2020 hindsight: five lessons as we begin 2021
Innovative companies can apply what they’ve learned this past year to excel in the months ahead
While many companies are still dealing with the acute impacts of the economic and social disruption of 2020, the Leeds Business Confidence Index indicates Colorado business leaders are confident the state will continue to outperform the national outlook in the first quarter of 2021.
Innovative companies can apply what they’ve learned this past year to excel in the months ahead.
Here are five ways that companies can build resilience, and weather future challenges, while being better positioned to capitalize on emerging opportunities.
Make cybersecurity a business-critical priority
You have seen the headlines and cybercrime is more of a risk in today’s remote work environment, so companies must prepare. Criminals realize that workers are less protected when working remotely and are launching malware campaigns targeting people with insufficiently secured devices. To reduce vulnerable attack surfaces in your company, 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, 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.
Financial discipline isn’t just for hard times
A thorough, proactive review of internal processes and key relationships can help protect your company. For example, cash flow issues are a common source of business failure, so it’s important to examine your supply chain and customer base for vulnerabilities that could impact your business.
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.
Don’t let uncertainty deter you from growth
The Mergers and Acquisitions (M&A) market shifted in 2020 due to the impact of the coronavirus and widespread digital transformation. Companies with strong 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 facing your company right now, whether it’s market expansion, reaching a new customer segment or digitizing more of your business model. Consider potential hurdles you’ll face in pursuing these opportunities as it will help you formulate an actionable, prioritized plan specific to your situation.
ESG strategy is no longer just for the big guys
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 percent) and something that builds a strong company culture (76 percent).
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 ETFs 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.
Invest in your employees
Just as you’re taking steps to safeguard cash flow and business operations, it’s essential to protect the wellbeing 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 today. The percentage of employees who rate their financial wellness as good or excellent declined from 61 percent in 2018 to 49 percent in 2020, and as many as 57 percent 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 healthcare costs, budgeting, saving for college and managing debt.
Coronavirus created unprecedented challenges for companies, and executives bravely faced new trials. While no one can predict what’s to come in the remaining months of 2021, these lessons from 2020 can help companies reignite growth and plan for financial success this year.
Raju Patel is the Senior Vice President and Market Executive of Global Commercial Banking and Denver Market President for Bank of America.