The COVID-19 pandemic is having a dramatic impact on the global economy and reshaping businesses in lasting ways. According to our own research, the U.S. economy is expected to see a sharp recession for the first half of 2020, likely to be followed by a U-shaped recovery. What’s more, the number of business bankruptcies is expected to increase by 25% and unemployment is likely to surpass 20% in the next few months.
As governments, leaders and industries around the globe grapple with the effects of the pandemic, one thing is certain: the fragility of businesses has been exposed. The question we are faced with now is what the aftermath will look like. Will the consequences of this crisis permanently mark the business world? Will we see a paradigm shift in the way businesses transform their strategies and priorities?
A shift in business values
As we shift into a post-pandemic world, will the traditional drivers of a capitalist society (productivity, profit and growth) be re-evaluated by businesses? I believe the answer could be yes. We’re already seeing younger generations less attracted to capitalist values, according to a study published last year. If they want to attract and retain the next generation of top talent, companies must get more in tune with societal movements to attract younger generations and strengthen the meaning in their actions with a clear vision that has a reinforced long-term impact.
I also believe that this catastrophic event will force a greater partnership on a national level between governments, businesses and individuals. We’ve already seen this group come together to encourage solidarity and altruism during this time. Across the U.S., businesses are repurposing their products and services to help fight the pandemic and individuals are stepping into action to shop for their neighbors and set up support systems all while celebrating those on the frontlines of healthcare and emergency services each night. Even state governments are working together to allocate resources across state lines to combat the spread of the virus. This movement toward unity is what the country needs to emerge stronger post-pandemic.
Closely aligning business with altruism
It is possible that this very same concept of solidarity becomes a strong value in the business world too. Businesses who once competed against each other are coming together. We see this with the explosion of innovation at pharmaceutical companies who are joining forces to find a vaccine while large-scale manufacturers and small businesses have stopped their usual production in order to manufacture ventilators, hand sanitizer and medical masks.
Even our credit insurance industry is taking action. In Canada, credit insurers are partnering with their Export Credit Agency to offer government-backed insurance plans. In France, its main actors have recently mobilized with the government to reactivate support systems (known as CAP) with a global budget of 12 billion euros in order to help companies survive the impact of the economic deadlock. In Germany, credit insurers and the government have collaborated to guarantee the payment of compensation to businesses up to 30 billion euros. In other countries like the U.S and U.K, industry leaders are moving to create similar partnerships to better support their countries’ economies.
As companies begin to think through what a post-pandemic world looks like, a closer and more harmonious relationship between different businesses could be what’s needed. Instead of being passive on subjects that require a collective approach, businesses need to join together to adopt like-minded social, environmental and governance standards.
History has taught us that massive events can trigger important changes thereafter. For COVID-19, this could be synonymous with business transformation as companies are forced to rethink and realign their priorities. To prepare for the aftermath, companies must adapt, anticipate changes and accelerate their transformation to link work with a greater purpose. While a “before” and “after” are certain for the pandemic, the future of business and the extent of this paradigm shift remains to be determined. It’s not enough to just survive this unprecedented crisis but rather companies must emerge more innovative and united.
Virginie Fauvel is the Chief Transformation Officer and Board Member for the Americas Region at Euler Hermes