The Irish economy performed well in 2018 with increased domestic activity, robust exports and job creation across a range of sectors resulting in GDP growth of 7 per cent.
“The outlook for 2019 remains broadly similar, although we do see Brexit uncertainty weighing on both consumer and business sentiment,” said Tom Hayes, chief executive of Corporate Banking at Bank of Ireland.
The most recent Economic Outlook released by Bank of Ireland’s Economic Research Unit found that two out of every three of the businesses surveyed plan to expand in the next one to three years.
Consumer spending rose by 3 per cent in 2018 and export grew by 7.8 per cent with further growth anticipated this year and beyond.
“Innovation is a key focus for Irish businesses and one that occupies a significant proportion of management time,” said Hayes, who served as one of six judges on the judging panel of this year’s Deloitte Best Managed Companies awards programme.
“From talking to our customers, I see a lot of positive evidence that Irish companies are confidently creating a reputation globally for providing best-in-class products and services,” said Hayes.
“From sectors such as food and agriculture, to tourism, the ability to innovate has been critical to Irish companies growing and competing domestically and internationally.
“Complementing innovation, agility is an essential attribute for success in today’s global economy and we believe that Irish businesses have a unique strength in this respect.”
Hayes said Irish companies were continuing to add to their international trading base and increase their share of the global market.
“We see evidence of this every day with Irish business succeeding, exceeding and thriving internationally, with over 7 per cent export growth achieved in 2018 and 5.5 per cent growth predicted in 2019,” he said.
“In addition, the Irish tax regime, the availability of debt and the large number of private equity funds competing with each other for assets, continue to combine to create a favourable financing environment for private mid-market M&A activity.”
The openness of the Irish economy carries its own risk for indigenous companies competing on the world stage, according to Brendan Jennings, chief executive of Deloitte in Ireland and another judge on this year’s Best Managed Companies judging panel.
“Ireland has the fifth most open economy globally,” said Jennings, “this means that companies operating here are impacted significantly by what is happening in the global marketplace.
“A number of these factors have become more pronounced in the last 12 months – and, of course, top of the list is Brexit.
“In response, Irish companies have been forced to increase their preparations for what may transpire, as regardless of what the final shape of Brexit is, it will impact,” he said.
Future of work
The very nature of work itself is also changing, according to Jennings. “Talent is now more mobile and more in-demand than ever before, increasing the need for talent strategies to attract diverse workforces and prioritise talent development,” he said.
Technological advancement will continue to challenge companies to assess their operating models in order to determine what their future workforce requirements will be.
“One further impact of this advancement I have already observed is the shortening of product life cycles in many industries,” said Jennings. “Continual innovation is bringing new ways of doing things and is disrupting traditional offerings.
“Companies need to be hyper-aware of these disruptions, and the potential impact they could have on their products or services. “It is a case of keeping ahead to stay relevant. Product development and improvement will become increasingly important.”
Critical to Ireland’s economy will be the continued growth of the indigenous companies that underpin its sustainability.
“Sustained progress has been made by indigenous companies over the last five years and great credit is due to all concerned,” said Frank Ryan, chair of the Best Managed Companies judging panel.
“Notwithstanding this welcome growth, global economic conditions and international markets will be more challenging as Irish businesses are faced with ongoing and accelerating change.”
It is this capacity to change that will be integral to their future success. “Irish businesses must innovate, show strong leadership and build capability. Innovation has to be top of their agenda,” said Ryan.
He sees innovation as the single greatest enabler of success for Irish businesses in the years ahead, one that will be crucial to future economic and social advancement.
“The foremost companies characteristically have an unwavering commitment to sustained R&D investment and actively participate in innovation networks and research groupings,” said Ryan.
“We must continue to provide support for innovation at all stages of company development so that Irish companies can lead the response to rapidly evolving customer requirements.”
It is vital that Irish businesses continue to be at the forefront of innovation in the years ahead, according to Brendan Jennings.
“Our reputation as an innovative technology hub must be protected and enhanced,” he said.
“Being at the forefront of new thinking and new technologies has led to many successful Irish businesses making their mark in international markets and, of course, has cemented our reputation as a location of choice.
“The end goal must always be quality – quality Irish companies that provide quality goods and services to their customers and provide quality careers for their people,” Jennings said. “We can drive this agenda of quality through investment in people, technology and innovation.
“The shape and format of these investments, be they grants, funding, tax incentives or policies, must be rooted in this pursuit of quality and drive good behaviour in this regard.”
As a small open economy, Frank Ryan sees Ireland’s continued engagement with the wider world as a critical factor.
“The outcome of the recent referendum in the UK presents challenges to many people who live on these islands and the long-term stability of that key relationship is of paramount importance,” said Ryan.
“Long after the current EU/UK negotiations are concluded, British-Irish economic relations will continue to influence the growth of bilateral trade across these islands. A strong and growing UK economy is in the best interest of all of the peoples of these islands and it is in our long-term interest that we continue to journey forward as partners.”
The greatest dividend of the European Union has been peace in Europe, according to Ryan, and the Irish economy has benefited greatly from membership of the European Union, through our duty free access to European markets and regulatory alignment.
“I look forward to the setting out of a new inspirational vision for the European Union within which Ireland will play a full and assertive role,” he said.
All of this year’s Deloitte Best Managed Companies have benefited from solid financials and customer-focused strategies, according to Feargal Mooney, former chief executive of Hostelworld Group and another judge on this year’s Best Managed panel.
“These companies have also shown strong processes around strategy development, clear and consistent communications across the organisation, and strong governance and programme management,” said Mooney.
“Each has demonstrated their ambition through a clear commitment to the long-term professionalisation of their management structures, investing in their people and organisational processes, and developing leadership at all levels of the organisation.”
Mooney’s fellow Deloitte Best Managed Companies judge Rose Hynes cited decisive strategic planning as a shared trait among this year’s winners.
“They all had clarity around their strategic planning and the ability to communicate and execute it,” said Hynes, who is chair of Shannon Group Board and Origin Enterprises.
“These companies also have strong chief executives and management teams with an emphasis on succession planning and building future leaders and staff development,” she said.
“They have a strong and sustainable financial position, including leverage or funding with a clear focus on the drivers of profitability.”
The Deloitte Best Managed Companies awards programme is unique here in Ireland and internationally for its in-depth judging process, which takes into account management capabilities and practices across all key business functions.
For Siobhan McAleer, commercial director at the Irish Management Institute and a member of this year’s judging panel, the programme plays a vital role in recognising excellence in management and considering a business from every perspective.
“Most leadership teams will, at some stage of their careers, find themselves looking at everything only through the prism of budgets and financial performance, but it is often a lagging indicator rather than a leading indicator,” said McAleer.
“It can also lead to myopic vision. It can trap you in a box of legacy thinking, finding old solutions for new problems, and seeing new challenges as a line-item to be resolved rather than an opportunity for innovation.
The Best Managed Companies Awards programme evaluates a company’s performance in a much more rounded way, according to McAleer. “The programme looks at those elements that drive the business, such as the people, the capabilities of the team and the so-called ‘intangible assets’, like the brand and customer relationships, which are really core to sustainability and future growth.”
Feargal Mooney sees a structured approach to strategy development as a crucial factor in enabling sustainable business growth. “This includes a commitment to clear and consistent communications across the organisation, good risk management and corporate governance,” said Mooney.
Financial statements alone don’t tell the full story for any company, according to Tom Hayes. “Success is also about the people leading the business,” said Hayes, “it is the management team that formulates and implements the strategy, makes the hard decisions and creates the culture for their organisations and their people to succeed. When I am judging a Best Managed Company, I am looking to see if the business has put the right people in the right positions, and most importantly, whether those managers can come together as an effective leadership team.”
In assessing applicants for this year’s Deloitte Best Managed Companies awards programme, the judging panel focused on a number of factors.
“We looked for focused thinking in these uncertain times – at those companies that have seen the uncertainty down the road and made preparations,” said Siobhan McAleer.
“Innovative thinking, particularly in a disruptive environment, is obviously key, but just as important is the ability of leadership teams to drive growth by aligning their company towards these new challenges and horizons through good management.”
As McAleer sees it, companies in all fields that diversify by broadening their customer base and looking towards new markets and opportunities are the most likely to succeed in any market.
“As Ireland is currently at full employment, we also wanted to see companies that have excelled in terms of engaging and retaining talent in this competitive marketplace,” she said. “We wanted to see how they have introduced a diversity of thought at all levels to engender the innovative thinking needed to reorient successfully around these new challenges.”
For Rose Hynes, a key criterion for judging this year’s companies was robust financials, including their leverage and funding position. “We looked for focus and clarity around the key drivers of profitability within the business and on the strategic plan,” she said.
“We looked at the companies’ market share, efficiency, attitude to cost, attitude to customers and customers service, the perspective of the management teams on the market and the ability of the businesses to identify and manage risk.
“We also looked at the structure of the senior management team, succession planning and plans for staff development and retention, staff attrition levels and, overall, the level of focus on the people side of the business and their progression.”