2022: A year to re-think, recover and re-build
1 February 2022
2022 has a lot to live up to. Despite the eleventh-hour curveball of the Omicron variant rearing its head in December 2021, business confidence is high, and many leaders are eagerly anticipating 2022, and capitalising on their plans – be they for recovery, transformation, or stability after a rollercoaster two years. We’ve asked our team what trends they noticed in 2021 – and what they think we can expect from the year ahead.
Sustainability has been one of the major themes of 2021 and will only continue to grow in significance in 2022 and beyond. Our Energy practice has been working at the heart of the energy transition, across both traditional energy suppliers and disruptors. Chris Smith, Partner , in our Energy practice predicts that “… developing technologies such as hydrogen, storage, carbon capture and ammonia will continue to cause the major energy firms a headache.” Sean Buchan, Group Managing Director, is also watching the energy world closely. “I’m pleased to see the continued and exponential growth of the Scottish offshore wind market, considering the response to the latest licensing round for Scotwind, which will offer significant opportunities for the many marine and subsea businesses which have previously operated in Oil and Gas, but can now pivot to supporting the renewable industry.” John Begley has seen a “growing demand for decarbonisation across operations, with many traditional Oil & Gas firms looking at new technologies,” while leaders across all industries will be looking at how technology more broadly can support the drive for NetZero.
But Sustainability is not merely a challenge in the Energy sector. Clare Nash, Director in our Financial Services practice also flags up that “sustainability is one of the biggest challenges that the Insurance Sector has faced in the last twenty years. 2022 will see organisations in this sector take a much firmer stance on their plans of action to effect real change.”
Oliver Hawkley, Director in our Digital and Tech practice anticipates that “Leaders across all sectors will be tasked with looking very closely at how technology can help them drive sustainability initiatives.” The pressure on organisations will only increase, he notes, as “Central Governments look for businesses to take an increasing level of responsibility to achieve aggressive targets.” Certainly, we are seeing a growing demand from clients for senior executives with experience in sustainability, and a growing demand amongst both candidates and consumers in general that the businesses they engage with either on a personal or professional level, are addressing with authenticity issues of sustainability and climate change. With this in mind, we plan on developing an ESG practice in 2022 to support our diverse client base at an ever-deeper level on this critical topic.
Tech / Digital
More broadly, technology and digital advancements will continue to be a priority for many organisations, a direct result of the enforced digitalisation we experienced through the pandemic. Oliver Hawkley calls this “hyper-automation, which will see artificial intelligence play an increasingly active part in our daily lives, both as consumers and employees.” He notes that “Boards will need to address tech, digital and any cyber security gaps at the governance level, with some urgency. The pandemic accelerated digital transformation, mobility, and enablement for many businesses. They will now be expected to provide the appropriate governance frameworks and skills will undoubtedly be required within this arena to compliment the more traditional skills found at the Board table.” This chimes with the experience of our Board practice in 2021. Clare Nash also noticed a “marked increase in demand for digital expertise in the NED arena.”
In particular, there will be a focus across all sectors on the improvements offered by AI and Automation. James Peskett, Partner in our Consumer practice, reflects that: “Clients are focused on working smarter and more efficiently, while building in redundancies and resilience to enable them to tackle future disruptions with equanimity.” However, AI will have an impact across all functions. Jonathan Stringer, Managing Director of our Finance Officers practice observed a growing trend throughout the pandemic of CFOs and Leadership demanding increasingly detailed and ‘real-time’ data to guide decision-making. In particular, he has noted a demand for highly technology-literate experts in FP&A, which seems likely to continue, “With the line between commercial finance and data analytics becoming ever closer, FP&A continues to expand to become the central hub of corporate analytics in the vast majority of large organisations.”
There is, however, a word of caution to be raised with the rapid advance of technology. Oliver Hawkley highlights the need for increased vigilance to “… guard against technological risk – particularly in the realms of cyber security and data protection,” where we anticipate a significant threat to business in 2022 and beyond. Mike Davies, Partner in our Change & Transformation practice agrees: “Risk professionals are in increasingly high demand, as the switch to home working has, in many cases, exposed fundamental flaws in business and operational systems.”
A competitive and candidate-driven marketplace
The end of 2021 offered many leaders a ‘taster’ of the highly competitive marketplace for talent which we anticipate dominating in 2022. In the UK, unemployment dropped to 4.2% by the end of the year, with well over a million advertised vacancies. The result has been a ‘candidate-driven’ marketplace. As Clare Nash observes: “Financial Services remains a candidate led market; employers are having to go above and beyond to attract senior talent. It’s not all about remuneration and who can pay the most, it’s about firms showcasing how values-led they are, how truly flexible they can be (not just lip service!), how engaged their current work force is and how they can support health and wellbeing.” Authenticity is key. In industrial markets, John Begley has noticed a similar trend: “Some candidates are basing their decisions on ecological / sustainability grounds – even choosing roles based on the ‘believability’/ achievability of ESG strategies.” Candidates are more likely to probe hard in these areas and are unlikely to be impressed by an organisation whose ESG policies are insubstantial or inauthentic.
In leadership roles, soft-skills continue to be vital, and Oliver Hawkley has also noticed that there is real demand for “Executives who can work across domains ever-more broadly. More and more of my clients are seeking broader skill sets that are complimented by behaviours such as curiosity, collegiality and critical thinking.” This enhanced focus on capability development is something we are seeing across the board, particularly within our Change & Transformation practice. We will be looking into the anticipated outcome of this shift later in the year, when we conduct our wide-reaching investigation into the Future of Work.
Change / Transformation
The pandemic, coupled with the ongoing digital revolution is truly driving demand for transformation processes across all functions and sectors. Dan Bruce, Partner in our Change & Transformation practice notes that: “Flexible working practices and organizational agility have really played into the market for using specialist expertise to help organisations deliver outcomes ranging from growth ambitions to restructuring, and from operational efficiencies to innovation.” There are still businesses struggling with legacy systems and seeking to update outdated systems, software, and processes. This will no doubt continue.
In addition, and perhaps an artefact of the increased competition for high-performing talent, we are seeing an upward trend in organisations seeking to truly develop teams and individuals into high-functioning collectives. Leaders are examining existing teams to identify not only strengths and weaknesses, but also investing in development and coaching to enhance leadership and other capabilities – across project management, operations, and commercial teams.
Organisations and leaders are looking to grow their employee’s capabilities and enhance team-working, enabling them to ‘do more with less’. Chris Smith noted that within the energy sector “key functions such as project management, commercial, operations and business resilience created an unprecedented demand for improved leadership and capability development.”
Interim management has also been key for those organisations losing senior members in the ‘Great Resignation.’ Dan Bruce notes that “when recruiting for critical roles, our clients are also seeking interim specialists, who are able to mobilise quickly in order to maintain business momentum in the face of a very challenging labour market.”
The pandemic was the crisis that no one saw coming. Many organisations, prior to March 2020 would have stood confidently by their organisational resilience – completely unaware that just around the corner was a shock that every system and process in place would be turned on its head. As leaders look towards recovery, many clients are discussing ways in which they can build in better business resilience practices across the board. Chris Smith notes that: “Whilst 2020 was a year of firefighting and 2021 placed a high importance on recovery and stability, organisations should now invest in business-wide strategic improvements to build greater strength and depth right across the organisation, whether that be operational and commercial resilience, security and technology improvements, workforce planning or any other critical function which contributes to the overall safety and performance of the business.”
Finance & Governance
The boom in M&A activity in 2021 shows little sign of abating, as private equity and venture capital firms seek to snap up some bargains amongst the casualties of the pandemic. Wayne Poulton, Director in the Finance Officers practice notes: “In 2021 we conducted a number of CFO appointments for PE-backed entities, either undergoing or just completing a transaction, and who were seeking a senior Finance professional to take them into their next phase of growth.” In addition, firms who thrived through the pandemic, in sectors such as Technology, are seeking highly experienced CFOs to bolster their Finance Teams.
Jonathan Stringer also notes: “many of our clients are already preparing for the arrival of the proposed UK version of ‘Sarbanes-Oxley’ legislation on internal controls. This means more emphasis on candidates skilled in Internal Audit and Risk.” Increased emphasis on Governance is not a new trend, per se, but looks set to continue for the coming 12 months, so organisations would do well to be mindful of it.
Supply Chain Crisis
The unprecedented global shutdowns had a knock-on effect throughout 2021, and the ripples are still being felt. Many FMCG firms are turning to technology to not only streamline their supply chains but also identify weaknesses and build in resilience. AI and automation provide ‘real-time’ data to help leaders manage the load. James Peskett observes: “we are seeing a high demand for those supply chain professionals with experience of managing highly technical supply chains, particularly those with planning and logistics skill-sets. As we move into this phase of the recovery, our clients are focused on rebuilding their supply chains with an emphasis on resilience and sustainability.” It is too soon to say whether the recent crisis will mean that ‘just in time’ supply chains are a thing of the past, but it is anticipated that supply chains will continue to alter radically as organisations look to reshape them in the wake of the recent crisis.
Diversity will continue to evolve as a priority for many hiring managers. Moving beyond the sometimes-tokenistic emphasis of ‘gender diversity’ and ‘ethnic diversity’ (which will continue to be vital benchmarks), organisations will be seeking to embed true diversity of background and thought in order to promote greater agility and flexibility – and resilience. Diversity also has a vital role to play in the upcoming skills-shortage. Many leaders will need to offer a more flexible approach to secure the skills they urgently need. This could include offering more senior roles on part-time or job-share bases, which open these opportunities to individuals who have been previously unable to commit to the regimented 9 to 5.
Boards, meanwhile, are reflecting on the conclusion of the Parker Review, which came to an end at the end of last year and has ensured a sustained focus on ethnic diversity throughout its duration. Andrew Smith, Group Client Partner notes “there was a continued focus on ethnic diversity amongst our FTSE 100 and 250 clients, which filtered through to our AIM-listed and privately owned clients’ too.” This can only be a positive trend, and one we hope will continue.
In addition, Boards are seeking a far broader range of skills and experience than before. Clare Nash noted that there is “a distinct trend in Boards appointing more first-time NEDs than ever before. These execs are closer to their executive career (for many of them, it is still ongoing) which means they bring a very contemporary skill-set to the Board.” Andrew Smith has also noticed an increase in the topic in his conversations with clients. “Our Board practice has increasingly been supporting our clients in placing additional NEDs to their Boards, specifically to bolster their expertise in three areas: Digital, Technology and ESG.”
Many of our clients are telling us that 2022 with be the year – not just for recovery – but for reflection as well. The last two years have raised significant questions around the world of work and what the Future of Work might look like across the globe. But it’s about far more than the question of ‘where we work’ – it goes beyond the flash-point issues of ‘remote working’. Organisations are digging deep to uncover their purpose, and wondering how best to communicate that to both colleagues and clients to develop strong, effective, purpose-driven teams. They are asking themselves challenging questions about development and growth and what it means to do what they do in the world we now live in. Hopefully that means that 2022 will be worth remembering.