Sampling ʼNew Normalʼ Business Sentiment
Now that the lockdown and restrictive measures introduced to keep the spread of the novel coronavirus at bay have been lifted, businesses in Hungary are adapting to business as a “new normal.” Hungary-based international consultancy Develor says this restart period is a time of challenges. Furthermore, how companies adapt may influence their success in this changed environment, if not their very survival.
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.
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.
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.
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