SMITHFIELD, RI - Michael A. Roberto, Bryant University Trustee Professor of Management, Harvard D.B.A., and acclaimed author, takes a look at several factors influencing how the world will turn in 2022—inflation, talent (the Great Resignation), and consumer behavior. Roberto has written several books on leadership and creativity including his latest, “Unlocking Creativity: How to Solve Any Problem and Make the Best Decisions by Shifting Creative Mindsets.” 

Inflation

As costs rise, can companies increase prices accordingly to maintain margins? Some firms will find it difficult to pass on those increased costs in the form of higher prices. Companies need to ask themselves: Are we investing in the activities that will maintain or enhance willingness-to-pay on the part of our customers?   One key thing to watch out for… competitors with deep pockets and strong balance sheets who will take the opportunity to NOT raise prices as much and try to grab market share during this inflationary period. 

Talent

Much has been written about the Great Resignation. Companies are going to great lengths to retain talented employees. However, one thing to be careful about though… firms may anger their most diligent and conscientious employees if they start rewarding behaviors that the best employees are already doing even without being offered an explicit reward. 

Here’s one key study on this topic:  A factory manager decided to recognize employees with perfect attendance at an all-hands meeting. From among those recognized, one person's name was randomly selected to receive a $75 gift card. How did his best performers respond to this new program? The researchers discovered that people did respond positively to the incentive for perfect attendance. However, people also tried to game the system, and their attendance record sagged after they lost eligibility for the recognition. The scholars also found that, "The awards crowded out intrinsic motivation in internally-motivated employees, who were already performing well by coming on time in the absence of rewards. These employees had increased tardiness after the program was implemented and they lost eligibility."  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2215922

Consumer Behavior

Companies will need to closely monitor consumer behavior as we (hopefully) move beyond this terrible wave and toward more normalcy. If we move toward COVID being endemic, then consumer behavior may start to change in unpredictable ways. What has worked during the pandemic may no longer work as well in terms of attracting and serving and retaining customers. Companies will need to keep a close eye on changing patterns of consumer behavior as we move through these next phases of the pandemic. The key will be to not just survey customers, but to observe them and to empathize with them so as to understand their changing pain points and needs.