The President and Chief Executive Officer – operational management
The Board of Directors appoints the President and CEO and the Executive Vice Presidents. Management of day-to-day operations is the responsibility of the President and CEO supported by the Group Management Team which, in addition to the President and CEO, consist of the Heads of Group Functions and the Heads of the business units.
The role of the Group Management Team is to:
- Establish long-term vision, Group objectives, strategies and policies.
- Maximize the Group’s business.
- Secure operational excellence and realize global synergies.
The Group Management Team meets monthly to discuss business and decisions and to share information of common interest to Ericsson.
Organization and corporate culture
Corporate culture has long been acknowledged as a very important factor for driving behavior, not only for compliance with rules but also in communication, decision making, reaching of objectives and striving for efficiency. Respect, professionalism and perseverance are the values that are the foundation of the Ericsson culture, guiding us in our daily work, how we relate to people and how we do business. Consequently, executive management makes communication and development of the Ericsson culture a key task in the management of the Company.
The organization is operated in two dimensions:
- Legal entities: more than 200 companies in more than 100 countries.
- Operational units: Group Functions (7), business units (3) and market units (23).
Ericsson’s core values
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ERICSSON ORGANIZATION
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Group Functions
Group Functions coordinate the Company’s strategies, operations and resource allocation and define the necessary directives, processes and organization for the effective governance of the Group. By optimizing common processes, tools and the organization, the Group Functions drive operational excellence across the Company. The Group Functions are: Communication, Finance, Human Resources & Organization, Legal Affairs, Sales & Marketing, Strategy & Operational Excellence and Technology. The Group Functions also manage common units like Ericsson Research, IT and Shared Service Centers. The heads of Group Functions report to the CEO.
Business units
Business units are innovators, developers and suppliers of competitive, high-quality products, services and customer offerings. Business units define business and product strategies and, by optimizing the product development and supply operations, ensure high-quality and competitive solutions. Business units are responsible for the profitable growth and consolidated results within their respective areas. The business units reflect the product- and service structure of the business: Networks, Global Services and Multimedia. Business unit heads report to the CEO.
Market units
Market units are marketing and sales channels and the Company’s representatives in the local market environment. Market units define customer strategies and, by building excellent relations with customers and local authorities, drive business growth. They manage the complete customer relations ranging from marketing to after-sales and support activities. Heads of market units report to the CEO directly or via a selected member of the Group Management Team.
Efficiency and coordination
Each of the business and market units is supported by an internal steering group. A steering group is chaired by an appointed member of the Group Management Team who reports to the CEO. The chairman selects the participation in the internal steering group to best support the specific needs of the unit.
Joint ventures
In certain areas, the Company has chosen to work with joint venture partners. The mobile handset partnership with SONY Corporation in Sony Ericsson Mobile Communications has been in operation since 2001. During the year, the Company signed a joint venture agreement with STMicroelectronics for mobile platform technology and wireless semiconductors.
Company management
As defined in the Swedish Companies Act and outlined in further detail in the work procedure of the Board of Directors, the CEO is managing the Company’s daily operations. The CEO and his appointed Group Function heads have implemented a management system to ensure that the business is managed:
- So that the objectives of Ericsson’s major stakeholders (customers, shareholders, employees) are fulfilled.
- Within established risk limits and with good internal control.
- So that the Company is compliant with applicable laws, listing requirements and governance codes and fulfills is corporate social responsibilities.
The Ericsson Group Management System
The Ericsson Group Management System comprises three elements:
- Management and control elements, i.e. objective setting and strategy formulation, and steering documents, such as policies and directives.
- Operational processes and IT tools.
- Organization and corporate culture.
Ericsson is ISO 9001 certified. The management system is an important foundation and it is continuously evaluated and improved in accordance with the ISO requirements.
Management and control
Ericsson uses balanced scorecards as a tool for translating strategic objectives into a set of performance indicators for its operating units focusing primarily on: market and customer performance, competitive position, internal efficiency, financial performance and employee satisfaction and empowerment. Based on the Company’s annual strategy work, these scorecards are updated with targets for each unit for the next year and communicated throughout the organization. The balanced scorecard is also used as a management tool to align operating unit goals and personal goals to Company goals, follow up progress towards goals and monitor identified risks.
Group-wide policies and directives govern how the organization works and include important areas, such as a code of business ethics, policies on roles and responsibilities, segregation of duties, capital expenditures, management of intellectual property rights, financial reporting, environmental matters, and risk management.
Processes and IT tools
As a leading vendor, Ericsson tries to utilize its possible competitive advantages through scale of operations and therefore has implemented common processes and IT tools across all its operating units. Through management and continuous improvement of these processes and IT tools, Ericsson reduces cost through standardized operational internal controls and performance indicators.
Risk management
We broadly categorize risks into operational and financial risks. Our risk management is based on the following principles, which apply universally across all business activities and risk types:
- Risk management is an integrated part of the Ericsson Group Management System.
- Each operational unit is accountable for owning and managing its risks according to policies, directives and process tools, with decisions made or escalated according to a well-defined delegation of authority. Financial risks are coordinated through our group function Finance.
- Risks are dealt with on three levels: in the strategy process, in the annual planning and target setting, and in the operational processes by transaction (customer bid/contract, acquisition, investment, product development project). They are subject to various process controls such as decision tollgates and approvals.
A central security unit coordinates management of certain risks, such as: business interruption, information security/IT and physical security. A Crisis Management Council deals with ad-hoc events of a serious nature.
