According to KPMG Futures’ new report, Our New Reality: Predictions after COVID-19, the pandemic has exposed existing weak links across industries, government and our economy. The urgency and importance of addressing these weak links has radically shifted, and many decisions and discussions have been brought forward. As a result, we see four distinct stages on the path to recovery.
We’re currently in the first stage of the recovery process. After the initial shock, professional and personal lives have been disrupted as the primary focus is on limiting damage to lives and livelihoods.
Many of us have been navigating our way through working from home while homeschooling, missing social interaction with friends and family, with pending or real unemployment keeping us awake at night. We are hypervigilant and unexpectedly tired.
One reality for most working people is that the nine-to-five routine of the office has been turned upside down, and remote working is an everyday experience.
This second stage is the one Australia and some other nations are moving into. As the virus spread is contained, controls start to loosen. Consumer demand begins to return but is constrained by lost wages, investment losses and recession fears.
It’s likely that certain industries will maintain stricter controls and reduced operations for longer. Airlines, for example, may need to keep measures in place until there is a vaccine or a means of establishing the health and safety of passengers.
Building business continuity and resilience will be a core competency. Cash/liquidity has become critical to survival, and organisations will have a sharper focus on how best to balance what they can control with the things they can’t.
With schools and businesses reopening, hiring, investment and consumer sentiment will cautiously improve. Recovery paths for organisations will vary based on their ability to limit damage from the reaction stage, the length and severity of the recession, post-COVID-19 industry demand, and willingness to adapt.
Hybrid workforces – with some staff working from home part or all of the week – will remain, with work measured by outcome rather than input. Business leaders will need to be more flexible. A shift to flatter and more fluid, task-based structures will follow and require new management skills and changes to performance measurement and reward programs.
The need for national and international travel will continue to fall as organisations realise both time and cost savings along with productivity gains. This will mean significant impacts on the business travel industry, including airlines, hotels, the car rental business and insurance services.
Another permanent change will be a shift in our relationship with consumerism ... with an increased focus on family time, health and wellbeing
4. The new reality
The final stage is recognising that the world will never be quite the same. New behaviours born out of the crisis will become central to the new normal.
With more people working from home, demand for large built infrastructure projects won’t uniformly return to pre-COVID levels. Instead there will need to be a rethink when it comes to commercial real estate used for office space:
how can it be repurposed to serve the new needs of companies and the community? Competition will come from the home office, with commercial real estate needing to offer more than just a place to work.
Meanwhile, reliance on connectivity has skyrocketed. There will be increasing demand for the accelerated rollout of 5G networks to boost speed and reliability. Mass adoption of video conferencing and collaboration apps will grow the need for virtual reality and augmented reality technology, moving it into mainstream use.
Another permanent change will be a shift in our relationship with consumerism. People will think differently about money and material goods, and what they value. The environment and community will be more important, with an increased focus on family time, health and wellbeing. Cost consciousness and value will be front of mind and a generational hallmark.
The sudden shift to remote working has been jarring for many, compounded by other impacts of the crisis. Large shifts take time to smooth over, but further improvements will come as we create better home office set-ups, start managing by output versus input, adapt leadership and management styles and improve technology.
Compared to other nations, Australia was relatively shielded from the heaviest impacts of the 2008 GFC. From here, we are likely to see significant changes to tax and welfare regimes, health and safety regulations, and businesses required to pay ‘social dividends’ for the bailout they’ve received.