ADECCO GROUP AG ANNUAL REPORT 2023
Our purpose
Making the future work for everyone
At the Adecco Group, our purpose - making the future work for everyone - inspires and connects us all. Through our three global business units (GBU) - Adecco, Akkodis and LHH - we deliver expertise in talent and technology, enabling organisations to succeed and people to thrive. As one of the world's largest employers, we are committed to ensuring people everywhere are prepared, skilled, and enabled to reach their full potential and can contribute meaningfully in an ever-evolving world of work.
Within our own organisation, we lead by example by creating an inclusive culture where everyone can be their best to make a positive impact. And in the communities we serve we're at the forefront of helping people adapt and succeed in a world that is increasingly tech-driven, enabling work environments that are people-centric, resilient, and that contribute to thriving economies.
Front Cover Image: Joanne Young, the Addeco Group Austailia
In this report
Company Report
Our purpose
The year in review - 2023 highlights Our strategic framework
Group Value Proposition Our global footprint
Letters from our Chair and CEO Strategic review
Global business units: Adecco Akkodis
LHH People & Culture
Operating and financial review
Cash generation and capital allocation Shares
Risk management and principal risks
Non-Financial Report
Introduction
Our business model
Our approach
Employee matters
Social matters
Respecting human rights
Leading with integrity and compliance | |
C1 | Sourcing responsibly |
- Environmental matters
- Governing our approach
4 | Measuring progress |
6 | Independent assurance report |
8 | Corporate Governance |
10 | |
Applicable Corporate Governance | |
12 | standards |
Structure, shareholders and capital | |
14 | |
Board of Directors, Executive | |
16 | |
Committee and compensation | |
18 | |
Further information | |
24 | |
Remuneration Report | |
34 | |
35 | Letter from the Chair of the |
36 | Compensation Committee |
Summary of key changes |
38 | Remuneration at a glance |
Remuneration philosophy | |
39 | |
Executive Committee remuneration | |
40 | |
Remuneration of the Board | |
41 | |
of Directors | |
42 | |
Remuneration governance | |
44 | |
Additional disclosures | |
Report of the Statutory Auditor |
45 | Financial Statements | |
46 | The Adecco Group | |
47 | Consolidated financial statements | 108 |
51 | Statutory Auditor's report | |
52 | on the audit of the consolidated | |
54 | financial statements | 128 |
Adecco Group AG (Holding | ||
Company) financial statements | 132 | |
56 | Major consolidated subsidiaries | |
of the Adecco Group | 167 | |
57 | ||
Proposed appropriation | ||
60 | of shareholders' equity | 168 |
Report of the Statutory Auditor | ||
78 | ||
on the Financial Statements | 169 |
Additional Information
83 | Non-US GAAP information | |
and financial measures | 171 | |
84 | History | 173 |
85 | Key figures | 175 |
86
90
101
103
104
106
The year in review - 2023 highlights
The year in review 2023 highlights
Despite the geopolitical instability, market contraction and digital disruption that characterised the external environment in 2023, the Group delivered strong growth and achieved record annual revenues. Powered by our Future@Work strategy and our Simplify- Execute-Grow operational plan, we continued to strengthen our financial performance, expand market share, and make a positive impact on the working lives of people around the world.
Revenues
€24bn
A robust result in the context of a slowing economic backdrop and downturn in tech sector activity
Cash conversion2
63%
A robust result during a period of growth and transformation
Total taxes paid4
€6,046m
Contributing to public finances through responsible tax practices
External individuals up-/re-skilled
884,029
Enhancing their employability and accelerating their careers
Gross margin
20.7%
A healthy result supported by firm pricing and the Group's well-diversified portfolio
Dividend
CHF 2.50
In line with our dividend policy
People placed - flexible
474,167
Associates provided with flexible employment every day, excluding joint ventures
Net Promoter Score® (clients)
35
+3 points
EBITA margin excluding one-offs1
3.6%
A robust result, driven by improved productivity and G&A savings, which were 92 million euros in run-rate terms at year-end, in line with target
Net debt/EBITDA3
2.5x
In line with management expectations
People placed - permanent
169,062
People placed in permanent employment
Peakon eNPS® (employees)5
26
9 points above the industry benchmark
- EBITA is a non-US GAAP measure and refers to operating income before amortisation and impairment of goodwill and intangible assets.
- Cash conversion is a non-US GAAP measure and is calculated as free cash flow before interest and tax paid divided by EBITA excluding one-offs. Free cash flow is a non-US GAAP measure and is calculated as cash flows from operating activities less capital expenditures.
- Net debt to EBITDA is a non-US GAAP measure and is calculated as net debt at period end divided by the last four quarters, EBITA excluding one-offs plus depreciation. Net debt is a non-US GAAP measure and comprises short-term and long-term debt less cash and cash equivalents and short-term investments.
- Total taxes paid is the aggregate total of income taxes paid, sales taxes paid, and employer payroll and social security taxes paid.
- Peakon eNPS®: Measures employee and consultant loyalty and satisfaction, by gauging the likelihood of employees recommending TAG as a great place to work based on their experiences and perceptions.
Annual Report 2023
1
Our strategic framework and business model
Our strategic framework
OUR PURPOSE
Making the future work for everyone
STRATEGIC VISION
Enable sustainable and lifelong employability for individuals and empower
organisations to optimise their talent needs and organisational model
THE ADECCO GROUP | |||
Sets Group strategy | Sets and enforces Group-wide | Allocates capital | |
and targets | governance, policies, processes | and talent | |
Drives | Orchestrates growth across | Supports shared | |
performance | our GBU ecosystem | services at scale | |
Our Global Business Units | |||
LHH helps future-proof organisations and | |||
Adecco is a global leader in workforce | Akkodis powers the Smart Industry | ||
solutions, offering flexible placement, | transformation globally with digital and | careers by building the right capabilities, | |
permanent placement, outsourcing and | engineering services across Consulting, | delivering talent solutions and enabling | |
managed services across all sectors. | Solutions, Talent and Academy. | workforce transformation. | |
FUTURE@WORK RELOADED: LEVERS TO ACCELERATE PROGRESS
Simplify | Execute | Grow | ||
Improve organisational | Empower decision-making | Top-line leading to | ||
effectiveness | closest to customers | EBITA profitability | ||
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Annual Report 2023
Our strategic framework and business model
Our Value Proposition
WE ARE ACCELERATING OUR STRATEGY THROUGH OUR VALUE PROPOSITION
Read more about our Value Proposition on pages 4-5 and 39
Define workforce strategy | Attract, hire, deploy | Skill, develop, transition | Transform and evolve |
Global Business Unit financial ambitions
GDP+ | ~6%+ | 6-9% |
Revenue CAGR | Revenue CAGR | Revenue CAGR |
3-6% range | 7-10% range | 7-10% range |
>5% mid-term | ~10% mid-term | ~10% mid-term |
EBITA margin | EBITA margin | EBITA margin |
Creating value
for our stakeholders
Investors | Employees | Clients | Candidates | Suppliers | Governments and |
and associates | social partners |
Read more about our Future@Work strategy on pages 10-11
Annual Report 2023
3
Group Value Proposition
Delivering expertise
in talent and technology, enabling organisations to succeed and people to thrive
DEFINE WORKFORCE
STRATEGY
Across our markets, organisations are navigating evolving employee expectations, skills shortages, and the impact of disruptive technologies. When it comes to creating long-term value, talent is an essential strategic asset, but businesses also understand that they need to transform their workforces to make the most of it.
Talent and skills are not separate from an organisation's long-term strategic objectives - they are a central part of it. Through our market-leading portfolio of talent solutions, our Global Business Units (GBU) create tailored and proactive plans for our global and local clients that align talent acquisition, development, and management with business objectives to drive sustainable success.
This means assessing the current workforce, identifying skills gaps, and developing strategies to attract, develop, and retain the right talent. By helping organisations define their workforce strategy, we amplify their competitive advantage and maximise their long-term success.
ATTRACT, HIRE, DEPLOY
Skills are the new currency of the changing world of work. In a talent market defined by scarcity, being able to access the skills needed to adapt and grow is not just a strategic priority for organisations - it is increasingly an essential part of their ability to remain competitive.
We want to eliminate the geographical, social, economic, and training barriers that stop people from attaining sustainable, long-term employment. Doing that means matching the right people to the right roles. But it also means leveraging innovative technology to create seamless hiring processes and nurturing skills.
As a Group, we are dedicated to finding, recruiting, and placing the most qualified individuals in positions that align with their skills and experience. Our comprehensive approach includes flexible roles, outsourcing, permanent hire, and Recruitment Process Outsourcing (RPO) to ensure our clients have access to the talent they need to achieve their business goals. By effectively attracting, hiring, and deploying talent, the Adecco Group plays
a crucial role in bridging the gap between employers and skilled workers.
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Annual Report 2023
Group Value Proposition
SKILL, DEVELOP, TRANSITION
Making the future work for everyone means making sure that no one is excluded from the opportunities created by innovation or the green economy. When individuals have the capacity to learn, the drive to develop and the right support, their impact is magnified. It's our mission to help people and organisations maximise their potential and thrive in the workspaces of tomorrow.
Through our three GBUs, we offer a market-leading portfolio of end-to-end talent solutions. From helping people gain the skills they need to access sustainable employment, to guiding experienced professionals as they take the next step forward, we are giving people the tools they need to shape their own futures.
Career development, up-skilling and re-skilling, redeployment and career transition can create new opportunities for people and help future-proof workforces. Through expert coaching and training, we help clients find new opportunities both within and outside their existing company, ensuring positive outcomes for all. Our certified career coaches have deep industry expertise to help clarify goals, create an action plan and execute on it.
Antonella
Muto
The Adecco
Group Italy
TRANSFORM AND EVOLVE
In today's market, innovation is the only option. Organisations can choose to maintain business-as-usual for as long as possible - or they can embrace change and use technology to unlock human potential at scale. But driving workforce and business transformation is a complex task, which is why we are on hand to provide tailored, expert support every step of the way.
Across the Group, we are responding at pace to leverage the latest technologies to improve candidate experiences, reduce time-to-market and drive efficiencies.
We are not only an expert talent partner to our clients around the world, but also a technology partner too.
We see the benefits that digital innovation and transformation can play in talent solutions and HR - both in supporting remote working and in addressing the labour shortages and staff retention issues that have impacted the global economy.
Annual Report 2023 | 5 |
Our global footprint
Leveraging our global footprint
38,000 | 180,000 |
Company-based FTEs | FTEs when including tech experts |
and bench associates | |
100,000+ | 2+ million |
Clients | Associates on assignment every day, |
including Joint Ventures |
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Annual Report 2023
Our global footprint
Contribution to
Group Gross Profit
53% | 13% | 10% |
Flexible Placement | Permanent Placement | Career Transition |
20% | 4% | |
Outsourcing, Consulting | Training, Up-skilling | |
& Other Services | & Re-skilling |
Annual Report 2023
7
Letters from our Chair and CEO
Improved value creation through strengthened execution
DEAR ADECCO GROUP STAKEHOLDERS,
2023 was a year defined by geopolitical volatility and economic uncertainty, yet paradoxically, resilience in the job markets. It was also the first full year of Denis Machuel's leadership of the Group as Chief Executive Officer. Through the year, the Group's diversified portfolio demonstrated resilience, and the Future@ Work strategy served the business well, as management put execution and performance firmly back on track with the Simplify-Execute-Grow plan.
Strengthened performance and value creation in 2023
I would like to thank our CEO, Executive Committee, and all employees for their relentless commitment which allowed the Group to deliver relative organic growth that outpaced our key competitors each and every quarter during 2023, while at the same time improving EBITA profitability. A high-performance, inclusive culture is intrinsically linked to company performance. Alongside the focus on operational discipline, Denis has intentionally focused on cultivating a winning spirit - inspiring our teams and empowering them to execute better.
Over the last few years, the Group has successfully diversified its portfolio to increase exposure to higher growth, higher value revenue streams beyond temporary staffing. The successful integration of the AKKA acquisition to form the Akkodis business unit was a significant step on this journey. Today, 55% of the Group's gross profit is generated from service lines outside of Adecco's flexible placement solutions, compared with just 32% in 2018, creating the potential for higher returns.
The Generative AI (GenAI) revolution, which gained speed in 2023 presents a significant opportunity for the Group to both improve our own efficiency and to differentiate in the market, offering enhanced solutions for our clients and candidates. We have moved at pace to seize these opportunities, launching a suite of GenAI-powered solutions in 2023, and establishing
a partnership with Microsoft to take us further.
Leadership in governance, social and environmental impact
The Board's digital expertise was further strengthened this year, with the election of Sandy Venugopal, a senior digital leader with experience at LinkedIn, Uber, and SentinelOne.
We will continue to refresh the composition of the Board in 2024. David Prince, who has served on the Board since 2004, has decided not to stand for re-election. With the nomination of Stefano Grassi, an international, seasoned CFO, the Board proposes to augment its operational finance expertise and general management experience. Ariane Gorin, who has served on the Board since 2017, has also made the decision not to stand for re-election, given her recent appointment as CEO of Expedia Group and the necessity to fully focus on her new role. We are grateful to David and Ariane for their dedicated years of service and invaluable contributions.
In 2023, we made further progress to embed material sustainability considerations in the execution of our business strategy. This year, in line with the Swiss Code of Obligations, we are publishing a Non-financial report that will be submitted to a consultative shareholder vote at the 2024 AGM.
Also, in line with the Swiss corporate law reform, we have amended the Group's Articles of Incorporation, taking the opportunity to modernise and refresh the articles in line with corporate governance best practices in Switzerland and beyond.
Considering the Group's operational performance in 2023 and cash flow generation capabilities, the Board will propose to shareholders a CHF 2.50 dividend per share at the upcoming AGM. The dividend proposed is in line with the Group's dividend policy.
Looking ahead
As we enter 2024, the Board is committed to strategic continuity, to ensuring management builds on the positive operational progress of 2023, and to delivering strong value creation for all our stakeholders.
Thank you to all of our shareholders for your continued support and confidence.
Jean-Christophe Deslarzes
Chair of the Board of Directors
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Annual Report 2023
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Disclaimer
Adecco Group AG published this content on 12 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2024 05:22:02 UTC.
