Enterprise & Market Resilience During COVID-19: Regional Development (Week-18)

enterprise_market_resilience_during_covid-19_learnings_from_a_virtual_forum_for_business_leader
Enterprise & Market Resilience During COVID-19: Regional Development (Week-18)

Key takeaways:

  • Agility and flexibility are more important indicators in recovery than which sector a business operates within;
  • ESG, innovation and digitisation will be vital investment criteria in the future as well as factors for attracting and retaining employees and customers;
  • Levelling up the regions will work best if regional bodies are trusted with the finance, strategy and decision-making that will deliver on the Government’s vision.

 

At Robert Half and Protiviti we believe there is tremendous value to be gained in collaborating and learning from each other at this challenging time. Hearing new and unexpected perspectives from others can help challenge your thinking, provide confidence in your own plans and increase your resilience. 

More than 100 business leaders joined our eighteenth Enterprise & Market Resilience During COVID-19 virtual roundtable at 8.00 am on Thursday 16 July. The aim is to have an hour-long meeting each week on Thursdays and build a community of people from different industries who can share relevant materials and experiences of operating in ‘the new normal’.

This week’s discussion focused on the future of cities post-lockdown, regional and sector recovery and the environmental, social and corporate governance (ESG) agenda.

The speaker panel included Mike Blackburn OBE, Chair of Marketing Manchester and Experience Non-Executive Director; Mike Owen, Group Investment Director, Welsh Development Bank; Fiona Morris, Head of Operational Resilience, Royal Bank of Scotland; Beth Houghton, Partner, Palatine Private Equity Impact Fund; and Lee-J Walker, Managing Director, BusinessDesk.com.

What will cities look like post-COVID-19?

Mike Blackburn said if we didn’t see any change in cities following the pandemic then it would be a case of ‘shame on us’. The lockdown has given us the opportunity to reflect on how we are doing things and how we should be doing them. Cities will still be the bedrock of growth for the UK, but it doesn’t mean we can’t change the way we use them, particularly when it comes to travelling to meetings or work.

Going back to city centres en masse will depend on human behaviour: over half of respondents to a recent survey said they were frightened to go back onto public transport. It’s likely that there will be a blended, more flexible working environment for most, with staggered travel times and hours. 

The fact that people are still both wary and confused about the rules means that the infrastructure of businesses and their offices office, including restaurants, pubs, cafes and shops will also struggle, Blackburn said. The Manchester city centre hospitality sector has seen a 30% fall in traffic year on year after reopening the week before, making it difficult for companies to make a profit.

There is no silver bullet for reopening city centres, he added. It will depend on the rules outlined by Government and personal confidence levels. However, it is possible to learn from the pandemic and take measures to encourage a balance of shopping locally, walking, cycling and cutting back on diesel cars.

Beth Houghton, whose firm has hospitality companies in its investment portfolio, said that companies operating outside city centres were doing well, along with brands aimed at a younger crowd that live in the centre and don’t need to travel to get to them. 

Sector recovery

Mike Owen continued with the theme of mixed results for sectors, saying that it is more a question of agility and the ability to adapt to circumstances that are the most important factors for recovery. Businesses within pharma and health, consumer goods, technology, gardening and landscaping are generally holding up well. 

But for all the companies within those sectors that have pivoted into selling alternative goods or using different delivery channels, there are those that have found it difficult to adapt. One gardening/landscaping firm could have been doing three times as much business as it is actually achieving, but it did not have enough flexibility or resilience in its supply chain, for example.

The barometer that is the construction industry is performing well, with demand for homes as strong as ever. However the sector will be tested when the furlough scheme ends, more jobs are lost and people potentially run into financial difficulty with lenders.

Lee-J Walker agreed that it is difficult to predict exactly how recovery will unfold. We are currently still in limbo, and businesses are reporting that they will not get back to full staffing in the office for many months to come.

There continues to be bad news from businesses, especially those in retail and hospitality, but there are some good news stories such as Next’s bid for Victoria’s Secret. Positive opportunities also exist for technology companies: the fact that the IoD’s North West awards ceremony was held online the previous evening shows how the agility of remote working has been embraced. Walker’s own business is also launching a series of online events in the coming months.

Levelling up the regions: Political rhetoric or reality?

Mike Blackburn said he had seen real evidence of the reality of levelling up, and that while it had been paused because of the pandemic, it is now likely to return with a vengeance. But it can only succeed if the regions are allowed access to the right funds, make their own decisions and take the right actions, he said. 

There is evidence that it works to place trust in regions to do the right things for their areas, added Mike Owen. For example, Tees Valley has made a huge success of switching from heavy industry to off-shore renewables. He agreed that there should be minimum influence on regional decision making from Westminster.

The ESG agenda

Beth Houghton said that while COVID-19 has been disastrous for businesses it will create an impetus for more resilience and sustainability underpinned by innovation and digitisation. For Palatine, investment decisions are already driven by two environmental pillars and four social pillars, covering everything from reducing carbon emissions and waste to supporting employees’ mental health, delivering diversity and maintaining ethical supply chains. 

Some portfolio business have cut back on travel by as much as half a million miles by delivering training and mentoring via video conferences - and will probably not return to face-to-face meetings. Companies that have taken a lead in digitisation generally have performed better during the crisis, so digital innovation is likely to become a key investment criterion moving forward.

The impetus for change must come from the public sector as well as the investment community, said Mike Blackburn. For example, local authorities could mandate more solar panels for schools or electric bus fleets, rather than building more roads for cars to drive on.

And the impact of ESG on recruitment and retention should not be overlooked, added Mike Owen. Businesses with a social conscience that have a positive impact on the environment and society attract and retain both employees and customers. 

Progress report from RBS

Finally, Fiona Morris gave a quick update on how RBS, to be renamed NatWest Group on Wednesday, July 22, has managed its way through the pandemic. The bank has coped relatively well in terms of people, property and IT, she said. The pinch points have come from changing customer behaviour and spikes in demand for particular services, such as payment holidays, business loans and credit card chargebacks.

Strategic plans that were put on hold are now back on track, and there are questions to be answered about what the bank’s proven ability to work from home means for offices in the future. There will be changes, but there will always need to be a place for people to connect and collaborate.

This week’s forum ended with a discussion on Brexit, which panellists felt is serving to add to the uncertainty faced by businesses, but that – given the right guidelines from Government - business leaders would show adaptability to in the same way they have reacted to COVID-19. 

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