While many businesses are currently reaping the benefits of a strong economy, the competitive job market and one of the lowest unemployment rates in a century are bringing about a new set of challenges. As teams struggle to find top talent, leaders must identify new ways to achieve optimal efficiency, further allowing their business to grow now while still insulating themselves from economic volatility later.
We surveyed 250 U.S. business leaders (director-level and above) to gauge the adaptability of their organizations to respond to change and economic volatility. We found that business leaders are aware of the importance in preparing for the future and are working to put the proper change management processes in place—but doing so isn’t proving easy.
In a downturn, leaders would focus on operating cost reduction and seizing growth opportunities
While it’s impossible to predict when the next economic downturn will happen, it is possible for businesses to start preparing for when that day might come. Being prepared means knowing your company’s most vulnerable areas of operation and finding ways to increase productivity.
According to our survey, if a recession were to hit within the next 12 months, 72 percent of executives said operating cost reduction would be the top area of focus, followed closely by 70 percent focusing on increasing operational efficiency. Both of these areas were ranked ahead of cost reduction in technology (48 percent) and capital (60 percent).
Interestingly, 50 percent of leaders were bold enough to list “capturing market share” and “acquiring a company” as top areas of focus in a downturn. This bullishness would likely signal companies spending stockpiled cash on discounted acquisitions luring customers away from weakened competitors. In other words, their actions would be different from the Great Recession, when debt and overhead plagued companies at all market levels.
Executives know where they need to gain productivity, and automation can help them do so
One way executives are already looking to drive productivity is through the adoption of automation, with 69 percent of respondents having already adopted some form of automation in the workplace.
Despite publicized concern that automation puts jobs at risk, executives and managers alike are excited by the possibilities this technology has to offer. Our March 2018 survey found that only 4 percent of managers fear that automation will replace their jobs. What’s more, an overwhelming majority of managers (97 percent) agree that automation will allow them to do their jobs more effectively and let them spend time on more challenging work, and 90 percent of executives say the same.
If you’re not planning ahead, you need to start
Through the findings of our survey, we know that companies are assessing their areas of vulnerability and implementing tools and processes to help alleviate some of the pain points within those areas. For companies that seek to not just survive an economic downturn, but thrive, a formal plan that includes how to increase operational productivity now, as well as over the next 12 months, needs to be put in place.
Luckily, many organizations are already on their way. Our survey found that 45 percent of executives believe their organization is properly prepared or has the proper plans in place to adapt if a recession were to hit in the next 12 months. And 59 percent say their leadership team has reviewed and/or updated these plans in the past year.
Businesses learned a lot from the last recession, but there is still work to be done to manage change
Recession or not, executives cite a flurry of factors that could significantly impact their businesses: 27 percent say tax regulation is the policy that will impact their business most within the next two years, and 25 percent point to cybersecurity/data/privacy regulation. But, rather than fearing uncertainty or change, many executives (46 percent) are planning to invest more in their businesses. The key will be ensuring they are investing in the right places.
Overall, our survey shows that despite inevitable change to the business landscape over the coming years, companies are confident about the future. What will be important for leaders to consider is that if they are looking to achieve meaningful, positive change within their organization to prepare, they need to start planning now or they will be left behind.