There is no doubt that 2023 will be another challenging year for consumers, brands and business leaders.
As an executive search and consulting firm, we talk to Chief Executives, leadership teams, and boards every day, meaning we have our fingers on the pulse of the key issues businesses are grappling with and the organisational capabilities and structures that drive growth in a difficult market.
From our engagement with clients, it’s clear that internal challenges remain from the pandemic for businesses. Be it the rising rates of long-term sickness and economic inactivity, embedding hybrid working in a genuinely effective way, or re-thinking the perks that will attract and retain staff (research from Glassdoor suggests that gone is the interest in an office gym or swanky kitchen), there is plenty for leaders to think about within their own businesses.
And this is only the half the job. It is impossible to ignore the tough external market conditions that are impacting firms across the economy. Most notably, persistently high inflation and a cost-of-living crisis is crippling consumers’ spending power and impacting sales, whilst global supply chain challenges and labour shortages make it harder and more expensive to do business in the UK.
Although certain firms remain optimistic that some of these challenges may ease, this may simply come too late for some companies.
Looking back, companies that typically fail during more challenging economic environments almost always share a common theme – their leaders were too slow to adapt or change.
It’s therefore a critical period for business leaders to fully grasp these challenges, viewing them not only as key to their current survival, but also as an opportunity for innovation and transformation which will make their firms more resilient in the face of future crises.
Creating the right culture to attract and retain top talent
Chief Executives and leadership teams need to really ramp up their focus on People and Culture. It’s well reported that consumers want to buy from (and people make the decision to join and stay with) brands where people, culture, values, and overall employer brand/EVP are at the very top of the agenda. These are companies where there is also ongoing investment in improving all areas of ESG, genuine progress across EDI, and companies which are populated with leaders who truly get that people are the most important part of a company and demonstrate this in all parts of their businesses.
Chief Executives and boards need to build a culture of trust, in partnership with their Chief People Officers. This will require them to not only develop the right environment but to role model the right behaviours which demonstrate that leaders ‘live the company’s values’. It will also mean focusing on how to deliver and support individual and collective success, without focussing on the structure of when/where people work.
Building resilient and engaged teams and retaining the right talent when the market is in a downturn is essential. Not only does churn come at a productivity cost, but creating engaged employees brings a benefit to the bottom line. Research from the CBI suggests 22% more profit is made by firms with the highest levels of employee engagement.
Three areas of heightened demand for talent
What is clear is that people want to be in environments where they can grow, have autonomy to deliver, and flexibility to enjoy their career alongside the other important parts of their lives. Whilst this means effective leadership in general is business critical, we at SRI expect to see heightened demand for talent in the following three areas.
1. Acceleration of digital transformation
Transformation, be that digital transformation or broader business transformation, is required for all businesses as they seek to provide better experiences for their people and consumers.
Accelerating at the rate required and having the right leadership talent on board to drive change, combined with the investment in technology, is critical to win in the world today.
And it will bring economy-wide benefits too Research from Accenture estimates that if firms invested in just 5 key areas of digital the UK could unlock an additional £33bn across the economy.
2. Growth across all channels – it’s not all about digital, it’s about making all channels work seamlessly.
Demand for experience across multiple channels is on the rise, and a need for leaders who understand a broad channel mix and how these channels work together with an omnichannel strategy is key.
Physical, IRL experiences are very much here to stay and growing in many industries. In fact, Forrester Research predicts as much as 75% of sales in the US will happen in physical stores in 2023 which is another shift.
According to an Enders report, E-commerce revenue still performs well and seems to have settled at a higher level in 2022 at 26.5%, (up from 19.2% in 2019). There is big growth across the world and other channels, and social commerce continues to rise.
Brands need to invest in 2023 in making all of these channels work seamlessly. Mckinsey reported that omnichannel consumers shop 1.7 times more than single channel shoppers, so there is an obvious commercial win in creating seamless channels.
3. Immersive consumer experiences
There is a growing focus within brands to provide better and more engaging experiences, whether they be in-store, through VR, in-home, or out-of-home. The consumer experiences delivered by brands like LEGO, Nike, and IKEA are great examples of how an investment in experience results in improved commercial performance and customer engagement levels. Personalisation remains key, but there is an even bigger focus on removing friction at every consumer touchpoint. The most significant issues arise when things go wrong – consumers remember the experience of how it was or wasn’t fixed.
To do immersive consumer experiences properly, innovators and those who can bring creativity, data, and insight together will help brands win the hearts and minds of the consumer and drive loyalty and lifetime customer value.
In conclusion, this year is going to be a challenging year for consumers, brands, and business leaders. Companies with leaders who are slow to adapt or change will have the most difficult time, and companies who focus on People and Culture will have an advantage. If you need help building resilient and engaged teams and want to understand how to retain the right talent for the year ahead, get in touch.