Leadership Series. Vol 5: Issue 17

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1 Boyden s Leadership Series presents discussions with business and thought leaders from organizations across the globe. The series focuses on topical issues that offer executives, political leaders and the media insight into current trends in business and talent management in the global marketplace. This issue features Paolo Cornetta, Senior Executive Vice President and Group Head of Human Resources at UniCredit SpA. He discusses managing a global workforce during the financial crisis, balancing talent and diversity across 22 European markets, engaging talent through corporate responsibility, and what career and sport have in common. Paolo Cornetta In 2010, Mr Cornetta was named Senior Executive Vice President, Group Head of HR and member of the Group Executive Management Committee at UniCredit. He joined the company in 2004, when part of ING was acquired and merged with UniCredit, and was appointed Head of HR New Europe. From 2000 to 2004, he served as Head of Human Resources of ING Group Italy. From 1994 to 1999 he was Banca Agricola Mantovana s Head of HR Development. He started his career in 1987 with Credito Italiano, where he held various positions in commercial banking prior to entering human resources as an Assistant HR Manager. Mr Cornetta holds a degree in law and an MBA. Boyden: Having held various positions in the commercial banking area, what made you switch to HR early in your career? Cornetta: Moving to HR for me was a surprise. I was getting a law degree and an MBA. But shortly after starting my career in banking after my education, I found out that HR required a pretty good understanding of a company s strategic vision. That s what attracted me to the function. Boyden: You ve worked across multiple HR roles at UniCredit. What are the traits that have helped you become such a successful leader? Cornetta: There are a couple of traits that I think are common in successful HR managers or professionals. The first one is to possess a very good understanding of the business challenges and how these business dynamics should impact HR strategies. The second trait, in my opinion, is one of the most important. I have developed the ability to listen to my colleagues and to speak in the language that they can understand. Very often HR professionals discuss and speak in HR jargon that business people find hard to understand. The way you communicate and link your process to the company needs is essential. Boyden: You ve had important HR roles at other major global financial institutions. What stands out to you as unique about UniCredit s approach to workforce management? Cornetta: UniCredit has been able to develop a few, but very important global processes that are used across the organisation. UniCredit now is

2 p. 2 a group of 160,000 people working across almost 30 countries, both with subsidiaries and legal entities. Our company is the result of intense M&A activity in the past years. Therefore, what is unique at UniCredit is the investments we are making to foster our colleagues sense of belonging to the new, truly European financial institution that is Unicredit. Our core global processes, that are valued and implemented across the company, represent assurance that we are really working as a global organisation in terms of governance and values. Performance and talent management, both for executives and for professionals, as well as a unique leadership competency model are the main drivers to develop an effective common identity. We also have a unique global compensation model and approach across the organisation. Boyden: The financial crisis and recession have been particularly difficult for financial companies. What has been UniCredit s approach to its HR management in the crisis? Cornetta: I would say the main impact for financial companies has been a new full set of regulations that are setting a new framework for retaining and developing people. This also requires a review of compensation practices. At the same time, the company has been rediscovering its traditional commercial banking roots and focusing on its core customer base. For us, this has been an incredible opportunity to fine-tune our main processes to the change in the environment. We found out that our HR processes were already well positioned to reinforce and sustain our commercial banking mission. Also, our compensation strategy is defined in a way that is sustainable and effective, and drives behaviour in ways that are aligned with the company s strategic goals. Boyden: Was the crisis a challenge in dealing with the compensation issue? Cornetta: Yes. There was a total shift in the mindset of the people. Before the crisis, the financial sector was very rich and, generally speaking, money has always been considered as the main retention and rewarding tool. Now, the financial services industry has totally changed. People are more conscious about long-term impact and result sustainability. In addition, as a reaction to some of the excess previously associated with investment banking compensation practice, regulators have introduced a new full set of rules and constraints that are now designing a clear, sustainable and efficient reward framework. Boyden: What impact has the European financial crisis had on the types of executives and managers hired in the last couple of years? Cornetta: The important shift has been a huge focus on investing in people with a background in controlling functions like risk management and compliance. During the crisis all the major institutions were discovering that their systems were not strong enough to comply with the continuously changing environment. UniCredit is improving the investment in our professionals managing these functions.

3 p. 3 Boyden: The risks of staff morale have been generally higher in financial companies. What has been your special approach to HR management with this rapid change and potential negativity? Cornetta: For our customers as well as our employees, being part of an important European group is a positive element. Therefore, we want to further invest in order to enhance our colleagues sense of belonging. Every year we measure the level of engagement of our people. We are one of the few companies in the industry that invests in a full-scale survey of our employees. Our surveys are conducted every two years for the full organisation in addition to periodic polls in specific areas. This allows us to understand all the levels of engagement in terms of geography and specifics in our business model. We consider and analyse the results of the survey in different ways. We want to create an environment in which people are feeling that they can develop, grow and learn. This growth includes clear and transparent rules of engagement between the organisation and the employees, transparency in terms of career opportunities and compensation philosophy. Boyden: UniCredit has a strong European identity with a network spanning 22 European countries. How do you balance such cultural diversity? Cornetta: We are further investing in our global processes and we highly value diversity. At the same time, we are taking into account local cultures and values in our networks. Executives have the freedom to develop specific projects linked to their regional interests. But, also an important part of this equation is that we have a unique leadership model that spells out the performance we are expecting from our senior management, which means defining priorities and spreading that same focus across the organisation and encouraging similar standards. Boyden: What key metrics do you incorporate for employee evaluation and performance? Cornetta: We have metrics that are related to operational goals, profitability and the sustainability of performance. For this task, we ve been one of the first companies in financial services to introduce customer satisfaction as one of the KPIs (key performance indicators) to assess the quality of performance of a network or a manager. Of course financial KPI, the what, is very important, but we are also focusing on the long-term sustainability of our actions, or the how. Boyden: As technology increasingly plays a key role in HR, how do you ensure people keep in touch with the human side and the intangible aspects of HR? Cornetta: This is one of the areas where we continue to make adjustments. At the moment, we have an HR structure that is investing a lot in technology. In any case, many of the key functions that are mainly part of traditional HR administration are driven by automation.

4 p. 4 At the same time, the human touch is represented by a structure of HR business partners who are physically present in all locations where employees work. We always make HR accessible to them in-person. Boyden: How do you decide when to bring in an external executive search firm to find the right talent? Cornetta: In an organisation so widely spread, there are different levels of involvement of executive search firms. Every year from the top 3,000 executives in the organisation we involve select professionals in our executive development program. For each of these executives, we assess performance and potential. We also build each executive s career plan and, at the same time, understand who could be their successor. We run this process once a year. Thus, all the roles for which we don t have proper successors, we often engage a search firm with a global reach. In addition, whenever the search is related to a specific local profile or professionals, the responsibility to select and engage a search firm stays at the local level. Boyden: In which of UniCredit s markets do you find it most difficult to recruit and why? Cornetta: Recruiting is always an important challenge, although currently in the main market in which we operate, I don t see major risk in completing and stabilising the staffing processes. Some of the CEE (Central and Eastern Europe) markets that are still growing significantly are presenting higher turnover ratios compared to Western Europe. For instance, we are continuing to find that Russia right now is quite a challenging market. There, compensation levels continue to rise and local players are not bound by European regulations on compensation. Boyden: On the flip side, which markets according to you are doing the best job in fostering talent? Cornetta: I would say that overall we are quite satisfied in our capability to have an adequate pool of talent for our needs in all the regions we operate in. Though, I would also say Central Europe offers a fantastic talent pool for the organisation. As a whole, we are quite satisfied with our recruitment process and our talent development. Boyden: The UniCredit Foundation has earned the highest position among financial institutions in the 2012 CSR Online Awards study, including the WWF Earth Hour Turn off the Lights event. How was this achieved? Cornetta: This is something of which we are very proud. We started by asking our colleagues to vote for the project that they think the foundation should fund. By voting, each UniCredit colleague also gave a contribution through Unicredit. Getting our

5 p. 5 colleagues involved brought enormous value both economic benefit to the project and on an employee engagement level. At the end of the voting process, we participated in programmes that create job opportunities for younger people and co-support organisations that help families in need of assistance. Asking our colleagues to vote on their preferred focus, which included their own contribution, offered them an incredible buy in that led to the success and the award. In terms of sustainability we are always looking to advance. We have implemented real estate projects which include our buildings and offices that are more environmentally friendly, with less pollution and therefore are more sustainable. Boyden: UniCredit Bank in Russia was named European Top Employer in 2012 by the CRF Institute, and UniCredit was the first company to receive the award at a European level for two consecutive years. What is your mantra in driving HR best practices? Cornetta: I think it is relatively simple, meaning that in the year of the crisis it was difficult to use the traditional level of reward for colleagues and for people working in the financial industry in general. The traditional reward has always been money. But now we are trying to create an environment in which people feel they are engaged and there is real value in their activity. They see the meaning of their contribution. I think this award recognises UniCredit s effort. Boyden: What is an example of non-monetary reward? Cornetta: One pilot we did last year in one of our countries was offering our colleagues the opportunity to design their own benefit plan. For example, in Italy, people had the possibility to dedicate part of their compensation in order to increase some important part of their company benefit plan. Therefore, people had the option to increase the value of their insurance plan, pension plan or to pay tuition for school, etc. This has been widely appreciated. This is just one example. With the same cost you can make the colleague become a major contributor in their family depending on how many people are living in the family, how many children are going to school, or if they have a specific need in terms of healthcare. Boyden: If you could highlight one significant career achievement, what would it be and why? Cornetta: I think my current job is incredibly stretching and challenging. It gives me the opportunity to create a major impact on people s lives and on the organisation. Having the opportunity to personally contribute to the future of the organisation I am working for is a major achievement. In terms of content, I would say that having the ability to define global processes for a complex organisation like UniCredit is paying off now. It has been very complex. It has taken many years to be able to get to and execute

6 p. 6 the same criteria on performance management, talent development and compensation across all of the countries we operate in. But now that we are there it s very satisfying. Boyden: We hear you are a fan of football, and UniCredit Group also sponsors the UEFA Champions League. What career and life lessons do you take from sport? Cornetta: First of all it s the ability to work in a team. Without the support of a team, you can t win the match. Team spirit is fundamental, whether it s in industry or sport. The second is that success is related to hard training and confidence. You cannot achieve results if you are not training and if you are not working hard. Especially for young people, it s important that they learn early that everything in life comes from a price and experience. The third commonality is to have fun. It s difficult to be successful in business or win on the playing field if you are not enjoying the experience. We would like to thank Anders Lindholm of Boyden Italy for making this edition of Boyden s Leadership Series possible. The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Mr Cornetta.