Leading in uncertain times is always a challenge, and the current rate of inflation is no exception. Here are some suggestions on how to lead in an inflationary economic environment.
The economy has entered a bit of uncharted territory with what appears to be persistent inflation that most of us have never experienced in our careers. Added to this is a challenging job market and low unemployment, stock market turbulence and global conflicts. Tech leaders might think they’re immune to these externalities. However, inflation can impact our operational and strategic activities. Here are some suggestions on how to manage and mitigate this impact.
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Look at your assets
Tech organizations often manage vast pools of expensive assets, from employee technology like laptops and smartphones to sprawling data centers and infrastructure. In the short term, and perhaps most obviously, inflation will likely increase the price of acquiring new assets and collecting parts and replacements for existing assets. Perhaps more subtly put, inflation will also increase the cost of funding these assets and amplify their impact.
It may be weeks or even months before this inflationary double whammy makes itself felt. The hundreds of companies involved in manufacturing your servers or laptops digest increased component and financing costs and build them into their economic models.
Savvy tech leaders can use this lag between rising inflation and its impact on prices to their advantage. Accelerating significant asset acquisitions, setting current prices, or moving expensive assets off the books through techniques like cloud adoption are obvious ways to save money. Similarly, examining whether the lifespan of existing assets can be extended can avoid the effects of rapid inflation if they are temporary.
Manage your personnel costs
A key driver of inflation has been rising salaries, and you’ve likely seen rising costs for new hires and demands for raises from the current team. Wage inflation coupled with a tight labor market is one of the reasons behind the sudden and rapid rise in inflation and a significant challenge for technology leaders.
Consider non-salary benefits or benefits with a high perceived value and lower cost than additional pay. For example, flexible work locations and hours can cost little in productivity but provide an edge over your competitors. New benefits such as “wellness weeks” or additional vacation days can also be effective. Employees often value a few extra days off more than a corresponding increase in base pay.
If you’re just throwing your hands in the air and assuming you can’t compete in the current talent environment, you’re doing the wrong thing. Last but not least, if you can’t make a clear and compelling argument as to why someone should join your company and how you can help them grow and mature as professionals, you will lose the talent battle in both the short and long term.
Become the eyes and ears of the organization
You’re not the only leader at your organization struggling to respond to turbulent and uncertain times. However, as a data and information leader, you are uniquely positioned to help your peers and leaders monitor and understand how the world is changing.
Tech leaders have been talking about the power of technology in predictive reporting for decades; What better time to apply this toolset than when executives are struggling to understand the markets and how they affect their businesses?
Take the time to review your technology portfolio and focus on current and ongoing investments in reporting, analytics, and data management. What tools do you have that could help identify supply chain challenges or new sales trends that can inform the business? What mechanisms have you already put in place to identify emerging economic or market trends? Which underutilized analytics tools could provide valuable insights with targeted training and support for the right end users?
After several years of focusing on the technological aspect of IT, most executives are hungry for information. Redouble your efforts to become the eyes and ears of your organization by providing early warnings and insights into key metrics to help other executives make informed decisions.
Uncertain times are always challenging, especially when you’re leading a team or providing important insights to colleagues. No one knows how the current economic environment will play out, and perhaps this is just an outlier on the road to continued prosperity. When you acknowledge the challenges and use your unique positioning as a technology leader to overcome them, you will become a better leader and help your team and organization weather the storm.