American Chamber of Commerce in the Netherlands

October 28, 2009 - The Doha Round must have priority within the G-20 to reach conclusion. Negotiations have been underway for far too long. Chief Executive Officer Paul Polman of Unilever said this on October 28 at a dinner hosted by the Netherlands Minister of Trade Frank Heemskerk and organized by the American Chamber of Commerce in the Netherlands for its members and guests.

Paul Polman, CEO Unilever

This starting shot of Polman's speech was the only reference to the international regulated trading system - but is an essential item in the long term focus needed by business to succeed in a globalizing world.

Since taking the helm in January, Polman has replaced “40 of the top 100 people” and Unilever “will be going through another round in November,” according to Polman. Polman, a former Nestlé SA and Procter & Gamble Co. executive, this year became the first outsider to lead the Rotterdam- and London-based company in its 79-year history in the midst of the worst economic crisis since the Great Depression. To evoke a sense of urgency within the company, he froze salaries, including his own, and made bonuses dependent on volume growth of Unilever products instead of earnings per share. The severe economic circumstances have led to some inevitable hard decisions to get the company on course again.

Too many business leaders have taken their eye off the ball - according to Polman. They have abandoned a view of long term thinking for the benefit of the company and its stakeholders for a focus on shareholder value, quarterly results and individual wealth accumulation. Bonuses were awarded for output and not for outcomes - whether the deal was made or failed, the bonus was there anyway. Average CEO tenure was some 3.5 years - enough time for a signing bonus, some short term rewards and negotiation of a golden handshake exit bonus, and, hey bingo, we're rich. And with the announcements of the December 2009 bonuses in sight, Polman is not optimistic that many have learned the lesson. It's difficult under these circumstances to create long term value for a company and ensure its continuation for the benefit of stakeholders and society at large.

The liberty that businesses have to function in a society has not been balanced by a sense of responsibility of those same businesses to become part of the solution to the problems society faces. The trust of society at large in business and market mechanisms has been severely bruised. This can only be restored by a long term focus on the good of the company and society as a whole. A focus on building shared value - what is good for society in the long term is good for companies - is what is needed to restore confidence in the market mechanism. This must be embedded in company operating principles. Creating shared value will build shareholder value in the long term. Not a new concept, but it will take a lot of work to make it come alive.

Business as usual will no longer wash. Lower levels of output and revised levels of economic activity is the new growth model for the foreseeable future. This is what consumers are asking for - according to Polman.

The present crisis has also brought the need for the longer term good of our planet to a higher level of awareness among the public. Increasingly the public is also leveraging its collective power to influence decisions on global problems - via twitter, Facebook and other social networks.

“The economic crisis was the best thing that happened to me,” he said. Having made “a lot of progress” under his predecessor Patrick Cescau, Unilever “wasn’t aware of standards of the outside world” and the decline gave Unilever “no time to waver.”

“We’re in for a long and slow recovery” of the economy, Polman said. “I assure you, we at Unilever will get out of this crisis stronger.”