Business leaders say the wage subsidy the Government implemented to support firms that had taken a revenue hit from Covid-19, was an important step to keep people in work and the economy going.
The Mood of the Boardroom 2020 survey revealed 41 per cent of respondents accessed the first round of the subsidy, and 15 per cent — the second round.
The subsidy was received across myriad industries, and those that took it up say it was a quick and sharp response that bolstered confidence and saved jobs. "I think this saved many jobs," says a healthcare boss. "We did not make people redundant because of this, and they remain employed post the subsidy ending."
"It was a significant help during times of extreme uncertainty to support staff and give them surety of employment," says Fulton Hogan CEO Cos Bruyn.
There have been reports of some companies rorting the system and claiming wage subsidies they may not have been entitled to but some survey respondents say although they may have been eligible for the support, their businesses chose not to take it up.
LIC chief executive Wayne McNee says given how the business performed for the full year, the firm chose not to use it. A tech CEO says, "we felt it was a badge of honour not to need or use the wage subsidy in the first or second round".
Chief executive Don Braid says Mainfreight applied and received $10.6m — qualifying under the rules.
"But we returned the full amount when we recognised we were better off than others and could see improvement occurring."
One CEO says their company accessed the first round, but repaid it in full as soon as it was clear the impact of Covid was less than projected. "It was hugely helpful in giving us the confidence to maintain full employment and remuneration at a time when some competitors were cutting one or both."
But business leaders caution: "We need business to adapt to the tough new environment and the Government — and indeed New Zealand — can't afford to keep subsidising business indefinitely."
Business resizing — not just down
The buffer provided from the subsidy has no doubt saved jobs. Exactly half of the survey respondents say they haven't had to downsize staff during the pandemic.
But even so there have been a significant number of casualties from the crisis — some 17 per cent say they have had to downsize by more than 10 per cent. Although some note the full impact of job losses will be revealed once the ventilator of the wage subsidy wears off.
The most dramatic reduction in staff numbers has been in the tourism industry.
But 8 per cent of respondents say they have upsized due to the impact of the pandemic. These are from a range of sectors, including food and agribusiness, banking, investment, professional services and IT firms. There have been several reasons for the staffing increase.
"We are taking the approach of investing through this crisis," says ASB CEO Vittoria Shortt. "This means providing permanent roles for contractors and recruiting more people into our business."
Chapman Tripp chief executive partner Nick Wells says there have been fewer departures from the firm: "Few want to leave for overseas, so we have grown slightly compared to what we would typically expect."
A professional director says one of her companies initially pushed pause on recruitment — "however it very quickly became apparent that the needs of our customers required us to accelerate progress in order to continue to help with their evolving needs."
CEO Chris Quin says Foodstuffs North Island upsized 6 per cent at peak due to panic-buying and growth in online.
Mixed impact on production levels
CEOs were asked how Covid will impact production levels within their businesses. The result is mixed over the coming two quarters, with a few (4 per cent) expecting a significant decline of more than 80 per cent, but others expecting no impact or even growth in production levels.
A law firm head: "We saw a decline over the past three months that averaged out at 20 per cent. A trend in the right direction is now evident — but still down year-on-year."
Most in primary industry and food and beverage say they don't expect to see a significant impact in the coming months. "Demand persists for premium infant formula in the China market," says director Ruth Richardson. "Demand signals remain very positive," says an agribusiness boss. "But we do have a lingering concern — perhaps through our approach of being constructively paranoid — that the music will stop and there won't be enough chairs."
As has been the case for many aspects of Covid-19, CEOs say in many cases production levels will depend entirely on the pandemic — and therefore the future remains uncertain.
"It depends totally on expectations of further Covid incursions, shutdowns and the opening of borders to both shows, sports teams, artists and tourists," says non-executive director Joanna Perry.
From a food and beverage boss: "This is a hard question to answer looking forward as it all depends on the Government's ability deliver on its elimination strategy."
Production is clearly not just a domestic issue. A slowdown in world trade growth (which CEOs score among their highest international risks at 7.64/10 on a scale where 1= no concern and 10=very concerned) contributes to general uncertainty and nervousness in the business community in terms of future production levels.
MinterEllisonRuddWatts' Lloyd Kavanagh: "We need to plan for each of the scenarios, and be agile in adapting depending on what unfolds. We can't project one outcome when there are so many variables."
The disruption in the way businesses operate as a result of Covid-19 has been a catalyst for businesses to adopt new technologies more quickly than they expected and accelerate their use of existing technologies. McKinsey estimates this rapid migration to digital technologies has seen us vault five years forward in consumer and business digital adoption in a matter of around eight weeks.
The Mood of the Boardroom survey asked CEOs how the Covid-19 crisis has changed the way in which their business is conducted.
On a scale of 1 to 5, where 1= strongly disagree and 5=strongly agree, the top-rated changes to businesses are: increased use of online meetings (4.63/5), increased use of technology (4.45/5), more flexible working (4.36/5), accelerated growth of e-commerce (4.33/5) and reduced international business travel (4.31/5).
Beca's CEO Greg Lowe said he was surprised during the initial lockdown at the effectiveness of working from home both for Beca and for its clients.
"The increased use of virtual meeting technology has not only increased the skill levels of all of us, we have realised that we can be more productive from remote locations and carry out more of our business activity remotely than we thought."
Beca managed to maintain its delivery to its clients with thousands of people working from home — but that this is not a sustainable business model in the long term.
"Building relationships, developing people, creating more effective teams, increasing productivity all needs some form of person to person engagement. While undoubtedly we will see more flexible working (for many reasons) and less travel, I do not believe that large numbers of people want to work permanently from home."
The adoption of flexible working saw one energy CEO reduce their organisation's footprint and rethink the use of office space. But an investment fund boss reckons the importance on office space from more people working from home is overrated — "but this will be impacted by economic factors".
Precinct Properties chair Craig Stobo says "the Covid wave has accelerated the digital wave". Another executive in the tech sector says New Zealand should "use this to become a digital nation!"
A property CEO says Covid has given their organisation a greater appreciation of the critical importance of business continuity planning. "It is no longer a 'nice to have when we get to it' item on the board agenda."
An increased focus on staff wellbeing and social purpose was also mentioned from executives spanning various industries as a major change from Covid.
"We have had a complete rethink on the role of HR and how teams work — including salary and incentive structures," said one CEO in the utilities sector.