Sampling ʼNew Normalʼ Business Sentiment

Develor Tanácsadó Zrt., which specializes in leadership, sales, talent development and human resources, surveyed business leaders from May 13 to June 1 to tap into the corporate sentiment post-lockdown, conducting 201 online surveys and 17 structured deep interviews.

The big majority of respondents, 32%, were from the manufacturing industry, followed by services (14.2%), others (13.2%), banking and insurance (11.7%), and retail (8.6%).

Some 32% of the respondents employ 50-249 people, 32% have 250-999 employees, 20% have 1,000 to 4,999 employees, 14% has 0-49 employees and 2% have 2,000+ employees. Some 75% of the respondents were C-Level executives, 20% were middle managers, 3% were experts and 2% others.

Of the respondents, 38.1% work for companies who experienced no slowdown or stoppage at all due to the coronavirus, while another 38.1% were restarting their operations at the time of the survey. Another 15.2% was expecting to launch the restart in the first two weeks of June while the remaining 8.6% expected to relaunch operations around the end of June.

From the telecommunications industry, 67% that they did not experience any slowdown or stoppage, while the remaining 33% was already restarting in the second half of May. In the agricultural sector 55% of the respondents said they experienced no disruption. In the retail sector this was true for 47%, for IT companies it was 40% and in manufacturing it was 37%.  

Unsurprisingly, with airplanes grounded and restaurants shut, companies in the hospitality industry (HoReCa) saw a significant blow to business. However, their answers signal positivism, or at least a restlessness to do business again.

Some 60% of the respondents said they were expecting to restart in the first two weeks of June, while 40% was already working on doing that at the end of May.

Nevertheless, in the short-term, pessimism, or rather cautiousness, characterizes the overall business sentiment as 51.3% of the respondents expect unfavorable business prospects in the post-COVID era. Some 22.8% see prospects staying the same, 14.7% hope for a bit better, while 9.1% say that they will get worse. Only a tiny fraction of 2% expects for great improvement.

Most Pessimistic

Banks and insurers appear to be the most pessimistic; 87% of the respondents believe that short-term business opportunities will be worse than before the pandemic, while 13% foresee no changes. Among public utility companies, 60% expect a worse climate and 40% no change.

For the HoReCa sector, 40% think the business climate will be “much worse”, another 40% that it will be “worse”, while a thin 20% expects a slightly better environment.  

Services and the agriculture sector are more optimistic and expect no change in 71% and 64% of cases, respectively. The most optimistic sector is telecommunications; 100% of the respondents see no change to their business post-lockdown, when compared to pre-pandemic.

Overall, no significant optimism appears to surface in the mid-term (three to 10 months). Worse business opportunities are expected by 48.2% of the respondents, 27.4% expect no change, 18.8% expect things to be a bit better, 3.6% foresee it as much better, while 2% expect especially bad circumstances.  

Some 80% of the HoReCa-related respondents expect worse circumstances, with 20% expecting an “especially bad” business environment in the mid-term. While 57% of banks and insurers expect things to be worse than before the pandemic, 26% expect no change and 17% foresees better circumstances.  

Telecommunications companies are much more confident: 33% expect no change, while the remaining 67% expect better business results than before the pandemic.

Some 76% of retail businesses, however, expect worse, a view that is shared by 53% of the respondents in manufacturing, 46% in services and 40% in IT. In public utilities, 80% expect no change with the remaining 20% expecting a better environment.

Changed Strategy

Some 18.8% of business overall say they have changed strategy and set up definite action plans, and 14.7% having made changes and informed their employees. While 21.3% of the respondents say that they are not changing business strategy as there is no need for it, 16.8% say they need to change but have not started yet.

A mighty 80% of HoReCa companies have made changes and determined new directions, while the remaining 20% have already informed employees about the changes and new goals.

Telecommunications companies (67%) and public utility businesses (60%) have made no changes as they see that their business environment has remained unaltered. Interestingly, the remaining 40% of public utility respondents said they have made changes and determined the new directions.

The majority of respondents, 58.4%, expect organizational changes to a small extent only, with 21.3% not expecting any changes, 13.7% expecting "significant changes", 5.6% having identified the necessary changes, and 1% expecting changes to a "great extent."

Despite the problems the pandemic caused, 55% saw innovative practices being introduced due to COVID-19, 24% saw “many innovations”, 13% saw it rather problematic and 4% saw conflicts and challenges.

The majority of respondents, 58%, expect another lockdown period and have an action plan in place for such an occurrence, 22% believe it is unlikely to happen but will react if it does, 13% do not expect it to happen and 7% are certain it will happen and keep optimizing their operations to face such a scenario the best they can.

The crisis seem to have boosted employee commitment, as 65.5% see employee morale as having strengthened in this period. Some 4.1% saw “significant” strengthening, 19.8% saw no change, and 9.1% saw some weakening. No respondents reported “significant weakening.”

The business leaders answering Develor’s survey believe that their own recognition strengthened in 43.7% of cases, did not change for 34.5%, worsened slightly in 8.6% of cases, got worse for 4.6% and “significantly worse” for 0.5%.

After the lockdown, businesses appear to have plenty to do. Although 69% say that employees have partially been prepared for the “new normal” and have learned a lot, only 16% say that everybody has been prepared, while 12% will play it by ear and ask staff to learn on the go, and 3% has not made any preparations at all.