10 things managers must watch in 2011

Businesses should brace themselves for a very different world in 2011. It’s a year to watch carefully and there are many unknowns. How high will interest rates go? Will the Aussie dollar finally start to fall? What areas will be hit hard by the skills shortage?

SmartCompany has identified 10 areas that managers need to monitor in 2011.

1. SALARY PRESSURES

With the economic rebound and a tight labor market, economists and recruitment specialists are tipping salaries will be heading one way: north.

Kym Quick, chief operations officer for recruitment services provider Clarius says salaries are tipped to go up by 5% over the next 12 months. In financial services, there have already been salary increases by a whopping 30%.

“Across the board there is a lot more pressure,” Quick says. “People are prepared to pay better dollars for the best talent.”

Economist Saul Eslake, a program director with the Grattan Institute, says there had been a decrease in wage inflation in the private sector and that was not viable as the economy picked up.

“That’s clearly not sustainable as we start to head towards full employment, and it seems pretty obvious that unions are now keen to test the new boundaries of the new industrial relations laws,” Eslake says.

“The economic environment will be more conducive for unions pushing wage claims. Payrolls are expected to come under more scrutiny in 2011.”

2. RECRUITMENT

The labor market is getting tighter and that will make it harder for companies to pick up talent, unless, of course, they are prepared to pay some serious money. Scott Mewing, national director of executive search at recruitment firm Michael Page, says recruitment will be the big issue for companies in 2011, with unemployment at historically low levels of 5.2% and trending downwards.

Part of the problem, he says, is that many companies cut back too deeply when there was a sniff of the global financial crisis. It was a knee-jerk response that might have kept them in business but they might reap the consequences now. They might be struggling to bring them back.

“When we emerged from the last recession, unemployment was around 10%. Companies now will have trouble filling positions. Look at certain industries, like the services industry, which has contracted 30 to 40%. If unemployment is low and you want to get back to where you were in 2008, that means you have to increase your head count by somewhere between 15 to 30%. There will be a struggle to find the right people. Companies are going to have to get a lot smarter getting back to pre-2008 levels. If unemployment is still at 5.2%, it doesn’t add up.”

Mewing says companies should expect significant turnover in 2011. “With unemployment relatively low, when the right opportunity comes up people will leave,” he says.

And the mining boom will drive much of that churn. “If you are in an industry competing against the resources industry, you are likely to lose out and that will spike up salaries and compensation benefits for people,” he says.

3. PATCHY RECOVERY

If 2010 was the year of recovery, it was not smooth. Recovery did not occur at the same pace in every industry and region. Rebuilding an economy after a downturn is like that, but it does present a challenge for companies. The patchy recovery needs to be monitored. Still, some are predicting a tipping point, where the recovery will build ahead of steam until it pulls in all the laggard sectors and regions.

Beaton principal Joel Barolsky says the patchiness is a challenge that needs to be watched so companies can be ready when the full recovery comes.

“Picking the timing is going to be hard because each sector is going to have a different timeframe. It’s going to be patchy and uncomfortable, it’s not that kind of upturn. Everyone is in a different place and that’s a challenge. Some sectors are going back to buoyant times, or maybe they never left, like the resources sector, but there are other sectors, like commercial property in Queensland, that are still going through a downturn. But when there is enough positive growth that feeds into the other sectors, everyone is drawn out in the wake. It’s patchy but it might reach a tipping point where it brings everyone with it.”

4. DATA MANAGEMENT

Companies are now sitting on a massive and growing cache of data. The Wikileaks revelations are a warning. They are now discovering what the music and film industry has known for some time: digital files are easily copied and endlessly distributed. The challenge for companies in 2011 is that the technology is constantly improving. The result: more corporate data.

Few companies have policies in place to deal with these changes, but in 2011, companies will need to manage the risk. That means defining who has access to what information, developing stringent acceptable use policies and making sure they have secure USB ports, CDs and DVDs.

Joel Barolsky, a principal at management consultancy Beaton, says data presents companies with massive risks and opportunities in 2011.

“We are sitting on mounds and mounds of data,” Barolsky says.

“There is a whole field of predictive analytics, a whole new area of management where companies are looking at how people behave in response to price and promotions. It’s about getting a more rigorous view of the future based on a much more sophisticated analysis of the data. It’s not crystal ball stuff, there’s more science now.”

He says it is not that difficult for many companies to employ these techniques. Want to know what impact a price hike will have on a product? Or how putting on more sales people in a region will affect the bottom line?

“Years ago to do predictive modeling, you needed a super computer,” Barolsky says.

“Nowadays, you could do it on a PC and provided you have some pretty smart statisticians and savvy people working with you, you can get insights into future developments and trends.”