How Canada’s private companies can turn optimism into a plan for the future

In a recent blog post, I explored the optimistic outlook held by many Canadian private company executives and how turning that optimism into reality will require them to focus on two of today’s critical business imperatives: building trust and delivering sustained outcomes. How can they go about doing that?

1. Grow through secure digital transformation

While many private companies have seen great success in accelerating digitization during the COVID-19 pandemic, executives clearly recognize the importance of growing through secure digital transformation. This is leading to rising concerns about cybersecurity. According to our 2021 CEO Survey, 86% of Canadian private company participants expressed concern about this.

Even so, we’re seeing a gap when it comes to the actions they’re taking in response:

• only 60% have factored cyber threats into their risk mitigation strategies
• just 71% are planning on increasing investment in this area

Public companies have been addressing this issue more systematically for some time, but with the recent acceleration of digital adoption and new threats emerging, it’s time for private companies to make this an even bigger priority. One way to do this is by investing in strong risk management frameworks: review the threats facing your business, develop action plans and stress test them to build trust and resilience as your organization’s digital journey continues to unfold.

2. Address the rising sustainability challenge

Delivering sustained outcomes will require increased efforts by Canadian private companies to address one of society’s biggest challenges: climate change. This makes it even more important for them to make their performance on environmental, social and governance (ESG) matters a key business priority.

While some private companies might think ESG performance isn’t as big of a concern for them because they have fewer reporting obligations than publicly listed organizations, this has become a critical imperative for all businesses. With private companies positioned to make a significant impact on the world amid today’s rising focus on these important global issues, making proactive efforts to understand how they can help shape the future in these areas will be key. Besides considering the increasingly widespread recognition of the link between ESG performance and strong financial results, private companies need to think about the implications for their ability to attract and retain employees. The issue goes beyond employees to other stakeholders as well. Customers also increasingly expect companies to be proactive in decreasing their environmental impact. And more and more suppliers are looking to do business with organizations that have strong track records in this area.  

We know many private company executives recognize the importance of this issue. In our CEO Survey, 68% of private company respondents said they were concerned about climate change and environmental damage. But as with cybersecurity, there’s somewhat of a gap in their response so far:

• only 26% have factored climate change into their risk mitigation strategies (versus 46% for public company respondents)
• just 41% of private company CEOs are planning on increasing their investments in sustainability and ESG initiatives (versus 66% for public company respondents)

Harnessing the ESG opportunity

Despite these gaps, we also know many private companies already have a positive story to tell in some areas of ESG performance.

We see this in our 2021 Family Business Survey, in which a very large majority of Canadian respondents (91%) said they’re involved in some form of social responsibility, including 56% who engage in philanthropy. And many are already focusing on sustainability. Almost half (49%) of Canadian respondents said they ensure sustainability is at the heart of everything they do. This puts them ahead of their global counterparts, only 28% of whom said they look at sustainability this way.

So whether you already have strong community links or have been focusing on sustainability and other social responsibility initiatives for some time but haven’t been telling your stakeholders about them, now is the time to get more comfortable talking publicly about your ESG performance. But to truly build on the opportunities created by these trends, it’s important to go beyond telling your story to truly integrate ESG performance and drive change across your business. This will require you to create a strategy-led plan for making ESG-driven changes throughout the business, using the right metrics and disclosures to build trust and harnessing the power of data and technology to create value for all of your stakeholders.

3. Embrace human-led solutions to today’s business challenges

Delivering sustained outcomes will also require bold ideas and a willingness to embrace new ways of thinking. This means people will be key drivers of growth, which is why it was great to see Canadian private company CEOs put a big emphasis on leadership and talent development in our CEO Survey. A large majority (75%) are planning to boost investments in this area over the next three years, with 85% expecting headcount increases over that time period.

We see great potential in the power of human-led, technology-powered solutions to address today’s biggest business challenges. And by combining a private company’s ability to pivot and adapt to change quickly with investments in upskilling and challenging work opportunities for your employees, you’ll be better able to attract and retain the people you’ll be relying on to transform and deliver the future of your organization.

A critical driver of Canada’s growth and recovery

Private companies are a critical driver of the Canadian economy, which means their success will be key to Canada’s recovery. Their agility has helped many organizations navigate a period of so much uncertainty, but as we emerge from the pandemic, they’ll need to build on the momentum for change and transformation as they look to address their biggest challenges and priorities. To explore how you can build a plan to secure the future of your organization today, please contact me.