The question I am most often asked nowadays by candidates and clients alike is “what do you think the new economy will look like in a world after COVID-19 (or at least in a world where we are out of lockdown)?”.
Through many conversations and much reading, some key trends are emerging which are likely to change how we conduct business. They may turn out to be right, or not, only time will tell.
We have crossed the chasm for remote working
Firstly, I strongly believe that we have leapfrogged years of evolution across technology and work culture. In my notes, I wrote down “technology is here to stay”, but actually I think that a change in workstyle, facilitated by technology, is here to stay. Leaders and their teams have adopted workstyles that have freed them from office real estate whilst remaining as, or more, productive.
This can have important ramifications for how we do business.
At least one multinational client we have spoken to doesn’t plan to re-occupy one of its London offices at all, they can simply take that expense off the bottom line and, instead of focusing on housing static workers at expensive desks in difficult to get to locations they intend to put more investment into dynamic meeting spaces and supporting “touch down” working for their people.
The implication is a much reduced requirement for costly, city centre based office space and much more need for creating remote, productive team working environments. I believe we have skipped a decade of the adoption curve for the technology necessary and now it is a question of continuing the best parts of culture change from lockdown. There are many potential knock on benefits if remote working continues to grow:
Through many conversations and much reading, some key trends are emerging which are likely to change how we conduct business. The may turn out to be right, or not, only time will tell.
Travel budgets can be significantly reduced
Training and learning can move fully online with real time accreditation
Dead time from commuting is now being replaced by productive working time from home, although new challenges will emerge regarding mental health and wellbeing particularly if home working becomes the default norm
Decision making will be streamlined
There have been clear winners and losers in the COVID-19 crisis so far and this will continue as we emerge into the light. Some industries, such as the restaurant trade, have been particularly hard hit, but even here there have been sparks of light and innovation that have resulted in good returns (or at least economic survival) and this, in my view is another key learning. It is those who have been able to turn on a sixpence that have faired best and those with long, convoluted committee based decision making that have suffered. Look at examples across industry, including gin producers switching to hand sanitiser and in manufacturing where automotive parts manufacturers have switched to PPE, ventilators and, now, tools for reopening business that have survived and thrived.
Our own business has had to adapt fast to a temporary change in demand for executive search and have created a partnership to deliver contractor management as well as completing remuneration benchmarking surveys and talent mapping for our clients in anticipation of better times.
We are seeing large businesses taking decisions now to reduce the size of their Executive teams significantly, not to cut costs, largely they are keeping the individuals, but to improve decision making clarity and speed. We are seeing a future where the Executive team is comprised of CEO, COO, CCO and CFO with key support functions, such as IT, HR, Service underneath in a C-1 level cohort. Clarity of ownership and speed of decisions will be crucial.
Your people and your competitors' people will remember how they were treated
When the chips are down is when real people leadership is tested and the chips have most definitely been down since March. Long serving, loyal employees will find themselves more open to a change of employer if they feel that their interests were not looked after by their employer. The opposite is, of course, true as well. Where employers have gone above and beyond to look after their people and ensure their business is intact for the bounce back will be rewarded by greater loyalty in return.
In our industry we have seen both of these situations play out over the past weeks, with some candidates being simply unwilling to engage after being well looked after by their businesses and others where we have been able to engage with previously closed off “lifers” in large multinationals.
One leading FTSE business has told us it plans to build up significant reserves for future similar crises and that they are hearing similar strategies from their peers in other businesses.
This could lead to a focus on liquidity and costs with a possible reduction in dividend payments as businesses not only seek to recover from lost quarters of revenue, but also as they build up “war chests” to ensure a level of “cash adequacy” to see through the next peak from this virus or as yet unseen global calamities.
Resilience and agility will be needed to balance this out - particularly impacting supply chain and stock holding.
Shorter supply chains
Our manufacturing clients have universally reported that where possible they have already shortened supply chains and that they plan to extend this as soon as possible. The cost benefits of global sourcing are being seen as less than the risks of critical components becoming unavailable at short notice.
One client is reviewing their off shoring strategy for service delivery after their remote call centre operator, based in South Africa, suffered several outages related to the outbreak. Instances like this will likely lead to accelerated process redesign and automation as well as the potential of on/near shoring of more services.
In the case of one automotive supply chain manufacturer that has switched to PPE manufacture they have replicated the patterns developed by a distant subsidiary to manufacture locally, rather than centralise and depend on logistics.
There is the potential, as we have seen with the USA, for countries to turn inwards as they seek to exit lockdown and restart economies. The impact of this and of shortening supply chains could see reduced demand for manufactured goods from developing countries and reduced overall global trade.
Jump start for the green economy?
As countries entered lockdown in the first and second quarters of this year we have seen a meaningful drop in CO2 and other pollutants emitted along with the benefits in air and water quality that these changes have had. There is an opportunity to rebuild our economies better and less polluting than they were and for greater investment in green technologies. It is likely that international travel will be dramatically impacted by reduced demand as well as reduced competition in air travel as the few who survive seek to recoup lost revenues in an environment with less competitive pressures.
With reduced international travel and shorter supply chains for manufacture as well as massive infrastructure spending by governments to stimulate economies back to life we could see a dramatic acceleration of:
Electric vehicle adoption
Renewable energy generation as a strategic move towards energy self sufficiency as much as to reduce emissions
Reduced commuter miles as employees seek to maintain some of the work:life balance they saw in lockdown by working more from home, or finding employment closer to home
Extraordinary times will require talented leadership
The enduring message across everyone we are talking to is that huge change is here, it is inevitable, growth from that change is a choice.
These times require a different sort of leader, it is time for boldness in Commercial functions and prudence in Finance. Whatever your needs, please share your thoughts and reach out for an open conversation.