opportunities in the marketplace.

Managing through the storm

PwC has identified six fundamental priorities that will help keep

businesses on track in these difficult times and to leave them well placed

to succeed when the environment improves. These priorities are outlined

below.

i ) Understand drivers of profitability

Goal posts have been moving and markets, regardless of the sector,

may have changed significantly in a very short space of time. Each

business needs to understand the key contributors to its profitability

and consider how key customers, suppliers, competitors, products and

markets will be impacted by the downturn. Once this assessment has

been performed it should inform a re-assessment of strategy which will

then drive the future direction of the business.

ii ) Focus on cash

Given the global funding constraints the focus for every business has

to be on generating cash whether by safeguarding existing assets,

reducing costs or disposing of assets - to ensure that potential funding

issues are minimised.

iii ) Address structural issues and change management

Businesses should also bear in mind that despite the current turmoil,

this could well be a good time to address structural issues within a

business, or to execute the strategic changes that may have been under

consideration for a long time - and do so on favourable terms.

iv ) Mind key talent

Talent is another critical factor in any economic downturn. In their efforts

to reduce costs, companies need to be careful not to impair the long

term fabric of the business. It is essential to manage and motivate key

people who are essential to customer relationships, job know-how and

intellectual capital as well as being prepared to recruit key talent when it

becomes available.

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v ) Embed systems to support effective and

timely decision-making

Now more than ever management teams

need effective and flexible management

information and budgetary systems; decision

making needs to be speedy and to be based

upon facts. Clearly defined performance

measures should be communicated and

targeted, perhaps by using short term financial

incentives.

vi ) Seek-out new customers and markets

Finally and difficult as it may be right now,

organisations also need to look at ways of

growing their revenues, developing new

products and markets an area that our surveyidentifies as a key challenge. At the heart of

this is staying close to customers and, indeed,

finding new customers. To survive in the

long term companies need to be innovative

and focus not only on costs and cash. There

remains a need to develop new products

and to continually challenge their customerproposition.

Conclusion

The downturn presents many challenges

but also real opportunities for change and

fresh thinking. How companies respond will

determine their future. As a nation, remaining

competitive and realigning our cost base is

hugely important for Ireland to continue to

attract foreign direct investment. Our surveysuggests that this is top-of-mind with Irelands

business leaders who are clearly taking steps

to ensure the cost agenda is being tackled

head-on. Businesses face a hard grind,

not just this year, but stretching into 2010.

Faced with this tough outlook, it is vital that

companies take action to control their owndestiny and our survey suggests that Irish

businesses are doing just that.

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The only significant departure from overall investment trends in prior years is that only

one-third of MNC CEOs indicated that additional Irish investment is currently being

considered this is down from just under two-thirds last year. This is indicative

of global sentiment on cutting costs in the short term, although it is notable that

approximately three quarters of MNC CEOs still believe that Ireland is well placed to

attract certain investments going forward.

Figure 4.0Most influencial factors in the decision to operate in Ireland

(% of CEOs of MNC subsidiaries)

Inward and outwardinvestment

Despite global economic difficulties and a serious

deterioration in tax revenues, Ireland continued

to attract significant investment in 2008. This

years survey suggests strong and continued CEO

support for Ireland as an investment location into

2009, notwithstanding the extremely challenging

environment.

Irelands continued status as an attractiveinvestment location is reflected in the following

survey results:

78% of CEOs of Irish headquartered groups

stated that Ireland forms part of their future

expansion plans. Furthermore, 85% of these

CEOs indicated that they are not consideringrelocating Irish activities overseas. Both of

these results have improved relative to last

year.

88% of CEOs of multinational companies

(MNCs) are of the opinion that Irelands

tax regime is the most important influencing

factor in the decision to continue to operate in

Ireland, followed closely by workforce and EU

advantages. (See Figure 4.0)

by Liam DiamondTax Partner & Inward Investment Leader

17CEOPulse 2009

0 20 40 60 80 100

State financial assistance

Business enabling regulatoryenvironment

5%

15%

57%

58%

77%

88%

Emerging network of R&D centres ofexcellence

Ease of access to the EU/Eurozone

Young, educated, English speakingworkforce

Favourable tax regime
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While Ireland has not been immune from the

downturn in the global economy, with various

groups reconfiguring the extent of their Irish

operations, these reductions have largely

been offset in 2008 by expansions and new

investments.

2008 brought a number of signifi

cantannouncements highlighting Irelands

continued attractiveness to foreign investors.

The end of year statement by IDA Ireland cites

130 new investments leading to the creation

of almost 9,000 new IDA supported jobs and

capital investment of 2bn.

Some of the significant 2008 announcements

include the following:

R&D

EMC announced a 20m investment in

its R&D function;AON announced 100

new jobs as part of its R&D Centre of

Excellence and Cameron announced

a 15m development of its R&D and

manufacturing facilities.

European headquarters

Some of those announcing Ireland as the

location of their new European/international

headquarters include: Facebook; Solaris

Mobile and GOA.

Manufacturing

The Coca-Cola Companyannounced

a $300m investment in a new

manufacturing and innovation facility;

Abiomed announced 250 new jobs in

its global manufacturing facility; Zimmer

announced a 50m medical devices

investment creating 250 jobs and Eli

Lillybegan construction on a 400m

biopharmaceutical facility.

Other

IBM announced a new Innovation Centre

to expand cloud computing into Europe as

well as a Global Centre of Excellence for

Water Management.

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Outward investment plans

Looking at outward investment from Ireland,

the survey again shows that the vast majority

of CEOs of Irish headquartered groups, if

considering expansions outside Ireland, favour

locating within the EU, with the UK being the

most favoured location. This emphasises

the continued importance of the UK andEU markets to Irish groups. MNC CEOs,

on the other hand, indicated high levels of

interest in low cost jurisdictions in Asia and

Eastern Europe. Interestingly, no significant

disinvestment plans are suggested by Irish or

MNC CEOs surveyed.

Opportunities for Ireland in the

current environment

Cost control was cited by CEOs as the clear

number one challenge facing their groups.

Cost reduction initiatives present significant

opportunities for Ireland as many international

groups will need to utilise a business friendly

low-tax location as they centralise businessmodels, simplify group structures and

reconfigure supply chains to reduce operating

and tax costs and inefficiencies.

Our Global CEO Survey also noted a shift

from mergers and acquisitions to joint venture

arrangements as the latter are significantly

cheaper to implement. With our business and

tax advantages, particularly our tax-efficient

holding company regime, Ireland is in an

attractive joint venture location and this may

be another area of investment opportunity in a

very challenging economic environment.

20CEOPulse 2009
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Ireland, 20% of their CEOs state that they have set specific sustainability targets while 14%

state that performance against these targets is reported to the management team.

For many companies, the true realisation of what sustainability entails comes from a request

from one of its corporate customers conducting Life Cycle Analysis, assessing what its

performance is in relation to sustainability.

For now however, it is clear that the majority of CEOs are more focused on immediate

financial concerns, such as cashflow and slowing demand in the market.

Fig. 5.1 Extent to which sustainability is embedded into business strategy and

performance management systems (% of respondents)

Figure 5.0 Importance attached to

managing sustainability(% of respondents)

Despite acknowledging its strategic

importance, it is clear that many companies

have yet to act convincingly on sustainability.

While just over 50% of indigenous Irish CEOs

state that their companies have developed

or are developing strategic sustainability

objectives, only 5% state that they have setspecific targets around sustainability. In the

case of multinational subsidiaries based in

0

5

10

15

20

25

30

35

0%

10%

20%

30%

40%

50%

Not important Moderatelyimportant

Important Highlyimportant



All CEOs



All CEOs

Not consideredimportant in thebusiness at this

time

Strategicobjectives under

development

Strategicobjectivesdeveloped

Specificsustainabilitytargets set

Performanceagainst specifictargets regularly

reported tomanagement team

14%

10%

9%1

0%

20%

5%

21%

17%

23%

25%

18%

28%

34%

31%

35%

8%

8%

8%

30% 3

2%

31%

41%

40%

41%

21%

20%

20%

22CEOPulse 2009
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When it comes to external reporting on sustainability, the majority of

firms are not providing information to external stakeholders on their

activities. Among Irish firms, less than 20% provide external reporting,

while 26% of multinationals with operations in Ireland provide some form

of reporting. Surprisingly, 18% of the CEOs of multinationals in Ireland

did not know whether or not their company provided external reporting

on sustainability.

Figure 5.2 Is sustainability reported to external stakeholders?(% of respondents)

For those companies that are providing external reporting, the majority

do not have the data independently audited. Again surprisingly, a large

percentage of CEOs did not know whether they were having their

sustainability information audited or not.

Figure 5.3 Is the sustainability information provided to stakeholders

independently audited? (% of respondents)

0%

10%

20%

30%

40%

50%



All CEOs

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No Dontknow



All CEOs

Yes No We do not providethis information to

stakeholders

14%

18%

47%

45%

46%

15%

3

9%

37%

39%

72%

79%

56%

18%

7%

2%

19%

26%

21%

23CEOPulse 2009


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that they are exposing themselves to, in terms of being uncompetitive if they continue to ignore

the sustainability agenda. Many of the worlds leading companies are looking to capture not onlythe cost savings that can be made from becoming green and efficient, but also the opportunities

for growth and brand positioning.

A key area of sustainability that will continue to grow in importance, perhaps even more so as a

result of the economic crisis, is Corporate Governance. The downturn will put renewed emphasis

on the need to rebuild trust and show commitment to conducting business in a manner that goes

beyond basic compliance and legal requirements, and instead incorporates decision-making andreporting procedures that respect all stakeholders.

Figure 5.4 Carbon footprint measurement (% of respondents)

As the concept of Triple Bottom Line

reporting (i.e. People, Profit and Planet)becomes more popular, and the benefits of

integrated reporting (i.e. financial and non-

financial) become clearer to stakeholders,

we expect to see more companies opting to

provide assurance on their reporting in relation

to sustainability.

While sustainability encompasses many

different issues under one umbrella, e.g.

resource and water use, waste management,

security of supply, ethical business conduct,

landscape preservation, supply chain integrity

etc., the burning platform at the moment is

around carbon and efforts to meet challengingemissions targets over the next decade. Our

survey indicates that as yet, the majority of

Irish companies have not measured, tried

to reduce nor set targets for their carbon

footprints.

While there are clear challenges and costsinvolved, it is vital for Irish companies to

understand the medium and long-term risks

0%

20%

40%

60%

80%

100%

Yes

No

Dont know

Carbonfootprint ismeasured

Measurementsintroduced toreduce carbon

footprint

Specifi

c targetfootprint level for2009

Carbon creditsmeasured to offsetcarbon footprint

10%

87%

3%

8%

84%

8%

3%

54%

43%

7%

78%

15%

24CEOPulse 2009

Managing and developing
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Managing and developingpeople

In this years edition of the survey, we asked CEOs for

more insights into the people challenges facing theirbusinesses. The sections below outline the highlights

of these responses. What is clear is that there appears

to be a heightened awareness of the impact of people

on business performance and a recognition that

more effort is needed to leverage this asset to deliver

results in a radically altered business landscape.

The responses outlined in Figure 6.0 clearly reflect

the people fall-out from the economic turmoil we

are facing at present. Quite rightly, there is significant

CEO focus on maintaining and supporting employee

engagement and motivation against a backdrop

of uncertainty, fear and unprecedented market

conditions.

There is a small handful of golden rules that can

assist in this process. They are not complex, yet

can be challenging to implement. The first is to keep

communicating with the whole organisation in as

honest and transparent a manner as is practicable.

0% 10% 20% 30% 40% 50% 60% 70%

Keeping employees motivated in the face of uncertainty

Managing workforce reductions while ensuring that key talent isretained

Effectively communicating changes in the business and itsenvironment

Maximising/Leveraging the existing skills base

Having an effective performance management system in place

Identifying and retaining key talent

Maintaining our corporate culture and people values in tough times

Managing underperformance

Offering effective and appropriate reward packages

Figure 6.0 Top people management challenges in the downturn (% of responses)

67%

19%

19%

24%

25%

28%

33%

40%

40%

65%

25CEOPulse 2009

by Ciara FallonSenior Manager, Strategy Advisory Services

It is important that where there is uncertainty, this should be declared. This is not

inconsistent with having a strong leadership voice. In any communications approach,ideally a mix of channels should be used, being sensitive at all times to the nature of the

message and the likely impact.

The second mantra is to meaningfully engage your people in the process of identifying

solutions. The implementation of difficult, yet necessary, changes can be done more

efficiently, effectively and - critically - with less resistance if approached in this way. This

is aside from the fact that the answers often reside with those at the front line.
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Figure 6.1 Plans to review remuneration packages over the coming

year (% of responses)

It is little surprise that base pay and short term (bonus) incentives

are the elements of reward packages, which will receive significantattention in the coming year. The reality is that the boundaries of what is

both palatable and acceptable have been shifting rapidly. By contrast,

long term incentive plans (LTIPs) seem to be less of a concern but

perhaps the perceived complexity around unravelling and restructuring

such arrangements may have influenced the above response rate.

Undoubtedly all forms of compensation and benefits will need

consideration so as to ensure that reward programmes provide value

for money to position businesses strongly for the future. Interestingly,

a sizeable minority of CEOs do not see this as an option, with 21%of respondents citing no plans for reviewing or revising remuneration

packages over the coming year.

Figure 6.2 Effectiveness of talent management approach

(% of respondents)

On the issue of talent management, there appears to be a reasonable

sense of confidence within the CEO community that this aspect of

people management is operating effectively, with only a small proportion

(13%) giving negative responses on this issue.

59%

16%

12%10%

3%

26CEOPulse 2009

0% 10% 20% 30% 40% 50% 60% 70% 80%

Basic salary

Bonus (short term incentive)scheme

Other fringe benefits (e.g. healthcare,life insurance, subsidised meals, travel)

Pension plan

Company car/car allowance

Share option / profit share(long term incentive) scheme

No plans to review/revise/freezeremuneration packages over

the coming year

21%

12%

12%

22%

22%

53%

67%

Moderately effective

Neither effective nor ineffective

Highly effective

Moderately ineffective

Highly ineffective
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The top scoring priority, at 56% of responses, highlights

how CEOs are looking to the HR function to identify anddeliver more cost-effective ways to recruit, retain and

develop employees, reflecting a desire to inculcate a

creative and resourceful mentality in tough times when

necessity becomes the mother of invention.

ConclusionThe bottom line for CEOs is that, yes, the downturn brings

with it many daunting challenges but it also presents

opportunities. From the people perspective, these can

include a timely review of the value-for-money and business

performance impact of human resources and connected

resource management and engagement activities.

Understanding this dynamic can help an organisation tobetter harness the value of its people, foster and fast-track

genuine talent that can thrive in ambiguity and create an

environment where effective people management can

help the business to emerge from the downturn fitter and

fundamentally stronger than it was when it went in.

0% 10% 20% 30% 40% 50% 60%

Figure 6.4 Top priorities for the HR function over the next 12 months

(% of responses)

Identifying cost-effective ways to recruit, retain and developemployees

Partnering closely with the business

Supporting cost reduction initiatives across the work place

Supporting the performance management process

Maximising value for money in terms of services delivered

Identifying & implementing low/zero-cost initiatives

Maintaining the employer brand

56%

53%

52%

36%

45%

35%

22%

28CEOPulse 2009

Coaching and mentoring
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Coac g a d e o g

Many of our business leaders who are now faced with the demands of

managing this down turn were not in leadership roles ten to fifteen yearsago and this is their first experience of recession. Many management

teams need support and advice to lead their business at this time of

great uncertainty in which they feel out of their depth. The issues around

capital, strategy and reluctant customers are immediate and there is little

appetite for solutions that are anything other than instant.

Having grown up in a can-do era of prosperity with bullish markets andfull employment, they are unfamiliar with todays challenges that demand

an immediate focus on survival while preparing for the up-turn. Cutting

costs and work-force reduction have replaced growth and the war for

talent. Many business leaders have grown up in a radically different

economic environment and so are understandably struggling with the

new ways in which we must now do business.

Lets acknowledge that the expectations of people who have grown up

in nothing but good times will be one of the drivers to lift us out of this

crisis, but their experience is of a totally different economic reality. The

demands of the paradigm shift required to restructure their business and

prepare for the up-turn are very significant. For example, the speed withwhich they must look at cost reduction and their services to customers

has put a lot of people on the back-foot.

So, for instant solutions, a very natural and indeed wise reaction in

these circumstances is to turn for advice to those who have previously

managed in a downturn. People who understand the leadership

challenge in a recession because they have been through it themselves.People who understand an industry or sector and who have many

years experience together with the ability to share their experience in a

supportive and developmental manner.

Its no surprise then to learn that significant numbers of CEOs have

turned to coaching and mentoring to help them work through their

challenges. They are consulting with senior executives who know their

business well and who have themselves managed in a downturn or two.

29CEOPulse 2009

by Ellen RocheLeader, Executive Coaching and Mentoring Services
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Aware of this growing trend we asked CEOs for the first time about coaching and

mentoring. We asked them about using executive coaching and mentoring asan approach to executive development when the pressure is on, resources are

stretched and timely but informed decisions can make the difference between

survival and failure.

Our survey shows that only 11% of CEOs intend to cut all learning and

development (L+D) budgets this year. Interestingly, over 40% (See Figure 6.7) of

CEOs have told us that, in the coming year, they will rely more on coaching andmentoring to meet development needs rather than more formalised, group based

L+D initiatives. Coaching is bespoke, flexible and solutions focused.

CEOs see personal recommendation (66%) and a specialist agency/professional

advisor (45%) as the top two means of identifying executive coaches and mentors

(See Figure 6.5).

Those polled cited references/ recommendation (70%) and industry/sectoralknowledge (68%) as the two most influential factors when selecting a coach or

mentor (See Figure 6.6).

30CEOPulse 20090% 10% 20% 30% 40% 50% 60% 70% 80%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Figure 6.5 Top means for sourcing executive

coaches or mentors (% of respondents)

Personalrecommendation

Specialist agency orprofessional advisor

Within the organisation

Panel of coaches andmentors informallybuilt up over time

Panel of coaches andmentor established via a

tender process

Figure 6.6 Most important factors when selecting an

executive coach or mentor(% of respondents)

References andrecommendations

Knowledge of businessand industry sector

Minimum number ofyears in practice.

Backgroung inorganisational

psychology

Accreditation

70%

68%

31%

20%

10%

66%

45%

25%

24%

16%


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Only 10% of CEOs said that they would

attach a high value to the accreditation of anexecutive coach when making their selection.

This reflects the emphasis on business

and professional experience over formal

accreditation leaders under pressure want

business experience. Fewer than one in three

CEOs attaches value to a minimum number of

years experience as a coach, while only, one infive values a coach who has a background in

organisational psychology

In summary, the evidence is that coaching and

mentoring are growing in popularity at this

time of huge pressure on business leaders.

Put simply turning to our elders is backin vogue. Its little wonder that this flexible,

bespoke and solutions focused approach to

executive development, is one of the oldest,

tried and trusted ways of working our way out

of adversity.

Selecting the right coach or mentor who

understands your business issues and canadvise, but not want to be in the driving seat

themselves, is an important part of getting it

right and will ensure that todays problems

are tackled. Good coaching and mentoring

relationships will mean that business leaders

will get the development they need in a way

that is effective and lasting.

Figure 6.7 Planned approaches to learning

and development for employees over thenext year (% of respondents)

31CEOPulse 2009

Training budgets will be restrictedand we will focus more on coaching

and mentoring

Development plans will be maintainedbut we will prioritise training for high-

performing employees

We will be investing in thedevelopment of our people now more

than ever

No plans all training budgets willbe cut

0% 10% 20% 30% 40% 50%

Appendix


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ppAbout the PricewaterhouseCoopersCEO Pulse Survey

Undertaken in February 2009, the fourth annual

PwC CEO Pulse Survey acts as a central voicefor the Irish business community. Derived from

220 fully completed questionnaires, the survey

presents the views of CEOs on a range of key

business areas including:

Business confidence


Inward and outward investment

Sustainability

Managing and developing people

People challenges in the currentenvironment

Coaching and mentoring

Profile of respondents

As can be seen from Figure 7.0 just over

two thirds of all respondents operated in

the Manufacturing, Services and Consumer

Products sectors, with a further 23% coming

from the Financial Services sector and the

remaining 11% operating in the Technology

sector.

While 155 respondents represented companies

having Irish headquarters, 65 respondents

represented companies having headquarters

located outside of Ireland. Thus, the sample

provides a relatively balanced representation of

both multinational subsidiary and indigenous

sentiment.

Fig. 7.0 Profile of 2009 respondents

(% of respondents)

40%

13%

23%

11%

13%

Services

Manufacturing

Consumer products

Financial Services

Technology

32CEOPulse 2009


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2009 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of memberfirms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.PricewaterhouseCoopers, One Spencer Dock, North Wall Quay, Dublin 1 is authorised by the Institute of Chartered

Accountants in Ireland to carry on investment business. Designed by PwC Design Studio (01578)

www.pwc.com/ie

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