By Bob Joyce, Senior Director | Business Retention & Expansion
I’m sure that 6 months ago, like me, most of you thought we’d start 2022 in a more stable business environment. The omicron variant, although less severe in health effects, is much more virulent than previous variants; causing an unprecedented number of infections and turning the clock back on mask wearing and social distancing. Is this the new normal? Maybe.
Business consulting firm McKinsey recently released a 2021 year-in-review report focusing on the major stories that will inform business decisions into 2022 and beyond. McKinsey notes these three themes are top-of-mind for decision-makers as the pandemic persists:
- A new talent crisis emerges
- Digital dominates the growth agenda
- Sustainability gains steam
TALENT– Executives surveyed still see COVID-19 as the biggest risk to growth in 2022… (47% in the US say so, 57% globally). They also believe we are moving from pandemic to endemic, which will require a momentous societal shift to the idea that this is no temporary phenomenon. Everyone must make permanent behavioral changes, including corporate leaders.
One of the most puzzling shifts is the Great Resignation. One CEO noted “employers can’t fix what they don’t understand.” The report continues: “With employees reassessing their options and leaders grappling with how to respond, the future of work became a hot topic. Will it be hybrid, purposeful, inclusive, and built for balance and well-being? With so much up for grabs, organizations risk their very existence by ignoring people and talent issues.”
There appears to be a decision point shaping up over a large-scale return to the office. C-suite managers acknowledge that many people are leaving jobs without another job in hand.” However, when asked about the return to “normal” office hours, 52% of managers think normal will mean at least four days in the office. Only 37% of employees think that the new normal will include that much office time.
McKinsey continues, “Keeping your best employees happy was never an easy task…leaders who neglect culture and connections do so at their own peril. It’s all about the employee experience.”
DIGITAL GROWTH – The pandemic greatly accelerated the embrace of digital technologies, and companies with a digital edge pulled farther ahead. But fundamental strategic rules still apply, and companies shouldn’t underestimate the power of making bold moves as they pursue innovation and other objectives.
The report says by 2030, cloud could be a $1 trillion opportunity, and the Internet of Things could enable $5.5 trillion to $12.6 trillion in value globally. One CEO said, “I’m more concerned about not being bold enough than about being too cautious.” Crafting a compelling strategy to tap into digital innovation and unlock growth is crucial.
SUSTAINABILITY GAINS STEAM – Commitments are rising, but net zero remains elusive. The effects of climate change became increasingly visible in 2021. As leaders reckoned with what it will take to stabilize global temperature increases at 1.5°C and achieve other energy-related sustainable-development goals, many corporate chiefs say net zero is the new organizing principle for business. Solving the net-zero equation is estimated to take the largest capital reallocation in human history. McKinsey’s analysis suggests it’s going to be about $9 trillion a year.
Decarbonization and the energy transition will take collective will, experimentation, speed, and broad coalitions for change.
With over 5 million deaths worldwide, the arrival of vaccines was a bright spot —but the persistence of COVID-19, and its myriad effects, remained the story of the year. McKinsey’s conclusion is that, with herd immunity now largely out of reach, business people are learning to live with an endemic disease and crafting a new normal…for growth, change and the search for a prosperous tomorrow.