Secrets of Success - · PDF fileAon Hewitt Proprietary and Confidential Secrets of Success 3 Therefore, for companies in Brasil facing record-low unemployment rates and fierce competition

Aon Hewitt Proprietary and Confidential

Risk. Reinsurance. Human Resources.

Secrets of Success What Brasilian Top Companies for Leaders Do Differently

July 2013


Secrets of Success 2

Executive Summary

Over the last decade, Brasil has been one of the fastest-growing major economies in the world,

establishing itself as a major global player. In 2011, Brasil surpassed the UK as the sixth largest

global economy.1

Graphic courtesy of IMF/UN.

The booming economy, fueled by steps taken by the government since the 1990s toward fiscal

sustainability and the measures established to liberalize and open the economy, provides a better and

more competitive environment for private-sector development. The growing global demand for the

country’s vast natural resources and the diverse industrial base in pioneering areas, such as ethanol

production, have also contributed to its continued success.

2

In addition, Brasil, together with Mexico, has been at the forefront of the Latin American multinationals

(also known as “multi-Latinas”) phenomenon by which, thanks to superior technology and organization,

local companies have successfully turned global. The “multi-Latinas” have made this transition by

investing massively abroad, in the Latin American region and beyond—thus realizing an increasing

portion of their revenues internationally.2 In addition, government policies aimed at reducing poverty and

increasing economic opportunity have resulted in a growing middle class, making Brasil an attractive

consumer market for foreign multinationals.

Despite slower than expected growth in 2012, Brasil’s GDP forecast predicts continued growth due to

major investments, particularly in infrastructure and the major international sporting events Brasil will host

in the coming years (e.g., the FIFA World Cup in 2014 and the Olympic Games in 2016).

1IBGE (Instituto Brasileiro de Geografia e Estatística).

2Global Competitiveness Report 2009–2010 World Economic Forum.

Countries with nominal GDP over

US$600 billion

Countries with populations over 100 million

Countries with area over 2 million km2

Brasil

http://en.wikipedia.org/wiki/Mexico

http://en.wikipedia.org/wiki/Multinational_corporation

http://www.weforum.org/pdf/GCR09/Report/Part1/Chapter%201.1_The%20Global%20Competitiveness%20Index%202009-2010.pdf

http://en.wikipedia.org/wiki/World_Economic_Forum



Therefore, for companies in Brasil facing record-low unemployment rates and fierce competition for talent,

the ability to attract, retain and develop the best leaders to meet growth demands becomes a key

business challenge that will not disappear anytime soon.

Aon Hewitt’s Top Companies for Leaders study provides interesting insights into what successful

Brasilian companies and multinationals with operations in Brasil are doing to face this challenge and

prepare their organizations to meet the talent needs of today and the future.

Business Challenges in Brasil

Based on our comprehensive Top Companies for Leaders research, we know there can be a strong link

between robust leadership practices and booming financial results. This combination is currently the

single most competitive advantage and is difficult, if not impossible, to replicate.

As part of one of the fastest-growing regions in the world, organizations in Brasil understand the need for

capable and inspired leadership. With over 478 participants globally (45 from Brasil), Brasil dominates the

list of winners in Latin America. Their powerhouse stature is displayed most prominently by winning six of

the top 10 spots in the 2011 Latin America Top Companies and Top Subsidiaries for Leaders lists. In

addition, Brasilian-based Natura Cosméticos is the only Latin American company to place among the

coveted Global Top Companies for Leaders. This winning group of Brasilian firms recognized among the

Latin America Top Companies includes Companhia de Bebidas das Américas (AMBEV) and WEG

Equipamentos Elétricos S.A. Those recognized as Top Subsidiaries for Leaders include multinational

dynamos Procter & Gamble Brasil, The Dow Chemical Company and Unilever Brasil. How these winning

companies evolved to become powerhouses in leadership is not only impressive, but telling of what the

future may hold.

Despite being one of the world’s most populated countries, Brasil experiences difficulties filling jobs—

especially in some industries such as oil and gas, consumer products, technology and financial services.

This is mostly due to poor-quality public education, which is driving families to choose private schools for

their children. However, private schools are largely confined to the developed southern regions of the

country and can be afforded only by the upper- and middle-class populations. As a result of the uneven

distribution of educated citizens, along with the increased demand for qualified employees, Brasil

struggles with a talent shortage—making salaries and executive bonuses much higher than in other

countries and creating a significant challenge for business expansion in the northern parts of the country.

Business leaders in Brasil are witnessing paradoxical times. On one hand, the country is full of

opportunities; on the other hand, the local and global business scenario throws up significant challenges.

In the course of the Top Companies for Leaders study, we asked companies in Brasil to share their top

challenges. The chart on the following page shows the top five business challenges that emerged.



Top Business Challenges

Business growth is rated among 67% of the Brasilian winners and 59% of all other participants in

Latin America as a top business challenge. With no long-term mindset for the overall Brasilian culture, plus the poor quality of public education, Brasilian companies are now struggling to make their businesses grow along with the economy.

“The strategic intent behind the 2012 objectives is to drive business growth, making it a company

that is greater than great, adding more and more vitality to people’s lives.”

Latin America Top Subsidiary for Leaders

Increased competition is a key challenge for 33% of the Brasilian winners and 25% of all other participants in Latin America. Many organizations see the growth potential of Brasil, with its attractive market offering new opportunities and millions of potential new consumers. As a result, Brasilian companies are facing increasing competition—both from aggressive local companies and multinationals—and seeing the need to take steps to stay ahead of the game.

“We are never completely satisfied with our results. Focus and zero tolerance will help us to ensure a

lasting competitive advantage.” Latin America Top Company for Leaders

“WEG maintains aspects that come from its founders (e.g., curiosity) while simultaneously introducing

contemporary aspects like ability to compete head to head with our competition. The organization has

this ability to be modern, resilient and competitive globally.”

WEG; Latin America Top Company for Leaders

Product/service innovation is a top business challenge for 33% of the Brasilian winners, and 31% of all other participants in Latin America also consider innovation as one of their top business challenges. In order to win in an increasingly competitive environment, Brasilian companies know they need to clearly differentiate themselves through creativity and selective risk-taking initiatives to drive the innovation of services and products.

67%

33% 33% 33% 33%

59%

25% 31%

7% 9%

0%

10%

20%

30%

40%

50%

60%

70%

Businessgrowth

Increasedcompetition

Product/serviceinnovation

Insufficienttalent overall

Employeeengagement

Brazil Winners All Others (Latin America)



“The platform ‘We innovate’ represents the internal innovation culture, promoting and recognizing the

best ideas, from products to suggestions for more efficient processes.”

Dow Chemical Brasil; Latin America Top Subsidiary for Leaders

Insufficient talent overall is a primary concern for many Brasilian organizations. The country hasn’t been preparing its workforce for the recent rate of economic growth. This scenario has generated a whole new discussion about the role of government versus private companies in talent development. Companies need qualified workers in the short term, and some of them have taken a proactive approach to talent sourcing by partnering with technical schools and universities on curriculum design, internships and scholarships. In addition, leaders at all levels are paying attention not only to their ability to attract talent, but also to how well they are retaining their current employees.

Leader Groups Involved in Recruiting Critical Talent

Leader Groups Involved in Retaining Critical Talent

83% 83% 83% 83%

28%

51%

74%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Board ofDirectors

CEO SeniorManagement

MiddleManagement


83%

67%

83%

67%

27%

49%

71%

59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Board ofDirectors

CEO SeniorManagement

MiddleManagement




“Retention is a little bit concerning in Brasil because the market is so hot right now. I’ve lost people already. Everybody needs talent so I feel the competition.”


“Every year we have 48,000 candidates for 40 trainee positions. Attracting is not an issue. Retaining

is an issue. My challenge here is keep the agility, to keep this flow and give them opportunity to

develop themselves within the company, giving the right level of diversity and challenge.”


Employee engagement has increasingly become one of the main people-related key performance indicators (KPIs) for companies in Brasil. Our data shows that engagement is a stronger focus among Brasilian winners compared to their global counterparts—83% of Brasilian winners vs. 76% of global winners say engagement of leaders is a KPI used to evaluate the effectiveness of their leadership strategy. It is also how most Brasilian winners determine leadership effectiveness, as 83% of the Brasilian winners see engagement as a top driver indicative of strong leadership performance compared to only 24% of Global Top Companies. According to Aon Hewitt’s Employee Research Database, containing data on more than 320 Brasilian companies, the key drivers that can increase employee engagement in Brasil include career opportunities, recognition, pay, valuing people and organizational reputation.

Driver Ranking Top Five Action Areas for Improving Employee

Engagement in Brasil

1 Career opportunities

2 Recognition

3 Pay

4 Valuing people

5 Organizational reputation

Aon Hewitt’s Employee Research Database, 2013.



Despite having strong engagement levels, the Brasilian winners do not take perceptions for granted, and

proactively take action to promote employee engagement.

“There is a good level of engagement but the company still needs to improve. Brasil is going through a

very good economic moment, but we still want more. We are worried about how to make more and faster.

We need to be sure that we are taking people out of the comfort zone so they can grow. It’s an ongoing

search for development.”

Latin America Top Company for Leaders

“An employee’s level of engagement while he/she is working there is much more important than the

length of the time he/she works at the organization.”

Natura; Global Top Company for Leaders

Top Companies for Leaders Study Highlights

The winners of the Top Companies for Leaders and Top Subsidiaries in Latin America are well positioned

to face the key business challenges of today’s dynamic and uncertain environment. They recognize that

building top leaders today requires resilience, consistency and a long-term commitment, despite the

short-term pressure for excellent results.

What Are Winners in Brasil Doing Differently?

Building a leadership value proposition. The Brasilian winners are intentionally developing strategies to build and promote the capabilities, opportunities and benefits of their leadership systems. The leadership brand is clearly articulated and aligned with their external consumer brand, employee value proposition and corporate culture traits, and is then disseminated throughout the organization. This holistic strategy and viewpoint plays a double role: it first attracts top external talent to the organization and then once there, it helps retain talent. Current leaders are responsible for making this brand a reality through day-to-day messages and actions to develop future leaders.

“We measure our brand awareness, and we associate its success with our leaders and our

leadership brand. We want to be attractive without being arrogant."


In the Latin America reality, building a strong leadership reputation becomes an even more compelling issue, due to a long history of corruption and lack of trust in formal institutions. According to a global risk study conducted by Aon in 2011, one of the top three risks faced by companies in the region are crime, theft, fraud and employee dishonesty.

3 In this context, building a credible leadership

brand cemented in strong values becomes even more critical in order to drive the right employee behaviors across the organization.

3Aon’s Global Management Risk Survey 2011.



Top 10 Risks by Region

Asia Pacific Europe Latin America Middle East and

Africa North America

1 Economic slowdown Economic slowdown Economic slowdown Economic slowdown Economic slowdown

2 Failure to attract or

retain top talent Increasing competition

Increasing competition

Regulatory/ legislative change


3 Increasing competition


Crime/theft/ fraud/employee

dishonesty

Damage to reputation/brand


4 Damage to

reputation/brand Damage to

reputation/brand Commodity price risk


Damage to reputation/brand

5 Exchange rate

fluctuation Business

interruption Weather/natural

disasters

Failure to innovate/meet

customer needs

Failure to attract or retain top talent

6 Regulatory/

legislative changes Exchange rate

fluctuation Damage to

reputation/brand Technology

failure/system failure


customer needs

7 Business

interruption Commodity price risk

Cash flow/liquidity risk

Merger/acquisition/ restructuring

Business interruption

8 Failure to

innovate/meet customer needs


customer needs

Technology failure/system failure

Lack of technology infrastructure to

support business needs

Capital availability/credit risk

9 Commodity price risk Technology

failure/system failure Political

risk/uncertainties Failure to attract or

retain top talent Cash flow/liquidity

risk

10 Technology

failure/system failure Failure to attract or

retain top talent


customer needs

Capital availability/credit risk

Third-party liability

Note: In Europe, risks 9 and 10 are tied for ninth. In Latin America, risks 1–3 are tied for first and risks 4–8 are tied for fourth. In the Middle East and Africa, risks 1 and 2 are tied for first, risks 4 and 5 are tied for fourth and risks 7–9 are tied for seventh. In North America, risks 9 and 10 are tied for ninth. Aon Global Management Risk Survey 2011.

Authenticity of purpose. A key engagement driver for employees in Brasil is having a clear sense of purpose, giving employees the opportunity to link their own sense of purpose to the organization’s mission, vision and strategy. Brasilian winners are working toward a better alignment between the employees’ personal values and the company’s culture because they believe this match will increase employee commitment and engagement.

“[Employees] need to look back and recognize a level of self-development and a clear connection

between their professional achievements and their individual purpose.”


“We have a purpose and a winning plan—and people want to be part of that.”




“Look forward to the future. People spend their whole life looking back, trying to prove something to

someone instead of looking to their future, living the present and searching for meaning, for a

purpose. The verb used here is ‘to feel’ and ‘be present’.”

Natura; Global Top Company for Leaders

Customized development strategies and taking top talent out of their comfort zone. Top Companies have formal and customized leadership development programs. They discuss their management development practices and needs at the top level of the organization. Top Companies also believe in growing their top talent by providing them new opportunities and encouraging them to take up new challenges outside their comfort zones, even if they are not 100% ready. According to most Brasilian winners, developmental assignments—those matched to specific development needs of leaders—are the most effective for leadership development, coupled with rotational and global assignments that allow leaders to move through several functions, departments and regions.

“Being out of your comfort zone is what is needed to accelerate development.”


“In 20 years, I’ve moved to a different country every two or three years. It’s good to move because if

you don’t, you can become too comfortable. Challenge is essential. Talent with support.”


“I understood that having an experience in sales would make a difference so I raised my hand and

worked on creating an area that didn´t exist. It was new and totally outside my comfort zone but the

company let me and gave me the support I needed. I went to find expertise abroad.”


Building a strong leadership pipeline. Brasilian winners are keenly aware of the challenges associated with talent development and its impact on the current and future success of their organizations. They plan for the future strategically and build leadership systems that support the cultivation of leaders. All the Brasilian winners have a formal succession planning process, compared to just 65% of all other Latin American companies. Moreover, of all the organizations that have a succession planning process in place, 83% of Brasilian winners (compared to only 35% of all other Latin American organizations) have metrics in place to evaluate the effectiveness of their programs. Establishing, cultivating and retaining a pipeline of talent takes dedication and strategic execution, but those who focus on these efforts reap the benefits of an enduring human capital supply chain.



What’s Next—Future Trends and Challenges in Brasil

Brasil’s dynamic environment has its share of ongoing talent challenges, as well as those resulting from

the recent rapid business expansion of Brasilian organizations.

Better integration of younger people into the workforce. The lower birth and death rates have led to a demographic transition in Brasil. The number of economically active people (77.5% of the total population) is now higher than that of their dependents.

4 Brasil’s challenge is taking advantage of its

“demographic youth bonus” to maximize growth potential. Talent shortages and the surplus of youth in Brasil have led companies to take a gamble on hiring younger employees into more advanced positions. Companies either look for young employees who have studied abroad, or may find themselves serving as the source of secondary education as employees build skills on the job. Either way, these companies don’t have the capability to develop their young talent at the promotion rate needed to keep up with business demands. Brasilian companies in general have been slow to adapt to these generation challenges, and struggle to see beyond the monetary priorities of their employees. This makes building a leadership pipeline, developing leaders now for the future, and creating a compelling value proposition for them key issues for business success.

The ability to attract and develop the next generation of leaders is seen by one-third of the Brasilian winners as one of the top leadership skills and experiences most critical to their future organizational success, tied with the ability to manage/lead a large, complex organization, demonstration of company mission and values, and ethical standards and practice.

“How [do] you retain this new generation? How [do] you create multiple stimulus and possibilities to a

generation with multiple desires?”


Top Skills Required for Future Organizational Success

4“Pioneering Initiative Boosts Potential of Brasil’s Youth Bulge,” UNFPA.org, July 2011.

http://unfpa.org/public/op/preview/home/news/pid/8066

50%

33% 33% 33% 33% 33% 29%

20% 16%

29%

15% 18%

0%

10%

20%

30%

40%

50%

60%

Ability tomanage/lead

innovation

Demonstrationof companymission and

values

Ethicalstandards and

practice

Ability to deliveroutstanding

results

Ability tomanage/lead alarge, complexorganization

Ability to attractand develop thenext generation

of leaders

Brazilian Winners All Other (Latin America)

http://unfpa.org/public/op/preview/home/news/pid/8066



Diversity. Eighty-three percent of the winners in Brasil formally work toward increasing the diversity of their workforces as part of the leadership strategy (compared to 57% of all other Latin American participants). These organizations make conscious efforts to build an inclusive workplace by promoting a global mindset and people with diverse backgrounds. However, this is still an issue that needs focus in order to support the resilience and innovation needed to face the challenges of the future. It becomes increasingly important as Brasilian companies continue the process of globalization through a variety of expansion models, which increases the need for leaders to deliver on cross-cultural contexts.

“I want to be the older leader from the young generation but I want to have the role of opening this

space where diversity and balance can happen.”


“I always say you learn from books and from people. If you always read the same books or meet the

same people, you don’t learn. Experiencing diversity is very important.”

Pedro Suarez, Dow Latin America President, Dow Chemical Brasil; Latin America Top Subsidiary for Leaders

Leadership development programs. Most of the Brasilian winners said leadership development programs could be more efficient if they didn´t face challenges such as limitations of geographical mobility (67%), balance between work and personal life (67%), development plans not being actively managed (33%), and the difficulty in moving talent across functions (33%). Brasilian culture tends to over-prioritize short-term results rather than seeing a longer-term perspective, and this becomes even more evident as Brasilian organizations try to “ride the wave” and seize the opportunities of the economic boom. Most of the leadership development initiatives require a significant time investment—finding the right balance between managing short-term business priorities and building for the future continues to be a daunting task for some.

It is very interesting that despite the challenges noted by some of the winners, they still show more discipline in execution than the rest; this is the cornerstone of their success. Many other companies in Latin America continue to struggle with the more operational aspects of leadership development, such as inefficient metrics to measure the effectiveness of programs, lack of know-how and experience in developing leaders and inconsistent execution of programs and practices. This may be due partly to the predominant informality and lack of strategic integration of talent management programs seen in many companies across the region.



Top Challenges Organizations Face in Developing Leadership Talent

Suggested Execution Strategies

Companies looking to achieve sustainable growth in Brasil can benefit by considering the following

key strategies:

Invest in workforce planning. In a hot talent market, aggressive business growth requires a solid strategy backed by numbers showing the anticipated workforce requirements in the short and medium term—not only to meet business expansion plans, but to supplement attrition. An effective workforce planning strategy can help you answer the following questions: “How many people will you need? In which roles? How many of them can be promoted or transferred internally? How many will need to be hired from the outside? How is the local talent supply? How will you find the people you need? What skills or experiences will they need to prepare them for the next role?” Having an efficient workforce plan will support organizational decisions on building a talent pipeline though recruiting, retaining, assessing and developing leaders.

Work on cultural alignment and on creating a compelling employee value proposition. Knowing where your business will be in the future and what culture will support this journey is essential for developing practices that deliver the right messages, recognizing desired behaviors, developing the capabilities you need going forward and promoting the best leaders for your organization. Brasilian companies tend to prefer informality, and many times, lack consistency among their people practices. Without proper focus, direction and execution, many organizations waste a significant amount of energy, time and money on choices that don’t accelerate leadership development, retain the best talent or sustain the business in the long term. Basing leadership systems on business strategy is an essential step, but organizations that have robust mechanisms for measuring the effectiveness of their programs will not only understand the progress they are making, but also help inform decisions around necessary change.

Integrate talent management programs. Top Companies optimize efforts and create consistency by aligning and integrating their talent management programs—from recruiting and onboarding to development and rewards. Top Companies don’t waste energy executing isolated or “flavor of the month” programs. They understand that each practice is dependent on and influences the others—

67% 67%

33% 33%

0% 0% 0%

30% 25%

43% 42%

23% 20% 20%

0%

10%

20%

30%

40%

50%

60%

70%

Limitations ingeographic

mobility

Work-lifebalance

Developmentplan notactively

managed

Difficultymoving talent

acrossfunctions

Ineffectivemetrics to

assesseffectiveness

Lack of know-how and

experience indeveloping

leaders

Inconsistentexecution of

programs andpractices

Brazilian Winners All Other (Latin America)



that strategic planning informs the talent review and succession planning practices, which in turn impact the high potential and leadership development plans. When it comes to reaping results from practices and programs, alignment, discipline, consistency and execution are at the heart of their leadership systems.

Focus on execution. The best leadership programs do not mean anything without effective execution. What really differentiates the Top Companies from the rest is that their leaders “walk the talk,” making every opportunity a good one to show their values and what they stand for. Leadership development practices are integrated into the senior leadership business agenda often central to the priorities of the CEO and boards of directors. They ensure discipline and credibility by giving up on “cosmetic solutions” and focusing on what really makes the difference to achieve their strategic goals.

Measurement of program impact. Top Companies believe in defining clear KPIs to measure the impact of their leadership development programs. In fact, 83% of them indicated that leadership metrics are included in the organization’s scorecard along with other business KPIs. In other words, they believe that what you don’t measure, you can’t manage.

The Brasilian winners of the Top Companies for Leaders and Latin America Top Subsidiaries for Leaders

have turned their leadership development efforts into a strong competitive edge. They recognized early

on that engaging their employees in a challenging environment marked by uncertainty is a big priority.

They have displayed creativity by developing leadership programs that do more than simply provide

career opportunities for key employees; they desire to promote a personal connection between their

people and the organization, providing a space where those who want to flourish can do so. They prove

that creating a true leadership culture is possible, but it takes ingenuity, true commitment and

determination.



Contact Information

Isabel Armani

Compensation & Talent Director Brasil

[email protected]

t.: +55 11 4700-5221

Aimee Fernandes

Compensation & Talent Assistant Brasil

[email protected]

t. +55 11 4700-5021



About the Research

Initiated in 2001 by Hewitt Associates (now Aon Hewitt), Top Companies for Leaders is the world’s most

comprehensive longitudinal study of leadership and leadership practices. The study, recognized for its

global scope and research rigor, attracts hundreds of companies around the globe that seek outside-in

insights on leader building and how the best develop and sustain their leadership pipeline. Aon Hewitt

was pleased to work once again with FORTUNE, the leading global business publication, and

The RBL Group. Through its 10-year history, more than 2,000 organizations have participated in the

study, many participating year after year.

For more information on the Top Companies for Leaders research, methodology and insights, visit:

www.aon.com/topcompanies.

About Aon Hewitt

Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent,

retirement and health solutions. We advise, design and execute a wide range of solutions that enable

clients to cultivate talent to drive organizational and personal performance and growth, navigate

retirement risk while providing new levels of financial security, and redefine health solutions for greater

choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over

30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on

Aon Hewitt, please visit www.aonhewitt.com.

© 2013 Aon plc

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific

facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available

information. The content of this document is made available on an “as is” basis, without warranty of any kind. Aon Hewitt disclaims

any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content.

Aon Hewitt reserves all rights to the content of this document.

http://www.aon.com/topcompanies

http://www.aonhewitt.com/

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Secrets of Success - · PDF fileAon Hewitt Proprietary and Confidential Secrets of Success 3 Therefore, for companies in Brasil facing record-low unemployment rates and fierce competition