What are the contemporary business issues you should be aware of?

Global economics and politics can have a major impact on the way a business is run, and the markets businesses operate in. Although this list is not extensive, there are contemporary business issues entrepreneurs should be aware of and we’ve compiled a list of them.

Global economic slowdown

According to the World Bank’s latest Global Economic Prospects report, they are expecting global GDP growth of just 1.7% in 2023, meaning many economies will be on the brink of a recession. Regarding the UK, the International Monetary Fund is expecting the UK economy to contract by 0.6% this year. However, the UK narrowly avoided falling into one at the end of last year, going against several analysts’ expectations, which gives hope that the recession this year might not be as bad as many are predicting.

ESG and CSR

In recent years, more and more businesses are considering the impact they have on wider society and the environment. Environmental, Social and Governance (ESG) and Corporate Social Responsibility (CSR) are both related to this, but the major difference between them is that CSR is a business model used by individual companies, whilst ESG is a criterion that investors use to assess a company and determine if they are worth investing in.

Nearly half of younger workers are prepared to leave their jobs over ESG, whilst Germany recently brought in a law where German companies are facing fines of up to 2% of their global turnover if they do not complete an ESG inventory of their supply chains, so it’s important to be aware of this business issue.

Digital transformation

Integrating digital technology into businesses is becoming increasingly more commonplace and was accelerated in many industries after the Covid-19 lockdowns forced many to work from home for the first time.

According to ECI’s Growth Characteristics report, one in five UK CEOs see their digitisation journey as their biggest challenge. However, research from Ricoh Europe found that digital transformation could increase EU and UK GDP by 3.4% over the next five years. So, despite its challenges, digital transformation offers excellent growth prospects for companies.

Talent shortages

Talent shortages are another contemporary business issue that it’s important to be aware of. Many companies in the UK and around the world are struggling to attract and retain talent for multiple reasons.

For example, as inflation has reached a near 40-year high in the UK, employees are leaving their companies in search of higher wages. With more companies offering remote and hybrid working post-pandemic, prospective talent can now apply to work at businesses much further afield, so competition for talent between companies has heated up too.

Diversity, Equity and Inclusion (DEI)

Another prominent issue for businesses in recent times is Diversity, Equity & Inclusion (D&I). The gender pay gap, a lack of people from ethnic minority backgrounds in senior positions and companies failing to hire talent from neurodiverse backgrounds are just some of the DEI topics people are currently discussing.

Last year, the Financial Conduct Authority announced requirements for listed companies to report against targets for female and ethnic minority representation on boards and in exec management, following news that the majority of FTSE 100 companies were falling short of their DEI claims. So, there could be increased scrutiny on DEI initiatives in the years ahead.

Burnout and wellbeing

Since the pandemic, more workplaces are beginning to recognise the importance of wellbeing, both for business leaders and employees, putting initiatives in place to support mental health. But despite this, many business leaders still find themselves on the verge of burnout. For example, the Global Workplace Burnout Study 2021 found almost 35% of people were experiencing real burnout.

As we enter a period of economic decline and more businesses become at risk of closure, many business leaders will push themselves harder to aid company survival, so the risk of burning out grows too.

Cooling M&A and funding markets

2021 was a record year for mergers and acquisitions, with the number of deals globally exceeding 62,000 and the total value of publicly disclosed deals reaching $5.1 trillion. However, M&A activity cooled in 2022. According to the Office for National Statistics, business investment in the third quarter of 2022 also fell 2.5%.

Thanks to high-interest rates, 2023 could be a difficult year for businesses to fund M&A, whilst the economic decline means attracting investment could also be tough. However, M&A and investment experts remain confident about what lies ahead.

The changing role of leadership

Like the world around us, the role of leadership is ever-changing. The global lockdowns a few years ago profoundly changed the way many companies conducted themselves, whilst economic pressures and changing expectations of work continue to create questions for how best to run a business in 2023.

Monkey Puzzle Training ran a survey of more than 60,000 UK and European business leaders in 2012 and 2020 to see how leadership had changed in that time. Interestingly, the biggest challenges remained managing time and dealing with difficult behaviour. However, being a modern leader also involves managing mental health, well-being, psychological safety, diversity, and inclusion.

Although contemporary business issues will likely change in the years ahead, the likelihood is they’ll have an impact on your business in some way. Therefore, it’s always a good idea for business leaders to have an awareness of them.