After the US presidential election and looking ahead to a new year, most companies are still wondering when the world will return to normal. News that a COVID-19 vaccine may soon be publicly available—both Pfizer and Moderna announced in November that their respective vaccines have proven to be 95 percent effective and are now awaiting federal approval—spurs hope that “normal,” or something near it, may be around the corner.
But as Kevin Depew, deputy chief economist of RSM US, and Adam Lohr, partner and life sciences senior analyst at the company, discussed during a virtual roundtable hosted by NACD and RSM on November 18, the United States is likely looking at a K-shaped recovery. This economic outlook has actually been decades in the making due to growing income inequality, and in the context of COVID-19 it means that recovery will be uneven across industries and communities, with housing and auto manufacturing likely to be the first sectors to bounce back, according to Depew and Lohr.
“You see the K shape dominated by technology automation, the ability to work from home and to operate a business from home—industries [with these abilities] are on the upward K-shaped path,” Depew noted. Organizations reliant on in-person events and services are at the bottom of the “K,” facing much slower recoveries or even continued decline in business.
This recovery, keeping up with the changes imposed on companies by the pandemic and the election, and preparing for what’s ahead dominated the roundtable conversation.
The inoculation situation
With recent good news on the vaccine front, what are the implications for companies and their boards? Distribution, for one, is a challenge most companies have yet to discuss.
“There’s not a methodology right now for distributing the vaccines—we’ll have 50 different plans,” Lohr told the group while discussing the time it will take to ramp up production and which segments of society are likely to get the vaccine during different phases of distribution. “Where do your customers, employees, and different states fit into these phases? Most of my staff is under 30 years old so they won’t have access to a vaccine for a long time, but our customers have more [of a] range in age.”
At a more macro level, Lohr mentioned that every nation is going to have an “our people first” mindset with regard to obtaining the vaccine. Once vaccines are approved for production, they take time to make. In a press release, Pfizer noted that it should have the ability to produce 50 million doses of its vaccine this year, and 1.3 billion doses before 2022; the world’s population sits at just under 8 billion people. And with only a couple of viable vaccine options resulting from worldwide research efforts, there will be global pressure on what will be a very limited initial supply. Nonetheless, Lohr insists, “We’re not going to get all of the economic benefit unless it’s a global recovery.”
But, one attendee observed, the issue of workplace safety will remain even once an effective vaccine is available to the general public. Here, employee privacy rights—which have been fairly well-defined before this point in time—become blurred and more difficult to navigate, and raise some serious concerns. “Once there’s a vaccine, what do you do if someone says, ‘I don’t want to come to work, and I don’t want to get the vaccine’?”
Continuing the telework debate
Working from home may have started to feel draining for workers and board members, and with this sense of exhaustion, some directors are transitioning away from can or how do workers work from home to will they do so post-pandemic.
“What will we permanently do that we’ve done in the remote workarounds, and what needs to still be face-to-face?” one attendee asked. “And then we start to think about ourselves—what are we [as a board] missing by meeting remotely? We miss the dinners, but we’ve been pretty efficient on the audit committee because there’s no chitchat.”
For other board members, working virtually has not only been going smoothly, but has had some unexpected benefits. An attendee noted that they are a director at a company that appointed its first board during the pandemic. “We’ve never met each other, but we’ve had three meetings thus far and it’s been going well,” the attendee said. Furthermore, for this director, working virtually reminded them that not travelling for meetings or conferences can affect the company’s environmental footprint in a positive way.
“Remote working works pretty well for most people,” another director attendee said of one of the businesses they oversee. “We’re looking at what our facilities look like, asking why we are paying so much for space which, even before COVID, was half empty all the time. Can we reimagine what we do in the office space and how we use it?”
Impacts of the election
The conversation then shifted to what the new presidential administration could mean for business. “Over the past four years, there’s been a lack of funding for regulatory enforcement—that’s going to change,” Depew commented. “It wouldn’t be surprising to anybody given the president-elect that we’ll see more regulation. On the industry side, the obvious difference will be clean energy versus oil and gas. Maybe less obviously, the technology sphere will be impacted. There’s popular opinion and bipartisan support that Big Tech is becoming too big, and this will have a trickle-down effect for all tech [companies]. There will also be a mending of trade relationships, less friction—some people have said they’ll bring their supply chains back within [the United States’] borders, but I don’t know that that’s [for the] long term.”
“Outsourcing to key global allies is probably going to happen to a much greater extent over the next four years,” Lohr said.
“On the tech side, there’s a bit of a sigh of relief in terms of the global supply chain being potentially less constrained because of current events,” one director noted. “Those of us who tend to be in the middle with regulation, compliance, and [environmental, social, and governance] stuff, we worry about the knee-jerk reaction of the pendulum swinging back so hard that regulations and rules are produced just to show the world that we’re going hard the other way.”
The road ahead
The conversation wound down as speakers and attendees discussed planning for and trying to predict when the world will return to a state of economic and political normalcy, and a director attendee pointed to the gilded age of the 1890s. They noted that that time period saw great disparity and polarization. “Then, for six decades after that, [the United States] had a greater economy and solidarity. If you trust our history, we have looked like this before—and how we looked in the 1890s was worse than how we look now.”
In closing, Depew offered the following thought: “The polarization we’re seeing today is in part a result of how technology has unevenly treated us. I’m optimistic that we will be able to meet some of these challenges. We’ve got the template of the 1960s and 70s that what drives the economy is what’s happening in Washington, DC.”
And, Lohr concluded, “We’re seeing the light at the end of the tunnel, and it’s not a train coming. The sooner you can start planning and having these conversations [with your boards], the better.”
Previously posted in NACD Board Talk