Strategic focus areas for year 2022
As the year 2021 ended, most people are looking back with mixed feelings. The year was beset with the obvious challenges we are all too familiar with, particularly the pandemic and that horrible third wave. As tough as the year was, it is also important to always look for the silver lining in your specific circumstances. I would argue that the ability to read this article is one such, because it means you have survived the pandemic and the rest of the challenges.
In the last few days social media was abuzz with a quote from Vern Mclellan which said, “What the new year brings to you will depend a great deal on what you bring to the new year”. We therefore need to ensure that we are ahead of the game as the new year starts with clear plans and strategies. I will pick on a few aspects that business leaders in any space must consider as we draw up plans for 2022.
Climate change and ESG
This is the usual story around economy, environment, social and governance issues, which hopefully all leaders are now aware of and have put as one of their top priorities. Google (Alphabet) chief executive, Sundar Pichai in an interview with the BBC reiterated the importance of managing climate change, for the sake of the next generation and laid it as perhaps our biggest challenge as humanity. I will not go into detail around this because of the extensive coverage, except to say this has to be one of the main strategic priority areas for any business. Whilst all businesses should focus on this, it will have even more dire consequences if ignored by the public sector, listed companies and exporters.
Technology
There are now some buzz words like Big Data, the Internet of Things (IOT), Artificial Intelligence and so on. The adoption of technology was accelerated by the pandemic. Furthermore, it has been revealed to us all that technology can have a positive impact on how we perform our duties and run our organisations. I don't suppose anyone needs any convincing on this so I therefore like to draw attention to the importance of cyber-security.
As we start to rely more and more on technology the risk of hacking and data breaches will grow as well. One must be familiar with the basic tenets of cybersecurity whether at personal level (our mobiles, WhatsApp etc) or at their organisation systems level. Simple controls such as two-factor authentication are a must at personal level to protect some sensitive information as for example one can communicate with colleagues via WhatsApp groups. Entities need to have robust policies in place on IT governance or ensure existing ones are updated regularly.
Covid-19 (pandemic to norm)
According to the economist, the way we view Covid-19 is going to evolve. Covid-19 will no longer be a fear-and-panic-inducing pandemic but just another usual occurrence. Looking at the ongoing Omicron surge in cases, one cannot help but be cautiously optimistic. The way cases are mild might be indicative of us one day being able to live with the virus. It is however important to note that some are not so fortunate, as they are losing their lives therefore complacency must still be avoided.
As we get into 2022, with more vaccines and virtually everyone having contracted Covid-19 at least once, we will eventually be able to live with it.
This means that there will be changes to how we live and work. With regards to our lives, there will be social and human dynamics to look out for in the work teams, and leaders need to rely on their emotional intelligence. With regards to the way we do our daily work tasks, this is touched on below.
Revised work set-up
It is important for leaders to manage the transition to the new work set-up. This will be unique per organisation as influenced by several factors such as access to basic infrastructure or whether the team is techsavvy or not. This means that the only issue we can be fairly certain about is that there will be changes to include remote working but the specifics will depend on the individual team. Leaders need to proactively manage this transition ensuring that employee well-being and productivity are not compromised.
Brain drain
Our ability to live with Covid-19 and remote working will trigger brain drain as some of our brightest stars in our organisations will finally be able to move out of the country or at least work for an international organisation from the comfort of their homes within the country. Staff engagement and motivation is going to need to be an area of focus to avoid disruptions for organisations.
This is particularly important as some of the key markets that our team members often migrate to are showing an increased appetite for competent staff. Recovery of the world economy will see movement of people to the leading markets as they will be able to offer the best incentives for the best talent, unless there is a deliberate effort to motivate and retain staff.
Inflation and exchange rates
The December 2021 month-on-month inflation figures remained constant at 5,76% with the year-on-year inflation rate at 60,74%. The continued reduction and stabilisation in inflation is important. This is an area that needs constant monitoring strategies to avoid any negative implications to an organisation in the year 2022. Unfortunately, for accountants anything above 27% per annum will make it difficult to exit the infamous hyperinflationary accounting (IAS29) therefore the inflation adjustments will need to be done for 2021 financial reports.
Closely related are the exchange rates, particularly the gap between the parallel and the auction rate. The parallel rate often drives inflation, in part because most of our goods are imported. Organisations need an import substitution strategy and as I always say, vertical integration is an option to assist on this front.
For an organisation the benefits would be guarding against the shortages of foreign currency in the year 2022. At a macro level this will ease pressure on the demand for foreign currency and reduce the rates and inflation.
Conclusion
The list above is not exhaustive and there is a need to look into an organisation’s strategy and pick out additional areas to focus on. In 2022 business leaders need to be resilient, flexible, and innovative. Some of the issues I touched on will follow us into the new year. On top of that, the next disaster is always around the corner and therefore navigating existing and new challenges calmly and strategically will separate the higher performing organisations from the rest in the upcoming year.
Mavengere is technical manager at the Institute of Chartered Accountants of Zimbabwe (Icaz). — technical@icaz.org.zw or twitter: @OwenMavengere.