The future is uncertain and change is coming fast. Companies need to look beyond short-term results. They must be able not only to withstand threats or unpredictable changes, but also to emerge stronger from these difficult times of greater uncertainty. In short, they need to be more resilient.
Increasing the level of resilience is an imperative on the agenda of management boards, but also a complicated pro-cess to systematize and implement, which involves all departments of a company. Managers with different priorities and separate reporting lines need to work together to prioritize the issues that make the company more resilient.
Although digital technology contributes significantly to this goal, experience shows that true resilience requires a balanced focus of executives on six levels, as follows: financial, operational, technological, organization, reputa-tion, and business model.
1. The financial level
Companies need to balance their short-term and long-term financial goals. Strong capital position and optimal liquidity allow companies to cope with rapid declines in revenue, rising costs or credit problems. Most companies need to pro-tect themselves against the malfunction or deterioration of financial markets and reduced access to capital. Thus, man-agers need to pay attention to debt and equity.
2. The operational level
Resilient companies maintain a solid production capacity, which can be flexible to cope with changes in demand and remain stable in the face of operational disruptions, while maintaining quality. They are also strengthening their supply chains and delivery arrangements to maintain operational capacity and provide goods and services to customers. Under all forms of stress, from the disappearance of suppliers to natural disasters and geopolitical events, managers must have solid operational back-up plans.
3. The technological level
Investing in a strong IT infrastructure is necessary to manage cyber threats and avoid technology failure. Resilient companies maintain and use high quality data in a manner that ensures confidentiality in accordance with all regulato-ry requirements. At the same time, it implements large and small IT projects – quality, on time and on budget – to keep up with customer needs, competitiveness requirements and regulatory requirements. Technology-minded managers maintain business continuity by avoiding disruption to customer service and internal operations.
4. The organizational level
Promoters of resilience support a diverse workforce in which everyone feels included and can perform best. They re-cruit the best talent, develop it in a balanced way, improve or retrain employees in a flexible and fast way, implement people-based processes and have solid succession plans throughout the organization. The desired culture and be-haviors are mutually reinforcing, supported by well-developed rules and standards that require adherence, while pro-moting fast and agile decision-making.
5. The reputational level
You are what you do. Resilient companies align their values with their actions and their actions with their words. From employees to customers and from regulators to investors and society at large, everyone holds companies accountable for brand promise, environmental, social and governance issues. Resilience requires a strong sense of each employee about the company's mission, values and purpose, which guides its actions. It also requires flexibility and openness on the part of managers in listening and communicating with stakeholders, anticipating and addressing the expectations of suppliers, customers and the community, as well as responding to criticism of company behavior.
6. The business model
Resilient organizations have business models that can adapt to significant changes in customer demand, the competi-tive landscape, technological change and the regulatory environment. This capacity means maintaining an innovation portfolio and capitalizing on entrepreneurship. Especially in times of crisis, resilient organizations will make strategic bets to quickly develop and adapt their business models.
Often managers cannot inventory all the possibilities that economic reality can offer to maintain the resilience of com-panies. However, by evaluating the potential disruptive effects, companies learn what are the gaps, inconsistencies, discrepancies between the 6 dimensions briefly explained in this article. Companies that respond resiliently to disrup-tions in the business environment, at the industry level or in a particular economic downturn can create a competitive advantage that leads them to superior performance in the next technological and economic cycle.
About PKF Finconta
For more than 27 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF Finconta Consultanta, PKF Finconta HR, and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping, and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.