Directors say the operating environment of businesses is improving
Share this article:
COMPANY directors believe the daily operating environment is starting to improve, despite feeling predominantly negative about broader economic conditions, and are looking forward to brighter prospects next year.
That’s according to the 2021 Institute of Directors in South Africa (IoDSA) Sentiment Index – the sixth iteration of the study. The survey, which polls the views of close to 500 directors, mostly in an executive capacity, seeks to gauge how South African directors view the current operating climate.
The survey was conducted earlier this year when South Africa was on a national adjusted level 3 lockdown due to the rising cases of Covid-19.
IoDSA executive: governance and corporate services, Vikeshni Vandayar, who oversaw the report, said in a statement that while serious macroeconomic concerns understandably remained around the boardroom table, the upside was a perception that general business conditions had improved from 2020, which she believed was due to the positive adaptation to the so-called new normal conditions of remote and virtual working.
However, many in South Africa feel predominantly negative about economic conditions facing South Africa in coming months and are also increasingly concerned over a shortage of skilled labour as well as sometimes onerous union demands.
This year’s survey included key questions around technology and its uptake given the Covid-19-driven move to a virtual workplace.
Just 46 percent of respondents believed boards were devoting enough time to discussion around technology and its future role. Only half of those surveyed believed that directors had a high-level understanding of cybersecurity risks.
Vandayar said that while directors were learning to live with the flux caused by the pandemic, most respondents still felt the uncertainty of the South African economy had impacted their business the most.
Corruption and inadequate government service delivery remained in the top-ranked challenges affecting business in the index. Energy security was not as much of a concern as years ago, but still ranked highly along with inadequate government service delivery.
The most negative sentiments remained the level of red tape, poor consumer confidence, an over-regulated environment, high tax levels and a lack of infrastructure development.
The index showed that South African directors felt positive towards current governance conditions in South Africa, but this positive sentiment had been decreasing since the survey started in 2016.
“Directors felt the most positive about boards adequately setting the tone of ethical conduct through their ethical leadership and most negative about the implementation of good corporate governance practices improving in the next 12 months,” Vandayar said.
The top governance challenges were lack of sustainable thinking and a lack of understanding of the overall benefits of good governance.
In terms of the job itself, directors were buoyed that continuous professional development was impacting positively on-board performance, but there was concern over the willingness of some directors to take risks that could hinder innovation and growth.