Keynote Speech by Philip Green

Thank you and good afternoon.  It is a pleasure and privilege for me to be with you today - personally and professionally.  At a personal level, I enjoy relationships with several academic institutions; I am on the advisory board of the London Business School and I occasionally teach at a very unusual undergraduate university in Romania - it is a business school run on Christian principles.  However, I have never officiated at a graduation before.

Professionally, at P&O Nedlloyd, we place great value on our long relationship with Erasmus, one of the leading academic institutions in Europe, particularly in the field of maritime logistics.

I would like to address my comments to the graduating class of students:

It has been a long while since I sat where you are sitting now - almost 30 years in fact, except that I was then in London and I was graduating with an MBA from the London Business School after completing a first degree in economics and politics at the University of Wales.

Graduation day is a significant milestone for all of us and I, like you I suspect, was a bit apprehensive about the future but confident that I was armed with the knowledge to begin my career and be successful in business.

Your degree in maritime economics and logistics is obviously very relevant to our business in container shipping; and, as it happens, the areas you cover are reflected in much of my career - DHL, where I worked from 1990 to 1999, is one of the world's major logistics companies, and Reuters, my previous company, is the global leader in financial and economic information.  Now, at P&O Nedlloyd, I am heavily involved in the maritime business.

What I did not realise 30 years ago and the lesson I would like to share with you today is that our university courses leave some gaps in our education.  The most important single thing I have learned in business during the last 30 years is about working with, and engaging, people - hence my title: the X factor in management education.

One of the most important skills to develop is to recognise what you do not know.  Whilst you now know a great deal about logistics, you have little real experience of the most important skill - people management.

This is the X factor in management.

Recognising the importance of people

In any business, people are your boss, people are your team, people are your customers, people are your suppliers, people are your partners, people are your analysts, people are your shareholders and people are your competitors.

You cannot escape them!

We can be experts in the laws or rules of economics and logistics and how the maritime industry works but there is often a difference between what should happen in business and what does happen - and that difference is often accounted for by people.

They are the magic and often unpredictable ingredient which makes things happen, enables us to solve problems, develops key relationships and makes the difference between success and failure - or at the very least between average and superior performance.

While a university education provides us with a range of knowledge and tools which will be invaluable in our careers, few courses attempt to prepare us for the "people factor".

Unless we succeed in engaging people, we are unlikely to achieve our objectives in business no matter what other skills we bring.

For me, understanding and working with people has been the most challenging and the most rewarding part of my business education - an education, like yours, that began in the classroom, included graduation, but continues today.

People at P&O Nedlloyd

Royal P&O Nedlloyd is a major Dutch public company, with our corporate Headquaters in Rotterdam; Rotterdam is also the home of our European business.  We have some 12,000 people spread all around the world - some 1500 of them serve on our ships and approximately 600 are based here in Rotterdam.

Our people carry out a huge range of tasks - booking cargo, looking after our customers, taking care of our finances, providing our systems - as well as crewing our ships.

Bringing such an organisation together with a common purpose is not a simple task but is one of the most important of the senior team.

Our challenge is to ensure everyone knows what we stand for and where we are going and then signs up to it.

Making it work

The key is leadership and management.  These are two very different concepts - leadership and management.  There is a big difference between the two.  I would like to share with you my understanding of what they are really about.

Leadership is not just about seniority or authority, nor is it the domain of a very few senior managers.  It is about providing direction, certainly, but it is also about truly believing in what you want to achieve and how to go about it and inspiring others to share that belief and work with you.

It is about getting people to abandon old habits and achieve new things, so it is largely about helping, and sometimes forcing, cultural change.  In P&O Nedlloyd I certainly believe that the leadership group includes more than 100 people.

Management is about implementing the right processes to deliver our goals, and providing the tools to measure our performance. Management is largely transactional.

A senior manager is required to do both.  But leadership and management skills are required at all levels of any organisation, albeit in different amounts.  Managers at all levels need to be able to motivate others to change and commit to providing their best.

Managers need to be equally good at setting objectives, organising work, managing performance and communication.

Good communication is critical for effective leadership and management.  Leadership communication is about setting the vision and inspiring others to follow.  Management communication is about connecting with your team and giving them a human link to the organisation.

Communication at both levels is as much about listening as it is about delivering the message.  It is not an accident that we have two ears and one mouth and they should be used accordingly!

It is also about being real and accessible.  When I joined P&O Nedlloyd at the beginning of this year, I set myself the task of meeting 80% of our staff in my first six months.  I have achieved this.

Finally we need to remember that actions speak louder than words - an old maxim, but a true one.  People may hear the words but they will remember and believe the actions.

So those are some of my beliefs about how to make it work.  And for these reasons we regard HR including communication as the most important function in our company, and indeed in most companies.  At your age I believed that each function was equally important - sales, operations, finance, HR etc.

However I now know that HR is the most important, it underpins everything else - values, structure and culture.

Making it work at P&O Nedlloyd

At P&O Nedlloyd we have defined and communicated our vision as follows "To be the recognised global leader in the point to point, full container load shipping market; recognition will be based on leading financial performance, customer satisfaction and staff engagement."  It is a short statement but it sums up how we see our business and where our priorities are.

We aim to be the best in product quality and customer service, upper quartile in engaging our people and upper quartile in financial performance; the challenge is to effectively measure our performance in all three and deliver improvement.  However we do know that if we can achieve this, we are likely to have satisfied shareholders.

It is not enough to make statements; as I have said, actions speak louder than words, so we have gone a little further and defined the behavioural values which we wish to grow as the cultural framework for our activities:

Trust - absolute confidence in each other to work in the best interests of the company.

Commitment - a passion to deliver on promises made.

Team - the desire and ability to work as one;

Fun - to make work more rewarding.

We believe that P&O Nedlloyd will only be successful when these values are fully embedded.

We are investing substantially in our HR department not because HR is actually responsible for people management, line management is, but because HR facilitates processes to enable our staff throughout our company to realise their potential, to promote talent and reward performance; and we will be measuring our people's engagement in the company, its vision and values.

We are giving new priority to our relationships with our customers and will measure both their satisfaction with us and the quality of the service we provide.

We are developing new systems of two-way communication linking the top of the company to the grass roots, making sure that everyone knows how they fit in and how their contribution makes a difference.

We have set out and communicated our goals and priorities for this year to ensure that we manage the basics of our business to a high standard and move towards the realisation of our vision.

Our overall goal is to bridge the profitability gap with our competitors; we have made an encouraging start this year (moving from a loss of around $200 million in 2002 to market expectations of almost $400 million this year) but we have some way to go.

An important driver is our technology driven change programme (FOCUS) which will allow the most important driver - improved yield management.  We will see full deployment by the end of the year and it will deliver full benefit to the bottom line over three years.

However, I know that again people are critical to making FOCUS a success.  No IT solution is ever delivered without the full buy-in of those who will be operating it.  In fact the world is littered with systems that have completely failed because the people factor has been ignored or forgotten.

Conclusion

As you go from here as the next generation of managers in the shipping industry, I hope you will add to the skills which you have now acquired by paying attention to the people factor - this still is really very important, it is critical to the success of you as individuals and of the companies that hopefully will be employing you.  Management and leadership are really different, communication is key to both.  I encourage you to really focus on people.

I wish you all every success in your future careers.

P&O Nedlloyd MEL Award

Finally, as a mark of our high regard for the Maritime, Economics and Logistics course and the work of Professor Haralambides and his staff, I am delighted to announce today the launch of P&O Nedlloyd MEL Best Thesis Award.  It will consist of a financial prize for the winner, together with help in publication of her or his thesis.  Our objective is to encourage your ideas in maritime logistics over the next five years and to work with you to develop new and effective solutions to some of the complex problems in our industry.  I will have pleasure in announcing this year's winner and presenting the award later this afternoon.