Global Business Environment in 2023

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

Buzzwords continue with 'quiet quitting', 'quiet hiring', 'Metaverse HR', and 'hybrid workplace KPIs' since the last quarter of 2022. Certain trends that emerged during the pandemic are gradually fading now, e.g., a study by Forbes shows that 95% of executives studied believe that employees in the office are far more productive than those who are working remotely. Another study shows that the collaboration of employees at Microsoft dropped by 25% and they feel more isolated than before (pre and during pandemic). The same study shows that 64% of those employees studied would quit their jobs if they were expected to return to jobs full-time.

The job of HR has now become all the more complex, in the metaverse where a study by Gartner shows that 25% of people will be spending at least an hour per day. Virtual events, employee onboarding, career coaching, training and development sessions have increasingly moved online. Recognizing the opportunity in this space, Meta is investing $150 million in creating an immersive learning ecosystem to support learning further and make it more widely accessible.

Hybrid work and employee productivity have shown us mixed results, mostly negative, however, in most industries. One of the consequences is that with hybrid work comes more monitoring and also higher KPI ownership for employees. e.g., companies that build software that can track productivity and measure KPIs precisely will win over companies that aren't measuring performance at that granular level.

Other external challenges for business in 2023 would start primarily with the skyrocketed inflation rates and recession (projected to engulf 1 of 3 countries on the planet by end of 2023). Consequently, businesses that were planning to expand or diversify their operations in the same market or internationalize in this period would need to prepare for uncertainty. The IMF projects only 2.9 percent global growth in 2023.

With the Russian-Ukraine war, besides labour shortages and Covid-imposed supply chain backlogs, businesses in the energy, grains, computer chips, and oil have been significantly affected and some major firms have ceased operations. A study by Accenture shows that supply chain issues could result in a potential €920 billion cumulative loss to the GDP across the Eurozone by 2023.

Going ahead, businesses should consider investing and new knowledge infrastructure support to accommodate and also to leverage Artificial Intelligence (AI). Other technologies like 5G, the cloud, and the Internet of Things (IoT) are building and speeding up AI, and all of them are feeding and enhancing them. Companies need to re-design their processes and ensure their people have the skills needed for a world where we increasingly collaborate with and work alongside capable and intelligent systems. Along with the increasing use of AI and smart systems, cyberattacks are becoming increasingly common as businesses accumulate more data, analytics, and granular information from and about suppliers, customers, and markets.

Sustainability and climate action remain important as ever, and now more than ever before consumers are demanding transparency in sustainability practices as well as more eco-friendly products and services. The recognition of responsible businesses that look after people-planet-profit and equally so is important. It is necessary that businesses that categorize themselves as 'responsible' provide an audit of their full supply chains and show evidence of the impact of switching to renewable energy, moving to more sustainable packaging, and allowing people to work remotely when appropriate and supporting them adequately.

There is much discussion around Leadership at this hour, especially after the wave of 'great resignation' which recalibrated the job and career market to a great extent. In order to keep teams and organizations moving forward, the first priority remains people-centric management and innovative problem-solving skills instead of an autocratic or entirely servant leadership style. Innovative businesses had a different struggle in the past two years, on one hand, it was about talent retention, and on the other, talent acquisition in a transient job market. Therefore, for firms to have a strong reputation in their given industry is important, this would draw out critical talent who would be willing to join firms and stay on to contribute to the critical mass. Talent retention has been a major challenge and despite a series of TED talks and speeches made at comfortable conferences, it has still not been recognized as the biggest challenge in the past two years.

Essential skills in HR and leadership should be about retaining and engaging organizational members and aligning them with goals as much as values. Supporting employees to accommodate work schedules, providing mental health support, and taking time to listen and recognize skills that would build the tomorrow for an organization are absolutely critical. Actively listening to employees' frustrations and seeing what can be done such as balancing workloads and enforcing healthier work-life boundaries. The recent buzz around 'quiet quitting' is when people are doing the bare minimum their work requires. They're disengaged with their organization and unhappy in their role but the job market has changed and maybe there aren't as many opportunities. Employee needs and welfare count as much as company goals and market expansion as well as adding to diversity and inclusivity targets. Putting resources into employee development is an essential way to demonstrate both respect and recognition.

As much as AI and other industry 4.0 components kick into the business processes, the 'humalogy' aspect should never be avoided. Leaders need to look at the broader changes in organization to minimize inefficiencies and barriers to productivity while accommodating a judicious mix of human and technology. The productivity paranoid was expected to emerge at one point given the fast transition to online mode of working in the past 2.5 years, and it's now here – whether to remain online, hybrid, or 100 percent in the office – the approach should start with reviewing – What's working? What isn't? When does in-person matter? How should we redesign work and workplaces for the hybrid era? Solving the paranoid by leading the design of the organization of the future, one that is fully adaptive to hybrid work, workplace, workforce, and also has a purpose, value, and culture at its heart.

The future of work could see a setting of skills-based organizations amongst other things, three-quarters of CEOs as studied by Forbes show concerns around availability of key skills which are scarce by nature and how this can be critical constrain in acquiring, developing, and retaining the talent they need to see a tomorrow for their businesses. Research by Deloitte shows that fewer than one in five organizations are currently adopting skills-based approaches to a significant extent. These are primarily facilitated by expecting HR to lead the way as companies develop new operating models as part of the transition to a skills-based organization. Secondly, greater emphasis on hiring for skills (than on qualification).