At this point, we are no longer strangers to disruption. It feels as though we have adapted, redirected, and flexed nonstop since early 2020 to the point where this has become our default mode of operation.
2022 was a continuation of this way of being rather than a deviation from it. While we saw the end of most of the remaining COVID-19 restrictions worldwide, the effects of the pandemic continue to ripple through our personal and professional lives. Rising inflation, geopolitical tensions, disrupted supply chains, greater adoption of emerging technologies, and shifts in the job market have created a new landscape for leaders to contend with as we wrap up this year and prepare to begin anew.
Naturally, many leaders are concerned about what lies ahead for the next 12 months, and what these hurdles might mean for their business’s growth, profitability, and shape. As many of our clients move their focus to 2023, we are highlighting five of the main challenges and priorities they foresee ahead.
With accelerated and disruptive changes remaining a constant, business leaders need to continue to adapt existing business models, experiment with new approaches or change direction, informed by past lessons. If the last several years have taught us anything, it’s that we need to embrace flexibility and agility to overcome challenges. Many businesses and their leaders have adapted out of necessity rather than strategic or competitive motivations. That needs to change in 2023.
Business leaders can no longer ride the waves of disruptions in an attempt to keep their heads above water. The time is coming to think differently and boldly. Agility is a critical component of this adjustment, but rather than simply flexing with the times, leaders need to be tracking the disruption and looking a step ahead.
If supply chains are insecure, efficiency and costs need adjustment, and customer expectations are fluctuating now, what might that look like moving forward? What implications might current disruptions have in both the short and long terms? What changes to organisational goals, standards, and practices will need to be made as a result?
This is the time for leaders to shake the constraints of legacy thinking and models. What has historically worked may no longer fit the current and future needs of the business. In 2023, leaders will be tasked with determining which models and practices or team mindset are most effective and implementing them into the organisation’s ecosystem.
Expect to see continued shifts in the ways we work as a result. Hybrid working models have been with us long enough now to no longer be considered ‘exploratory,’ so expect to see businesses solidifying their stances on their staff’s office attendance in 2023. Hybrid calls for more fluid organisational hierarchies, with employees taking on more individual self-management responsibility and working more closely together. Rather than making decisions and edicts in a top-down management style, the role of the leader in 2023 will be more focused on encouraging and empowering the rest of their team’s decision making, autonomy, innovation, and collaboration.
Businesses will continue to face challenges in building teams in 2023. The effects of the pandemic’s ‘Great Recession’ are still with us all, with PwC’s Global Workforce Hopes and Fears Survey from earlier this year finding that one in five workers globally had plans to quit in 2022. Moving into 2023, we are also contending with trends such as ‘quiet quitting’ in which employees’ burnout impacts their motivation and productivity, as well as many major organisations enacting their own hiring pauses in reaction to economic difficulties.
All these factors combine to create a turbulent talent market in the new year. Many executives will enter the ‘job’ search either unwillingly as the result of redundancy or corporate restructures, or willingly in search of increased reward or deeper fulfilment. Rialto Associate Director Nicholas Storey expects that the latter motivation will be a key factor driving the talent market in 2023. He says:
“YouGov data has found that only 17% of people actually enjoy their jobs. That means that the other 83% are waking up to attend jobs that either don’t excite and fulfil them, don’t pay them enough, or don’t match their skillsets. After enough time, that will wear on a person to their breaking point at which time they will likely undergo a transition. On the business level, this is a big issue as you end up with staff that are dissatisfied, not invested in your organisation’s mission or objectives, and on their way out. I think 2022 was a wakeup call for many leaders in this regard, so I expect that in the new year these leaders will actively look for ways to help their employees feel more fulfilled and valued where they are while also enticing new talent to come on board.”
Employers need specific skills on hand to grow the business and deal with the challenges ahead, and therefore they need to be in the best position to develop their existing teams and attract any skills by they don’t have. Retaining and attracting employees will be a top priority for HR directors and other leaders in 2023 but will be difficult to accomplish with such fierce competition in the marketplace. While the Great Recession and corporate cutbacks have injected an influx of talent into the market, not all these professionals possess the in-demand skillsets that will help propel the business into the future. Therefore, competition for those individuals who do possess these capabilities will be fierce. Organisations need to consider what they can offer to new talent that sets them apart from other businesses, whether it be financial reward, aligned values, opportunities for progression, training, or beyond.
If leaders cannot recruit the talent they need, then they will need to cultivate talent and skills required in-house. Investing in skills and training for current staff can help ensure the business has the skillsets it needs for ongoing success without the difficulties of having to recruit it. Not only does this set the business up for success, but it also helps to deepen employee’s individual investment into the business and improves retention. Expect to see more businesses invest in in-house training or funding outside learning opportunities for employees in the new year.
Leaders will need to invest in their own skillsets as well to stay relevant. However, leadership is complex and varies by person and organisation. There is no singular recipe or combination of skills that ensure a leader will be successful in their role, but there are a few areas where senior executives can focus their efforts in response to the varying shifts in the marketplace to become more effective in highly disrupted environments.
While it will be imperative for those at the helm to have the necessary technical capabilities that their roles and industry might require, at the leadership level there is an even greater need to focus on the development of skills that help those in charge to better engage their stakeholder audiences.
‘Human-focused’ skills like communication, collaboration and empathy will be important focal points in 2023. The pandemic created a need for more compassionate leadership and continues to matter as we enter 2023 amid financial strains, geopolitical instability, and other challenges. Leaders need to be able to show resilience themselves whist also taking time to understand the circumstances of their staff, stakeholders, and customers so decisions can be made with those groups front of mind.
If future success is to be achieved through cross-department collaboration and empowered teams, then leaders need to be able to bridge the gaps between groups and create alignment. As mentioned, many organisations will be shifting away from top-down leadership styles in 2023. For this to be successful, communication will be key. It falls on leaders to engage their teams, customers, and other stakeholder audiences in conversation to gain insight and identify future opportunities and areas for improvement or diversification. Amid so much change, leaders will also need to ensure they are sharing the right messages with the right audiences at the right time. This requires tactful communication skills that take time to hone and develop therefore doing so would be a worthwhile investment for any senior executive in 2023.
Of course, strong digital skills will also be imperative at every level as digital transformation disrupts at an accelerated pace. According to data from Vistage, despites 86% of decision-makers expecting a recession, the majority of leaders are poised to spend more on technology in 2023. In fact, 51% expect to increase spend by an average of 21%. This will involve a modernisation of both hardware and software in an attempt to streamline practices, make better use of data, and optimise organisational efficiency.
There are several major trends that business leaders should be focusing on in 2023. Cloud technologies and ‘bossware’ tools will remain popular as staff splits their time between home and the office and leaders aim to keep track of productivity. Augmented and Virtual Realty (AR and VR, respectively) tools are positively impacting the experiences that companies can deliver to their customers and are in the early stages of reshaping how we work via the Metaverse. However, one technology continues to reign supreme above all others.
Artificial Intelligence (AI) will remain a top exploratory area for businesses in 2023 and will touch every industry and function in some capacity. Rialto consultant Katie King is well-versed in this shift, having published two books on the impacts of this technology on businesses. She predicts:
“We are seeing record AI adoption following the pandemic, and the population of businesses actively using and exploring this technology far outnumbers those who continue to resist it. AI makes it possible to overcome so many of the challenges that plague businesses today such as delivering results with limited teams and resources, managing a disrupted supply chain, and navigating ever-changing customer demands. There are so many tools and vendors already in the marketplace, which may make it feel a bit overwhelming to start but also lowers the barrier of entry for businesses looking to adopt. I expect that many of the holdouts will shed their AI inhibitions and get on board in the new year and that this technology will be an integral part of many business functions by the end of 2023.”
Expect to see AI take on a more active role in the new year. HR will enlist automated tools for their recruitment, training, and employee engagement activities. Manufacturing and operations will assign AI to resource optimisation, maintenance, and supply chain management. Sales and marketing will use technology to better understand customers, deliver more personalised experiences, and keep on top of trends while management will leverage AI to gain real-time insight into all areas of the business. There is not a single function that will not be impacted by technology, and businesses seem more open-minded than ever about embracing it.
Of course, as practices become more digitally driven, risks increase. Cybersecurity threats are at an all-time high with new threats emerging every day. As businesses invest in new tools, they must also be thinking of ways to safeguard their systems against any vulnerabilities. Therefore, it is essential when assigning 2023’s technology budget to allocate funding for security initiatives. All it takes is one breach for customers to lose confidence in your business entirely.
All that in mind, a threat bigger than cybersecurity, inflation, technology, and talent shortages looms above us all. Climate change continues to worsen year-on-year and cannot be ignored. As a result, customers are demanding greater transparency in organisations’ sustainability initiatives, climate-friendly products and services, and pledges from businesses to ‘do better.’ According to Harvard Business Review, over 700 of the 2,000 largest publicly traded companies—including 52 of the FTSE 100— have stated their intentions to reach net zero carbon emissions by 2050.
If your organisation has not defined its sustainability values and begun altering its practices accordingly, then 2023 is the time to do so. Take the time to zoom out on the big picture of your day-to-day activities and to think critically about the impact your business is having on the world at large. From there, you can begin to identify actionable steps towards change. You will not be able to drastically reduce your impact overnight or eliminate your environmental footprint entirely, but small actions can compound and amount to major impacts over time. In 2023, businesses might consider switching to renewable energy sources, reducing waste, tightening up your supply chain, or allowing staff to work remotely more often.
Beyond demonstrating your organisation’s dedication to the global issues that impact your people, taking the time to examine your practices may highlight other inefficiencies and potential cost savings you may have otherwise overlooked. At the end of the day, an investment in sustainability should be part of all decision making, no matter the cost.
After three full years of disruption and change, there is still more ahead in 2023. Therefore, it is critically important to take the personal time to reflect and learn from what has come before so that we may continue to evolve and drive business forward and remain competitive across an ever-changing landscape.
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