Directors have suddenly become optimistic about Australia and have turned their attention to company culture.
The latest Australian Institute of Company Directors’ (AICD) bi-annual Director Sentiment Index shows that directors are more confident than at any time in seven years since the measure started.
And 90% of directors surveyed also reported the need to make improvements in corporate culture.
“Corporate culture is an important topic for the board table,” says AICD chair Elizabeth Proust.
“It is positive to see the vast majority of directors are actively working to improve corporate culture in their own organisations.
“A focus on culture over the long-term is critical for management and boards of all organisations. This is a complex task that requires sustained effort.”
The sentiment index is the only indicator measuring the opinions and future intentions of directors on a range of issues including the economy, government policy and governance regulations.
The latest shows directors are more optimistic about the outlook for the Australian economy than they’ve been since 2011, and optimism has also increased for the outlook of the US and European economies.
And 57% of directors expect their business to expand over the coming year, continuing an upward trend over the past two years.
Optimism around wages growth and decreasing unemployment is also strong.
The survey was conducted with 973 members between September 21 and October 4.
“We’ve recently seen the strongest employment results since 1994,” says Proust.
“So the fact that directors are so confident about employment and wages growth over the coming 12 months suggests the economy may be turning a corner after a sustained period of flat wage growth and investment.”
Directors nominated infrastructure, energy policy and international competitiveness as the top three issues the federal government should address in the long-term.
Renewable energy sources topped the list of priority areas for infrastructure investment (53%), followed by regional infrastructure (41%) and roads (33%).
More than half (53%) reported their boards were actively seeking to increase gender diversity while 77% said they were actively looking to increase diversity of skills.
Directors nominated a greater focus on the long-term in planning and reporting, accountability for corporate misconduct and corporate culture as areas needing improvement in relation to business standards and social licence.
Personal income tax topped the list of priorities for taxation reform (50%), followed by company tax (47%), multinational tax arrangements (43%) and state-based taxes such as payroll tax (43%).