We hope you find Executive Outlook’s latest survey findings on local business sentiment helpful.
Executive Outlook is presented exclusively by Top Office Group, and known as the “most comprehensive and insightful study of the region” (matched against broader trends, for our 12th year running). We’ve interviewed 65 business leaders so far, and thank you for sharing your insights. Here’s what we’ve found so far.
Confidence is bouncing back (revenue’s sporadic, margins are tight and we’re adapting as we go, but the heartbeat’s back). 45% of business leaders are optimistic, tempered by high levels of uncertainty.
This crisis is indiscriminate. Good businesses have suffered, which was also reflected in results. 38% of business leaders are neutral about prospects and 17% are concerned. Navigating the pandemic, recession and global headwinds has kept us on our toes. The good news is most economists tip our economy to grow in this quarter.
Overall, our conversations with business leaders are upbeat about where they’ll be in three months. We’re grateful for JobKeeper, but concerned about the removal of this scaffolding.
For others, recovery has thrown up opportunities to take the brakes off and grow market share, based on reputation and “good old fashioned service”. There’s a sense of “Why waste a good crisis when there’s a silver lining”. This one has presented opportunities to slash travel expenses, cut costs and lean on technology like never before, so, despite revenue drops, profits have broadly held their own.
The top challenge for almost a third of business leaders is sustaining profits, faced with falling demand and tight margins (30%). This was closely followed by cost pressures and regulations.
We’re all on-board with creating a Covid-safe workplace, and thankful for the Government stimulus, but this has been tricky for businesses to manage across the board – we heard this time and again. These issues are front and centre, coupled with the “what ifs” (as we brace for more virus shocks).
“Maintaining profitability, when revenue has been so dramatically reduced, is hard”.
The Plan B is one thing, but to get through this, we need a Plan C as well. Start, pick up the pace, pause, step back and go again. It’s still a bit like that right now, and it comes at a cost!
There’s been a massive investment in technology to work from home, coupled with resources and cleaning to keep workers safe.
Local cafe owners have Covid plans in place, so customers can feel safe in their venue. They are grappling with reduced dine-in capacity and price hikes (sanitising, deep cleaning and contact tracing don’t come cheap), and our survey reflected this.
“We strictly follow Covid restrictions. It takes a lot of time, effort and money to get that right”.
Anecdotally, there’s talk of rising bad debt levels, and the robust cash flow management it takes to minimise these credit risks (across the board).
“Debtors are dragging out and spend is down. Clients are in a state of flux”.
The agricultural sector is struggling with competitive international markets and a shortage of cattle from a prolonged drought. China’s tariffs and anti-dumping measures on wine, barley and beef exports are also hurting farmers.
It’s patchy in the construction sector, but business leaders are positive about the outlook, with strong growth in infrastructure and retirement living. Their main challenges are razor-thin margins, competition, regulations and new technology.
“We are now seeing multi-storey buildings being prefabricated”.
We interviewed leaders from the local tourism sector, which has seen dramatic dips and peaks, linked to location and pockets of outbreaks. In August, occupancy rates for the City sat at 15-20% (as opposed to the normal average of 80%). This reflects a clear drop in corporate travellers.
40% of business leaders we talked to have reshaped their business model, in response to the pandemic. We’ve had TOP for 32 years, and worked through a recession, floods and the GFC, but this is scarier because there’s no end date.
It’s called on high levels of operational, financial and emotional resilience. Ideas from our conversations focus on return on investment, new revenue streams, the bigger picture and short-term planning.
“It’s meant rethinking our plan in 3 month sprints, rather than too far ahead, because no one has a crystal ball”.
The focus is to build relationships, share ideas and connect with clients to understand their needs, then build solutions to match demand. In fact, a number of leaders told us they’ve “got better at this”.
It’s a time to connect and find opportunities, with a compelling narrative that will leave clients with new ideas. This was reflected by leaders in Executive Outlook.
“Know where your value lies, then build a pipeline of solutions to match demand”.
“We’ve trained our whole team to engage in sales activities and connect with our clients”.
“We’ve reworked the skills and technology needed to meet rapid change; this need has intensified”.
Australia Post is a shining example of transformation, moving from mail services into parcel deliveries to match a surge in e-commerce. The WHO reports show national growth in ecommerce since the pandemic is over 78% year-on-year” (153% for Victoria).
“Australia Post had little time to ramp up capability. Take-aways are the importance of agility, transparency with shipments and communicating with customers. We’ve gone 24/7 to keep up with volume, in a Covid safe workplace. This translates to more jobs locally”. Ashley Marshall, Australia Post
The need to create on-line delivery platforms for customers has reshaped local restaurants. The lifelines of takeaway and delivery are here to stay (Deliveroo and Uber Eats are on a sure thing).
“Take-aways are more sustainable. There’s less running and labour costs, no wait staff and contactless payments”.
Cafes are catering for as many customers as possible, to comply with available space and social distancing rules.
“We stay up to date Covid plans and restrictions to make sure we’re doing the right thing”.
Safety still hangs in the balance, and the reputational damage from an outbreak is huge. Arts, theatres and performances are down 30% locally.
58% of business leaders have embraced remote work. It started out as a conversation about leveraging technology to work from home. This allowed us to operate right through Covid, with greater flexibility. A month later, we were up to our eyeballs in Zoom fatigue.
Some leaders are now questioning the need to lease large work spaces. More people are working from home, saving on travel and loving it. It works well in IT, professional and government sectors. Similarly, tele-consults are now firmly embedded in medical practices across the region.
“Technology drives efficiencies … so we can keep doing what we do so well”.
Longer-term, the jury’s still out on working from home. We’ve had mixed feedback on productivity, and mental health’s a smoking gun. Business leaders are watching for signs of burn-out, which was reflected in comments:
“We’re more in tune with our staff, and the pressures they’re feeling”.
“Catastrophe fatigue is entering our workforce. We’re concerned about the long-term effects on people”.
“There’s no end point. Covid plays on our vulnerabilities”.
Ultimately, Executive Outlook found that people miss the social interactions, sharing knowledge and team cohesiveness.
“Our staff value coming back to work – they missed the social side”.
“Remote work is hard to manage and disjointed. It puts more pressure on those in the office to manage phones and distractions. You have to reach a critical point”.
“Remote work is fine for a while, but then productivity falls. You’re left with the same cost and less productivity”.
Once we have a vaccine in place, there will still be a place for remote work, and we’ve perfected the technology for that to happen (just not in the same way).
Our goal is to be at work, but the flexibility to work from home will come into its own if a family member is sick, or as needed, as part of a blended approach. In this way, remote work can ensure continuity, boost productivity and reduce downtime. For this to work, businesses will need to be crystal clear about KPI’s, expectations and outcomes.
Surprisingly, 40% of business leaders face skills shortages. There’s lingering issues in attracting local talent in some professions. Health and finance professionals are in high demand, as are logistics personnel to support the massive growth in on-line deliveries.
By default, technology has emerged as a critical sector. We’ve been forced to digitise our economy very quickly. For cyber criminals, that’s gold. Cyberattacks to access websites and systems via phishing or socially engineered attacks, fuelled by Co-vid have skyrocketed. We are all vulnerable to these security risks.
“You need brilliant IT support behind the scenes”.
“It only takes one person to click on an infected email link, or one virus to make its way through your firewall, and there goes your data”.
This has paved the way for cybersecurity specialists, to tackle hackers, leaks and identify fraud. The market’s also red-hot for Web designers, ap developers and digital marketers.
- Interpol is seeing an “alarming rate of cyberattacks aimed at major corporations, governments, and critical infrastructure.”
- Cybersecurity firm, MonsterCloud reports ransomware attacks are up 800% in the pandemic.
The Australian Government’s Stay Smart Online alert service is helpful to stay updated on threats. along with up to date anti-virus software, meticuloous off-site back-ups and training staff in identifying malicious emails.
“It’s still hard to find the right person, with the right mix of skills”.
The unpinning soft skills to shine in this crisis combine engagement, influence and empathy with high-level technical skills. These qualities are so important in this fast paced transactional world.
“You need customer focussed people, who can engage, think on their feet and build phone relationships fast”.
There’s a series of discrete interactions involved in moving from transactions to relationships and consultative selling. These are the subtle skills that are sought-after across all disciplines and reinforced by business leaders in Executive Outlook.
“People still need to talk to someone for advice. No system can do that!”
64% of firms intend to maintain current staff numbers. Notably, 15% plan to decrease headcount. The encouraging news is 21% of firms signalled their intention to hire more staff. However, faced with another lockdown, all bets are off.
More young candidates are struggling to get a foothold (reflected in over 16% youth unemployment, and that’s conservative). It’s harder for graduates to get their foot in the door. This was reflected in our survey.
“Unis deregulated and opened up cheap law degrees. There are too many offered, and few job prospects.”
Australia has had steady growth for decades with strong coal, iron ore and natural gas exports to China. Tourism has also been a big driver of growth.
We were hit hard this year. First the bushfires ravaged over 12 million hectares, which smashed tourism and local commerce. Then the coronavirus pandemic hit, and we’re left with the health and economic fall-outs.
Thankfully, the sky’s not falling in. The best part of a recession is that there will be a rebound. Jobs will be created, but skillsets will morph into new ones. As technology changes the scope of jobs, many are likely to be in industries that haven’t even been invented yet. This means constant renewal, up-skilling and then starting again, no matter what sector you’re in. This was widely acknowledged in our survey.
“Never underestimate the importance of training. There’s a need for workers to reskill across the board”.
If you would like to find out more about Executive Outlook, and be part of this authentic study of our region, please call Jan, Belinda or Roger on 3812 2920.
Top Office Group’s programs, traineeships and training courses enable you to stay relevant and employable.
We’re delighted to offer our youth community the opportunity to upskill and transition into growth sectors. Our popular 2 week Ready for Work programs, with our qualified career practitioner, covers tailored career plans, employer expectations, interviews and job search skills.
This is an incredible opportunity – both for businesses as well as creating meaningful job pathways for young people. Over 100 local businesses have employed a trainee from our programs, supported by the amazing subsidies on offer.
Please reach out to Bree on 3812 2920 to find out more.
Compiled by Jan Gadsden, Founder/Director of Top Office Group Pty Ltd.