More than half of directors expect their organisations to have improved financial performance over coming year
Concerns over labour capability and capacity fell off the top of directors' list of organisational risks in 2024 amid upbeat business confidence.
This is according to the latest Director Sentiment Survey released this week by the Institute of Directors in New Zealand.
It found that only 10.1% of directors consider labour capacity and capability as the "single biggest organisational risk" to their business.
This is down from the 20.6% of directors who cited it last year, causing it to fall from the top of the list to the fourth spot.
Source: Director Sentiment Survey 2024
The report cited the drop in employment growth stalling and rising unemployment, making staff easier to retain and hire.
"With high unemployment rates, concerns about workforce demographics and labour capability and capacity fell off the radar this year," the report read.
"This is despite the increasing numbers of young people leaving the country and the ageing workforce, and the impacts this may have on the future workforce and succession planning."
The new single biggest organisational risk for directors in 2024 is demand, as cited by 14.7% of the respondents, followed closely by political/policy uncertainty with 14.5%.
Economic, business confidence
The findings come amid upbeat confidence among businesses in 2024, according to the report. It revealed that 58% of directors expect their organisations to have an improved financial performance over the coming year, up from 47% in last year's survey.
The report further noted that the upbeat business confidence was aligned with the optimistic forecast by directors on the economy.
According to the report, 52.2% of directors expect the economy to improve over the next year, much higher than the 28.3% in the previous survey. Those expecting a deterioration also plunged to 27.8% in 2024, down from the 55.8% in 2023.
"Last year's economic pessimism has been replaced by the highest level of national economic optimism since the survey began, despite soft trading conditions, high unemployment, and high interest rates," the report read.
It added that the "near closing" of the gap between organisational and national economic confidence is a new feature of the survey this year.
Source: Director Sentiment Survey 2024
"It is the first time since the survey started in 2014 that there has been such strong alignment on the directions of organisations and the economy," the report read.
"This alignment may reflect the coinciding of an anticipated upswing in the economy and a change in government to one putting added focus on areas directors have typically seen as economic impediments, such as red tape, productivity and the more recent concern around the cost of living."