How to build a winning team
First came the share market crash of the late eighties, then the slow economic cycle of the 90s, the global financial crisis in the 2000s, and the aftermath of the pandemic . . . businesses, like humans, must be resilient.
We can be complacent or conservative, convincing ourselves we are caught in an endless cycle and each crisis will resolve itself, relying on the business ecosystem and society to do what is right. Or we can use each disruption to adapt and make the necessary changes for progress.
The key is to keep moving forward – and that requires strong board leadership. And while it is no doubt harder today to start a business with the added compliance hurdles, the opportunities are far greater. This will keep expanding with disruption, whether in E-commerce, artificial intelligence, or the breakup of monopolies and duopolies, among other factors.
As chairs, and as boards, we should not be frightened to have, and take on, brave aspirations. To achieve this, you need capable teams with diverse skills – the default position of no-to-little risk is the eminent danger to business. Diversity of gender, thought and experience has brought big benefits to business culture and performance.
A chair helps build the right culture, which drives standout businesses – getting this right or wrong determines outcomes, regardless of the profit or not-for-profit status. Culture, like reputation, is hard fought and easily lost. We have a duty to constantly monitor this and not be frightened to address poor culture.
Transformational moves require open and honest relationships between boards, management and stakeholders – no different to any high-achieving sports team. We are proud of our many and varied sporting achievements but less of our business successes.
Boards are going to be faced with multiple challenges as we navigate weakening economies, and the reality of cutting costs with the backdrop of increasing costs of compliance, operating expenses, trade tariffs and our imports on the back of the declining New Zealand dollar.
How do we as chairs and directors add value to shareholders? This requires a disciplined approach to risk and return. While we are all aware of compliance duties, our first obligation is to maintain a sound and profitable business – profit ultimately pays for compliance costs.
Much of the new added compliance is politically motivated and, like governments, subject to change. Strong economies are driven by strong businesses, creating overseas earnings, employing personnel and paying taxes. Businesses either grow or retract but never remain static, so adapting to ever evolving market and customer demands is vital.
Having always been supportive of regulation, the question is, ‘have we gone too far in increasing regulation requirements, and driving businesses to reduce risk’? Health and safety is an obvious area, with ever increasing compliance on the back of increased injuries. No one wishes for accidents, harm or death. Getting this right would add markedly to productivity and quality outcomes.
Normally, performance is a key indicator, but we are experiencing rapidly declining margins in most New Zealand businesses. We all have a role to play, getting back to being productive and rebuilding a future for future generations.
Greg Tomlinson CMInstD is Chair and non-independent, non-executive director of Heartland Group.