Labour quality and capability, supply chain disruption and immigration policy are the top three issues facing the economy, directors say.
The Institute of Directors’ annual director sentiment survey showed 68% of directors expected New Zealand’s economic performance to fall during the next year. That figure surpassed the survey’s previous high of 63% in 2020 and was a significant jump from 51% last year.
But the negative expectation for the economy — which included inflation as another concerning factor — was not mirrored in expectations for directors’ own organisations.
Fifty percent expected their performance to improve in the coming year.
Other major concerns were climate change, changing community expectations and the need for boards to prepare for an uncertain future.
Increasing expectations for transparency from stakeholders and shareholders in areas such as climate change reporting and supply chain transparency, as well as emerging issues around organisational culture, values and trust, were now firmly on the board agenda, institute chief executive Kirsten Patterson said in a statement.
In terms of staff, boards had talent and people capability in their sights ‘‘more than ever’’. Some 87% of directors said their boards were having strategic discussions on talent.
The report said there was growing recognition that staffing strategies needed to be holistic, focusing on all aspects of staff wellbeing, not just remuneration.
Recruitment and retention challenges looked set to continue for the next couple of years, given unemployment was at its lowest in 40 years and net migration flowing outward, with consequent upward pressures on wages.
Research had found less-engaged employees were more likely to quit and engaged employees produced better work.
Employees ‘‘don’t just want to be a cog’’ — they wanted to be a valued part of the team, encouraged, communicated with, listened to, and delivering on behalf of an organisation that had a vision, meaningful purpose and added value.
‘‘Above all, employees want to feel like they are contributing to something meaningful, which means that organisations with a clear purpose are more likely to attract and retain scarce talent and capability,’’ the report said.
Ms Patterson was concerned a significant proportion of boards did not appear to be sufficiently prepared for a digital future.
Just over half of directors (54% — down from 60% in 2021) reported their boards’ regularly discussed cyber risks and were confident their organisation could respond to a cyber attack.
When it came to Covid-19, one in four directors said responding to the global pandemic had improved their organisation’s performance over the past 12 months.
The survey found Covid continued to have an overall negative impact, 56% of directors saying it adversely affected their organisation’s performance, but that was down from 61% in 2021 and 60% in 2020.
ASB chief economist Nick Tuffley said economic uncertainty had long been a fact of life but the past few years had brought huge volatility.
Directors needed to ensure their organisations had strategies that were resilient to, or readily adaptable to, economic changes.
