Culture of confidence, cooperation and co-creation

To deliver on our medium-term ambitions, we must work together in a different way. While business units will remain the core of who we are and will continue to be responsible for focusing on our customers’ future first (one of AkzoNobel’s five core values), both functions and countries/regions will have an important role to play in delivering on our strategic ambitions.

Specifically, functions will need to create centers of excellence, set targets and standards, transfer best practice and leverage our scale if we are to reach our EBITDA margin, operating working capital, safety, employee engagement and eco-efficiency ambitions. Countries/regions will need to help us deliver on our revenue targets, pursue synergies, represent AkzoNobel in the country/region to key stakeholders and be the “home” for all our employees.

Delivering simultaneously on business, functional and country/regional agendas will require us to behave differently. We must have confidence in the judgment and professionalism of others, both within and outside the company. Based on this confidence, we must cooperate to deliver on key initiatives. In some cases, we must go beyond this and actually work with others, again, both within and outside the company, to co-create better solutions. To do this, we are:

Continuing to be clear about business principles

At a very basic level, we must continue to be clear and completely consistent in what we stand for from a business principle (or Code of Conduct) perspective, regardless of the market segment, function or country in which we operate. We continue to mandate training in this area, including focused modules for competition law and anti-bribery aspects. In 2011, we expanded the training to include a new manual for export control.

Creating a diverse and inclusive working environment

To realize our growth ambitions, it’s important that we draw from as wide a talent pool as possible and we create a working environment where differences are valued and everyone has the opportunity to develop their skills and talents. To achieve this, we have had a Diversity & Inclusion (D&I) program since 2008, which includes a dedicated global working team and steering committee. The goals of the program are to create awareness and engagement around diversity and inclusion issues to embed the concept in the organization, to establish company-wide metrics and to make AkzoNobel a true reflection of the markets in which we operate.

We have made good progress with D&I in recent years. We have improved the proportion of our executives who are either women or come from high growth markets, our key metric in D&I. Since the start of 2009, the proportion of women in executive positions has increased from 10 percent to 13 percent of the total population. The presence of women in executive positions has been particularly strengthened in functional roles. With regard to executives in high growth markets, we have made less progress, although the proportion of executives coming from these markets is now 13 percent.

We do, however, recognize that we still have a long way to go. In particular, in 2012 we will need to redouble our efforts with regard to our two key issue areas. These are appointing women to general management, sales and/or marketing roles and appointing individuals from high growth countries to roles based in more established markets.

Ensuring that our employees are fully engaged

We need to ensure that all employees are knowledgeable about and engaged in the business, as well as the functional and country/regional strategy that is relevant to them, so that they are able to contribute fully to strategy implementation. We measure our progress in this area using the Gallup Q12 survey, with additional specific AkzoNobel questions. The results of the survey provide a comparison against a database of approximately 500 organizations. We made progress during 2011 in terms of our employee engagement scores, but more is clearly required in 2012 as we are a long way from reaching our top quartile ambition.

As engagement is typically highly dependent on creating successful teams within the overall organization, we have different approaches to strategy engagement in different parts of the company. For example, in our Decorative Paints business – where the strategy is to move from a “multi-local” to a global approach based on repeatable models – we have a program that we call Ignite the Spirit. In the last two years, more than 10,000 of our Decorative Paints colleagues from all over the globe have participated in this initiative as a means of building a culture of confidence, cooperation and co-creation around achievement of the Decorative Paints strategy.

Working with our stakeholders

Beyond AkzoNobel, we need to work with our stakeholders to develop better solutions to business issues. This goes beyond the open innovation referred to earlier and encompasses involving stakeholders in setting and managing business targets and improvement processes. One area where we continue to proactively pursue stakeholder engagement is with the communities in which we are based. To do this, we continue to:

  • Carry out excellent work through our Community Program, which entails small amounts of corporate financing for projects that also incorporate volunteer work from our employees
  • Support our AkzoNobel Education Fund, which helps provide infrastructure and teacher training to improve the education of children in developing countries. To mark its 15th anniversary in 2011, we initiated projects in Vietnam, India and Brazil to help young people – in many cases girls – find decent and safe employment which offers them better long-term prospects
  • Carry out major community projects as part of the Let’s Colour campaign led by our Decorative Paints business

We are also developing partnerships with key non-governmental organizations. For example, following our partnership agreement in 2010 with the Forest Stewardship Council (FSC), we have set up a central fund to support the FSC’s work in increasing the supply of FSC-certified products. We are also rolling out local partnership agreements between our consumer woodcare brands (e.g. Cetabever, Cuprinol, Pinotex, Xyladecor and Sparlack) and FSC’s national offices to promote awareness of the FSC and the use of wood and paper from sustainably-managed forests. So far, we have seven active country-AkzoNobel partnerships in the Netherlands, UK, Germany, Switzerland, the Czech Republic, Brazil and the Nordics.

While we are clearly very excited about collaborative efforts with the FSC and relevant parts of our business, we are also aware that we need to do more across the whole of AkzoNobel. With this in mind, we are in the process of developing some key next level relationships and hope to announce some exciting developments in this area in 2012.

If we do all of this right, we will be able to create a virtuous cycle in terms of achievement of our ambitions. By making much better use of our knowledge and potential, we – together with our partners and stakeholders – will deliver better solutions to the market and the communities in which we are based.

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