Executive Board highlights, lessons learned and outlook

2021/2022 has been a year with two sides. On the one hand, the COVID-19 pandemic continued to hang over all of us like a dark cloud, putting pressure on our wellbeing. And almost directly after lifting the COVID restrictions, sadly, the war in Ukraine started. From geopolitical tensions, an overheated labour market,  high inflation, an increasing equality gap in society to a collective concern about sustainability, we have operated in a challenging environment. On the other hand, we have been working in a favourable economic climate with a strong demand for professional services.

The complex environment that we find ourselves in, made us as Executive Board, together with our Supervisory Board, reflect on our strategy. Are we, as Deloitte Netherlands, on the right track? The answer is positive, we are confident that our ‘Connect for Impact’ strategy stands the test of these unprecedented times. It was the right choice to be more purpose-led, to support our clients in their transition to more responsible and sustainable business models and to contribute to societal challenges. Our increased impact and the results of the past years feed this confidence, but at the same time we recognise we must step it up even more.

In the past year, our clients have intensified their investments, driven by the need to accelerate digital transformation, to comply with new regulations, to realign their existing portfolios (resulting in an increase in mergers and acquisitions activity), and to be more sustainable. This fits our ambition to support our clients in their transition to become more responsible and sustainable, and in providing trust and transparency to capital markets and other stakeholders by high quality and relevant audits. Hence, we have further accelerated our investments around these topics (in particular in sustainability across advisory and audit) and intensified our collaboration within Deloitte NSE to benefit from our combined strength and investment power.

Through the work we do with our clients, by operating in ecosystems and by collaborating with the public and private sectors, we contribute to tackling big societal challenges. As Deloitte Netherlands, we have focused on our ‘Future of’ themes: Energy, Food, Health and Mobility. For these topics, we connect cross-business and cross-industry to accelerate transformation and take responsibility by orchestrating and bringing together stakeholders creating new ecosystems. How we do this and what impact we made, is captured in the client stories featured in our ‘Connect for Impact’ brand campaign.

It’s now more evident than ever that it’s not enough, for us or our clients, to comply with laws and regulations. Moral leadership is needed. To make conscious choices in the work we do and the clients we work with, we set up our Responsible Business Committee (RBC). This discusses dilemmas and ensures that we give the right level of consideration when accepting a client or engagement, not only through the lens of compliance and risk, but also from the perspective of people and our Purpose. 

Companies are increasingly challenged and evaluated on more than their financial performance. We stepped up our efforts to increase the relevance of our audits by investing in topics such as fraud, business continuity and ESG. We strongly believe in the added value of our multidisciplinary model, including our in-depth knowledge and capabilities to deliver high quality audits. Additionally, we actively contribute to the (public) debate about the future of audit.

In addition to the support we provide clients in becoming responsible and sustainable businesses, we make an impact on our society through our Deloitte Impact Foundation, via employee-led initiatives and Deloitte wide-priority programmes, with an increase of contributed hours from 17,529 hours in 2020/2021 to 36,284 hours in 2021/2022. In 2021/2022, we have chosen to focus on three key themes. The first theme is ‘WorldClass’, with the ambition  of giving 90,000 people a better future through various projects linked to educational equality and digital inclusion. Furthermore, we have focused on our second theme, ‘Inclusive Society’, for example, by zooming in on financial health through our collaboration with SchuldenLabNL . ‘Sustainability’, including our long-term partnership with The Ocean Cleanup, is our third key theme.

Very much in line with the work we do for our clients and through the Deloitte Impact Foundation, we invested in becoming a more sustainable firm ourselves, for example, by reducing our carbon footprint. To illustrate, we are well positioned to become carbon neutral for mobility and housing by 2025 as part of our WorldClimate programme.

Aside from our impact on clients and society, our impact on our people is vital for our success. It is essential to remain the employer of choice and to attract talent. And while operating in a labour market that is characterised by a structural shortage, our strong employee brand - that is best ranked amongst professional services firms – contributed to recruiting more than 2,500 outstanding people in 2021/2022. To support our growth in the longer term, we are also working on alternative talent solutions, including leveraging our near and off-shore competence centres .

We are proud that our employee engagement has risen (from a score of 7.5 to 7.7) despite several lockdowns including working from home full-time. Our renewed Employee Value Proposition (EVP) certainly contributed to this improved score. Our EVP focuses on creating a more inclusive talent experience, for example by offering flexible holidays and new policies for (rainbow) families. We support the continuous growth and development of our people, seeking to create a workplace where everyone can be his/her/their best self. We are striving towards a culture of recognition with fair and transparent total reward, so our overperformance is shared equally between employees and partners. To this end, we revised our flexible reward scheme.

It was, and will remain, a top priority for us to be a leading employer in terms of inclusion and diversity, so we have a holistic programme focusing on gender, cultural background, neurodiversity and LGBTQ+. As the Executive Board, we participate in our Reverse Mentoring Programme to deepen our understanding of the challenges and opportunities around I&D. We have found these conversations to be very valuable and inspirational. We invested in inclusive people leadership to reap the benefits of our diverse teams; this asks for strong and inclusive leaders. We aim to have more diverse teams on all tiers, from consultants to directors, and to partners. In the past year, progress has been made on all levels. For example, we have worked on developing our partner pipeline to reach our target of having 40% female partners by 2030. We are moving in the right direction with a growth from 10% in 2018/2019 to 21% female partners in 2021/2022, but we must keep prioritising this to reach our goal.

The robust demand for our services has resulted in a strong performance with a record growth of 23% in terms of revenue to €1,270 million. It is encouraging to observe that this strong performance is across all our businesses and  industries. Our clients appreciate our services and impact with an average NPS score of 63% on c-suite level.

Our profit growth is modest with 0.3%, as we made the deliberate choice to re-invest in rewarding our people, to invest in our capabilities in the field of digital and sustainability and to digitalise further our own firm.

Lessons Learned

Looking back at our impact and results over the past year, we have made great progress. But to keep moving forward, we must learn from our experiences of the past year.

To start with, we have worked on high profile engagements in the public eye for clients in the public sector. It made us even more aware of the public interest related to these kind of engagements and how this affects our stakeholder landscape, and ultimately our reputation. These engagements are often more complex than is generally assumed, so going forward, we have to take the effects of our engagements on public opinion into consideration even more. The Responsible Business Committee, as a counselling committee, will help us to look at our engagements - especially those in the public domain - through the eyes of our Purpose, clients, people and society at large.

With an increasing part of our business focused on large technology-driven business transformations, the way we manage risk and anticipate possible interdependencies within our multidisciplinary model is more complex and requires more sophistication. This will be better embedded in our day-to-day business and our enterprise risk framework.

The high demand for our services in the past year, combined with the stretched labour market, resulted in a high work load for our people. In addition to that, the influence of the COVID-19 and the war in Ukraine have taken an extra toll on our people. In the past year, our focus has been on work-life balance for our people and providing support for those directly affected by the war in Ukraine. Looking ahead, our attention will be even more focused on wellbeing, especially as we expect the talent shortage to continue.

We are proud of our Purpose and call-to-action ‘to connect for impact’. It is key to make this as tangible and meaningful as possible in our daily work. For the upcoming year, we will further intensify the conservations with our people, clients and stakeholders on how we can achieve this.  

Outlook

Looking forward, we are cautiously optimistic as we see a ‘mixed outlook’.  On the one hand, we see risks on the horizon, with a high inflation combined with the overheated labour market putting pressure on margins and a volatile geo-political situation. On the other hand, the strong underling drivers for our businesses, such as further digitisation, sustainability and new regulations, will most likely be there in the medium to longer term.

We will continue therefore to invest in our people and are looking forward to the opening of our European Deloitte University in Paris to support continuous learning and development.

Across all businesses, we will continue to invest in our core propositions - digital, M&A and sustainability  as well as in further enhancing the quality and relevance of our audits, with a focus on topics such as fraud, business continuity and ESG. With our deep-industry specific knowledge, we will tailor our propositions for our most important sectors and enrich them with assets: Deloitte intellectual property in software form.

We are determined to continue our journey to become a more integrated European business, where we are striking the balance between the benefits of global scale and the importance of keeping our local touch.

We look forward with confidence and pride and hope to increase our impact on our clients, people and the Dutch society.

Rotterdam, July 18, 2022