We outline the key steps your organisation can take to stay strong during times of economic and political uncertainty
The past 12 months have seen a return to economic uncertainty in the UK thanks to both Brexit and the coronavirus pandemic. It isn’t clear yet what the full effects of either will be but as the headline of the most recent CBI quarterly industrial trends report read, “Manufacturing outlook remains dim.”
With uncertainty likely for some time to come, we look at seven steps businesses should be taking now to strengthen themselves ahead of economic challenges.
1) Focus on talent
While figures from the Labour Market Outlook, published by the Chartered Institute for Personal Development and Adecco, show that 56 percent of employers were planning to recruit in the first quarter of 2021, the same report notes that there is greater uncertainty than usual around these numbers owing to the current economic environment. This puts even more pressure than usual on getting recruitment right.
Patrick Woodman, former head of external affairs at the CMI and expert on the future of work, believes that attracting and retaining the best talent is the ideal way for a business to prosper, regardless of any wider economic issues: “You need to hire the right people. Once you achieve this it’s important to retain them by focusing on developing existing talent and making better use of their skillset.”
Dr John Glen, former director for customised executive development and now visiting fellow at the Cranfield School of Management, believes that communication is the key to achieving retention. “In order to keep your best talent during tough times you need to share your vision with them,” he explains. “It’s important that your employees understand your strategy, what it means for them and their role in it. That way you remove uncertainty, which is likely to reduce the chance of losing key people.
2) Add value through procurement
Procurement is often responsible for a large percentage of an organisation’s spending, but it is important to look beyond simply seeking bigger discounts in order to make efficiencies.
Helen Alder, Knowledge Manager at the Chartered Institute of Procurement and Supply (CIPS) believes that a narrow view of procurement efficiency is not helpful: “It’s important to look at unlocking value beyond price reduction,” she says. “Organisations should be concentrating on process improvements, productivity gains and the simplification of what they are doing – that’s where value comes from, and the knock-on effect of this work is usually cost savings that will benefit the business anyway.
“Value-based procurement is where you align work closely with suppliers and find ways to improve the process to achieve your organisation’s overall goals.”
3) Target new growth areas
While many organisations will rightly prioritise efficiencies during leaner times, business must still go on and Glen points out that it’s important to be aware of opportunities: “With established markets slowing down, businesses could look for growth potential in new geographical markets or market segments that they don’t currently serve or have underserved.
“Newly emerging economies such as Latin America and sub-Saharan Africa are growing quickly,” adds Glen. “Obviously there are business, political and regulatory risks attached to these places, so it’s important to manage that, but it can be reduced by launching a tried and tested product or service in a new location, or by entering a new market segment aimed at existing customers.”
4) Cut down on red tape
A massive 77 percent of CEOs in the UK are concerned about uncertainty around policy, report PwC in their annual survey of business leaders. And while organisations can’t control new regulations, Woodman believes that equipping key employees with the knowledge required to meet new rules and regulations is worth the investment.
“Establishing relationships with public bodies is essential to increasing the number and standard of professionally qualified managers and leaders,” Woodman explains. “This will vastly improve your prospects for long-term survival, increasing productivity and growth, which are currently undermined by a knowledge shortfall among managers and leaders. This is particularly relevant for giving managers the confidence to effectively manage changes that arise as a result of economic changes.”
5) Manage risk
Uncertain times tend to increase organisations’ awareness of risk and while it may have taken less of a pivotal role in businesses during growth periods, the arrival of the coronavirus and the uncertain economic landscape has seen far more emphasis put on risk management.
Glen comments: “There is a natural move towards considering risk as times get tougher, but it’s important that there is an explicit recognition of what the risks for your business are when key decisions are made.
“It’s important that people are open about any risks and discuss how to evaluate and reduce the impact they could have on the business. That way you are going forward with your eyes open and are ready to react to that risk, if needed.”
6) Boost productivity
Speculation as to why UK productivity lags so far behind other comparable economies has been a staple feature of business pages and blogs over the last ten years or more, with the period 2010 to 2020 often referred to as a lost decade in this regard.
The common factor here, according to Woodman, is leadership. “The number one factor affecting productivity is the quality of management and leadership,” he explains. “Managers can’t work effectively with their hands tied behind their backs. We know that two in five managers don’t feel empowered to take necessary decisions; so it is little surprise that so many firms report they are bloated by bureaucracy.”