Household financial stress eases after rising for the past 6 quarters as Australians grow more accustomed to a number of ongoing pressures, but financial concerns are still climbing among lower income earners.
From tackling risk to growing your employee value proposition, 2022 is going to throw your business plenty of opportunities. Here’s our expert take on what they’ll look like and how to respond.
If there’s one thing we can say about business with some certainty, it’s that 2022 is going to be bursting with opportunity. Where that opportunity will lie and how to embrace it is answered here by these leading business experts. Read on to discover their six key areas of focus and insights on future-proofing your business.
Businesses have an opportunity to accelerate their growth in the year ahead, particularly through mergers and acquisitions (M&A), says Bruce Sweeney, partner and Financial Services National Lead, Enterprise, at KPMG.
“For businesses that are confident about their growth, there is an opening to seize opportunities caused by disruption,” he says. “There might be attractively priced acquisitions available, which represent good value.”
On the other hand, businesses may also consider a sale themselves, as it is a good market and many are “getting tapped on the shoulder” about mergers, Sweeney says. This might not begin as an outright sale, but a joint venture or other alliance that can eventually end up as more.
According to a recent report from accounting and advisory firm HLB Mann Judd, M&A activity has not slowed down at all despite lockdowns, and the outlook for 2022 continues to be strong.
At the same time, Sweeney says businesses need to continue to invest in addressing key risks.
Firstly, stabilising supply chains is critical. Many businesses were “not set up for global disruption” as seen since the onset of the pandemic. Supply chain disruption has impacted a diverse range of areas including hard and soft commodities and retail products.
Meanwhile, digital disruption, while not a new concept, has been “greatly accelerated” by the pandemic, Sweeney says.
“COVID-19 restrictions and working from home have massively increased online use of services and products.” To keep up and avoid being “disrupted” themselves, businesses need to make sure digital assets such as their website are up to scratch, and that they have a strong plan for distribution and supply.
Finally, businesses need to invest in solutions that protect their information from cyberattacks.
According to the Australian Cyber Security Centre’s Threat Report 2020-21, reports of cybercrime were up nearly 13 per cent year on year, as criminals took advantage of Australia’s dependence upon the internet, particularly in relation to the pandemic and the resulting rise in remote working.
“In Australia a cybercrime is reported every eight minutes,” warns Ana Marinkovic, Executive, Business Direct and Small Business, NAB. “Any business, large or small, can find themselves under threat from cyberattack at any time, and cyber criminals are continually raising the bar.”
There’s been much discussion around the future of the workplace, including flexibility and hybrid home/office working models. A recent report from the Productivity Commission called the pandemic “one of the biggest changes to work in 50 years”.
Social analyst and founder of McCrindle Research Mark McCrindle says as millions return to the office, we also need to think about deeper implications for social cohesion – because without it, you can end up with workplace toxicity.
“The process of going back to work will be a re-orientation and a re-gathering,” he says. “We will need to look after our wellbeing and our community.”
As well as this, there needs to be a focus on company culture. As the famous saying attributed to management guru Peter Drucker goes, “culture eats strategy for breakfast” – in other words, a workforce that fails to share the company culture can undo the strongest strategic plan.
“Normally, culture changes are organic, but now we’re coming from a standing start,” McCrindle says. “Everything needs to be rebuilt.”
There are other social considerations too, he adds, including the growing prominence of Generation Z (those born from the mid-90s onwards). “We’ve been talking about millennials for so long, but a new generation is moving into leadership now,” McCrindle says. And this shift will have a substantial impact, as Generation Z’s management style is quite different. They are technologically savvy but also social, valuing wellbeing, purpose and inclusivity.
The skills shortage is a very real issue. Many industries are already struggling to find the talent they need, says Nick Deligiannis, Australia and New Zealand managing director of recruiter Hays.
According to the company’s latest salary guide, most businesses have permanent staffing levels equal to or above pre-pandemic levels, and almost half intend to add to their permanent headcount before June 2022.
“At the same time, turnover is increasing and the ‘great resignation’ has been flagged by many commentators as a significant issue for Australian businesses,” Deligiannis says. Hays data shows 38 per cent of skilled professionals plan to look for a new job in the next 12 months, while a further 39 per cent are open to opportunities.
Deligiannis says 2022 will become the year of the ‘employee value proposition’. This means businesses need to think beyond salary and career progression to values and purpose.
“To attract and retain suitable talent, you’ll need to clearly articulate who you are as an organisation and what you stand for,” he says. “Then make sure you promote this across every touchpoint.
“When you add regular flexibility, job security, career progression and a competitive salary and benefits package, you’ll create an appropriate defence for 2022’s war for talent.”
Meanwhile, organisations need to remember innovation remains critical to their businesses, helping their growth and safeguarding their future, says Tania Bucic, Professor of Marketing at UNSW Business School. Businesses are typically a powerhouse for innovation and also the backbone of the Australian economy, she adds.
Innovations include emerging technologies such as facial recognition, germ line editing (that is, genetic alterations within germ cells), the internet-of-things, blockchain, artificial intelligence, augmented/virtual reality and machine learning.
“Emerging technologies can change the business landscape quickly by being integrated into existing businesses for a competitive boost, or used to create new industries altogether,” Bucic says.
“They can be used strategically to manipulate market dynamics to force change, engineer trust by pre-empting customer needs, and accelerate growth.”
Bucic also acknowledges that businesses may find it tricky to fund this kind of development after spending so much of their cash reserves surviving lockdown. Those struggling to find cash to invest could look to government support and incentives for help.
It’s not always a matter of spending up big, though. NAB Group Executive of Business and Private Banking Andrew Irvine points out that even small-scale ideas can have an impressive impact on growth. “The vast majority of innovation isn’t your Apples and Amazons,” he says. “It’s making your product five per cent better, but doing that consistently.”
“COVID has changed the conversation with customers and laid bare how some businesses took their customers and their reputation for granted,” Sweeney says.
“It has highlighted how important it is to understand and predict customer needs.”
Some ways of doing this, he says, are engaging honestly and openly with customers or those that are affected by business decisions, investing in a PR/reputation management strategy, reimagining your brand and purpose post-COVID, and finding ways to bring customers’ voices into your business.
Perhaps most crucially, businesses should invest in the skills and expertise needed to make good use of data, in order to glean strong insights into customer behaviour and needs, then use them as the pillars of their strategy.
That way, businesses can be sure they’re backing up their ‘customer first’ mantra with genuine action and creating a competitive difference that can drive home growth and increased profitability in the year ahead.
For Irvine, achieving this boils down to constantly asking yourself these questions: “What value am I providing to my customer? Am I making their lives, their businesses better, and how am I doing that?”
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