Talk of recession is growing in the US. Google searches for the word recession were more active in December 2018 than they have been over the past seven years1. 48.6% of CFO’s recently interviewed in a Duke University Poll2 believe there will be a recession by the end of 2019.
This top of mind issue has many leaders in an uncomfortable position made worse by a lack of risk protection. The cost of doing business without a strategic economic recession plan puts companies at risk of insolvency, a chance most leaders do not want to take.
Leaders are now executing digitization projects for many aspects of their businesses as an economic risk mitigation strategy. They see that by using today’s technology, they are actively softening the pressures of a recession by reducing waste, reducing errors, increasing the value of their human capital, and increasing staff morale. These four components are a strategic advantage to protecting their margins, leaving them better prepared for an economic shift.
Many leaders spoke of moving away from traditional email and paper communications and using more transparent forms of information sharing. They spoke of how immediate, clean, and complete data sharing reduced both physical waste and wasted time of staff and management. They saw how greater information integration between the office staff and operations reduced both manufacturing errors and turnaround time.
Leaders have been most invested in reducing interdepartmental errors which many noted as long standing issues. Through digital investments, some of the most cost intensive errors either no longer occur or are apparent earlier in the process. They said how through something as simple as appropriate input captures from the sales department reduced significant errors through every other department the order touched.
Increase Value of Human Capital
Leaders noted that by increasing data and transaction transparency, workers had more time to pursue projects that helped the company in valuable ways. Office staff were able to invest less time in reducing errors and assuring work flow and moved to more value-add roles for companies.
Increase Staff Morale
Investments in employee morale have incalculable bottom line benefits, per the leaders interviewed. Leaders talked about how investing in digital technology and moving people into more interesting jobs, helped increase employee contentment in both their positions and their relationship with the company. They note that through their companies making internal improvement investments, it drove morale and elevated productivity.
Although an economic recession is unpredictable, there are active changes leaders can make to help protect their profit and their company. By investing in digital technologies now, you can remain in business more confident that you are well positioned for any turn of the market.
- Google Trends data
- Duke University | Duke CFO Global Business Outlook: https://www.cfosurvey.org/press-release/recession-considered-likely-by-year-end-2019/