TABLED : Emerging Issues in 2008

The heightened competitive business landscape and ongoing regulatory pressures will continue to put the spotlight on governance practices and performance in the year ahead. Boardroom discussions will surely be dominated by the need to deliver on strict compliance expectations, and strategy formulation marked by themes of ‘responsibility’, global view, leadership development and people ‘asset’ protection.
Since 2001, compliance reporting has become an industry in itself. There is little sign, certainly in New Zealand, that the present Government will let up on its requirement for more information, as real and imagined risks become more centrally managed. key challenge for boards will be to ensure compliance does not become the predominant or sole focus. Time-effective management of these compliance processes needs to be achieved so that the board can be as proactive an agent as possible in ensuring that the company, from strategic perspective, is more purposeful, profitable and enduring entity.
This year, there will be increased emphasis on corporate ‘responsibility’. Beyond financial results, the impact of the organisation’s activity on its community will be under the microscope. The quality of products and services, whether in the context of health standards, commercial fairness or environmental protection, will be subject to greater government and consumer scrutiny. In particular, the environmental impact of doing business will claim more of centre stage this year. While the debate over the reasonableness of carbon emissions legislation (both locally and internationally) and its impact on business needs to continue, it seems inevitable that growth will continue in corporate investment in environmental technology, water conservation, water/heat recovery, electricity co-generation, renewables and so on.
With this issue and others in mind, let us not forget ‘responsibility’ should not be merely an acceptable response to external demands. Boards need to be seen to lead and promote discussion, at the highest levels, of issues that need less politicisation and more rational and robust consideration. In election year, engagement across the political spectrum on vital issues affecting business health needs to become strategic priority for boards.
Where appropriate, boards need to think more deeply and act more assertively in leveraging the commercial potential of their products and services on the global stage. The New Zealand
Institute’s research and recommendations in this area deserve very serious consideration. Even though New Zealand is physically isolated, improvements in international communication and transportation mean we are now less disadvantaged, although significant ‘access’ gaps still exist when compared with other countries. In this situation ‘going global’ scenario (similar to Fletcher Building’s purchase of US-based Formica Corp or Methven’s purchase of the British tap company, Deva Tap, or the potential listing of part of the Fonterra business) enables New Zealand companies to change location and substantially enhance production and distribution activity. In addition, the quality of our business services sector is well regarded internationally. The sophistication of com­munication technology allows us to export the high value output of well-educated and creative workforce.
There is work to be done on the infrastructure required to make all these global initiatives more possible. Boards need to be more visible and strident in promoting savings initiatives, capital markets, favourable tax incentives and the quality of our trade representation.
Perhaps most importantly for boards in 2008 will be the need to attend to how relationships with the workforce are strengthened. The values the company espouses and practises, the image it projects and the way people are treated have now become strategic imperatives. Talent can pick and choose whom it works for. It is demanding and is more in demand. In many cases high gap still exists between the lip service paid to recognising these ‘real assets’ of the organisation and the practice of how these resources are kept. The business of spotting, attracting, developing, and retaining talent must be regular board agenda item in 2008.
Pushed to do better by customers, employers, myriad of stakeholders, regulators and society in general, boards must manage information flows and data detail in the most efficient and transparent way possible. From strategic perspective, the integrity of the organisation needs to be guaranteed, as does the development of its leadership capability and global potential. These, and commitment to cherish the talent that really does make difference, will help to build organisations that endure.

Ian Taylor is director of Sheffield.

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