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Any return to a “new normal” in the modern economy should include a return by most employers to in-person workplaces, Principal Financial group president and CEO Dan Houston told about 500 attendees Jan. 26 at the Corridor Business Journal’s annual Economic Forecast Luncheon at the DoubleTree by Hilton in downtown Cedar Rapids.
“When I reflect on some of the biggest challenges we’re facing right now, the continued health and safety of my workforce is job one,” Mr. Houston said. “And I come from the perspective that I don’t think that long-term working from home is in the best interest of employees, employee development or health and mental well-being.”
Mr. Houston said that about two-thirds of Principal’s employees have returned to in-office work at least three days a week.
“With 50 million customers, we have an obligation to reflect and look like our customers,” he said. “We have industries that are part of our customer base, and they’re all working, and they’re on-site. It can be a little bit disingenuous if we’re not able to match up and demonstrate that same strong sense of commitment.”
The modern workplace is at an inflection point, Mr. Houston said, and a “new normal” of sorts is beginning to emerge – an increased focus on digitization and automation, plus other factors that are changing expectations for the next generation of employees.
“Culture and cohesion in a virtual role is a challenge,” he said. “How do we ensure that we’ve got that alignment with people wanting to be part of our organization or part of your organization, the ethos, the DNA? When you think about that context, it’s really hard to do that from the bedroom or the living room or in the office where you’re not having that day-to-day contact.”
Mr. Houston then touched on the currently contentious political climate as a potential obstacle to business operations.
“Without getting overly political here, the political polarization that is taking place is creating a lot of disruption for businesses,” he said. “Which set of regulations are you going to have to operate under? Which EPA rules do you have? What are all the various changes that are impacting each and every one of your businesses?”
Oft-referenced supply chain disruptions are also hindering productivity, Mr. Houston noted.
“We have people that are idling plants,” he said. “People are closing things down because they just can’t get the raw materials in order to activate their lines.”
The enduring pandemic remains a concern, Mr. Houston said, and will soon create a new behavioral norm.
“When is this pandemic going to be over?” he asked. “Anybody have a good idea? Never. Welcome to our new reality. This is what it looks like. I’ve traveled to Asia for the last 20 years. The idea of wearing a mask is very commonplace. And we’re going to be dealing with something like this on a fairly ongoing basis. My guess is there’s a two-thirds chance that by the end of 2022, we see what is considered to be a sort of normalcy. Most of the people here do not have a mask, and there’s 500 people in this room. Look at any athletic event going on, any basketball game, how close people are, and the intensity of that. So we’ve as a society decided we’re going to open up as our new reality. We’ll have to find a way to adjust to that.”
Other economic issues and challenges addressed by Mr. Houston:
Labor shortages: “Never in recent history have we seen such low worker participation rates in this country. We have doubled the rate of retirees in 2021 than we did in 2020, and it was people who, I think, were at that point of their careers where they said, ‘I want to step out of the labor market.’ I don’t know that they’re going to come back. If I were a betting man, I don’t think they will. I worked with the governor and co-led Future Ready Iowa, and a lot of the emphasis was not only getting people ready for a four-year degree but a two-year degree. Iowa is heavily dependent on our ability to attract and retain talent in the state. If we don’t have the labor pools here, labor’s become so fungible in so many of our big industries, they’ll go someplace else. Iowa really has to double down on education and our ability to get a workforce that can make this transformation into our new society.”
Pandemic fatigue: “People are just wearing down from this, and we’ve got to find as employers the right ways to motivate employees, to encourage them, to provide flexibility, but at the same time serve the needs of the customers.”
Regulation: “To the extent that the regulation pendulum swings too far one way or another, it will stymie (growth). There’s nothing worse for CEOs trying to make a decision than not knowing what rulebook you can use. And that’s been one of the challenges for, say, the last 20 years.”
Cybersecurity: “It’s a big deal to our power grid. It’s a big deal to our water systems. We’ve seen examples now of this occurring. These are state organizations that are more than likely creating these disruptions, and we need to be incredibly mindful, as we build out our organizations, what cybersecurity controls we’re putting in place.”
Ag ownership: “There’s a lot of consolidation of ag properties. Bill Gates is now the single largest owner of ag ground in the country. And when asked, ‘Was that your intention? Is it part of your overall concern about the environment?,’ the response was simply no, that’s a normal asset allocation, about 6%. Let that soak in for just a little bit. His asset allocation of farm ground being 6% of his portfolio just made him the largest owner of farm ground in the United States, which is pretty interesting.”
