Personalities and trends that will dominate Irish business in the New Year
Published 04/01/2016 | 02:30
Trends: Ireland’s economy will race ahead
The pace of Irish growth was pretty staggering in 2015; the country’s economy is thought to have expanded by about 7pc in the year, making it Europe’s fastest-growing economy by far. While a lot of this related to the movement of patents onshore by multinationals, the underlying domestic economy also recovered at a solid pace. This super-charged growth is expected to continue in 2016, experts say. Unemployment should continue to fall, making Ireland an employees’ market and prompting wage inflation.
The rest of the world is a different story. Globally, the world economy grew at its slowest pace since the depths of the financial crisis, an expansion rate of around 3.1pc. However, all major forecasters – like the Organisation for Economic Cooperation and Development, and the International Monetary Fund – are predicting stronger growth in 2016. Economies in Europe, the US and Japan should all accelerate, driving demand for Irish exports. Countries in trouble will include commodity-driven economies like Brazil, Russia, and Canada, since commodity prices have plummeted so dramatically in recent months and are expected to stay down. Of these, only Canada’s economy is expected to grow in 2016.
Privacy, privacy, privacy
The protection of personal data will be high on chief executives’ and legislators’ agendas in 2016. The cleverest companies are already obsessed with data protection and privacy, and rightly so. Malicious hacks of company data cost companies like TalkTalk millions in 2015.
“Right now, a lot of businesses are only concerned about the safety of customers’ financial information, like their credit card details” says Joan Mulvihill, chief executive of the Irish Internet Association. “That is dangerous, because so many different types of personal data – from our image to our online shopping habits, stuff most people don’t know is being stored by companies – can be used in negative ways.
“Data privacy has to be treated as a core part of any business. We need privacy by design – companies need to be built with an ethos of privacy from day one, rather than chasing to keep up with legislation. Chief executives need to stop asking what’s the minimum they need to stay on top of data protection rules, and view a strong approach to data protection as a competitive advantage.”
One challenge is that increases in the occurrence of big corporate hacks, and the massive surge in the amount of data being collected, is happening at a very fraught time for international security. Companies may face pressure from governments as well as cybercriminals when it comes to data, making it all the more important to have well-thought-out processes in place.
But Irish companies are at an advantage. “We have in no way fallen behind in Ireland,” says Mulvihill. “We are home to one of the most important Data Protection Commissioners in the world, some of the biggest technology multinationals ... we are arguably becoming a European hub for data privacy.”
Changing legislation on some of the most sensitive aspects of data privacy will be a major issue for technology multinationals in 2016 – and the thousands of Irish people they employ. European teenagers face having to secure parental permission to join the likes of Facebook, Instagram and Snapchat before the age of 16 in data protection rules which have been working their way through Brussels since 2012. This has major implications for their user base.
More of us will change jobs than ever before
The workers of 2016 will have no interest in finding a job for life. Instead they will be concerned with developing a ‘portfolio career’, according to Richard Eardley, managing director with recruiter Hays Ireland.
This year workers view job opportunities as a stepladder on the climb towards their ultimate goal, the means to an end rather than the end itself.
“The frequency with which people are changing jobs has sped up massively,” says Eardley. “Lots of professionals now look at a new job in an 18-month timeframe rather than the five year-plus commitment a new job was previously considered as.”
This is problematic for employers. How can you plan when you can’t guarantee important members of staff will still be with you in two years’ time? The smartest companies, Eardley says, are responding by allowing their staff to move jobs within the organisation rather than leave. “Companies who are concerned about staff retention need to understand that people are no longer willing to plow the same furrow for a long time. Technology companies are leading the way here – many facilitate employees trying out other jobs within the business and allow them to move if they wish.
“They know that if you’ve got good people who aren’t happy in their current job, it’s far better to allow them to move to another part of the company than to lose them altogether. That approach also makes it easier for companies to hire – people are attracted to businesses who offer them variety.”
The rise of ‘connectors’
Taxi-ordering app Hailo and takeaway app Just Eat are but a couple of the rapidly growing online ‘connectors’ which are changing the way Irish people spend their wages. These businesses are defined by the fact that most of them don’t actually manufacture the goods or provide the services that bring customers their way – but many are still making a fortune.
California-headquartered eBay is the classic example; it has amassed annual revenue of $18bn and 35,000 employees through the business of connecting sellers and buyers. Airbnb, which connects people seeking accommodation with those wishing to rent it, hails from Silicon Valley. But Irish ‘connectors’ are making big strides too. In lending, there is Laughter Lounge owner Peter O’Mahony’s LinkedFinance; coffee chain KC Peaches and fish and chip shop Leo Burdocks have both used the site to raise thousands from small-time Irish investors. In the laundry and dry cleaning industry there is Laundr.ie, the new cloth cleaning collection-and-delivery service founded by Dubliner Evan Gray.
This year will herald even smaller, more localised connectors – from personal trainers to bike couriers, for every service, there will be an app. It should also see the emergence of co-op style connectors, where industries which have been disrupted by third-party apps – like taxis, or takeaways – develop their own systems run for the benefit of their members.
AIB chief executive Bernard Byrne
Earlier this month, newly appointed Byrne formally started the process of returning the lender to private hands. By putting into motion its capital reorganisation plan, which will see the lender’s stock consolidated on a one-for-250 basis, Byrne began a process that should see the bank repay about €1.7bn to the State.
Successfully privatising the bank will be a big victory for Byrne, who joined AIB in late 2010 from semi-state ESB, where he had held roles including group finance and commercial director. Since he took over the top job at the bank last summer, the 47-year-old has continued the work of his predecessor, David Duffy, slimming the lender’s overall size and focusing on its core activities in Ireland.
Rightly or wrongly, Byrne is seen internally as more down-to-earth than Duffy, whose image as an international banker sometimes grated with the rank and file.
While one could argue that the bulk of the work to get AIB back on its feet was done by the time he took over, Byrne will be the man in charge when it actually starts to repay the bailout to taxpayers. This will be trumpeted by both the bank and the Government.
Central Bank governor Philip Lane
Lane inherited a very fractured institution when he took over from predecessor Patrick Honohan earlier this year. He entered Dame Street amid controversy over the paying of secret bonuses to Central Bank staff, which the bank said were aimed at employee retention.
In early December, 92pc of the members of trade union Unite endorsed a vote of no confidence in members of senior management at the Central Bank.
The organisation also continues to be hit with the same light-touch regulation accusations that it has battled for years now, and is undergoing the complicated process of sharing some supervision duties with the European Central Bank. On top of all that, its staff must move into a vast new headquarters in the Docklands next year.
Dealing with all of this will put Prof Lane’s management skills to the test – an area where the academic was seen to have less experience than his rival for the job, Department of Public Expenditure and Reform secretary general Robert Watt. But Watt lost the battle and now Prof Lane is responsible for the sprawling organisation employing around 1,400 staff.
Prof Lane’s new job will also see him join the Governing Council of the ECB, which is hoovering up bonds around Europe in an attempt to inject some life into the stagnant European economy. It doesn’t seem to be working. Will Lane try to rein in Mario Draghi’s appetite for quantative easing?
FBD Chief Executive Fiona Muldoon
Muldoon is tasked with restoring FBD, the country’s only indigenous insurer, to a stable footing in 2016. Parachuted in earlier this year as chief financial officer, she took the helm a couple of months later when former chief executive Andrew Langford stepped down from the troubled insurer. Muldoon’s achievements so far include securing a crucial €70m cash injection from Canadian investment group Fairfax. But the country has just been hit with the worst flooding since 2009, and flooding is often a very costly event for insurers.
Muldoon will also be tasked with steering the country’s biggest bank through increasingly
tightly regulated waters next year, having recently joined the board of Bank of Ireland as a non-executive director. She knows banking inside out following a three-year stint at the Central Bank, where she was director of credit institutions and insurance supervision until May 2014. She was known for her outspoken and forthright approach, and hit the headlines during her time in Dame Street when she compared top bankers to surly teens, for their failure to get on top of the mortgage crisis.
Selfridges Managing Director Paul Kelly
The acquisition by Selfridges of Arnotts was a major shot in the arm for the Irish retail industry, securing the future of the country’s oldest and largest department store just months after its long-time northside rival Clerys was shuttered.
Selfridges Group managing director Kelly – who is married to Brown Thomas head buyer Shelly Corkery – is a legend in the industry, famed for turning the eponymous British store into one of the UK’s best-loved retail destinations. What will he do with Ireland’s largest department store in 2016? Will he bring it closer in line with Brown Thomas now that the luxury chain is a sister company rather than a rival?
“Our approach in Selfridges Group is that whatever the customer cares about, we care about and we achieve this with world-class customer service and by constantly reinventing everything we do and championing the things that matter for the customer,” he recently told the Irish Independent. “That’s the approach we will be taking with Arnotts and we hope customers will see and feel the difference. But it’s not going to happen overnight. It will take time.”
Whatever happens, the deal is a major signal of confidence in the Irish economic recovery story from one of the world’s most professional retailers, which has already proven it knows what Irish shoppers want via Brown Thomas.