“Seismic year of uncertainty and upheaval marked by opportunities as well as challenges” says IoD CEO of ‘the year of COVID’. Institute of Directors (IoD) in Ireland research in 2020 revealed the dramatic impact of both COVID-19 and Brexit on business leaders in Ireland.
As an organisation with 3,000 members, who are business leaders and company directors, the Institute of Directors (IoD) in Ireland published eight pieces of research during 2020 to track business sentiment amongst its members during these unprecedented times. The key findings from this research highlighted significant changes in remote working, digital transformation, business models, team cohesion, work-life balance, governance and AGMs.
There were also significant findings regarding Brexit, and the impact of COVID-19 on the economy. Reflecting on the year, Maura Quinn, Chief Executive of the Institute of Directors (IoD) in Ireland, commented:
“As we enter the final days of 2020, the history books will record it as a seismic year of uncertainty and upheaval marked by opportunities as well as challenges: from the delayed formation of a government after the general election to the COVID-19 pandemic, which impacted almost every aspect of Irish society and business, to the continued uncertainty of Brexit.
“It has been a year, that led many business leaders to face some of the most difficult challenges in their professional lives. Business leaders have had to be agile and decisive, and show strong leadership, as business models had to evolve and adjust to the new reality. Furthermore, the ways and means of working within organisations have undergone a quiet revolution. Remote working and the increased use of digital technology have reconfigured the way we work, where we work, and how we work. The long-term legacy of this remains unknown.”
In relation to governance, in particular, the year was not without its consequences, as Maura Quinn noted:
“This year proved more than once that governance is not just about oversight, but also foresight. The critical importance of the leadership role of boards in strategic direction, business continuity planning, and continuous ‘horizon scanning’, has rarely been more obvious that during the pandemic.”
In addition, some companies faced difficulty hosting their AGMs. On the passing of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, Maura Quinn added:
“The hosting of physical AGMs also proved very difficult during the year, so we welcomed the temporary change in Company Law to make virtual AGMs acceptable across the board and their decisions and motions legally binding and effective, where applicable. We welcome continued initiatives by the Government with legislation such as this, and in its ongoing support measures and stimulus packages, which are essential in providing a lifeline to many businesses.”
Some of the key research findings by IoD Ireland in 2020 included: (Please note the IoD source and date of the findings are listed under each finding).
COVID-19: Impact on Ways and Means of Working
Digital transformation: 88% of business leaders say the impact of COVID-19 has accelerated the digital transformation of their organisation in a significant or marginal way. (Source: 24th September, IoD snap poll).
Impact of COVID-19 on organisations’ business models: 77% of business leaders say their business model has changed either significantly or marginally since the arrival of COVID-19. (Source: 24th September, IoD snap poll).
Office space: 30% of business leaders are either planning to downsize their office space or have it under consideration. (Source: 18th June, IoD snap poll).
Return to the office workplace: When asked how the workplace would be affected after the government would lift restrictions in June, just 12% (or, nearly I in 8) of business leaders said ‘All staff will be back in the office/workspace’ while 26% said ‘A minority of staff will continue to work remotely’, 18% said ‘The majority of staff will work remotely’ and 40% chose ‘An equal mix of staff working in the office and remotely’. (Source: 18th June, IoD snap poll)
The continued uncertainty regarding the ways and means of working during the COVID-19 pandemic was still evident in Q3 2020, with the highest percentage, 26%, of business leaders believing the majority of their staff will be back in the company workplace by Q2 2021, and 23% believing it will be in Q3 2021. Just 15% and 12% believe a majority of staff will be back in the company workplace by Q1 and Q4 2021, respectively. Interestingly, in a snap poll conducted by IoD Ireland in September 2020, 12% of business leaders believed all staff would be working remotely by the end of 2020. This is consistent with the findings in this Q3 2020 survey, with 10% of our respondents believing that all or most staff will work remotely in the future. (Source: 27th November, IoD Director Sentiment Monitor survey for Q3 2020).
Remote working effectiveness: Isolation of staff and lack of cohesion of teams concerned 62% of business leaders. Productivity rates concerned just 12% of business leaders (Source: 27th November, IoD Director Sentiment Monitor survey for Q3 2020).
The remote working experience: A small majority of business leaders (39%) believes remote working has been a positive and productive experience for their organisation, while 24% say it has not and 35% are undecided. (Source: 27th November, IoD Director Sentiment Monitor survey for Q3 2020).
Work-life balance of business leaders: 42% of business leaders say their work-life balance has improved since the arrival of COVID-19, while 33% say it is largely unchanged, and 23% say it has reduced. (Source: 24th September, IoD snap poll).
Virtual AGMs: In an IoD snap poll in April, 90% of business leaders said Company Law should be amended temporarily during the COVID-19 crisis to allow virtual AGMs to be held without the need for a company to amend its Constitution.
In June, the IoD wrote to the Government and opposition spokespersons highlighting these findings. On 30th July, IoD Ireland welcomed the passage of the Companies (Miscellaneous Provisions) (Covid-19) Act 2020) addressing the many issues facing companies trying to comply with, in particular, the Company Law requirement to hold AGMs during the current crisis, as detailed in Section 6 of the Bill.
The Economy
COVID-19 and the economy: In the early stages of the pandemic, in March, 81% of business leaders said they believe that COVID-19 is the ‘biggest risk’ facing their organisation. This compares with the ‘effects of Brexit (22%), ‘political/economic uncertainty’ (21%), and ‘labour sourcing’ (20%), which were the leading risks in Q4 2019.
However, by the end of Q2 and the easing of the Government’s restrictions, the ‘biggest risk’ they envisaged was a ‘second wave’ of COVID-19 (34%). By Q3 2020, as COVID-19 cases became more prevalent in the community, the two main risk factors for business leaders were 'an escalation of COVID-19 restrictions' (27%) and the 'COVID-19 impact on business continuity' (22%). This was followed by 'political/economic instability' (13%), 'negative consumer confidence' (8%), and the 'level of regulation' (6%). (Source: 27th November, Director Sentiment Monitor for Q3 2020).
Recession looming: 71% of business leaders say they think a short-term recession is looming, while 22% say they think a longer-term recession is imminent. (Source:18th June, IoD snap poll).
Brexit impact on the Irish economy: 91% of business leaders in Q3 2020 believe that Brexit’s impact on the Irish economy will be negative in the short-term (this figure was also 91% in Q2 2020 and was 87% in Q1 2020 and 96% in Q3 2019).
Furthermore, in Q3 2020, 56% believe Brexit's likely impact on the Irish economy will be negative in the long-term, a slight decrease on Q2 2020 when it was 59% but an increase from 49% in Q1 2020 - it is, however, closer to the Q3 2019 figure of 55%). (Source: 27th November, Director Sentiment Monitor for Q3 2020).