The COVID-19 pandemic is triggering an economic fallout that could drive millions across the globe into poverty and further increase the inequality of resources for humankind. This will adversely impact world economic performance. Numerous countries have faced a deep recession caused by the shutdown of businesses, significant scaling down of production and operations, the notable disappearances of service-sector jobs, and the significant rise in the price of food and other basic essentials. It could create extreme economic hardship, more so for the underprivileged poor, the vulnerable people in society.
Among the top ten risks in 2021, both by likelihood and impact, identified by the World Economic Forum are the "livelihood crises", which if not addressed will hamper the global progress to long-term prosperity.
People have lost jobs and income. For example, small island nations such as Sri Lanka, where I am based, have a fair dependency on tourism and the hospitality trade. They have experienced empty hotels, deserted beaches, and drastically reduced tourist revenues. Air travel and inbound travel operators and the hospitality trade have experienced significant hardship ranging from job cuts, furloughs, and reduction in remuneration to business closures.
The pandemic questioned many of our existing ways of doing business and the compartmentalised and siloed approaches within organisations. The way forward for business in the post-pandemic regime is to focus on a few key fundamentals, namely agility, technology, innovation, and resilient and visionary leadership.
For pure survival, the ability to be agile and flexible in the short term of two to five years is critical for businesses to navigate through these turbulent times.
Technology will make the greatest impact on businesses in the immediate to short term, and the initial survival of business will depend on how rapidly businesses embrace technology to drive their own operations and also link up with others to build upon possible synergies. Cohesive collaboration will be key.
The world of connected devices — the internet of things — cloud computing, and AI, including machine learning, will provide the stepping stones for businesses and their own survival. Technology itself comes with its pros and cons: Cybersecurity is an issue that all businesses should be aware of and address early as they begin to embrace technology. In addition to utilising the technical expertise of technology professionals, businesses need to train employees and make them aware of cybersecurity risk. Failure to do so can cause significant damage and costs to businesses.
Very closely linked to technology is, of course, timely innovation and adaptation. Businesses that fail to innovate will undoubtedly become dinosaurs on the road to extinction. Flexibility and adapting require timely reactions, which means pre-empting change rather than responding to it. We need to be disrupters as opposed to responders. Given the rapid pace of change, businesses should always be "ahead of the game". Adaptation and innovation go beyond technology. They require "an open mind" and the acceptance of a "mindset change". This should revolve around the needs of the hour — the call of the moment.
Businesses will need to embrace openness and trust; relationships should be built on trust as opposed to authority. For example, the pandemic uncovered the rigidity of micro-managing, the eight-hour workday, and physical meetings, which were replaced overnight by virtual interactions, Zoom meetings, online engagements, and flexible hours that wove work/life balance into a different fabric.
For those that have experienced shrinking revenues, increased cash and liquid asset stresses, and enhanced market volatility, corporate resilience is a key criterion to ensure survival and remain sustainable in the immediate, medium, and longer term. Professionals, particularly financial professionals, have a significant role to play in these challenging times. Businesses and organisations will have no choice but to rely heavily on the acumen, integrity, and competence of their finance professionals, leading from the front and strategically steering business through these turbulent times.
Digital transformation and the increased use of mobile-based applications, including cloud-based accounting, are here to stay. As businesses adjusted overnight during the pandemic lockdowns to operate their systems remotely, those that already had their cloud-based accounting and digital frameworks in place and tested were at a definite advantage and were able to continue their operations undisrupted.
Emerging business models
On the flip side, we will see the emergence of new business opportunities, which is where we as professionals can also add value. New and innovative business models continue to emerge: For example, home-made food industries have developed, and new restaurant delivery networks and online logistics systems came to the forefront, including in developing countries and emerging regions of the world.
One of the most significant transformations, however, was in education — in primary, secondary, tertiary, and higher levels. Universities relied on technology to provide mass open online courses (MOOCs) and conducted semester courses off-site and online. Closer to home, CIMA made the first move to introduce online exams with remote proctoring. This provided students with the mechanisms and systems to continue with their professional studies unhindered, while ensuring that the quality of our exams held through. Standards were maintained, and systems were fine-tuned to respond to and meet students' needs.
The need for in-person interactions
Online connectivity tends to work well with already established networks and relationships. Building new work relationships and onboarding new recruits and integrating them fully into the culture, office environment, and the new "work family" will have challenges. Given that human relationships are built over time, and interactions in person are needed to develop camaraderie amongst work colleagues, hybrid work environments will need to become part of the new work order.
This also has given rise to considered changes in the real estate footprint as the move to unassigned nondedicated seating increases. There was a conscious effort to remodel offices to embrace the social-distancing standards and to accommodate rostered working from the office — when absolutely required.
From the human perspective, we have seen how key professionals, with their skills of effective communication, emotional intelligence, empathy, agility, creativity, and innovation, made the difference to their businesses operating virtually. Leading with kindness and empathy, focusing on the mental state of their employees, championing change in a remote context, onboarding new recruits into the organisation and training young professionals, and keeping employees motivated in a challenging landscape required an ample measure of these softer skillsets, which will remain in demand as businesses emerge from the pandemic and continue charting a new course forward.
Melanie Kanaka, FCMA, CGMA, is CIMA vice-president. To comment on this article or to suggest an idea for another article, contact Oliver Rowe, an FM magazine senior editor, at Oliver.Rowe@aicpa-cima.com.