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© 2007 Hay Group. All rights reserved. What Makes the Most Admired Companies Great Board Governance and Effective Human Capital Management.

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1 © 2007 Hay Group. All rights reserved. What Makes the Most Admired Companies Great Board Governance and Effective Human Capital Management

2 © 2007 Hay Group. All rights reserved. Welcome Richard Hardwick, Managing Director, Hay Group (Pacific)

3 © 2007 Hay Group. All rights reserved. 2 WELCOME The Worlds Most Admired 2007 Carlo Cataldo, Head of Risk, GE Money –Working for the Worlds 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

4 © 2007 Hay Group. All rights reserved. The Worlds Most Admired Companies 2007 Denise Girdlestone, Senior Consultant, Hay Group

5 © 2007 Hay Group. All rights reserved. 4 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)

6 © 2007 Hay Group. All rights reserved. 5 Fortune Survey of Most Admired Companies Attributes: 1.Ability to attract and retain talented people 2.Quality of management 3.Quality of products or services 4.Innovativeness 5.Long-term investment value 6.Financial soundness 7.Wise use of corporate assets 8.Social responsibility to the community and the environment 9. Effectiveness in conducting business globally

7 © 2007 Hay Group. All rights reserved. 6 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% S&P %

8 © 2007 Hay Group. All rights reserved. 7 All Stars for 2007 * Company also included in Top 10 list in 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 Worlds Most Admired

9 © 2007 Hay Group. All rights reserved. 8 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

10 © 2007 Hay Group. All rights reserved. 9 The Best 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

11 © 2007 Hay Group. All rights reserved. Working for the Worlds Most Admired Company: Carlo Cataldo, Head of Risk, GE Money

12 © 2007 Hay Group. All rights reserved. The increasing role of Boards in Human Capital governance Paul Meijer, Consultant, Hay Group

13 © 2007 Hay Group. All rights reserved. 12 And then there was…..

14 © 2007 Hay Group. All rights reserved. 13 Life on the Board has changed Sarbanes-Oxley-Higgs-ASX-CLERP9 Liability of the Chair (Greaves Precedent) Committees Time

15 © 2007 Hay Group. All rights reserved. 14 So what do the Board of the Worlds Most Admired do? They are more directly focused on human capital issues

16 © 2007 Hay Group. All rights reserved. 15 So what do the Board of the Worlds Most Admired do? They are more directly focused on human capital issues % Agree Peer Group Most Admired Human capital strategy has been reviewed and approved by the board

17 © 2007 Hay Group. All rights reserved. 16 So what do the Board of the Worlds Most Admired do? They are more directly focused on human capital issues % Agree Peer Group Most Admired Human capital strategy has been reviewed and approved by the board. Board is regularly given information and metrics related to human capital management

18 © 2007 Hay Group. All rights reserved. 17 So what do the Board of the Worlds Most Admired do? They are more directly focused on human capital issues % Agree The CEO and management regularly draw on expertise of the board on human capital issues. Peer Group Most Admired Human capital strategy has been reviewed and approved by the board Board is regularly given information and metrics related to human capital management

19 © 2007 Hay Group. All rights reserved. 18 Boards of the Worlds Most Admired evaluate their CEOs differently They look beyond strategy and finance

20 © 2007 Hay Group. All rights reserved. 19 Boards of the Worlds 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 Peer Group Most Admired

21 © 2007 Hay Group. All rights reserved. 20 Boards of the Worlds 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. In evaluating CEO performance, board focuses on success in developing human capital. % Agree Peer Group Most Admired

22 © 2007 Hay Group. All rights reserved. 21 By being better prepared for the loss of top executives WMA Boards manage CEO and Executive succession differently

23 © 2007 Hay Group. All rights reserved. 22 Peer Group Most Admired By being better prepared for the loss of top executives % Agree We have a well defined plan to cover the emergency loss of the CEO. WMA Boards manage CEO and Executive succession differently

24 © 2007 Hay Group. All rights reserved. 23 Peer Group Most Admired By being better prepared for the loss of top executives % 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. WMA Boards manage CEO and Executive succession differently

25 © 2007 Hay Group. All rights reserved. 24 So, a small checklist Are you up to speed with the status of Human Capital in your organisation? Is your CEOs performance measured in regards to leadership development? Do you know who your next CEO will be? Do you have an emergency succession plan?

26 © 2007 Hay Group. All rights reserved. Cheryl Batagol, Chair, Melbourne Water A Local Perspective: The Journey of Melbourne Water

27 © 2007 Hay Group. All rights reserved. Questions & Comments

28 © 2007 Hay Group. All rights reserved. Thank you


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