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What CEOs predict for the way we work in the future
Amid a confluence of global crises, one group remains cautiously optimistic: CEOs.
The U.S. economy is in the middle of a steady but still uncertain recovery. The unemployment rate steadily dropped from its April high of nearly 14.7% to 7.9% in September, the same month the Consumer Confidence Index sharply rose to 101.8, up 15.5 over August, before declining slightly in October. At the same time, the lack of another federal stimulus bill leaves a lot of uncertainty about holiday spending while the current rise of COVID-19 cases across the country could significantly limit economic activity, according to Federal Reserve Chairman Jerome Powell.
There is, however, at least one group that remains cautiously but persistently optimistic: CEOs. A new October poll conducted by Fortune in collaboration with Deloitte about CEO attitudes and predictions finds a partially sunny outlook for 2021 amid the 2020 gloom. Forty percent of the CEOs who responded said revenues have either already recovered or never dropped, and an additional 24% expect a rebound to pre-pandemic levels by June 2021. Despite news of layoffs and furloughs, 50% of CEOs say that their employee headcount levels have either recovered or never declined in the first place.
What is the explanation for the generally optimistic attitude of CEOs? Do they see something the rest of us don’t?
The survey data provides some intriguing clues. Yes, the pandemic has upended the way business has and will be done in the past, present, and future, but that doesn’t mean there isn’t opportunity for a rosier outlook. Seventy-four percent of respondents say the crisis has created significant new opportunities for their business, and 58% cite an improved outlook for productivity in the medium and long term.
“The historical data and correlations that leaders have relied upon to drive strategic business decisions are proving far less useful in these unprecedented circumstances,” said Deloitte US CEO Joe Ucuzoglu at a recent virtual meeting of Fortune CEO Initiative members to discuss these themes. “As a result, planning for a range of scenarios and being able to adjust quickly to the facts on the ground have proven to be very advantageous.”
CEO optimism also may be buoyed by growing momentum around digital transformation catalyzed by the pandemic. In fact, 85% of CEOs agree that the pandemic has significantly accelerated digital transformation, up from a 77% majority in the June 2020 Fortune/Deloitte CEO Survey. “As in so many other areas, the pandemic acted as a forcing mechanism to initiate and accelerate change that might have otherwise been slow to happen, and now everyone has been thrown into a kind of experiment around digital,” says Benjamin Finzi, who leads Deloitte’s Chief Executive Program. “CEOs are eagerly looking to discover what new advantages and opportunities there are to be gained.”
Virtual work as a catalyst to define the future of work
Remote work is still pervasive, with CEOs reporting that 68% of their employees are currently working from home. What might this prolonged remote-work model mean for the future of work itself? Especially considering, as Ucuzoglu points out, that the euphoria of the first few months of working from home has likely worn off, and there is a general consensus that while greater flexibility is here to stay, some level of in-person interaction is important.
“A consistent message I hear across our client base is the desire to safely get people back in person for at least some of their time and find an optimized hybrid model,” said Ucuzoglu.
The pandemic’s impact on the way we work and other key economic parameters could be felt long after a vaccine and other therapeutics are available. Indeed, CEOs expect 33% of their workforce to be remote even in January 2022, and 76% of CEOs expect to need less office space in the future—with 28% saying they will need a lot less—as a likely result. In many ways, the pandemic has only accelerated trends already underway: As companies work through how best to return to the office, their longer-term opportunity is to more fully utilize real estate as a core piece of a differentiated talent and workforce strategy.
In the meantime, whether a virtual workforce is as productive and innovative as before is unclear to CEOs, as only 39% and 40% of them say their virtual workforce has been more productive or innovative, respectively. The others were split between decreases and the status quo. It’s already well-established that remote working has its own employee-burnout concerns and day-to-day, in-home challenges. In response to an open-ended question about how their companies are struggling most, the top answer from CEOs was employee well-being, followed closely by a concern that innovation will suffer the longer the crisis continues.
But there is evidence that a virtual world can create positive change. The massive spike in virtual health care interactions has not only helped people get the care they need in challenging times; it has increased productivity and improved customer experience. One large health care company is using data and artificial intelligence to identify chronically ill patients who are avoiding doctor visits due to COVID-19 so the patients can reach out to schedule virtual sessions. This technological use case creates efficiency by removing manual effort from the identification, notification, and follow-up process for patients who should be receiving treatment, and by reducing the amount of people who will need much more serious (and costly) treatment after delaying care.
New partnerships as a valuable tool
The October survey revealed that 70% of CEOs agree that the pandemic is fostering the formation of new partnerships and alliances. But why? Are CEOs looking for strength in numbers? Do they want to compare notes? Find efficiencies? Co-create and co-innovate? Come together on societal issues?
The answer is: all of the above, and more, because, as Rich Nanda, Deloitte’s US Strategy Offering leader, says, “The pandemic has taught us that our toughest problems aren’t solved through established best practices. The virtualization of work extends beyond employees to include customers and partners—digitally transforming how value is being created and monetized across all aspects of business.”
Digitization allows a company to connect with a greater array of potential partners more quickly. And intra-industry partnerships provide a pathway to faster innovation and market-ready solutions.
Perhaps the most compelling examples of innovative partnerships fueled by lightning-fast digital transformation are those that formed to deal with and defeat the virus. Most of the vaccines in development are run by partnerships. And the urgent timelines to create and distribute a vaccine that will save lives and help the economy recover can be met only with efficiencies realized by more than one entity working together.
“There is a consistent view across Deloitte’s client base that the pandemic has created significant new opportunities for their companies,” Ucuzoglu says. “Even in an environment where it’s challenging to find cash to invest, what we’re seeing is that clients are prioritizing investments in technology, software, and cloud migration. I’m optimistic around the potential for the real economy to experience a long period of tech-driven growth coming out of this.”
Though the CEOs surveyed in October indeed have slightly less confidence in the economy than they had in June, they remain steadfast in their optimism that things will get better. With COVID-19 cases on the rise, the question remains: when?
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