InTouch: Beating the recession – southern style

South Island managers gained useful insights into today’s challenging business issues at the recent NZIM Southern Business Forum.
Inevitably the focus was on the global recession and how businesses can best stay optimistic, recession-wise and confident. Themes to emerge included good business practice, good governance, honesty, integrity, trust, care of customers, cash and capital management, caution with credit, productivity improvement, and improvements to the NZ regulatory framework.
Rod Carr, vice chancellor of the University of Canterbury, painted picture of New Zealand society when (or if) large companies, local governments and central government adopted such SME (small enterprise) behaviours as staying close to the customer; meeting their needs and selecting those who can and will pay over those who can’t or won’t; being reflexive and responsive; ensuring short lines of communication and flat management structures; minding capital and cash flow; being “fit for purpose” and the right size for the market. When big business adopts SME thinking, said Carr, the culture of connectedness with customers and end users will effect tremendous productivity change in our society.
Jane Diplock, chair of the Securities Commission, drew distinctions and comparisons between the mini crisis of NZ financial institutions and the global recession. Both, she argued, grew out of greed and self interest getting out of hand. In New Zealand, our completely under-regulated financial markets enabled few poorly governed and perhaps not-so-well managed financial advisers and investment companies to take advantage of investors.
Amongst the issues that led to financial institution collapse here were: too few directors, especially independent board members; failure to disclose details of borrowing and lending; ineffective auditing requirements; and ‘heroic valuations’. Diplock pointed out the importance of good governance in creating market value.
Michael Sidey, deputy chair, Forsyth Barr, spoke of lessons the company has learned. Four major management decisions made over the past 30 years helped drive growth. One: introducing full corporate audit put the directors under scrutiny and created transparency that enhanced trust. Two:focussing on private client fund management meant that caring for the needs of each customer has become hallmark of the business. Three: strategic planning initiated in 1998 set in place technologies, services and practices that are still in place today and added lasting value. Four: reaching out to the community and bringing in independent directors further enhanced decision making.
The recession itself has brought opportunities that Sidey said may not have arisen otherwise. Important facets underpinning the company’s growth were securing their banking facilities, reviewing all costs and attracting new senior advisors and staff.