2022 started with a degree of optimism, although most were still wary of the COVID-19 restrictions and other continuing issues from 2021 such as supply chain issues and staffing shortages. Below, we summarise some areas that business mentoring professionals have identified as the critical issues and challenges affecting businesses in 2022.
Business performance was top of the list, with businesses having to navigate supply shortages, talent shortages and delivering financial performance in terms of profit, cashflow and returns. The focus was on optimising the profitability of products, services and customers, while delighting customers, moving proactively with demand, maintaining high quality and a tight control on cost structures, improving productivity, and implementing better systems and technology to carry the businesses forward.
Cyber security has reared its ugly head for some years, with a crescendo in 2022. Business leaders are constantly being reminded that they must focus on prevention of systems and data being hacked. Breaches in 2022 included:
- com: Cryptocurrency was subjected to a serious breach at the start of 2022 which targeted nearly 500 cryptocurrency wallets. The hackers circumvented the site’s two-factor authentication and stole $18 million of Bitcoin and $15 million of Ethereum.
- Microsoft: Computing giant Microsoft was hacked in March, and in the process Cortana, Bing and several other products were compromised.
- Red Cross: A cyber-attack hit the Red Cross in January 2022 via a third-party contractor, resulting in more than half a million records being compromised, including documents that the Red Cross classed as “highly vulnerable”. This hack led to thousands of people having their sensitive data stolen, and most of the victims are currently listed as missing or vulnerable.
- Medibank: In November, Medibank confirmed that the criminal entity behind the cyber-attack on their company had access to the data of at least 4 million customers, some of which includes health claims.
- Optus: Optus announced in September that the personal details of up to 9.8 million Optus customers were stolen during a massive data breach. This data includes names, dates of birth, phone numbers, emails and home addresses, as well as drivers’ licenses and passport numbers in some cases.
War in Europe
Business mentoring professionals have identified that the war in the Ukraine has had a catastrophic impact on all people caught up in the conflict, as well as globally through the indirect impacts caused by supply chain shortages, escalating costs, and the spreading humanitarian crisis, which continues to challenge many. This war has increased the risk levels of doing business.
COVID-19 has devastated peoples’ health and taken many lives. COVID-19 and related restrictions will continue to increase costs, decrease availability of staff, and create challenges with productivity due to flexible and remote working arrangements. The flexible working arrangements will in turn continue to reduce the demand for commercial real estate.
ESG Environmental, Social & Governance
ESG stands for environmental, social and governance, and it refers to the three main factors that affect the sustainability of a company.
- Environmental aspects are now critical, with public companies, governments and other organisations rightly demanding action to reduce emissions and make improvements around sustainability.
- Every business needs to implement policies around climate change, as organisations around the world scramble to meet the environmental demands of the Paris Agreement and halt irreversible climate change.
- Those that have been decreasing their emissions have reported an increase in returns over time.
- Social aspects of ESG require business leaders to better understand the relationships of their business with their employees, customers, the communities they operate in, and more. Workplace health and safety, product safety and quality, staff wellbeing and consumer protection are some of the many social metrics that are considered.
- Governance is the aspect of ESG that focuses on how the company is run. This includes board composition and operation, compensation, strong company policies and control systems, firm oversight of corporate executives, honouring shareholders’ rights and providing them with good information and reporting, complying with regulations and laws, and generally acting as good corporate citizens.
Business leaders realise the importance of developing an inclusive, ethical and harmonious culture that demonstrates high standards from the very top of their organisation. This must filter down to all personnel, while maintaining a performance focus to improve the business’s sustainable competitive edge.
At the same time, the culture must support:
- Innovation to maintain and develop the competitive advantage of the business
- The advantages fast-tracked during the COVID-19 lockdowns:
- Remote working
- Use of virtual meetings to speed up communication and reduce time and cost of travel
- Reduced office costs
- Mental Health and Stress Management – Mental health and stress are still feeling the impact from COVID-19 restrictions, causing lingering problems. Businesses need to identify, support and assist their people suffering from mental health problems by directing them to professional assistance, offering time off or providing other helpful services.
Shortages of Staff & Talent, and Challenges with Retention
All business leaders appreciate the importance of good people, especially with the market’s current shortage of talent. Any business mentor will tell you that attracting the right people and retaining them is vital. This in turn is linked to a good company culture that attracts, retains, encourages performance from and develops and invests in good people. Pleasingly, many business leaders have pivoted to new ways of working and into new areas of business, with business leaders working hard to predict future skills, operating environments for staff, and types of workforces they may need. This includes assessing which jobs will become obsolete and what new positions are likely to be needed.
Other challenges identified by business mentoring professionals in 2022 include:
- Cost of living pressures and inflation – The cost of living has risen sharply, with supply chain shortages driving up prices that have an impact on both business and personal lives.
- Interest rates – Central banks around the world have increased their interest rates in response to the inflation rates to attempt to reign inflation in. These rate rises have added to the cost of living and the cost of doing business.
- Energy costs – Energy costs have started to rise significantly for electricity and gas as supply chain restrictions due to the Ukraine war continue. This will continue to severely impact households and businesses in the coming year. Along with interest rate rises, this will reduce the spending power of households, reduce company profits and slow economies down – hopefully not sending these into prolonged recession.