Talent Famine Looms Large In Director Survey With Vaccine Efficacy Hot On Its Heels

A mounting skills shortage, border restrictions and vaccine efficacy were top of the list of issues causing directors sleepless nights in the Institute of Directors and ASB’s latest Director Sentiment Survey.

The 2021 Survey proved Covid-19’s omnipresence with around 60% of directors still reporting negative impacts on their organisation’s performance as a result of the pandemic.

Another rising concern among those surveyed is New Zealand’s diminishing talent pool, with 57% (up from 32% in 2020) identifying labour quality and capability as one of the biggest hurdles for the national economy. Following close behind were border restrictions, cited by 54% of directors.

The IoD’s CEO Kirsten Patterson says fighting to attract and retain staff will be a clear focus for boards in the year ahead.

“We are now seeing the snowball effect of Covid-19 on workforces across multiple sectors. For organisations, some financially challenged by the pandemic, there now seems to be a volatile labour force, increasing salary expectations and a gap for some of the key skills needed,” Patterson says.

“We know the ‘great resignation’ is also a factor, where people have been forced to review their priorities during the pandemic. This means organisations will need to review their approaches to things like work-life balance, positive work culture and reward and recognition in a bid to attract and retain key talent.”

Spotlight on mental health and wellbeing

Organisations need to focus on the health and wellbeing – and ideally the retention – of employees. We saw this reflected in the survey with 85% (up from 81%) regularly discussing workplace mental health and wellbeing in the boardroom.

With Covid-19 hitting workers hard, particularly in regions facing extended lockdowns, it’s not surprising 72% of boards have approved initiatives to help address workplace mental health issues in the past 12 months.

Glass half full despite gloomy economic outlook

Fifty-one per cent of directors anticipate economic deterioration over the coming year, but still remain hopeful about improving their own performance in 2022, closely mirroring last year’s faith in the ability of their organisation to ride out any challenges ahead.

Facing a talent crisis and economic uncertainty, is it just a case of optimism bias or are directors right to feel rosy about their future? ASB Chief Economist Nick Tuffley says New Zealand can expect to see economy growth of 4% or more over 2022 as it rebounds from a lockdown-affected 2021, and starts reopening up to the rest of the world.

“Under the traffic light system New Zealand organisations can look forward to an environment that will be more stable, with less of the extreme lurches in restrictions that were used over 2020 and 2021 to combat Covid-19,” Tuffley says.

“Loosening of the external border will permit more talent to enter the country, and start the recovery of the country’s beleaguered international tourism and education sectors.”

With hopes pinned on vaccinations as the key to business continuity and economic recovery, 80% of directors are in support of workforces choosing to mandate vaccinations. Despite this, 37% of directors cited the effectiveness of vaccine schemes as one of the biggest possible impediments to national economic performance.

“Globally, vaccines are enabling greater opening up of economies, though by themselves are not necessarily enough to contain the pandemic,” Tuffley says.

“Although New Zealand now has a much higher number of people vaccinated than at the time the survey was conducted, we are still learning about how long vaccines provide protection and the extent to which the country will need to rely on other health measures to keep Covid-19 sufficiently contained.”

More traction on climate change

COP26 has seen a surge in the call for urgent action on climate change, and boards in New Zealand are making headway.

This year has seen a rise in number of directors putting climate change at the fore, with 48% (up from 35% in the past two years) tackling climate change risks and practices across their businesses. Transparency has also been a focus, with 20% of respondents (up from 13% in 2020) including disclosures on climate related risks in their annual report.

This number was significantly higher for publicly-listed companies at 68% (up from 42% in 2020).

“With mandatory reporting on climate-related risks on its way in, it’s reassuring to see a rise in the number of organisations keeping climate change front of mind in the boardroom, but there’s still a long way to go,” IoD CEO Kirsten Patterson says.

The push for more visibility on social issues

The proportion of respondents who think CEOs should speak out on social issues has almost doubled (50% up from 28% in 2020), and a slightly higher proportion (54%) thought that the board should also be visible in providing comment.

IoD CEO Kirsten Patterson says the increase in expecting CEOs and Boards to front up on social issues could be driven by stakeholders wanting to see more from the leaders in times of crisis.

“Eighty-five per cent of respondents in this year’s survey said their board regularly discusses the organisation’s brand and reputation, it’s definitely a case of ‘ignore it at your own peril’,” Patterson says.

“People are looking more and more to directors to step up and show leadership on a range of issues, on everything from climate change through to diversity in the boardroom.

“When faced with a crisis we know that often your stakeholders will be more forgiving and supportive if you have sound values – and you live by them.”

The eighth annual online survey of IoD members ran between 16 September and 12 October 2021 and had over 900 responses.

Read the full Director Sentiment Survey 2021 report:

www.iod.org.nz/resources-and-insights/research-and-analysis/2021-director-sentiment-survey-report/

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