November 3, 2020 – As a result of the COVID-19 pandemic, nearly 70 percent of global companies are shifting more than 81 percent of their operations online, with the financial services industry in the lead, followed by professional services and technology, according to a new report by Kingsley Gate Partners.
The search firm found that organizations are now grappling with three strategic challenges: response, recovery and reimagination, said the report, entitled “Reimagining the Crisis as Leaders of 2020.”
The study, which included over 1,200 global respondents, focused on leading during the first six months of the crisis. “The ‘new normal’ is not so new anymore,” concluded the report. “It is the present now. But back at the beginning of 2020, the new normal sprung an unprecedented turn of events in the business environment.”
This phase was one of many firsts, said Kingsley Gate. “Companies were experiencing new sides of technology; leaders were reaching out to their employees almost daily; Zoom, Webex, Google Meet, WhatsApp, WeChat became the new voice of firms worldwide; and employee welfare and training became the primary focus,” said the report.
“It’s not an easy transition when your organization shifts from one type of IT behavior to another,” Igal Rotem, CEO of Credorax, a licensed merchant acquiring bank, told Kingsley Gate. “The biggest challenge was shifting from personal human interactions to becoming a friend of Zoom.”
Last spring, Kingsley Gate ran a global survey back to learn how leaders were dealing with the news of the pandemic. “Firms were suddenly faced with the difficult decision of layoffs/furloughs and salary reductions,” said Kingsley Gate. “Our survey showed that 34 percent of our global respondents were not making any changes to their internal processes. However, 23 percent were implementing leave of absence/furloughs and 20 percent were laying off 30 percent or less of their workforce. These included the industrial, private equity, real estate, and consumer and retail industries primarily. The professional services and technology industries leaned more toward providing a leave of absence/furloughs for their employees when compared with the rest.”
The recovery phase brought an acceptance of the pandemic and the new work environments, said Kinsley Gate: “Vision 2025 plans were replaced by new strategies to adopt in 2020 and 2021; organizations slowly realized the flexibility and efficiency of remote work; sales and employee productivity came to the forefront; new leadership skills were recognized; and digitalization became the main focus.”
While home offices became a reality and e-commerce sales boosted particularly in the Latin American region, the search firm’s studies found that 76 percent of employers observed less than a 25 percent efficiency loss in productivity due to employees working from home. These included companies from the financial services, consumer/retail, industrial, professional services, and the technology and media industries.
The effect on sales, after a more in-depth analysis, told another story. “With more than 81 percent of the workforce working remotely, 40 percent of companies anticipated 25 percent or less decrease in sales by the end of 2020 – primarily those from the financial services, technology and professional services industries,” said the report. “Seven percent of companies predicted no impact – particularly in the life sciences and healthcare industry. Thirty-four percent of the respondents, in the consumer/retail and industrial sectors, anticipated a 25 to 50 percent decrease in their sales. Digging deeper, we found that those companies with 300-5,000 employees were facing up to a 50 percent decrease in sales.”
“Only a mere four percent of our respondents foresaw an increase in sales—primarily from the technology and financial services industries,” said the report. “Credorax reportedly saw a significant growth due to the e-commerce boost. Impossible processes from yesterday have become the only way forward today.”
Continuity and availability are the driving force of the recovery phase, said the report, and firms are doing everything possible to sustain their business. “Global organizations share a history of expatriating talent but considering the current circumstances, are shifting base to develop the local talent,” said Kingsley Gate.
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Santrupt Misra, CEO of Aditya Birla Group, a conglomerate with operations in 40 different countries, provided the search firm with three fundamental areas around which people will change. “First, the equations will change,” said Mr. Misra. “Second, the employee experience, and third, employee enablement with new technology and training will develop.”
“Multinationals like theirs cannot depend on one global way of bringing people back,” said Kingsley Gate, pointing to the Aditya Birla Group. “Companies are reinventing their operations and leveraging technology to the optimum, ensuring a smooth transition to the future now of work. It is these instances that call for resilient, adaptable, community-driven, and technologically sound leaders.”
“This analysis agrees with the skills that were brought forward during our global CHRO panel discussion,” said the report. “The new leaders must have strong business acumen, be quick on their feet, and manage risks effectively in such adversity.”
With nearly 40 percent of the workforce using technology to build a community with regular communications from their leaders, the advent of digital tools has allowed for seamless integration to the virtual world. “Low-cost platforms like WhatsApp have become a boon for us,” Rahul Taneja, former Group CHRO at Jindal Power & Steel, told Kingsley Gate. “This is the time we need to relook at our cost management and invest in technology that is optimally priced and is intuitive in nature. Let’s really use technology to bring more transparency within our processes. We owe it to our colleagues.”
“This phase redefines the ‘next normal,’ keeping in mind the learnings the pandemic has brought about,” said Kingsley Gate. “Tasks that earlier ‘required’ physical presence are just as easily accomplished online; investment in technology is seeing an increase; supply chain networks were getting digitized; firms are reintroducing and restarting themselves with more efficient methods of operation and new processes that ensure a rigid customer experience – without any physical contact.”
The six-month period provided learning of a different kind, said the study. “Technology and consistent communication have allowed the workforce to be more mindful when it comes to working as a team, to be flexible and understanding of limitations, and to adopt change and adapt to technology,” said Kingsley Gate.
“The pandemic has created an incredible opportunity,” said the report. “It has allowed organizations to reevaluate their strategies, the company vision, and enhance the company culture.”
“Maybe the most reasonable assumption to function from a business planning perspective is to believe there will be no vaccine,” said Simon Paris, CEO of Finastra. “That allows you to think objectively, with effective global management teams going to market to understand the new customer across geographies.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media