Without a doubt, people and culture are once again at the top of the agenda. That was the case last year. It’s the case this year. What we find here is that even amid an uncertain economy, and with inflationary conditions and fears of a possible recession over the next 12 months, people, talent and cultural issues are standing out as critical concerns to board members and C-suite executives.
There are several subthemes that have emerged in this respect. First of all, finding and keeping top talent is the top risk not only looking out 12 months but also looking out long-term. That is an important consideration here — not only acquiring and retaining talent but also the focus on succession challenges: How do you preserve and maintain your core of top talent? This is globally. Going back to Mark’s comment earlier about Significant Impact risk, how we measured that, this is the one risk that is rated globally at the Significant Impact level.
Then, there are other subthemes as well. The future of work continues to be a defining business challenge. We made that assertion two or three years ago when we saw the 2020s as a disruptive decade, but we also articulated that the future of work was a defining business challenge. This is the state of labor markets and the expected adoption of emerging technologies, artificial intelligence, automation in all of its forms and other technologies such that significant efforts will be necessary to upskill and reskill existing employees over the next decade to realise the full value proposition associated with these technologies. This is the seventh- and the second-rated risk for 2023 and 2032, respectively. This is another people-and-culture-type risk that has legs to it looking out 10 years.
As Mark indicated earlier, rising labor costs is an elevated concern. It’s on everybody’s mind, and there’s not a whole lot I need to add to that. Again, it was, interestingly, not only a near-term risk but also the 10th-rated risk for 2032 — another people and culture risk with legs to it looking out 10 years.
Culture remains a priority, and it has increased in significance relative to other risks. You have two aspects of this: First of all, resistance to change, we find that is an anomaly in that everybody sees a very rapidly changing risk landscape, and yet we’re resistant to change here in our organisation. Those are two different perspectives that simply don’t mix well — they’re oil and water. That’s one aspect of culture. The other one is the ability to escalate and communicate emerging risk issues and market opportunities upward through the organisation. That’s extremely important because without that, leaders risk losing touch with what’s happening in the marketplace. It’s the real action, and what’s really being seen in the marketplace is on the front lines.
Finally, another subpart is, workplace evolution is more of a near-term issue. These are concerns over whether an organisation can manage the ongoing demands on or expectations of a significant portion of the workforce to either work remotely or be a part of a transformed collaborative, hybrid work environment. This is the ninth-rated risk for 2023, but it’s not perceived as that important relative to other risks looking out 10 years. Longer-term, this is less of a concern, but near-term, leaders are struggling with it. The playbook hasn’t been written yet, and everyone’s learning as they go.
These are important risk issues, Mark, because talented people and culture are so interrelated. As the latter attracts the former and effectively led, the best and brightest engender innovative cultures that can compete and win in the digital age.