NZ executives more risk-conscious, study shows

Photo / Bay of Plenty Times

Nearly 80 per cent of New Zealand executives have changed their approach to risk-taking in the wake of the global financial crisis, according to a global survey by PricewaterhouseCoopers to be released at the World Economic Forum's meeting in Davos, Switzerland.

The research, carried out through a mixture of one-on-one interviews and multi-choice questions involving 72 local chiefs, was the first time PWC's annual survey stretched to include New Zealand.

PWC New Zealand chief executive Bruce Hassall said the global review had been running for 13 years but the financial crisis had sparked the decision to include New Zealand.

"We were keen to run a New Zealand equivalent survey to find out how New Zealand executives compared with global trends, how New Zealand businesses had managed through the recession and their outlook now."

Hassall said the survey had found strong similarities between New Zealand chief executives and their overseas counterparts as well as some key differences. He said the global consensus was that executives believed they had navigated the recession well and optimism was now picking up with an expectation of growth this year.

"Many felt proud knowing they took hard decisions well."

Those decisions included making major cutbacks with 98 per cent having to slash costs.

The survey also showed 90 per cent of New Zealand chief executives had re-assessed their overall tolerance for risk and 79 per cent had changed their approach to it.

But local executives had not made as much of a change as their global counterparts. Hassall said 41 per cent of those outside of New Zealand had made major changes to reduce risk whereas only half that number had taken such drastic action here.

Hassall said overseas executives were much more concerned about the threat of Government regulation than New Zealanders.

Foreign executives were also worried about reputation damage.

"There is a view that the business community reputation in the eyes of the wider public has been damaged."

Those in the global financial sector also believed there had been a serious loss of trust.

"But that is not the case here in the banking sector," Hassall said.

Half of those surveyed outside New Zealand also worried consumers had permanently changed their behaviour in the wake of the crisis.

But Hassall said that while shoppers had shifted away from higher-cost products to budget brands and away from luxury items, there was not such a strong change here and executives believed consumer demand would pick up.

But some issues had also struck more of a chord with Kiwi managers.

Hassall said the biggest lesson they appeared to have learned from the recession was how to sharpen up their business models.

"During buoyant times the business model gets lax and when they started cost reductions they also found questions raised like 'why are we doing it this way? How does this add value?'."

Hassall said those concerns had been particularly noticeable in the public sector.

He said it was a good sign that 75 per cent of executives said they planned to invest more in their workforce.

One over-riding theme for this year was that executives wanted the Government to take action on policy decisions to help boost growth in the economy.

"2010 is crunch time for the Government."

WHAT CEOS THINK
* 79 per cent of executives have changed their approach to risk.
* 44 per cent believe over-regulation is a threat to business.
* 75 per cent are planning to invest in leadership and talent over the next three years.