Developing a recovery strategy requires an understanding of the impact of the crisis. Tis impact is not limited to physical loss; disasters produce ripple effects that can have a long-range impact on the survivability of a company. Tere are three basic questions that must be asked when developing a business recovery strategy:
1. What is the impact on your LABOR POOL?
For most companies, their ultimate competitive advantage lies in their employees. Employees are the repositories of intellectual capital and represent a significant investment in training. However, disasters can have a disproportionate impact on hourly employees. Damage to housing stock may encourage employees to relocate to other areas or seek higher- paying jobs to meet unanticipated expenses. Disasters also create new opportunities such as high-paying construction jobs. One need look no further than the mass-evacuation of the city of New Orleans following Hurricane Katrina for an example of the effect of disasters on local labor pools.
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3.. What i is the impa t on you CUSTOMER BASE?
CUSTOMER B SE
Disasters can frequently lead to demographiic shifts that can alter your customer base. Demand for products and services can increase, decrease or be unaffected, depending on the nature of these changes. Disaster may actuallly offer an opportunity fory for increased sales in some sectors. However, these changes can be temporary or permanent, so increasing capacity may be a risk. Folllowing the Northridge earthquake in California, many of the existing population of middle-class, retired aerospace workers chose to relocate to other states. Tey were replaced by an influx of largely Hispanic immigrants. T. Tiis demographic shift resulted in changed demand for products and services such as grocery items, clothing, and restaurants.
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2. What is the impact on your SUPPLY CHAIN?
Disasters frequently create spot shortages of goods and services, particularly those related to reconstruction. Tey also can generate significant transportation infrastructure damage that can affect the delivery of goods. Large numbers of manufacturers go out of business following disasters either through destruction of their facilities or their inability to resume normal business operations. All of this suggests that the resources needed to continue business may not be readily available or may be spoken for by competitors. In the classic supply chain study of microchip shortages following a clean room fire, Nokia was able to secure all future production runs of the microchips in question and dealt a devastating blow to its competitor, Erickson.
Tese same three questions can, of course, be asked in the immediate aftermath of a disaster and can certainly help guide response activities. However, just considering immediate impacts can blind you to future problems. Te long-term effects of a disaster can initially be very subtle and not manifest themselves for a considerable time. It is critical, therefore, to consider the potential impacts of a disaster on employees, suppliers, and customers over an extended period.
Strategy is not static. Asking these three questions once is not sufficient. Disasters are complex and so are their effects. A good strategy needs to be reassessed periodically by asking the same questions again and again.
Many businesses have recovered from disaster by developing a recovery strategy based on the effects of the disaster. Te story of the Sheraton Hotel is not unique and there are many stories just like it. Let yours be one of them by asking the three critical recovery questions.
Lucien G. Canton, CEM is a consultant specializing in preparing managers to lead better in crisis by understanding the human factors often overlooked in crisis planning. A popular speaker and lecturer, he is the author of the best-selling Emergency Management: Concepts and Strategies for Effective Programs. For more information, please visit
www.luciencanton.com, or email
Info@luciencanton.com.
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26
TPI Turf News September/October 2016
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