Climate crisis, Swiss economy, gender quota
Deloitte Switzerland’s CEO takes a position
We put 15 questions to Reto Savoia, CEO of Deloitte Switzerland. How much is climate change a cause for concern? How can Switzerland stay ahead of the pack and maintain its position as a top international business location? What is his view on gender quotas? Click on one of the five topic areas to learn Reto’s thoughts and ideas.
Business and our performance
Deloitte is a fast-growing professional services company in Switzerland. How well is it developing?
Deloitte Switzerland is delivering a strong financial performance. Over the past few years, we have regularly posted double-digit annual revenue growth. In our financial year 2019 (ending 31 May 2019) there was a slight slowdown in growth, but we still performed well compared to our peers. We reacted appropriately and are back on a very solid growth path. The current fiscal year ending 31 May 2020 will – despite COVID-19 – finish with strong growth. I am very pleased with our performance so far in this financial year – it has put us in a strong position to tackle the ongoing and upcoming challenges that all businesses are facing with COVID-19 and to support our customers with all our strength in overcoming the economic crisis.
Deloitte’s multi-disciplinary business model continues to be a source of competitive strength. We are the largest advisory firm in Switzerland and market leader on the issues that matter the most to clients, such as technology-driven transformation, cyber risk, global tax and regulatory change. We have created over 600 jobs in the past five years, establishing ourselves as a major employer. We are continuing on our growth path in the Swiss market, which is particularly pleasing given the considerable investments we have made in new business and delivery models, technology and talent.
From developing new business models, to creating a different experience for our clients and our people, I believe that we provide a more contemporary and relevant service offering, and that our multi-disciplinary approach is best-in-class in the professional services market. Although the process of globalisation is slowing down and trade wars hinder the free exchange of goods and services, the technological developments continue and our clients are operating in a more digitally interconnected way than ever before. They turn to Deloitte, as the largest global professional services firm, for strategic advice and pragmatic solutions.
What challenges does Deloitte face in the audit market?
The role and purpose of audits require clarification amongst the different stakeholder groups, such as the board of directors, investors and the various regulatory authorities. We want to shape the discussions about the future design of the audit. Currently the auditor issues an opinion on the annual accounts according to applicable rules, and checks whether the client’s financial situation is reported accurately. We go further than that and also ask relevant questions to test the client. As auditors, we aim to provide certainty and build up trust among the various stakeholder groups.
Our Audit & Assurance business in Switzerland is robust and growing. We want to deliver the audit of the future: providing intelligent and insightful audits to meet the evolving needs of investors and society. Audit will always be a crucial part of our firm and with our strong internal regulation on independence and quality, we have great potential for growth.
Deloitte now has an established client portfolio of Swiss and international clients of mid- to large size in a wide range of sectors. Amongst others, we have recently added SBB to our audit portfolio.
Deloitte is well known for its advisory business. What are the challenges in this market?
We are acting faster, more globally and more digitally – just like our clients. They expect real benefits from Deloitte as their consultants. Despite the current challenges in globalisation, it is still an important topic, and we are supporting our clients in finding the most resilient international setup. At the same time, local market knowledge and relationships still play an important role, as markets differ and local regulations matter.
Competition in the professional services industry will intensify further, due mainly to globalisation and digitalisation. We now compete with more niche players and start-ups and adapt our delivery models accordingly. We can only earn our margins through outstanding performance.
Although digitalisation is important, consulting is still a people business. Trust is essential, with close cooperation and communication.
The challenges facing the Swiss economy
Digitalisation, automation and artificial intelligence. What is the impact for Swiss companies and the workforce?
Automation has its roots in the industrial revolution. The Swiss economy, corporates and employees have undergone continual change over the past two hundred years. Over this time, entire sectors and occupations have been transformed, with some disappearing and new ones replacing them. Responding to change calls for a huge amount of effort. People need to change jobs and invest in education and training. To remain competitive, companies need to evolve constantly and train their employees.
Automation has delivered significant benefits for the entire Swiss economy: greater prosperity, higher productivity, and more and better jobs, to name just a few. The transformation caused by digital technologies, including artificial intelligence, is likely to have a similar impact. Switzerland as a high cost country needs to apply modern technologies faster and companies must recruit the best people from all over the world.
Is the Swiss workforce ready for the future? What do companies need to do? What about government?
We have published a report about Switzerland’s digital innovation capacity, which we measured using three main criteria. One of these was including talent. The results were clear: Switzerland has an excellent education system, and excellent universities, and is highly attractive to foreign workers. Based on these findings, we conclude that the Swiss workforce is ready for the future. However, there is room for improvement with regard to the basic digital skills of ordinary workers, and schools should focus more on teaching skills in ICT (Information Communication Technology). Switzerland also performs rather poorly in comparison to countries such as Germany and the UK when it comes to the number of graduates in science, technology, engineering, and mathematics (STEM). It is important to generate greater enthusiasm among young people for technical subjects and to strengthen cooperation between schools and companies.
Furthermore, we should not forget demographic change. The ageing of society and the approaching retirement wave among baby boomers will lead to severe labour shortage in Switzerland in 10 to 15 years’ time. We, therefore, need to make use of any under-utilised labour potential and also retain older workers in employment. To do this employers need to offer attractive and flexible working models. The government needs to make the retirement age flexible and improve financial incentives for continuing to work beyond normal retirement age.
What should Swiss companies do to be successful in the future?
We have not yet seen the full consequences of the coronavirus crisis: in the immediate term, recovering from this shock will be the most important concern. In the long term, Swiss companies need to consider what a sustainable business model for the future entails: they need to develop a future-proof strategy for their business that delivers value to their customers, their employees and other stakeholders. They need to invest in lifelong learning for their workforce, and to ensure that skills and aptitudes are utilised and expanded.
At the same time, companies need to find ways to attract the best talent and bring them to Switzerland to address a different challenge: The Swiss labour market is likely to face a shortage of up to half a million workers by 2030 due to the demographic shift in the population. We need new and more flexible solutions to attract highly-skilled workers from countries outside the EU to Switzerland.
A key to being innovative is to develop enthusiasm for experimentation, collaboration and an appetite for risk among employees. And finally, but importantly, a company will not succeed without passionate, skilled and trained leaders that walk their talk.
Objectives and leadership principles as CEO
What are your goals as CEO of Deloitte Switzerland?
I shall continue to build on our success of recent years, and at the same time try out new things – making targeted investments in new technologies, businesses and people, and help our clients to identify and implement crucial changes they should make in order to stay competitive.
I also want to continue investing in our people: Diversity & Inclusion is one of my top priorities. We will continue to strengthen our inclusive corporate culture and the diversity among our employees, for example with targeted initiatives to increase further the proportion of women in management. We celebrate our international culture, our ethnic diversity and our openness to individuals of any sexual orientation. With this in mind, I am sure that we shall be able to expand our business further and continue our sustainable growth and develop our culture.
What are your principles of leadership?
In my eyes, an executive should be curious, collaborative and courageous. I expect the same from our employees. I also want to question existing structures and bring in new ideas. Mistakes can and should be made – but taking responsibility is also important. I want absolutely to communicate transparently: our employees have the ability to understand difficult topics and appreciate open communication. We are a very diverse company and I want to help everyone here to develop their talents. Flat hierarchies are important to me, and I want to empower individuals to achieve their goals and fulfil their personal ambitions.
Corporate culture and equality
Is there something like a Deloitte culture? What is the difference compared to the other Big4 firms or the other consulting companies?
I think we are very different compared to the other Big 4 firms. At Deloitte we are highly entrepreneurial, dynamic and technologically literate, and our employees take on more responsibility. We are building an environment where our people feel they can truly be themselves and where they are appreciated for who they are and for their unique ideas and perspectives. We are a Swiss company with strong international flair and with a particular focus on large and mid-sized companies.
How important is diversity and inclusion for Deloitte Switzerland?
Diversity and Inclusion are strategic priorities for my leadership team. Without diversity of thought, we will never be able to solve the most complex problems facing our clients. Innovation is fuelled by diversity of thought and views which fuse together to create powerful solutions. Inclusion is making diversity work, and this is much more than ‘just’ getting more women into management positions, although that is also important for me. It is about making sure that everybody – regardless of gender, generation, background, religion, ability, sexual orientation or ethnicity – can be the best version of themselves, and about creating a culture where we appreciate and reward the right leadership behaviours and where all our people can thrive.
What measures do you have in place to support women in their careers?
I strongly believe that inclusion is about creating an environment where everybody can thrive. An example of this is in our recruiting and promotion standards. We also have programmes in place to empower specific groups, such as a sponsorship programme for our female leaders, mentoring programmes for women, and also a highly-valued leadership journey for our talented high-potential women.
Since 2017, we have increased the proportion of women at management level by six percentage points, to 26 per cent. This means that women now make up more than a third (36 per cent) of Deloitte's management team and 39 per cent of the workforce.
It can also be very challenging to find the right balance between parenthood and career. That’s why we support our male and female employees with generous measures before and after the birth of a child.
We also promote women outside of Deloitte. We launched the “Women in Cyber” initiative a little less than two years ago in a move to ensure greater gender equality in the area of cybersecurity. Since then we have succeeded in convincing an increasing number of young women to pursue a career in this area.
Social and environmental responsibility
Do you think quotas are a good measure to promote the advancement of women?
My feelings towards quotas are ambivalent. On the one hand, I wish that quotas would not be necessary: the business imperative for diversity is clear and companies should push forward with promoting women. At the same time, the reality is that society is not changing fast enough, so quotas would definitely help to move things along faster. I believe in a combination of clear targets, and individuals should be held accountable for embedding a cultural change to create an inclusive firm.
How does Deloitte interact with society, and what are you giving back to your external stakeholders?
We are committed to driving societal change and promoting environmental sustainability, in Switzerland and globally. Giving back to society is a key aspect of our purpose as a firm. Working in innovative ways with government, non-profit organisations and society in general, we are designing and delivering solutions that contribute to a sustainable and prosperous future for all.
I see Deloitte as a responsible part of the Swiss business community. We are active in many associations and publish regular studies on the state of the Swiss economy. For example, we have recently released a study with recommendations to government and businesses about how to address the imminent labour shortage. We have also encouraged Swiss board members not to shy away from the ethical challenges surrounding digitalisation since boards are a powerful forum to ask such questions and provide clarity.
With our programme for refugee employability, we want to increase the employability of refugees through business acceleration, mentoring, sponsorships, integration events, and co-creation with other companies. This initiative is in collaboration with local NGOs and was launched successfully in Zurich and Geneva last year. We presented the project at the UN Global Refugee Forum in Geneva in December 2019.
How should companies contribute to tackling climate change?
It is very clear to me that climate change will have a significant impact on all business activities and our lives. Our recent CFO Study is surprising to me, as it shows that many CFOs do not yet see action against climate change as a priority: they claim to have more immediate challenges threatening their business. However, companies are in fact taking action in this area, for example by improving energy efficiency. But this is only the first step, and issues surrounding climate change must have a more direct impact on corporate finances and company strategies.
At Deloitte, we want to reduce emissions resulting from employee business travel by 10 per cent annually until 2025. We have also launched a joint initiative with the Institute of Chartered Accountants (ICAEW) which aims to help companies, financial experts and users of financial statements to learn more about tackling climate change.
Stakeholders are increasingly demanding more transparency. Switzerland needs a swift and coordinated action plan based on international standards. Companies need to take the initiative and improve their corporate reporting to adequately address the financial and non-financial risks and opportunities created by climate change.
Do companies in Switzerland accept their corporate responsibility?
Four out of five board members state that this issue is embedded in their corporate strategy. However, two out of five do not appear to have sufficient resources and expertise to implement changes successfully. The swissVR Monitor - with responses from 429 board members - found that only about half of the companies involved have clearly identified the subject areas that are important to them. Their approach to corporate responsibilities focuses primarily on employees, followed by customers and then, at a distance, followed by the environment.