'Conditions for change have never been better': Tim Ryan on CEOs' big challenge
Tim Ryan has spoken to more than 150 CEOs in the last two weeks.
The U.S. chairman and senior partner for PwC has been listening to companies' experiences in dealing with the pandemic, adjusting to remote work and planning for the eventual return to offices. The accounting giant is in a unique position, itself a massive employer with upwards of 55,000 staffers in the U.S. alone. It's had to grapple with the reality of being entirely remote, while also helping guide clients through the same process.
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"There's a realization that work has changed forever," Ryan said.
Over the past four years, the company formerly known as PricewaterhouseCoopers has been trying to "peek around the corner" at what's coming, Ryan said. PwC updated the software stack it relies on and moved most of its operations to the cloud, meaning that, in theory, anyone should be able to work from anywhere. The pandemic tested that, and Ryan said the decisions the company made have paid off. "It's always better to fix the roof when the sun is shining," he said.
Protocol spoke with Ryan about how PwC and the world will get back to work — and what business looks like on the other side of this pandemic. He talked about a "three-pronged approach" to reopening offices, the quandary of doing COVID-19 contact tracing on employees, and his advice for executives on how to deal with sudden and extreme change.
This interview has been edited for length and clarity.
How has work changed at PwC? Have you been using new tools because so many people are having to work remotely?
The short answer is yes. There's an old saying: Sometimes you're better lucky than good. And I put us in that category. For the last three, four years, we have aggressively been changing our infrastructure, our culture, our tools and the skills of our people. Four years ago, we anticipated that the world would demand us to be more digital. And if we wanted to win the war for talent, we needed to be more digital. As a result, we are now 95% in the cloud — outside of a small segment of clients that don't allow us to be in the cloud — in terms of our enterprise tools, our human capital systems, our CRM systems, our finance system. That has served us very well, and our people are very adept at working in the cloud.
In addition, three years ago, we launched a very aggressive effort — the largest one we're aware of — across an enterprise with 55,000 people, and now it's been rolled out to 270,000 employees globally. It's a program to digitally upskill our people on a continuous basis. We effectively made upskilling an employee benefit like a 401(k) and health care. So everyone, no matter where you are on your journey, you're constantly getting upskilled. It's part of our culture. Our people have earned digital badges; People have learned to build bots, have learned visualization tools, have been building automations. And we've brought on over 2,000 people who have skill sets that we otherwise wouldn't have at the firm.
All of that has allowed us to use tools that we would have never used three years ago. So now that we're in a remote world, we have over 4,000 bots and automations that our people have developed the last couple of years. They're doing audits, tax returns, supply-chain consulting, without being physically present in ways that we haven't ever seen before. That investment has allowed us to work way differently than we would have ever worked before.
So basically you were ready for this?
Absolutely — and we were lucky, because we did not plan for a pandemic, but across the globe we have 270,000 people working remotely on an average of three devices. The technology side and the comfort level with the technology went off without a hitch. Now we have the same challenges that everybody else has, because we have people in small apartments, people with roommates who don't work for the firm, or spouses, partners and children.
What's the roadmap for getting people back into the office?
I'll give you our perspective, which is also informed by talking to our clients, and I've interacted with well over 150 CEOs in the last two weeks. Two things I would say: For those who don't need to be, we're not sensing a big rush back to work. I'm proud that almost every business leader that I've talked to, including at PwC, said employee safety comes first. And companies that are able to get work done virtually, at least for the time being, are taking it very slow. Other companies, like utilities, CPG companies, grocers and health care companies, don't have that luxury.
What we're looking at is very similar to most organizations: We're looking at the frameworks provided by the federal government, we're looking at CDC, state and city requirements. But we will set our own approach that's equal to or above the highest restriction out there. And then obviously we'll tailor locally where we need to.
What are others saying?
We're seeing that businesses aren't naive in thinking there'll be a solution coming from government at any level. They're hoping for frameworks. Most companies are looking at what's happening locally around hospital capacity, number of deaths and number of cases, and as those shrink, it'll give more confidence to begin back to work.
What's the strategy at PwC?
We're looking at a three-pronged approach. The first bucket is safety and that's everything from temperature checks, social distancing in the workplace, closing lunch rooms, not having large gatherings, limiting people in elevators, wearing masks.
Bucket two is testing. But as we know, large-scale testing will not be available for a long time, so it puts way more pressure on bucket one.
And then bucket three is contact tracing. Every other week we do a CFO survey. In the last one, 22% of companies in their back-to-work plans are looking at contact tracing. I fully expect that number will continue to increase. When you don't have testing, it puts a lot of pressure on safety and contact tracing. This ties back to our digital strategy that started four years ago. Our people developed the tool that we will use when we come back to work at PwC that is very technologically advanced.
We will require all of our people to log on to a secure site and download an app on their phone, and when they come into the workplace, we will anonymously track where they go. And then when somebody does inevitably test positive, we will know with a degree of accuracy who those people came into contact with. It'll only be a small number of our human capital people who then can notify people who were close, reducing anxiety and also limiting the number of people we have to then self-quarantine. We would not have been able to develop that tool had it not been for all the [cloud] investment.
Do you have concerns about the privacy implications of contact tracing?
Without a doubt, we've studied that, and we are comfortable, after consulting with our risk and our legal people. All we're doing is anonymously tracking proximity in the workplace, not when they leave PwC, not at home, not outside the workplace. We realize very clearly there are elements of privacy, but we're not sharing that data with anybody. We're not collecting personal data, private data, HIPAA data. It is simply proximity. And the only people who will know are a small number of human capital people, and only when somebody tests positive. So we think it's a very important benefit to our employees so we can keep them and their family safe when they do come back to work.
You mentioned there will probably have to be changes to the office. What sorts?
What we're looking at is very consistent with many companies. Lunch rooms will be limited high-traffic areas. We won't be doing large gatherings in the office. We're debating right now whether we allow face-to-face meetings in a conference room, even socially distant versions versus doing videos still in the office. We'll still have people who are working from home, and we want to make sure we not only keep our people in the office safe, but not lose the inclusiveness with the working-from-home people. Because if we all think back to just eight weeks ago, we'd have seven or eight people in a conference room and one person dialing in or on a video, and they tended to get excluded. Now we've all become very good over the last eight weeks around inclusiveness on videos. So we don't want to lose that element.
One of the things we and almost every other company is going to have to consider is productivity. One of our medium-sized offices holds 1,400 people. Well, if we put in just the 6 feet of social distancing, that capacity is going to be 600. We already know that everybody's going to have to deal with that, whether you're a manufacturer or a medical device company. In order to not lose productivity, companies will need to go get more physical real estate, which I think is very unlikely in the short term, or they'll have a part of their workforce that is working from home.
So do you think that there'll be a kind of ramp here, in terms of when people will be going back to the office and when things will go back to normal?
Most CEOs I've spoken with, there's a realization that work has changed forever.
What is so unique about this is we all have a shared experience. The only analogy I can come up with, and it's not a perfect one, is 9/11, and one CEO said to me that 9/11 brought us the TSA and the Patriot Act. And that was not even a complete shared experience — it was more severe if you were in New York or Boston or D.C. — but to some degree we all had to share the experience. And because we all have had a shared experience, you don't have the naysayers of change that you typically would have, because everybody lived it.
Things like telehealth will now not be 5% of the market, but 50% of the market. I'm expecting that we won't ever go back to the way that it was and I don't necessarily think that's bad, by the way, because of the shared experience. We know we can do things differently.
If you go back, prior to eight weeks ago, what most companies would have said is that they struggle to help people work from home, give them the flexibility they need to care for an aging parent, to care for children, to just deal with wear and tear from commutes that have gotten longer and longer. Everybody acknowledged there was an issue but nobody had an answer. We have a big partial answer right now. I see a lot of those challenging questions now getting resolved in ways they never did before, which is going to drive work to change in a big way.
I'll give you a data point: I talked to several utilities. They would have said it was heresy to think you could ever do a call center from anything other than everybody in one center doing the calls. They're running just fine in people's dining rooms. That's going to cause us to do things differently. And it is in many cases better for people, obviously under the right working conditions.
At PwC — because of a combination of employee safety, employee value proposition and because some of our clients want to interact with us differently — I don't see us going back to the way things were.
With the worst recession in a generation on the horizon, is digital transformation a tough sell right now?
It's funny, one of the biggest themes we've been seeing is companies were already under pressure to digitally transform prior to this virus. If you name an industry — insurance, retail, banking, professional services, health care, higher education, the list goes on — we would have said all those industries have to change, to deal with new competitors, platform companies and increased competition in order to survive. The virus simply accelerated that. One CEO said to me, "We woke up at the end of March, and we were two years into our strategy immediately." So what we're seeing is companies are making sure they're secure with liquidity, and the companies that are not fighting for their lives, they're now accelerating the digital transformation rapidly.
One major client in the restaurant business said they used to be 20% online, 80% dining room. They're building the business model right now to flip that to 80% online, 20% in-dining. We're seeing it across the board now. My own view is the next two years will be the fastest pace of digital transformation we've ever seen.
What will the world look like in about two years? Do you think business will have actually made those changes to survive?
I do. I think almost every company will be even more digital than they've ever been. And it won't just be in the back office, it'll be in the sales function, how they interact with clients, how they fulfill orders for customers. To be very frank, some are going to do it very well, and others are going to struggle. You need to be strong financially to make this happen. But even more, you need exceptional leadership to take advantage of the shared experience. Everyone has to move quickly because the execution risk of making this happen is very high.
And I'm not a believer in saying only that the big will survive: I think you're going to see small- to medium-sized companies do this extremely well. It's not big or small, it's the quality of management and then also taking advantage of your starting point. In other words, if you started out weak financially, it's going to be hard to do, but if your starting point is strong, and you have exceptional management, those companies are going to win. It's size-agnostic in my view.
What does the future look like for professional services businesses, where a lot of the work relies on face-to-face interaction? Is the new normal just going to be hopping on Zoom?
You've got to look at two critical things: What do your customers want, and what do your people want? I see some of our customers wanting in-person fulfillment. But there are other clients who say, "You know what, that digital fulfillment that you did, that audit you just finished for the March 31 year-end, that tax return you did for June 30, that supply chain analysis you just did for me virtually? I'm perfectly happy having that fulfilled virtually and limiting expenses to travel, lowering the risk of infection or anxiety." I see some wanting to buy that way and I see others saying, "We want you here face-to-face." I also see a number of our people wanting to go face-to-face and some not wanting to.
I think professional services has gone through a massive shift and I do see way more digital fulfillment than we've ever seen. But I don't think it goes to 100%. I think it will be driven by whatever the clients want and what our talent is comfortable with.
Has this time taught you anything about PwC that you didn't know before the pandemic?
If you talk to any of my partners and my people over the last four years, the general consensus would have been, why are we moving so fast? I think what we've learned is that it's always better to control your destiny when you can. And I want to be clear, we made a zillion mistakes. I don't want to come across as we batted a thousand, because we didn't. But I think what we've learned is that it's always better to control your destiny and it's always better to fix the roof when the sun is shining versus when you're in the eye of the storm.
Is there a piece of advice that you would give to other CEOs and other business leaders about how to start this project right now?
The first thing I would ask them to do is let go of the past. And that every member of every CEO's executive team has now had the same shared experience. Which means that conditions for change have never been better. Every change book that's ever been written talks about alignment, about getting on the same page, leading from the top. This shared experience, it's the easiest time ever to make change. Don't miss it.