Growth is the fuel that feeds the engine of business. It is an assumed priority of every executive I speak to. Our discussions almost never revolve around the need for it, but rather what creates growth in the future and possibly what could threaten its existence. And the economic impact of COVID-19 has threatened growth in many sectors.
As businesses have dealt with the impact of the global pandemic – moving from reaction through to resilience, and recovery - the list of issues to consider to keep their business going is long and varied. From capital and liquidity issues to workplace health and safety, cyber security, to remote working and changing customer behavior, COVID-19 is presenting challenges on many fronts. But when we asked CEOs in the KPMG 2020 CEO Outlook COVID-19 Special Edition about the greatest risk to their growth over the next three years, their response pointed to what they are focusing on in the new reality and it was very different than what they believed at the beginning of the pandemic.
In January and February this year, at a time when no one knew what the full impact of COVID-19 would have on the global economy, we asked CEOs what are their top risks to growth over the next 3 years. Climate change, return to territorialism and cyber security topped the list. However, when we asked the same question 6 months later, when leaders now are turning their minds to how their business will grow in the new reality, ‘talent risk’ moved from 11th to the #1 risk to growth.
There are a number of elements that can fall under “talent risk” especially in the context of the new reality. When we look at the workplace of the future, I think most businesses will have to have, or very quickly plan to put in place, the necessary measures required to keep their employees safe. Retention of key talent is an obvious risk and failure to provide a working arrangement that suits the individual needs and wants of employees (e.g. working remotely versus commuting into an office everyday) might cause them to seek opportunities elsewhere. As businesses re-tool their operating models, adjusting to their new reality, what new skills are needed and how are businesses going to get them? If a business has to transfer tasks currently done elsewhere in the world, moving it on-shore, are you going to be able to find the right skills and talent? It is no wonder this has risen to the top of the list of concerns for future.
However, it would be wrong to look at risks to growth as a sequential ranking. Just because one risk is addressed before others does not mean the others on the list are not a major concern of CEOs and other business leaders. Looking at the top five risks to growth over the next 3 years --supply chain risk, return to territorialism, climate change and cyber security -- are all burning issues that are requiring the attention of leadership as they plan for the new reality. For example, 65 percent of CEOs in the CEO Outlook said that their ability to manage climate related risks will be a key factor in keeping their jobs over the next five years. All of the risks will need to be addressed and soon, however, talent seems to be the most pressing threat to growth.
Business leaders are clearly looking at how to best position their companies in the new reality, with the assumed goal of maximizing their growth. If growth is the fuel of business, then talent will be the spark necessary for business to be successful in the new reality.