CPA Mining & Resources Conference 2012
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This document discusses strategies for leading organizations through uncertain times. It begins by reviewing the key findings of the 2012 Global Dynamism Index, which measures countries' resilience and ability to recover from economic changes. Australia ranks moderately according to the GDI. The document then outlines challenges facing Australian business leaders, such as high tax rates, workforce issues, and underinvestment in technology and R&D. Finally, it proposes strategies for leading through uncertainty, including managing risk prudently, incremental planning, technology-enabled service delivery, and flexible workforce planning.
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CPA Mining & Resources Conference 2012
- 1. Leading Through Uncertain 23 November 2012 Times, what differentiates Rory Gregg dynamic organisations Partner – Operational Advisory Grant Thornton Australia www.rorygregg.com @rory_gregg #cpacongress
- 2. Assurance Tax Advisory over 120 partners & 1,500 professionals Helping dynamic leaders grow their businesses
- 3. AGENDA Global Dynamism Index (GDI 2012) Challenges facing mining & resources leaders Strategies for leading through uncertainty Questions
- 4. AGENDA Global Dynamism Index (GDI 2012) Challenges facing mining & resources leaders Strategies for leading through uncertainty Questions
- 5. What is it Global Dynamism Index (GDI 2012) “The GDI is a series of performance indicators that analyses and measures the resilience of 50 diverse economies and their capacity to recover from a change in economic circumstances.”
- 6. Global Dynamism Index Business Operating Environment Labour & Economics & Human Growth Capital Financing Science & Environment Technology
- 7. Key Findings Top Economies(GDI 2012) IrelandSweden Finland China France Sweden Slovak Singapore Republic Israel Uruguay Labour & Business Economics & Science & Financing Operating Human Environment Technology Growth Environment Capital Argentina
- 8. Key Findings Regional Insights (GDI 2012) 66.1 Nordic 62.9 North America 59.2 Western 55.7 Europe Eastern Europe 51 Middle East and Africa 59.3 Asia Pacific 60 53.8 G7 Latin America 55 Growth8 57 All Countries
- 9. Key Findings Country Insights (GDI 2012) United Sweden States Finland 69.6 China 64.1 70.5 61.4 Austria Singapore 66.1 72.1 Israel 69.3 Australia 65.6 Best - Business operating environment - political stability (96) Worst – Financing environment - inbound M&A deals (6)
- 10. Key Findings Where Australia Stands? 66.1 55.7 Eastern Nordic Europe 62.9 Top 3 Ranking North 59.2 America Western 1 - Singapore (72.1) Europe 2 - Finland (70.5) 3 - Sweden (69.6) Australia & New Zealand 59.3 Asia Pacific 6 - Australia (65.6) 51.0 11 - New Zealand (63.9) 53.8 Middle Latin East and America Africa Bottom 3 Ranking 48 - Greece (40.2) 49 - Nigeria (40.2) 50 - Venezuela (37.4)
- 11. AGENDA Global Dynamism Index (GDI 2012) Challenges facing mining & resources leaders Strategies for leading through uncertainty Questions
- 12. What does this mean for Australia Global Dynamism Index Business Labour & Operating Human Capital Environment (91) (64) Top 15% of economies Aust labour productivity Strong political stability rates and % of workforce under 30 is low compared to high performing economies Financing Economics & Science & Environment (63) Growth (59) Technology (51) Ranked low in growth Real GDP growth low R&D as a % of GDP of value of inward M& compared to top was low compared to A deals but high in performing economies top performing financial regulatory economies systems
- 13. Business Environment 91 Challenges facing Australian leaders Increased focus in compliance & risk High corporate tax rates Cost of doing business in Australia
- 14. Labour & Human Capital Challenges facing 64 Australian leaders Attracting & retaining talent Increase pressure on wage costs Constrained by traditional resourcing models Replenishing talent pool
- 15. Financing Environment 63 Challenges facing Australian leaders Accessing capital for growth Identifying suitable M&A targets Appetite for risk
- 16. Economics & Growth 59 Challenges facing Australian leaders Population size continue to constrain GDP growth Low productivity rates Geographical isolation
- 17. Science & Technology 51 Challenges facing Australian leaders Under investment in technology Over reliance on US/Europe to lead technology innovation Slow to adopt new technologies & ways of working
- 18. JUMEX Survey 2012 Key findings #1 Issue for 2013 Availability of equity capital 68% of mining companies planning to raise capital in 2013 Competition for scarce capital Investigating alternate funding models Joint ventures, asset sales, mergers
- 19. Mining & Resources 2012 - 13 Key Priorities 2012 Priority 2012 Priority 2012 Priority 2012 Priority 2012 Priority General stability Availability of Volatility of Availability of Availability of of financial equity finding commodity prices skilled workforce equipment markets 2013 Priority 2013 Priority 2013 Priority 2013 Priority 2013 Priority Availability of Stability of Volatility of Availability of debt Availability of skilled equity funding financial markets commodity prices funding workforce
- 20. AGENDA Global Dynamism Index (GDI 2012) Challenges facing mining & resources leaders Strategies for leading through uncertainty Questions
- 21. Leadership Myths Leadership Realities Conquer local markets before growing Australia’s population limits growth options offshore for many businesses 80 percent of large Australian businesses accept the need to expand into Asia1 Don’t be afraid of doing business in international markets Strengthen your ties and business in Asia and emerging economies 1 Grant Thornton Australia, 2012
- 22. Leadership Myths Leadership Realities Establishing aspirational goals is the key to Don’t mistake vision for strategy guiding an organisation to success Focus on iterative and rapid execution to achieve performance improvement Don’t be afraid to change tactics or strategy
- 23. Leadership Myths Leadership Realities Focusing on improving existing products and "Doing the same things better" is not services is a low risk path to future profits necessarily the path to future success Fluctuating terms of trade, looming skills shortages and new technologies are major sources of future instability Leaders need to constantly question assumptions and explore innovative alternatives
- 24. Leadership Myths Leadership Realities Skilled workers are easily hired Adopt a broader range of workforce and resourcing strategies is essential for future sustainability. Explore outsourcing, talent retention, flexible work models Develop tactics for lifting use of women and mature age workers. Women are paid up to 19% less than male counterparts2 2 Australian Bureau of Statistics 2012
- 25. Leadership Myths Leadership Realities Workforce productivity only relates to the Productivity is not just about wages. It number of hours employees work divided by depends on a combination of factors. total output Redesign work practices to reduce inefficiency and duplication. Consider impact of employee empowerment and engagement, training, workforce utilisation, output quality and customer satisfaction measures3 3 Dept of Workplace, Employment and Education
- 26. Leadership Myths Leadership Realities We invest a lot in technology, and it is a high Innovation is not linked to IT and priority infrastructure. It is a cultural issue IT investment has plateaued over the past 18 months with the Government sector performing worst, Energy sector highest4 IT infrastructure can sometimes make it harder to change workflows, and stifle innovation Focus on the customer experience, rather than internally focused projects
- 27. Strategies for leading through uncertainty Australian business leaders need to focus on what matters… Manage Technology Flexible Risk Incremental Enabled Workforce Prudently Planning Service Delivery Planning
- 28. AGENDA Global Dynamism Index (GDI 2012) Challenges facing mining & resources leaders Strategies for leading through uncertainty Questions
- 29. RORY GREGG Partner – Operational Advisory T +61 2 8297 2531 E rory.gregg@au.gt.com #CPACongress @rory_gregg www.rorygregg.com © Grant Thornton International. All rights reserved.
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- Good AfternoonBy way of introduction my name is Rory Gregg, I'm a Partner within the Business Consulting Practice for Grant Thornton and am based in Sydney.Next slide
- Good AfternoonWe are a International Professional Services firm with offices in most capital cities within Australia.We have 120 partners and over 1500 professional services employees supporting our client across the full spectrum of Assurance, Tax and Advisory Services.More often than not we find ourselves working closely with the Board, the CEO and their executive leadership team to identify and overcome a broad range of complex problems they may face in leading their businesses.The past three years has seen unprecedented changes and realignment of the global economy. We've seen the dramatic shifts in the economic capital Eastward, whilst the West continues to recover from the sovereign debt crisis, Further more, the political instability in Syria combined with the uncertainty surrounding the future of a number of Australia's industries continues to weigh heavily on the minds of business leaders across Australia. Today I wanted to spend some time sharing with my some of the emerging tends and key challenges facing business leaders in Australia. I'd also like to share with you some of the strategies that we believe dynamic leaders should consider as they continue to navigate their way through these challenging and uncertain times….. Next slide
- The Global Dynamism Index is effectively a series of economic and business related performance indicators that analyses and measures the resilience of 50 diverse economiesThe index also ranks the capacity of these 50 economies to recover from a change in economic circumstances.The Index (published earlier this month) conducted by GT in collaboration with the Economist Intelligence Unit, the Worlds Bank, Thompsons Financial and UNESCO. 406 Senior Business leaders from the respective economies also play a pivotal role in providing the business perspectives.The Index ranks the 50 economies from 1 to 50 using a weighted index. Basically the higher the number the better the resultThe reason I've included the GDI results in todays presentation is because it provides an insight into how Australia, and more importantly Australian Business leaders are performing against other economies during these uncertain times.I hope that these results will also highlight to you some of the key areas that you as business leaders need to consider as Australia begins to take it's place in the new commercial order.So lets get straight into it……
- So just quickly let me take you through the key categories of performance areas.Business Environment performance indicators focus on…Foreign trade and exchange regimes and controls. These indicators focus on Policy, legal and regulatory riskAlso covers political stability Labour & Human Capital performance indications focus on….Focus on workforce productivity growthUnemployment School, life expectancy% of population under 30 years of ageScience and Technology performance indicators focus on ….Broadband subscribers per 100 inhabitantsGrowth of Broadband subscriptionR&D as a % of GDPTotal IT spending growthFinancing EnvironmentQuality of overall financial regulatory systemAccess to medium term capitalGrowth of value of inward M&A dealsPrivate sector credit and percentage of GDPInward direct investment growthCorporate Tax burdenEconomic GrowthReal GDP growthPrivate Consumption per headChange in value of stock market index
- Top EconomiesBusiness Operating Environment; (Finland, Ireland & Sweden)These countries provide robust safeguards and regulatory riskOpen trade policies, clearly defined competition and legal systemsOffer a much better platform for dynamic businessesBusiness leaders identified foreign trade and exchange regimes and controls as being a key priorityWorst performing were Nigeria, Venezuela & ArgentinaScience & Technology; (Israel, Finland, Sweden)The rise of the internet has steadily eroded geographical and economic boundaries that once existedPoor internet connectivity holds back economiesSignificant investment in R&D is likely to boost the growth prospects for economies – for example creating new enterprisesTop economies from across the globe, all sizes and at all stages of developmentIsrael offers the most dynamic environment with a 4.4% of GDP being devoted to R&DWorst performing was Venezuela, Egypt and IndonesiaLabour and Human Capital, (Argentina & Slovak Republic, Uruguay)Access to the right talent is a critical factor in supporting business growthThe best workers not only increase productivity, but can also save a business time and moneyThe best people will often be attracted to the most dynamic organisationsEmerging economies scored better than mature economies largely because growth in labour productivity favours emerging markets as they started from a lower baseline.Argentina's labour productivity of 6.3% compared with 3.5% in AustraliaWorst performing, UAE, South Africa and EgyptEconomics & Growth; Argentina, China & UruguayFaster growing economies offers consumers, businesses and the publics demand to match their ambitionEmerging economies such as Argentina, China and Uruguay are not restrained by the debt crisis of mature economies and have access to a growing middle class to support growth.Worst performing was Greece, Portugal and Japan.Finance Environment, Singapore, Finland, FranceAmbitious growth plans are important for dynamic economies such as Singapore, Finland and France.Dynamic organisations need to invest to stay ahead of the curve and therefore require a financing environment in which they operateBusiness leaders identified the need for sound financial regulatory systems and measures in order to support their growth targets.Worst performing was Argentina, Nigeria and Russia.
- Regional InsightsRegional SummaryNordic nations are most dynamic globally followed by North America, the G7 , Western Europe and Asia Pacific above average.Eastern Europe ranks just below Latin America and Growth 8Middle East & Africa rank lowestEmerging EconomiesThere is no doubt that growth prospects are healthier in emerging economies such as china, Latin America and IndiaOver the next 5 years the IMF expects emerging economies to grow at around 7% to 8% per annum compared to 3.2% in mature economiesDespite this, emerging economies still have their challenges for example the Indian government's battle with corruption, high inflation, and the declining value of the local currencyWe see some of these emerging economies tapering off as they begin to grapple with the changing environment, China's growth is slowing as debt begins to riseMature economiesThe 10 economies that sit at the top of the rankings vary significantly and include, countries from Asia pacific such as Australia, Singapore & Korea. A further five from Europe, being Austria, Germany, Finland, Sweden and Switzerland. The US from North America and Israel from the Middle east.
- Country InsightsSingapore emerges as the most dynamic economySingapore is perfectly paced to act as a gateway between west and eastBusiness and economic prospects are supported by an open and transparent financing environment and a well educated workforceFinland, Sweden, Israel and Austria complete the top 5United States ranks 10 and China ranks 20US ranked highest in Financing ahead of Canada, ranks 2 in G7 and behind GermanyNot surprisingly, China ranked highest in Economics a growth and was ranked 2 in G8 behind Korea. They ranked 6th in Asia Pacific For those of you who were wondering, the United Kingdom was ranked 32ndAustralia ranked 6th and 2 in Asia Pacific behind Singapore. Highest for political stability (96) and lowest in growth of inward M&A deals (6)
- Country InsightsSingapore emerges as the most dynamic economyFinland, Sweden, Israel and Austria complete the top 5United States ranks 10 and China ranks 20Australia ranked 6th and highest for political stability (96) and lowest in growth of inward M&A deals (6)
- Good AfternoonBy way of introduction my name is Rory Gregg, I'm a Partner within the Business Consulting Practice for Grant Thornton and am based in Sydney.GT is a global Professionals Services firm that specialises in providing our clients with a broad range of Assurance, Tax and Advisory ServicesMore often than not we find ourselves working closely with the Board, the CEO and his or her executive leadership team to identify and overcome a broad range of complex problems they may face in running their businesses.In Australia we have over 120 partners and 1,500 staff located in all major capital cities.Our core clients include a broad range of public and privately held companies, both Government and Non Government Today I wanted to talk to you about the role I believe CIOs can and should play in supporting the Board and the CEO in leading and managing organisationsNext slide
- Business Operating Environment (91)Performed in the top 15 % surveyed (96 for Political Stability)Economics & Growth (96)Real GDP growth was low compared to other top performing economies but high in private consumption per head.Science & Technology (51)R&D as a % of GDP was average compared to other top performing economiesLabour & Human Capital (64)Labour productivity was lower than other top performing economies (eg. China 90) & scored low on % of population under 30.Financing Environment (63)Ranked well in the quality of overall financial regulatory systems but not so well in growth in value of inward M&A deals
- Section - What Dynamic Organisations need to consider1. Findings from a recent Australian Industry Group survey show more than 80 per cent of large businesses are already engaged in some way with Asia. Only half of mid-sized companies have plans to start or expand their connections2. According To Grant Thornton, on 3.4 per cent of small to medium sized enterprises export to China3. China is moving to be a much more consumption-based economy so they've got more of a need for services and technology and that's where a lot of the mid-market and SMEs have a good capability
- CEO FocusLets start by looking at the CEO Focus and link this back to how we believe CIO can take a greater role in supporting the business.Standard prioritiesStrategyGrowthCustomer RetentionQualityStructureAgilityScalabilityAlignmentPeopleTalentRewardEngagementProcess Customer CentricEfficiencyLeanTechnologyMobilitySecurityFlexibilityWhat does this mean for the CIOStrategyAligning technology to business strategyInnovation (Customer & Quality)StructureBusiness partneringAligned to business needsOutsources vs InsourcedPeopleBusiness capabilitiesAlternative Talent sourcing modelsProcess Placing the customer at the heart of the processRemoving barriers through technologyTechnologyFocusing on what mattersGetting the basics rightChallenging the business (innovation)Leaders should also know their strength and the strengths of their team
- Good Afternoon
- Despite the climate of uncertainty, Australian business (and their leaders) continue to perform.Recent results from the ABS suggest that growth of 3.7 for the Jun Quarter led by the mining, banking and healthcare sectors. Reinforcing the broad impact of our economic strength86% of ASX 200 were profitable in their most recent periodReal labour costs are trending upwards, rising 1.4% in the quarter, which is hardly surprising given a full employment scenario in an economy growing strongly.Australian Leaders should..Risk ManagementSpread their risk, and make smaller moves that can be easily completed in short time scales.Incremental PlanningAvoid maintaining the status quo however avoid embarking on any grand untested strategies and plansBe prepared to make frequent adjustments to your plans, and keep a watchful eye on both your clients and the marketTechnology Enabled Service DeliveryService Delivery should not be constrained by you technology or workforce capabilities.Flexible Workforce PlanningDiversified Workforce; leaders should working across a broader portfolios of responsibilities ( client and non client integration)Workforce Flexibility; Flexible not "casualised" workplace arrangementsWorkforce Reskilling; Reskilling the workforce especially aging workers to respond to changing needs.
- Good AfternoonBy way of introduction my name is Rory Gregg, I'm a Partner within the Business Consulting Practice for Grant Thornton and am based in Sydney.GT is a global Professionals Services firm that specialises in providing our clients with a broad range of Assurance, Tax and Advisory ServicesMore often than not we find ourselves working closely with the Board, the CEO and his or her executive leadership team to identify and overcome a broad range of complex problems they may face in running their businesses.In Australia we have over 120 partners and 1,500 staff locates in all major capital cities.Our core client include a broad range of public and privately held companies, both Government and Non Government Today I wanted to talk to you about the role I believe CIOs can and should play in supporting the Board and the CEO in leading and managing organisationsNext slide