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COVID-19 AND REPUTATION: A NEW REALITY FOR BUSINESS?

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By Alberto Lopez Valenzuela, Founder and CEO, alva, and author of The Connecting Leader

 

While there is much talk of the world “returning to normality” with the worst of Covid-19 now hopefully behind us, it seems unlikely that society will allow businesses to simply revert to how they behaved before.

Having been plunged into uncertainty by Coronavirus, businesses have been rapidly rethinking their stakeholder management priorities, conscious that the corporate reputation rulebook is being rewritten. Some are already showing they have learnt from these valuable lessons as the Black Lives Matter crisis unfolds.

My assessment is that we’re now in the middle of a second distinct phase of the changes initiated by Covid-19, and will sooner or later be moving into a third, fourth and final phase. And after that, a new reality will emerge.

Each of these phases has seen the needs of different stakeholder groups come to the fore, prompting corresponding corporate responses.

 

Shock and survival

Roughly corresponding with the second half of March and most of April, the early Shock Phase involved an outpouring of altruism from businesses in all sectors, committed to doing the right thing, whatever the cost.

The stakeholder groups that were the focus of this charitable period were society at large, the local communities surrounding a given business, and key workers, especially those in healthcare. Empathy and solidarity were the order of the day; resources were redirected into healthcare, to support the vulnerable with donations, and to allow payment holidays.

In late May, businesses moved into the Existential Phase. Here, the stakeholders most in focus were company employees, as decisions had to be made about whether furloughed staff could be retained, and how best to ensure job security.

In making pragmatic decisions for their survival, the importance of each company’s people – and who could and could not do be done without – had to be weighed up. This evolved into a focus on employee health and wellbeing, as firms attempted to ensure that staff were protected, safe and comfortable as they moved to reopen their businesses.

 

Recovery, then letting our hair down

Around late June, we’re likely to enter the Recovery Phase, with businesses turning their attention to the chance to reopen and recoup some of the losses experienced during the worst of the crisis.

This will mean a refocus on financial stakeholders – companies will seek to assuage shareholder concerns on their viability. Decisions over whether to pay out dividends or channel cashflow back into the business will become front-page news, while firms will also look to project an image of ‘business as usual’, ahead of this actually having been realised. Shareholders’ needs have come under scrutiny, and their dominance as the primary stakeholders in business decisions has been seriously questioned.

Sooner or later, we’ll enter the Pent-up Demand Phase. After suffering the deprivations of lockdown, demand for pre-Covid luxuries will soar. People are likely to feel they deserve that big night out, the rush of retail therapy, or a long-awaited holiday abroad. And as financial hardships will mean many consumers’ spending power is reduced, companies will need to be especially creative as they jockey for position to be the beneficiaries of this wave of spending.

We might repeat the above cycle, or parts of it, more than once.

But in time, we will get to the New Reality, a post-pandemic take on capitalism that may well rewrite the rules of business as usual. Through the phases of business response to Covid-19, it was demonstrated that companies were generally able to rebalance their stakeholder focus as events shifted.

The virus has proved that the business world is able to step away from hierarchical shareholder-centric capitalism in which financial stakeholders are always the top priority, and move towards a model in which stakeholder prioritisation is fluid and based upon shifting needs.

This more stakeholder-focused model would mean businesses positioning themselves as part of society, with equal responsibilities to employees, customers, the community and their shareholders, rather than solely as a conduit for channelling profits to investors.

It would build on the growing emphasis on environmental, social and governance (ESG) issues, and we may begin to see increased finance streams being redirected into fair employee pay, community programmes and enhanced customer service.

The trade-off for shareholders on the receiving end of reduced dividends is simple, and very attractive – a stake in more robust businesses that are better able to survive whatever the future brings.

If so, the Coronavirus may ultimately be remembered as the catalyst for the realisation of a fairer, more enlightened form of capitalism that allows society and the planet as a whole to thrive.

Business

TOP TIPS FOR BOOSTING YOUR CASH FLOW AND BUSINESS IN 2021

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Ian Gass, CEO at Agitate

 

Many small businesses are still dealing with the disruption caused by the pandemic. Improving financial performance is most likely to be at the top of agenda, and a good place to start is reviewing cash flow. No matter what the product or services a company provides or the size of the business, cash flow still remains king.

Research has shown that 38% of small business owners who have suffered cash flow problems have been left unable to pay debts. With 1 in 7 small business owners having been left unable to pay employees because of cash flow issues, this equates to a huge 2.2 million people in the UK not being paid on time.

 

The importance of positive cash flow

Profit has traditionally been seen as the most important measure of an organisation’s financial performance. However, the focus is increasingly shifting from the income statement to the balance of cash inflows and outflows. Prioritising profit levels reflect long term fiscal health, but it does not necessarily mean that a business can pay its bills on time and survive in the short term.

Ian Gass

Sudden drops in demand prove how keeping an efficient cash flow balance is essential, and can expose shortcomings of currently used solutions. When reviewing your cash flow, you need to look at ways to get more money coming in and better manage the money that is going out. Here are a few ways to improve cash flow management and see positive changes in a short period of time.

 

  1. Efficient forecast

It is important to be able to compare actual income and expenses with those that are in the pipeline, as it helps to determine which area of business is under performing or generating unnecessary costs. Start by looking at your projected income and expenses for the next three months, don’t wait until you receive a bill to realise there are not enough funds to cover it. An easy way to overcome this issue is a free cash flow template available online.

 

  1. Terms and Conditions review

Making sure that T&Cs are clear and comprehensive not only provides your business with a protective layer, but also makes customers understand when and how the payment is expected, and the process and penalties for late payments. That’s why regular checks and reviews of existing agreements prevents businesses from potential loses. It is also good to use reward tactics to encourage customers for prompt or early payment such as discounts or free shipping.

 

  1. Payment terms

Payment terms that are understandable and realistic is clear T&Cs in place. As it creates a contract with suppliers and obliges the organisation to pay on time, it is important to match these terms wider operation processes. For instance, if you have 14 days to pay your suppliers, but your customers get 30 days to pay you, a problem of late payments will be inevitable. To avoid damaging relationships with suppliers, you should consider an extension of the terms or reducing the credit period for your clients. It is worth taking deposits, asking for payment in advance or on receipt.

 

  1. Invoice management

Another method that can quicky improve cash flow is sending invoices promptly and ensuring they are accurate. Any mistakes will simply require queries to be resolved and it will take longer to receive payment. In addition, it is important to remain persistent at following up late payments and moving the money to the bank as soon as possible. Some clients will always need chasing and, without a follow up, they will hold on to the cash as long as possible.

 

  1. Payment options

Making it easy for clients to pay gives businesses the best chances of being paid quicker. While accepting card payments might be common place, there is a high risk of fraud. For example, in 2019 £620.6m was lost in card fraud in the UK. Also, it can be expensive to process and often leaves an organisation to wait days to receive the funds. Using a free bank-to-bank payment app means businesses can send payment requests from mobile phone straight to customers via email or messaging app (such as WhatsApp).

In that case, the consumer will receive a message with all the information they need to make the payment instantly. They click the secure ‘Paylink’, which directs them to their online banking app and all the relevant information is displayed such as your name, the amount to be paid and a reference. The transaction needs then authorising with their bank and the money moves instantly from their account to yours.

 

  1. Cost reduction

If there is too much money going out that a company can’t afford, business owners need to think of ways to reduce those expenses. There are a few questions to help understand where money can easily be dislocated:

Is there software or equipment that you are paying for that you don’t use? Can overhead costs such as utilities and administrative expenses be reduced? Are card transaction fees putting an unnecessary pressure on cash balance? If so, it can be eliminated with a bank-to-bank payment app.

Although profit might be seen as the ultimate goal for companies of all shapes and sizes, sustaining positive cash flow provides vital foundations on which a company can grow. By using the right tools, business owners can not only get paid faster and more securely, but also improve customer experience, reducing the transaction to a quick QR scan. Making a few smart changes to the existing balance sheet can have a big impact and future-proof an organisation in no time.

 

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Business

BRIDGING THE DIGITAL EMPLOYEE EXPERIENCE GAP

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Matthew Sturman, senior technical consultant, AppLearn

 

While the financial sector was arguably some way along the digital transformation curve before the pandemic, embracing innovative solutions to enhance customer experience and security, the last 12 months have required a step change like no other for employees.

Overnight, teams were operating remotely, using an array of new business applications from communications tools to support systems. Business critical processes which may have been stagnant for some time due to a risk adverse culture, quickly evolved with a need for greater agility.

In a post-pandemic world, it’s crucial that financial leaders don’t become complacent about the employee experience; KMPG put employees at the top of their list for financial institutions six considerations in dealing with the impact of COVID-19. Organisations have rapidly undergone transformation to facilitate home working while maintaining operations, however the proliferation of technology has also highlighted a critical digital employee experience gap. Addressing this will be key to embedding digital strategies which enable and support employees in the long-term.

 

Matthew Sturman

The overwhelmed employee

Even before the pandemic, research from Okta detailed how the number of worker applications deployed by organisations had increased by 68% over the past four years.

You only need to look at how employees access IT support to realise just how complex this picture has got for employees. Every technology application – from risk and complicance to payroll software– has a different route to access support, with employees having to navigate chatbots, online knowledge bases, resource hubs or the helpdesk. The result? Context-switching. Time spent flitting between different applications or windows to complete tasks, taking employees out of the flow of work. Studies have shown that switching contexts has a dramatic impact on time lost mentally re-focussing between tasks, in addition to time wasted navigating to try and find support.

In fact, research from McKinsey has found that workers spend up to 20% of their working week searching for information or support on tasks. This issue has only been compounded further with employees working from home, and not knowing where to go for timely support.

 

Prioritising the user

Over time, these small interruptions can add up to a significant impact on an organisation’s performance – and lead to user frustration, as well as decreased motivation amongst employees.

Historically, financial services businesses have taken a customer-first approach to investing in user experience – prioritising external customer service and communication over the internal employee experience. However, most employees are also users of this technology, and expect the same smooth transitions and consumer grade experience when using their work devices or software. When their digital experience is seamless, employees can focus on their role without interruption.

In a recent report, KPMG said organisations should create an ecosystem of tools and technologies that work together to enable experiences that help people work better. Any shifts in technologies should consider the combined impact of features and integration. It’s this sentiment financial leaders must embrace to truly empower digital workers.

 

Bridging the employee experience gap

According to a recent report from analyst firm Constellation Research which looked at the impact on the pandemic on the digital workplace, organisations have a historic opportunity to transform the employee experience.

It encourages organisations to adopt an ‘employee experience platform’ (EXP) model that connects disparate digital tools into a more cohesive digital workplace. This model is made up of disruptive technologies that bring together siloed applications and software.

Technologies such as digital adoption platforms (DAPs), machine learning, ‘people analytics’ tools and on-demand talent sourcing have been highlighted by Constellation as key components to the EXP. DAPs, for example, help solve the issue of disparate IT estates by overlaying software applications and providing a consistent support experience across multiple applications. This can take the form of step-by-step guides to navigate the user through new digital tasks and workflows, through to ensuring knowledge articles and chatbots are seamlessly available when required and provided in context of the individual requiring it and the task they are performing. Crucially, this keeps employees in the flow of work and avoids wasted time switching between applications and searching for support.

 

Looking ahead

It’s been an immense year of change for financial leaders, organisations, and importantly employees. As we move out of the pandemic, getting this next phase right will be absolutely key. For many businesses, this will be about moving from survival to thriving in a digital world.

The steps are simple. Identify the experience gaps, explore disruptive tools and technologies that bridge them, but most importantly, create an employee experience that enables and empowers them to do their job better.

 

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