Building resilience for the next normal
Following the launch of the Global Crisis Survey, we held a CEE Resilience Webcast to present and discuss the results for our region. The event was hosted by Ferenc Bíró, Forensics Partner, PwC Hungary.
Many thanks to our panelists:
Missed the event? Watch the highlights below:
COVID-19 caused the greatest global disruption in living memory, upending individual lives, company operations and the entire global economy. As business leaders regroup and seek to learn from the crisis to build resilience for the future, several lessons have become clear.
The fundamental lesson is that the response needs to centre on people – on building an organisational culture that allows companies to respond quickly and appropriately to crises. That means breaking down silos and taking an integrated approach to responding to the challenges of a crisis. Our global survey has identified several specific behaviours by companies that have managed to turn the experience of the pandemic into a net positive.
Those global lessons apply just as much here in Central and Eastern Europe. While executives’ responses to our survey were roughly in line with global trends, we did manage to identify several specific areas where companies from our region slightly underperformed. We’ve spotlighted three types of companies globally that have been more resilient to the crisis, and in turn we have identified opportunities for organisations in CEE to raise their game.
Companies’ ability to seize those opportunities will play a huge role in determining their ability to survive – and even thrive – once the next crisis hits. Those that can move beyond command & control management structures to more inclusive and democratic models will have an advantage, as will those who are able to put into place formal management structures and documentation to plan for crises and to analyse lessons learnt once those crises have passed.
Globally, 20% of companies said the crisis had an overall positive impact on their business, compared with 19% in CEE. When we look more closely at the behaviours identified among the global beneficiaries, the slightly lower figure for CEE is no surprise: countries in our region lagged behind in implementing almost all of the solutions that have proven key to success in other regions.
Our global survey found several common elements among companies that said the crisis had a positive overall effect on their business. The behaviours they shared were formal plans for the future, and strategic reviews of past events: pandemic plans, business continuity plans, changed strategies, designated response teams, formal reviews and acknowledgement of their ability to learn.
But in CEE, just 29% of companies have conducted after-action reviews of their response to the pandemic, compared with 49% globally. More encouraging was regional companies’ plans to further integrate crisis management into their broader resilience programmes, at 70%, which is closer to the 76% global figure. Still, just 55% of companies said they were actively working to build resilience, compared with 69% globally (though more indicated informally that this was the case). In general, companies that were successful globally had more formalised procedures in place to plan for crises, including pandemics, and formal processes for after-action reviews that derive lessons for the organisation going forward.
How does the lower number of companies reporting positive effects square with Central and Eastern Europe’s reputation as a land of agile, tech-savvy entrepreneurs, who have managed to build world-beating companies during three decades of geopolitical turmoil and economic upheaval? The answer seems to be that while managers in the region may be good at responding quickly to some changes, the challenges of COVID-19 require more formalised management structures: not impromptu responses, but written plans and designated teams with official responsibility for analysing strategies and outcomes.
Many of the emerging champions in our region are younger than their global peers, in many cases still run by the founding generation, and may lack the formal management structures and procedures that marked the top global performers during the COVID-19 crisis. As Central and Eastern European companies move onto the global stage, the winners will be those who can successfully implement formal strategy, planning and feedback systems that allow them to learn from yesterday’s crises to prepare for those of tomorrow.
PwC’s 24th Annual CEO Survey does reveal some encouraging signs on this front. Companies in CEE indicated that they were doing more than their global peers to digitise the risk management function (91% compared with 85%), taking on aspects of risk mitigation traditionally managed by governments and multilateral organisations (82% to 75%). They’re also investing more in their workforce strategy to remain competitive: 26% are changing pay, incentives and benefits (compared with 17% globally), while 39% are devoting more efforts to workforce engagement and communications (versus 30%).
If the response to COVID-19 needs to centre on people, how well have companies in CEE done by this measure? The answer shows some room for improvement: A total of 71% of respondents agree or strongly agree that their organisation “has considered the wellness and physical/emotional needs of its employees during COVID-19”, compared with 80% globally.
There’s a clear opportunity for forward-thinking companies in our region to commit to developing empathy and care for members of their teams. And in light of CEE executives’ concerns about the difficulty of attracting people with the right skills, there’s a clear business case for this.
Fortunately, the CEO Survey shows companies in the region are beginning to move in the right direction. In addition to improving pay, companies are also beginning to invest in other ways to fulfil their duty of care toward employees, such as workforce engagement and communication. More is needed on this front, including conscious work to build a people-focused workplace culture and to nurture diversity and inclusion.
Questions about actions that companies have taken and plan to take in response to the crisis tend to show leaders in our region have the same priorities as their global peers, but fewer of them are acting on them. The area where most companies have already changed their strategy was communications, with 25%; an additional 31% plan to take action in this area. That compares with 39% and 32% globally. Next came technology enablement, with 22% in the region having already taken action and 40% planning to act, compared with 36% and 37% globally. Both in CEE and globally, the Top 5 was rounded out by changes to sales channels, work on the digital footprint/distribution model and bolstering operational/supply chain resilience.
CEE executives also placed a lower priority on human capital management than their global peers; this area was the fifth-highest priority for them, compared with third place globally. Again, we see an opportunity for CEOs to set their companies apart by taking the initiative on people-centred solutions, and such a strategy would address their acknowledged need to invest more in employee skills.
Looking specifically at how companies are enhancing their resilience functions, the region’s priorities are largely in line with the global figures, in some cases with greater emphasis. As many as 50% of CEE executives said their organisations will prioritise business continuity management; this also ranked first globally, but with 38%. Within the region, that was followed by crisis management with 40%, then by enterprise risk management, cybersecurity, emergency planning and disaster recovery – the same as the top global priorities, in a slightly different order. The growing emphasis on cybersecurity is welcome news in light of indications in the 2021 CEO survey that there was room for companies in our region to invest more in this area.
These figures give cause for optimism: in response to the pandemic, CEE business leaders are putting into place the formal procedures for planning, risk management and recovery that distinguish the companies with the best responses to COVID-19 at the global level. The task now is to pair those structures with empathy and care for employees, building truly people-centred companies. We believe that these are the organisations that will derive a positive impact from the next crisis, whatever the cause, and benefit from a culture of resilience.
PwC surveyed 2,814 respondents for the Global Crisis Survey from which 215 were from Central and Eastern Europe.