Periods of extended high inflation pose an existential threat to many businesses. Variables such as contract flexibility for both production inputs and sales, buyer demand volatility, adverse supplier impacts as a result of price increases, along with potential resulting delays in the production cycle all present an interwoven matrix of risks that companies must understand and address in order to survive and prosper. Inflation is an economic shock that causes prices to increase and often triggers central bankers to engage in mitigation strategies that tend to have downward impacts on consumption and investment. These shocks can directly impact customer demand and a company’s bottom line. Added concerns about employee compensation and morale during inflationary times also pose a threat to maintaining operational capacity and retaining institutional knowledge and must be addressed as the entity works to overcome the pressures of rising prices. Furthermore, companies must forecast and understand possible impacts to their customer-base and adapt operations timely to ensure that they continue to serve customers optimally while minimizing reputational risk as they adjust to the changing environment.
There are 5 key Business Continuity Planning activities that are relevant and key to ensuring the highest level of preparation and to building organizational resilience during inflationary times. It is recommended all private and public entities undertake the following activities to ensure survival and perhaps even to prosper in these most challenging times:
- Perform a Business Impact Analysis – Understanding key roles and responsibilities, critical resources, vendor relationships, and interdependencies within your organization. This analysis will provide the organizational footprint that is central to developing a robust strategy to respond to any potentially disruptive impact.
- Conduct Critical Path Analysis – Analyzing key inputs and outputs and tangential relationships, noting critical interdependencies and possible single points of failure. As the organization plans, it must reinforce these areas to avoid potential catastrophic outcomes. There are numerous historical cases where seemingly secure companies failed suddenly as result of a single input being temporarily unavailable or being exploited by a competitor.
- Develop Succession Plans – Identifying critical roles and responsibilities and developing succession strategies that would allow a successor to stand-in whenever a primary functionary is unavailable for any reason. It is, hence, important that companies cross-train personnel on key roles and responsibilities to ensure the organization can retain key know-how in any adverse event. Whenever there is risk of operational upheaval, this becomes particularly critical. Companies must take every precaution to retain institutional knowledge and to minimize the risk of adverse supply chain or quality impacts.
- Build a Communications Strategy – Developing plans that include triggers to prompt communication, ensuring organizational communications are properly vetted and channeled, and being proactive at all times is key to an effective communications strategy. There are 4 key prongs to consider:
- Overall Public Relations: Use press releases and press conferences as appropriate to notify clients and the interested public of any set of situations, with sufficient detail about the company’s planned approach for dealing with it. This is key to building confidence, controlling messaging, and minimizing adverse outcomes in the case of a business continuity impact.
- Suppliers: Wherever there are potential supply chain impacts it is important to communicate timely and regularly with key suppliers to ensure that key inputs are available, or alternatives identified, as needed. Organizations may also consider storing excess supply for durable inputs that present a potential risk of single point of failure.
- Customers: Communicating directly with customers about what is going on and what you are doing about it will help to retain customer confidence. Businesses should ensure that their customer relations strategies are practical and include countermeasures to foreseeable impacts.
- Other Key Stakeholders: Tailored communications may be important to relationships with stakeholders, including employees, vendors, strategic partners, government, and neighbors. Companies should analyze their relationships and develop customized strategies for dealing with stakeholders that are key to their operations.
- Incorporate an Employee Support Plan – Include an Employee Support Plan as part of your business continuity strategy. Empathy, timely communication, and helpful support will blunt the risk of untimely turnover and will build goodwill that will help with employee morale. Consider employee support actions that could be taken for a variety of impacts, including inflation, and be sure to act timely to address employee needs and concerns.
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