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have hired new employees with digital skills
say cybersecurity is very important to their company’s resiliency
see building closer relationships with suppliers as very important
Pandemic-fueled uncertainty has given way to market instability, and COOs are planning to shore up operations in the near term while creating more resilient businesses over time. As executives size up the risk of a potential recession, COOs are taking a concerted, yet strategic, approach to managing costs, maintaining profitability and gaining a competitive advantage.
To improve the technical talent of their workforces, 48% of COOs say their companies have hired new employees with digital skills, according to our latest PwC Pulse Survey. While that adds capabilities, it also can introduce a culture transition challenge for operations teams. COOs also are seeking to fortify against cyber threats and working within the confines of current supply chain realities to gain an edge where they can. With new suppliers difficult to come by in some cases, 57% of COOs see improving current supplier relationships as very important to transforming their business operations, higher than any other measure we asked about.
COOs are hiring to build resiliency, but they’re most concerned with who, not how many.
of COOs have hired new employees with digital skills to improve operational resiliency
In an effort to build resiliency and drive growth, COOs continue to steer into hiring. But it’s not just about getting bodies in the door — they’re looking to expand their workforces strategically.
Battle-tested by the pandemic, 48% of COOs say they’ve already hired new full-time employees to improve operational resiliency, while 43% say they’ve brought aboard contract workers. These hires are serving a dual purpose: steadying operations to prepare for a potential recession and creating resiliency to withstand further disruption. At the same time, 48% of COOs have brought on new employees with digital skills, and 45% have made workforce changes to improve analytics capabilities.
Workforce skills are more important to maintaining and improving resiliency than workforce size, according to COOs in our survey (57% and 43% saying that they are very important, respectively). On the policy front, labor is one of the top areas on COOs’ radar, with 48% saying they’re monitoring it closely and an additional 41% actively engaging with lawmakers to influence policy.
Highly skilled talent can help reduce a company’s reliance on a broader workforce. A selective few can automate tasks that normally would have been done by many. In some instances, however, finding the right talent has been challenging, forcing operations leaders to think creatively about how to fill the gap.
Focus on training. Start by creating new employee evaluation criteria, assessing your hiring practices and revisiting training and transition expectations.
Be creative about filling your talent gap. Consider creating incentives for teams to partner with other organizations to gain access to their employees.
Automate ruthlessly. Robotic process automation and simple automation are relatively easy to get up and running, and both can free up more time for employees to focus on value-add activities.
COOs view cybersecurity as key to maintaining resiliency, even if they may not talk openly about the threats their companies face.
of COOs said cybersecurity is very important to maintaining and improving their company’s resiliency
Many states have enacted data breach notification laws that require companies to divulge breaches to impacted parties. Most businesses don’t openly discuss these matters because of the potential for reputational risk and the possibility of hackers gaining knowledge that their systems are vulnerable. That doesn’t mean COOs aren’t concerned.
When asked about maintaining and improving their company’s resiliency, 60% of COOs say cybersecurity is very important, higher than any other category on the list. COOs are also more concerned than their executive counterparts, with 68% saying they’re very concerned about the impact of more frequent and broader cyber attacks on their businesses (compared to 52% overall).
Businesses face an evolving array of cyber risks. Companies are more engaged in e-commerce than ever, increased employee turnover has created more possible touchpoints for bad actors to exploit, and the move to cloud in new arenas presents operational risks that business units haven’t previously had to consider. (Think of IoT in the warehousing world.) Research has suggested most ransomware attacks go unreported. But it’s clear these threats are weighing on COOs, whether they’re talking about it or not.
Bring your cybersecurity leadership team to the table. Given how much digitization is taking hold, it’s critical to take cybersecurity into consideration at the start of any project.
Work closely with HR. As companies handle a mix of new and contract employees, they should coordinate in real-time to help reduce potential exposure and address security gaps.
Tighten security and maintain regular training and awareness of security and controls while monitoring security metrics closely.
As it becomes more difficult to find reliable suppliers, COOs are doubling down on their existing relationships with suppliers.
of COOs see building closer relationships with suppliers as very important to transforming their business operations
The supply chain turmoil of recent years has COOs increasingly focused on their supplier relationships. With new and reliable suppliers often difficult to come by, COOs are assessing who and what already is in place. More than half (57%) of COOs tell us building closer relationships with suppliers is very important to transforming their business operations, while 52% say the same about improving supply chain visibility.
Meanwhile, only 38% view increasing supplier diversification as very important to transforming their business operations. This may be due to the limited options for supplier diversity in some industries. Other companies may lack the size and scale needed to justify the additional complexity of taking on a new supplier.
Whatever the reason, COOs appear to be leaning into relationship structures that could allow them to “cut the line” as needed, improve baseline prices, create more stability or increase quality. To improve their chances of securing these relationships and boosting resiliency, 46% of COOs have expanded procurement and sourcing teams.
Reevaluate your supplier relationships. Assess whether or not you’re getting the most out of those relationships based on your defined needs. Consider where you can separate more transactional supplier relationships from those that could deliver long-term value.
Focus on building additional supplier management skills within your procurement department. Confirm your staff’s capabilities extend beyond contract negotiations and compliance checks.
Confirm that your suppliers align with your company’s strategy. Be clear about the capabilities your company requires and how your suppliers will need to fulfill those needs. If a supplier falls short, assess your options quickly.
Our latest PwC Pulse Survey, fielded October 12 to October 18, 2022, surveyed 657 executives and board members from public and private companies about the current business environment, the risks executives are facing and the impact those risks have on company strategy and growth plans. Of the respondent pool, 82 are COOs and operations leaders.
Operations Transformation, Partner, PwC US
Brian Matthew Houck
Connected Supply Chain Leader, PwC US
Partner, PwC US