Hindsight 2020: CEO Poll Reveals Key Lessons For The Future

A recent survey highlights how the year 2020 has provided a unique opportunity for CEOs to consider ways to reset how their companies conduct business and, more importantly, grow and compete in a changed world.

The year 2020 presented challenges that few business leaders could have predicted. To quantify how companies are navigating these challenges, Segal—a leading global HR and management consulting firm—and Chief Executive Group conducted a poll of approximately 500 CEOs across 21 industries leading firms with between $5M to $1B in revenue.

Among other things, the poll gleaned key areas that separated the businesses best positioned to successfully navigate the pandemic and other events from those that were met with much more significant challenges. Those five areas include:

• Adjusting priorities not only to survive but also seize business opportunities. In some cases, this has led to re-imagining the business model and creating a new vision moving forward.

• Accelerating the adoption of technology to enhance employee, customer and supplier interactions, while improving business continuity.

• Improving data management practices and the use of analytics to enhance scenario-planning and accelerate smart decision-making.

• Reimagining the workforce to effectively support business goals and consider roles, responsibilities, workplace, tools and workflow, while keeping a close eye on culture shifts.

• Improving employee communications, engagement, productivity, loyalty and performance.

Trends Revealed

The poll found that one-third to one-half of the companies had instituted significant changes in response to the events of 2020, and between 15 and 32 percent had changes already in place or ready to implement. Many of these changes related to aspects of employee work processes, standards and systems to support employee productivity, connection and engagement.

While companies have pivoted to adapt to the environment brought about by the events of 2020, many of the changes instituted to support workers and business operations were reactionary and evolving. Answers to open-ended, non-multiple-choice questions revealed frustration with regards to issues such as workforce management and the impact a changing—and at the time of polling yet uncertain—political landscape was having on CEOs’ decision-making about their business transformation timing, processes and plans.

Companies with annual revenues of $100 million or more were overall better prepared than their smaller counterparts to deal with the changes required in 2020. In fact, a greater number of these larger companies reported having been making changes even before the event-driven needs arose.

Further analysis of this revenue bracket did not show the expected universally increasing curve of preparedness measures. We would have expected preparedness to continue to increase as company revenue rose. In fact, answers to questions that probed leadership flexibility demonstrated some flattening of the upward trajectory within the $250 million+ cohort. This implies that those CEOs whose companies were in the $100 million to $250 million revenue bracket might have already had an adequate mix of resources to prepare and adapt going into the crisis, as well as the agility and culture organizations need to be flexible and execute on changes when needed.

While the survey did not probe specifically whether CEOs planned to leave flexible work arrangements in place post-Covid, responses across the questions spoke to a permanence for some of the workplace changes instituted in 2020. Where possible, it is likely that where work is performed and hours of operation will remain somewhat flexible.

Companies that had existing flexible work arrangements before 2020 will be in a stronger position to judge how much the events of 2020 affected productivity. Those companies that measured and created a baseline for these programs before changes or expansions were implemented could use that data to evaluate the effectiveness of adaptations and develop improvements.

The survey revealed a marked uptick in training programs that started or expanded in the first months of the crisis, likely in response to adopting or expanding remote-work or hybrid arrangements. Once again, company size contributed to some differences in the data: One third of the respondents overall provided new training due to Covid-19, but 47 percent of those with $100 million+ in revenue confirmed the addition, compared to 28 percent of those earning less than $100 million annually. Our assumption is that greater resources are available for training for the higher revenue group, but this is likely not universal and dependent on the type of business, the work performed and the skill level of the employees. In many cases, companies are redirecting travel expense dollars to training and other infrastructure improvements. As one write-in response said, we are “shifting a lot of the T&E savings to digital/social marketing.”

A number of CEOs participating in the survey spoke to the need for effective employee communications programs. Every change in workplace processes that affects the nature of work can affect productivity, so it is not surprising that communications would take on an important role as companies digitize and change workflows. Some of the respondents, however, noted the need for incremental communications to parallel incremental changes or process improvements. Following this approach helps employees personalize the changes and understand what they need to start doing and stop doing in their roles better than one major communication tied to one significant role shift.

A number of the answers pointed to a growing recognition by leaders that their employees are stressed, that the stress is cumulative and that support through workplace programs is required. Zoom fatigue is real, and companies need a strategy to deal with it in terms of employee morale and productivity. Have the employers really made changes to improve mental health or only to deal with immediate fallout? This speaks to the definition of wellbeing and whether mental health is a component or a driver of that wellbeing.

A question not probed by the survey but noted in a few of the write-in responses is, How will virtual interactions affect client/customer relationships? More than a third of the respondents (36 percent overall, and 40 percent of those with $100 million or more in revenue) said that they have added or changed their customer satisfaction tools or measures. This helps those organizations judge whether aspects of the virtual interactions such as frequency of Zoom check ins are effective in maintaining customer/client loyalty.

Drawing Conclusions and Moving Forward

Without question, 2020 was a year of disruption, as confirmed by the data collected. It tested each organization, each leader and each employee’s tolerance for stress and their efficacy in approach to handling that stress. It also emphasized that adaptations and the solutions that follow must be stress-tested in the context of “us”: just as employees must work together, business leaders need to consider the actions they’ve taken and the plans they’ve crafted for the future in the broader context of their peers (including suppliers and customers).

The challenges posed by 2020 are not unique to one organization or one sector, and so the solutions will likely emerge from this common experience, from a collective consideration of best practices. The elements of commonality—such as the increase in remote work and hybrid work arrangements or the need to consider expanding employee wellness programs—tend to cut across employers and industries. The broad-scope solutions then can be adapted to fit the requirements of each company’s culture. Some of these are suggested in this survey.

The link between culture, engagement and productivity has become more evident. Companies where the culture could adapt to necessary business continuity changes have weathered the 2020 storm with greater agility and resilience. Based on the survey responses and other observations, culture should be moving toward improving people, process and outcomes, rather than altruistic reasons, but because the events of 2020 have transported the work environment five years or more forward in time, we learned that even the best business continuity and disaster recovery plans were not prepared for the magnitude and number of challenges 2020 brought us. However, we also discovered how quickly people can come together to creatively solve problems. Ideally, this has created lasting changes to culture whereby companies strive toward improving people, process and outcomes continuously.

Leaders also needed to adapt, as evidenced by the survey responses. Covid-19 and other 2020 events were “personal” for everyone, and the effect continues. No one was or is immune to the effects—whether directly or indirectly affecting health, wellbeing, relationships, financial stability, job and career—and even spirit. Leaders need to be keenly sensitive to this reality and include this in their planning for 2021 and beyond.

Tangible forward-looking steps and questions CEOs and other leaders may consider include:

• Planning for more than technology to support remote work environments. For many companies, 2020 proved that working remote can be effective, but now, as we shift focus away from short-term actions and survival, it is time to evaluate carefully the frequency and objectives of online meetings. Better methods, techniques and tools can increase interactions and collaboration among teams, as well as with clients and customers. As many organizations are planning less travel for 2021, technological approaches will become the norm for many customer, partner and supplier interactions, and this change likely will become, at least partially, permanent.

• Evaluating not only how employees work but also what they do. As the survey showed, Covid-19 triggered an increase to remote work (55 percent), a focus on employee wellbeing (54 percent) and the establishment of new goals (36 percent). What have we learned from these changes that we should continue doing, adjust moving forward or stop doing once we turn the corner?

• Expanding the possibilities through digitalization. Digitalization is more than new virtual meeting technology. It is a fundamental change in how business is conducted, starting with the customer experience. This may require process re-design, better data management methods, new systems and integrations, and the use of advanced technologies like analytics, artificial intelligence (AI) and robotic process automation (RPA). As CEOs view the changes in the nature of work, the work environment, the work processes and evolving roles of the current workforce, organizations are going to require a much more agile and hi-tech-enabled workforce to compete.

• Recognizing the shifts in employee composition and the reasons why. The year 2020 saw accelerated retirements and retirement planning for many employees. Digitalization notwithstanding, many of these employees will need to be replaced. This presents a twofold opportunity: bring in workers with the new skills that are needed for the new environment and address governance issues that have surfaced. DE&I (diversity, equity and inclusion) and ESG (environmental, social and governance reporting) are not just buzzword acronyms; they represent a 5-10-year advancement in these areas in just one year. Where business governance structure is lagging these advancements, CEOs and their management teams will need to learn what to measure, why measure it, what is considered “good” and what to do when those measurements fall below “good.” New reporting standards on human capital metrics will likely be in place soon, and companies that ignore these changes will be in a weaker competitive position relative to the labor and investment markets.

• Developing an analytics-based familiarity with the organization’s culture. Although most organizations believe their culture has gotten stronger, the question remains, how do they really know? Since culture reveals itself during challenging times, evidence needed to gauge the behaviors and attitudes of employees during this time goes beyond traditional surveys and other measures and well past longstanding “gut” feelings. A new analysis of organizational culture will give leaders a chance to see what has changed, what employee concerns will need to be addressed and what aspects of the traditional culture remain.

• Continuing and improving employee communications channels. For many companies, employee communications increased dramatically in 2020—and so did the level of transparency. Will this continue, and if so, what must be shared moving forward now that employees have gotten used to the frequency and transparency? Determining this will take careful consideration because an abrupt change may have a negative impact on engagement and productivity.

• Deciding on when, how and how quickly to re-start business initiatives put on hold. CEOs may consider utilizing some form of business scenario-planning that goes beyond pre-Covid levels of sophistication. One example is the scenario-modeling used in some of the emerging M&A toolsets. Similar tools are coming to market for evaluating digitalization, sales, marketing, operational improvement and other potential initiatives.

The year 2020 has provided a unique opportunity for CEOs to consider ways to reset how their companies conduct business and, more importantly, grow and compete in a changed world. Those who seize this opportunity may find themselves in a stronger position to deal with the continuing requirements to be agile and responsive to what lies ahead.

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Fred Hencke is a senior vice president and Segal’s mergers and acquisitions solutions leader. He has more than 35 years of consulting experience, and his M&A leadership includes buy-side, sell-side and private-equity deals in many industries.