People and technology:
At the forefront of European leaders' recovery agenda
HLB Survey of Business Leaders 2021 - Europe outlook
Risk-averse, but recovery ready
The pandemic still persists atop European leaders’ agendas. 81% named the ongoing consequences of COVID-19 as the main risk for their business in 2021. Uneven success with the virus containment across countries, manufacturing stop-starts, and repercussions around Brexit understandably made Europeans wary of the economic climate both within the region and globally. Admirably, local leaders managed to find a strong footing amidst the challenging (and constantly changing) operating conditions.
European leaders are focused on improving operational efficiency, further enhancing their digital collaboration abilities, and carrying on with the adoption of emerging technologies. Tempered in their plans and actions, but fairly tech-savvy European leaders are realigning their business to benefit from the newly emerged digital opportunities, as well as the “green” agenda.
Over the past 12 months, European leaders have faced disruption at multiple fronts: trade routes, supply chains, and talent pipelines were badly battered. To recoup and regroup for the new growth cycle, the majority is committed to improving operational efficiencies — the number one priority in 2021 — and further cost containment. Thanks to the adoption of digital tools and rigorous process optimisation, European businesses indeed have become leaner and some even managed to accumulate the much-needed cash reserves.
With the cost of borrowing approaching historic lows, local leaders will soon need to switch to more proactive actions. During the next 12 months, 45% of European leaders are committed to building organic growth this year and another 39% plan to launch new products and services. With the market conditions gradually improving and consumer spending climbing up to the pre-pandemic levels, the momentum for growth is close. However, to be among the frontrunners when the markets restart, European leaders will need to fill in the gaps in talent. Despite overall high unemployment rates in the region, 28% recognise their weakness in talent acquisition.
Businesses in Europe started transitioning to agile, resource-light, and digital-enabled operational models pre-pandemic. Earlier investments in connectivity, digital collaboration tools, and cloud technology have helped European leaders to maintain a high level of continuity during the strict lockdowns. Still, “cloud” remains among the most important technologies for 44% of European leaders in 2021. Though they are planning to invest in a wider range of emerging technologies.
Robotic Process Automation (RPA), AI, IoT, and Machine Learning (ML) are among the top-ranked emerging tech solutions, viewed as strategically important by European leaders. Strong technical acumen, access to the latest scientific research, and deep-rooted experience in design-based industrial manufacturing also make Europeans more confident in their ability to innovate. Only 18% name this area as a weakness compared to 24% of global respondents and 36% of respondents from the APAC region.
The economic and social ramifications of the pandemic remain significant for all states in Europe. Yet, despite a very challenging year, 90% of local leaders express confidence in their ability to successfully steer the business in a new direction post-COVID-19. From operational transformations to new technology acquisitions and process optimisations, Europe’s leaders are strongly committed to pivoting out of this crisis.
European leaders are more committed to building organic growth than global peers and are less constrained by weaknesses in digital capabilities, innovation, and customer acumen. Soundly, they are also seeing the current crisis as an opportunity to make important structural improvements to their businesses. 93% agreed that employee physical and mental wellbeing is a top priority for their company’s HR departments. Also, nearly three-quarters of leaders see the recovery process as an opportunity to better position their business for profiting from the low-carbon economy.
China's businesses move forward
HLB Survey of Business Leaders 2021 - China outlook
Penchant for pandemic-prompted growth
The first to enter and the first to emerge from the worst of the pandemic, China had a ‘headroom’ for an economic rebound. Though timing isn’t the only crucial factor making China’s leaders more optimistic about their business growth prospects and normalisation of economic activity. High infrastructure readiness, digital maturity, timely government support among other factors put local leaders at a better starting position within the new growth cycle as we found in our survey.
Despite a strong focus on tech-led and growth-oriented initiatives, China-based businesses also recognise that a well-rounded workforce will be crucial to driving innovation in the long-term. Key social imperatives around the diversity and well-being of talent received a high priority on this year’s agenda. Not to mention the local leader’s growing commitment to becoming the world-leading low-carbon and high-growth economy.
Only 62% of China’s leaders are wary of the economic uncertainty. The local government’s capable and timely management of the pandemic bolstered trust in its ability to steer the country out of the crisis and also led to a faster resumption of economic activities. While the global markets remain in turmoil, China’s domestic market escaped the worst of the contraction cycle and still showed positive growth (albeit the lowest since the 1980s).
The favourable local conditions have prompted China’s leaders to exit the “survival” mode and prioritise growth-fuelling strategies. 53% of leaders we spoke to put plans for launching new products and services this year and are twice more likely to be focused on raising their customer acumen when compared to global respondents. Yet, local leaders still focus on resourcefulness, rather than bullish growth at any cost. For 60% higher operational effectiveness remain a top priority and 46% also seek ways to reduce operational costs.
Prior to the pandemic, China’s leaders already had access to leading-edge technology infrastructure. A high-level of technical maturity was advantageous for businesses as the rapid transition to digital operations began. China’s hyper-connected consumer society and the workforce rapidly eased into new ways of working, shopping, and receiving entertainment, effectively challenging businesses to propose an even wider portfolio of digital products and services. So it follows that 49% of China’s leaders plan to improve their innovation abilities in the next 12 months and bring new offerings to the market.
A properly-executed combination of AI, IoT, and 5G — the main tech-enablers executives named — can spur China’s leadership in emerging sectors such as the autonomous vehicle market, unattended retail, industrial robotization, and “green” transportation among others. Technical excellence, paired with effective execution, also make local leaders overwhelmingly confident in their ability to overcome cross-border challenges with the help of technology.
A “fit” workforce is critical to capitalising on the emerging, tech-enabled business opportunities. China leaders acknowledge the importance of hiring, nurturing, and retaining the best minds. For 91%, staff physical and mental wellbeing is a top priority and 95% of executives agreed that diversity is a growing area of importance for their business. While local leaders are not as likely to take advantage of remote work as a facilitator for sourcing diverse talent, they are more committed than their global peers to seek out strategic partnership opportunities and collaborate with entrepreneurs.
Purpose-led initiatives, aimed at bolstering China’s position as a leader in renewable energy, biofuel, and biotech production, are in mainstream focus as well. Evoked by the government’s pledge to achieve carbon neutrality by 2060 and supporting actions, promoting “greener” transformations, 89% of local leaders see the economic recovery process as an opportunity to reposition their business for profiting in the low-carbon economy and actively seek ways to commercialise emerging green-growth opportunities.
Sign up for HLB insights newsletters
A strong year for Australian IPOs after initial market shock
2021 IPO Watch Australia summary of findings
29 January 2021
Despite the widespread economic impact of COVID-19, the Australian IPO market rebounded strongly in the second half of 2020 with a resurgence in market listings. This was one of the key findings from HLB Mann Judd’s annual IPO Watch Australia Report.
The report analyses IPO activity over the past 12 months on a number of key metrics, including listing volumes, share price performance, industry spread and overall trends, as well as a review of the pipeline for 2021.
In 2020, there were 74 new listings on the Australian Stock Exchange (ASX), which was an increase of 12 on the year prior. Most interestingly, 62 of the 74 listings occurred in the second half of the year. The strong end to 2020 reflects the resilience of Australia’s economy amid particularly tough business conditions.
In early 2020, the Australian Federal Government adopted a mass suppression strategy to minimise the impact of the COVID-19 virus. The country’s geographic isolation, combined with a AUD17.6 billion economic support package, strict quarantine system and high test rates per capita, has resulted in comparatively low infection and death rates. Australia is in a strong position as the country prepares to roll out its vaccination program from February 2021.
However, in the first half of 2020, Australia was not immune to the unique set of circumstances and significant market volatility which saw historically low volumes of listings. In the first half of 2020 only 12 companies listed on the ASX. However, by September, there were signs of improvement, which was arguably reflected in Australia’s broader economic position. The December quarter then experienced a resurgence in activity with volumes and funds raised being the highest in a single quarter since 2010.
Australia’s listing volumes trended alongside the global activity which saw some of the highest IPO capital raising activity in the last decade, particularly from the US and China domestic markets. In the US there were several high profile listings including Airbnb, Palantir, Snowflake and DoorDash.
While many businesses and markets globally have been impacted by the pandemic, some sectors flourished during the year. Companies in the e-commerce, technology, pharmaceuticals, food delivery and technology services sectors performed well upon listing.
In Australia, listings from the retailing sector accounted for 13 per cent of total funds raised across IPOs in 2020, well up its contribution in previous years. Australian consumer activity also mirrored the global shift to online shopping as consumers avoided bricks and mortar retail outlets during the crisis.
Other notable ASX listings during the year from businesses that experienced growth during the pandemic included Youfoodz Holdings Limited (ASX:YFZ), a producer of ready-made meals and Aussie Broadband Limited (ASX:ABB), an internet provider, which have achieved post listing valuations above company expectations.
Despite uncertainty in the global markets, with several macro-environment trends at play, a number of high profile companies have reported their intention to capitalise on the IPO boom.
Australia’s strong end to the year also looks set to continue throughout 2021, with a healthy pipeline of new market entrants scheduled to list. At the end of 2020, 14 companies had applied for listing, representing a small increase on the comparable period last year.
About IPO Watch Australia
HLB’s IPO Watch Australia is authored by Marcus Ohm, a Corporate and Audit Services Partner based in Perth. The report provides a detailed summary of IPO activity within Australia for the year and analysis on key aspects of the market including:
- Share price performance
- Sector analysis
- IPO subscription rates
- Review of activity by quarter
- The road ahead for the year
Sign up for HLB insights newsletters
Achieving the post-pandemic vision:
leaner, greener and keener
HLB Survey of Business Leaders 2021
A crisis that made us think
Pivotal, disruptive, re-defining, unprecedented: The global Coronavirus outbreak and its economic implications will make 2020 go down in history as a year of crisis. Operating remotely under lockdown and physical distancing restrictions, business leaders had to chart new strategic priorities, balance a multitude of risks, and find ways to deploy the ‘human touch’ into their now digital-first brand and wider operations.
As we enter 2021, pessimism around the state of the global economy is gradually being replaced with a staunch commitment to finding new opportunities for growth. Over three-quarters of leaders we surveyed for this year’s report feel optimistic about their ability to grow in the new economic cycle.
For many companies, COVID-19 and its implications served as a strong prerequisite for questioning how their actions shape consumer perception of their brand, and what practices could better position them for future success. From new product launches and increased pace of digitisation, to workforce transformations and accelerated commitment to a greener and leaner production, business leaders are actively planning to achieve their post-pandemic vision.
Thank goodness for technology
Technology has become a crucial driver for keeping operations at speed during the pandemic. Cloud computing, AI, and robotics process automation (RPA) are the top 3 areas of importance for the leaders we spoke with. In the current international business environment, 88% believe technology will help overcome cross-border challenges.
Yet, they also recognise they need to strengthen their digital capabilities in order to fully benefit from what these digital technologies have to offer, ranking it the top weakness area to address in 2021. With great hopes placed on tech comes the responsibility of proper implementation. Technology itself isn’t the solution, it’s a means to an end.
Are we missing the human touch?
Prolonged physical distancing and transition to remote work have placed a strain on the workforce’s well-being and business development. While digital collaboration tools enabled operations at distance and even resulted in some efficiency gains, in-person interactions are universally missed. For 84% of leaders, deploying the value of ‘human touch’ in their businesses remains a tough act to master. Fostering creativity, building trust, and infusing spontaneity in day-to-day interactions are areas that cannot be fully bridged with new technology.
Diversity — a salient competitive driver
As innovative thinking has become crucial for all rather than the task of some teams, business leaders are increasingly seeking ways to promote the diversity of thought within their organisations. 82% believe that commitment to building a more diverse and inclusive workforce will result in better financial performance in the shortest-term perspective. The rising acknowledgment of the importance of diversity is further backed by a nearly unanimous commitment to ensure equal support and opportunities for all people, as well as prioritisation of staff physical and mental well-being. All of the above could prepare leaders better to face an emerged set of challenges and serve the next generation of socially-woke customers.
Rebuilding back better
The halt, prompted by the pandemic, was seen by many leaders as an opportunity to reflect on their past actions. As leaders are reinventing their business models, they are re-committing to new prerogatives — leaner and greener production. 65% plan to focus on increasing operational effectiveness and nearly half of leaders seek ways to reduce costs.
Additionally, over 77% view the recovery phrase as an opportunity to make their business more conducive to profiting from the low-carbon economy in the future. These ‘green-growth’ numbers are even higher in some sectors such as Financial Services and Agriculture and Food. Changes in supply chain management, especially in regards to sourcing proximity, also contribute towards more climate-friendly practices.
HLB Cybersecurity Report 2020
Navigating the cyber-risk landscape in the age of remote working
The COVID-19 pandemic forced many organisations across the globe to adopt remote working and digital processes with record speed. In doing so, CTOs and IT management faced increased vulnerabilities allowing for cyber-attacks and data breaches to take place more easily. Overnight, organisations went from controlled office environments to diverse home worksites. Continuing business, while securing multiple virtual environments, proved to be a challenge. But remote working is here to stay, so enterprises must adjust and overcome security hurdles.
In light of Cybersecurity Awareness Month 2020, we surveyed 76 IT professionals about their perceptions on information security and data protection in today’s complex digital environment. We also spoke with HLB cybersecurity experts about today’s cyber-risk landscape, the lessons learned from lockdown and the road ahead for CTOs to protect against cyber-crime in the age of remote working.
Across the globe, companies shifted teams to remote work to reduce disruptions to business when governments announced lockdown measures to prevent the further spread of Coronavirus. While business continuity was the most immediate, and pressing concern, changes also had to reflect the unexpected cybersecurity challenges of virtual workforces.
From mobile security threats to unauthorised access to files, recent cyber-attacks shed light on an increasing problem. These online assaults may affect multiple networks and computers. It disables programs and steals data. Cyber-attacks may also use your remote workers’ computers to launch additional attacks. Cyber-risks include reputational damage, financial loss, and disruption to business operations.
To manage cyber-risk, it’s necessary to adapt the three tenets of information security to remote working environments, as every threat to security is not necessarily malicious. Major security breaches have been caused by well-intentioned users, which is why security training is essential. Access to data should be given to users on the principle of least privilege, which means that the level of access given to users should be confined to what they need to accomplish their duties.
Infrastructure plays a crucial role in data confidentiality, so now that data is accessible in more places, professionals are under pressure to address their approach to cybersecurity and regulatory compliance standards while people remote work. As organisations increasingly move away from the concept of office space and consider remote working a longer-term or more integrated solutions, IT teams need to ensure infrastructure en security meet long-term remote working business requirements.
Sign up for HLB insights newsletters
Unconscious Bias Awareness Study
Unconscious bias, binding the business success
The extent to which unconscious bias has an impact on our society and the professional services industry is hard to capture in full since the very nature of the problem is evasive and unintentionally cultivated for years. What can be attested with certainty is that a consequence of biased behaviours is an industry lacking diversity, particularly at higher organisational levels. Furthermore, unconscious biases constrains the career progression for certain groups of professionals and is becoming a bottleneck to diverse hiring. All of these practices gradually, but inevitably, erode a firms’ success.
At HLB we believe that it is our duty as professionals to analyse the as-is state of any matter and advise on the best steps towards the desired to-be state. In this report, we look objectively into the current practices and identify where and why bias overtakes objectivity and what can be done to address and resolve unconscious bias within the professional services industry.
While the number of female public accountants has steadily increased, there is still a significant lack of female leadership within the industry. We discovered that several unconscious biases as the cause of this. One example is that the traditional career curve for women in accounting is rarely accommodating motherhood. In addition, the pressure to deliver measurable results and clock in the billable hours is another core factor that eschews the career progression curve for female CPAs.
In addition, the career progression curve for non-white candidates of both genders differs significantly to that of white professionals. Despite the increased number of graduates coming in from different backgrounds, CPA firms are still slow to embrace diverse hiring practices. Our own findings suggest that even in richly diverse areas, there are no shortage of diversity at entry-level, but few non-white CPAs progress up the ranks, with less than 10% promoted above the mid-level positions. In addition, structural reasons such as systemic barriers to education and access to opportunities can explain the lower rate of diverse candidates entering the industry.
While the supply of candidates from diverse backgrounds to the industry has steadily increased since the start of the 21st century, the demographic split within CPA firms is still strongly focused on white males as both our internal and external research suggests. Our profession has been too slow in acknowledging the importance of diversity and inclusion in the workforce, as recognised by 55% of HLB Managing Partners. Yet it’s widely agreed that moving the needle towards more equal power distribution isn’t just a social priority; it’s a key driver for the future viability of the industry.
The lack of diversity in leadership positions comes as a direct result of practices and unconscious bias which exists on the grassroots level within the industry. With a compromised career curve, fewer female and non-white candidates manage to make their way to leadership positions, with many giving up on either their professional growth or the industry. This has a direct impact on the attractiveness of the profession, with 67% of HLB managing partners agreeing that prospective employees look at the demographic make-up of the firm and leadership team when assessing an employer brand. Ultimately, homogeneous leadership structures are holding firms back from realising their full potential and driving outcomes for their clients.
Unconscious biases are small bricks that support our mental ‘mortars’ and stand at the foundations of many organisational practices. Removing all of them at once is neither feasible nor sustainable. However, gradual minor adjustments made both on the grassroots and leadership levels can yield a substantial impact for the professional services industry. Addressing biased behaviours at the leadership level is a priority as such targeted action can facilitate with further dissemination of the practices to the lower levels. The Maintaining the ‘status quo’ on the matters of diversity isn’t an option either as inaction will further heighten the issues of inequality and drive new talent to other industries.
Sign up for HLB insights newsletters
Five strategic priorities to succeed in the new world
The post-pandemic world arises
To increase your post-pandemic readiness and succeed in the new world, we have identified five strategic priorities to unlock business transformation: Digital acceleration, Workforce transformation, Consumer acumen, Cost management, and Supply chain reinvention.
As we head down a path of uncertainty, the risk of sitting tight and not investing in transformation will decrease company growth or possibly result in lost market share. To maintain competitive in the new world, business leaders must adopt greater agility to anticipate change and mitigate its impact. To drive sustainable change in the organisation and re-write the manual, tough questions need to be asked within boardrooms. This report helps you identify the strategic priosities to focus on and the actions to take.
Five strategic priorities to increase post-pandemic readiness
While business transformation through digital technologies has been on the CEO agenda for over a decade, the lockdown measures in response to COVID-19 have forced businesses across all sectors to rapidly adopt technology enabled processes to keep operations running remotely. From home-working arrangements to online sales and distribution channels, they are here to stay. Businesses that do not prioritise digitisation and the adoption of new technology will fall behind the competition and will not be able to keep up with the needs and demands of customers and employees alike.
The well-being of your workforce is directly linked to business performance. In the post-pandemic world, interactions between people in both the physical workplace as well as via digital collaboration platforms must be adjusted to fit a more agile working model. This also includes more flexible arrangements to up or down-size the workforce more easily depending on business needs. Key to success is fostering a flexible and open culture within the organisation.
Findings from HLB’s Global Survey of Business Leaders revealed that pre-pandemic, just 24% of business leaders planned to focus on customer acumen in 2020 to strengthen their business. But in a post-pandemic world, we identify consumer acumen as one of the five strategic priorities in order to succeed. The wants and needs of your customers today are likely to look different from what they did before. With consumer spending in decline, B2C businesses in particular need to make sure their products, sales channels, customer service and brand messages meet the new demands of their customer base.
The foreseeable future remains uncertain, and in times of uncertainty, cash is king. The pandemic has shed light on the importance of cash preservation and cost control. Strategic cash control and cash management will be key to survival of businesses during times of change. The key to your continued survival will be your ability to quickly adapt to unanticipated disruption. Business leaders should centralise cash where possible and optimise operational efficiency and productivity.
The pandemic has uncovered a variety of issues and inefficiencies in global supply chains. One common challenge is replacing or augmenting manual processes which are dependent on the action of individuals. For example, manually inputting information—whether it be for purposes of filling orders or completing a multitude of tasks—can get easily delayed and slow the supply chain process. Data analyses to inform procurement processes and decision-making on inventory requirements can be made more efficient through the use of digital technology.
The Execution Challenge for a New Decade
HLB Inaugural Survey of Business Leaders
Reasons to be confident, reasons to be wary
At the dawn of a new decade, we find half of the business leaders we surveyed pessimistic about the global economy, with factors including access to talent, regulatory chance and economic uncertainty topping their list of concerns. At the same time, business leaders seem strikingly confident about their own ability to grow their business.
In a time where political, economic, social and technological change is happening at accelerating speed, we found that business leaders understand the make-up of the successful business models of the future. However, are they doing enough to execute for the change that is needed to thrive in the 2020’s or is their speed of adaptation too slow?
New business models for a new decade
Business leaders across all sectors have a clear vision for ideal business models of the future. They are setting their sights on a more mobile, flexible, cloud-enabled business model fit for the future. And this reflects in their talent strategy: 81% of business leaders are exploring more flexible resourcing arrangements and 72% are trying to recruit more diverse employees with broader skill-sets. They are aware of new ways of working that will make them more agile and better suited to today’s business environment.
Preparing for new realities and an accelerated speed of change
Business leaders are keenly aware of the need to improve their agility and adaptability to remain competitive. Innovation and operational effectiveness are the top two areas CEOs are focused on strengthening. They recognise that turbulence can bring opportunities. Although only a quarter of business leaders have identified consumer acumen as an area to strengthen in their businesses, more than half is using market research to stay abreast of rapidly changing consumer behaviour. Research methods include social listening (45%), investing in improved CRM (43%) and analysing search (29%).
Harnessing new technology and scaling innovation
The digital revolution is not new and business leaders are well aware of its role in transforming the way organisations operate. Some technologies once viewed as disruptive have become important drivers of success, with AI and Cloud technologies ranking as most important. But while business leaders understand the revolutionary potential of new technologies, only 31% of respondents state that they are focused on strengthening digital capabilities. The demands of a rapidly evolving digital arena will force businesses to innovate or be left behind.
Bridging the performance gaps
If companies are to flourish in times of unprecedented change, they must be honest with themselves as to how their processes measure up again best in class. Although business leaders recognise the challenges ahead and characteristics of more agile business models of the future, it seems that they are focused on optimising – or fixing – existing processes, rather than adopting models more consistent with the demands of the contemporary economy. Across technology, innovation, operations and costumer acumen, there are gaps which need attention to maintain competitive and relevant in the 2020’s.