There is no doubt that Covid-19 is a catastrophic event impacting the lives of people everywhere. It has resulted in economic contraction, unveiled vulnerability in business models and heightened the realisation that new ways of working are required to achieve revenue growth.
In this context, the term ‘resilience’ is used to describe the way a business responds to external shocks. But what exactly is ‘resilience’, and how can CEOs and CFOs balance business imperative while ensuring staff wellbeing?
First, I would like to set right a common misconception. Resilience is not about ‘bouncing back’; there is no ‘back’ or ‘normal state’ to which to return. Rather, resilience is the capacity to absorb shock and the ability to respond to opportunity during that period of shock.
Beyond economic cycles
There are a series of step-like progressions which characterise the movement of a company during any period of change; there is seldom a straight upward curve.
It is also important to note that resilience transcends economic cycles and is as relevant during good times as it is during bad bad. Resilience propels a company to grow faster than GDP growth when times are good, as well as cushioning the decline during a downturn.
Crucially, a resilient business reflects the mindset of the senior leadership and the degree of connectivity between that leadership and every person across the organisation. The greater that connectivity, the greater the ‘stickiness’ or ‘elasticity’ of the organisation and the faster that it can respond to shock.
When there are multiple breaks in that connectivity, we see ‘friction’, and the business underperforms. Friction is a primary reason why a business is slow to respond to market changes or has low employee engagement. A highly resilient business therefore has low friction.
The following are three key areas that senior business leaders need to focus on to achieve their business imperative, while ensuring the wellbeing of their employees.
A resilient business reflects the mindset of the senior leadership and the degree of connectivity between that leadership and every person across the organisation
1. Get the basics right
Effective management of the base business is a source of incremental profitable growth and is also the best defence against competition and economic contraction. To quote a bank CEO, ‘The pandemic presented an opportunity to pay closer attention to making our fundamentals better and we have already started to see the growth benefits with improving margins.’
There is a determined search for the ‘pain points’ that impact employees and customers, with a task force dedicated to eliminating the issues. With supply exceeding demand for several commodities and services, there is also opportunity to achieve synergies through better procurement, to deepen penetration in existing markets and to eliminate costs from corporate structures.
2. Performance trumps presence
This is the new mantra and requires innovative thinking around people engagement. One major bank is piloting a virtual teller system where customer experience is improved while keeping employees safe.
Other examples include Excel Global Solutions in the US, which has launched a virtual patient-doctor platform that connects the doctor, patient and pharmacy in real time to improve care and reduce exposure risks and wait times. Meanwhile, executives at London Consulting Group in Mexico took no income for several months to keep employees on the payroll and Trinidad’s Shine Distributors was able to increase its revenues while reducing the hours employees worked.
Employees also need to adapt and strive for smarter ways of working. Trade unions should reconsider their approach to ensure they strike a balance between preserving workers’ rights and the need for a higher level of productivity with work flexibility in a new environment.
3. Put quality and sustainability first
There is a movement towards performance indicators that measure quality and sustainability as well as financials. Many companies are scrapping the traditional budgeting process, which consumes months of executive time, and replacing it with more dynamic processes such as rolling forecasts.
Such measurements could, for example, include minimising waste and maximising plant utilisation and customer order fulfilment rates. The financial outcomes – the revenues and earnings – are secondary to the real drivers of value.
Get the drivers right, eliminate steps in processes, manage the balance sheet right, manage the talent right, have the right delivery model and the dollars will flow into the P&L.
Open for business
Ultimately, government, business and society must work together to eradicate Covid-19; we need to get world borders reopened safely and our factories and service teams to full operation in a responsible way. The ambition must not be to return to doing business on a pre-Covid-19 basis but to go beyond.
We must balance caution with an entrepreneurial desire to invest capital and expand. Working together, we will beat this pandemic and from it we will emerge a more adaptable people with an improved resilient business culture.