Measuring the Impact of Resilience in an Organization (and what companies can learn)

 

“Resilience? Oh yes, we’re very resilient.”

That’s the common retort when asked if people consider themselves to be resilient. People intuitively understand the nature of resilience and are able to describe it using a number of anecdotes on perseverance, rags-to-riches stories, facing and overcoming challenges, surviving economic downturns, and others.

However, people are less sure when asked if their organizations are resilient – not to mention the blank stares when asked to name indicators of low resilience, measures of low resilience, and the impacts of low resilience in the organization.

This leads us to the following question.

Can Organizations Be Resilient?

You bet they can. Just like people that work in an organization, organizations themselves embody cultures and sets of values that are or are not resilient.

Just ask Blockbuster and Kodak on how resilient they were when Netflix and the digital camera, respectively, came knocking. Were they able to pivot away from the old paradigm onto a new world order? Were their leaders and employees equipped to address and overcome the changes needed to persevere in this new environment? Had they been infusing the values of resilience into their culture and people, would they have suffered the loss of their businesses?

When obstacles and changes come:

• Is your organization ready to embrace the changes and persevere?
• Do your employees proactively take on the new obstacles head-on?
• Is there a culture of coaching and mentoring that allows teams to shine together?
• Are communications handled with transparency?
• Are your employees connected and aligned with the vision, mission and goals of the organization?

If you answered “no” to any of these questions, you’re likely facing an organization that has low resilience, and, if at this point in this narrative you’re asking why you should care, then please read on.

Why is Resilience in the Organization Important?

Let’s back up to our two examples from earlier: Blockbuster and Kodak.

Sure, there’s definitely a case to be made that technologies can drive old business models out of business. There are plenty of books and papers written on the demise of companies from disruptive technologies. However, those companies able to adapt (i.e., be resilient) to new business models and obstacles have a greater claim to sustainability and longevity.

A good example of this is Apple. They were consistently losing to IBM in the PC world for much of the 90’s. Today, which of these two companies is still in the PC business? Everyone knows the story of Apple and the proliferation they’ve made not just in PCs but in all sorts of consumer-driven technology. Throughout the obstacles and battles, Apple has shown admirable resilience, not only in its culture but also in its employees.

The table illustrates some common attributes of resilient organizations:

Low Resilience	High Resilience
Chaos rules the Company; Resistance to change; Falters under duress; Short-sighted; Company has operational inefficiencies: Low Productivity Rate; Low Customer Satisfaction; Low Market Share; Revenue Stagnation	Order runs the Company; Embraces change;  Overcomes hardships; Long-sighted; Company runs effectively and efficiently; High Productivity Rate; High Customer Satisfaction; High Market Share; Revenue Growth

Table 1

Related to our company examples, the resilience attributes in Table 1 stand-out. The not-so-obvious attributes of resilience are those related to an organization’s employee base:

Low Resilience	High Resilience
High Attrition Rate;  High number of Employee Relations Issues; Low Employee Morale; High Absentee Rate; High Cost of Low Resilience (i.e., high costs in recruiting, medical, workers comp, absenteeism, tardism, etc.)	Low Attrition Rate; Low number of Employee Relations Issues; High Employee Morale (aka “Best Place to Work”); Low Absentee Rate; Low Cost of Low Resilience (i.e., low costs in recruiting, medical, workers comp, absenteeism, tardism, etc.)

Table 2

The Low Resilience attributes in Table 2, in a way, are more important than those in Table 1. Though they’re easy to spot, many are overlooked and, hence, their effects are more insidious. These attributes need to be watched very closely so they don’t sneak up and create the very same conditions related in Table 1.

How Do You Measure the Impact of Low Resilience in an Organization?

Measuring the impact of low Resilience starts with understanding and spotting the attributes of low resilience. Doing so proactively, minimizes the stress on the health and longevity of an organization.

Table 2 summarizes many of the attributes that an organization can use to test its level of resilience. For the remainder of this narrative, we’ll focus on two very noteworthy “people” issues common in many organizations:

• Unplanned Employee Turnover
• Employee Issues

An organization that has these resilience attributes under control has the ability to more adeptly respond to hurdles and challenges. Those that have yet to manage and control them will face daunting challenges when unplanned changes enter the scene.

Here follow the impacts caused by these resilience attributes when left un-checked.

1. Unplanned Employee Turnover. High attrition rates can bleed an organization. It’s much cheaper to deal proactively with employee issues than to take on the high costs of recruiting. You are going to be taxed with not only the recruiting spend itself, but also the cost of training, onboarding, rebuilding the team, mitigating any hits to product quality and project deadlines, and averting impacts to customer service. All these impacts have a direct correlation with productivity losses, depressed margins, risk of reduced customer satisfaction, and reduction in market share.

The following table illustrates the issues facing an organization:

2. Employee Issues. In an organization where employee issues run unchecked, employee morale can be compromised. With limited sense of engagement and empowerment, employee productivity can quickly plummet. Busted due dates and diminished product quality are next in line to surface. Before you know it, sales and revenue have taken a hit and customer satisfaction has fallen. At this point, your hard-earned reputation gets tarnished.

The following tables highlights the impacts.

Of course, this is a nightmare scenario for any organization, but one that is not out of the realm of real possibility. Even in a company with only a few employee issues, the effects can quickly domino. Understanding the issues and rectifying them head-on averts a bigger problem down the pipe.

Other indicators of low resilience include high medical costs, high worker’s comp claims, and high absentee and tardiness rates, but you can see how just two seemingly minor attributes of low resilience can have a dramatic impact to a company’s well-being.

 

How Resilient Are You?

Find Out Here!

 

This post was written by Erin Marin, Partner. Eric Marin has worked in the Management Consulting industry for more than 22 years in the domestic and international arenas. During this time, he has sat on public and not-for-profit boards and has served in various executive positions, overseeing strategy, governance, compliance, organizational effectiveness, and operational performance.