In a market economy there will always be both winners and losers. That is the name of the game. But bad news attracts eyeballs in the media, and it is a pretty safe bet that your daily serve of news will be full of negative distractions.
In recent weeks the economy wrecking carbon tax has finally vanished from news headlines, and the death of the mining boom was recanted in the space of a single day. After a month of feel good Olympic reporting, it was almost inevitable that we would be due for another dose of doom and gloom. Stepping ably into the breach, both NSW and QLD state governments choose to announce major workforce reductions.
Actual business conditions are of course a positive story, and less likely to attract eyeballs. The ABS announced last week that the economy experienced annual growth of 3.7% for the June quarter, led by the mining, banking and healthcare sectors. Reinforcing the broad impact of our economic strength, CommSec analysed ASX200 company results and found 86% were profitable in their most recent period.
Of course some industries are feeling pain due to the high Australian dollar. But the reality is that we are at full employment levels, and GDP growth and household savings are booming. Real 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.
So why are measures of business confidence falling when operating conditions are good?
Perhaps it comes down to a general mood of uncertainty and poor corporate leadership. Job security is well and truly a thing of the past for most of the Australian workforce, and undoubtedly has an impact on workforce morale and productivity.
The latest ABS analysis of workforce mobility paints a truly Darwinian picture, with high rates of employee turnover across the entire economy. For those employees who recently moved into a new job, 57% changed industry and 42% completely changed occupation. These figures point to massive shifts in the workforce, and the difficulty in sourcing skilled employees. The industries which currently have the highest proportion of employees with more than 10 years of tenure included agriculture (54%), education (35%), public administration (34%), and manufacturing (30%).
Across the entire economy, the ABS analysis found that senior executives were by far the most likely group to still be working at a business after 5 years. It seems that many businesses are still deliberately shedding their most experienced frontline and mid-tier employees, while desperately hanging onto their leaders. It will be interesting to see whether the recent state government workforce cuts follow this same trend.
From a leadership perspective, the best way to deal strategically with uncertainty is to spread your risk, and make smaller moves that can be easily completed in short time scales. You should certainly avoid embarking on any grand plans.
I have often heard leaders cite uncertainty as an excuse to maintain the status quo. In reality, maintaining the course is likely to be one of the riskiest possible options in a truly uncertain environment. Strategically, you could liken it to the captain of the Titanic deciding to speed through a stretch of ocean filled icebergs, rather than slow down and adjust course.
In uncertain times, teams look to leaders for their certainty. When you find yourself navigating uncertain waters, you should expect to make frequent adjustments to your plans, and keep a watchful eye on both your clients and the market. Shared adversity can be a strong glue to help build a cohesive team environment.