Director Sentiment Monitor (Q1)
The first of our quarterly Director Sentiment Monitor surveys was conducted with IoD members from 5thto 16thApril 2018. We would like to thank our members for their valuable feedback. The survey findings provide insights from our members about on their views on a number of issues relating to business, economic and governance.
*Throughout this document, percentages may be rounded up/ down for illustrative purposes.
Respondents:Male (77%), Female (23%). Chief Executive / Managing Director (38%), Senior Exec / Head of Function (28%), Non-Executive Director (14%), Chairperson (9%), Sole Trader / Consultant (6%), Other (5%).
Company Type:Private (44%), Multinational / Plc (19%), Professional Services (16%), Non-profit (9%), State / semi-State (7%), Other (5%).
Industry Type: Financial Services (24%), Professional Services (16%), Life Sciences / Healthcare (12%), Technology / Media / Telecommunications (11%), Consumer & Industrial Products (10%), Services (8%), Construction (6%), Charity / Non-Profit (4%), Other (7%).
Optimistic business, economic, markets outlook
The mood amongst business leaders is cautiously hopeful when it comes to the Irish economy. Just over half of respondants (51%) say that they now feel more optimistic in respect of the Irish economy compared to end 2017, 38% say they feel the same and 11% are more pessimistic about the economy.
Directors and senior executives are more upbeat about the outlook for their own organisation, with 57% of respondents expecting improved performance of their primary organisation in Q2 (2018). Over a third (37%) say that they expect the performance of their primary organisation to stay the same while (5%) expect a decline.
Appropriate to this optimism, the highest proportion of respondents (64%) also believe that the performance of their primary organisation will improve in 2019, 25% say that the performance might improve and just 8% say performance is unlikely to improve next year.
Certainly, strong business performance is demonstrated by the 48% of respondents who say that the number of people that their company employs has increased over the past three months, 41% say the employment figures are unchanged and just 8% say the employment figures have decreased.
In respect of their primary business, it is anticipated that the EU market will provide the most significant opportunities for growth in 2018, according to the majority of respondents (48%). Trailing behind the EU is the UK (19%), USA (18%) and global (11%) markets. It is anticipated that emerging markets will provide significant opportunities for growth for 10% of respondents, and the Chinese market will do so for 6% of respondents. Some 16% note that they anticipate growth in other markets, such as the domestic Irish market, the Middle East, and Australia.
Supportive of government performance, investment
Among surveyed business leaders, the general perception of government performance to date is positive. While over a quarter (27%) believe government performance is merely fair, 67% of directors and senior executives rate the Government’s performance as either good or very good and 4% rate it as excellent.
This largely affirmative rating of government performance is supported by just over half (56%) of respondents’ noting that they either strongly or somewhat favour an extension of the Confidence and Supply Agreement from three to five years. One fifth (20%) of respondents either strongly or somewhat oppose this. Another 20% say that they feel neutral about such an extension.
In terms of the recently published initiative, ‘Project Ireland 2040’, which illustrates the Government’s commitment to reforming how public investment is planned and delivered over the next two decades, the majority of respondents (66%) say that increased infrastructure spending is key in terms of investment in Ireland’s future development. Housing investment is rated the second most-critical at 63% and 39% say that preparations for Brexit are key. The fourth-highest proportion (38%) say that less focus on short-termism is critical to future development, and (30%) note ‘development of entrepreneurial activity’ as critical.
Labour sourcing, retention top risk facing organisations
Directors and senior executives identified that the tight labour market is precarious for organisations, with the highest proportion, (26%) selecting ‘labour sourcing/quality/capability/retention’ as the single biggest risk currently facing their organisation.
This result is consistent with our previous findings presented in the Leadership Challenges in an Uncertain Agereport (November 2017), which showed that the availability of talent with key skills was the most significant constraint to business growth (74%), talent sourcing and retention is the feature of business that is rated the second-highest current priority (49%) and talent sourcing and retention received the third-highest percentage (82%) in respect of current risks facing companies in Ireland.
Other risks that are currently top of mind for directors and senior executives include the effects of Brexit (18%), while 14% of respondents highlight political/economic uncertainty. Lower percentages of respondents indicate that the current level of regulation (13%) and access to capital/funding (8%) are key risks currently facing their organisation.
With the date for compliance of the General Data Protection Regulation (25thMay 2018) fast-approaching, it is notable that just 2% view this regulation as the single biggest risk that is currently facing their organisation.
Storm Emma impacts business productivity
In reaction to Storm Emma (27thFebruary - 5thMarch 2018), the vast majority of respondents (84%) confirm that their businesses closed down for one or more days, and almost half (45%) say that the storm had either a moderate or major impact on business productivity.
A further 34% say that the storm had either a moderate or major impact on the timely arrival of delivery of products/services, while 28% say the storm had a moderate or major impact on (increased) operating costs. However, 73% say that the storm did not incur non-performance penalties and 54% say that the storm had either no impact or a minor impact on employment costs.
Brexit – Ireland equipped to compete for business, housing shortage a main barrier
Overall, IoD members’ attitudes towards Ireland’s capacity to compete for international business post-Brexit, is divided. While 40% of all respondents believe that Ireland is appropriately equipped to compete for business on an international scale post-Brexit, 36% of respondents do not feel that Ireland is sufficiently equipped.
Respondents also point to a number of perceived roadblocks to effectively competing for business on an international scale post-Brexit, and the widely-held view is that the ongoing housing shortage is a main barrier. According to 50% of respondents, the housing shortage is an obstacle, and 46% reference the availability of talent with key skills, which supports the earlier finding that labour sourcing/quality/capability/retention is the primary risk that is currently facing organisations.
Along with infrastructure and productivity concerns, business leaders are also worried about border controls/delays; 31% say this is a roadblock to competing for business on an international scale post-Brexit.
Businesses in Ireland are trustworthy
56% of respondents believe that the public’s perception of business in Ireland is moderately or extremely trustworthy, with 29% saying the public’s perception is somewhat trustworthy, whilst 14% believe the public is either slightly or not at all trusting of business.
Most respondents (80%) believe that the action to take in order to create a climate of trust in the wider community, is to ‘set the right tone from the top’. Incidentally, 87% of female respondents and 78% of male respondents reference ‘tone from the top’ as being key to creating a climate of trust.
Other noted actions include ensuring that business decisions reflect company values (42%) and that businesses demonstrate corporate social responsibility (37%). Ensuring that products and services are of a high quality (31%), clear, frequent communications with the community (30%) and transparency (30%) are other actions that can be taken to create a climate of trust in the wider community, according to respondents.