Business leaders are facing a whole new operating environment in 2023 as their focus shifts completely away from the pandemic and towards managing rising costs and improving productivity, according to a recent study.
2degrees’ latest Shaping Business Study, conducted by Perceptive on employing business decision makers around Aotearoa and released in August, revealed that 87 percent of businesses have seen their running costs increase in the past 12 months, yet only 63 percent had increased their prices over the same time, suggesting that many businesses were having to absorb inflationary impacts.
Andrew Fairgray, Chief Business Officer at 2degrees, says in a statement that the report shows that while the pandemic may be in the rearview, the business outlook is still filled with challenges.
“This is the second straight year that we’re seeing cost increases across the board for businesses, but the impacts of that aren’t being felt equally. What we see in the market and in this report is that the businesses who can thrive in this environment are those who can find innovative ways to increase productivity, whether that’s through attracting and retaining great staff or making more effective use of digital tools.”
As the economy gets to grips with a new set of challenges, businesses are moving from just getting by to a more measured outlook. This year, the number of business leaders who said they were surviving (just getting by) dropped by 6 percentage points to 23 percent, while most businesses (53 percent) said they were reviving (getting things back on track), and 17 percent said they were thriving (stronger than we have ever been), up from 14 percent last year.
People are the deciding factor
2degrees says business leaders see their staff as the key factor which will help them sink or swim. When asked about the biggest driver of increased productivity, business leaders overwhelmingly cited their staff, with one saying “skilled staff with the supporting resources to do their job well” was the key.
Building on that theme, business leaders who prioritise productivity cited motivating staff and employing more highly skilled people as the two top ways to achieve higher levels of productivity in their business.
Despite knowing that staff are key to getting ahead, business leaders who are looking to cut costs are focusing on their people spending with 24 percent of that group were looking to reduce training, learning and development, and a further 24 percent were looking to reduce the number of staff.
Effective use of technology
Effective use of technology is one of the best predictors of business success in the report. Businesses’ use of digital technology to improve productivity aligned directly with their reported performance with 76 percent of thriving businesses saying digital technology improves their productivity, compared to only 50 percent of surviving businesses saying the same.
Fairgray says the report paints a picture for businesses looking to get ahead.
“In this inflationary environment, the best way for businesses to move the dial is to increase their productivity and deliver more value with the resources they have. Attracting and holding onto the best staff will be top of the list for most businesses, and making sure that modern technology tools are reducing friction and adding value shouldn’t be far behind. The combination of these two factors will be how businesses can set themselves apart and thrive long term,” he says.
