As we begin 2023, we may hope to leave some disruptions behind us. Yet inflationary pressures, interest rates, and a potential economic downturn threaten as lingering and new forms of disruption. We can predict only one thing: that for the foreseeable future disruption is the new normal.
Therefore, businesses are preparing to face these headwinds by strengthening systems and pursuing the flexibility created by digital transformation. In addition, in 2023, we’ll continue to see employee-led changes to the workplace and companies shoring up capital, customers, and supply chains to weather further turmoil.
While many firms have escalated investment in digital transformation since 2020, the process isn’t a set-it-and-forget-it exercise. It’s a continuous journey of learning, testing, iterating, and executing to exceed ever-expanding and evolving expectations.
Digital transformation will remain a strategic focus for companies this year. According to the Bank of America Digital Edge Report, the pandemic prompted enormous demand for new digital capabilities. The survey found that 97% of enterprise decision-makers reported their organization sped-up digital transformation during the pandemic. A KPMG report indicated digital transformation will continue to be a top priority, as 72% of CEOs surveyed say they have an aggressive digital investment strategy to secure first-mover or fast-follower status for their company.
And according to another report, the emerging technologies most likely to be important to small businesses over the next decade include cybersecurity (57%), 5G (50%), automation (39%), artificial intelligence (AI) (34%), cryptocurrency (26%), virtual/augmented reality (25%), the metaverse (20%) and non-fungible tokens (NFTs) (16%).
AI and machine learning allow firms to gather more sophisticated predictive insights and to speed up and save costs on repeatable tasks.
Terms like “great resignation” and “quiet quitting” wove their way into the popular lexicon in 2022, bringing attention to employees’ heightened needs and expectations. Those include support from employers for employee well-being through changes in compensation, benefits, culture, and flexibility.
In 2023, employers will need to continue to listen to and partner with their workers to understand their needs. According to the Gallup Organization’s State of the Global Workplace Report, just 21% of employees were engaged at work in 2022. Of note, expectations around the value and purpose employees derive from work are increasing, according to Gartner. These trends lay the foundation for ongoing shifts in employee needs for greater engagement, performance, and retention.
Some employers raised employee satisfaction by offering greater financial wellness support. Nearly all (97%) of employers surveyed say they are in some way responsible for their employees’ financial wellness. More than eight in 10 said offering financial wellness support can result in more satisfied, loyal, and engaged employees resulting in greater productivity and performance.
By 2025, digital natives — including Gen Z and millennials — are expected to comprise 75% of the workforce. Digital natives have higher technology expectations as employees and less tolerance for performing manual tasks that could be accomplished with technology. Automation will help keep employees satisfied and streamline and quicken business processes.
Companies are preparing for a realm of disruptions by increasing resilience across operations. Chief among the steps companies can take is freeing up cash. With interest rates and inflation expected to continue to rise, strengthening working capital becomes imperative. Focus on ways to reduce costs while also identifying new revenue streams to mitigate risk. Automate tasks where possible to improve operational efficiency. This is also a good time to review customer payment systems and payment data and consider any necessary upgrades.
Despite recession fears, business owners appear confident they can weather an economic downturn. While 67% of women business owners are concerned a recession will impact their business over the next 12 months, 71% say their business is equipped to survive a recession.
Preparation, optimism, and flexibility are vital for business leaders in 2023. Investment in new workforce models and digital transformation top the list of priorities to remain resilient. Digital is not a separate strategy but an opportunity to reevaluate how a company works and to navigate successful transitions. A high level of adaptability and willingness to explore new models will be critical for business owners during the year ahead.
Wendy Stewart is president of global commercial banking at Bank of America.