Technological disruption a key challenge for directors

Nearly half of directors (47%) expect their organisation to be impacted by a major disruptive change, with barely a third (35%) saying they have the right capability to deal with their organisation’s digital future.

The latest Director Sentiment Survey from the Institute of Directors (IoD) and ASB, designed to take the pulse of the director community, says technological disruption, labour shortage and red tape are key challenges for directors.

IoD Manager Governance Leadership Centre Felicity Caird says digital leadership is critical in a disruptive world.

“Technology continues to be a strong theme when it comes to internal risks so developing board and organisational capability must be areas of focus for directors to ensure organisations are resilient,” Ms Caird says. “In 2015 we said just 27% of boards regularly discussed cyber-risk and were confident about their company’s capacity to respond to an attack, although this increased to 32% this is still very low and remains a concern.”

Directors are more optimistic about economic performance than a year ago and remain buoyant about business performance.

“Increased confidence comes on the back of a strong economic performance – one that most directors feel can be sustained or improved on,” ASB Bank Chief Economist Nick Tuffley says.

“As a result of this economic strength, the labour market has tightened. The effects of this are evident to directors, with almost half seeing a lack of labour capability as the biggest risk to their own company’s performance and a risk to New Zealand’s more generally.”

Directors see red tape as the second-highest concern in relation to both economy (33%) and business performance (34%).

An overwhelming majority of boards (86%) said stakeholder interests are very important to their business, including almost all (97%) of publically listed companies.

“The importance of stakeholder interests is a key global theme in corporate governance as businesses increasingly focus on long-term sustainability, including the impact this has on society and the environment,” Ms Caird says.

“It was pleasing to see diversity remains a key consideration when making board appointments at 70% up from 60% last year. While the number of boards with the capability to comply with the new Health and Safety at Work Act has also increased to 68% from 60% last year and 51% in 2014.”

The survey was conducted in October 2016 by the IoD and involved 883 members of the Institute of Directors.

This is the third annual Director Sentiment Survey, and this year the IoD has partnered with ASB on the survey.

Read the 2016 Director Sentiment Survey report

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