CEO PULSE: Sweating the productivity question

Australian CEOs are seeing rays of sunshine amid economic gloom, but their long-standing concerns over staff shortages are being outweighed by a different issue.

Our latest soundings on the mood of Australian chief executives suggest that at least it’s not getting any worse. There’s some patchiness, to be sure, but overall CEO sentiment appears to have stabilised.

The fourth quarter Business Spectator GA Research CEO Pulse, now sponsored by IBM, has seen a slight increase in optimism from bosses about both the economy generally and their own businesses.

Also, expectations about employment and capital investment have stopped falling for the first time since our surveys began.

CEOs are even feeling better about the Gillard government: the average score out of 10 for the government’s handling of the economy has increased from 2.6 to 3.3 – not exactly a pass yet, but certainly an improvement.

And all this is despite the negative impact of the high Australian dollar. About half the CEOs said it was bad for their company as well as their industry and 78 per cent said it was bad for the economy as a whole.

In response to the high exchange rate, 43 per cent of company heads have changed either their corporate strategy or their hedging strategy and 33 per cent are importing more inputs, including labour. A big majority – 88 per cent – is now factoring in an exchange rate at or near parity with the US dollar.

On balance it is a mildly positive survey of CEO sentiment – the first one we have seen. Considering the uncertainties around the global economy at the moment, that’s a result which augers pretty well for 2012: CEOs are investing and employing staff and they seem to have come to terms with a dollar at parity and are adjusting their strategies accordingly.

Nevertheless most of them want to see interest rates come down some more. Said one: "manufacturing is gasping for air and needs oxygen through a lift in consumer confidence”.

One interesting result from this survey was that for the first time CEOs report that the issue most likely to keep them awake at night is not finding and keeping good staff – it’s improving operational efficiencies, in other words productivity.

It confirms that at a micro level as well as the macro level, Australia’s productivity challenge is at the forefront of business thinking.

Research design and analysis for the CEO Pulse was conducted by GA Research and fieldwork by AFS. The sample comprised 128 CEOs of organisations with an Australian turnover of $100 million or more who opted to participate in a five minute survey conducted over the phone or online between Monday 28 November and Sunday 11 December 2011.

Follow @AlanKohler on Twitter

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