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Welcome to this edition of the New Shape of Work podcast series. Today, I'm actually joined in person with Amelia Hadfield, who is the professor at Surrey University and we're going to be having a discussion on the political situation and what are some of the implications for business and the people agenda. I'm just so bowled over that I'm actually in person--

I know.

--with someone.

It feels very radical, doesn't it?

It does, doesn't it?

Yeah.

It's so straight. But boy, how much has happened in the last year, both in being able to be side by side, but also the conversations that companies have been having around the geopolitical tensions and how that is now a part of all their planning this year. So maybe we can start there.

Let's do that, yeah.

What's got us into the current situation?

My goodness, it has been a whirlwind and a very volatile couple of years, actually. Obviously, the war in the Ukraine has catalyzed our attention. And since then what we've seen is a series of offensives and counteroffensives between the Russians on the one side and the Ukrainians on the other.

And alongside that, of course, what was a regional upheaval really turning into a massive global crisis because you've got food arising as an issue from this, you've got massive energy shifts-- energy markets around the world now are completely topsy turvy-- and you've got politics and security and defense. So it might sound like I'm overegging it, but really the future of Europe is at stake. We have never seen higher stakes, I think, since the end of the Second World War.

NATO has shifted almost completely in its philosophy. All of the states of NATO, all of the states of the European Union have had to rethink fundamentally where they are. Other areas, I think, COVID continues, actually, to dominate in terms of the way we think of ourselves, just now face to face.

Companies are rebuilding. People are just rebuilding the muscle of getting back to work, if you like. And also that question of what is work and what is the right method for companies to be able to incentivize people in terms of understanding them, and sponsoring them, and making them feel special while changing at the same time.

Other big ones, you've got China on the one side, United States on the other. Expect major global shifts from this. All eyes possibly on the midterms in 2022.

And I think a question as to whether American leadership is going to be something that is supported by the White House. It's looked for by Europe. So if that trajectory continues, I think we're in a good place. But if it changes, then it once again you've got massive question marks as to where the world is going to go.

Final one, and that's, of course, Britain's relationship with the European Union. I'm happy to say I think we've seen some positives here. Post Brexit, Europe and Britain have come more closely together, I think, whether it's been trying to rebuild and work in the Ukraine or it's something called the European political community, a new idea of non-European member states getting together with the European member states to talk about the big things-- democracy, climate change, security, and defense.

So I'm positive. I'm happy. I'm optimistic that Britain might be able to find a new way back to Europe.

Amelia, what a whirlwind tour of what's been going on in the last year. Can I get you to maybe look forward? What do you think are some of the big topics that businesses need to be thinking about as they execute on their plans in 2023?

Businesses, I think, continue to work their way beyond those COVID logistics as I've mentioned before. I think it's undeniable they're going to be impacted by aspects of the war in Ukraine, maybe not directly, but indirectly, as a result of rising inflation. If they're a part of a market where recession is an obstacle that's obviously going to be a problem.

And I think questions also as to how to invest and where to invest. I think we've seen an uptick in services which is good, but I think we've also seen halts in terms of goods. Even now we've got supply chain blockages.

Companies need to be very aware of that. That's going to impact on planning. That's going to impact on investment.

I think also in terms of how to, as I mentioned before, really incentivize their employees and make them feel genuinely part of a company and to trust a company. Trust in government is at an all time low right now, so our next best area of feeling that we're part of something is either just our families or where we work. And being able to get a bit of a boost if you're in a company that really values you, I think, that's hugely, hugely important.

I really agree with your comments about trust in organizations. We see that through our Global Talent Trends data. That's actually shot up during this period, so I think organizations are really in a very firm footing to take that forward.

You mentioned inflation and I know you get asked a lot about how is that going to play out. How long do you think we're going to be in this inflationary environment? And more specifically for some of the challenges we face, what do you think will be the impact on wage and health inflation?

It's a key question. Governments around the world are looking at this and so is business. I think it will be slightly dispersed. Some governments might be able to accelerate out of it rather quicker depending on the types of sectors that they specialize in. Others may languish in it a little bit longer.

I don't think it'll be as chronic as the banking crisis of 2008/2009. This feels more episodic and quite sector-driven probably as a result of post-COVID upheavals as well. So certainly being aware of that.

Also keeping an eye on political events. Because, again, if you've got chronic shortages in things like food, and particularly in some areas and aspects of commodities, and those are the commodities that your company is interested in, be aware that you might have to shift your business plan, your model, your paradigm. And in doing so, that's going to have an impact on the employees and your staff and try to motivate them and make them aware first of all of what's happening and why they need to be part of that shift. So everybody getting together, that common collective mindset, that's very, very important.

I've heard you talk a lot about the need for a collective mindset not just across Europe, but also to make sure that we're sharing information transparently within organizations. You just mentioned there the 2008/2009 recession and I wonder if there's any lessons from that that we should be taking heed of this year.

Yes, I think so. I think maybe better financial planning. I mean, we do all our quarterly reports. So I think this is something that's the DNA, if you like, of good and responsive companies.

But being aware of the need to plan in our employees in terms of rewards, perhaps that's something that-- it's a bit of an unintended appendix. We always forget about it. It's always at the end.

But if COVID has taught us really something in the last couple of years, it's that people are the absolute, they're the engine, they are what drive us forward. So being able to identify them, help them, source them, and support them, and reward them, I think, is incredibly important. Also, I think companies are beginning to think about their role in the world. So sustainability aspects, environmental boosts, and the way in which they're part of a broader governance structure, if you like, really taking corporate social responsibility much, much more seriously than before.

It used to be a tick box. Have we done this? Yes, we have. Now I think companies are much more on this and actually I think that's a good thing.

Absolutely. And I think we're seeing a lot more human capital disclosures and a lot more reporting on ESG progress. As we do face recessionary environment, how do you think that might impact organizations commitment to those ESG goals?

Well, obviously, we don't want to see companies downsizing. That's the big question and you're bound to get, I think, skittish employees. And that's a reasonable question for them to ask, are you keeping me or what's going on? I would also want to urge companies that despite this period of volatility, the one thing that shouldn't go out the window is ESG.

I think the corporate sector has done very well to fight hard to identify why ESG is important at the corporate level whether you're a huge multinational company, or you're a small micro company, or you're somewhere in the middle, small SME. Our responsibilities to the planet surpass any responsibilities we may have to our stakeholders. So that's incredibly important.

I think what's interesting is that companies are going to need a bit more training. It's one thing to say, OK, well, we recycle at the end of the day or we've got a program. But the idea of actually training your staff in what ESG is, are they aware of the responsibilities of COP, for example, do they know what the United Nations does, is it worthwhile telling them? Yes, I think it really is.

Do you have an ESG compliance officer? Is that something who can try to steer the ESG philosophy in your company further forward? Can you do it in tandem with another company?

Can you do this? Is there an ESG buddy system that you can set up? So there's a whole host of really creative ways just beginning to open up now. So I think in the next couple of years, it'll be fascinating to see which companies are the ones to identify those and have that first mover advantage.

Amelia, thank you for sharing those creative examples there. You said a number of times during this interview, putting people at the heart is so critical. And we see that young people in particular are looking to join organizations that do not just have commitments around ESG, but deliver on them. And you're right that that needs to infuse right throughout the organization if we're going to make progress.

We are at time. I could have another half hour speaking to you on this topic, but thank you. Thank you so much for sharing your thoughts around what's happening politically in the current state and how that might impact business planning in 2023.

An absolute pleasure. Thank you so much for having me.

And nice to be here in person.

Yes, it is. It's lovely.

Listeners, thank you so much for tuning in today. If you're interested in hearing these type of discussions that do impact the future of work, please do visit Mercer.com where you'll see other conversations like this looking at how the world of work is changing and what we need to be thinking about in the year ahead. Thank you for listening.

Thank you.

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