This article was contributed by Bill Lawrence,
a Principal of Revitalization Partners.
It was first published in the King County
Bar Association newsletter.
There is no question that small to medium size businesses (SMB) have had to make major changes to their business models in order to cope with the impact of the COVID-19 pandemic.
Businesses were forced to make rapid changes in many cases just to survive, while others failed to adapt and have either gone out of business or are struggling to stay afloat.
As corporate or general counsel to these companies, attorneys play a significant role in advising executive management on the legal ramifications associated with whatever course the board and management choose to pursue.
Beyond that responsibility, however, lawyers also have a unique opportunity to participate in forward-looking discussions around how best to invest in the company’s future growth and build enterprise value. Our goal is to equip them for those strategic conversations.
RE-THINKING PRODUCTIVITY …
There are a number of factors that would indicate that the requirement to change rapidly will continue well into the future, and in fact, will accelerate.
Here’s why: The United States is producing the same amount of goods and services as before the pandemic.
However, it’s occurring with 8.2 million fewer workers according to a recent report from the Bureau of Labor Statistics.
The pandemic forced companies to become more productive by accelerating the introduction of robots, advanced software and artificial intelligence to maintain required levels of production.
ATTRACTING SKILLED WORKERS …
Now, companies are facing serious problems in attracting enough skilled worked to meet projected increase in demand.
This shortage, coupled with the prospect of wage inflation and high employee turnover, has fueled the need to improve productivity more rapidly.
Adding further pressure, lenders are seeing a surge in inquiries from businesses related to financing for new equipment purchases.
Given the overwhelming evidence that improving productivity is now a mandate for companies, what should CEOs be doing now to either catch up – or, just stay even with their competitors? How can legal counsel help them develop a strategic framework to inform those discussions?
NOW AN OPERATIONAL IMPERATIVE …
First, there must be an ongoing effort to examine their business and understand where there are opportunities to improve productivity and profitability. This must be an imperative in operating their business, as there may well be multiple areas where small changes could result in significant improvement.
Improving productivity must be part of a cultural change. Management must make sure to reinforce with each key manager the mindset that improving productivity is an expectation.
Out of the box thinking must be encouraged and in fact be a normal part of the planning process.
Furthermore, legal advisors should be part of an executive team or task force that helps leadership set productivity improvement goals so that key people have a framework in which to evaluate potential changes in the methods, equipment or technology that supports higher output.
Setting goals and having frequent discussions regarding how to achieve them will improve effectiveness and minimize legal pitfalls. Financial rewards for achieving goals will also motivate key managers to work together to achieve them in a more focused and coordinated manner.
SCALING THROUGH AUTOMATION …
Rapid advancement in technology and automation has made it easier for companies to achieve improvement in productivity.
This is particularly evident in areas related to customer service, production planning, and the use of faster and more productive equipment utilizing automated technology and manpower and productivity planning.
Understanding the areas of a business where productivity can be enhanced will help management teams, including their legal counsel, determine the most appropriate tools available to attain their goals and in what time frame they can be achieved.
Typically, investment in automation and equipment can be justified and financed based on the return on investment and cost savings realized by implementing these tools.
As we’ve heard said, doing the same thing over and over and expecting different results, is the definition of insanity.
In reality, it is a pathway to failure. Companies that embrace the new normal baseline for business productivity will have an advantage in competing with their peers.
Those that don’t will find it difficult to keep up, and even worse, it could be their demise.
Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering, a State Receivership or Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.
