The pandemic has clearly required most business leaders to deal with a more diverse, new and challenging set of demands than almost any have encountered before. According to Greenspan Advisory's research this summer, whilst CEOs found the pandemic very unsettling and it impacted adversely the effectiveness of their leadership teams, many thought their teams rallied together and, especially in larger companies, successfully managed the demands being placed on them – at least for the short term. As such, we think we all have witnessed examples of business model change that would have been seen as wildly unrealistic even six months ago.
However, as we cope with another UK lockdown whilst government support across developed economies lessens, and the fuller consequences of the dislocation are experienced over time, there are a number of pressing issues and dilemmas we think leaders across financial institutions need to address. Many of those demands appear as contradictory but we believe strongly that thinking in this way is a false dichotomy and one to be avoided.
Acknowledge Covid's true significance
The implications of the dislocation created by the pandemic are, and will be, very material. For many, those implications are clearly negative. However, we believe that leaders must recognise that whilst most will obviously present very significant challenges to be addressed, there are opportunities as well. The starting point must be an acknowledgement of Covid's true significance and not deluding ourselves that 'we're rounding the turn' or that a vaccine will immunise us all straight away. When, over the last few weeks, we've heard business leaders say "we'll be back in the office in January", we've challenged if that really was the most rational planning assumption or just something that was temporarily reassuring (yet, in fact, quite unhelpful). Obviously, we can't predict how the pandemic will play out and nor are we trying to. But we are encouraging leaders to dispassionately assess the current situation and to make very conservative assumptions when looking forward. If we assume that we're going back to the office in 6-8 weeks we can probably muddle through as is, but if we assume it will be circa six months then we need to face that reality and respond accordingly. Now.
'Lean in' to the implications
Once financial services leaders do look at the situation dispassionately, we see a number of potential implications they should 'lean into', specifically:
1) With less in-person contact how do I optimise or rethink (assuming another six or more months) those aspects of business life most directly affected by remote working? This includes robust decision-making, innovation, brainstorming, collaboration, and communication.
2) How do I focus on survival whilst devoting sufficient focus and resources to identifying and acting on the opportunities presented by the dislocation? We believe that periods of significant dislocation and uncertainty, perhaps paradoxically, create conditions for unparalleled amounts of human change.
3) How do I find the right balance between encouraging my staff and ensuring people appreciate fully the reality and implications of our situation?
4) How do I optimise staff engagement when there are varying reactions to working remotely? Recent research with 9,000 knowledge workers by Slack showed that only 12% want to go back to office-only working because, on average, they now enjoy a better work/life balance, feel less stressed and think they're more productive – even if their sense of belonging in their organisation has decreased. However, they found that women with children viewed remote working less positively. In addition, recent research by McKinsey reports that mothers of children under 10 who are in dual career couples are as twice as likely as men in the same situation to spend more than five additional hours per day on household responsibilities than they did prior to Covid. Lastly, Slack's research showed that 'knowledge workers' actually don't want more team updates or status meetings, contrary to what many leaders might think, and instead prefer asynchronous digital updates paired with occasional more informal activities.
5) What balance should I strike when preparing and focusing my organisations on 'recovery'/ 'collection' as opposed to new business? Or is this yet another challenge that appears, but may not be, contradictory? A potentially toxic combination of elevated levels of bad debt, diminished living standards, rents not being paid (or collected by the large number of non-professional landlords), government having reset SMEs' perceptions of the cost of debt and further disruption of supply chains due to Brexit makes this a tough call.
6) We're seeing a rapid acceleration in financial services of the pre-Covid transition to digital platforms, such as for buying, marketing, and servicing. As a matter of increased urgency, how can I ensure that the required capabilities are in place in my organisation? Also, how do I cope with this transition potentially eroding the perceived switching and substitution barriers many of us benefit from?
7) How do I choose the right working model for my employees and for my organisation? We're seeing a material, but more complex than it may appear, shift in office practices and attendance. A high proportion of people say they want a hybrid model. Executives have been surprised that the negative effects of remote working haven't been as bad as feared and the opportunity to shrink property footprints – and cost bases – significantly is very attractive. However, there are loads of questions and subtleties beneath those headlines which must be understood. For example:
– if everyone wants to work from home on Monday and/or Friday, won't we still need the same property footprint to cover Tuesday through Thursday?
– how do I manage performance when I can't observe people working as easily? Does this mean I'll need to become even more numbers and results oriented?
– how do I ensure I'm sufficiently visible and my passion for our customers and products really comes across via video call and email?
– how do I ensure our middle and junior managers are effective remote people leaders?
Seize the opportunity for unprecedented change
We believe that the periods of pronounced dislocation and uncertainty driven by the pandemic counterintuitively create conditions for unparalleled amounts of system and human change. Ideally these are intentional and self-initiated though, all too often, externally imposed. As such, we believe business leaders today require an ability to deal with varied demands that can appear contradictory to a far greater degree than ever before.