I’ve been writing recently about the need to strategise and plan for a post-pandemic successful future in your business – something your board should be actively pursuing.
Stifel, the US-based investment banking and services company, recently undertook some research to understand how companies were preparing themselves for this future and the results made for interesting reading.
Top risks the companies identified were labour constraints (86%), supply chain issues (53%), a COVID resurgence (46%), inflation (35%) and increased regulation (34%) followed by cyber threats (26%) and tax policy changes (26%).
This all makes sense – “The Great Resignation” leading to the labour issues, the well-documented the supply-chain issues due to port closures (whether in full, or part, due to outbreaks of COVID), and the almost-certain increase in inflation and tax as a result of the ‘easing’ measures put in place by governments to try to offset some of the disruption caused by lockdowns and other actions. Cyber threats were a growing problem anyway, and this trend is bound to continue, while increased regulation of many areas is likely as governments have seen the ease with which they could impose new regulations under COVID.
Turning, then, to how companies are looking to address the implications of these issues, 82% said they were increasing investment in technology and automation, while 54% said they were increasing emphasis on acquisition opportunities that could provide for better operational efficiency. Both of these aimed, of course, primarily at the envisaged labour issues. Interestingly, though, less than a quarter were considering shifting to using lower-cost geographies, despite 95% having had to increase wages to retain or attract employees.
Three quarters of the companies were continuing with their planned strategic initiatives despite the risks of regulatory and tax changes, showing they felt the importance of making these strategic moves outweighed the risks of any likely changes.
Of course, within your own businesses, if your board has been active in performing its duties of strategy and risk management, you will already likely be well prepared for much of this, with strategies and plans in place.
If, however, the business has been more occupied with day-to-day issues in the face of our very changeable environment, with short-notice lockdowns and so on, this is the time to call an urgent board meeting and start to address these issues. I would suggest the agenda (and it’s likely to lead to more than one, lengthy, board meeting over the next few weeks) should include the following:
- Supply chain – we are all, to varying extents, dependent on a supply chain. What are the current, and likely future (looking, say, up to 12 months ahead) impacts on your business, and what mitigation actions (perhaps building up inventory levels to buffer possible delays) can you put in place? Of course, increased inventory levels will impact cash-flow and storage facilities, so there will be a ripple effect that would need to form a part of this planning.
- Labour – what measures can be taken to reduce the likelihood of significant levels of resignations, at what cost and in what timeframe? Are your succession plans in place for all levels in the organisation – not just for succession with other internal people (remember, they might be planning to leave, too), but identified external candidates who, you believe, would fit the culture of the business? Has management had appropriate exposure to the risk, and what mitigation strategies are identified, apart from those mentioned above, to bridge any gaps in teams?
- Inflation – this, of course, has impacts on operating costs and profitability, apart from potential revenue hits if rising prices lead to buyer resistance. How are your contracts with suppliers structured, in terms of notice of price increases? Can you fix some of the operating costs now – perhaps rentals in this time of supply exceeding demand, for example – to reduce the impact of inflation on costs?
- Cyber security – apart from ensuring compliance with POPIA (for South African customers) GDPR (for Europe), the UK’s DPA, etc., how secure are your systems and also your processes? You can have great security in your data centre, but if your employees use their phones to gain easy access to the systems this is a potential point of access by others. The same goes with PCs, if they take them out of the office, or their own home computer setup if used for work. What do you have in place to prevent breaches through these devices/systems? Do you engage external “white hat” hackers periodically to try to access your systems and test security? And, of course, in the event of a major event like a ransomware attack, how do you keep your business running (off-site, multi-generational backups, redundancy with your cloud provider, etc.)?
Hopefully, much of this is, in fact, already in place, so it’s more a review of where you are and what the road ahead might look like, and there are still all the other issues on your board calendar to keep up with, remembering that the board has the responsibility to manage and direct the business and affairs of the company – in other words, the proverbial buck stops with your board.
Addressing the issues now can save a lot of trouble in the future.
#BusinessFitness #Board #Crisis #Governance #Leadership #Pandemic #Planning #Resilience #Success #Unstoppable
Other posts on this issue that might be useful include:
- Will Your Business Survive “The Great Resignation?”
- Directors – Are You Risking Your Assets?
- Post-Pandemic Business Upturn – Give Your Board Real Muscle
- Proper Preparation for Productive Boards
- Reduce Costs by Defining Your Ideal Employee
- Leadership in Times of Crisis – 5 Cornerstones of Effective Action
- Is Your Strategy Fit for Purpose?
- Boards Accelerate Success & Increase Value for Small Companies, Too
- “Plans are useless, but planning is indispensable.” – Dwight Eisenhower