Note 4: Employees

Our sustainability agenda is integral to our employee value proposition. By focusing on the success and sustainability of our business, we attract, retain and motivate our employees. Sustainability is one of our core principles, defining who we are and what we stand for.

Our talent and development programs are a vital investment in our human capital – the skills and knowledge of employees – to ensure that we’re equipped to drive the company’s growth and profitability. In 2018, our human capital return on investment was 1.33 (1.43 in 2017), meaning that for every euro invested in AkzoNobel’s workforce, €1.33 was returned. Improving our human capital return on investment is achieved through a combined effort in improving revenue, efficiencies in non-employee costs, controlling our FTE numbers and aligning our employee cost and remuneration structure to our business performance goals.

People agenda and HR annual operating plan

In 2018, we launched a new people agenda and HR annual operating plan process across all our businesses and functions. This process is based on external best practices, as well as internal practices and business needs. It translates business strategy into a people agenda covering a three-year timeframe, which is in turn translated into an annual operating plan implemented by different parts of the HR organization. As part of this process, staffing planning is also conducted to set the basis for our budgeting, talent acquisition, talent management and learning and development processes.

Attracting, developing and retaining talent

We’re proud of our continued recognition as a leading employer in many of our key countries, including Brazil, China, the UK and Sweden.

During 2018, there were concentrated efforts in defining career paths and building capabilities in functions such as marketing and manufacturing that directly benefit the company strategy. We also put significant effort into creating a sustainable pipeline of future leaders, particularly in our business units and corporate functions. As part of the process, we identified critical roles and focused on the succession planning of these roles to ensure business continuity. This resulted in a balanced approach to promote our future senior leaders from within the organization, while continuously enriching our pipeline from external markets. The outcome was that we filled 54% of our executive roles internally.

In 2018, overall employee turnover was 14% (2017: 12%), while the voluntary turnover was 8% (2017: 6%). Although increasing from 2017, both are still in line with the top of the industry benchmark. High potential employee turnover totaled 8%, an increase from previous years as a result of continuous organizational transformation. This trend is expected to slow down in 2019 based on the closure of many transformation programs. At the same time, changes will be made to our performance, talent and career management processes to better service the changing needs of our employees.

Capability building

We’re focused on building the capabilities of our people in order to meet our strategic ambitions and ensure we drive a performance culture where our people learn quickly, grow and proudly deliver on their commitments. During 2018, we focused on providing learning and development programs that particularly support the company’s strategy. Key focus areas included sales and marketing, integrated business planning (IBP) and leadership development that enables a high performance culture. To support our strategy with relevant learning offerings, we continued to update our competency frameworks in sales and marketing, as well as various supporting areas of the business, to reflect the changes in our organization needs.

Diversity and inclusion

AkzoNobel is developing an increasingly engaged, diverse and capable workforce to deliver our strategy. We believe it’s also important that our management teams reflect the diversity of our overall workforce, because inclusive and diverse teams are better able to understand customer needs and innovate to meet their requirements.

In 2018, we launched an informal women leader network to further promote our gender diversity at all levels in the organization, and to provide peer support to our female leaders in advancing their career ambitions at AkzoNobel.

Engaged employees

We’ve embarked on an ambitious transformation journey to become the reference in our industry. The cultural shift we aspire to achieve is substantial. A good balance between performance and organizational health will be required to ensure our transformation creates sustainable impact. We therefore decided to launch a new internal survey which goes beyond measuring people engagement and focuses more on measuring our wider organizational health. This measurement is achieved by surveying the effectiveness of our organization in combination with the actions and behaviors that take place. In 2018, the survey was conducted three times for all AkzoNobel employees, resulting in a current score of 58.

The results show that we have an engaged workforce. In total, 86% of our employees indicated they really care about the company, while 84% are willing to put in a great deal of effort – beyond what’s normally expected – in order to help AkzoNobel be successful.

The insights from the survey also show that the company needs a continued focus on four specific areas: employee involvement, inspirational leaders, rewards and recognition, and talent development.

As part of our transformation journey, we need to be able to check our progress on a regular basis. It is therefore an absolute necessity that we carry out quarterly health checks. The outcomes are reflected in action plans (overall, per business and per function), as well as helping to steer our culture and organizational change management agenda. The culture and transformation teams, as well as initiatives such as the AkzoNobel Network (a network of colleagues who can be a sounding board for senior leadership) will help to drive the roll-out of the agenda.