Organisations that succeed are those that adapt to change. These businesses understand the issues they will face in any given year and implement measures to proactively deal with these concerns. A strong CEO who will work with the Board of Directors to bring about such positive measures is essential.
Each year, CIO NZ’s Governance Leadership Centre puts together the top five issues New Zealand boards will face. The 2018 results show an emphasis on trust and ethical behaviour, as well as data governance and a talent shortage.
Let’s look at each issue in more detail, and see how CEOs can help boards to fix them.
1) Trust and confidence
Trust in business has been eroding for some time now, and the trend is showing no signs of slowing in this year. Edelman’s 2018 Trust Barometer for New Zealand indicates that only 47 per cent of the population trust businesses.
The reasons for this are numerous and complex. They include the rise of fake news, memories of the global financial crisis and the growing wealth gap (data from Oxfam shows that New Zealand’s two wealthiest people are worth the same as the poorest 30 per cent of the adult Kiwi population).
It is up to CEOs, who are visible embodiments of their organisations, to raise trust. This can involve a range of things, from disclosing their salaries, to speaking out over political issues they disagree with. Social media makes this easier than ever – consider a LinkedIn post written by a CEO, that explains why they are paid the way they are, and discusses things like their CSR efforts and how this is linked to salary.
— Edelman (@EdelmanPR) March 31, 2018
2) Ethical behaviour
The Harvey Weinstein scandal has made ensuring businesses remain ethical more important than ever – this isn’t just about fraud and corruption, but also about the organisation’s wider culture. CEOs can implement measures from the top down with regards to reporting code of conduct violations, and set examples when issues do come up that the business is taking appropriate action to curb abuses.
It’s essential that organisations show they will not tolerate unethical behaviour.
3) Shareholder activism
Though still relatively rare in New Zealand, shareholder activism is starting to take hold. A report by Chapman Tripp highlights Augusta Capital’s recent experience, where institutional investors voted down a proposal recommended by the NPT board. They also replaced three of the board’s four directors. Meanwhile the new NZX Corporate Governance Code has now placed much greater emphasis on disclosure.
Although it is up to boards to disclose on their own activities, CEOs can assist by introducing a culture of transparency within their business. This would involve reporting on key metrics such as salaries, gender and race diversity, as well as environmental initiatives such as fossil fuel usage.
4) Data governance
We can use data to improve all facets of our organisations, from targeting new customers to increasing productivity. However, as we gather more data, we also have more responsibility to safeguard it. Australia has recently introduced its Notifiable Data Breaches scheme, and Europe’s General Data Protection Regulation legislation will impact any NZ business that has employees or customers in the UK.
Boards and CEOs must work together to create extensive cybersecurity programmes, placing it as an integral part of the business strategy moving forward and allocating sufficient budgets.
5) Access to skills and talent
The shortage of tech workers, particularly in this part of the world where talented individuals often move to Silicon Valley or Europe, is making things like data governance even more of a concern. It is up to CEOs to help make their companies as attractive as possible. They must ensure they are connecting with millennials by placing more emphasis on ethical behaviour and CSR, as well as introducing measures such as work from home. Only then will businesses manage to draw the best talent, both tech and otherwise, to them.