Pursuing growth in 2021: The C-suite focuses on a rejuvenated workforce and building trust

Our first Pulse Survey of 2021 finds confidence among US business leaders surging amid expectations of a strong US economic recovery. But that positive outlook is clouded by concerns around social factors. While many companies have found ways to prosper without going back to pre-COVID-19 patterns, they remain troubled by the lingering effects of the pandemic on the workforce and their communities. For example, 29% told us that resuming business travel is very important, well below the 52% who believe their prospects are intertwined with the pace of schools reopening. Less than a third of executives are optimistic that the country can close the social and economic gaps that became more apparent last year.

Eighty-three percent of all US business leaders are expecting to increase revenues this year. That’s a significant jump over last fall when only a quarter of finance leaders were expecting growth. Part of that optimism comes from the $1.9 trillion in COVID-19 relief money that’s flowing into the economy — just as rapid vaccine rollout is easing restrictions on economic activities. In our past Pulse surveys, business leaders have consistently, and almost unanimously, sought a strong federal government response to the COVID-19 crisis. Today, 71% percent express satisfaction with the US pandemic response.

With an acute awareness of their own role in rebooting work and lives in 2021 after a devastating year, many business leaders are taking concrete action. Topping the business agenda is supporting and strengthening a pandemic-weary workforce and growing trust among all stakeholders. We conducted this survey from March 8 to March 12 and fielded responses from 732 senior executives in C-suite and corporate board director roles. Senior executives shared what’s most important for their companies to thrive in a post-pandemic economy and their strategies for success in 2021.

What executives consider most important to drive post-pandemic business recovery 

1. A more skilled and rejuvenated workforce: More than half of the business leaders surveyed consider people issues, such as availability of talent with technical skills (59%) and supporting burned-out employees (55%), as very important for success this year. Almost as many (52%) attach high importance to what they can’t control, such as school reopenings. In comparison, returning to the old ways (e.g., business travel and in-person events) matter far less.
2. Supply chain agility to meet demand and policy shocks: Reducing supply chain disruptions as consumer demand surges will be very important this year for almost half of these business leaders (49%). The pandemic accelerated tech investments in supply chains, and businesses will now look to home in on capabilities like demand sensing and forecasting. Policy shifts such as President Biden’s recent Executive Order on America’s Supply Chains — to review vulnerabilities in US supplies of critical technologies, metals and pharmaceuticals — are also influencing strategies to improve resiliency.
3. ESG strategies to grow trust and transparency: With consumer spending picking up, 44% of business leaders are prioritizing building trust with customers, followed by 27% who rank employees as their top stakeholder group this year. Maintaining — and growing — trust earned during the pandemic has become critical. That means improving business performance on environmental, social and governance (ESG) factors in addition to financial performance, and telling that story to stakeholders. Business leaders are enhancing diversity and inclusion (D&I) training and reporting as well as pursuing ESG-related investments.
4. Preparing for potential tax-increasing legislation: With the American Rescue Plan Act of 2021, President Biden and the Democrats demonstrated their ability to enact significant legislation using budget reconciliation procedures. Likely anticipating potential action on Biden’s broader Build Back Better plan next, 56% of all respondents and 75% of tax leaders are modeling potential impacts of a tax rate change. More than half of business and tax leaders (51% and 55%, respectively) are also stepping up tax planning for value creation and risk management.

Further action to consider

Bring data and critical insights to policymakers: The outlook on the US policy and regulatory environment is mixed, with 42% viewing it favorably and 37% expressing pessimism. While this suggests that executives are still assessing the likely impacts of the president’s whole-of-government approach to policy, a wait-and-see attitude could be costly. Biden’s call on Congress to act on his Build Back Better economic recovery plan is expected to begin with bipartisan outreach around issues like infrastructure and clean energy transition (even if Democrats ultimately use a second reconciliation bill to pass parts of the plan). This creates a window of opportunity for business to help shape the potentially tax-increasing legislation, yet only 33% of respondents in our survey are planning to engage with legislators on tax policy. More companies will benefit from communicating the potential impacts of proposed policy changes on jobs and business operations to the White House and Congress.

Hybrid workforce models will build in employee wellness and flexibility

For companies, the supply of skilled and healthy workers is at risk just as consumer demand has snapped back and the economy is poised for recovery. A refreshed workforce, equipped with technical and trade skills, is critical for prospering. More than half of business leaders are taking action to secure talent with technical skills. In parallel, they will step up support for stressed, burned-out employees who have been juggling job insecurity with family demands over the past year. These actions matter far more than returning to old ways of working, such as business travel, or further government support.

As companies plot their growth trajectories, they’re not rushing to bring people back into the office. Instead, they’re creating hybrid work models to meet employee needs while helping companies emerge stronger. Some temporary actions quickly taken during the crisis are here to stay — most notably, remote work is becoming permanent for suitable roles, and investments in digital tools are being made to help the workforce succeed in virtual work environments. Companies are also rethinking their real estate footprints to enable more collaborative employee experiences while reducing costs. 

The challenge for leaders is to sustain such improvements while also addressing areas where companies have fallen short. Almost 3 million women have dropped out of the workforce over the past year, but just 42% of business leaders see their reentry as very important to their ability to prosper. Schools reopening alone won’t solve this workforce crisis. Our workforce surveys show that women aged 35-44 have been struggling much more than other workforce segments. How companies address the pandemic’s disproportionate toll on women as the economy recovers will affect not only women’s career growth but also employee morale, D&I goals and business performance.

Actions for business

1. Build trust with employees to engage them in upskilling: Employee anxiety about automation and job loss can hurt workplace productivity and impede growth strategies. It’s important now to commit to workforce investments and communicate the business case for upskilling. Employees want to increase their productivity and employability, and helping them understand what skills they need to build their careers can reassure and empower them. Focus on not just technical skills but people’s ability to cope with change. A culture of flexibility and continual learning, along with customizable tools to meet people’s needs, can all contribute to growing trust and confidence in new ways of working.
2. Incorporate rest and recovery into agile ways of working: Many companies have found that small groups of employees collaborating in virtual or hybrid teams are able to innovate in short sprints. As these agile ways of working become more permanent, it’s just as important to build in time for rest and recharge. The concept of flexibility should evolve to include dynamic scheduling and more choices, including time for switching off screens. Take the pulse of employees through regular surveys and offer more benefits and flexibility options so individuals can make choices that work for them. Continue to personalize benefits to meet employees where they are as return-to-work plans take shape such as, for example, providing safe transportation options for employees coming back to the office.

A recoupling of economic growth and social progress

The pandemic and the social justice movement have highlighted gaps between economic growth and social equity and inclusion. Now, as economic recovery takes hold, business leaders recognize the need to lead a recoupling of growth with social progress. Many are embracing ESG strategies to achieve more equitable and sustainable growth while turning a profit for their business. 

Our survey reinforces what we know from our work with clients: Companies are at different stages of tying all the elements of ESG into consolidated reporting and to their broader strategy. Fifty-six percent of business leaders are planning to increase D&I training, and almost half (49%) are increasing D&I reporting this year. And 39% are also considering ESG-related investments and deals, signaling a pivot toward more climate-resilient business models as pressure builds from consumers, investors and the Biden administration.

Actions for business

1. More rigorous analyses of the interconnectedness of E, S and G factors: Companies preparing for investor-grade, digital-friendly ESG data and systems should bear in mind that market forces and policies will continue to push them toward more rigorous analyses of the intersections among ESG factors. The Biden administration, for example, is making environmental justice a focal point of its climate policies. Investors, too, are more attuned to the connections between environmental and social factors. Consider the growth of sustainability bonds with broad objectives such as financing low-carbon operations and supporting better working conditions for the workforce at the same time.
2. Incorporate ESG into the company's deals strategy: More and more investors are assessing ESG’s impact on asset values. PE firms, for example, are sharpening their focus on ESG with “buy dirty and cheap, sell clean and expensive” strategies. With ESG becoming an important issue for buyers, sellers who are lagging behind risk leaving value on the table. Comprehensive ESG due diligence has become critical to negotiating the right terms for a deal.