What issues must company directors deal with in 2014
The uncertain economic climate has given European company directors a number of obstacles to overcome in the past few years.
Whether it was financial budget cuts, skills shortages, the emergence of new technology or changes in the labour market, there has been a lot to deal with. This feature will look at some of the challenges facing senior executives in Germany and Switzerland heading into 2014 and beyond.
An uncertain economy
Germany still has one of the most powerful economies in the world, but it is not immune to financial problems.
Government statistics suggested that gross domestic product (GDP) expanded by 0.7 per cent in the second quarter of 2013, according to national broadcaster Deutsche Welle. Chancellor Angela Merkel warned that economic growth would slow down in the second half of the year, as widespread floods have had an impact on production.
The economy is anticipated to grow steadily in the next few years, although the financial uncertainties in some parts of the eurozone could suppress trade. The lack of clarity surrounding Europe's economy will make it difficult for businesses to expand. Many firms have hired new workers in the past on the basis that the economy was improving, only for orders to fall dramatically again.
A recent study by the World Economic Forum (WEF) showed that Switzerland has the most competitive economy in the world. It suggested the country's main strengths are innovation and labour market efficiencies, as well as its "sophisticated" business sector, strong financial markets and excellent infrastructure.
The Global Competitiveness Index outlined some areas where Swiss companies need to improve, most notably greater inclusion of women in senior corporate roles. This is a global issue, but the WEF feels Switzerland is lagging behind some of its European rivals when it comes to gender diversity.
Germany was said to have the fourth most competitive economy on the planet and was praised for its reputation for innovation and the country's ability to use the very latest technology.
A shortage of talent?
Companies need access to a pool of talented professionals if they have any chance of expanding. There are a number of sectors reporting skills shortages in Europe - most prominently IT and engineering.
A report conducted by research and consulting firm Pierre Audoin Consultants (PAC) in September 2013 looked at how the ongoing mobile revolution was forcing companies to hire more IT managers. Focusing on Germany and Switzerland, as well as France and the UK, the study showed the "bring your own device" (BYOD) culture is causing problems.
The findings indicated that German businesses are the best at enforcing policies that restrict the use of personal gadgets in the workplace. This helps to limit the amount of sensitive corporate data that leaves the office environment on a day-to-day basis.
Lead analyst of the study Dr Andreas Stiehler explained that many firms are still coming to terms with BYOD.
"Today, most companies silently tolerate BYOD. Very few enterprises have so far been trying to proactively take advantage of this trend," he remarked.
"Companies that do not deploy an appropriate solution to support [personal devices] act with gross negligence in terms of security and administration effort."
Germany is a leader when it comes to mobility management in Europe, with 60 per cent of enterprises using cutting-edge technology to ensure their workforce is as flexible as possible. The research also indicated that cloud adoption is low in Germany when compared with other European countries, something IT managers will need to address.
Swiss companies, the PAC research revealed, are the best in Europe at adopting smartphones for business purposes. They are also more flexible than their German counterparts when it comes to BYOD, but are reluctant to embrace cloud solutions.
Cloud systems can save companies significant amounts of time and money, so it is important that directors find enough skilled IT specialists to take advantage of this technology.
Labour market reforms
The WEF's Global Competitiveness Index indicated Germany's labour market is too rigid and this could hold some businesses back.
It stated: "A lack of flexibility in wage determination and the high cost of firing hinder job creation, particularly during business cycle downturns."
Jens Weidmann, the head of the Bundesbank, recently told newspaper Die Welt am Sonntag that the government must take action to improve flexibility in the labour market. Although Angela Merkel has already introduced regulations to make it easier for companies to plug emerging skills gaps, these have generally focused on temporary and contract jobs.
There has also been a lot of debate about the lack of a national minimum wage in Germany - something that is likely to be addressed in the near future. This is an important development that company directors will have to keep an eye on.
Mr Weidmann was quoted as saying: "If you want to introduce a general minimum wage I strongly advise depoliticising it. Thus, the legal minimum wage, for example in the UK, is not fixed by parliament or by the government, but by an independent commission."
In Switzerland, the global economic downturn has inevitably piled more pressure on workers in the financial sector. This particular arm of the Swiss economy generates six per cent of the country's overall GDP and attracts a lot of interest from wealthy businesspeople from all over Europe who are looking to keep some of their fortune offshore.
With the economy showing signs of growth, many Swiss banks are in a position to expand, which means they need access to talented and experienced financial professionals. A small minority of organisations, Reuters reports, have attracted complaints about their failure to abide by the nation's labour laws - especially with regards to working hours.
This is another issue that corporate directors will need to monitor as the sector continues to grow.
These are just some of the issues facing German and Swiss directors in the coming years. While both nations have strong economies, the difficulties being experienced by neighbouring countries could hinder trade. This is especially concerning for German corporations, as the country is a member of the struggling eurozone, whereas Switzerland is not.
Recent legal reforms, particularly in Germany, have given directors more scope to hire talented workers from further afield, but certain restrictions remain. With technology revolutionising the way business is done, it is vital that firms have enough experienced IT professionals to keep them up to date with the latest developments. Being able to hire specialists from overseas will certainly help to address any skills gaps.
With the global economic outlook brightening, German and Swiss companies could enjoy a prosperous future if their directors are able to overcome these challenges.