Why BP Went to Sweden for Its New Chairman

By Northedge, Richard | The Independent on Sunday (London, England), June 28, 2009 | Go to article overview
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Why BP Went to Sweden for Its New Chairman

Northedge, Richard, The Independent on Sunday (London, England)

When BP ended its long hunt for a new chairman, the searchlight stopped in Sweden - a country whose GDP is smaller than the oil company's yearly turnover. But while the Scandinavian country's population may be small, its impact on business is huge. And it has a chance to show whether it's political influence is as weighty when it takes over the EU presidency this week.

Carl-Henric Svanberg, the new head of BP, is currently chief executive of Ericsson. But even the telecoms giant is not Sweden's largest company; that honour goes to the H&M retail chain.

"Sweden has always had a large number of influential entrepreneurs over past centuries, creating companies such as Ericsson, Volvo, Ikea and Skype," says Annika Wahlberg, the managing director of the Swedish Chamber of Commerce. She could have mentioned Saab, Electrolux and Pharmacia & Upjohn. "For its size, Sweden has a varied and large range of international companies."

It is especially strong in engineering, which accounts for half the country's output and half its exports, while Britain manufacturing sector has shrunk well below 20 per cent of GDP.

Svanberg studied engineering at university in Linkoping, where Saab builds jet aircraft. His first job was with Asea Brown Boveri, the power and automation technology group, and before joining Ericsson he was chief executive of Assa Abloy, a locks company.

Sweden has a tradition of exporting innovations, and not just pop foursomes like Abba. Swedes claim credit for inventing products from roller bearings to steam turbines and from the safety match to dynamite. In communications, Sweden has been an innovator in computer-controlled telephone switching.

But Svanberg also has an MBA and the country's attitude to commerce could explain how it punches so far above its weight on the world stage. Its corporate hierarchies are notably flat. As a result, pay differentials are low, with executives typically paid just a third of what their equivalents receive at similar size companies in Germany or Britain.

At Ericsson, Svanberg is the only executive on a board that has 10 directors plus employee representatives. The non-executives are high-powered, however, including former BT chief executive Sir Peter Bonfield and Marcus Wallenberg, who chairs Saab, Electrolux and the SEB bank besides sitting on AstraZeneca's board.

And while Sweden decided three years ago not to adopt a law similar to Norwegian legislation that requires women to hold 40 per cent of public company directorships, it actively promotes them. BP, where 12 of the 14 directors are male, will seem like a boys' club by comparison.

Sweden holds the record for the greatest proportion of seats in government held by women - almost a majority at 47 per cent. But this European utopia is at the top end of many scales. It is the world's most democratic country and the least corrupt; it has the smallest gender gap, according to the World Economic Forum, which also puts it third in the environmental league and third on its index of countries that enable trade. Save The Children has it top of both its mothers' and women's indices and it is in the top 10 for life expectancy.

It also comes fourth on the global competitiveness table and is in the top 10 nations for filing patents. "We always score highly in innovation rankings," says Wahlberg. "Smaller countries have to be more inventive to succeed, and this is what has happened in Sweden."

This may all be testament to the country's education system and social policies that provide free childcare and 15 months maternity leave, thus helping women stay in work. "The government has a history of investment in and support of education and research," says Wahlberg.

The one league table Sweden is embarrassed to top is for taxation. All those state services cost money and personal tax rates have been as high as 80 per cent.

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