UK boardrooms are thinking about life beyond the immediate crisis and what happens next, including M&A for transformative deals.
We’re living through an unprecedented time in our history. Normal life has been suspended amid an ongoing human tragedy. Almost overnight, our society has had to come to terms with immense change, uncertainty and new and unforeseen challenges.
The utmost priority for executives has been the welfare of their workforce, customers and health of their supply chain. This is happening alongside the pressing need to engage stakeholders and address the immediate business continuity and liquidity challenges posed by the impact of COVID-19.
We can see this response in the latest edition of the EY Global Capital Confidence Barometer (pdf), conducted in February and March, when UK companies moved from feeling the first impacts on some overseas operations and supply chains to a complete domestic lockdown. But, as the survey also highlights, boardrooms are also thinking about life beyond the immediate crisis and what happens next.
The 22nd edition of the EY Global Capital Confidence Barometer (CCB) survey began on 4 February and ran until 26 March 2020. From 19 February, we added supplementary questions on corporate responses to the COVID-19 outbreak. In this latter part of the survey, almost three-quarters of global executives said that they expected the COVID-19 outbreak to have a severe impact on the global economy, and about 40% expected a severe impact on their own company’s margins.
Indeed, there can hardly be a company that hasn’t been affected in some way by COVID-19, from those contending with a rapid increase in demand, to businesses dealing with a complete shutdown of all their operations. Business continuity is an ongoing and evolving challenge. In this latest CCB survey, almost all executives at a global and UK level indicated that they were taking steps to change or reevaluate their supply chains in response to COVID-19. Most UK and global respondents are also accelerating automation and digital transformation to adapt their operations to the operational challenges posed by the impact of the virus.
It’s also noticeable in the last few weeks how companies are starting to look further forward, beyond the immediate challenge of day-to-day operations. They are starting to think about how they can restart operations, how their business will emerge from this crisis, and the role they can play in the recovery of the economy and society.
We are certainly seeing a renewed focus on purpose and long-term value. This crisis has highlighted the organizations and individuals that play a vital role in our society. It’s also underlined how essential it is that companies understand their purpose and apply this to all their actions.
Having made such huge changes to working and operating practices, it would also be astonishing if we all returned to our old ways of working. We have learned so much in this last month – and will no doubt learn more in the weeks ahead. I expect to see the emphasis on the health and well-being of workforces continue. We may also see productivity increase rapidly in many areas as we keep many of the good practices we’ve adopted in areas like automation and remote working when life returns to “normal.”