The Darwinian evolutionary theory of survival of the fittest is a means by which we can describe the mechanism of natural selection amongst humans, but this also applies to organisations, although specifically so in the private or corporate sector.  Darwin is quoted as saying “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”, and the same applies to company’s or any form of organisation.   Unless companies and organisations adapt to the post COVID world, then they will simply be neither relevant nor can they hope to survive, but the real question has to be, is simply surviving sufficient, or do you want to be successful in the new, post COVID world?  

In the writers first article, we took the first step in securing future success as opposed to just surviving, by ensuring that you understood your organisations current service offering, company structure & your current market analysis, which has in turn enabled you to be successful to date.  We now need to take the next step to ensuring your organisations future success, by assessing what should be your future service offering & what the future market is likely to be in the short, medium and the longer term.  

Future Service Offering & Market Analysis – Short, Medium & Longer Term
The key questions for you and your management, need to analyse and assess, are which of your: 

Service Offerings

1. Existing offerings, which are likely to remain unaffected or even of enhanced value to your customers post COVID and whose resources should be maintained or even enhanced at current levels?

2. Existing offerings, will be affected at least for the short to medium term, but will eventually bounce back in the longer term, whereby such resources should be reduced in the short term and transferred where possible to alternative offerings? 

3. Existing offerings are likely to be seriously and negatively affected and either require to be gradually but permanently “wound down” or substantially “modified” if they are to be of any future long term value for the organisation?  

Markets

1. Existing markets which are likely to remain unaffected or even of enhanced value to the Company post COVID and to which resources should be maintained or even enhanced at current levels?

2. Existing markets will be affected at least for the short to medium term, but will eventually bounce back in the longer term, whereby the resources applied to pursue the market should be reduced in the short term and transferred where possible to alternative market development?

3. Existing markets are likely to be seriously impacted and either require the Company to reduce the marketing and employee resources committed to that market, or to make a clear decision to gradually withdraw from the market and concentrate on the new, developing markets of the future.

Buyer Beware

Remember, this is not a “perfect science”, but far more “perfect” than just letting everything happen and watching and hoping for survival whilst others who have had the foresight to think and plan ahead, create new or refined offerings and swallow up your share of the market !!  

As Dell boy said, “he who dares wins”, or at least it is probably fairer to say, he who does not dare is more likely to lose and this applies to any organisation who fails to be creative, fails to think ahead and to least everything to hope.  

Forecast Service Offering & Structural Analysis – Short to Medium Term

Therefore, although the COVID 19 crisis will add complexity and likely, due to the global nature and impact across every continent to make it more likely that any upturn will be slow and gradual as opposed to a “V” shape, now is the time to get ready to benefit and secure your organisation and its future success and profitability. 

In the first instance, lets consider the freight market.  Going forwards, there is likely to be a major restructuring of the airline industry, with excess capacity resulting in some of the smaller and even larger players going under and with capacity then decreasing, this is highly likely to cause costs to rise.  This may well in turn result in a transfer of capacity from air to road or sea and an increased emphasis on TIR or sea freight specialists and hence the internal requirement for air freight specialists would reduce.  

Secondly, if we consider the recruitment and temping industry where during any recessionary or bottoming out period, companies are more likely to exhibit caution in ceasing or minimalizing permanent recruitment and hedging their bets and delaying the fixed overheads of permanent staff by concentrating on short to medium term temps.   Therefore if an agency has tended to place all of its proverbial “eggs” in the basket of permanent recruitment, then the resulting cliff edge, could well be a disaster unless they are able to switch to the temp market, but will find it tremendously difficult to compete with other agencies who have either a mixture of both, or whom have specialised in temp recruitment.  

Whilst every organisation across every sector will need to conduct its own individual analysis in order to answer the current and future “service offerings” and “markets” in which they operate, so as to gain a clearer understanding as to where they should focus their future resources and efforts and to create a plan going forwards on both issues, at this stage, lets take a view on the current main topic, (other than countering the pandemic itself).  

Furlough – Longer Term Benefit or “Handcuffs?”

The governments job retention scheme, has been both unprecedented and a life saver for many organisations, but it does need to be remembered that the intention of the scheme is to save jobs that “will be required coming out of the COVID crisis” and not just to retain jobs. 

One thing is certain, it is imperative that organisations review their structures in order to focus their activities to meet the post COVID challenges and to cut overheads costs by removing any surplus or ineffective roles which will either not be required or will be in excess of that required in the upturn.  Those who do not, will unquestionably be restricted and operationally and financially “handcuffed” in any subsequent upturn.   Operationally, such companies will have some employees who either; less effective or mediocre, being paid high salaries for roles that could be completed by lower paid and less qualified employees and hence, more likely to make errors and place service standards and the company’s reputation at risk or finally, are simply surplus to the real needs of the company in any upturn.   Financially, such employees will be a burden as they add less value to the customer experience and service, increase overheads and hence, place at risk the likelihood of the organisation being able to competitively price its services or goods.  In any industry, the outcome of organisations failing to effectively focus resources in their service offerings and towards markets that will be expanding post COVID, would be margin erosion, an increasing loss of bsuienss to more competitive and efficient competitors and ultimately, survival is they are lucky, but more likely subject to either a takeover or administration.   

Therefore if organisations do not prepare themselves by reducing unnecessary employee overheads prior to any upturn, then they will be saddled with excessive overheads at a time when they neither have the luxury of time to restructure and rebuild a new team and when due to competition, markets become extremely competitive and margins are eroded, they are unable to financially afford the redundancy programs that are required to secure their ability to service the new market place.     

Therefore, in the short term, the furlough scheme is definitely an amazing benefit, but if organisations assume that the scheme can be treated as a longer term crutch and an excuse not to restructure the company in preparation for the upturn, then the scheme will more likely become handcuffs, both to their survival and any chance of future success.        

Happy hunting!
“The HR Manager”

“BOTTOMING OUT” Phase

While no single individual or organisation can precisely predict the criteria to secure their organisation’s survival up to and beyond the bottoming out phase of a downturn, the creation and implementation of a properly planned product, service and cost strategy for this phase, will undoubtedly increase not only the likelihood of the organisation’s survival, but also secure its readiness and fitness for the upturn phase of the cycle.  Whilst much may well depend on the consolidation of any structural changes implemented during the ”downturn”, there equally needs to be a growing awareness and emphasis on the criteria or “trigger” points, which can reasonably be assumed to indicate the impending upturn.  

Therefore it is critical at this juncture of the recessionary process, to conduct an analysis of the “upturn” indicators or criteria, upon which the organisation can rely to initiate plans to capitalise on the impending upturn.  Without an understanding of these indicators, both general economic and sector specific, the organisational leader and change “drivers” cannot assess at what point it will be most effective to both gain maximum advantage of the upturn, but to also be ahead of their immediate sector or market competitors.

Process

1. Analysis of what are the key indicators in all market sectors in which the organisation operates, which will prove both growing confidence and ascending aspiration within the economy.

2. Analysis of which criteria are more prominent or critical to substantiate growing market and general economic confidence.

3. Assessment and points analysis of when/what point it can reasonably be concluded, that an upturn is firstly imminent and secondly occurring.  While not a precise science, criteria such as an increase in banking activity, the housing sector, recruitment activity, GNP, advertising revenues and marketing spend, all should be “weighted” so as to place an emphasis on how important each factor is viewed in relation as relevant to the sector in which the organisation operates.

“UPTURN” Phase

Yes, “what goes down, must also come up” although it may be difficult to appreciate when organisational managers are fighting crocs and trying to keep their heads simply above or at times near the water level.  However, the first of two critical issues at this time is to have a fully prepared organisational plan with a thorough analysis of the resources and organisational structures required to profit from and realise the maximum potential of the upturn.  The second imperative is for the organisation to maintain a continual watching brief on the economy, so as to know when the “upturn” indicators or “triggers” are either about to be met or have been exceeded.  

The organisational plan requires that management understand the functions, which will be most immediately impacted and therefore required to be highly flexible and able to expand at short notice during an Upturn phase.  Usually this will involve pre-sales and sales activities such as sales quotations etc., and will be specific to the company and particularly dependent upon whether the company is service provider, product based, private or public sector.   The plan will need to set tangible and quantifiable HR statements, such as “one additional internal sales person until additional sales of £250,000 are achieved” or “one additional quotations/tendering administrator until an average rate of £500,000 of tenders are reached for each calendar month”.    Additionally, linked to the timescale of the “upturn” criteria, there will need to be some recognition that you cannot turn on people like water taps, they take time to recruit and to train on product ranges and services.  In an Upturn phase, as has been shown in previous recessionary periods, growth can occur at a fast rate and if in terms of recruitment, the company is caught off guard, then, there will be insufficient time to train new employees or that good potential recruits, will have been recruited by competitors.  Therefore with some roles recruitment processes will need to actually start, 1, 2 or even 3 months before the person is actually required on board.  

Furthermore, the plan will require flexible criteria to be instilled within management, other structures and procedures, in order to minimise any likelihood that the ability to grow will be restricted by either a lack of resources or a lack of authority within the line management team.     For example, there should be clearly designated ranges of management authority whereby supervisors or managers have normal authority to sanction up to £x expenditure, but following confirmation by strategic management that they are satisfied that the upturn phase is imminent or is underway, then the individual authority to implement expenditure decisions, increases to £xy.  While the specific criteria that requires flexibility will differ according to the sector, size and support resources available to the organisation, by viewing and determining these in advance, this will prevent or al least minimise the possibility of opportunities being lost or at least, partially missed, due to delays in authorising changes, expenditure etc.

Other examples of flexibility criteria:-

• Additional PC’s or general expansion of IT systems, albeit not inclusive of major system changes or enhancements.  However, these must be restrained by stringent cost/value ceilings.

• Fast track credit rating systems for new potential customers – increased management discretion.

• Increased marketing spend

• Increased office or manufacturing capacity

• Additional overdraft facilities to be obtained.

The further imperative in an upturn phase, is to secure the resources and allocated members of the senior management team who will be tasked or held responsible for monitoring the general sector and economy “trigger” criteria, so as to ensure that the organisation is able to initiate and implement the changes required to benefit from any upturn.  As they say, the “early bird …..” and for an organisation to wait until the upturn is upon them and self evident, means at the least, that they will be slow to react and are ill prepared to benefit from the opportunities opening up to them.  At the worst a slow start or reaction will mean that the existing competitive advantage between them and their competitors will diminish if they were ahead or will increase to the benefit of competitors, if the organisation was already behind.  To be ill prepared or slow to start, cannot be an option for a strategic organisation whose objective is to become a market leader or to maintain an existing leadership position.

Fundamentally without an on going monitoring process to ascertain when preparation should begin for realising the opportunities that open up, then any actions will be knee jerk and not be based upon proper criteria, albeit such criteria should not be rigid.  This process is not a precise science, but to have nothing prepared, should not be an option at any time for the strategic management of any organisation.

Process

1. As soon as minimum criteria or cycle “trigger” points are reached or exceeded that are relevant to the organisation, then the “short term” resource plans need to be initiated by senior management.  These will include aspects such as gradual changes from rental towards purchase of equipment, moving away from using temporary staff towards the recruitment and training of new employees and reviewing options to expand office or manufacturing space.  

2. Initiation of the first phases of any restructuring of divisions and management in order to anticipate the requirements and impact of the projected growth in both front line and support services in terms of HR resources.   

3. Gradual initiation of marketing, product/service development plans to enable the organisation to achieve its short, medium and longer term strategic plans.

4. Reviewing of the minimum criteria or cycle “trigger” points that when reached or exceeded, will indicate that medium and eventually longer term plans for the organisation, product development and marketing, should be implemented.   

“Buyer Beware”

A note of caution, as if needed!  It is important that those members of the senior management team that are tasked to monitor the trigger points, continue to do so at all times, so as to secure the organisations position in case of a “blip” in the economic cycle, which may necessitate a brief holding of planning and progress, until such time as the economy restarts its upward progress.  What should be self evident is that assuming the foundations of either market effective/efficient products or services are provided by the organisation, then, the ability to react promptly to every phase of the cycle will:-  

• firstly secure the continued growth and profitability of the company, 

• secondly will enable the organisation to take advantage of both market and also any opportunities that occur due to poor, inadequately prepared or indeed failed competitors and 

• finally, will minimise the likelihood of the organisation becoming one of the many who become just faint memories in the market place and keep insolvency practitioners busy.    

Happy hunting!