Fit for the lean times

Phil O'Reilly says New Zealand businesses have reacted to the Recession in a mature way. Photo / Brett Phibbs

Product innovation, increased training, bonuses and multi-tasking are just some of the measures New Zealand businesses are embracing to boost productivity.

The latest New Zealand Herald Mood of the Boardroom survey, conducted last month in association with Business NZ, reveals an unprecedented commitment by many companies to lift productivity in the face of the global recession.

Of the 186 survey respondents, from Business NZ's membership, nearly seven out of 10 said their business had made changes in the past year to increase productivity. Rather than shedding jobs, companies expected staff to do more - and more efficiently - and in some cases were providing incentives to make it happen. New technology and improved work and sales processes were also taking over as businesses sought to eliminate waste and downtime.

Some respondents reported job cuts, but most spoke positively about improving systems to do more for less and making better use of plant and equipment. Many said they had introduced better systems and processes, some involving increased spending on training and technology.

"Business has got the message about productivity that we have been raving on about for four years," Business NZ chief executive Phil O'Reilly says. "Yes, we are lean, but we tend to be lean with low skills which means we still have lower productivity compared with other countries."

O'Reilly says there is no question that New Zealand business had become more efficient but productivity was still lower than countries such as France where featherbedding - over-manning - was rife. This, he says, was because New Zealand tended to produce unsophisticated products efficiently but was less successful in developing higher-margin, higher-value products.

"You might have featherbedding [in an overseas economy] but if you were making a Mercedes, until recently you were making a healthy margin."

O'Reilly says there is a good future in the food industry that would benefit from the expansion of free trade. "The story of New Zealand is that we need to be doing very well in food [and producing] different types of food products.

"There is a good story to tell in New Zealand. When you think about productivity it is about getting more value out of every hour we work in the economy ... It is all around building value in the product."

He says sensible companies retained their skilled workers in times of recession. "Two years ago there was a lot of talk about skill shortages. It was the number one issue. The big story today is that many companies are keeping their staff even if they are not well utilised. They recognise that the [long-term] productivity of the labour force is critical."

He urges companies to think carefully about not replacing skilled staff who left. "You need to be careful in small businesses about running sinking lids."

He is encouraged by the willingness of New Zealand companies to take ownership of their challenges rather than demanding action from the Government. "New Zealand business is a lot more mature about these things than other businesses elsewhere in the world."

Despite some reports of companies shedding staff, the level of pessimism in responses to the latest Mood of the Boardroom survey is low, considering the impact of the global recession on New Zealand. But Business NZ's Stephen Summers, who co-ordinated the survey, warns: "Dead companies don't speak."

That said, the "head-in-hands" approach that has been the response of many companies in Europe and the US to the recession is not coming through in New Zealand. O'Reilly says this might be because New Zealand had an earlier and softer start to the recession than other countries.

"We had a 'practice recession'. We went into recession earlier when all the rest of national markets were going quite well. We got into it quite softly.

"We did not hit the wall like other countries. When the [global] downturn occurred last year we had made the moves to make ourselves fit."