NZIM: The Ups And Downs Of New Zealand’s World Competitiveness

This world’s most authoritative index on national competitiveness ranks us just behind Germany (15th), the United Kingdom (16th), Norway (17th), and five places behind Australia (14th). Published yearly since 1989, the index ranks and compares the competitiveness of 49 countries on the basis of 314 criteria including economic performance, government, business efficiency and infrastructure.

The world’s competitiveness environment is currently characterised by nervousness and unpredictability, according to Christchurch-based NZIM National Board director and Business New Zealand president, Doug Marsh, who was recently briefed by the Switzerland-based IMD.

In terms of world competitiveness, 2001 was year to forget, said Marsh. Tougher than anticipated, 2001 was expected to be year of technical correction after the exuberance and excesses of 1999 & 2000. Reality proved somewhat different: the world economy suddenly lost momentum and the stock market plunged, dragged down by the technology sector slump.

Despite the two negative trends of economic slowdown and market consolidation, the continuing growth in the size of the world markets remains the most fundamental long-term factor affecting world competitiveness. It now takes only 12 years to add billion people to the world’s population, compared with 123 years between 1804 and 1927. By 2050, the population of Europe will have decreased by 100 million people to 628 million. Everywhere else it will continue to grow. In the United States, the population will increase from 305 million to 392 million, in Latin America from 504 million to 809 million, in Africa from 749 million to 1.766 billion, and in Asia from 3.585 billion to 5.268 billion.

The IMD views New Zealand as one of the “purest” of the Anglo-Saxon behavioural models of society, according to Marsh, an economy that is characterised by deregulation, privatisation, degree of labour flexibility and higher acceptance of risk. “But our government has the difficult task of striking balance between hyperactive global business environment which fosters entrepreneurship, pressure from New Zealand business leaders for innovative economic growth strategies and more socially responsible environment,” he said.

“Although New Zealand’s middle and top level management indicate their optimism about state efficiency, an independent public service, lack of protectionism, transparency of government policy and lack of improper practices, they are more critical about new legislation encouraging competitiveness, environmental laws and compliance as impediments to growth (ranked 47th), incentives attracting direct foreign investment (45th) and corporate taxes that discourage entrepreneurial activity (38th).”

New Zealand also fared less well in retaining talent. The brain drain is dramatically high (45th) and it only ranked 44th for the international experience of its senior managers.
New Zealand ranked 34th in availability of competent managers, 31st for overall productivity real growth and 35th for skilled labour availability. “In terms of sustainable economic growth, New Zealand business should be seriously concerned about the implications of these index ratings,” said Marsh.

Marsh expressed concern that overall New Zealand’s management practices ranked 15th. Even more concerning was the 26th place ranking of managers’ credibility and 25th ranking of effectively managed shareholder value. Managers adaptability ranked 15th, corporate boards’ effectiveness managing company performance ranked 13th, marketing effectiveness 18th, customer satisfaction and social responsibility 16th.

Whereas business efficiency at 22nd has fallen from its 16th place ranking in 1999; government efficiency has fallen from 8th in 1999 to 16th place. Notwithstanding real improvement has occurred in the criteria for determining New Zealand’s value system. The country benefits from population that is regarded as flexible and adaptable when faced with challenges (4th from 22nd last year), with high percentage of females in senior political or economic responsibility (3rd) and ranking 7th for the gender income ratio (females’ earnings compared to males). The openness of the national culture has improved from 23rd to 18th place.

“At 9th on the quality of life scale, ours is one of the best countries of opportunity to lift and enjoy the benefits of competitiveness, improved management capability and economic growth,” said Marsh.

NZIM’s Search for Management Index
By the time this column appears the election will be over and we will know the party or parties of choice for the next three years.

One of the issues for business in the lead up to the election was the importance of economic growth if New Zealand is to secure education, health and social outcomes at level we all expect. The issue for the New Zealand Institute of Management as professional body for managers is the extent to which we can link management performance to economic performance.

If we are doing our job well and improving the performance of managers then, ipso facto, this must have an impact on the country’s economic performance. The argument seems, on the face of it, to be sound enough. In reality it is rather more difficult to demonstrate the connection because there are many other factors beyond an individual manager’s control, such as government policy, the exchange rate, world economic performance and so on.

Organisations such as the IMD, which compiles the World Competitiveness Yearbook and the World Economic Forum survey, rank countries in terms of their economic environment being supportive of international competitiveness. Neither of these surveys has an effective focus on management performance. Notwithstanding the difficulty, we continue to research business schools, education institutions and economic organisations around the world to try and find model that will allow us to make the connection.

The other major issue for NZIM has been to find way to internationally benchmark local management performance and qualifications. We have canvassed management organisations and business schools around the world but, so far, have come up with very little in the way of surveys which look at management practice and skills.

NZIM has close working relationship with the American Management Association and they tell us that they survey management skills and competences against management skills. The New Zealand Institute of Management, itself, surveys management practices and competence against management practice.

The Chartered Institute of Management in the United Kingdom has been the lead body in two-year study undertaken by the UK Council for Excellence in Management and Leadership. Its report, just out, contains some 30 recommendations and mirrors the work we have been doing in New Zealand. At least two recommendations from the report are worth noting. The first covers the development of national framework of indicators to promote the importance of developing good managers and leaders. This will include research looking at the development of management capability, management capability itself (knowledge/skills/attitudes) and the application of capability to management practice. The second recommendation looks at research for the development of theories and models aimed at improving the link between management and leadership capability and economic performance.
We will follow this work with real interest.

Finally last month I attended meeting of the Asian Association of Management Organisations in Melbourne and these topics were high on the agenda. The good news is that I was able to persuade my colleagues from the AAMO countries to participate in shared research project that will allow us to benchmark our management performance in the Asia-Pacific region. This will then be the first part of what I hope will be an international benchmarking exercise that will allow us to est

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