As the country comes out of the grip of the pandemic and the economy starts to recover, business needs to re-evaluate the environment in which it operates.
I think the pandemic has had a profound social, economic and political impact and business owners or senior management need to reassess and re-evaluate since there are new challenges and opportunities.
A simple, popular but effective management tool is the PEST analysis, which normally I advise clients to use when there is a change in government proposing a new political orientation or when the country embarks on a new strategic orientation, such as joining the euro. I think the post-pandemic situation merits a similar approach since Malta 2019 is different to Malta 2021.
The PEST analysis tool allows a business to analyse the political, economic, social and technological changes in the business environment. It helps them understand the big picture and the forces of change that are occurring which create new business challenges and opportunities.
Failure to do this, on the assumption that we will go back to how things used to be pre-2020, could mean changes or mega trends that leave your business standing as its competitors sprint out to recovery and growth.
Political
Sustainable business models which ‘build-in’ (as opposed to ‘bolt on’) socially responsible business practices which actively strive to have a significant positive impact on social, economic and environmental areas (internal and external), coupled with CR reporting is here to stay and increase.
The current government is betting big on green business and incentivising businesses to invest in environmentally sustainable technology. The EU is about to introduce legislation which will add costs to businesses. Everybody needs to plan, prepare and adapt.
HR strategies need to understand the post-COVID employee who takes for granted, even expects and demands, working from home and hybrid home-workplace arrangements. The pandemic has changed the de facto concept of the workplace and I think employers need to adapt to this new reality if they want to attract and retain the best
talent. In fact, I wouldn’t be surprised if the government introduces new legislation to redefine the concept of work (how, where and the conditions of work).
Prime Minister Robert Abela has in recent weeks explained that his social-democratic vision is to help those at the bottom of the social pyramid without holding back those at the top. To the business owner or senior management this means a government aiming to humanise pre-pandemic capitalism through a bigger and more compassionate state. This will mean greater workers’ rights/benefits, better quality of life for workers, even if this comes at a cost to the economy and a ‘taming exercise’ on aggressive and rampant economic growth.
Economic
I forecast that inflation will start to show its ugly head as economic growth accelerates, and it will take central banks two to three years to tame it again. The most obvious macro-economic tool will be an increase of interest rates.
The relevance to business is that the cost of borrowing is most likely to go up. I would direct finance departments preparing investment appraisals, cash flow forecasts and/or business plans to assume a hike in the business cost of borrowing.
I also suspect supply chain bottlenecks or disruptions, labour shortages and higher costs of importation will invariably be the new reality of the economic recovery. With Malta being physically cut off from continental Europe, I think this challenge which will directly impact local businesses and force a major rethink at a macro level. The government needs to take the lead here and formulate a forward-looking supply chain and labour strategy which seeks to support/ help businesses; otherwise growth will be stunted.
Social
Unfortunately, the single largest social shift and change that has occurred in 2020 and 2021 is the fear of human contact. Strict public health control directly and negatively impacts business.
The country needs to recognise that COVID-19 is now fast becoming endemic and that laissez-faire Malta needs to migrate to a UK or Norwegian model post-pandemic. The business community and lobbying arms need to persuade the government that this is the only way and the surest way to a strong economic recovery.
Technological
The COVID vaccine passport, which was only meant to be a temporary emergency measure lasting not more than 12 months, seems to be resembling the ‘Ruling Ring’ from the Lord of the Rings. Unless, the government quickly scales back and preferably dismantles the current vaccine-for-freedom imposition, employers and employees are going to have to learn to operate in a state-controlled environment led by technology and digital footprints.
I also see cybercrime and contactless payments growing exponentially in the medium term, and again these three technologically changes will have huge impacts on business and their customers.
Conclusion
Business owners, directors and senior management, therefore, need to take stock of the post-pandemic reality and plan and strategise accordingly. There will be plenty of opportunities and threats, so try to anticipate them.
Put simply: adapt or die!
Kevin-James Naudi is director consultant, FENCI Consulting Ltd.