Business Leaders are Struggling to Adapt Amid Political and Economic Uncertainty
Political and economic uncertainty are creating shifts in the global business landscape and leaving business leaders struggling to adapt according to BSI’s third Organizational Resilience Index, which surveyed 800 global business leaders.
The research looked at the four key areas of organizational resilience: leadership, people, process and product and found that just one-third of CEOs are confident in the long-term survival of their business, underscoring the acute need for businesses to become more resilient to survive turbulent times.
This statistic may not be all that surprising given that the average length of time a company is on the S&P Index is declining. For comparison, in 1964, the average index tenure was 33 years, however within the next decade, researchers expect tenure to dwindle to just 12 years.
The declining confidence coupled with diminishing company and S&P Index lifespans, should urge CEO’s to take careful stock as to why some organizations are more successful in coping with complexity and volatility while others are not, and how they can anticipate, prepare for and adapt to business disruptions.
Fortunately, there are clear steps businesses can take to improve and remain resilient amid uncertainty. BSI’s Index focused on 16 core factors, including leadership, vision and purpose, reputational risk, financial management and resource management; alignment, awareness training and testing, culture and community engagement; information and knowledge, supplier management, business continuity, and governance and accountability; and innovation, horizon scanning and adaptive capacity.
Step one: businesses are in desperate need of strong leaders who can adapt to the disruptive effects of technology and cope with changes to government policies and regulation. This requires leaders who can learn from experience and anticipate future actions while at the same time understanding and monitoring present conditions. Companies must actively identify, recruit, encourage and develop these types of leaders.
If employees aren’t empowered to act when they recognize a problem, they won’t be able to respond to incidents and develop solutions to emerging challenges.
Second, businesses should focus on retaining talent and developing the workforce of the future. The study found that concerns about employee turnover increased in 2019, emphasizing the need for companies to look inward to find ways to offer individualized training, cultivate inclusive environments and shed legacy corporate attitudes that are not geared towards technological innovation. This is particularly true in the United States, where the responses show that technology is the biggest future challenge businesses are facing.
Legacy businesses also have another cause for concern identified by the report; companies older than 50 years are less flexible and adaptable which is leading to recruitment and hiring challenges. These firms need to bring in younger workers in order to compete, yet more than one in six of these companies struggle to attract millennial-age, and younger, workers.
As the millennial workforce continues to grow, and with the careers of Generation Z on the horizon, businesses should focus on ethics and sustainability as part of their broader HR strategy as this is shown to be of vital importance to these generations. This action is required to recruit and retain talent effectively and to build a company’s reputation with both its internal and external stakeholders.
Quite simply, engagement with this cohort is critical to a company’s future success as evidenced in a report earlier this year which suggested that 40 percent of millennials have chosen a job due to a company’s superior sustainability credentials. Now, as both consumers and participants in the workforce, these generations are demanding accountability on ethical, environmental, and sustainable practices. If you aren’t prepared to answer questions on the sustainability and ethicality of your supply chain, they won’t shy away from calling you out on it.
Third, businesses need to strike a balance of focusing both inward and outward, in the short and long-term, to be successful. A narrow focus on short-term gains only jeopardizes medium-term performance and takes away from long-term sustainability goals.
The good news? Simple assessments can put businesses on the right track to resilience. A clear benchmark of strengths and weaknesses creates the environment for leaders to have honest and open discussions with their senior leadership team and put together a snapshot of company resilience. Simple questions such as: are you focusing enough energy on looking forward, or are you stuck on the present; what is your employee retention rate, and how can you improve it; how are you using technology to enhance engagement, recruitment, performance and productivity; can all help build a path to organizational resilience.
Without an understanding of how your organization stacks up against the 16 factors of organizational resilience, it’s likely your business is sleepwalking into disaster – or worse – irrelevance, which is why today’s business environment requires coaches rather than commanders at the top. These types of leaders are needed to prepare the workforce for the future by instilling a belief in delivering that brighter tomorrow.