As business leaders take stock of a previous year of growth among volatility, they look forward in 2024 to a year of significant, potential change on multiple fronts. Five trends will challenge boards and senior management teams to continue their growth trajectory and find opportunity while managing risks amid instability.
In 2024, geopolitical developments risk impacting business beyond usual levels, potentially in terms of rules and regulations, trade conditions for goods and services, financial investment flows, property peril, commodity prices, inflation, supply chain and employee security. Several factors drive this situation:
Many will prove consequential for years to come. National elections will be held in the U.S., Russia, Ukraine, Mexico, Finland, India, Indonesia, Pakistan, Belarus, Croatia, Lithuania, Bangladesh, Iran, Taiwan, Rwanda, South Africa and South Korea. Effective leaders are monitoring global events – and risks – closely to identify opportunities for growth while preparing to act quickly and decisively when events occur.
Labor markets are more stable than they were at this time last year: The Great Resignation is likely over, with quit rates and labor participation rates in the U.S. tracking to where they would have been without a pandemic, the number of job openings far lower than at the start of last year and unemployment backing off its structural lows. Nevertheless, permanent demographic shifts have created long-term shortages for certain jobs and skills that could persist for years, and companies are still catching up to find the workers they need.
Leaders have made progress with efforts on how to balance the often-conflicting needs between remote/hybrid work arrangements and in-person interaction, but recognize they are not done. Data suggest manufacturing employees are working more hours but are less productive and are more susceptible to burnout, while non-manufacturing employees are also working more hours but are more productive.
Multiple generations in the workforce are pushing leaders to be more creative in how they manage different sets of needs. More companies are onshoring and near-shoring (e.g., Mexico, Poland, Romania, Uruguay) to address geopolitical, supply chain and talent availability issues. Effective leaders continue their efforts to get ahead of these trends through new talent strategies, building unique cultures, transforming pay, benefit and career programs and redefining employee experiences.
At the outset of 2024, inflation is far lower than last January in most countries, and most countries avoided recession in 2023 (some narrowly). Market consensus suggests economists are cautiously optimistic, articulating modest risk that the global economy goes into recession in 2024 while expecting low global growth and conditions such as European stagflation or mild recession in some countries. (They acknowledge that stubborn inflation above central bank comfort zones may keep rates higher for longer).
Economists expect a soft landing in the U.S. but are mindful of credit card delinquencies, corporate credit defaults, the impact of higher unemployment and lower wage growth. They also are mindful of the impact of healthcare cost growth.
The Bipartisan Infrastructure Bill, CHIPS Act and Inflation Reduction Act have contributed to a surge in manufacturing construction over the past two years, but limited worker availability has increased costs and, in some cases, sparked labor action. Effective leaders continue to monitor conditions closely and develop new approaches to growth amid higher costs.
While last January few board members and senior executives were thinking about AI, most have at least a basic understanding of the technology today. Since its rapid rollout and intense adoption last year, organizations have stepped up their understanding and governance of generative AI but also are still catching up.
Recent lawsuits such the one by the New York Times suggest it is still early days for technology governance and usage at both governmental and corporate levels. To fill the vacuum, it is likely that boards and senior leadership teams will increase technology focus in 2024 to address generative AI, as well as the metaverse, spatial computing and quantum computing and their impact on risk and work.
Effective leaders understand these technologies require new skills, understanding appropriate use cases and deep expertise to achieve interdependent goals of efficiency, cost effectiveness, stability, security and performance.
At the outset of 2024, there remains considerable polarization among certain corporate stakeholders on ideology-attached topics related to ESG (such as climate, diversity, equity and inclusion, wellbeing and governance). These issues likely will come to a head in 2024 as effective leaders ask what is good for their companies and communities in the short- and long-term – moving away from ideology to focus instead on practical application. For example, the risk to specific assets due to climate events or the costs and benefits of climate transition activities in response to COP28 and other factors.
Effective leaders also are clear in why they are taking action, in terms of compliance, corporate social responsibility or business strategy. In practicing stewardship, effective leaders reduce ideological rhetoric and address the actual impact on performance and risk of any actions.
At the outset of 2024, there exists debate over whether VUCA (volatility, uncertainty, complexity and ambiguity) or BANI (brittle, anxious, nonlinear and incomprehensible) are appropriate descriptions of the current environment (often now associated with a utopian versus dystopian mindset). Effective leaders focus on strategies that allow them to operate and grow in an ever-changing environment, setting the stage for new challenges and opportunities.
A version of this article originally appeared on Forbes on January 8, 2023.