Gayle Allard (Vice Rector of Research at IE Business School), brought to us an analysis of the causes behind the actual European crisis, drawing the attention to the enormous challenges ahead. Referring to the different factors that contribute to the satisfaction of women, Gayle Allard shared with the audience a research survey illustrating the lack of correlation between wealth increase (GDP) and happiness in general, inviting all the presents to reflect on the way society should be heading to.

1. Recession, or renaissance?
Thriving in the new era
Gayle Allard
IE Business School
EPWN LISBON AND
IE BUSINESS SCHOOL
3 NOVEMBER 2011

2. Part I:
recession
WHEN WILL IT END?
WHAT WILL THE POST/RECESSION WORLD LOOK LIKE ?

3. The financial crisis and recession have taken a
heavy toll on developed countries...

4. …and it isn’t over yet.
Governments (Ireland, Greece, Portugal, Spain, UK, US)
are cutting deficits and implementing austerity; others
paralyzed by indecision (US, EZ)
Global banking is still dysfunctional
Businesses are finding stiff international competition
(hence mini-currency wars)
Consumers are unsure of their jobs, savings, pensions
and future incomes and are afraid to spend
All of these factors will continue to dampen employment,
incomes and consumer spending and could pull us into a
second recession in coming months

5. Why was the periphery hit so hard?
Economies were not prepared for the euro
Average 1982-2010. Source: OECD.

6. Solving the euro/debt crisis is one of the keys to
global growth
The EFSF is too small to protect peripheral borrowers
(€440bn); Greece alone may need €444bn, according
to a recent study*
Italy and Spain are both too big to fail and too big to be
bailed out
The cost of a euro breakup could be 40-50% of GDP
for a peripheral country and 20-25% for a core country
(UBS estimates); much higher than the cost of a
bailout.
Germany: soaring new currency would devastate manufacturing,
require bailout of banks with old euro assets
Greece: plummeting new drachma, crippling new debt and collapse
of financial system (“mother of all financial crises”)

7. Some countries, like Portugal, may soon be
making a comeback after harsh austerity
Some governments slashed spending, raised taxes
and adopted painful reforms
Ireland and Portugal are starting to see a surge in
exports, as they have brought costs under control
and become more competitive
This is a painful “internal devaluation” which may be
the only way out for eurozone countries

8. The crisis has broken down our growth
model, and no one is sure what will replace it
Before, fast growth driven by “big spending” US (as
well as overconsuming peripheral countries)
What will the new world look like?
More multilateral and more balanced
Different currencies rather than a hugely dominant reserve
currency
More balance between developed and emerging economies
More rapid return to automatic adjustment on external accounts
New engine of growth in the new global economy?
Slower global growth, concentrated in emerging economies
Continuing pressure on labor costs in developed nations, as
hundreds of millions of workers join the global labor market
Could we see a backlash against globalization and our
present capitalist model?

9. Who will be the G20 in 2050? Some projections

10. For developed countries: the specter of
“Japanization”?
Japan was supposed to be the world´s largest economy
by 2010; it was the model for management
The bursting of the asset bubbles in Japan and
elsewhere in Asia in the late 90s sent it into a decade of
crisis
Poor leadership aggravated the crisis
China is now larger than Japan, and the most likely
outlook for Japan is a steady and possibly irreversible
economic decline
What do we have in common with Japan?
Aging population
Heavy government debt burden
Slow growth
Uncertain political leadership

11. Part II:
renaissance
TRENDS THAT ARE SHAPING OUR WORLD
DEMOGRAPHY
GLOBALIZATION
SUSTAINABILITY
SEARCHING FOR TRUE SATISFACTION

12. Demography was moving our world to a “new
normal” even before the crisis

13. Portugal´s population pyramids

14. Aging will slow growth everywhere
Fast growing population of
workers and consumers
stimulates growth
A large dependent
population –old and
young– harms growth
because
They do not work
They make claims on a
country´s income without
contributing to it
They depress savings, which
slows capital growth and
productivity growth

15. Slow or negative population growth will have
some great benefits
We will need major pension reform and an overhaul
of our public services, BUT
The pressure on the environment may be alleviated
A scarcity of workers will produce fiercer
competition for talent
Unemployment may recede as a problem

16. How is globalization transforming our future ?
Globalization has brought huge benefits in
declining prices, rising efficiency, higher real
incomes
But for developed countries, it poses profound
issues:
Higher prices for raw materials as demand from emerging
economies surges
Competition in labor markets is generating
Lower real labor costs (and rising structural unemployment)
We may have to work harder, longer, for less in the future
Globalization has brought greater wealth equality among
nations, but greater inequality within nations
Rising debt in some nations could be a “cascading” effect to
compensate for inequality and stagnant incomes

18. There could be benefits both from more
globalization AND from an end to globalization
If we keep globalizing If we stop globalizing
× Pressure on labor costs Higher prices, lower real
will continue and jobs in incomes, lower growth
traditional sectors will Preservation of
keep disappearing traditional patterns of
Countries that find a life and cultural
competitive niche in high identities
value added sectors will End to treadmill of world
generate excellent jobs for competition
a huge market
More equality at home
Better chance for emerging
nations to develop

19. Environmental pressures will change our world
If the world´s GDP expands six- or sevenfold by 2050,
the planet will be unimaginably stressed
The earth´s regenerative capacity has already been passed
If China and India used as much energy per capita as the
Americans, their total power consumption would be 14x the U.S.
If China, India, other emerging countries reach Western levels of
car ownership, the world would have 3bn cars (4x current total)
Asia and West must make growth more sustainable:
Carbon and resource taxes that will provide incentives to produce
in a much less material- and energy-intensive way
Draconian rules on consumption of fossil fuels, fisheries, forest
products
Massive investments in public infrastructure
Different models of production and consumption

20. A more environmentally friendly world would
have huge benefits
Growth would be slower and real incomes lower, BUT
We could avoid the tragedies of destruction of species,
wilderness, natural spaces
Many new jobs would emerge in low-carbon, alternative
energy, recycling, repair, cleaner industries, research and
development, organic farming, socially responsible
production, etc.
Countries that move first to protect the environment will
have a competitive edge

21. But maybe our world needs changing...
because it isn’t giving us what we really want
Surveys asking people how happy they are indicate that the average level of
happiness has not increased over several decades, despite large increases in
income per capita in the United States, Japan, the UK, and continental Europe.

22. So what DOES make us happier?
Economic research demonstrates that past certain
levels, higher income does not lead to greater
happiness or life satisfaction
Recent research focuses on spending rather than
income and concludes:
If money doesn´t make you happy then maybe you aren´t using
it right.
What kind of spending makes people happier?
Spending on leisure or experiences with other people (nights at
home with family or “staycations”)
Giving money away

23. What makes us happy/unhappy?
happiness
index
Income Family income up 50% relative to average +1
Family income down 33% relative to average -1
Freedom Quality of government improves (Hungary vs Belarus 1995) +2.5
Religion “God is important in my life” (“Yes”, all else constant) +2
Trust “In general, people can be trusted” (“Yes”; all else constant) +1
Morality “Cheating on taxes is never justifiable” (“Yes”; all else +1
constant)
Work Unemployed (rather than employed) -3
Job is insecure (rather than secure) -1.5
Family Divorced (rather than married) -2.5
Widowed (rather than married) -2
Health Subjective health down 1 point on 5-point scale -3

24. Slower growth in the “new normal” may
actually move us in the right direction
The crisis has reawakened many people to the limits of
obsessive consumption
The “100 things challenge” invites people with money
NOT to buy everything they can; rather, to limit their
possessions to a minimum
If we rearranged our priorities away from consumption,
there would be a sea change in behavior in the developed
countries
This could have remarkable results for human satisfaction
…and for the environment.
People are finding that their homes are full of stuff, but
their lives are littered with unfulfilled promises.

25. Part III:
thriving in the new era
WHAT WILL THE NEW WORLD MEAN FOR WOMEN?
WHO ARE WE… AND WHO DO WE WANT TO BE?

26. Female workers have transformed the postwar
world
Expanding economic opportunities for women has
drawn many into the work force
Female labor force participation rate has grown
dramatically since 1960
Delayed childbearing, better education has
accelerated this change
Men´s participation rate has fallen while women´s
has soared: the difference is now only 26 percentage
points, compared to 32 in 1980

27. Women have prepared themselves for better careers

28. Gender equality is an important indication of
true democracy
Hillary Clinton, U.S. Secretary of State

29. Gaps between men and women persist in the
workplace
Gender gaps persist in earnings and productivity
across the world, at every income level
Women are overrepresented in informal work and
in part-time and temporary jobs
Number of female bosses of large firms is still small
No female CEOs on France´s CAC 40 share
index or Germany´s DAX index
US: 15 executives of Fortune 500 companies
are women; in Britain: 5 of FTSE-100
Indra Nooyi, Pepsico

30. r
Christine Lagarde, IMF

31. Why does more diversity make good economic
sense?
Women are more likely to understand the largest group of
consumers in the world
They represent an “underfished” pool of talent
They bring unique strengths:
More collaborative than men
Better at multitasking
Some evidence that companies with more women in top jobs
perform better than those run only by men
McKinsey studied 89 companies in Europe with a
high proportion of women in senior management
posts, showed higher return on equity, higher
operating profits and better share prices than
the industry average
Clearly, this minority of women is excellent
Patricia Woertz, Archer Daniels Midland

32. Why do women continue to lag behind?
Women do as well as men in university and are
overrepresented in MBA programs
They hold more than half of the entry-level jobs in top
companies
But they quickly fall behind:
Less aggressive when negotiating salary and raises
In the US, women are 37% of middle managers, 28% of senior
managers, 14% of executive committee members
Irene Rosenfeld, Kraft Foods

33. Why do women continue to lag behind?
Oprah Winfrey, Harper and OWN
Is it discrimination?
Are legal, financial systems discriminating against
women?
Do men consistently underestimate women?
Patronage does not work in favor of women
Women may not have as many powerful backers as
men
They may also be reluctant to call in favors
Balancing act: women struggle to balance
work and family, where they still have the main responsibility
“ Women look at the top and don’t see anyone they want to
emulate… They become weary of what they often describe as
game-playing, as they discover a greater level of jockeying and
competition.”

34. How does family responsibility compromise
women´s careers?
European women devote at least twice as much time as
men to domestic tasks
Nordic: men spend 2.3 hours/day; women 3.4
Latin countries are much worse: men spend 1.3; women 5.2
How do women cope with home responsibilities?
Choose jobs with flexibility, predictability
Take time off
In the US in 2009, 31% of women had taken a career break (avg. 2.7
years)
66% had switched to part-time or flex-time work
Once on the “mommy track”, they may find it hard to get back on the
fast track
Many have decided to avoid family responsibilities by
not marrying or not having children

35. Women are having few or
no children and (in Asia)
many flee marriage…
About 1/3 of Japanese women in their early 30s are
unmarried
Why? Being both employed and married is tough in Asia:
Men do 3 hours of housework a week vs 30 for women
Financial independence and education contribute to
decline of marriage

36. Can women be helped to balance work and family?
Government responses:
Parental leave for both parents, with job guarantees on return
Part-time work
Child care
Holiday scheduling (work and school)
Company responses
Child care on site
Teleworking (nearly 20% of American workers
telecommute)
Understand family demands
Ginny Rometti, IBM

37. Are quotas the solution to greater equality?
Norway: all publicly listed firms must reserve 40% of
seats on boards for women
Spain, France have passed similar laws; Holland will
soon; Germany considering it
European Parliament passed in 2011 a resolution
requiring that 40% of seats on listed
companies´ supervisory boards will be
reserved for women by 2020
But quotas may elevate women who
would not otherwise get onto the board
Ann Livermore, Hewlett Packard

38. Women also need to be creative
New generation of female entrepreneurs starting up
business from home during a break from the
workforce to have children (Australia: 15% of women
with small children are “mumpreneurs”)
Technology helps
Control own destiny
Give high priority to flexibility
Sheryl Sandberg, Facebook

39. Bottom line: our own priorities and doing what´s
important
What is success?
What do I want to do with the time I’m given?
What will outlive me?
Just as our mothers or grandmothers had to buck
trends and think outside the box to get
into the working world, we need to do
the same to seek true satisfaction
Melanie Healey, Proctor & Gamble

40. Don´t be trapped by dogma, which is living with the
results of other people´s thinking. Don´t let the
noise of others´ opinions drown out your own
inner voice. And most important, have the courage
to follow your heart and intuition. They somehow
already know what you truly want to become.
Steve Jobs, 2005

41. THANK YOU!