Sticking plaster solutions adopted in 2020 are morphing into new ways of working that will outlast the pandemic. UHY Experts discuss the ways business has been changed forever by Covid-19.
In January the chief executive of Unilever told a conference that a significant part of the firm’s 150,000-strong global workforce would never go back to the office full time.
His words made headlines. Here was further proof that the adoption of remote
work, an emergency measure when Covid-19 swept across the world in 2020, was no longer seen as a temporary fix. Alan Jope’s comments showed that for Unilever, there would be no going back. Instead, the company would join a growing list of businesses determined to offer a hybrid working model (in which employees split the working week between the office and home) after the pandemic ends.
In that way – and in many others – the pandemic has changed business for good. Emergency measures that were adopted overnight when Covid first struck are morphing into permanent solutions that will outlive lockdowns and social distancing. The pandemic-fuelled transformation of business goes beyond remote working to include the reimagining of office space, the accelerated adoption of new technology and prioritisation of more secure supply chains.
The world is in the midst of perhaps the biggest shake-up to business practice since the invention of the internet. UHY’s global network of member firms is part of this change, working with businesses on the ground.
REMOTE WORKING HERE TO STAY
According to some estimates, three or four times as many people could be working at home after the pandemic than before it began.
But making remote work as productive and collaborative as its office-based counterpart can be a challenge. Adil Buhariwalla, partner at UHY James Chartered Accountants, UHY’s member firm in UAE, says the supervision of remote workers requires physical distance but ‘virtual closeness’. There is a fine balance to be maintained.
“Remote supervision of work is untrodden ground for many organisations, and threats arise from either too much or too little of it,” Adil adds. “If there is too much remote supervision, employees feel distrusted, resulting in possible compromise on work ethics. If it is too little, work and productivity could slacken.”
Still, remote work is likely to continue for many employees as part of a hybrid model, when they spend some of the working week in the office and some at home. Employees want it – in a recent UK survey, 73% of knowledge workers said they favoured a hybrid arrangement after the pandemic, meaning companies that refuse to offer it could face a recruitment and retention problem.
DIGITAL TOOLS FOR REMOTE SUCCESS
For companies considering a move to hybrid working, new digital tools that promote virtual communication and collaboration are vital. This could mean video conferencing and file-sharing software, teamwork tools, and cloud-based unified communications systems that let employees make professional calls from anywhere.
“You don’t necessarily need to spend a ton of money; there are many cost-effective solutions out there,” says Adil. The worry, he adds, is “the digital highway suddenly widening, exposing businesses to a huge magnitude of potential threat traffic, be it unintentional or malicious.”
Eran Amir, partner at UHY Shtainmetz-Aminoach & Co CPAs, Israel, says the use of digital tools that give businesses the ability to switch quickly to home working has become a key measure of business resilience, and that remote working will make cybersecurity even more of a challenge.
“It’s essential to make sure business clients have secure remote access to essential systems from any internet connection including encrypted connectivity to employees, suppliers and invoices,” he says.
BIG CHANGE AHEAD
If remote and hybrid working models do become the norm after Covid, the consequences will be significant. Hybrid’s appeal goes beyond its flexible working benefits for staff. Businesses are eyeing potential savings in equipment costs, bills for utilities (power and lighting) and even reduced office space.
A well planned hybrid work programme could mean companies having to physically host less than 65% of their workforce at any one time. That fact is leading to the reimagining of offices as digitally advanced, fluid spaces for meetings, hotdesking and team bonding, with most of the day-to-day work carried out elsewhere. Research by Cisco Systems found that over half (53%) of larger organisations plan to reduce the size of their office space after the pandemic.
The result of this shift away from large, centralised offices is potentially transformative. UHY firms around the world have already seen clients reduce office space in preparation for a post-pandemic world. In addition, the flight from city centres could see an increased requirement for co-working spaces in the suburbs and small towns where many of us live. Remote workers may replace the social aspect of office life by renting communal desk space closer to home.
The appeal of smaller offices away from city centre locations is one Roman Seredynski, managing partner at Polish member firm UHY ECA Group, knows well. Lockdown has shown that it is possible to work efficiently remotely, and has opened up the possibility of working from smaller offices and premises away from the expensive centres of major cities.
“Our own firm has set up an audit subsidiary in a small town near Warsaw,” Roman says. “It’s much cheaper and it’s a university town, so there isn’t a problem finding talented people. It’s one possible model for the future.”
Both the increase in remote work and the flight from city centres have consequences beyond office space and location. UHY’s professional advisors predict that businesses relying on the daily commute – food vendors near train stations, for example – may suffer, or they may decide to relocate in tandem with the workers they serve.
Hospitality businesses that rely on corporate bookings may also lose out in the ‘new normal’. In some cases, marketing efforts will need to target remote working teams who will still come together regularly for team building days, social contact and creative workshops.
Roberto Macho, managing partner at UHY Macho & Asociados, Argentina, believes that some businesses, especially in badly hit sectors like tourism and hospitality, will have mothballed large parts of their operations during Covid, and that reshaping them for the post-lockdown world might require “a pivot through organic innovation and inorganic growth. Some may be forced to abandon the market in the longer term,” he says.
RETHINKING THE SUPPLY CHAIN
UHY experts agree that changes to supply chain management may be one of the lasting hangovers of Covid. “Supply chain disruption has clearly materialised with Covid-19,” says Donna Frye, director of transfer pricing, UHY Advisors Inc., Michigan, US. “Supply chain reorganisation has been constant for many (during Covid) and accounting firms like UHY have been helping our clients manage the change.”
Donna adds that management of multinational entities (MNEs) are now focused on developing greater supply chain resilience for the months and years ahead. “That might involve finding local suppliers, redefining supplier relationships and using technology to change the cost structure where applicable,” she says.
Adil agrees, but adds that sourcing new suppliers can prove tricky for many firms. “Businesses have to forge partnerships with new often, untried and untested suppliers. This poses threats in terms of reliability, quality, costs, and production and distribution delays,” he says.
OPPORTUNITIES AS BUSINESS RESUMES
There is no doubt that the post-pandemic era will be a challenging time for many businesses. But UHY advisors also predict a period ripe with opportunity. Lean and agile businesses that quickly adapt to new business realities will thrive.
Some economists are even predicting a 21st century version of the ‘roaring twenties’, a consumer-led spending spree driven by a post-pandemic determination to make up for lost time. Entrepreneurial opportunities will be unlocked and the widespread shift to digital platforms also offers possibilities for tech-focused firms and niche retail.
Roberto says that entrepreneurs are already sensing this shift. “Some entrepreneurs see opportunities to get into new markets now, and venture capitalists are making money available. Risk takers and adapters will be the winners.”
Agile businesses with flexible workforces, a ‘digital-first’ philosophy and low costs will be in the best position to exploit this wave of consumer spending. Eran believes professional advisors can help businesses remodel themselves for the post-Covid landscape. Could workforces be leaner and more agile, perhaps by merging roles or the greater use of contractors and freelancers, he asks? Businesses may require short-term credit to increase stock during a period of limited income, and UHY member firms are on hand to help clients find the very best sources of credit for their needs.
Roman also believes that a professional services network like UHY can help entrepreneurs grasp opportunities. “Through an ‘ask the expert’ platform, supported by the Polish Chamber of Commerce, UHY ECA Group shared information in the areas of labour law, civil and commercial law, digital transformation, finance, company liquidity and debt, bankruptcy, restructuring and taxes,” he says.
With good advice and an agile mindset, many companies will do well but for others, the post-pandemic world will present challenges, as measures adopted during Covid become permanent. UHY members can help businesses navigate a new reality of hybrid work, accelerated digital transformation and a fresh focus on secure supply.
If you’re thinking about how you can improve your organisation, our business strategists are fully equipped to assist you with your staff planning and business planning and strategy. We provide internal audits that assess the effectiveness of your current operations and provide insight into what changes are right for your business. Please speak with our business specialist Dean Vane.
Dean Vane: D.Vane@uhyhnseq.com.au