2011: The Key Management Issues
Inevitably, the business landscape has altered dramatically in the past 12 months. Management Today analyses 10 of the top issues facing managers as we move into 2011. By Chris Sheedy.
1. Two-speed economy
Australia weathered the financial storm better than most, but there are still areas of risk and reward. It's all part of the two-speed economy that Associate Professor Nick Wailes, Associate Dean of Executive Education at the University of Sydney, says we have always had.
"If you're exposed to consumer demand, or you're a manufacturing exporter or in retail then things look pretty grim," Wailes says. "You'd expect to see low growth in the near term. There'd be concern in those sectors about the tailing off of the fiscal stimulus. In the resources sector though, we're witnessing the opposite."
It's important to note that the two sides of the economy do not operate independently, Wailes says. Unbalanced growth means pressures from the rapidly growing sectors of the economy can negatively impact slower-growing sectors.
One area of major importance in 2011 will be staffing and talent. "Successful companies invest in retaining talent through tough times, so they can compete in the future," Wailes says. "And diversification is another key area in this economic climate, including doing whatever can be done to minimise exposure to the low-growth parts of the economy."
Tip: Concentrate on staff retention and diversification to reduce risk in an uncertain climate.
2. Global economic health
The biggest issue for Australian companies in terms of global economic health is business confidence, says Keith Skinner, Chief Operating Officer of Deloitte Australia.
In a recent quarterly survey of CFOs in Australia, Deloitte Australia found confidence had dropped. This was a backwards step after rises in the previous three quarters.
"The biggest issue was sovereign risk," Skinner says. "Greece was in the news and other countries in Europe were expected to follow. Eighty per cent of CFOs felt the increasing sovereign risk would have a negative impact on the speed of Australia's economic recovery, and 76 per cent said it would negatively impact their access to credit."
Confidence generates investment, and investment has extremely valuable flow-on effects. But a lack of confidence drains value from the market, Skinner points out.
Despite the gloom, Deloitte's COO is seeing positive signs that business believes a recovery is taking place, but there's one nation we'll always look to before we truly believe it.
"When we see signs of growth in the US it will have great effects," he says. "It's critical for us that the US market gets going."
Tip: For a full economic recovery a change in thought processes is required: from 'glass is half empty' to 'glass is half full'.
3. Development and training
As managers look to increase levels of innovation and agility within their organisations, the need for staff development and training becomes greater, says David Wakeley, CEO of the Australian Institute of Management (AIM) NSW/ACT.
"Developing and retaining an effective and engaged pool of talent is becoming critical to ensuring business success.
"Organisations should take central responsibility for developing and reviewing their talent management strategy," Wakeley says. "It's likely to become increasingly important for managers to identify individual learning and development needs and/or the need for job redesign. This can be done as a part of individual performance planning, or broader succession planning, or less formally through discussions with managers."
Career recognition programs can include shadowing and coaching/mentoring opportunities as well as implementation of training and development plans, Wakeley suggests.
At the same time, Wakeley says, the nature of training is expected to change in the near future from focusing on hard skills, such as project management and finance, to a balance of hard and soft skills, such as team development.
It's also expected that online learning will blend more with face-to-face sessions as people increasingly use new technology.
Tip: Formalise the implementation of mentoring, coaching and training procedures in order to increase agility and improve staff retention.
4. Export opportunities
Ian Murray, Executive Director of the Australian Institute of Export, believes there are amazing opportunities on offer to Australian exporters in the near term. "There will be continued growth of opportunities throughout South-East Asia for two reasons: one is that we now have a free-trade agreement with countries in the ASEAN group; the other is that these nations are experiencing growth of the middle class.
"The diversification involved with export is healthy in today's economic environment, and export will grow because of the internet and the ease with which a business can sell products offshore. Today's entrepreneurs have been born into a global environment."
Businesses looking to export should test the waters by heading first into New Zealand, Murray says, then to nearby territories such as Singapore and Malaysia. "These territories are not too far away, and they are a great training ground before heading into different cultures and new business environments."
Tip: Whether you're currently exporting or looking to begin, look to the markets in our own region of the world for great growth opportunities.
5. Sustainability issues
Despite the shelving of the Emissions Trading Scheme (although at time of printing the Greens had moved it firmly front and centre again), organisations have plenty to be concerned about in terms of sustainability, says Professor Carol Adams, Pro Vice-Chancellor Sustainability at La Trobe University.
"A key issue is to build trust with stakeholders, and there are a lot of organisations not doing this right now," she says. "The public are concerned about sustainability and climate change, including broad issues such as limitations of natural resources."
Several years ago, Adams says, "PR fluff" might have worked in convincing the public of an organisation's environmental credentials, but not any more.
"You have to build credibility by managing performance and setting targets," Adams, also a judge for the ACCA's Sustainability Reporting Awards, says. "Another key area in terms of sustainability is risk management. The BP oil rig example shows us what happens when organisations aren't doing this well.
"Finally, when a company is competing for great staff, top graduates, and better relations with their communities, those organisations that are really serious about social responsibility and sustainability management perform very strongly."
Tip: Make sustainability a serious issue in your business - as important as the bottom line - because it is to many stakeholders.
6. The war for talent
Although the effects of the global financial crisis still reverberate, a skills shortage is with some of us, again.
"The skills shortage is returning with a vengeance," says Judy Higgins, a business consultant in the field of workforce planning. "We know there are already serious shortages in engineering and in specialised jobs in mining, for instance. Some businesses are going to be in terrible trouble.
"Businesses who will do well are planning ahead. They do regular skills audits so they have a very good idea of what their skills requirements are going to be in the future," says Higgins. "This allows them to train staff ahead of time."
Managers should have a three to five-year view of where their company is going in order to have enough time to source and train people to get the work done, Higgins says. They should also be creative in their approach: looking into areas that previously have not been engaged, including disabled, indigenous or older people. Creativity also means allowing flexible work practices to provide options for potential staff.
Tip: Take the time to plan your skills needs ahead of time by keeping a three to five-year map of where your organisation is going.
7. Customised technology
Observe business travellers in airports and you'll see a good percentage using their own devices, such as iPhones and netbooks, rather than laptops provided by their employers.
It points to the fact that a revolution is taking place in the world of corporate technology, says Iggy Pintado, Director of Marketing, Sustainability and Innovation at UXC Connect.
"IT companies used to plan around what you needed at the time, not for the outcome," Pintado, author of Connection generation, says. "These days, the solution must deliver operational efficiency as well as being financially and environmentally viable, and fitting in to a new way of working.
"You need to look at technologies that make sense to your people and that allow the infrastructure to be agile, consolidated and highly available from anywhere. We're talking about highly mobile devices with cloud- and location-based data services."
Working nine-to-five from a desktop computer in an office is no longer the most effective and productive model in many organisations, Pintado says, so management and IT departments must provide what their staff need in terms of technology, for today and for the future.
Tip: Don't supply technology that did the job 10 years ago. Instead, ask staff what exactly they need and plan a customised solution around that.
8. Leadership: the right stuff
There are four fundamental traits of an effective leader, says Dallas Burgess, an organisational psychologist with PeopleAdvantage. They are self-awareness, confidence, stress management and the intellectual capability to make sound judgements within the context of the complexity of the organisation.
The complexity of businesses today is fast changing and requires a leader who can keep up, Burgess says. "If a leader can't get their head around the complexity and clarify it, simplify it then communicate it to staff then they will fail," he says.
"Stress management is about not regressing to a lower level when you're stressed, and having the self-awareness to recognise when you are."
It may seem like just common sense, but confidence, of course, is important in the correct doses. While under-confidence takes away from a person's ability to lead, overconfidence leads to dysfunctionality, such as narcissism.
"One of the most significant failures in choosing leaders is a lack of recognition of the importance of the impact of the level of leadership that has to be performed," Burgess says. "It's often many rungs above the person's last role."
Tip: Recognise that leadership is very different to management, with an entirely new set of challenges involved, then work on those challenges.
9. Key staff issues
Many people lost a level of engagement with their employer due to the way restructures and other pressures during the GFC were handled, says Simon Meyer, National Director of Michael Page International. With a re-emerging skills shortage, staff issues must be seriously considered.
"Communication is vital," Meyer says. "Staff should feel they're working under leadership that's caring about how things look for them from a career perspective.
"Last year the leadership message was about getting through month by month. It's now about inspiration and personal fulfilment. We're seeing organisations become more holistic in terms of how they're looking at employment benefits. There has been a lot of uncertainly and it has made staff think about how much time they have with family and what's important to them."
Tip: Communicate on an individual level with staff about career advancement and work/life balance, then act on it.
10. Fair Work Act
The Fair Work Act is a document that covers such areas as employment rights, award rates, enterprise agreements, working hours, flexible arrangements, leave, termination and much more.
With Labor returned, its main outlines are unlikely to be tampered with in the near future, says Associate Professor Anne Junor, from UNSW's Australian School of Business. She says there are useful online resources.
"The websites of Fair Work Australia and DEEWR provide clear guidance. The Australian Industry Group website has an education program, too, explaining how The Fair Work Ombudsman operates."
Tip: Refresh your knowledge and keep up with amendments at www.fairwork.gov.au.