Business resilience: How employers can create the right culture

Business resilience has never been so important.

Covid and lockdowns have been followed by war in Europe and the disruption of supply chains, all set against a background of rising inflation, increasing energy bills, the battle for talent and the constant threat of cyberattacks.

How can small businesses become more resilient?

In this article, you’ll learn what resilience means for businesses, how to identify risks and what you can do to make particular elements of your business more resilient.

Here’s what we cover:

• Creating a culture of business resilience
• Risks facing small businesses
• Making businesses resilient
• Resilience and employee wellbeing
• 9 practical actions to take to be resilient
• Being proactive with business resilience
• Plan your resilience strategy now

Creating a culture of business resilience

When it comes to creating a culture of business resilience, it’s worth considering that it is less a process and more of a state of mind.

It means being constantly alert for threats and being ready to respond quickly.

Resilient businesses are those that are agile and can adapt quickly, with alternative suppliers, distributors, routes to market and ways of working ready to go should they hit an unexpected problem.

Disruption can come from a wider variety of directions than ever these days, including climate change.

In a paper published at the end of 2021, the London School of Economics argued that: “Many small and medium-sized enterprises (SMEs) in the UK are ill-equipped for an unpredictable future, and are making business decisions today which will ‘lock in’ future risks from disruption like floods or heat waves.”

It quotes analysis of Ordnance Survey data which shows that almost 8% (7.82%) of new business premises in England and Wales were built in medium or high-risk flood areas.

Risks facing small businesses

According to a survey produced by insurance company Allianz, based on the insight of 2,650 risk management experts from 89 countries and territories, 44% cited cyber incidents as the most important global risk with 42% pointing to business interruption such as supply chain problems.

Just as global supply chains were returning to normal following the impact of Covid and lockdown, the war in Ukraine with its resulting sanctions on Russia and then the aggressive response by the Chinese government to a new outbreak of the pandemic in Shanghai introduced a whole new world of uncertainty.

Meanwhile, new technology is constantly disrupting businesses – introducing opportunities for some and rendering the whole business model of others redundant.

Could your sector or your own business be next?

Brexit has caused legislation and regulation for businesses to evolve more quickly and unpredictably especially when it comes to imports and exports.

Difficulties with transporting goods to the European Union (EU), exchanging data and recruitment of staff from outside the UK means businesses need to be more resilient in this area.

ESG (Environmental, Social and Governance) legislation is constantly changing and so is the risk of being accused of “greenwashing” or having procedures and supply chains that are not sustainable.

The use of social media by increasingly vocal and demanding customers means any business could find itself at the centre of a “Twitterstorm”.

If that wasn’t enough, there’s always the ever-present risk of fire or flood.

Would your business be able to continue to trade if your main office was out of action or you couldn’t use your workshop, factory or warehouses?

Making businesses resilient

Businesses need to be resilient so they can respond quickly in the event of any of these threats impacting upon them.

Resilience means that even if something does go wrong suddenly and unpredictably, you’ll be able to retain staff and keep them motivated.

Neither should you need to let down customers.

This means that you’re finally up and running again, you won’t find that they’ve moved to another supplier.

Of course, your finances might take a hit but if you’re resilient and agile this won’t be a knockout blow.

Suppliers and other stakeholders in your business will see that you’re managing the situation and so they’ll have confidence in you and stick with you.

Making your business resilient requires a shared goal and a sense of direction for all staff.

When times are hard, and threats could come from any direction, it’s more important than ever that all of your team are aligned and know exactly what the company’s purpose is and what it needs to do to be successful.

This means that if a department or even the whole business gets knocked off course, you know where you’re going and you’re ready to get back on your feet to continue the journey.

It’s also important to ensure that everyone shares the same values and that staff feel supported.

If they make a mistake caused by a knock to the business, will they get help rather than a reprimand?

If they find the changes brought about by returning to the office, adopting hybrid working or responding to an external threat are too challenging, will they receive adequate support and guidance?

Similarly, worries about rising energy bills and even concerns about the global political situation can take their toll and employers need to be ready to act to ensure that their staff are resilient themselves.

Resilience and employee wellbeing

“Employers need to understand and accept the new landscape they are in,” says Mike Jones, founder of Better Happy, an employee wellbeing and engagement consultancy.

“To thrive in this new environment, we need to put the same emphasis on our employee journey as we do our customer journey.

“We need to invest in the whole person, lead with empathy and show our people that we are genuinely invested in their development.

“When we do this we not only attract and hold on to great staff, but we increase engagement, productivity and profits as a by-product.”

Collaboration is an essential building block in creating a culture of resilience, as is communication.

To discover how committed your teams are to the business, you can carry out some research to find your Employee Net Promoter Score (eNPS).

This scoring system helps employers measure employee satisfaction and loyalty.

Employees are usually asked to rate, on a scale from zero to 10, how likely they would be to recommend your company as a place to work. They’re then asked why they gave this score.

By looking at how many employees gave your company a low score (from zero to six) you can work out how many detractors you have.

Those who gave you a middle ranking score (seven and eight) are counted as neutral.

Anyone who scored the company highly (nine and 10) are regarded as promoters.

By subtracting the percentage of detractors from the percentage of promoters you can work out your net promoter score.

An eNPS survey is easy to carry out and it provides you with a clear, quantitative snapshot of how your employees feel about your organisation.

Including specific issues such work/life balance, salary and training opportunities give more detailed information to help you to make informed decisions.

Carried out every two to three months, your eNPS will allow you to track concerns so you can take action quickly to boost morale and engagement, and make your company more resilient in terms of your employees.

This ensures your employees, customers, suppliers and the communities around your business know what’s happening if you’re hit with a problem and, even more importantly, what you’re doing about it is essential.

There are a number of practical actions that you can take to improve your business resilience.

9 practical actions to take to be resilient

1. Be prepared to work remotely

You should be ready to work remotely.

Already, most companies are adapting hybrid working models but employees still have to come into the office for certain tasks.

Ensuring that technically and managerially you can continue to service customers, develop new products and carry out routine tasks such as paying bills and salaries, carrying out appraisals and communicating with suppliers are all essential.

systems and management need to be fully capable here. Our payroll solution for small businesses takes the headache out of getting your payroll right, so you can focus on strategic goals and enhance your resilience.

2. Get your employees involved

When problems occur or times get tough, it’s more essential than ever to listen to all of your employees.

Everyone, not just the senior leadership team, has something to contribute. Those working on the shop floor or in more junior roles might well have constructive, practical advice.

Some of these ideas might come as a complete surprise to those further up the management structure.

3. Listen and learn

Related to the point above is ensuring that you’re listening to employees at all levels and communicating with them.

The challenges of the pandemic and lockdown prompted many managers to want to learn new skills so they could navigate an unfamiliar business landscape.

Continuing and expanding this learning culture should be encouraged for all employees.

4. Be clear on your business’ financial position

Being resilient means you need to have more accurate and updated knowledge of your financial position than you might normally.

Constantly monitoring your bank balance and cash flow as well as your liabilities will allow you to make better informed decisions, enabling your business to become more agile – and to be ready to pre-empt financial difficulties.

5. Take care of yourself

There’s been a growing interest in physical and mental wellbeing in many companies as employees seek to get the best from their employees and encourage loyalty.

In times of uncertainty, it’s often tempting to let these concerns slip down the agenda.

However, it’s during these times that you and your employees need to be at your best, fighting fit.

To improve resilience, ensure nutrition, rest periods, exercise and activities such as mindfulness and mental health training are ramped up rather than being dialled down.

6. Turn setbacks into opportunities for growth

An important way to make your company more resilient is to foster an environment in which setbacks are seen as learning experiences.

Whenever something goes wrong, the following question should be asked:

What can be learned from this experience?

A no-blame culture, for instance, is one in which employees are encouraged to celebrate their successes and share their mistakes in a way that helps identify solutions and best practice.

Mistakes, though obviously not encouraged or ignored, can be seen as an opportunity to learn rather than a reason to blame.

7. Develop and maintain strong relationships

It’s during difficult times that relationships become more important than ever in business, be they with employees, customers, suppliers, local communities or regulators.

Ensuring your resilience or crisis plan includes ways of working closely with these groups and communicating effectively with them is essential.

Developing strong, constructive relationships with shared goals and regular, transparent communication will help to develop resilience.

8. Protect and manage your supply chains – and consider suppliers too

This is an essential element of business resilience.

You can start by conducting a vulnerability audit including a risk analysis to identify the weakest links in these chains.

This will help you focus on where you need to find potential alternatives routes and suppliers.

You can also think about diversifying your supplier base so you spread your risk. If one supplier goes down, then you’ve got alternatives to rely on.

Developing a plan to keep customers and other interesting parties up to date with any problems with your supply chain and what you’re doing to overcome them is important.

9. Invest in cybersecurity software

According to a survey by Close Brothers Asset Management, half of small and medium-sized enterprises (SMEs) in the UK have suffered a cyberattack.

However, just over half of them (52%) have invested in staff training to help prevent attacks.

Investing in cybersecurity software such as antivirus and anti-spyware programmes as well as firewalls, which block unauthorised access to your network, will improve your cyber resilience.

A virtual private network (VPN) can improve privacy and hide your essential information.

Being proactive with business resilience

Colocation is normally used to refer to a place to host a data centre or server as part of cybersecurity and IT resilience, but it can also be thought of more widely.

It’s important to have a plan for people to work from home or from another location should your office suffer damage by fire, flood or any other risk.

As well as the physical elements of this change in working, are your people management systems set up to cope? Do you know of alternative warehouse space?

Is there another venue nearby that you could use to continue to manufacture or fulfil orders?

For David Brennan, CEO of Nexus Vehicle Rental, being proactive and forward thinking has been an important factor in ensuring that his business is resilient.

He says: “Although today’s challenges are unpredictable, many do stem from well-understood economic trends, making it possible to engage proactively with developing challenges – if the business can correctly identify and understand them.

“Business leaders can work with advisers to prepare for worsening economic conditions,” he adds.

“If a crisis requires scaling back operations, reducing the size of the workforce, or adapting service-level agreements, it is better to consider these in advance.

“If the situation improves, these plans can be discarded but if the worst does happen, the business will be prepared and react in a calm, measured way.”

Chris Middleton is the Operations Director at Quirk Solutions, a UK-based management consultancy that has helped some of the country’s largest businesses to overcome challenges agrees.

He recommends stress testing or war gaming your business’s resilience.

Chris says: “We really focus on cognitive diversity in our sessions to maximise the perspectives and skill sets working against a problem.

“In a room of 15 people, you will probably find 11 different reasons why a plan might fail. From there you can prioritise what the most important issues are.”

All too often, companies fixate on a risk which is one they can easily marshal the skills and resources to manage.

“What we regularly see emerge from our exercises are risks that the company has no idea what to do about,” Chris adds.

“Risks which are poorly understood require novel capabilities to address, and which emerge quickly are the ones likely to prove the most dangerous.

“By doing exercises such as this, organisations can prepare for the issues that they lack the skills to be able to deal with.”

Plan your resilience strategy now

Any company’s greatest asset is its people and ensuring they’re both physically and mentally looked after is essential to ensure resilience.

The pandemic has shone a spotlight on mental health, wellbeing and what it means to live a good life, points out Maryam Meddin, founder & CEO of The Soke, a mental health and wellness clinic.

She says: “Organisations need to develop a clearer and more honest recognition of their employees’ experience in order to provide a healthier environment with a focus on personal growth.

“The way we feel at work has a big impact on our performance. We are motivated to think, learn and create when we feel seen, appreciated and understood.”

Maryam adds: “Post-pandemic, we have an opportunity to rebuild our organisational cultures in ways that incorporate our employees in the strategic conversations.

“Through this gesture of inclusion, we demonstrate a new commitment to creating a place where partnerships are nurtured and where senses of shared purpose can begin to take hold – a place that’s sustainable and resilient to future adversity.”

Few of us like to dwell on doom and gloom and so it can be tempting to put off planning your business resilience.

However, taking time out with your teams to identify risks and threats and thinking about how you’d mitigate them is essential.

Equally important is ensuring that people management, systems and procedures and other day-to-day aspects of running your business take into account the importance of being resilient.

And here’s some final tips from our group of entrepreneurs on business resilience:

• Carry out regular eNPS surveys.
• Work with advisers to prepare for economic challenges.
• Make the most of cognitive diversity and avoid group think by seeking ideas from a wide variety of sources.
• Create an environment with a shared purpose where partnerships are encouraged.