A group of professionals gathered last week by NJBIZ for a town hall discussion outlined tactics and strategies for businesses to keep the post-pandemic recovery moving in the face of an array of financial, legal and societal challenges.
The panelists were Luis De La Hoz, first vice president, regional director, commercial lending, Valley Bank; Daniel Stolz, partner and chair Bankruptcy, Reorganization & Creditor’s Rights, Genova Burns; Brian Lowe, president and CEO, BML Public Relations & Digital; and Richard Jania, managing director, CBIZ Marks Paneth. NJBIZ Editor Jeffrey Kanige served as moderator.
The discussion began with an around-the-horn round about how each of their companies are navigating the workplace aspect of COVID.
“I’ve talked to a lot of business owners and CEOs and the whole remote or hybrid idea of arranging your work schedule seems to have taken hold,” Kanige said. “Some are grudgingly accepting it. Some have embraced it, seeing a chance, for example, to reduce real estate costs. And others are outright resisting it. I’m curious as to where you each fall on that scale and what your organizations are doing.”
The answers ranged from improving technology to trying to find a happy medium with the hybrid model and even a novel idea from Lowe to create a remote incentive.
“We actually reopened our office back in February. And I probably don’t sound like the most popular person on this webinar because of it,” said Lowe. “We’ve also instituted a bank of remote time that are virtual days that people can use.”
Lowe said that if employees decide, on a particular day, that they would prefer to work in their pajamas, they can do that. “We want to give that flexibility because, at the end of the day, it’s still an evolving situation,” Lowe explained. “And we want to make sure that we’re covering all the bases.”
Stolz said that a lot of law firms have gone to what they call a hotel concept, which he believes is a way of the future office.
“In the old days you had an office with your name outside the door,” Stolz said. “That doesn’t exist in many law firms these days. They’re giving everybody a Surface notebook, and there’s a monitor and a dock on the desk. There’s nothing else in the office.”
De La Hoz pointed out that a big challenge of the rapid embrace of technology has been securing it, as well as the digital divide that often exists in minority businesses. He estimates that Valley Bank moved some 70% of its employees to remote work within a week when COVID hit.
From there, the discussion moved to some of the immediate financial concerns of businesses, including inflation and interest rates, which are beginning to climb a bit after a long period of being near zero.
“It’s very interesting because people had been waiting to sign term sheets and deals,” said De La Hoz. “All of the sudden, they panicked because they realized that the interest rates are changing.”
“As inflation goes up, as wages are going up, costs are going up,” Jania said. “It’s hard to control the increase, especially in certain businesses, like restaurants. Clients are getting creative and trying to manage other costs to get around the increase in wages and the inflation.”
“I would just say that the inflation forces obviously made it really difficult being in a service business as well,” Lowe said. “While we’ve got great client partners, nobody ever wants to hear that, ‘well hey, our numbers have to go up.’ And we’re not buying beach houses off of it. We’re just trying to manage.”
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Lowe added that those have been tough conversations to have.
Stolz, a bankruptcy lawyer, said he would have anticipated an avalanche of business failures a year ago, but it never happened. He can only theorize why.
“Our theories are that the courts are clogged up,” he said. “For the longest time, you couldn’t evict anyone from a property, even if they weren’t paying rent. So, the foreclosure process is now going to be back to where it was, where it will take three or four years.”
“I am concerned about what’s going to happen in the next year or two when this is all going to be reflected when the market gets back to normal,” Stolz added.
De La Hoz said the biggest concern for many of his clients is access to supplies because materials that cost $100 a few months ago now cost $150 to $180. He said that has led many contractors to give estimates based on labor because of the cost uncertainties, as well as just simply being able to even find those materials.
The discussion then shifted to labor, more specifically, the high costs to acquire, as well as the cost and perks needed to maintain talent in this unusual market.
Lowe said this issue has been challenging, especially with younger employees. “They’re getting an entry level salary, which is even inflated, because you need people. So, we’re paying above the industry pay bands,” Lowe explained. “And then you have them for eight months or so. Then somebody else comes along and they’re maybe more desperate than you, and they throw $15,000 more on the table. And it becomes now you’ve just lost your eight-month investment in that person.”
To illustrate how aggressive the talent recruiting market is, Lowe said that he has been actively recruited by other companies, despite owning his own business.
Jania said that his company faces the same challenges as other companies are offering big signing bonuses and increased salaries. And while he believes that compensation is the biggest factor, he also feels that quality of life perks are extremely important in the current climate. Some examples are his company holding appreciation days, extended holiday weekends, summer Fridays, and more.
“Compensation just isn’t enough. You have to make it a very friendly and a family type of environment,” Jania explained. “For some people, compensation isn’t the only thing they really want.”
The panel then answered some questions from the virtual audience before closing out with their final thoughts, which focused on how businesses continue to emerge from the historically unprecedented pandemic.
“The facetime that you have with the leadership, especially the senior leadership of your organization cannot be replaced by a Zoom meeting or via any other way,” De La Hoz said. “Sometimes even being at the office and having that opportunity to have a weekly conversation makes a huge difference, because that is the way we develop relationships.”