Organisations Upended By COVID-19; But Directors See Glimmers Of Hope Ahead
COVID-19 had a starring role in the Institute of Directors’ (IoD) and ASB’s 2020 Director Sentiment Survey, with reverberations from the global pandemic still being felt at both a strategic and operational level. Although, not always in a bad way.
In the annual survey, which takes the pulse of New Zealand’s governance community, 60% of respondents said their organisation was adversely affected by COVID-19; although, 22% said the impact had been positive. In addition, 26% cited the pandemic as their single biggest risk factor, almost twice the rate of the next-biggest concern (labour).
“2020 has been tough for all New Zealanders, so it’s hardly surprising that the year’s unparalleled events have weighed heavily on every aspect of organisational governance,” says IoD Governance Leadership Centre and Membership General Manager Felicity Caird.
“However, we’re heartened by signs of optimism. Half of directors expected their organisation to perform better over the year ahead, while more than three quarters were confident it could survive another lockdown. This reflects New Zealand’s collective success in containing the pandemic, as well as the resilience and fortitude of our organisations and their workforces.
“The crisis also accelerated progress in some key areas of governance, with lockdown in particular intensifying boards’ focus on things like staff welfare, as well as their own adaptability,” Caird says.
Eighty-one percent of directors surveyed said their board had discussed workplace mental health and wellbeing issues (up from 62% last year). Meanwhile, most (83%) said their boards were more flexible and adaptive than they were last year, with many planning to keep meeting online in the future.
Directors were more circumspect on the economy, both at home and abroad. Sixty-three percent of survey respondents expected the domestic economy to weaken over the coming year; with half saying uncertainty around global growth was one of our biggest economic impediments.
ASB Chief Economist Nick Tuffley says ambiguity will cloud the economic outlook for a while yet, though there is scope for cautious optimism.
“Green shoots have started to appear in the domestic economy. Retail spending, exports and overall GDP are off the lows they reached during peak disruption earlier this year, while the housing market is booming. Since the survey, we’ve also had outcomes in both our own election as well as in the US, which is a confidence boost in itself.
“On the other hand, our borders are closed until further notice and we probably haven’t seen the end of restructuring and job losses. Weighty questions remain about the direction of global trade and large swathes of the world continue to grapple with the pandemic. However, remarkable progress on vaccines is a valid source of hope. If that plays out as expected we could be in for a healthier 2021 in every sense,” Tuffley says.
Greater risks, more liability
The survey also highlighted directors’ concerns around personal liability. While 79% of respondents said they had liability insurance, less than half were comfortable with the level of protection it provided. This has troubling implications for the governance community.
“As the challenging operating environment and increasing complexity piles more pressure on organisations, robust and dynamic governance is critical. Yet, our members tell us they’re becoming more cautious, or reluctant to take up board roles altogether because they’re worried about the risks to them personally,” Caird says.
“This is far from ideal. Skilled, committed directors, with diverse experience, help build successful, sustainable organisations. We need more of these people in governance roles, not fewer.
“And it’s even more important today. The majority (60%) of directors surveyed expect their industry to undergo disruptive change over the next two years. Meanwhile, only half believe their board has the right capabilities to deal with increasing business complexity and risk.
“Strong leadership and strategic focus is critical to long-term sustainability. As 2021 approaches, we urge boards to consider whether they have the requisite skills and experience around the table to lead their organisation into the future,” Caird says.
The online survey of IoD members ran between 1 October and 20 October and had 914 responses.
The 2020 Director Sentiment Survey will be available on the IoD website from Friday 4 December: www.iod.org.nz