Wellbeing Has Significantly Decreased Among NZ Business Leaders – Financial Pressures And Uncertainty To Blame

Mental wellbeing has decreased significantly among New Zealand business leaders over the past six months as financial pressures and political and economic uncertainty take their toll, according to the latest edition of the BDO Wellbeing & Business Performance Index - Te Rangahau o ngā hauora pai.

The research, conducted by accounting and professional services firm BDO, uses the internationally recognised World Health Organisation’s WHO-5 wellbeing index to measure mental wellbeing among over 500 NZ business leaders. The report highlights that wellbeing has reduced from 69 points out of 100 in the May 2022 WHO-5 results to just 62 out of 100 in this latest survey, which was carried out in October.

Economic uncertainty driving stronger concern for business financials

Just under half (46%) of respondents said that they had been feeling less mentally healthy than normal in the past six months. Among these, COVID-19 disruption (and its lingering impacts) remains the number one cause of stress for NZ business leaders, but is on the decline - 45% of those said it had been causing them to feel less mentally healthy than normal in May 2022, compared to 36% in October.

The second most common driver of negative wellbeing was business financial concerns (34%), including general financial performance challenges and cash flow specifically. Over one-quarter of those feeling less mentally healthy cited cash flow as a key concern (an increase of 8% compared to the May 2022 results).

Third was workload being too high (33%), followed by not having enough people to rely on for support came (29%), and external economic and political factors (27%).

Supply chain issues have been a key challenge for many businesses in managing the lingering impacts of COVID-19 and geopolitical tensions. However, surprisingly only 16% of those feeling less mentally healthy than normal cited supply chain disruption as a key cause of this, down 3% from the May 2022 results. This indicates that generally business leaders may have found ways to manage global supply chain issues. However, this may also be causing flow-on effects to cash flow, as many businesses have begun buying stock several months before they intend to sell it.

Cash flow expected to be the number one cause of negative wellbeing in six months' time

Furthermore, when asked about expected wellbeing in six months’ time, 42% of those who expect to experience negative wellbeing in six months cited business financial concerns as the top cause of this, overtaking the impacts of COVID-19 (26%) for the first time. Those calling out cash flow specifically increased to 31% in six months’ time, from 26% currently.

Business leaders just as stressed now as during COVID-19 peak disruption

In the May 2022 results, nearly two-thirds of respondents indicated that they were feeling significantly or somewhat better than when COVID-19 disruption was at its peak. This figure has now fallen to 52% in the October results, with a further 41% saying they are feeling about the same – indicating that the current business conditions are causing just as much stress now as when COVID-19 disruption was at its peak.

An opportunity for stronger financial and risk management processes in NZ’s business community

When asked what business leaders were doing in their business to manage their wellbeing, 61% said they adopted flexible working practices. This was followed by managing boundaries between work and home (52%), delegating tasks when workload is too high (32%) and having strong financial management processes, including creating a cash flow management plan (31%).

Kimberley Symon, BDO Advisory Partner, said: “With so many citing business financial concerns as a key cause of negative wellbeing, and with the economic outlook continuing to be highly uncertain, we were surprised to see only one-third of business leaders saying that they were adopting strong financial management processes as a way to manage wellbeing in their business life. My clients who are performing the best at the moment are the ones who are checking their cash flow regularly – sometimes daily if conditions are calling for it. This means they can be absolutely sure they have enough to pay their essential business costs as inflation and interest rates mount, and they’ve known instantly when things have become too tight – meaning they can reach out for help ahead of time, instead of waiting until the problem becomes insurmountable.”

Tarunesh Singh, BDO Head of Risk Advisory and author of the recently released BDO New Zealand risk landscape report, ‘Riding the wave of uncertainty’, said: “We are currently experiencing an unprecedented level of geopolitical tensions leading to high levels of economic instability, and this is having a very real impact for businesses across the world and in Aotearoa, who are having to deal with the stresses of a high inflation, high interest rate economy. While businesses cannot control what happens in the geopolitical sphere, they can control how prepared they are and how they react to change. This means having strong risk management processes in place, and forecasting and scenario planning to manage those risks as we head into the next six months.”

The BDO Wellbeing and Business Performance Index - Te Rangahau o ngā hauora pai – is New Zealand’s only investigation into the link between business performance and mental wellbeing. The bi-annual report also includes a range of practical advice and tips for business leaders to manage the key causes of stress in their business.

To view the report as well as video interviews with reporter Wilhelmina Shrimpton and business and wellbeing experts, go to bdo.nz/wellbeing.

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