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Common challenges for business and government

  • Liz Forsyth, Leadership |

KPMG International recently released a special COVID-19 edition of its annual CEO Outlook which provides an in-depth three-year outlook from hundreds of private sector executives around the world. For government leaders, this survey makes for interesting reading. New trends have emerged in industry as a result of the pandemic, and governments would do well to understand the implications as policy custodians and employers. Key standouts for me are the fields of workforce, digital transformation, supply chain, and environmental, social and governance (ESG).

A changing workforce – and evolving competition for skills

Since January 2020, talent risk has elevated from the eleventh CEO priority to their top concern, with 21 percent identifying it as their main organizational threat to their growth over the next three years. As a result, three quarters of businesses are looking to change their recruitment strategies, enabled by a widened recruitment pool as remote working becomes ubiquitous.

Despite the attractiveness of government jobs in times of economic uncertainty, there are important reasons for government leaders to be just as focused on talent as their private sector counterparts:
 

  1. Even before the pandemic, governments typically under-invested in the skillsets required for modern service delivery. Engineering, AI and data science will be increasingly in demand, as citizens come to expect digital delivery by default. Rapid digitization in the public and private sectors will only accelerate this trend, forcing governments to quickly adopt new recruitment and up-skilling strategies.
  2. In the past, de-centralization of government agencies has been used as a policy tool to re-invigorate economically disadvantaged areas. The new reality presents an opportunity to increase these benefits, with remote government jobs likely to stimulate local service economies. A more decentralized workforce may also be more diverse, strengthening links to communities and supporting better policy outcomes.
  3. With their eyes opened to the potential of genuine flexibility, workers will look for employers that embrace the change, while providing supportive workplace conditions, mental health services and enabling cultures. Some private sector organizations have been quick to act, and governments must keep pace in order to remain attractive.

Digital transformation will continue to accelerate

The pandemic has been a wake-up call in the business community, with 80 percent of CEOs accelerating their digital transformation programs during lock-down. Thirty percent of business leaders estimate that this has resulted in progress years in advance of where they expected to be.

This change has been amply reflected at all levels of government, both in terms of how employees do their work, and the way that services are offered to citizens. Examples abound of governments adopting digital citizen identities, launching digital education strategies and even organizing ‘hackathons’ to crowd source ideas for pandemic response.

Digitizing internal operations and service delivery also makes good financial sense for governments. Unprecedented levels of economic stimulus will increase the demand for efficiencies on overburdened budgets. Effective digitization can achieve this goal, while also keeping pace with citizen expectations for improved services.

Governments must also recognize their broader role in enabling the entire ecosystem of digitization, including:
 

  • Setting an appropriate regulatory environment, to maintain public confidence;
  • Sharing information and building national capability in cyber security; and
  • Investing in infrastructure such as 5G to ensure that the connectivity backbone does not crack under the weight of this tectonic shift.

Carefully re-thinking supply chain security

The pandemic has also caused many firms to look at their supply chains more critically, with 67 percent of organizations re-thinking their approach. Governments are also looking closely at their critical supply chains, identifying the need to depart from the current free trade orthodoxy in areas such as health (think PPE), defense, national security and disaster recovery.

Despite its necessity, this shift will produce domestic winners and losers. Governments should carefully consider the impacts of these policy shifts in consultation with the private sector, so that they become an opportunity for local investment rather than a net loss. A good place to start would be investing in technology that provides visibility over all key supply chains, in order to identify future shortfalls and effectively plan for them.

ESG considerations are paramount

The pandemic appears to have given CEOs an increased confidence in their capability and responsibility to solve intractable global challenges. Prior to the global spread of COVID-19, seventy-six percent of CEOs now agree that they have a personal responsibility to be a leader for change on societal issues. Sixty-three percent say that the pandemic has shifted their focus towards the social component of ESG, while 71 percent want to accelerate their climate change gains as a result of changes made during the pandemic.

Governments should recognize this opportunity to take the willing hand of industry and work together on common approaches that will shift the dial. This will involve clarifying policies and regulatory frameworks around renewable energy and carbon policy, as well as ensuring that stimulus spending is used to create greener assets.

Will governments seize this moment to create lasting change? This window into the thinking of industry leaders provides ideas for areas of focus, and the promise of support along the journey.