Many of the challenges we’ll face in 2023 are largely the same as last year: increasing cost of doing business, supporting our people through the cost of living crisis, trying to ignite growth in the economy, and securing investment when economic policy is going against us.
During uncertain times, authenticity, humanity, agility and balance are crucial to surviving—and thriving.
The authenticity we built up during the pandemic, where we admitted that we didn’t have all the answers and businesses showed their true colours in the way they treated employees, will be just as important this year as we continue to retain and attract the best people.
We were great at checking in with our people during the pandemic, but external pressures both short and long-term still affect our teams: from train and school strikes, to anxiety and mental health issues. Leaders must demonstrate real humanity by ensuring everyone has the support and flexibility they need. People who feel genuinely invested in will genuinely invest in their work, their clients and the business they work for in return.
On the level
Balance is also key. Of course, every CEO would love to provide their people with big bonuses and pay rises, particularly in the midst of a cost-of-living crisis. But for many businesses, balance sheet resilience is lower than before the pandemic. From maintaining jobs and paying rent bills to home-working tech and late client payments, Covid-19 took a lot of capital, and while it’s important to look after our people in the shorter term, we must also ensure jobs remain secure beyond that.
The greatest lesson learned in 2022, however, was the need to be agile. At the end of 2021, businesses across the country would have sat down to plan their forecasting and strategies for the year ahead—little knowing there would be a war in Ukraine, two budgets, record inflation and two new prime ministers.
With so much uncertainty, it’s almost irrelevant to plan in 12-month cycles. Instead, leaders should consider shortening planning cycles to monthly or quarterly and ring-fencing a large contingency budget to cover unexpected costs and, crucially, enable them to take advantage of opportunity too. For example, we ring-fence a ‘Dragon’s Den’ pot that can be spent on great ideas, or calculated commercial risks that we didn’t—or couldn’t—plan for, but could pay dividends, as well as a separate pot for potential cost increases.
Resilience and risks
Recessions continue to provide the opportunity to optimise commercial risks: by understanding how much resilience you have in your balance sheet, you can make a calculated risk with capital investment.
Fortune favours the brave, not the foolish, and so it’s important that you take a holistic view of your business. Is there a brand, product or service line where you can afford to take a risk, while other areas remain steady? Do you have the management structure and autonomy in place that empowers your people to spot and action a great opportunity? Diversity of thought and experience at the top is crucial for quick, responsive and reliable decision making when opportunity or crisis arises.
Last year was full of surprises and, while none of us has a crystal ball, it is possible to spot trends in economics. If you look back in history, you’ll notice that economic shock (like the war in Ukraine) is almost always followed by strikes, shortages and peak inflation. Conversations with peers, keeping an ear to the ground and taking a closer interest in economics and the expert commentary in this field can help you and your business prepare for potential challenges and opportunities.
In times of uncertainty, it’s always good to reconnect with your purpose and your ‘why?’, as well as revisit your values. Our values are ‘ACT Brave’—Authentic, Collaborative, Trusted and Brave—all of which I believe have become even more relevant today than when they were established in 2019. And never underestimate the power of mindset. You cannot fail if you take a commercially optimised risk: either you win, or you learn.
While it might sound like a contradiction, leaders have to plan for the unknown. Contingency, agility and calculated commercial risks all play into growth. And, as Winston Churchill said, ‘Never let a good crisis go to waste,’ because change will inevitably uncover fresh insight and opportunity.
Sarah Walker-Smith is CEO of legal and professional services group Ampa