Shared responsibility
By Adam Krasoń, CEO of PwC CEE
Russia's invasion of Ukraine has added additional geopolitical risks to the numerous existing threats to business. Our Central and Eastern European region will never be the same again and Poland will never be as it was before 24 February 2022. I am full of admiration for the courageous Ukrainian people. And I’m impressed by the helpful rally of citizens and the support that has also come from companies in our region.
Unlike some of the world's investors – who are only present with us from time to time and mainly operate outside of our part of the world – we cannot afford to temporarily hold back on our current business decisions and 'quietly' wait for the post-war landscape of Central and Eastern Europe to clarify. As we chart a path forward in our region, we need to respond effectively each day to the 'new reality' (which I hope will not turn into a 'new normal') by building resilience and acting to address the impact of extraordinary geopolitical and social events.
We still have, and will have in the coming year, the biggest humanitarian crisis in Europe in the 21st Century, which has an alarming impact on energy carriers, as well as numerous macroeconomic consequences and disturbances – especially those related to double-digit inflation. Among the economic fallout of the current circumstance, it is the further upward spiral of prices, and therefore costs, that Polish business fears most.
Undoubtedly, this coming year is another year of testing current business models. Their possible modification and transformation. It is a time for wise investment decisions, including those in technology and cyber security, but also a potential period of cost control, where business growth has been stimulated primarily by readily available credit and helped by relatively low energy costs. This is a difficult time for parts of the industry where there is a growing risk of late payments, congestion or, as a result, possible bankruptcy. Such shocks, albeit of varying magnitude, are likely to affect not only the low-capitalised start-up environment, but also many companies for the first time in their history. However, we cannot automatically convert today's mood into a vision of tomorrow.
We have a great deal to offer the world – the world outside our region – even today. Ukrainian resilience and sense of freedom, Polish independence and, above all, an unparalleled entrepreneurial spirit. Estonia's good example of how to build a digitally resilient state and business. Pragmatism and strong industrial models from the Czech Republic or Slovakia. The dynamism of the Georgians, who will positively surprise with this year's possible double-digit economic growth. There are indeed many examples at the level of individual countries, companies and individual achievements of managers. I therefore derive a great deal of optimism from the conversations I have had in the region.
I am convinced, while at the same time hoping for a de-escalation of the conflict of course, that Poland and our region will become even stronger thanks to growing exports and will also become an important centre of the nearshoring phenomenon worldwide. As a result of the disruption to supply chains caused by the pandemic and exacerbated by the war in Ukraine, companies are increasing their capacity to produce and to store and locate services in Europe. They are doing this, and should do so, in CEE.
In order to meet these challenges, it is worth asking ourselves today whether our goals and business strategies cover all the priorities. We know that the list of short- and medium-term goals is long: protecting revenues, making the right investments to ensure growth, implementing new processes to increase efficiency or the inevitable decarbonisation of operations and ESG goals changing business strategies.
But with current concerns about inflation, geopolitical turmoil and the economic downturn, isn't looking after our employees an even more pressing issue than ever before? Macroeconomists indicate that the coming slowdown will not necessarily translate into a significant increase in unemployment. This news may please employees, and should also prompt employers to act to invest in employees and build a welcoming workplace for all. Just as paying taxes is a constant part of life, competition for talent is and will continue to be inevitable.
We know that organisational and human capital factors are critical to the success of business transformation and company survival. Making the right decisions about our teams enables change and improves business performance. This is seemingly a given, but in times of current threats, it is worth setting this very high on your list of priorities for 2023.
We can only tackle such difficult challenges together: when people with different skills, from different places and with different histories join forces to solve complex problems, so that business can take seriously its responsibility for its impact on society, the environment and the economy.
This article was originally published in Polish in Puls Biznesu on December 26, 2022.
About Adam Krasoń
Adam Krason is the CEO of PwC Central and Eastern Europe (CEE), with effect from 1 January 2023. He leads a Regional Leadership Team of 12 Partners and a community of solvers of more than 12 000 PwC practitioners in 27 countries across the region.
Adam served as the Country Managing Partner of PwC Poland and Northern Cluster Leader (Poland, the Baltic States, Ukraine) for the past eight years. Prior to that he was the leader of the Assurance practice in Poland. In the past, Adam was also responsible for non-audit Assurance services in CEE and was the leader of the Telecommunications, Media and Entertainment Industry Group in Poland.
Adam has been with PwC for 30 years, including a two-year secondment in the Washington D.C. office of PwC US.
