Trends Impacting Business

Trends Impacting Business

The COVID-19 pandemic continues to be a devastating event that is transforming the world in many ways. One of the most transformed areas, especially in the United States, is the business world. Every single sector that conducts business in the United States, no matter the size, has been forced to adapt to the regulations and restrictions that this destructive virus has created. These newly created rules have accelerated a variety of trends that have been percolating for the past several years.

The most obvious trend within the last calendar year has been the increase in telework. Some interesting facts regarding working from home:

  • According to the United States Census, more than one-third of United States households reported working from home more frequently than before the pandemic.
  • During the pandemic, 31 percent of establishments (employing 68.6 million workers) increased telework offered to employees (U.S. Bureau of Labor Statistics).
  • 38.8% of employed persons between the ages of 25 and 54 worked as full-time remote workers in May of 2020 (U.S. Bureau of Labor Statistics).
  • This is up from 3.2% of the entire U.S. workforce working remotely in 2018 (Global Workplace Analytics).

Now while this sharp increase in telework can be attributed to the uncertainty of workplace safety brought on by COVID-19, the trends are certainly pointing to a stabilized increase in remote work in the post-pandemic business world.

According to a study done in December 2020 by Owl Labs and Global Workplace Analytics:

  • Of the 2,205 full-time workers between the ages of 21 and 65 surveyed, 92% expect to work from home at least once a week, and 80% expect to work from home at least 3 times a week on a go forward basis.
  • 1 in 2 people surveyed will not return to jobs that do not offer remote work post-COVID-19.

This preference shown by employees for remote work is not a negative for those in management and ownership roles, as an increase in remote work creates less of a need for large office spaces, and overhead expenses such as building maintenance, security, furniture, and office supplies can be greatly reduced.

The trend that makes this increased use of teleworking possible is an increase in the use of integrated technology, automation, and digitization.

Workforce Turnover

A major consequence of the COVID-19 pandemic has been the upward trend in quit rate (individuals quitting their jobs vs. total employment) observed in working adults since the beginning of 2021. According to the Bureau of Labor Statistics, more than 3.9 million people quit their jobs in April of 2021, which is the highest quit rate since the bureau began collecting data in 2000. The Bureau of Labor Statistics also reports that the number of nationwide job postings hit a record high in April of 2021, with 695,000 more open positions than currently unemployed workers. In addition to these individuals who have recently quit their jobs, more people are actively planning or contemplating doing the same. According to the Microsoft Work Trend Index, “54% of Gen Z workers, who make up 41% of the global workforce, are considering resigning,” and according to Prudential’s Pulse of the American Worker Survey, nearly 26% of all workers surveyed (2,000 full time working adults), expect to change jobs when they feel as if the pandemic has completely subsided.
So, why is this? The pandemic was obviously a traumatic and overwhelming time for many Americans, but why is it leading to so much turnover in the workforce? According to Anthony Klotz, a professor of management at Texas A&M, it is corporate burnout, a newfound appreciation for one’s free time, and bolstered savings accounts, all of which have been exacerbated by the pandemic.

  • Corporate burnout: Many companies were forced to lay off employees to stay afloat financially, leading to an increased and more stressful workload for the retained employees, and in turn, burnout.
  • A newfound appreciation for one’s free time: While the pandemic created an incredible amount of loss, heartbreak, anxiety, and fear, many isolated Americans were forced to look at the way they spend their time. Does my job make me feel emotionally fulfilled? When life can change so drastically, so quickly, do I want to spend my life working a job that makes me unhappy? For many, this reflection led to resignation.
  • Bolstered savings accounts: For the individuals who remained employed throughout the pandemic, it was a time of reduced expenses and financial stimulus, leading to a “cushion” of sorts that many are using to quit their job without another one lined up, or take another job that is more flexible, but provides less pay.

Technology & Business

The turbulence of 2020 caused businesses to adapt their technological processes on the fly, as in-person meetings and brick-and-mortar shopping became cloud-based video conferences and ecommerce. This trend has continued into 2021, and because of the benefits of teleworking mentioned prior, seems to only be accelerating.

Early signs of automation can be seen with self-checkout machines at retail and grocery stores, replacing what used to be human cashiers. Management sees these machines as a quicker, cheaper way to facilitate customers through the checkout line and out of the door, leading to a more satisfied customer experience and less overhead costs.

Improving supply-chain productivity through automation, solidifying data security, and increasing the use of advanced technology in operations (Sneader, Singhal, 2021), are three examples of common technological breakthroughs experienced by small and large-scale businesses since the beginning of 2020. A McKinsey survey published in October of 2020 also found that businesses are now three times more likely to conduct 80% or more of their customer-facing interactions digitally than they were pre-pandemic (LaBerge, et. al).

In a more global sense (All data according to DataReportal’s “State of Digital: 2021”):

  • 5.22 billion people use a mobile phone as of January 2021, equating to more than 85% of the world’s population aged 13 and above. Unique mobile phone users also rose 1.8% between January 2020 and January 2021.
  • 4.66 billion people worldwide use the internet as of January 2021, up by 7.3% since January 2020. 59.5% of the global population now has internet access globally.
  • There are 4.20 billion social media users worldwide, and this figure has shown year-on-year growth of 13%. Roughly 15 ½ new users joined social media every second in 2020. More than 53% of the world’s total population uses social media.

These figures show not only how widespread the use of mobile and internet devices are worldwide, but also a large reason for the digitization of business operations in 2020 and 2021. Individuals are on their mobile devices, social media, and the internet more than ever, so what better way to reach the consumer? Through targeted ads, ecommerce, and AI customer service bots, companies are turning to screens to send their message and sell their products and services.

Sustainability

The relationship between business and sustainability is not a new one; for the most part, businesses have been aware of their impact on the environment since the Industrial Revolution. But during the last fifty years or so, efforts by environmental groups and the public have brought the possibility of an environmental crisis to the forefront. The COVID-19 pandemic indirectly shed light on this possibility as well, as companies observed how devastating the early months of the pandemic were for public safety and their bottom line. The climate crisis, many believe, could be even worse for both. This is a major reason why green initiatives are as popular as they are in 2021: businesses do not want to risk another pandemic-like catastrophe for themselves and others. BlackRock stated in its 2021 Global Outlook that it expects a shift to sustainability to “help enhance returns” and that “the tectonic shift towards sustainable investing is accelerating,” (Sneader, Singhal, 2021) and this opportunity to prevent another financial bloodbath while increasing opportunity for further equity and profit have created a perfect storm of sustainability in business. The answer, then, is to rethink and revise operations, practices, and the impact of products on the environment.


This article was also featured in our newsletter Bottom Line Vol. 24.

Tyler Clehane

Tyler Clehane

Staff Accountant

Tyler is a member of Cerini & Associates’ audit staff where he works with our education and school district clients. Tyler has experience in accounting, auditing and claims auditing, and he uses these skills while conducting claims audits at various school districts on Long Island.

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