New Zealand CEOs Optimistic About The Future

WEDNESDAY 27 JANUARY, 2010

New Zealand CEOs Optimistic About The Future

With the challenges of New Zealand’s prolonged recession behind them, CEOs are confident their organisations are emerging stronger and are more optimistic about the future. They believe the decisions they have made, including cost reduction initiatives that were implemented by 98% of organisations, have put them in a better position for growth as they now enter the recovery phase.

This was a key finding from the New Zealand section of the PricewaterhouseCoopers 13th Annual Global CEO Survey which was released at the World Economic Forum in Davos, Switzerland, today. The global survey sought the views of around 1,200 CEOs worldwide. For the first time, PricewaterhouseCoopers New Zealand carried out its own extensive survey of New Zealand CEOs, seeking the views of 72 of the country’s top leaders in both the public and private sectors.

“We were interested to see how New Zealand organisations fared during the recession, and how our overall economy has performed when benchmarked against countries around the world,” said PricewaterhouseCoopers Chief Executive Officer, Bruce Hassall. “New Zealand companies have displayed real vision in tackling the challenges of the past year which means they are in a much leaner and more productive shape than they were when the recession hit.”

The survey showed that 90% of CEOs had re-assessed their overall tolerance for risk and 79% changed their approach to risk.

“It is clear CEOs took a greater interest in risk management and were looking to make changes to their organisations in response,” Mr Hassall said. “They believe there are opportunities for growth in the next year, yet the volatility of the New Zealand dollar and commodity prices were seen as key indicators that demand may not come back strongly.”

While there were some differences between the responses of New Zealand CEOs and those globally, CEOs universally are steering their organisations towards a growth agenda. While concern remains about the recovery from the global financial crisis, organisations are moving with cautious optimism into the future.

Like their worldwide counterparts, New Zealand CEOs predict there is more regulation on the horizon as governments move to protect the public from further financial vulnerabilities. There was division among Chief Executives as to whether new regulations would be an issue, and 44% believed over-regulation was a threat to business growth. However, most acknowledged that there were some positive aspects to regulation and identified the finance sector as an area where new policies would be welcome.

Another area that CEOs generally considered as key was focusing further on their employees.

“CEOs have noticed record levels of employee productivity and engagement,” Mr Hassall said. “Staff training and development has been on top of CEOs’ agenda with 75% planning to invest in leadership and talent development over the next three years.”

A number of New Zealand public sector organisations were included in the survey and Chief Executives of these organisations noted that the recession had forced the public sector to focus on commerciality and efficiency with increased pressure on state owned enterprises to perform financially against publicly listed equivalent benchmarks. Some had taken a strategic shift towards performance improvement and had explored the benefits of public/private sector partnerships.

“Overall, New Zealand CEOs expressed the view that 2010 is crunch time for New Zealand and for the government,” Mr Hassall said. “This is the year where game changing policies need to be rolled out to lift growth and productivity and to incentivise people to work and invest wisely.”

Mr Hassall said this year’s government budget, due in May, needs to be a landmark document.

“We anticipate significant announcements in key policy areas including regulation, infrastructure, business innovation, education and tax.

“There is no doubt that the world, and the New Zealand economy, have moved on since this survey was undertaken towards the end of last year,” Mr Hassall said. “But many issues raised by the CEOs remain topical and important to address. Among the fundamental issues raised by CEOs was the need for government to address confidence levels in the investment market, widen the tax base, and encourage New Zealanders to save.”

Note to Editors:
The New Zealand CEO survey executive summary and full report are available at www.pricewaterhousecoopers.com/nz.

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