While many companies are still dealing with the acute impacts of the economic and social disruption of 2020, innovative companies will apply what they’ve learned to excel in 2021. Here are five ways that companies can build resilience and weather future challenges while being better positioned to capitalize on emerging opportunities.
A thorough, proactive review of internal processes and key relationships can help protect a company. For example, cash-flow issues are a common source of business failure. It’s important to examine your supply chain and customer base for vulnerabilities that could impact your business. In addition, review customer payments to identify small issues before they become larger problems.
Cutting expenses in a defensive and reactive posture can have unintended consequences. Instead, create “what if” scenarios now and plan allocations for each. If the time comes, you can respond with a thoroughly vetted plan.
The M&A market shifted in 2020 due to the impact of the coronavirus and widespread digital transformation. Companies with substantial working capital and cash reserves could have a significant opportunity to put that to work through a merger or acquisition, especially if they have limited debt.
If your company is not in a position to pursue M&A activity, develop a strategic plan for future growth. Start by identifying the top opportunities, whether it’s expanding into new markets, reaching a new customer segment, or digitizing more of your business model. Consider potential hurdles you’ll face in pursuing these opportunities. It will help you formulate an actionable, prioritized plan specific to your situation.
Cybercrime is more of a risk in today’s remote work environment, so companies must prepare themselves. Criminals realize that workers are less protected when working remotely. They are launching malware campaigns targeting people with insufficiently secured devices. To reduce vulnerable attack surfaces, look to strengthen mobile device management, ensuring security tools and protocols are in place.
Companies should also update and enforce a security policy for remote connectivity. Policies should provide guidelines on the safe use of public Wi-Fi. A policy should prohibit workers from transmitting sensitive information and require the use of VPNs and well-protected home routers. Finally, cybersecurity training can teach employees how to put essential safeguards in place while keeping cybersecurity top of mind across the company.
Focus on environmental social and governance (ESG) is far from a feel-good, concessionary strategy — it creates a culture of responsibility, sustainability, and innovation and can be directly linked to a company’s long-term outlook.
Best practices for strengthening your company’s ESG commitments include disclosing comprehensive ESG information and helping investors understand how to interpret it; having a diversity and inclusion program; and ensuring diverse representation on the board of directors, particularly as a strategy for attracting top talent. Employers surveyed in our 2020 Workplace Benefits Report cite diversity and inclusion programs as essential for retaining talent (73%) and something that builds a strong company culture (76%).
Along with the social benefits these actions bring, looking out for the good of society is good for companies, too. During the market fall in March 2020, $8.2 billion was pulled out of equity exchange-traded funds while ESG funds tracked by BofA Global Research continued to attract inflows, suggesting that fund managers faced less pressure to sell stocks with strong ESG characteristics.
Just as you’re taking steps to safeguard cash flow and business operations, it’s essential to protect the well-being of your employees. Management should support employees even more holistically and proactively than before. Leaders can schedule more frequent communications with staff and play an active role in broader wellness areas like financial stability and mental health.
Comprehensive wellness programs that support employees’ physical, mental, and financial health are more important than ever. The percentage of employees who rate their financial wellness as good or excellent declined from 61% in 2018 to 49% in 2020, and as many as 57% of employees feel their well-being has a great impact on their productivity, which could have major ripple effects on a company’s health.
Financial wellness tools and education should cover a range of needs including saving for retirement, planning for health care costs, budgeting, saving for college, and managing debt.
COVID-19 created unprecedented challenges, and executives bravely faced new trials. While no one can predict what’s to come in 2021, these lessons from 2020 can help companies reignite growth and plan for financial success in the year ahead.
Bob Arth is executive vice president and Northeast region executive, global commercial banking, for Bank of America.
© 2020 Bank of America Corporation