A Look at the Second Half of 2022 and What Lies Ahead
June 16, 2022 – Disruption has taken on a positive connotation: Industry “disruptors” are shaking things up in creative, future-oriented, and highly profitable ways. It has not, however, lost its older, negative, connotation: The pandemic has been broadly disruptive at every level of everyone’s life, according to a report for ZRG Partners. The search firm, which is backed by private equity firm RFE Investment Partners, is particularly concerned with how work has been disrupted by the past two and a half years. What changes are going to stick around, and what will be the bedrock of the next “normal”?
Hybrid work and work-from-home (WFH) have become standard for office-based work that can feasibly be completed remotely. ZRG doesn’t expect that this will change substantially in the future, although there are new challenges that arise from these arrangements.
Communication is key to designing a hybrid workspace that leads to success, according to the ZRG report. “Work culture in a hybrid/WFH future will not look like it did when most employees reported to a common office space,” the firm said. “Leaders will need to think about how to manage behaviors, expectations, systems, and symbols in future hybrid/WFH environments.”
ZRG notes that this changed work environment is not spread universally across all industries. Manufacturing is still an in-person task, whether it’s automotive manufacturing or the manufacture of mRNA vaccines. “Management may be able to adopt a hybrid work schedule, and new technologies will play a major role in whether and how manufacturing can become a hybrid workspace,” the report said. “A major U.S. producer of consumer food and beverage has been able to adopt augmented reality solutions to allow workers in the U.S. and engineers in Europe to look at the same piece of equipment together in real-time in order to diagnose malfunctions and produce a solution. Prior to travel restrictions, this would have meant flying the engineer across the Atlantic to see the equipment in question; today, it means having two people log into a meeting across that same distance.”
Video conferencing has become a keystone to the current normal in many businesses. Companies that want to remain innovative and retain the best talent, however, will need to look beyond just the choice among video conferencing software options.
Getting this balance right is clearly on the minds of many leaders, as Harvard Business Review has served over 3.5 million reads of articles on hybrid/WFH concerns. “Whether employees can set their own WFH schedule is incredibly important not only to managing internal work culture but also to workplace diversity,” the ZRG report said. The latter concern has led Nicholas Bloom of Stanford University to advise against letting employees select their own WFH schedules. His two main reasons against what would seem to be an employee-friendly option are workplace culture and workplace diversity.
Diversity, Equity, and Inclusion
Diversity, equity, and inclusion continue to be incredibly important to any company’s success. ZRG’s global life sciences practice leaders, Robin Toft and David Fortier, find that DEI is one of the key challenges to the life sciences and biotech industries in 2022. While it is true that the pandemic hit all of us, it did not hit all of us in the same way or with the same force. It did not cause workforce inequalities, but it did serve to exacerbate and highlight those that already exist. Chief DEI officer and president of TurnkeyZRG, Zing Shaw, recently led a webinar discussing how to successfully integrate DEI strategies to create not only a single company but a workforce that better represents diversity. Kelly Lewis, VP and people, culture, and inclusion lead of TurnkeyZRG recently examined the ways in which executive recruiters affect the employment prospects of black applicants.
How Diversity, Equity & Inclusion Fuels a Powerful Employment Brand
When taking into account how many discouraged and/or unmotivated workers there are, or to what extent the labor force participation has fallen, some economists put the “true unemployment rate” at about 22 percent. In a new report, Allen Austin looks at the value of DEI in helping to mitigate the effects of today’s labor shortage.
From April 2020—when shutdowns, lockdowns, and pandemic-related disruption began—through today, the aggregate average unemployment rate in the U.S. sits at 3.6 percent, per the Bureau of Labor Statistics. When we look into the data more deeply, however, we can immediately see that even with an incredibly blunt analytical instrument like the national civilian unemployment rate, this pain was not felt equally. The unemployment rate for white workers in this time period has never been above the aggregate average, peaking at 14.1 percent in April 2020 and ending at 3.4 percent in January 2022. Unemployment among white workers has not been at or above the current national average of seven percent since September 2020.
“Addressing these gaps is going to be difficult yet incredibly important to do as companies seek to represent greater diversity at all levels of employment,” ZRG report said. “We have seen a great increase in companies who wish to diversify at the C-suite level among our clients but addressing the overall employment opportunity gap cannot happen only through executive moves. It is no single company’s task to fix this issue, nor is it within the power of any single company to do so. This will require honest, and sometimes difficult, discussions around company culture, recruitment practices, and promotion policies.”
In ZRG’s DEI Benchmark Survey conducted last year, the firm found that 80 percent of technology companies had development programs specifically targeted at diverse workers with high potential for advancement. The same survey found that consumer-focused companies had these programs at a rate of 71 percent and life sciences companies at 50 percent. These programs are going to be the minimum commitment going forward to address racial and ethnic opportunity gaps. “Companies who wish to be serious innovators in this area need to start thinking beyond the existing workforce and start thinking about how to develop a talent pipeline that begins in college or even high school,” the ZRG report said.
Environmental, Social, and Governance Issues
Like DEI concerns, environmental, social, and governance issues (ESG) were once grouped under the rubric of corporate social responsibility, according the ZRG report. “Between shareholder pressure and the general social climate, there has been plenty of reason to bring these issues out from under one vague organizational principle and into their own areas of concern,” the study said. “Focusing on sustainable business practices, like focusing on the diversity of the workforce, is rightly being considered at levels ranging from SVP to the C-suite. Just as different industries have different impacts on the environment and on society, they will have different responses to ESG issues.”
Related: Leadership Development Pays Off in Times of Crisis
When ZRG spoke with Luciano Rodembusch of Pandora Jewelry, the firm covered some of what that looks like in the luxury goods sector. Mr. Rodembusch detailed both instrumental and philanthropic ways various companies can demonstrate positive concern for the environment and for society at large. “By philanthropic ways, we mean the very tried-and-true method of donating funds to, or in some cases establishing, a non-profit organization dedicated to environmental and social improvements,” said the report. “By instrumental ways, we mean companies that undertake infrastructure projects which benefit a community and the company both.”
The example shared here is a brewer establishing their operations in Africa building wells and ensuring clean water to the communities in which their operations are based and in which their workers live. The benefit is to the community who gets clean water and also to the company which cannot brew beer without water.
“Both of these engagements can be carried out in a top-down fashion. Indeed, buy-in is utterly necessary at the C-suite level to achieve much in ESG for any company,” the ZRG report said. “They might also persist under a segmented organizational structure in which there is a reporting chain for sustainability that does not spread far horizontally across the company. An alternative to that is to imbue sustainability practices at all levels of the company.”
ZRG recently spoke with several companies in the industrial sector who advocate this kind of culturally suffused ESG strategy. By making ESG concerns part of the overall company culture, the commitment is more, with apologies for the pun, sustainable. ZRG notes that it is not tied to one leader or one organizational entity who can move on to a new position or be restructured away.
Leading Into the Future
Leadership is never static, and the capacity to assess talent must always adapt to meet current needs. Vikash Salig of ZRG’s healthcare practice recently proposed looking to Jungian psychology to assess leadership potential and cultural fit between candidates and hiring organizations. ZRG’s view of talent and fit evolves along with our current challenges.
Biologists who study evolution are divided by the belief that change either occurs slowly at a nearly imperceptible but constant pace, called phyletic gradualism, or that it occurs in rapid bursts between which change does not occur, called punctuated equilibrium, according to the ZRG report. “The changes we have seen in the past two years appear more like the latter model,” it said. “Whatever the scientific community decides about how species become distinct from one another, it is clear that work has evolved rapidly.”
“Skill in change management will be a central factor deciding the success of business leaders moving forward,” the ZRG report said. “Whatever the next normal is, it will not be one in which every business can require daily attendance at an office, or any business can ignore issues of diversity or environmental impact. Hybrid/WFH arrangements and deeper engagement with social issues will be the future of business. Leaders need to evolve along with these changes or risk extinction.”
Related: Transforming Corporate Culture and Driving Performance in the New Workplace
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media