Mark Riley, president, Bank of America Fresno/Visalia

As we move deeper into 2023, the business community is hoping to leave some of the disruptions we’ve all experienced during the past few years behind us. Yet inflationary pressures, higher interest rates and a potential economic downturn threaten as lingering and new forms of disruption. Given all of that, we can predict only one thing: for the foreseeable future, disruption is the new normal.

That’s as true in Fresno/Visalia as it is in California and indeed the nation. But businesses can prepare to face these headwinds by strengthening systems and pursuing the flexibility created by digital transformation. In addition, we expect to continue to see employee-led changes to the workplace and companies shoring up capital, customers and supply chains to weather further disruption.

Workforce priorities

Terms like “The Great Resignation” and “quiet quitting” wove their way into the popular lexicon in 2022, forcing employers to pay closer attention to employee needs and expectations. These include support from employers around employee well-being through compensation, benefits, culture and flexibility.

Employers need to continue to listen to and partner with their workers to understand their needs. According to the Gallup Organization’s State of the Global Workplace Report, just 21% of employees were engaged at work in 2022. Of note, expectations are increasing around work in terms of the value and purpose employees derive, according to Gartner, Inc. These trends lay the foundation for ongoing shifts in employee needs for greater engagement, performance and retention.

According to Bank of America Workplace Benefits report, some employers increased employee satisfaction by offering greater financial wellness support. Nearly all (97%) of employers surveyed say they are in some way responsible for their employees’ financial wellness. More than eight in 10 said offering financial wellness support can result in more satisfied, loyal and engaged employees resulting in greater productivity and performance.

Develop resilience

Companies are preparing for a realm of disruptions by increasing resilience across operations. Chief among the steps companies can take is freeing up cash. With interest rates and inflation expected to continue to be an issue, strengthening working capital becomes even more imperative. Focus on ways to reduce costs while also identifying new revenue streams to mitigate risk. Automate tasks where possible to improve operational efficiency. This is also a good time to review customer payment systems and payment data and consider any necessary upgrades.

Despite recession fears, business owners appear confident they can survive an economic downturn. While 67% of women business owners are concerned a recession will impact their business over the next 12 months, 71% say their business is equipped to survive a recession, according to the Bank of America Women and Minority Business Owner Spotlight.

Digital leadership

While many firms have escalated investment in digital transformation since 2020, the process isn’t a set-it-and-forget-it exercise. It’s a continuous journey of learning, testing, iterating and executing to exceed ever-expanding expectations that will continue to evolve.

Digital transformation will remain a strategic focus for companies this year. According to the Bank of America Digital Edge Report, the pandemic prompted enormous demand for new digital capabilities: 97% of enterprise decision-makers report they sped up digital transformation during the pandemic. A KPMG report indicates digital transformation will continue to be a top priority: 72% of CEOs surveyed say they have an aggressive digital investment strategy to secure first-mover or fast-follower status for their company.

And according to the  Bank of America Small Business Owner Report, the emerging technologies most likely to be important to small businesses over the next decade include cybersecurity (57%), 5G (50%), automation (39%), artificial intelligence (AI) (34%), cryptocurrency (26%), virtual/augmented reality (25%), the metaverse (20%) and non-fungible tokens (NFTs) (16%).

AI and machine learning allow firms to gather more sophisticated predictive insights and to speed up and save costs on repeatable tasks. Further, by 2025, digital natives — including Gen Z and millennials — are expected to comprise 75% of the workforce, according to a Citrix report. Digital natives have higher technology expectations as employees and less tolerance for performing manual tasks that could be executed with technology. Automation will help keep employees satisfied and streamline and quicken business processes.

Preparation, optimism and flexibility are vital for business leaders this year, with investment in new workforce models and digital transformation topping the list of priorities to remain resilient. Digital is not a separate strategy but an opportunity to reevaluate how a company works and to navigate successful transitions. A high level of adaptability and willingness to explore new models will be critical for business owners this year and beyond.

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Mark Riley is president of Bank of America Fresno/Visalia, Market Executive, Business Banking, Greater Central Valley.