I have yet to meet a business that is not going through change or transformation. It is the new norm across all sectors and markets.
Less clear is whether, around the world, we are facing a reversal in globalisation. According to Deloitte, globalisation is not in retreat: Growth in trade has merely slowed, and there has been no reversal in cross-border capital movements, overseas ownership of assets, or foreign direct investment. Certainly, the trend I have observed is that today most companies — from large businesses to SMEs — are operating on a global level.
I have also seen and heard more discussion about sustainability and climate-related risks to business. A subject that was on the periphery just a few years ago is now very mainstream. This was the most destructive risk that former Unilever CEO Paul Polman, HonFCMA, highlighted in March in his speech at the CIMA President’s Centenary Dinner in London.
I suggest the well-documented demographic shift across the globe is having a more significant impact on business and populations than technology. For example, in China, the drop in the birth rate means an ageing population and a shortage of workers and students. The same pattern can be seen in Japan, where a boost to inward migration is countering some of the effects of a declining population. In Europe, Finland in particular faces the same problem with its population ageing faster than elsewhere in Europe. In Africa, there is the different challenge — of wide underemployment and unemployment, with a 27% unemployment rate in South Africa and a 25% rate in Mozambique, for example, according to World Bank figures.
Employers face a further challenge with the disconnect that younger workers — of Generation Y (Millennials) and Generation Z — feel towards work and the way they perceive business’s motivation and ethics. According to the 2018 Deloitte Millennial Survey, the proportion of Millennials (48%) who believe businesses behave ethically has declined significantly from 65% in 2017. This demographic segment is also showing relatively low levels of loyalty to their employer, with 43% seeing themselves leaving their jobs within two years. Perhaps surprisingly, Millennials — and Gen Z — feel unprepared in terms of the skills and knowledge they will need to thrive in the future.
There is a paradox in all of this, however. There has been a massive squeeze on the cost base in many businesses, and jobs have been taken away. However, at the same time companies remain short of the right talent. The solution is for employers to repurpose, redeploy, and retrain their employees.
Employers I have met are interested in what our Institute is doing to address these issues. We have created a virtuous circle — through our Future of Finance research we engaged with top employers to understand the skills they need in the future, and we are creating the supply to meet their demands.
It will mean we can increase the proportion of CFOs who say their finance team has the right skills to support their business’s digital ambitions — from the 10% revealed in the recent Association and Oracle co-produced report Agile Finance Unleashed.
If you would like to comment on these important issues I have raised, please get in touch at Steve.Swientozielskyj@aicpa-cima.com.
In my final column, in June, I will discuss some of the impacts and outcomes I have contributed to during my year as CIMA president.
Finally, I commend this quote from automotive manufacturer Henry Ford, which I believe applies to employers and employees alike: “To do more for the world than the world does for you — that is success.”