BSI’s third Organisational Resilience Index finds business leaders struggling to adapt to new technology amid political and economic uncertainty. According to the third annual Organisational Resilience Index report, published by the BSI and which surveys 800 senior leaders across the globe, business leaders’ confidence in the resilience of their organisations has faltered for the first time since 2017.
While the majority of organisations have reported stronger financial performance in the last 12 months, the UK and Ireland – together with Japan – lag behind other markets. 23% of businesses in Japan and 14% in the UK and Ireland report their financial performance is worse than five years ago. That’s at least double the proportion of any other market.
Consequently, adaptive capacity is now seen as the most important factor to maintain organisational resilience, up ten places on last year’s Index and overtaking financial management. It appears that an increase in the disruptive effects of technology, alongside changes to Government policies and regulation, are the driving forces behind the adaptive capacity agenda. Those surveyed in the report identify technology as both the greatest opportunity and most severe threat to their success.
The Index finds that innovation, horizon scanning and adaptive capacity have the greatest impact on organisational resilience, but that relative performance in these areas has declined over the last 12 months.
As organisational resilience has come under increased pressure, the Index reveals that business leaders are stepping up. Leadership displays a much smaller gap between impact and performance than other elements, ranking as the second impact factor and moving up three ranks to fifth in the performance standings.
Changing emphasis in organisational resilience
Howard Kerr, CEO at the BSI, said: “While we’ve seen a changing emphasis in organisational resilience in the past, this year reveals a decline in organisations’ ability to adapt to change. In order to survive and prosper, business leaders must be aware of issues on the horizon and remain vigilant in ensuring that they – along with their teams – are focused on strategic priorities. In balancing short-term business results with long-term resilience, businesses can use this year’s uncertainty as a springboard to future success.”
The detailed and thought-provoking report identifies a shift in the skills required of business leaders, with financial management no longer rated as the most important skill. The top five skills are staff engagement and recruitment, clear direction, business performance, leadership skills and use of technology.
It appears that growing pressure on business has caused it to look inwards, prioritising these skills ahead of innovation and political acumen. This introspection was initially seen in last year’s report and is a reaction to growing uncertainty and faster, more drastic change. This change has accelerated in the last year, causing organisations to doubt their ability to predict future market conditions to the extent that the ability to ‘horizon scan’ is now seen as the lowest performing factor.
Concerns over employee turnover have risen by 5% year-on-year, while staff engagement is one of the lowest performing elements. As the millennial workforce continues to grow, and with the careers of Generation Z on the horizon, businesses are beginning to place ethics and sustainability at the core of their Human Resources strategies. The need for this strategic change was evidenced in a report earlier this year that suggested 40% of millennials have chosen a job due to a company’s superior sustainability credentials.
Elements comprising organisational resilience
Of the 16 elements that make up organisational resilience, the report finds the following (+/- numbers denote annual move in rank):
Highest impact elements
Adaptive capacity (+10), leadership (=), alignment (+10), horizon scanning (+10), vision and purpose (+2), innovation (+6), resource management (+2), awareness and training (-3), culture (+1), financial management (-9), suppliers management (+2), reputational risk (-6), information and knowledge management (-6), governance and accountability (-10), community engagement (+1) and business continuity (-8).
Highest performing elements
Financial management (=), vision and purpose (+1), business continuity (+11), information and knowledge management (+3), leadership (+3), suppliers management (=), governance and accountability (-5), reputational risk (-4), awareness and training (-4), resource management (=), innovation (+1), culture (+2), adaptive capacity (+2), community engagement (+2), alignment (-6) and horizon scanning (-4).
*The full report is available at www.bsigroup.com/organizational-resilience