Fire! Flood! Swine flu! Terrorist attack! These situations are not just random alarmist theories but unfortunately, sobering possibilities as evidenced by Hurricane Katrina, 9/11, Madrid and Mumbai bombings, tsunamis and H1Ni virus. We do not need to only look at international headlines, incidents happen in our own environments. Apart from the grave impact on daily life, crises such as these cause havoc within the supply chain. Fundamental training in Business Continuity Planning and Disaster Management prepares us to competently plan for and handle such natural and man-mad disasters. While many organizations have proactively made crisis preparedness and response vital elements of their planning process, focus has been primarily on physical assets, technology and partner networks and daily operations. We need to look deeper and address the issue of human capital resiliency and the human dimensions of disaster. Human capital resiliency can be defined as an organization’s ability to respond and adapt rapidly to threats posed to its workforce. Let us look at human capital risks in crisis situations: in a crisis, organizations will be challenged to safeguard and support employees while continuing to deliver the services needed to keep the business operational and the revenue flowing. Ability to attend work We need to consider to what degree employee attendance will be affected because of health and safety concerns during a disaster. Even employees who are not directly affected by a disaster may need to miss work to look after the health and safety of family members who are affected. In the event of a pandemic, attendance may be disrupted over longer periods of time. If employees have lost or been displaced from their homes, they will need to spend time finding new housing, and some may even need to move to new locations. Transportation Employees who are willing and able to work through a crisis may simply not be able to get to their work location. Public transportation systems may be disrupted or international travel restrictions could be in force. Even smaller-scale disasters, such as transit strikes and floods, can significantly impact employees’ ability to get to work. Trauma Employee shock and grief can lead to increased absenteeism, as well as to higher turnover and reduced productivity. Proactive counseling may be required to help employees confront emergent issues — and enable them to address the crisis more rapidly, so they can focus on their work and tackle disaster recovery activities. Communications Mobile phone, landline and other communications networks can be destroyed or become dysfunctional in a disaster, making it difficult to locate employees and share critical information with them. If your offices or other facilities are unsafe to use or inaccessible, employees will find it more difficult to collaborate and tap into their existing social networks. Given the need for close coordination during a crisis situation, the inability to bring people together can significantly hamper the rapid decision-making needed during recovery efforts. Without normal communication channels, maintaining business relationships with customers and business partners may also be difficult. Payroll Maintaining payroll is both essential and challenging during and following a crisis. If your payroll system is inaccessible, funds are limited or the staff members who are responsible for payroll are absent, it’s going to be difficult to pay employees in a timely manner. Employees may also need disaster relief funding, which requires coordination from a variety of sources. Employee tracking Limited access to critical personnel data, such as emergency contact information, user IDs and passwords, and individual skill sets, can affect your organization’s ability to resume operations after a crisis. If your organization cannot determine which employees have been impacted by the crisis or how, it will be difficult for decision makers to determine the company’s next steps. Recovery efforts can be further hampered if your organization cannot locate key personnel or access core business systems, or has not identified or arranged for potential replacement workers. Succession and training Many times, organizational leaders are incapacitated or unavailable during or after a disaster. If your company has not engaged in formal succession planning, individuals at all levels may be forced to take on leadership roles or increased responsibilities with little or no preparation. Staffing issues can also emerge as a reduced workforce tries to cope with the demands of an increased workload. Skill gaps can also become a problem as workers try to carry out new jobs for which they have little training. In addition, crises may require changes in employee locations and schedules that are difficult to coordinate in a fast-changing environment. SOLUTIONS: There must be a people-based approach to your Business Continuity/Disaster Management Planning and must be vital elements of all: · Policies and communications · Employee education and support · Virtual infrastructure · Job training · Talent management · HR Systems and reporting · Organizational culture Are you prepared? Despite cost-cutting measures in this economic downturn, thousands of organizations still successfully use and implement management systems to save them time and money, to improve their internal processes and procedures, to prove their competency to their customers and to manage risk. Corporate governance is the way in which corporations and other organizations are directed and controlled. The subject has been around for a while, ever since the problems arising from the separation of ownership and control of organizations has been recognized. Organizations such as Enron and WorldCom acted as catalysts for corporate governance reforms. Industry in both the UK and the United States has since become more focused on managing corporate governance appropriately and safeguarding stakeholders’ interests. Compliance issues are at the very top of the corporate agenda. Even with the introduction of new regulatory measures, it is clear that no firm is immune to the problems of poor risk management and corporate governance, and that initiatives introduced by the regulatory bodies should be viewed only as abase-line preventative measure. It is thus recognized that there is a need for greater corporate responsibility and Accountability than exists currently; the need for corporate governance and good risk management and includes a systems approach to adopting effective arrangements, in particular through the use of appropriate management systems and the application of sound Business Continuity Planning. Management systems A management system is a way of running an organization that embraces its overall structure, its planning activities, responsibilities, practices, processes and resources for developing, implementing, achieving, reviewing and maintaining the policies of that organization. In short, it is everything about an organization. Thus when you are looking for a way of improving your risk management it makes sense to ensure that governance is at the heart of your chosen management system. Central to all of this is the idea of ‘risk’. An organization’s top management Should commit to establishing systems that will ensure that their strategic risks are identified and effectively managed. This system needs to operate at a strategic level and should encompass all of the organization’s activities and the impacts they mayor may not have on all stakeholders. Business Continuity Planning (BCP) is a proactive planning process that ensures critical services or products are delivered during a disruption. It is the creation and validation of practiced logistics which will help an organization recover and restore partially or completely interrupted critical functions within a predetermined time after a disaster or extended disruption. The BCP process has evolved so that it not only addresses recovery, but prediction and mitigation of disasters. The obvious conclusion is that the most innovative organizations wishing to get Ahead of the marketplace should embrace additional measures that safeguard their business and create a ‘change-orientated’ culture. Globally recognized tied in with certified training from an established Business Continuity Planning Institute ,can offer a unique combination of risk management and cultural change that encourages dynamic thinking and business improvement. The system of internal control should be embedded in the operations of the company and form part of its culture. Business Continuity as the ‘new’ quality It is perhaps appropriate to draw parallels between the development of a quality culture in business throughout the 1980s and beyond with the current situation in risk, Business Continuity and corporate governance. When the quality revolution happened it was slow at first and then gained momentum as companies pushed ‘quality’ back through their supply chains. It became necessary to have a quality certification in order to even tender for certain projects –such was the confidence in the systems. The support structure for this embedded quality was impressive, accompanied by new job titles: quality managers, quality control analysts etc. A formal structure of institutes and societies were founded for continuing professional development – The Institute of Quality Assurance and the American Society for Quality amongst them. Quality arrived and dug in. So how is ‘Business Continuity’ similar to this? In 20 years time risk management will be as embedded into our systems and processes as quality is today. The trick is to discover and describe how we get from where we are today to that position of truly embedded Business Continuity Planning and Management. We should mirror the route taken by Quality. Quality developed from manufacturing as a part of the efficiency drive of the 1980s, when statistical process control charts helped operators to optimize control and improve on quality. Business Continuity has its background in disaster recovery. Both have strong links to probability, with the language of ‘expected outcomes’ and ‘Monte Carlo simulations’ being used at the academic end of both subjects. Quality’s now applied to business ethics, corporate governance, reputational risk, IT risk, operational risk and insurance risk. Business Continuity can pull all these themes together into a future formal management system and help ensure that Corporate Governance is sustainable. Businesses will want to work with partners that have ‘good’ business continuity plans, but how should it define ‘good’, especially when it cannot get access to those plans as they contain competitively sensitive information. An independent accreditation to a formal standard is the perfect solution. Everybody can agree that they are all working to the same levels. Implementing management systems They are also based on the ‘plan, do, check, act’ (‘PDCA’) model. The model is consistent throughout the new generation of management systems and allows for organizations to integrate more easily their management systems to achieve the holistic risk management model mentioned above. This is particularly relevant as many of the existing corporate governance solutions in the marketplace have a financial orientation. In addition to easier integration with other management systems, the PDCA model encourages a culture of ‘continual improvement’ within an organization. This can help to improve efficiency and unleash the firm’s entrepreneurial spirit, whose potential was held back by the ‘tick box’ mentality created by the desire to comply with new legislative reforms. Business Continuity process follows similar pattern: Best practice So what is it that organizations should be aiming for? What would constitute best of breed in this tricky area? In my opinion there should be a strategic policy at top management level to focus on managing risk for corporate governance. This should lead to specific policies and arrangements to deal with specific risks. In particular, the policy should encourage a positive culture within the organization to make certain that strategic risks are identified, removed, minimized, controlled or transferred. These are all part of the Business Continuity Planning process and its focus on Business Impact Analysis. Third-party certification of a recognized Business Continuity Training program can give internal confidence that appropriate measures have been implemented to prevent acts of poor corporate governance. Certification also gives external stakeholders (that is, regulatory bodies and potential investors) evidence of a sound management structure. Both the act of certification and the exit reports generated during the certification process can be used when producing an organization’s corporate governance report. Competitive advantage A combination of legislative compliance and third-party certification to a formalized Business Continuity Management system can also be a source of competitive advantage: additional risk management methodologies and solutions offer organizations a unique selling point within the marketplace. Implementation of one or more globally recognized management system demonstrates to all stakeholders that the management of risk is taken seriously, and gives confidence for both trading and investment purposes. Implementing and achieving certification to a globally recognized Business Continuity Management system is an aspiration: it is a way for a company to benchmark itself against its peers and know that it is doing well. Potential investors can also take confidence from the fact that firms with Secure management systems and practiced Business Continuity Planning will be focused on controlled growth and continuous improvement. Typically, financial investments are made on the basis of growth, and third-party certification can help give confidence to would be investors, both individuals and corporate. This is particularly important in this more cautious21st century. Trust ies a significant business driver, and selecting those who manage risk appropriately is often difficult. A combination of a good corporate governance and third-party Business Continuity certification can help sustain good governance and maintain trust. Karyl Kowlessar Triumph International There are certain business phrases and adjectives that conjure very specific meanings…strategic planning, supply chain management, auditing, risk assessment…the list goes on. And then there is Corporate Social Responsibility (CSR). What is it, really? Via attendance of the V Summit of the Americas regional Civil Society Forum held in October 2008, we learned from many grassroots organizations the trials and tribulations of dealing with the public and private sectors. At the end of this two-day forum we were advised, via serendipitous conversations, to merge the civil and the commercial via CSR, and to do so via the South Trinidad Chamber of Industry and Commerce (STCIC). Triumph International was already a member of the STCIC by this time, so after a talk with the organization’s CEO Dr. Thackwray Driver, the natural next step for Triumph was to join the STCIC’s CSR committee – so said so done. And thus the unraveling of what Corporate Social Responsibility really is began. We, like 99% of the global private sector, considered CSR to be akin to corporate philanthropy or employee voluntarism. The good company writes a check for $$$ to a chosen charity, and then calls out employees for a community day activity, with corporate communications standing by. In short CSR = Corporate Giving = Public Relations. At best, a strong internal CSR policy will naturally attract external attention and promotion, and would leave a company in a stable financial state to contribute to corporate giving if it so desires. At worst, this misconception of equating CSR policy solely with corporate giving, known as “greenwashing,” can lead to disastrous repercussions. A company with very weak internal controls that uses philanthropy and corporate communications to “spin” an image is soon to fail. And we have seen many of these large corporations fall between 2007 to present! So if Corporate Social Responsibility does not equal corporate philanthropy or image marketing, what can CSR possibly represent? We shall forget the expert opinions and jargon for now. What comes to mind when one thinks of the phrase Corporate Social Responsibility? A business behaving responsibly within a social context. So then, what is responsible behavior really? Let us equate a corporation to an individual to answer this question. A responsible person has proper management over many aspects – health, education, finances, home – and such a person usually follows a life track that adds value both to one’s life and thus to the lives of others. From this example, we see that behaving responsibly starts internally and individually, and then naturally emanates out to one’s environs. Of course while growing internally many others are simultaneously involved in one’s life – teachers, mentors, parents, spouse, children, the taxman, the spiritual counselor. These are stakeholders in one’s life, with whom interaction is constant, consistent and dynamic. If an individual who ignores internal growth and behaves irresponsibly either hurts, or is punished by one of these stakeholders. And there we have what truly defines CSR: strong, sustainable, internal company growth, while dealing transparently with and learning from an intertwined network of stakeholders. Now so many of us have come to understand CSR as philanthropy, that this concept may be very hard to integrate, but really this is great news! What this new revelation signifies is that all the effort put forth into strategic, pro-active internal planning is mostly CSR and Corporate Governance. There is no more need for a business, large or small, to feel pressured into writing a checks to meet “CSR” requirements, or to suddenly need to ramp up Marketing & Advertising only for a better CSR image. All that is necessary is that a business takes care of the fundamentals of operations, while dynamically sharing its updated processes with all necessary stakeholders. In even simpler terms, charity truly begins at home. Pro-active planning, from waste disposal & recycling to business continuity planning, crisis management is a factor of effective CSR, especially if: This planning and implementation is done consistently All levels of the organization participate in such planning/implementation All pertinent external bodies (regulatory, grassroots, and media) are immediately informed of such planning and implementation. One may comment though, what about the “Social” aspect of CSR. Does this now get redefined as well? We refer to an anecdote from bpTT, a multinational (MNE) energy company we had the pleasure of interviewing in Trinidad, as part of the STCIC CSR Committee. This MNE, now a true expert in CSR and Corporate Governance, consults on these subjects. In one instance a consulting client complained of not having knowing how to implement a CSR Policy, yet this client already had an extensive, ongoing, co-partner training program with a local university to fast-track students into assured employment positions. This is a sound example of a sustainable “Social” corporate practice. And here we see the word “sustainable.” CSR International, a leading expert on Corporate Governance, has mandated that “CSR” stand for Corporate Sustainable Responsibility, thus calling this new paradigm CSR 2.0. We at Triumph International have taken it a step further by coining CSR into SCG…Sustainable Corporate Governance, hereby removing the “airy-fairy,” green-washed stigma attached to the stereotypical Corporate Social Responsibility misnomer. SCG fully encompasses internal corporate strengthening, thereby being an inspiration to and supportive of, external stakeholders. Of course, the corporation cannot be privy to mindset change when it comes to CSR, or SCG as we will now call this concept. Externally engaged stakeholders, government, business organizations, Civil Society and the media must yield to this change as well. The expectations of kickbacks, various charity checks and public relations media madness must now gradually transmute into public/private focus groups, business and NGO training collaboration, and more up to the minute, press release type media on the company’s processes, procedures, operations, tenders etc. It is time to make this concept practical, efficient, flowing, yet dynamic. From our perspective, the myth behind CSR is debunked. Sustainable Corporate Governance is concrete, encompassing business continuity, pro-active, company wide development solutions and creations, where various models can then be exported to train other companies, organizations and governments needing support. Can corporate giving be integrated into the mix? Of course, but really, philanthropy comes naturally after the company has internally strengthened. That is the responsible choice. AFK Triumph International Post Title. 01/18/2010
Finance Leasing Industry Creation in the CaribbeanIn T&T Business Guardian’s January 8th 2009 issue, CEO Johnathan Adams of Trinidad’s Small Enterprising Business Association estimated a decrease in national Small Micro Enterprise (SME) activities by 60% for 2009 and beyond. It is noteworthy that Trinidad & Tobago is considered a high income country having comparatively more resources than other smaller nation states to support the SME sector. This gives clear indication as to the more dire expectations for the smaller OECS countries for SME growth. In contrast, the V Summit of Americas policycalled for private sector and financial institution support of SME and micro-entrepreneurial initiatives to foster human prosperity within the region. SME initiatives have not seen the sort of results desired by investors and entrepreneurs alike, as by and large most SME activity in the Latin American and Caribbean region has operated within either a traditional lending or a subsidized framework. Both ends of the lending continuum have not lent the ingenuity and creativity needed to foster a sustainable entrepreneurial community. As well, the conglomerate and expatriate structures within the regions private sector also have deflated market penetration in the traditional commercial sense for burgeoning business communities. Two significant challenges are posed to SMEs, that of collateral and lack of technical assistance. Traditional commercial lending provides few financing options for an SME’s lack of physical collateral, and even when the loan is had, technical assistance is lacking. Many government subsidized initiatives provide numerous grants to a quota of SMEs without access to funds or collateral. However, an added approach to financing is pivotal to fostering true accountability and longevity within small and micro enterprise initiatives. The traditional business climate as it stands is in need of additions and modifications to the SME paradigm. It is here where the creation of a finance leasing sector within Latin America and the Caribbean comes into focus. The Small Enterprising Business Association (SEBA) CEO gives recommendations for supporting SME growth in these challenging times.
What institutions may provide such assistance? Via e-mail information request with Minerva A. Kotei in January 2009, IFC Leasing Specialist located in Washington D.C., we see leasing is indeed the wave of the future for SME Growth. According to Mrs. Kotei: “IFC's experience in leasing over the past 30 years demonstrates that leasing is relevant to address the key issues that hinder SMEs access to finance and facilitates the development of a strong financial sector by broadening the range of financial services. There is however no strict institutional mechanism for developing leasing. Leasing can work as part of commercial banks operations, bank subsidiary or as an independent entity depending on the institutions operational framework and market conditions. Generally, independent units can be more effective in building a leasing market while banks in SME outreach.” The Caribbean, especially utilizing Trinidad & Tobago as a financial and developmental hub, already possesses a far more political and economic environment, rich with entrepreneurial growth to embrace new industry creation via lease financing. For example the Business Development Corporation (BDC) of Trinidad & Tobago currently has a sound leasing and technical assistance program which, to me, is underutilized. But what exactly constitutes a leasing industry? Is it one where the banks beef up on their equipment leasing programs for SME’s? Is it one where the government implements more institutions such as NEDCO or BDC in Trinidad to offer equipment leasing options to more SME’s? Or should a private sector leasing industry be developed, where existing construction, hardware and computer/IT firms learn how to offer leasing packages to SMEs? It may be a combination of the three. A leasing program offers SME’s access to equipment and other services. While an operating leasing leave a SME with less tangible long term assets, it allows a company to have use of newer equipment without the hassle of maintenance and obsolescence, with the option of purchase at the end of a certain period. The point is to get around the lack of collateral, while allowing for business operation and building cash flow. The International Finance Corporation strongly supports creating visible leasing programs to bolster an SME sector within developing nations. And I agree. It may be that existing banking and government lease programs be mass-marketed and made much more visible, or, that existing private sector wholesale/retail centers (e.g in Trinidad, Bhagwansinghs, Courts) begin a strong SME equipment/business leasing program. One thing’s for sure, and I KNOW this for FACT after speaking to many small business entrepreneurs – SME’s have the drive to succeed in business, but do not know what help is out there and do not know how to begin to look for this help – business development consultants, a leasing program, other technical assistance. The current pattern of providing the services and expecting the SME owner to come is not truly working. We need more exposure and marketing to these SME’s of the services, leasing and otherwise, that exists. The SME keeps balance in an economy, especially when big business is in need of restructure. In that case, we can’t afford a 60% SME failure rate. If you have any thoughts about leasing and microfinance programs, please share. --------------------------------------------------------------------------------------------------------- Additional References: IFC’s Access to Finance Report http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/A2F-HighlightsReport2008/$FILE/A2F-HighlightsReport2008.pdf Tiger Leasing Company, New York http://www.tigerleasing.com/faq.shtml Leasing Options: Capital or Operating Lease http://www.cr-ny.com/Operating_vs_Capital_Lease.html Blog post Image taken from: http://www.4leasequotes.com/equipment_leasing_options.html | AuthorTRIUMPH INTERNATIONAL ArchivesCategoriesAll |
RSS Feed