Five Business Priorities for the Future of Work
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COVID-19 is ushering in an entirely different future in terms of working life. However, forces such as digitalization have been altering the workforce long before the pandemic.
OECD research suggests that 31% of jobs could be radically transformed as a result of automation. At the same time, specialized jobs are being created elsewhere. These big picture trends mean that many organizations are already preparing for a now-accelerated future.
This infographic from PwC identifies five priorities that can help provide a path forward for a company’s Future of Work plan—strengthened by responses from an ongoing survey of U.S. CFOs on their workforce strategy.
1. Business Strategy
According to the survey, 72% of U.S. chief financial officers (CFOs) say they that responding to COVID-19 with better resilience and agility will be a key factor to their company’s improvement in the long run.
|Better resilience and agility||72%|
|New ways to serve customers||53%|
|Community and societal engagement||27%|
Flexible ways of working, such as telecommuting or shorter workweeks, also can help improve productivity and work-life balance, further spurring this shift. Companies should avoid ignoring the needs of employees and invest in creating a thriving work environment.
2. Talent Planning
Hiring to accomplish workforce goals alone is not enough. Companies should think about three steps when building a strong talent pool:
- Recruit well
Assess your company’s values and mission, and keep an eye on diversity and inclusion while hiring. For example, it’s been proven that gender diversity initiatives are good for the bottom line, improving outcomes and increasing profits and productivity.
- Retain talent
At present, 55% of CFOs don’t feel very confident in their company’s ability to retain critical talent.
Organizations should avoid hiring with a short-term mindset. Instead, focus on building employees’ skills, with emphasis on upskilling in digital tools and software.
- Stay adaptable
Businesses are increasingly leveraging the gig economy, as alternative models grow in popularity.
- 41% reduction in absenteeism
- 24-59% less turnover
- 20% increase in sales
- 17% increase in productivity
3. Learning & Innovation
Despite incoming automation threats, six in ten adults still lack basic information and communications skills. The good news? In the future, both digital and human skills will be in high demand.
To keep up with these trends, upskilling—ranging from digital literacy to critical thinking—will be of the essence. It requires both an individual and an organizational commitment to create a culture of learning in the workforce.
Currently, only 45% of CFOs feel very confident in their company’s ability to build the necessary skills for the future.
4. Employee Experience
These days, employees rarely approach their work as only a “Nine to Five” job. Instead, they seek meaningful work, relationships, and experiences—PwC notes that one in three workers would be willing to consider lower pay for a more fulfilling job.
To that effect, there is a renewed spotlight on supporting individual needs and well-being. There are tangible benefits to an engaged workforce:
For future success, organizations should build a holistic view of the employee experience. To that end, 49% of CFOs do not feel confident in their company’s ability to manage employee well-being and morale.
5. Work Environment
Flexible work is an essential component of the future of business, and it seems that it’s here to stay. 72% of CFOs believe that work flexibility will make their company better in the long run.
This drives home the urgent need to reconfigure the traditional office and bolster remote work capabilities—enabling employees to work from wherever they want, whenever they want.
It’s clear the Future of Work discussion isn’t happening in a bubble—these alternative workforce needs are simply speeding up the inevitable transition.
Many companies only focus on two or three of the above priorities, but aligning all five will be crucial for the future of work.
Note: All statistics are from the same PwC U.S. CFO Pulse survey unless otherwise stated.
PwC surveyed 330 US CFOs and finance leaders between June 8-11, 2020. 88% percent of the respondents were from public and private companies in these top five sectors: health industries (9%), consumer markets (13%), financial services (23%), industrial products (23%), and technology, media and telecommunications (20%). Twenty-nine percent of respondents were from Fortune 1000 companies. The PwC CFO Pulse Survey is conducted on a periodic basis to track changing sentiment and priorities. Now in its sixth installment, the inaugural survey was conducted March 9-11, 2020.
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Operational Health Tech: A New Billion Dollar Market
Operational health tech is poised to be a multi-billion dollar industry. This graphic breaks down how its disrupting healthcare as we know it.
Operational Health Tech: A New Billion Dollar Market
Many lessons were learned throughout the COVID-19 pandemic, but what has become most apparent is the need to invest in healthcare on all fronts. In fact in just a few short years, businesses, governments, and consumers have had to entirely reassess healthcare in ways not quite seen before.
What’s more, this elevated importance placed on health could be here to stay, and one area in particular is poised for significant growth: operational health tech.
The graphic above from our sponsor Bloom Health Partners dives into the burgeoning market that is operational health tech, and reveals the key driving forces behind it.
What is Operational Health?
To start, operational health is an industry that provides health services to employees to help keep companies running smoothly.
A critical piece of operational health is workplace health, which is expected to soar in value. From 2021 to 2025, the market for workplace health is expected to grow 200% from $6.5 billion to $19.5 billion.
The industry is undergoing a tremendous amount of innovation, specifically in relation to technological advances.
Operational Health Tech: Disrupting Healthcare
The operational health tech industry is disrupting traditional healthcare by providing direct services to employees in the workplace.
For decades now, the U.S. has increasingly become a statistical outlier for healthcare spending relative to health outcomes. For instance, the average American incurs $9,000 in healthcare spending per year, nearly twice that of OECD countries, yet life expectancy is flatlining while other countries see rises.
A worsening and increasingly expensive health dynamic makes the environment ripe for disruption and is allowing for new ideas to be brought to the table.
In addition, people are already responding to these inefficient practices by shifting greater emphasis on health within the job market. For example, studies show that workers care more about healthcare benefits over the salaries when choosing an employer.
Going forward, employees will gravitate towards employers that provide standout health benefits like workplace healthcare options offered by operational health. Here are some additional factors that act as catalysts for this space.
1. Healthcare as Smart Business
What do companies that rank as some of the best to work for have in common? First, they all tend to outperform relative to the S&P 500 on a cumulative stock performance basis. Second, many offer superior healthcare benefits.
Moreover, from 2012 to 2022, companies that were the best to work for saw shares appreciate nearly 500%, compared to around 300% for the broader market. Data like this suggests investing in healthcare and keeping employees happy is smart business that pays dividends.
2. Healthcare as a Differentiator
Since 2020, labor markets have changed dramatically. As a result, employees now have more options and are much more selective about where they work. This is evident from the difference between job openings and hires which has risen to unrecognizable levels. For example, the data shows that there are nearly 12 million job openings, but only around 6-7 million hires in 2022.
Altogether, with an oversupply of jobs relative to workers, employers will have to find new ways to differentiate. One way to stand out is through healthcare and initiatives around operational health tech.
3. The Looming Mental Health Epidemic
Today some 700 million people suffer from some form of a mental health condition and COVID-19 has continued to exacerbate the problem.
Moreover, the cost of mental health for the global economy is estimated to be a whopping $6 trillion by 2030, over double compared to the $2.5 trillion figure in 2010.
Under the umbrella of services operational health tech covers, mental health will stand to benefit. Especially in the years to come as we look for new ways to combat its mounting costs.
Investing in Operational Health Tech
Bloom Health Partners is an operational health tech company looking to revolutionize workplace health by supplying employers with data to better understand their employee base and business.
One way Bloom stands out is with Bloom Shield—its flagship cloud-based big data platform for employee health data management. With Bloom Shield, new health insights become available to make better decisions. Employers can get insight into demographic data and age trends within the workplace, pre-screening detection for cancer and diabetes, and testing for management to tackle the spread of disease.
Click here to learn more about investing in operational health tech with Bloom Health Partners.
How Environmental Markets Advance Net Zero
The global price of carbon increased 91% in 2021. Below, we show how environmental markets are supporting a greener future.
How Environmental Markets Advance Net Zero
In 2021, roughly 20% of global carbon emissions were covered by carbon pricing mechanisms.
Meanwhile, the global price of carbon increased 91%, bolstered by government, corporate, and investor demand. This puts traditional fuel sources at a disadvantage, instead building the investment case for renewables.
This infographic from ICE, the first in a three part series on the ESG toolkit, explores how environmental markets work and their role in the fight against climate change.
What are Environmental Markets?
First, meeting a goal of net zero carbon emissions involves limiting the use of the world’s finite carbon budget to meet a 1.5°C pathway.
Achieving net zero requires us to:
- Change how we utilize energy and transition to less carbon-intensive fuels
- Put a value on the conservation of nature or “natural capital” and carbon sinks, which accumulate and store carbon
Environmental markets facilitate the pathway to net zero by valuing externalities, such as placing a cost on pollution and placing a price on carbon storage. This helps balance the carbon cycle to manage the carbon budget in the most cost-effective manner.
What Is the Carbon Budget?
To keep temperatures 1.5°C above pre-industrial levels, we have just 420 gigatonnes (Gt) of CO₂ remaining in the global carbon budget. At current rates, this remaining carbon budget is projected to be consumed by 2030 if no reductions are made.
Each scenario based on a 50% chance of success
Source: IPCC AR6 WG; Friedlingstein et al 2021; Global Carbon Budget 2021
Across three different scenarios, the above table indicates the amount of carbon emissions humanity can emit to prevent the worst effects of climate change.
What are Negative and Positive Externalities?
Second, when companies compensate for CO₂ emissions, they can fall across two categories: negative and positive externalities.
- Negative externalities include pollution. Carbon cap and trade programs, using carbon allowances, put a cost on pollution.
- Positive externalities include renewables, such as wind and solar power that generate carbon-free electricity. The value of renewable energy can be expressed with a renewable energy certificate.
Natural capital is another example of a positive externality, which involves the capturing and storing of carbon. The value of this type of natural capital can be expressed using a carbon credit.
Environmental Markets and the Energy Transition
Next, environmental markets can drive the transition to cleaner energy sources by ascribing a cost to pollution and putting a premium on renewables, to change how we use energy.
As one example, in 2013 the UK government introduced the Carbon Price Support mechanism to complement the emissions cap and trade program and weaken the investment case for coal. Between 2013 and 2020, Britain’s overall CO₂ emissions fell by 31%.
Here’s how coal was phased out of the UK’s energy mix, while renewable energy sources such as wind, solar, and bioenergy played a greater role.
|Date||Coal||Gas||Wind and Solar||Bioenergy|
|Q1 2000||31 TWh||40 TWh||0 TWh||1 TWh|
|Q1 2005||41 TWh||36 TWh||1 TWh||2 TWh|
|Q1 2010||31 TWh||47 TWh||2 TWh||3 TWh|
|Q1 2015||28 TWh||23 TWh||13 TWh||6 TWh|
|Q1 2020||3 TWh||27 TWh||28 TWh||9 TWh|
Source: Digest of UK Energy Statistics (DUKES); BP; EMBER via Our World in Data (2021)
Today, less than 5% of the UK’s electricity is coal-generated, with remaining plants expected to be decommissioned by 2024.
How Environmental Markets are Advancing Net Zero
Finally, as governments increase their commitments to net zero, carbon prices are rising towards a level that requires industries to decarbonize and meet those goals.
In fact, between 2014 and 2021, the global price of carbon has increased over sixfold.
|Date||Global Carbon Price (Year End)||Annual % Change|
As indicated by the ICECRBN Global Carbon Price (CPW Weighted)
Source: ICE (Apr 2022)
As companies begin to treat their carbon footprints as liabilities, there will be increasing demand for environmental attributes, such as carbon allowances and carbon credits.
Managing Risk and Opportunity
Quoted markets like ICE Futures Exchanges and NYSE allow stakeholders to precisely value positive and negative externalities to:
- Manage emissions cost effectively
- Hedge climate transition risk
- Allocate capital to facilitate the energy transition and build carbon sinks
- Create an asset class for Natural Capital
- Invest in assets to meet climate obligations
Everyone is exposed to climate risk which means it needs to be measured and managed.
That’s why balancing the carbon cycle will be critical to managing the world’s carbon budget. Markets are providing greater access, liquidity and opportunity in supporting net zero ambitions.
In part two of the series sponsored by ICE, we’ll look at four motivations for using ESG data.
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