Opinion Leaders A Case to Answer

Politicians would have us believe that the New Zealand economy is in pretty good shape. In fact, the overall picture is stronger and more balanced than it has been for nigh on third of century, according to Finance Minister Michael Cullen.
Interestingly, the New Zealand Institute of Economic Research is projecting meagre per capita income growth of 1.4 percent per year for the next five years.
Contrast this with International Monetary Fund figures that show New Zealand’s average economic growth rate in the 10 years to 2002 was more than double this projection. OECD figures show that New Zealand recorded economic growth of 3.7 percent year on average in the same period. We rank 20th out of 30 OECD countries in terms of GDP per capita.
The conclusion is New Zealand’s forecasted economic health is ailing.
Average per capita income in the United States is about 40 percent higher than it is in Australia and New Zealand is about 30 percent behind Australia. Hardly surprising therefore that we find it hard to retain good staff, afford the pay levels, standards of living, health and social services enjoyed across the Tasman.
The time bomb of New Zealand becoming third world South Pacific country with superb scenery is ticking.
To get into the top half of the OECD per capita income rankings – the Prime Minister’s goal – real gross domestic product (GDP) per person must grow by at least four percent year. Even at that rate it would take nearly 20 years.
Falling commodity prices and the strengthening dollar is hitting home. Export margins are being squeezed as the currency consolidates around US$0.60c and currency hedging near US$0.55c runs out. Strong inward migration has acted as counterbalancing force but its impact on commercial construction and housing market demand will ease. The current account deficit is widening and more restrictive employment relations laws, anti-business and anti-growth policies will progressively reflect negatively on the business confidence barometer.
The case for growth articulated by business groups is often bland, abstract and not compelling. Most people don’t have clue about what “getting up the OECD rankings” really means. Growth is about business producing more goods and services that the market values. More output means higher incomes. Governments do not create growth – markets do. Business has case to answer.
Does the business argument that high tax, labour law reform, energy costs or shortages, infrastructural deficiencies and trade and technician skill shortages act as impediments to growth disguise more important impediment like “business competency and capability”?
Notwithstanding existing pockets of private sector brilliance, international benchmarking suggests the New Zealand business score card is generally low.
The recent IMD World Competitiveness Index survey shows New Zealand’s management practices ranked 15th out of 59 countries, 34th for the availability of competent managers and 31st for overall productivity real growth. New Zealand managers fall short of their Northern Hemisphere counterparts when it comes to leading strategically, managing capital, and developing international markets. In terms of world competitiveness New Zealand improved one place in 2003 to 18th – but still below its 17th position in 1999.
The Global Entrepreneurial Monitor (GEM) report identified 23 percent drop in entrepreneurial activity in 2002.
Too few of New Zealand’s thousands of new business start-ups fail to reach significant size and the number of listed companies has barely changed in 10 years.
Of the 278,000 businesses in New Zealand 87 percent have five staff or less, only half percent employ more than 100 people and only four percent are serious about exporting. Just 150 companies produce 78 percent of all exports.
The NZIM Management Capability Index finding that our managers are performing at only two thirds of their potential in terms of strategic leadership performance, innovation and technology, reinforces the belief that there is considerable opportunity for improvement.
This is borne out by the NZIM/Wevers Index which measures the “gap” between managers’ expectations or stated importance of key management practices and their perceptions of actual current performance and practices. The latest survey reveals that while managers have shown improvement in managing staff, pursuing developmental or people-focused leadership style and long-term strategic focus for their businesses has declined.
Both surveys illustrate “gap” between what managers know should be done and what they actually practise.
Business needs to be seriously concerned about the implications of these benchmark ratings, given that business leaders play an undeniably important role in achieving sustainable economic growth.
But it is not just Government that has case to answer. No enterprise can be successful, and no nation competitive if public opinion is distrustful of the business community and lacks confidence in the competency, strategic capability and motivation of managers to “raise their game”.
In the words of Jack Welsh “get better – or get beaten”.

Doug Marsh Life FNZIM is Christchurch-based company director and chairman.
[email protected]

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