RSM US LLP (RSM) – the nation’s leading provider of audit, tax and consulting services focused on the middle market – today announced results from its RSM US Middle Market Business Index (MMBI) Special Report, Reopening the Middle Market, Part Two. The report found middle market companies have been adapting to the pandemic by moving to remote work and leveraging new technologies to continue operations, but many anticipate they’ll have to continue operating this way until a vaccine for COVID-19 has been widely adopted. In a survey fielded piror to vaccine approvals, 82% of business leaders reported they don’t expect a full reopening of the economy until the development of a vaccine. A further 79% say any reopening will depend, to at least some extent, on a significant percentage of the U.S. population being vaccinated.
“Distribution of an effective vaccine, and peoples’ willingness to get the vaccine, will be a major determinant of how quickly the U.S. economy will be able to accelerate into a recovery period,” said RSM US Chief Economist Joe Brusuelas. “While this survey was conducted before the vaccine announcements from Pfizer, Moderna and AstraZeneca, which might impact middle market leaders’ future expectations, we still have a long way to go before a majority of the population receives the full vaccine. In the meantime, middle market companies must continue to adapt by making strategic decisions about investments and using technology in new ways to drive efficiencies.”
Using Technology in New Ways Has Helped Companies Manage Disruption
Middle market business leaders report they have implemented new ways of utilizing technology during the pandemic, though a divergence in how that technology is used could indicate smaller firms have had to play catchup to their larger counterparts.
Almost half (49%) of middle market businesses reported they were implementing technologies in ways they hadn’t prior to the pandemic; 49% say the new uses included facilitating remote work and collaboration while 46% say they used new customer-facing technology. However, smaller middle market businesses – those with revenues of $10 million to $50 million – had to play catchup to their larger counterparts – those with revenues of $50 million to $1 billion – when it came to enabling remote work for their employees. Fifty-seven percent of smaller firms said they leveraged technology in new ways for remote work while just 42% of larger firms reported the same.
Remote Work Might Become a Permanent Option
A majority (60%) of MMBI respondents said COVID-19 concerns would prevent a full reopening of the economy for between six months and a year, meaning remote work will stick around for some time. Sixty-five percent of middle market businesses now have employees working remotely who weren’t doing so prior to the pandemic, with smaller firms reporting 57% of their employees are remote while 72% of larger firms say the same.
"Significant levels of remote work are going to be around for the next one-and-a-half to two years,” said Geoff Hopkins, RSM principal and lead of the firm’s Microsoft Office 365 practice. “Just based on the logistics of vaccine deployment, and prior to the pandemic, the trend was overwhelmingly moving toward remote work flexibility and flexible work options.”
With the investment in remote work increasing, the MMBI found the way businesses have approached the practice has further evolved. Thirty-eight percent of smaller middle market firms and 43% of larger middle market firms report they were making remote work a permanent option for some employees on a fulltime basis, extending the practice even after the pandemic ends. Some businesses are going a step further and rethinking the role of physical offices or other workspaces (37%) or reducing their total volume of physical office space or workspace (31%).
Business Concerns Increase as Employees Stay Remote
As middle market businesses continue exploring their relationships with remote work, business leaders report having a remote workforce has also created new sets of security, business operations and employee engagement challenges. Four of the top six ways companies adapted to the pandemic were strategies related to technology or IT, and 31% of leaders with longer-term remote work say they have enhanced IT security during the pandemic.
Additionally, business leaders have expressed some concerns about the potential side effects of remote work on their employees such as supervising those not in the office (71%), impediments to continued training and development (68%), difficulties maintaining culture (68%) and mental health issues for remote workers (56%).
“It’s important that business leaders maintain contact with their teams to sustain productivity in this remote environment,” said Jen Busse, national leader of RSM’s human capital practice. “We’re seeing clients move to daily standups, while others are holding check-ins at morning, lunch and evenings just to continue progress and foster one-on-one time. The key is to be extremely intentional about those touchpoints.”
To stay informed with the latest insights, ideas and countermeasures to minimize the outbreak’s negative effects as well as prepare for future emergency events, visit RSM’s COVID-19 Resource Center. Watch for our next report on how the middle market is addressing IT and data security, due to publish in early 2021.
The MMBI Special Report, Reopening the Middle Market, Part Two data was gathered between October 5 and October 23, 2020.
RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.
RSM US LLP is the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with 51,000 people across 123 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.