Several Swiss firms have recently replaced their former English-speaking bosses with locals and German executives.
swissinfo asked professor and former CEO, Fritz Fahrni, why the Anglo-Saxons had fallen from favour, and which qualities were needed to run a Swiss firm successfully.
Over the past few years, Swiss firms have flirted with high-profile executives who were brought in to turn around their flagging fortunes during the economic downturn.
North American and British executives were given top posts at the national airline, Swiss, the two big banks Credit Suisse and UBS, as well as Zurich Financial Services, Lonza and SGS.
But most have been replaced recently by low-key Swiss executives or managers from neighbouring Germany, raising the question whether the English-speaking bosses were able to adapt to Swiss management culture.
swissinfo: Why were Anglo-Saxon executives suddenly in vogue and why did they fall so quickly out of favour?
Fritz Fahrni: I don’t think it’s a question of fashion. We have to realise that for international companies, North America represents at least half of the worldwide market and that’s a very obvious reason why English-speaking managers have a certain advantage.
There are times when there are lots of changes at the top, and times when there are fewer. Right now, it’s probably the latter, which may have something to do with the upswing of the economy. But there will be more again when the economy declines.
swissinfo: During the bubble years, it seemed the only thing that mattered was increasing value for shareholders. Has that changed?
F.F.: Without shareholders you can’t run a company. But without success with customers you can’t satisfy the requirements of the shareholders. You have to have success with your products or services, so you can generate enough profit to ensure a return on equity, and you have to rely on a workforce which generates new ideas and can develop innovative products.
swissinfo: What qualities does one need to run a Swiss company successfully insofar as these may be different from those needed to run a company in North America, or a business in the EU?
F.F.: A manager needs to have the ability to ensure a high degree of satisfaction with customers, co-workers and shareholders.
He has to be able to formulate and stick to long-term goals – visions - to motivate his people, his customers and shareholders.
You have to be a doer and an organiser – a true manager - who can allocate resources, set up structures, who is able to run things on a day-to-day basis. You also have to communicate your intentions and your products to the customers, to your workforce and to the shareholders.
This combination of abilities – leader, manager and communicator – makes for a real and successful entrepreneur. One specific requirement in Switzerland is that you have to cross borders – in language, politics and culture – almost from the very first day whereas the US market is sufficient for many companies during their whole existence.
swissinfo: Is there such a thing as a Swiss or European management culture, and if so, how does it differ from Britain or the US?
F.F.: There are cultural differences between countries and they are reflected in the different management systems in these nations. On the other hand, most large companies are international, usually global. Therefore the requirements are global but you still have to act locally.
There are cultural differences such as language. German has a reach of about 100 million people, English about one billion. There is no specific “Swiss way” of managing a company, but generally US managers tend to be better communicators in their broad language area while Swiss tend to be better organisers and more multilingual.
swissinfo: What are the benefits of running a Swiss company?
F.F.: It’s the entrepreneurial challenge from a small base, making use of the potential and taking advantage of the conditions which are somewhat special for Swiss companies, for example, building international networks into different areas. This is true for banks as well as companies like Novartis, Nestlé or ABB, but also for smaller ones such as Schindler, Hilti, Serono, Phonak, etc.
swissinfo: Executives worry about their market value as much as investors do the value of stock. Is running a top Swiss multinational company like UBS or Nestlé as prestigious as heading Citicorp or Kraft Foods?
F.F.: Yes. I think prestige or the value of the company depends a lot on its size. If you take rankings of “best-known” companies or “best-run” companies, one of the dominating factors is the size of the company, and its branding.
The latter is the case for Nestlé. It’s large and has a well-known brand. It’s in the food business so everybody can identify with its products.
On the other hand, General Electric, which is a much larger company, sells either investment goods or abstract financial products. Therefore its degree of public recognition is substantially lower, even though in certain aspects it may be a much better company.
This kind of public awareness is then automatically reflected on the CEO because the media usually wants to identify a company with a person and vice-versa. What matters is the value creation for customers, co-workers and shareholders. And this is teamwork. The CEO happens to be the captain and the coach.
swissinfo, interview Dale Bechtel
Fahrni is professor for Technology Management and Entrepreneurship jointly at Zurich’s Federal Institute of Technology (ETH) and the University of St Gallen.
He was president and CEO of Switzerland’s Sulzer Corporation from 1988 to 1999.
A graduate of the ETH, he also holds a PhD from the Illinois Institute of Technology and a degree from the Harvard Business School.
He worked for the US space programme, NASA, in the late 1960s.
In his capacity at ETH and the University of St Gallen, Fahrni heads an annual seminar on executive leadership (see related links).
The programme is divided into three one-week modules which will be held in Switzerland and in Boston at the Massachusetts Institute of Technology.
Next year’s will take place in May and June.