Few could have foreseen the devastating impact of the COVID-19 pandemic of 2020. The fallout of the crisis has been as multi-faceted as it is ubiquitous. Societies, economies, industries and businesses face a myriad of challenges – many of them still unknown.
Yet in the midst of this uncertainty, there is cautious cause for optimism. Certain trends that were visible before the pandemic have been exponentially accelerated by its impact – new approaches, ideas and technologies that might yield better, fairer, more sustainable ways of working and living in the longer term.
Above all, there is an awareness – and a growing consensus – among businesses, communities and leaders, that we must change; that we must do better and do more to contain and mitigate the risks that threaten our wellbeing – and our existence on the planet.
We asked four LSE experts – professors of management, organisational behaviour, international relations and finance – to share their thoughts on how we might emerge from this crisis, and what threats, opportunities, mega-patterns and trends might shape a post-COVID future.
Here’s what they told us.
"Now there is a whole new imperative for leaders to bring in a more human dimension and pay attention to the whole person."
No going back to the way things were for leaders
Pre-COVID, there was a relatively clear demarcation between home and work-life. With the shift to remote working, these boundaries have become blurred with significant implications for leaders and organisations, says Connson Locke, Professorial Lecturer in Management.
“Virtual working has led to an intermingling of the personal and professional spaces that has brought a more human dimension to the way we work – and to the way we need to manage people. Leaders today are being Zoomed into their employees’ homes – they are exposed more to the personal challenges of team members who might be caring for young or elderly relatives. That means that they need to learn to relate more and to manage their teams as human beings. Even before crisis it was true that people perform better when they are supported in the things that they are dealing with and managing. Now there is a whole new imperative for leaders to bring in a more human dimension and pay attention to the whole person.”
Mental health too needs to be front of mind for managers, says Locke.
“Even when we get back into the office, people are going to be anxious and worried about what happens next. They’ve just survived this huge pandemic, and they’re likely to be waiting for the next disaster to strike. Leaders have to understand that we’re operating at a much higher level of stress and uncertainty than before. To help their people continue to perform, they’re going to have to find ways of giving them the space they need, and encouraging them to slow down and reach out to others.”
As we emerge from the COVID-19 crisis, the onus will be on leaders to think hard about the lessons it has given and proactively factor the unexpected into how they plan and create their strategies, says Locke. This will entail creative scenario planning, and more participative and multidirectional communication to ensure that information flows at every level of the organisation. It will also mean doubling down on efforts to build an agile culture – one with the resilience and nimbleness to withstand future shocks. And this is where the “human” and interpersonal dimensions of leadership also come to the fore, she says.
“If you hire really talented people and you support them with the space to take responsibility and to be autonomous, you’re empowering them to become more resilient. And with resilience comes greater agility. When another unexpected shock hits you – the next pandemic where everyone has to work from home, say – you can trust these people. These are the people who know how to do their jobs so that they can pivot very quickly when necessary.”
We will not be going back to the way things were before COVID-19, says Locke. The world has changed and leadership will need to keep pace with that change – which is no bad thing, she believes.
“The separation of home and work – being one person at home and another in the office – I don’t see it as something natural or normal. The blurring of personal and private has had a humanising effect that allows all of us, leaders and teams, to bring a bit more of themselves to the workplace. And that is a trend that I believe will continue to shape the way we work.”
Digitally-empowered change agents
The role of HR as supportive change agents has never been more acute, says Dr Jonathan E. Booth, Associate Professor of Organisational Behaviour and Human Resource Management.
“The impact of COVID-19 has demonstrated the dire need in business for HR to take on the role of supportive change agents. As change agents, HR can help organizations to continually adapt and better navigate the business landscape that has become more volatile, uncertain, complex, and ambiguous particularly since the pandemic.
One way to be an effective change agent is to adopt digital transformation in the HR function and use data, AI, and emerging technologies to make better HR decisions, he says. This is particularly true in areas like selection, performance management, rewards, benefits, retention, learning and development. Further, given the current context, employees are facing difficulties, such as personal financial and mental health questions, he says. AI and emerging technology HR tools can ethically capture data from employees to sustain their engagement and to help alert them to when they may need employee assistance programmes and how they can successfully access such benefits.
“These emerging technologies can aid organisations in compassion organising and showing their employees the empathy that they deserve. Yet to achieve this, HR departments will need to have staff on hand who have the digital acumen to interpret data and deliver on business decisions that reinforce and are aligned to the organisational strategy and core competencies.”
Dr Jonathan E Booth teaches on our executive education programme Negotiation.
Big trade-offs as digitisation speeds up
COVID-19 has vastly accelerated some of the mega trends that have been reshaping our societies and economies over the last years; shifts that in the case of digital disruption may have taken years, rather than months, to come to full realisation. So says Robert Falkner, Associate Professor of International Relations and the Research Director of the Grantham Research Institute on Climate Change and the Environment.
“The pandemic produced a massive upheaval and shock to our global economy. But it has also cut through some of the resistance in social systems to rapid change, driving a shift in people’s skills and their tech-readiness. We’ve seen a huge leap forward in technologically enhanced ways of working and communicating. It’s actually surprising how nimble firms and organisations have been in finding new ways to keep work patterns and productivity alive while switching to remote work.
”The shift to virtual working and the speeding up of the digitisation of the economy have yielded and will continue to yield certain benefits. Some organisations will achieve a significant reduction in fixed costs as they have seen their physical footprint shrink during the pandemic. There’s also greater flexibility in work patterns that bodes well for businesses.
“White collar workers no longer have to be office-based and can work more flexibly. Organisations will be better placed to source their talent from far places around the world, which creates opportunities for cutting costs. We will see more of this kind of digital migration, I believe.”
"We’ve seen a huge leap forward in technologically enhanced ways of working and communicating"
The tech sector itself has of course been the main beneficiary of this pandemic-induced shift and will continue to do well into the future, says Falkner. With businesses increasingly reliant on tech-based solutions, such as automation and AI, our reliance on the likes of Google, Apple and Amazon is only set to increase.
“Companies will be investing even more in tech upgrades: AI to become nimbler in international digital markets; automation to drive productivity in factories.
”But these shifts will come with certain trade-offs and costs to society, he warns.
“Technological innovation also represents a threat to certain patterns of employment. Automation and AI have the potential to replace an ever-greater share of workers– even white-collar workers in services, medicine, law and other professions. And then there’s the toll that this kind of rapid change takes on human beings: organisations might adapt quickly, but humans work to a different timescale. For some, the relentless pace of new work patterns has been difficult. It can be stressful and not easy to cope with.”
There is also mounting concern over privacy, and the sheer power exerted by the tech behemoths who dominate the market. The backlash against these firms has increased, says Falkner, with more calls for scrutiny from competition and anti-trust authorities, particularly in the US and Europe.
“With the recent US election we have seen even greater concern about the negative influence of social media. There’s a push to treat them more as publishers and regulate them as public utilities rather than private firms. For this reason, the tech sector has to face up to greater regulatory and social scrutiny. The problem is that we still haven’t worked out how this will work.
“We are utterly dependent on these companies for our online searches, online ordering and communication – yet we haven’t found a way to assess, regulate and contain their market power. So I believe we will go through a phase where regulation is overhauled to deal with these competitive threats. And there are different layers to this problem, of course: competition policy, concerns over privacy, influence of social media on electoral processes. After the Biden victory, the US will be a key battle ground for all of this.”
Dr Robert Falkner teaches on our online certificate courses Technological Disruption: Managing the Impact on Business, Society and Politics and Business, International Relations and the Political Economy
Momentum is building among investors to hold firms and investment funds to greater social responsibility in 2021,says Dr Vicente Cuñat, Associate Professor of Finance.
“We’re seeing a number of trends gather pace in global finance that put ethical practices and procedures firmly on the table. Stakeholder culture is a shift in thinking that posits the idea that firms need to rethink their responsibility to the broader community they interact with, from clients to suppliers to employees.
Investors are asking interesting questions: do firms have a role to play in hedging society against some of the risks we collectively face? Do they have a responsibility that goes beyond shareholders to encompass the broader community? And if so, how do you make this happen?”
One way is through investor activism, which is very much on the rise as we go into 2021.
“We’re seeing this more and more in investor behaviour. Traditionally investors interact with firms through voice and exit. Voice is about communicating with management and maybe voting. Exit is about dropping those firms that don’t engage with you from your portfolio. Increasingly, there is a version of exit strategy that is basically exclusion: investors are not prepared to include certain types of businesses in their portfolio based on the activities these firms pursue. Typically, these would be things like arms development, tobacco or alcohol.” Cuñat likens this to so-called cancel culture: the consumer trend of calling out or boycotting corporations for wrong-doing.
Another way of holding funds and firms to greater account is through Expectation Documents.
“With intermediated finance there’s the risk that investors can feel out of touch or distant from the end firms that they’re investing in. In response, funds have been getting creative about how they cater to investors’ concerns. A really powerful mechanism that has gained huge traction in the last 10 years is the Expectation Document: a document signed by investors that sets out values and ethical norms they expect firms in their portfolio to uphold.”
Like exclusion, Expectation Documents limit investment in businesses subject to how that business behaves. But the effect doesn’t end there, says Cuñat.
“Blackrock, Charles Schwab, Fidelity – all really huge global mutual funds have a hand in everything. They invest in firms all over the world. Now, if they have an Expectation Document that says: throughout the globe we require firms in our portfolio to adhere to certain standards, that’s not just a way of coordinating firms –it’s also a way of coordinating the countries where those firms operate. Those maverick states that deregulate on things like sustainability or climate to attract investors are suddenly very much on the back foot.”
Going into 2021, funds are in a very interesting position to exert influence over the way business is practiced around the world, says Cuñat.
“Very often we have negative picture of huge funds. But there are many things that need international coordination and these funds and investors are in a very good position to deliver it. Of course, we need to remember that these are private entities with the requirement to make profits for their shareholders. They’re not the UN or elected governments setting the tone on governance, climate change or global transparency. But at the same time, they’re in a good position to do real good.”
Dr Vicente Cuñat teaches on our executive education programme Corporate Finance and Strategy