These days, it seems like we’re never too far away from the next crisis. It can be difficult to keep track of all the changes taking place in wider society. We have identified five areas that all businesses should be considering now, and in the future.
Growing businesses should be fast, reactive, agile and forward-thinking. One way of ensuring this is through cloud business.
Costly IT servers, hardware and software solutions are becoming a thing of the past. The cloud and software-as-a-service solutions are revolutionising the way businesses operate, for everything from enhancing individual accounting functions to full IT infrastructure. Cloud computing allows individuals to store and process data in a privately owned cloud server.
Businesses are waking up to the efficiencies that cloud computing has to offer. We’re barely touching the surface, and yet the measurable impact it is having on business cost and profit margins already are extraordinary.
2. Data and cyber-security
A well-thought out, and developed, cyber security plan tends to translate into a business that can identify and react appropriately to the many factors affecting their work. Control of their tech estate is key for any well-managed company.
This is increasingly relevant: the recent implementation of the GDPR affects just about any economic entity, regardless of its scale and location. Any company that has its own payroll accounting department or a comprehensive customer administration system is covered, as are all companies that request personal data from customers.
The changes are far-reaching: it is almost unthinkable to consider a company existing without the personal data of customers, suppliers or employees - and the existence of such data should trigger a review to ensure GDPR readiness.
At a consumer level, AI can already be seen in products with domestic use (such as Amazon’s Alexa personal assistant or the driverless cars currently being developed by Tesla, BMW and Toyota and others).
The potential application to business is equally significant: AI is increasingly automating manual processes, increasing efficiency while driving down cost and reducing the risk of human error. It also allows businesses to focus their time and effort on the activities which generate the most value.
In future, machines are expected to undertake the cognitive aspects of tasks rather than purely mechanical elements, potentially threatening roles in professional services. Jobs are likely to be lost to technology and artificial intelligence.
The removal of lower to middle skilled jobs will be part of a number of business models. The better businesses will be those that do not lose that workforce, but rather upskill them to support these emerging technologies.
4. Employee benefits
Strategic employee benefits reviews have not been top of recent to-do lists for many human resources or finance directors. Benefits are often assessed on a ‘cost’ basis, i.e. looking for savings where possible, particularly in times of economic uncertainty.
However, firms also acknowledge the importance of both financial and non-financial rewards in attracting talented people, responding to the aspirations of millennials through a greater focus on training, career development, mentoring and appraisals. Today’s workplace has four generations working side-by-side, so it’s crucial to establish whether existing benefits are still relevant to your employees.
You should carry out regular reviews of your employee benefits package to determine whether it offers superior benefits compared to your peer group or whether you’re lagging behind your competitors, subsequently risking increased staff turnover and failure to attract the highest calibre staff.
This crucial exercise can reveal liabilities and uncover cost savings, along with simple but effective strategies to increase employee engagement. A clear benefits and communications strategy supports organisational goals including staff attraction, retention, productivity, well-being and corporate profitability.
5. Business Continuity Planning
A successful business relies on key people to drive it forward. So what happens when one falls seriously ill or dies? Would the business survive the financial impact of such a loss? What strategy is in place to protect the business should such an event take place?
Whilst all businesses have insurance in place for business premises or key machinery, often the most important asset of the company is not covered – its people.
So, what is a key person?
Anyone whose absence would have a significant impact on the future profits of the business. Normally you would think of the owner(s) or partners as key but there are others whose loss could have a financial impact to the company. A Salesperson, Technical Expert or R&D Specialist may be central to the operation of the business too.
How do you quantify the risk?
To be able to manage the risks associated with the key person, there must be an understanding of the financial impact the loss any one individual might have. There are different ways to calculate this; basic multiple of salary, a proportion of payroll or an actual impact analysis are all methods of assessment.
What can a company do to protect itself?
Once the risk has been quantified, appropriate strategies and insurances should be used to mitigate this risk.
A business can use insurance products to protect their business. Sometimes it can be complicated, the structure and taxation can often cause confusion. Broadly, the products can be split into Continuity or Succession planning.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.