2014 emea expatriate management conference consumer goods ... · pdf file2014 emea expatriate...

2014 EMEA EXPATRIATE MANAGEMENT CONFERENCE CONSUMER GOODS, FOOD AND RETAIL BREAKOUT 3-4 APRIL, BUDAPEST, HUNGARY

Kate Fitzpatrick, Principal

London, UK

MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 1 1

Agenda What We Will Cover Today

• Proctor & Gamble Case Study: Managing International Mobility in a VUCA

World

• Consumer Goods Industry Future Trends: Impact on Mobility

• Q&A

April 4, 2014

MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE

Section 1

PROCTOR & GAMBLE CASE STUDY MANAGING INTERNATIONAL MOBILITY IN A VUCA WORLD

April 4, 2014 2

Leonid Davydov

Senior HR Manager

Expatriate Compensation

& Policy EMEA


Agenda The case study will cover:

• P&G (Procter & Gamble) global business and global talent

• International Mobility Programme and its evolution

• Facing the challenges of 2008-2013

• Key learnings and Q&As


Our Heritage - More than 175 Years of Growth The Company was founded in Cincinnati in 1837 by William Procter and James Gamble, a candle maker and a soap maker who started a small business that has grown into one of the world’s most admired companies and includes brands that have become household names, used and trusted by consumers every day in nearly every part of the world.

P&G at a Glance

Countries of Operations ~70

Countries Where Our Brands Are Sold 180+

Consumers Served by Our Brands 4.8 billion

(Approximate)

Financial Highlights

NET SALES ($ billions)

09

13

12

11

10

$84.2

$75.3

$83.7

$81.1

$77.6

Fiscal years ended June 30

2013 Net Sales

BY BUSINESS SEGMENT

Beauty

Grooming

Health Care

Fabric Care and Home Care

Baby Care and Family Care

24%

15%

9%

32%

20%

*Results exclude net sales in Corporate, fiscal year ended June 30, 2013

2013 Net Sales

BY GEOGRAPHIC REGION

North America

Western Europe

CEEMEA

Latin America

Asia

39%

18%

18%

10%

15%

2013 Net Sales

BY MARKET MATURITY

Developed

Developing

61% 39%

Leadership Brands

Global Beauty

GLOBAL BUSINESS UNITS CATEGORIES LEADERSHIP BRANDS

Beauty Care Antiperspirant and Deodorant,

Cosmetics, Personal Cleansing,

Skin Care

Cover Girl, Max Factor, Olay,

Old Spice, Safeguard, Secret

Hair Care and Colour Hair Care, Hair Colour Head & Shoulders, Herbal

Essences, Nice ‘n Easy,

Pantene, Rejoice

Prestige Fragrances, Prestige Skin Care Gucci, Hugo Boss, SK-II

Salon Professional Salon Professional Wella

2013 NET SALES

$20 billion*

* This reflects an estimate. Our historical

financial data will be restated to reflect the

new structure in fiscal year 2014.

Global Baby, Feminine

and Family Care


Baby Care Baby Wipes, Diapers, Pants Luvs, Pampers

Family Care Paper Towels, Tissues,

Toilet Paper

Bounty, Charmin, Puffs

Feminine Care Feminine Care, Incontinence Always, Naturella, Tampax

2013 NET SALES

$22 billion*




Global Fabric and Home Care


Fabric Care Bleach and Laundry Additives,

Fabric Enhancers, Laundry

Detergents

Ace, Ariel, Bold, Bounce, Dash,

Downy, Gain, Tide

Home Care Air Care, Dish Care,

Surface Care

Cascade, Dawn, Febreze,

Mr. Clean, Swiffer

P&G Professional P&G Professional —

Personal Power Batteries Duracell

2013 NET SALES

$26 billion*




Global Health and Grooming


Braun and Appliances Beauty Electronics Braun

Oral Care Toothbrush, Toothpaste, Other Oral

Care

Crest, Fixodent, Oral-B

Personal Health Care Gastrointestinal, Other Personal Care,

Rapid Diagnostics, Respiratory,

Vitamins/Minerals/Supplements

Prilosec, Vicks

Pet Care Pet Care Eukanuba, Iams

Shave Care Blades and Razors, Pre- and Post-

Shave Products

Fusion, Gillette, Mach3,

Prestobarba, Venus

2013 NET SALES

$17 billion*




Worldwide Operations Developed Markets

MARKET DEVELOPMENT ORGANISATION (MDO)

North America

Western Europe

Japan

SALES % OF TOTAL P&G

61% VOLUME % OF TOTAL P&G

55%

North America Japan

Western Europe

Worldwide Operations Developing Markets

MARKET DEVELOPMENT ORGANISATION (MDO)

Asia (excluding Japan)

Central & Eastern Europe, Middle East & Africa

Latin America

SALES % OF TOTAL P&G

39% VOLUME % OF TOTAL P&G

45%

Latin America

Central & Eastern Europe

Africa Asia

Middle

East

Procter & Gamble Case Study Managing International Mobility in VUCA world

INTERNATIONAL MOBILITY PROGRAMME AND ITS EVOLUTION

MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 18 April 4, 2014

P&G International Mobility Programme Journey from1990s to 2010+

• RIM/IM 14 types of transfers Differentiation of transfer

packages

• Basic Comprehensive

Evolution and fine tuning of Policy

• Multiple sources One vendor Compensation Data

• Basic processes Integrated solutions Technology

• In-house BP Outsourcing Relo Vendor

Relo & Expat Services Operations


International Mobility Programme and its Evolution Talent Mobility Drivers

• Grow/promote From Within

– Recruit from Universities

– 95% of Management from within P&G (or acquisitions)

• Top Talent / High Potential

– Strategic Expat assignments, 3-5 y., Director/GM/VP career path, across

sectors/business units/regions

• Early Career Development

– HQ assignments, 2-3 y., return to home country to bigger jobs

• Developing/Emerging Markets Expansion

– China, India, Africa, Russia, Latin America – project assignments (short term

expats, extended business trips), startups, critical skills and knowledge transfer


International Mobility Programme and its Evolution Talent Mobility Drivers

• Co-location with key global customers

– e.g. METRO, CARREFOUR – rotational assignments focused on capability

building

• Evolving Geographic Footprint

– New regional/global centers (e.g., Geneva, Singapore) and hubs – temporary

assignments to foster collaboration/organisation

– Shifting manufacturing and R&D capabilities – permanent moves with

localisation

• Talent Retention (career/life planning & flexibility)

– Personal request temporary transfers (dual careers)

– Personally initiated localisations


P&G Globally Mobile Talent 3,000+ Temporary Transfers/Assignments

EXPAT 58%

Early Career 27%

Personal Request 1%

Temp Training 1%

Net Salary Package 5%

Dual Career 7%

Like-Location Package

1%


P&G Globally Mobile Talent 600+ Permanent Transfers/Localisations

Local to Local 50%

Expat to Local 27%

Personal Request 23%



FACING THE CHALLENGES OF 2008-2013


Facing the challenges of 2008-2013 P&G business in VUCA world

• VOLATILE

– Commodities prices

– Currency ex rates

– Political/social instability

• UNCERTAIN

– Economic recession (US, Western Europe)

– Hard-to-predict emerging markets

• COMPLEX

– Local/regional laws and regulations

– Product customisation requirements

– Increasing organisation complexity

• AMBIGUOUS

– New trends – consumers, customers & distributor channels, online vs offline

– Competition, traditional and new (private labels)


Facing the challenges of 2008-2013 P&G business in UCA world

• Challenge for HR

– Innovation

– Productivity

– Workforce flexibility

– Engagement

• Challenge for Talent and Global Mobility Management

– Right people, assigned to a right job, at a right time, at a right cost

– Balance of short/mid term needs for Talent with long term career development

– Drive out unnecessary costs of expatriation/relocation, reinvest in key areas

with maximum ROI

– Deliver Expatriate/Relocation programme with excellence, maximise

employees engagement


Facing the challenges of 2008-2013 Cost Saving Opportunities

• One-time Relocation Support – Top 10

COSTS TO BE REDUCED/OPTIMISED % of total Cost Saving Opportunity

1 HOUSEHOLD GOODS MOVE 26% limited

2 TEMPORARY LIVING (TEMP ACCOMODATION, RENTAL CAR) 17% yes

3 DESTINATION SERVICES 7% limited

4 IMMIGRATION SERVICES/COSTS 7% no

5 MISCELLANEOUS RELO ALLOWANCE 6% yes

6 CAR AND TRANSPORTATION SUPPORT 6% limited

7 LANGUAGE TRAINING 5% yes

8 EN-ROUTE TRIP 5% no

9 HOME FINDING 4% no

10 FAMILY RELO RESOURCE PROGRAMME (SPOUSAL ASSISTANCE) 2% yes


Facing the challenges of 2008-2013 Cost Saving Opportunities

• Ongoing Compensation & Support -Top 10

COSTS TO BE REDUCED/OPTIMISED % of total Cost Saving Opportunity

1 HOUSING ALLOWANCE 38% limited

2 COLA 19% limited

3 SUPPLEMENTAL ALLOWANCE 7% limited

4 INTERNATIONAL HEALTHCARE INSURANCE 7% no

5 UTILITY COST 6% no

6 LOCATION (HARDSHIP) PREMIUM ALLOWANCE 5% limited

7 DUPLICATE HOUSING 4% limited

8 HOME LEAVE 3% no

9 BELOW HOUSING MAXIMUM INCENTIVE 3% limited

10 HOST DIFFERENTIAL ALLOWANCE 2% limited


Facing the challenges of 2008-2013 Key Interventions

• Expatriate Compensation

– Tight control of host housing maximums (esp. in regional centers e.g. Dubai,

Singapore, Geneva)

– Host Housing Norms adjusted/increased (more realistic)

– Caps on certain expatriate allowances, e.g. hardship premiums, miscellaneous relocation

allowance

– More conservative assumptions behind COLI

• Relocation and on-assignment support ( Singapore / Asia )

– Replace air shipment by excess baggage support

– Replace car rental support with transportation allowance (temp living in Singapore)

– No home sale / re-purchase support for expats

– Deliver cross cultural training via a web-based programme

– Lower cost temporary living accommodation

– Discontinue off-site language lessons

– Differentiated international schooling support based on home country

language/curriculum

- Savings: current $ 1.4 MM

- 2015: $ 4.0 MM

- 2017: $ 5.5 MM


Facing the challenges of 2008-2013 Key Interventions Operational Excellence in Running Relocation Services

P&G Expatriate Comp & Policy COE

Cartus – Relocation Services Vendor

Third Party

Service Suppliers

P&G Human

Resources

• Policy Design • Governance • Exceptions

• Talent Strategy • Employee Communication • Sensing and Feedback

• Programme Administration • Cost Management • Service Quality

• Ownership of service and results in immigration, destination services, tax, shipping, etc.



KEY LEARNINGS


Facing the challenges of 2008-2013 What did we learn …

• It is all about balance …

– Changing too much might be as risky as changing too little

• Managing transition is key …

– Which policy changes to apply to various groups of mobile employees,

how quickly, who is grandfathered, etc ?

• Communication and service delivery …

– This is part of the Mobility Strategy for expats because communication

and service delivery influence how the expats experience the policy.

Section 2

CONSUMER GOODS INDUSTRY FUTURE TRENDS IMPACT ON GLOBAL MOBILITY

April 4, 2014 32


Consumer Goods Industry Future Trends – Research

33 April 4, 2014


Convergence with Divergence EIU/Mintel Research – Indexed Spending Growth

34 April 4, 2014


Convergence with Divergence EIU/Mintel Research – Fastest Growth Areas by Country

35 April 4, 2014

• Prepared Food China

• Household products India

• Beverages Mexico

• Household products South Africa

• Beauty products Turkey

• Non-alcoholic drinks UK

• Beauty products

• Food service USA


Convergence with Divergence EIU/Mintel Research – Specific Growth Items and Rationale

36 April 4, 2014

• Growth in laundry detergent due to growth in washing machines (from 1-16% of rural households between 2010-2016) China

• Growth in prepared foods has more than doubled with cereal consumption increasing. India

• Pet food sales doubled in last 5 years as pet owners shift from feeding their animals scraps to packaged food. Mexico

• Previously a tea-drinking market, coffee has started to gain ground in middle class households, with expected annual growth of 8.8%. South Africa

• Rise in sun cream sales – people want to be tanned, but are increasingly taking into consideration health concerns. Turkey

• Chocolate sales resilient during the recession, particularly individually wrapped sweets which feel indulgent but are inexpensive. UK

• Sparking wine sales have contributed to strong growth in alcoholic drinks sector, and carbonated non-alcoholic drinks expected to bounce back. USA


What does this mean for Global Mobility? Expatriate Destinations

37 April 4, 2014

40.3

11.3

38.5

9.8

19.6

29.6 31.5

27.5

0

5

10

15

20

25

30

35

40

45

China India Mexico Turkey South Africa Russia Brazil UAE

Where do you expect the highest increase in the number of assignees (% of Consumer Goods respondents)?

Source: Mercer Worldwide Survey of International Assignment Policies and Practices, 2012

EIU/Mintel Research Locations

Other Next Highest Assignee Growth

Locations


What does this mean for Global Mobility? Expatriate Destinations – What We’re Seeing

• Larger consumer goods companies (like Proctor & Gamble) are already established in many emerging markets, but will need to keep up their ‘continuous improvement approach’ to continue to succeed.

• Smaller consumer goods companies are actively and aggressively seeking new markets.

• Even the large consumer goods players have ‘greenfield’ sites so will continue to face expansion challenges.


1.5

9.4

1.5

3.1

6.2

47.7

22.1

44.8

59.4

59.7

61.5

46.2

66.2

52.2

77.9

53.7

31.3

38.8

35.4

53.8

27.7

0 20 40 60 80 100 120

Career/leadership development

Business expansion

Know-how transfer

Corporate values transfer

Technical skills not available locally

Managerial skills not available locally

Fulfilling a specific project need

For training purposes

Decrease

No change

Increase

What is the current trend for each assignment purpose listed below (% of Consumer Goods respondents)?

What does this mean for Global Mobility? Assignment Purpose

Source: Mercer Worldwide Survey of International Assignment Policies and Practices, 2012


What does this mean for Global Mobility? Questions for Discussion

• How do you manage new location set ups, particularly in challenging locations?

• How do you identify and incentivise the right talent to take postings to open up new markets and share knowledge with new local teams?

• As local markets mature, how do you use global mobility to develop and retain local hires, and deal with the retention of internationally experienced staff?


The Decade Ahead McKinsey & Company Research

41 April 4, 2014

• A billion new consumers in emerging markets

• Consumers ‘going green’

• Shifting demographics

• Rise of digital consumers

• Health and wellness concerns

• Modernisation and concentration of trade

• Rise of the value segment

Demand Trends

• Rising trade protectionism

• Changing tax regimes External Factors

• Increasingly volatile input costs

• Labour shortages in emerging markets Supply Trends

Trends that could influence performance over the next decade


The Decade Ahead McKinsey & Company Research

42 April 4, 2014








Demand Trends





Top five trends that could influence company performance over the next decade


What does this mean for Global Mobility? McKinsey & Company Research

43 April 4, 2014








Demand Trends





Top five trends that could influence global mobility over the next decade


What does this mean for Global Mobility? Shifting Demographics and Labour Shortages in Emerging Markets

Source: “Talent Mobility Good Practices: Collaboration at the Core of Driving Economic Growth”, World Economic Forum and Mercer


HEALTHY EMPLOYEES:

• Are present

• Are less likely to have high claims costs

• Have fewer worksite injuries

• Set a social norm

ENGAGED EMPLOYEES:

• Are more engaged employees

• Are more focused on their customers

• Leave the organization less often

EMPLOYEES WHO ARE BRAND STEWARDS:

• Help business grow

• Get the word out

• Matter more in emerging markets

HIGH- PERFORMANCE

CULTURE

HEALTHY

BRAND STEWARDS

ENGAGED

HIGHER TOP-LINE REVENUE

AND LOWER COGS

HEALTHY, PRODUCTIVE WORKFORCE

ENGAGED WORKFORCE

What does this mean for Global Mobility? Health and Wellness Concerns

April 4, 2014 45


Aging

Low birth

rate

War for

talent

Health cost

is increasing

Stress and

engagement problems

Social media and

technologies

4 Generations

Diabetes

epidemic

Managing

renewal risk

People

getting

sicker but

living longer

Growth and

profitability,

especially in

emerging markets

Corporate

social

responsibility

Auto

enrolment

Governance, litigation

and risk management

Potential

increase in

retirement

age

Legislation

Changes

What does this mean for Global Mobility? Health and Wellness Concerns

April 4, 2014 46


What does this mean for Global Mobility? Changing Tax Regimes

47 April 4, 2014

Average Income Tax and Social Security Rates as a Percentage of Base Salary: Variance within Africa and the Middle East

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Upper Middle Management

Senior Professional

Skilled Para-Professional

Source: Mercer International Geographic Salary Differentials, 2014 Edition


What does this mean for Global Mobility? Questions for Discussion

• Are shifting workforce demographics and labour shortages impacting workforce planning within your organsiation (eg. aging/retiring experienced workforce versus younger, inexperienced candidates). If so, what talent mobility strategies do you have in place to address them?

• Are Health and Wellness considerations prevalent in your mobility policies or strategy?

• How do you manage health benefits for your assignee population and their families while on assignment? What challenges do you face, and how have you overcome them?

• Do you use policy segmentation to optimise low income tax

jurisdictions? If so, why and how? If not, why not?


QUESTIONS

April 4, 2014 49

MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 50

Today’s Speakers

Kate Fitzpatrick

Principal – Senior Mobility Consultant

[email protected]

+44 (0)20 7178 5653

April 4, 2014

mailto:[email protected]

April 4, 2014 51

2014 emea expatriate management conference consumer goods ... · pdf file2014 emea expatriate...

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