After two years of uncertainty, business and leaders have slowly adapted to the shifting realities. The business model has changed, the way we work has changed, employee expectations are changing, consumer preferences are changing, and even the regulatory regime is changing. These dynamics are compounded by the pandemic and supply chain disruptions. As a result, the need to act quickly and intelligently in the moment has never been so critical.
For leaders to act boldly, investing in technology and refocusing business strategies is paramount. So is understanding these shifting dynamics to forge a path to an agile, creative, and resilient tomorrow. What are some of these overarching trends that will shape the decisions of organisations and leaders in 2022, especially in Europe?
Here are some of the trends identified by Forrester that will affect businesses in Europe in 2022.
Attrition at companies which fail at anywhere-work will rise
The report notes that companies with a fully in-office model will see resignation rates rise to 2.5% per month. While ten percent of companies will commit to a fully remote future, for the remaining 90%, vaccine mandates will lead to complications but won’t be the cause of most return-to office failures. The real pain will be felt at the 60% of companies shifting to a hybrid model: One-third of first attempts at anywhere- work simply won’t work.
This is because while leaders will claim support for hybrid work but will still design meetings, job roles, and promotion opportunities around face-to-face experiences. Also, a smaller number of failures will come from the 30% of companies that insist on a fully in office model, only to find that employees simply won’t agree. Attrition at these companies will rise above their industry averages — monthly resignation rates will rise as high as 2.5% for as much of 2022 as needed until executives finally commit to making hybrid work.
Jason Lee, Founder and CEO behind the fintech company DailyPay, shared, “The world of work needs to be rebuilt from the ground up, but this time, employers need to put the employees at the center of their considerations. When planning for hybrid work, it’s important for employers to remember that some employees will be concerned about their safety and wellbeing when coming back to the in-person work environment. It’s an employer’s responsibility to provide adequate safety measures for their employees and foster a safe work environment. In an ongoing pandemic and even in a post-COVID world, there will always be employees who are apprehensive about safety, whether it be the number of people in the office at once or the number of times per week someone visits the workplace. To build a positive hybrid culture, it’s critical to understand that those are legitimate concerns, and to work with employees on a case-by-case basis to find a happy medium. Employers need to express to employees that they care about them and want to help.”
Sustainability takes centre stage
In the last 12 months, the EU has adopted a climate adaptation policy; introduced the first delegated act stipulating what counts as environmental objectives for EU climate adaptation and mitigation and adopted a proposal to make corporate sustainability reporting standardised and mandatory for more companies from 2023. With this increased focus on sustainability, 25% more EU companies — especially in financial services and retail — will add chief sustainability officers in 2022.
Also, consumers in EU are sceptical; Forrester’s 2021 data reveals that just 34% trust companies when they say they will commit to reducing climate change. Hence greenwashers that have only embraced sustainability in their communications will struggle to adapt.
Employee backlash grows as more employers monitor productivity
In October 2020, almost one in three European employees said that their employers used software to monitor their productivity while working from home. EU privacy regulators started fining companies for unlawful monitoring of employees and expect more fines in 2022. Moreover, employee backlash over tattleware will grow as employers attempt to monitor how often they click, what they click on, and when they are facing their computers. In fact, the report points out that tattleware adoption degrades employee experience by 5%.
What CISOs must do is strengthen the governance of their insider threat programme, establish clear and reliable risk escalation procedures that safeguard employees’ privacy, educate their organisation about the benefits of the programme and ensure that employees understand the boundaries in place that prevent disproportionate and unethical monitoring.
The pandemic has shaped consumer expectations forever
As pandemic restrictions lift, companies and institutions have begun to resume some pre-pandemic ways of doing business and transitioning away from virtual options. However, that’s a mistake, because consumers have grown used to many of the services and will continue to want them. Forrester’s data reveals that one-half to two-thirds of US and European consumers say that the pandemic has changed how they shop for products. Brands that successfully navigate the transition to the new normal will avoid a complete reversion and analyse current customer insights and research to evaluate which services to keep, adjust, or toss. This is because customers will want over half of pandemic-era services to become the “new normal.”
Also, it’s not employees alone that want to work with organisations in sync with their values. Even consumers will buy from brands that match their values. According to Forrester Analytics data, 69% of European adults wish more companies were transparent about their business practices, and that figure is 87% for the most empowered consumers — they increasingly expect brands to use their platforms to contribute positively to society. In 2022, 50%+ of European consumers will buy from brands that match their values, driving brands to take further action.
Investment in automation continues to rise
It’s not a surprise that investment in automation will continue to rise. In 2020 alone, European enterprises invested a total of € 1.88 billion in employee productivity automation tools such as digital process automation (DPA), digital decisioning platforms, workforce optimisation, conversational intelligence, robotic process automation (RPA), and AI-based text analytics. Compound annual growth rates in 2022 will continue to be at around 33% for RPA and 13% for DPA. European businesses will invest up to €3.3 billion in automation to boost productivity. In addition, in 2022, Europe will invest in automation to boost productivity in traditionally low wage sectors such as retail and hospitality.
Ashutosh Garg, Co-founder and CEO at talent intelligence platform eightfold.ai seconded this and shared, “Automation in the EU isn't restricted to any industry or aspect of your company. Artificial intelligence in the hiring and talent management process is already being embraced, regulated and used to take organizations to a new level of success in today's unique work environment. Why is that? Many think about AI as a gatekeeper -- is it restricting the candidates we are seeing, or screening out people without the right skills? The answer is a resounding no. In fact, AI can be more efficient than any person, looking deeper into a person's ability to learn, grow and succeed than any resume could. For example, if someone has learned several coding languages in the last few years, it is more indicative that they could learn another that is trending up -- is that skill more valuable than already knowing one coding language? In many cases, the answer can be yes. Additionally, AI can blind hiring processes from gender, location, age or even naming biases and focus only on the core ability a role requires. That is automation and AI at its best.”
Cyber insurance might lose some sting
Cyber insurance has been an important tool since its introduction but now ransomware attacks occur every 11 seconds and extortion demands have gone up by 300% in just a single year, putting big dents in a once very profitable line. Cyber insurance premiums are up close to 30%, while the list of coverage limits and exclusions grows longer. More businesses might choose to self-insure or just go without. At the same time, the lack of and access to historical data and growing loss ratios for cyber lines continue to test underwriting and claims teams. Consequently, insurers have been collecting small premiums while facing near-infinite risks. Forrester predicts that at least one top 10 cyber carrier will cease writing new business and selectively run off existing business in 2022.
Open finance continues to push more data sharing between companies
The push for open finance will yield more data sharing between financial and non-financial businesses. 2022 will see adaptive banks focus on the data mashups and co-created journeys they can weave with third parties. 2022 will also see the number of banks offering lifestyle platforms double — using “super apps” such as from Indonesia’s Sea, India’s Paytm, and Alipay and WeChat in China as inspiration. However globally, bank led lifestyle apps will still number fewer than 50.
Only leading manufacturers to sustain adaptive innovation
Last year, Forrester observed the COVID-era acceleration of emerging technologies becoming sustained adaptive innovation. In 2022, as COVID-19 pressures reduce, only the industry’s leaders will maintain the sharp focus required to continue differentiating with creative processes, organisations, products, and business models. The report predicts that only 10% of manufacturers will successfully operationalise COVID-era creativity.
Ultimately, the report points out that in 2022, creativity, resilience, and agility fuelled by strong customer understanding and smart technological investment will separate leaders and laggards, no matter the industry.