Paradoxes of the pandemic: challenges for BritTech in the hybrid era
Technology companies face a series of major and at times seemingly contradictory challenges in this tumultuous era, says our Head of Technology Paul Wright.
In our recent article, we discussed the challenges and opportunities faced by the technology sector during the last two years of the pandemic. Year one’s mostly unsung support of the pivot to a digital workplace, online schooling and data analytics for the vaccine roll out was achieved in record time and was followed by a year of driving forward the digital, data, cloud, and cyber agendas of businesses.
Yet some paradoxes also surfaced during the pandemic. We explore what those look like and how they may play out in year three as we slingshot into recovery. All against the backdrop of the terrible conflict in Ukraine which looks set to extend this period of disruption, especially in supply chains, foodstuff and energy.
Paradox of diversity & inclusion
Tech as a sector has long talked a good game on D&I (newly minted as DEIB: Diversity, Equity, Inclusion & Belonging) and made strides forward in gender and ethnicity. Yet not to the extent predicted.
Early in the pandemic, many of our contacts suggested remote working would widen the talent pool due to the freedom ‘to hire from everywhere, to work from anywhere’ and tap talent pools such as the neurodiverse and less abled. Now clients report that when employing in one location to deliver work or services in another geography they incur unexpected costs, particularly payroll taxes. These have a sting in the tail.
And, paradoxically, although the hybrid working model means we can consider every corner of the UK, proximity bias has not disappeared. Meanwhile, the Brexit effect of every hire requiring the Right to Work in the UK is self-limiting our country’s talent pool. New visa rules will only marginally alleviate this.
During the pandemic a PwC survey found only one-third of employees believe their companies provide an inclusive workplace. This looks challenging to improve as we recover. As The Economist points out, the most reluctant returners to the office environment are women and minorities because they are the most likely to be disadvantaged. Moreover, should they choose remote working, they are also the most likely to be overlooked for promotion.
The net result, DEIB remains a thorny issue and a paradox that features among the top 5 hybrid working challenges leaders need to resolve in 2022, according to ZDNet.
Paradox of ESG
CO2 emissions from aviation fell by up to 60% during a mass grounding of flights at the height of pandemic travel restrictions. Prognostications about the benefit to the environment duly followed. These seem short lived as TravelTech is benefiting from a rebound in flying (though more for leisure because commercial travel is still recovering from falls reported to us of as high as 97%).
There has been a sea change over the last two years in views about Environment, Sustainability and Governance (ESG) across the UK technology sector. COP26 added impetus to growing concerns among consumers, who of course are also B2B buyers and employees. Now investors, C-suite leaders and Boards in both PLC and private worlds tell us weekly that ESG is a top issue for them. Executives’ pay and the cost of capital are increasingly linked to ESG. Perhaps it isn’t surprising that technology market leaders in sustainability and social are hiring interim and permanent talent executives to drive tangible ESG initiatives.
Meanwhile, employees and candidates at all levels, interim and permanent, are scrutinising employer value propositions for ‘greenwashing’ and social impact. In a recent interview, Elona Mortimer-Zhika, CEO of IRIS Software, the accounting and payroll software firm backed by Hg Capital PE, says “I get interviewed by recruits about ESG, net zero and diversity. People expect this”. Other CEOs I speak with talk of the same phenomenon.
The paradox that tech bosses face is to be purposeful leaders. They need to create a clear, cohesive vision that unifies DEIB, ESG, social impact and wellbeing and that balances profitability and purpose. All while implementing fact-based initiatives that demonstrate authentic commitment to achieving ESG goals. “Treating the environment as a real stakeholder”’ is the way forward, as one (newly appointed) Chief Sustainability Officer of a PE-backed IT services firm told me.
Paradox of digital
McKinsey reported the equivalent of three years’ digital transformation compressed into the first year of the pandemic alone, likely repeated in the second. Ecommerce and contactless payments grew 20% or more during the period. Today, the threads running through everything we’re observing in tech post-pandemic are connected to digital, data, cloud and cyber.
But there are some counterintuitive anomalies. For example, the volume of bank notes in circulation in the UK has also continued growing, as has demand for US dollar bills; perhaps to hedge against risk. The demand for physical products across electronics, IT hardware, fibre, photonics and semi-conductors seems higher than ever, as evidenced by the global silicon chip shortage. And alongside the cloud, old-fashioned data centre co-location has grown 30% or more.
So, predictions of a cashless society where we exist in the metaverse cloud seem premature. We will need to live with this paradox for some time.
Paradox of hybrid work
The conversation for SaaS and IT services leaders is heavily skewed to the hybrid workplace. So, it’s easy to forget that more than 45% of the UK remained in the workplace. Naturally, that includes construction sites, hospitals, and factories. But bear in mind IT hardware manufacturers have wrestled with keeping employees physically safe in the actual workplace and overcoming genuine supply chain shocks while trying to maximise profit.
Meanwhile, over 90% of leaders in UK tech tell us they found the eightfold increase in digital working (and schooling) in the pandemic easy. Mainly as they were already partly in the cloud. They also tell us they saw increases in individual and team productivity of around 5-7%, However, it is unclear if this WFH efficiency boost is simply an outcome of not commuting.
Zoom and Teams may have saved the world of office work but, as the Tech sector coalesces around two or more days per week in the office (albeit with outliers on zero or seeking five), can its leaders build a cohesive, inclusive culture virtually?
No one I’ve spoken with in BritTech has the definitive answer yet. As Satya Nadella CEO of Microsoft cites, there is no one size fits all to solution to this paradox. Arguably, there’s only one answer to the exam question, ‘what works for your organisation for now’.
Paradox of hybrid leadership
The pandemic has also thrown up a leadership conundrum. Employees say they want to be in the office more, which their C-suite leaders also desire because while individual and team productivity have spiked, collaboration and cross-sell have dropped off when people are away from the office. Yet employees also report they want to keep working remotely, so balancing these pressures remains a management challenge.
Moreover, every request we receive for an interim leadership hire contains inherently contradictory combinations of leadership skills. As PwC highlighted in a recent Harvard Business Review piece, contradictory examples include the:
- Strategic executor: who can create the plan and get into the detail to execute it.
- Human technologist: who combines deep technical and analytics experience with high EQ and empathy
- Enterprise entrepreneur: combining start-up adaptability with enterprise scale
Combining these at any time would be a challenge, even more so in the new normal of disruption.
These paradoxes mean leadership in the UK tech sector will a remain a test, particularly at a time of great uncertainty around new covid variants and the downstream impact of the war in Ukraine. What’s required is agility in thought and action, a high cadence of authentic communication with all stakeholders, and the ability to think paradoxically to deliver change and innovation at the pace demanded to outperform the competition.
For more information, please contact Paul Wright.