It is difficult to lead in uncertain times. The current inflation rate is no exception. Here are some suggestions for how to lead in an inflationary economy.
The economy has entered uncharted territory. There is a persistent inflation that seems to be affecting the economy, something most of us have never seen in our lives. This is combined with a challenging labor force, low unemployment and stock market volatility. These externalities might seem to be beyond the reach of tech leaders. Inflation can impact our strategic and operational decisions. These are some ways to manage and mitigate inflation.
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Take stock of your assets
Tech companies often manage huge pools of expensive assets. This includes employee technology like smartphones and laptops, to large data centers and infrastructure. Inflation will increase the cost of purchasing new assets and acquiring parts and replacements for existing ones. This is most obvious in the immediate term. Subtly, inflation will increase the cost of financing these assets and magnify its impact.
This inflationary double whammy may take weeks, or even months to manifest. The hundreds of companies involved with the production of your servers and laptops absorb higher component and financing costs and integrate them into their economic models.
This time gap between rising inflation, and its impact on prices can be used by tech leaders who are savvy. It is easy to save money by accelerating large asset acquisitions, locking down current pricing, and moving costly assets off the books using cloud adoption techniques. If assets are temporary, it is worth examining whether they can be extended to avoid inflation.
Control your people costs
Rising salaries are a major driver of inflation. You’ve likely seen rising costs for new staff or increased demands for raises from your current team. The rapid rise in inflation is due to wage inflation, which is combined with tight labor markets, and this presents a significant challenge to tech leaders.
Non-salary benefits are benefits that have a higher perceived value and lower cost than additional salary. Flexible work hours and working hours, for example, may be a small cost but can provide an advantage over your competitors. Similar benefits such as wellness weeks and additional holidays can prove to be very effective. Employees will often appreciate a few more days off than a similar increase in base compensation.
If you’re just throwing your hands in front and assuming that you’re not able to compete with the current talent environment, then you are doing the wrong things. You will lose the talent fight in the long and short term if you are unable to clearly and persuasively explain why someone should join your company and how you will help them grow and mature professionally.
Become the organization’s eyes and ears
You are not the only leader struggling to adapt to uncertain times. Your position as a leader who deals with data and information is unique, because you can help your peers and leaders monitor and understand the changing environment.
For decades, tech leaders have been talking about predictive reporting and the power of technology. What better time to use that toolkit than when leaders are struggling with understanding the markets and how they affect their businesses?
Spend some time reviewing your tech portfolio to identify the most important investments in data management, analytics, reporting and reporting. What tools are you using to identify supply chain challenges or emerging sales trends? These tools can help the organization. What mechanisms do your organization have in place to identify emerging economic and market trends? What underutilized analytical tools can provide valuable insight and targeted training and support to the appropriate end-users?
Many leaders have spent years focusing on the technology aspects of IT. Now they are hungry for information. Redouble efforts to become your organization’s eyes and ears, providing early alerts and insights on key metrics to help other leaders make informed decisions.
Uncertain times are always difficult, especially when you’re leading others or giving crucial insights to them. We don’t know how the economic environment will change, but we can hope that this is just a blip on the road toward continued prosperity. You will be a better leader if you are able to recognize the challenges and use your unique position as tech leader to address them. This will help your team and organization weather any storms.
