(1) Includes impact of B&R acquisition.
(2) Includes impact of GEIS acquisition.
(1) Reflecting less favorable timing of tax payments and a lower contribution from discontinued operations (USD).
12 10 8 6 4 2 0
Capital Allocation
2 014 – 2 01 8 US D B N
Capex(1) Dividend paid
Acquisitions Share buyback (1) 2018 capex in continuing and discontinued operations.
Adjusted free cash flow and conversion rate
Adjusted free cash flow
% of net income
24 A B B A N N UA L R EP O R T 2 01 8 01 I N T R O D U C T I O N
— People
Employer of choice
Our people are our most important strategic asset.
As a company that is writing the future of work, we are very conscious that our people make the differ-ence. With this in mind, we invest continuously in their personal and professional development.
ABB is a truly global company, and its strength lies in its diversity – with 147,000 colleagues across more than 100 countries, and 45 nationalities rep-resented on our 200-member senior leadership team. In our constant effort to build a diverse and inclusive workforce, we have set ourselves the goal of increasing women’s representation on our se-nior leadership team by 30 percent by the year 2020. We are also aiming to make at least 30 per-cent of our reper-cent university graduates hires women.
We are proud to be ranked the No. 1 employer of choice in the field of engineering studies in Swit-zerland and in the top 10 in Sweden. By offering hundreds of apprenticeships and engaging in partnerships with leading academic institutions in our field, we maintain a healthy pipeline of early talent for our future needs. We have continued to increase our appeal as an employer, receiving close to a million applications in 2018 and filling over 10,000 vacancies.
At ABB, we believe that the “how” of our business is as important as the “what.” Our values drive our actions and serve as guiding beacons in our everyday conduct as leaders and managers. Our Values in Action leadership competencies have been embedded in all our HR processes – the way we recruit our people, the way we assess their
A B B A N N UA L R EP O R T 2 01 8 01 I N T R O D U C T I O N 25
performance, the way we develop their careers, the way we train them. This ensures that we main-tain a consistent and coherent leadership culture across the company.
Driving high performance is at the heart of our management philosophy. We have further refined our reward and recognition policies to ensure that they promote the delivery of winning results.
As part of our efforts to develop our leadership bench, we have significantly strengthened our fo-cus on workforce planning, people reviews and succession planning. This has resulted in a healthy increase in our successor pipeline for all key roles in the company. A new values-based assessment framework was launched in 2018, serving both to assess our leaders and managers and to support them on their career development journeys.
We continued to roll out our cultural transforma-tion program, “Come to the Edge,” to cover a broader population beyond top leadership. Over the next three years, we plan to cover the majority of our middle and frontline managers, equipping them with the additional competencies needed to win in the future.
The “Come to the Edge” program complements a comprehensive portfolio of development programs already in place, offering lifelong learning opportu-nities to our people. These include the Senior ership Development Program, the Emerging Lead-ers Program, the Middle Management Program and ABB Life, among others.
We are actively working to shape ABB’s future cul-ture in the context of digitalization. To better un-derstand this change, our Human Resources func-tion published a white paper at the end of 2017, titled “The Impact of Digitization on Work, the Workforce, and the Workplace.” The paper identi-fies the key competencies that our people will need in order to adapt successfully to disruptions from technology and automation, as well as the developmental, organizational and cultural actions ABB must take to support them. Several of the ac-tions identified were already implemented, laying the foundations for the ABB of the future.
Additional actions were rolled out under our gen-der diversity framework, which ABB implemented and reported on in 2017. Creating new options for flexible work, signing the European Round Table inclusiveness pledge, launching a special mentor-ing program for women in our Global Supply Chain function – these are just a few examples of what was done in 2018.
Employee health and well-being
At ABB, we are conscious of our mandate as a responsible employer. Our health, safety and well-being programs were further strengthened, and at the end of 2018 more than 70 percent of our employees were covered by ABB’s well-being programs, up from 58 percent in 2017. We achieved these results through a combination of ongoing and newly introduced initiatives.
Our resilience-building program, which aims to bolster our people’s coping skills when they face challenges, forms a major pillar of ABB’s health and well-being initiatives. The program helps our people manage difficult situations and take up challenges in a healthier and more relaxed manner.
We believe the program has contributed to a cul-ture of flexible thinking within ABB, in which peo-ple are ready to welcome new challenges with open arms. In 2018, we provided resilience training to more than 25,000 employees in 60 countries.
Learning new skills in a changing work environment
Advances in automation and robotics, connectiv-ity, the industrial internet, artificial intelligence and machine learning are leading the world into an era of autonomous operations, where systems of production will increasingly be able to run themselves. This new paradigm is transforming the nature of work. Jobs in the future will increas-ingly require the ability to understand, conceive, plan and develop new organizations, processes and technologies.
While the changing career landscape will likely re-quire people at ABB to acre-quire new skills and en-gage in periodic retraining, we are helping to guide our people through these changes. In 2018, we im-plemented a global learning management system that now covers a majority of our employees; this ensures that all ABB employees have opportunities to improve their skills. Our ABB University, a global network of more than 120 learning centers across the world, offers courses focused on ABB prod-ucts, technologies and solutions, business pro-cesses and tools, in multiple languages. By the end of 2018, the global learning management system had more than 126,000 registered users and had facilitated more than 167,000 training interactions.
Through all of these employee initiatives, ABB seeks to inspire its people with a sense of pur-pose in their work: To write the future. Together.
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