The office centre stage
Only 24 percent of Irish CEOs plan to downsize their office space due to the pandemic – down significantly from 88 percent in 2020
64 percent of Irish CEOs said that most employees in their organisation will be working remotely at least 2 or more days a week
64 percent of Irish CEOs also say that new partnerships will be key in maintaining the pace of digital transformation
CEOs in both the Republic and Northern Ireland have significantly modified their plans to reduce their office footprint. Only 24 percent in the Republic of Ireland and 16 percent in Northern Ireland plan to or have already downsized as a result of the pandemic and changing working habits.
This is a significant change from attitudes at the height of the pandemic in 2020 when 88 percent of business leaders in the Republic of Ireland and 72 percent in Northern Ireland were aiming to downsize.
With people returning to places of work, and governments increasingly looking for business to lead a return to normal, CEOs are focusing more on flexibility rather than wholesale changes to office-based work. Meanwhile, the impact of the pandemic on companies’ workforces has made CEOs re-evaluate how they can maintain the sustainability of their business over the long term. This includes employee well-being, the physical workplace, travel needs and more.
Technology & talent
According to Gary Reader, Global Head of Clients and Markets, KPMG, “The global pandemic has caused business leaders to rethink their operations and the role their employees play in the future of their business. Smart CEOs are actively engaging with their workforce and using their data more effectively to rewrite their operating model to position their business for growth.”
CEOs have narrowed the gap between digital transformative objectives for their own organisations and investing in the future of work and a digitally enabled workforce. Eighty eight percent of CEOs worldwide (76 percent in both the Republic of Ireland and Northern Ireland) are looking to increase their headcount despite the fact that a majority (60 percent worldwide and in the Republic of Ireland and 72 percent in Northern Ireland) of business leaders are prioritising investment in technology over developing their workforce’s skills. It highlights that technology is vital for businesses to remain competitive, but CEOs are increasingly seeing that hiring talented people is also vital for growth.
There has been a reset in the velocity of business, in areas such as customer behaviours, and CEOs need to ensure their companies are plugged in to this new dynamic and leading the pack. CEOs are shifting toward a cloud-first mindset, with half (50 percent) of global CEOs saying that they intend to partner with a third-party cloud technology partner in the next 3 years in pursuit of their growth objectives.
In the context of digital innovation - 78 percent of CEOs surveyed worldwide (76 percent in the Republic of Ireland and 80 percent Northern Ireland) believe they must be quicker to shift investment to digital opportunities and divest businesses that face digital obsolescence.
According to Paul Toner, Head of Consulting at KPMG in Ireland, CEOs can quicken the pace of change by having a clear, medium-term vision and roadmap that provides real clarity on the direction of travel, “It needs to be supported by a clearly defined near-term roadmap of opportunities with associated target outcomes that are well understood and are backed by a detailed benefit realisation strategy and plan.”
The Future of Work
Following over eighteen months of pandemic-induced disruption to the world of work, almost two thirds (64 percent) of CEOs in the Republic of Ireland said that most employees in their organisation will be working remotely at least 2 or more days a week – which is significantly higher than their global peers (37 percent) or their counterparts in Northern Ireland (36 percent).
As employee and societal demands for workplace flexibility have evolved, around half of global CEOs (51 percent) recognise the demands created by a rapidly evolving future of work and will be looking to invest in shared office spaces to allow for increased flexibility – a figure that reduces slightly in the Republic of Ireland (44 percent) and Northern Ireland (48 percent). Meanwhile, four-in-ten (42 percent) of CEOs worldwide will rely on the strategy of hiring remote workers to revise operating and labour models to attract the best people by expanding their reach into the entire labour force. This figure rises significantly to 64 percent in the Republic of Ireland and is closer to the global norm in Northern Ireland (44 percent).
Operating model transformation
Reflecting on the evolution of leadership thinking on the role of the workplace, Managing Partner of KPMG in Ireland Seamus Hand says, “The office is here to stay as the focal point for the vast majority of companies. However, Irish business leaders increasingly recognise the need for greater flexibility and a strong organisational culture given the changing nature of talent acquisition and retention. Transformation of operating models will enable employers of the future to expand their reach into a wider pool of talent.”
According to Seamus Hand, “CEOs are less likely to see it as necessary to downsize their physical footprint since last year as some of the challenges experienced with remote working have highlighted the value that offices bring in building culture, enabling coaching and facilitating collaboration and innovation.”
Meanwhile just over one-in-four of global CEOs (28 per cent) expect to prioritise incentives and rewards for employees to retain talent - a figure that rises to 40 percent in Northern Ireland and is somewhat behind the global average in the Republic of Ireland (21 percent).
Disrupting the disrupters
CEOs recognise that digital lies at the heart of how companies can create new sources of value. While this is an opportunity, it’s also a risk.
The acceleration of digital technologies means that business models that have existed for years can quickly become obsolete and irrelevant. Carl Carande, Global Head of Advisory, KPMG says, “CEOs have narrowed the gap between digital transformative objectives for their organisations and investing in the future of work and a digitally enabled workforce. Technology advancement is still vital for businesses to remain competitive, but hiring talented people is equally important.” The research shows that CEOs are embracing the need to push the boundaries of their business and question long-held assumptions of what it will take to succeed in the mid- to long-term.
When we asked them what action they planned to take in pursuit of their growth objectives, two-thirds (67 percent) of business leaders worldwide said they intended to invest in disruption detection and innovation processes (36 percent in the Republic of Ireland and 48 percent in Northern Ireland). This is an essential step to enable teams to think disruptively: questioning historical assumptions and traditional mindsets and brainstorming new ideas for a vastly different market environment. And rather than waiting to be disrupted by competitors, 72 percent of CEOs worldwide say they’re actively disrupting the sector in which they operate. A figure which rises to 84 percent in the Republic of Ireland and is significantly lower at 52 percent in Northern Ireland.
Partnering for transformation and resilience
Companies across the world are operating as part of digital ecosystems searching for ways of securing competitive advantage. While the cost of failure can be high, getting left behind can be terminal.
New relationships are constantly being explored from collaborating with partners, suppliers and even competitors to drive operational performance, to identifying new digital revenue streams and creating compelling digital customer experiences that deliver on an organisation’s purpose. CEOs recognise the importance of collaboration and a fluid approach, with 70 percent of global business leaders (64 percent in the Republic of Ireland and 52 percent in Northern Ireland) saying “new partnerships will be critical to continuing our pace of digital transformation”.
For what’s next…
COVID-19 has challenged business leaders at home and abroad like never before, accelerating change and creating potential risks and opportunities in every sector. To find out more about how KPMG perspectives and fresh thinking can help you focus on what’s next for your business or organisation, please get in touch. We’d be delighted to hear from you.