It’s the start of another year - 2018! 365 days of promise for your team and organisation to build on your progress to date, to take things to the next level, to maybe do some things differently and modify, change tack and try some different directions and initiatives .
With any planning though it is important to look at the wider environment you operate in. Like the boatie wanting to go fishing or the surfer looking for waves, it’s always helpful to turn on that long-range radar and see what may lie further ahead so you can make most effective use of your time and effort. And importantly; to ensure your 2018 plans are not disrupted by unexpected rough weather.
Here are some of the things we expect will need to be taken into consideration by many organisations in the New Zealand environment in 2018.
Labour and skills shortages
The New Zealand economy has been on a solid and steady growth path for a while now. We are a very desirable country to live and work in with great fundamentals regarding stability of the economy, food & water supply, energy supply, infrastructure, law and order, honesty, ease of doing business and many more respects. However, this positive story brings with it some first world challenges such as infrastructure lag, housing shortages, and low unemployment to name a few. While the latter is normally seen as a positive for any economy, all organisations will appreciate the challenge a potential shortage of labour imposes. And not only a shortage of labour but also the challenge of access to the right skills at the right time.
We expect to see a continued tight labour market in 2018 for both trade and professional staff across most levels. Auckland is likely to continue to be hard hit with people moving out of Auckland due to the cost of housing, and inability of many to get into the housing market, coupled with the new Government’s stated intention to restrict immigration. However, the rest of the country will not be immune and is also likely to face this challenge, just to differing degrees.
- Invest in your Human Resource systems and ensure you remain a desirable place to work and are not unnecessarily losing staff. Attract, develop, & retain.
- Investigate alternatives such as outsourcing, contracting, increased flexibility & gig economy models
Bank funding and access to funding
We expect a continued tightening of bank funding with banks keen to ensure they are not over-exposed at what may be some consider nearing the top of an economic cycle. With tightening already starkly seen in areas like lending for apartment development and purchases, the later stages of 2017 also saw banks being much more particular about what they want to see in funding application processes as well as organisation’s rigour in business planning and managing their activities. We expect this to continue.
Another trend has been the increasing regulatory impost on other 2nd tier lenders by regulators such as the Financial Markets Authority. This is likely to continue and hence result in reduced alternative funding streams, or at least a lack of growth in funding alternatives.
- Ensure you have robust demonstrable business planning and monitoring processes and systems
- Seek external advisor assistance for expertise and an independent perspective
Technological and business model disruption
Business models changing and utilising technology was a feature of some considerable disruption in 2017 eg Uber, Airbnb, Netflix etc. However, the success of these and others was not so much a result of new or radical technology, but rather a new business model that put the customer at the centre, were really easy to transact with, and specifically took away customer frustrations. We expect this sort of disruption to continue in 2018 and to apply to many more sectors.
Another interesting aspect of this disruption is that your future competitors may well come from outside your industry or sector. For example, most camera companies monitored their camera company competitors and not mobile phone companies - to their detriment.
- Invest in understanding who your customers are and what problems they are trying to solve
- Think about strategy and competitor analysis from different points of view
- Keep abreast of emerging technology that may assist your organisation
Cyber & data security
Cyber security was an increasing concern in 2017 with New Zealand highly susceptible having relatively high levels of internet connectivity, technology adoption, and small average business size. We also are a first world country with a culture of high trust, and are recognised internationally as an easy country to do business with. While these are normally considered strong advantages, sadly they also help explain why New Zealand was the estimated 8th most cyber-attacked country in the world by volume in 2017, despite us only being the 123rd ranked country on population size. Hence, we expect that 2018 will continue to see disproportionate levels of cyber-attacks and especially phishing and malware attacks. Expect these also to get more sophisticated and harder to identify as obvious scams.
As organisations store increasing amounts of information about their clients, this poses an additional risk to their reputation and licence to operate if this information is leaked or compromised in any way. Expect more regulation such as the European Global Data Protection Regulations to be implemented and affect your organisation.
Interestingly, while cyber-security and data protection are undoubtedly technology issues, some of the biggest risks and best protection lies within your people and their awareness of the threats and what they should and shouldn’t do.
- Visit www.cert.govt.nz and sign up for their helpful newsletter and alerts.
- Educate your team regarding your technology protocols and threats they pose
- Keep your software and systems up to date
- Get your IT systems and procedures independently reviewed
Impact of the new Government
Our new Labour/Green/NZ First coalition Government has clearly signalled a change in priorities. Many of the intended changes appear initially to involve more spending on issues rather than a direct investment in future growth, albeit the details in many cases remain as yet unclear. The new Government have inherited a house in good economic order. The challenge will be whether they can achieve their aims while maintaining this, or if their promises force them to spend the kids’ inheritance.
Legislation changes will undoubtedly have an impact on many organisations. This is likely to provide threats and additional compliance costs for many organisations as well as opportunities for others.
- Keep abreast of policy and legislation changes that may impact your organisation
Social media impact and the licence to operate
Love it or hate it, an age of social media. Everyone has a voice and potential access to amplifying their views via the internet and social media channels greater than ever before. Opinions and information about your organisation disseminated this way can have rapid and extensive reach. This is important when it impacts the trust and confidence that customers, suppliers and team have about your organisation. We expect that social media use and influence will continue to increase albeit the medium that are most used may continue to change.
- Consider monitoring social media channels for your organisation if not already doing so
- Be prepared for proactive and timely response to set the record straight if needed
The only guarantee and constant is change. The successful in 2018 will be those organisations most aware of and proactively responsive to changes as they arise. We at RSM are ready to help you face the changes your organisation may encounter and to find the opportunities in those changes.