According to the Global CEO Survey of PricewaterhouseCoopers, the confidence among Australian chief executives has been declining monthly. The study interviewed 44 Australian CEOs, where they were asked about the challenges that they face in leading their respective companies. These executives revealed the hurdles that they encounter in running their business, especially in the age of advancing technology and an unstable economy. Below are some of the pain points that Australian CEOs deal with, including how they are able to overcome these obstacles.
Sustaining Business Growth
More than half of the Australian CEOs at the PwC study said they are able to discern threats to their company now as compared to three years ago. Among the factors that they see as affecting their business include competition from newly formed companies, unrest in different parts of the world and the occurrence of cyber attacks. Similarly, the Ai Group’s annual CEO Survey found that 38% of CEOs in Australia are expecting the business landscape to decline further this year. Major changes in the market are affecting the optimism of executives. The strong investment in mining is increasingly waning, while the housing recovery is insufficient to jumpstart the economy.
According to Ai Group CEO Innes Willox, some CEOs have managed to overcome these challenges. “As they confront this patchy outlook, CEOs are taking steps to lift the performance of their own businesses. With broadly similar results across industries, the major strategies CEOs anticipate adopting are growing sales of existing products and services; introducing new products or services; and developing new domestic markets,” he said.
Aside from this, Australian CEOs are also considering partnerships to pursue growth. About 40% of the respondents at the PwC survey stated that they are aiming to complete a domestic merger and acquisition this year. Meanwhile, more than half say they are partnering with other companies to strengthen innovation in their business and keep up with the advancements in technology.
Keeping a Talented Workforce
Although majority of the CEOs in the PwC study plan to expand the size of their workforce this year, a major concern for them is how to manage talent. There’s a possibility of skills shortage in some industries. Meanwhile, the number of “help wanted” ads has been increasing on major Australian job sites, according to the Olivier Job Index. Once the economy begins to recover, Australian workplaces will be hard-pressed to maintain a talented workforce. This will be further hampered by an ageing population, which can shrink the labour pool for Australian businesses. Aside from building a talented workforce, these businesses also need to work on employee retention to maintain business growth.
To address the skills shortage, Australian businesses are increasingly building a diverse workforce. This means disregarding the gender, culture or religious background of individuals in hiring them as long as they are skilled to meet the requirements of your company and match the culture and values. In particular, there’s a growing call to include more women in the workforce since they constitute more than half of university graduates. Currently, only 17% of CEOs are female and women occupy only 26% of senior management roles. The numbers could improve soon as 86% of CEOs in the study revealed they are implementing a diversity and inclusiveness strategy in their workplaces.
Another aspect of talent management is employee retention. This means keeping your employees engaged to provide superior customer service and ensure a high quality of performance for the company. In 2012, Celia Hodson was appointed as the CEO and turn around agent of School for Social Entrepreneurs Australia, and worked to motivate her team in taking ownership of their roles. She encouraged them to be free to act on initiatives that could save the organisation from bankruptcy, which empowered them to take leadership, and eventually turned the business around.
Strengthening Customer Relations
When it comes to enhancing customer relations and reaching out to new clients, executives have to change the way they do business now that the internet is increasingly connecting companies and prospects online. They need to ensure that the business is available 24/7 to address the customers’ needs in real time. Recognising the “always-on” market, former Telstra CEO David Thodey set up a contact service centre to respond to client enquiries, and instituted a social media team to address customer concerns via Facebook and Twitter.
Additionally, CEOs also need to revamp how they think about marketing. With the Internet, customers are becoming savvier about the products and services they buy because of information online. To draw their attention, companies need to use helpful or interesting content to turn prospects into customers. Christie Summervill, CEO of start-up consulting firm BalancedComp, invited HR leaders, CEOs and CFOs on LinkedIn to share their thoughts first on employee compensation before doing business with them. The company also posted blogs on the same topic. Eventually, these business leaders consulted with the firm, which now has 100 clients.
Government regulations and economy
In the PwC study, it was seen that overregulation was a major concern of Australian CEOs. 95% of those surveyed said that strict, government regulations could undermine their business growth. Grant O’Brien, CEO of Woolworths, said the rules on trading hours limit the performance of brick-and-mortar retailers. Physical stores have less time to sell products and services as compared to online retail, where customers can buy 24/7.
Another concern among Australian CEOs is the country’s tax system that has lagged behind internationally. More than half of those surveyed said the current tax system is currently weighing down their business. Furthermore, CEOs cite the incompetency of the government on managing fiscal deficit. This is affecting consumer confidence, which, of course, is hurting businesses. Customers are not spending, which contains revenue growth and discourages corporate innovation.
Given these concerns, Australian CEOs need to be more strategic in their thinking to ensure sustainable business growth. In an uncertain economy, they need to nurture their relationships with their existing customers to maintain revenue and attract new clients. Executives need to leverage technology and build a competent and engaged workforce to deliver superior customer service and enhance overall performance. Exploring new markets, and/or launching new products and services can help companies remain competitive. This should be done with care to ensure that these initiatives bring long-term growth.