Four key strategies all businesses should employ in the current environment.
The state of Oregon’s economic forecast looks surprisingly bright, even taking into account historic pressure from inflation. Labor markets are expected to grow; however, labor will remain tight for businesses looking to hire. Inflation will persist noticeably above the Federal Reserve’s two percent target, but the real economy will see strong gains due to business investment and consumer spending. Consumers have the ability, and are showing the willingness, to pay higher prices for goods and services. Businesses can pass along production cost increases as a result, maintaining or even increasing profit margins.
At Summit Bank, we remain very bullish on business growth throughout 2022 and 2023. While key national and international challenges will continue to affect local growth, the power of the business community, the resiliency of our economy, and strong household income should continue for the upcoming six to 18 months. Ensuring that your business is on a sound footing to both capture and enhance growth will be key. There are four strategies all businesses should employ to grow in the current economic environment.
President & CEO, Craig Wanichek
Build your client base while lengthening the sales cycle and utilizing consolidation
Much of the new business we close today is the direct result of developing and nurturing contacts and relationships over time. We’ve made a conscious decision to lengthen our sales cycle by nearly two years. What might have been a 12-month cycle back at the end of the Great Recession is now more like a 24- to 36-month cycle. In the community banking space, we continue to see larger national banks acquire local institutions. Because we’ve been talking with local clients over a longer duration, we can take advantage of their apprehension in moving their money over to a larger bank where decision-makers are located out of town or out of state. We are seeing this trend of acquisition amongst all the business sectors we serve including nonprofit, manufacturing, professional services, healthcare and more. The height of the pandemic has only accelerated this trend. While the Paycheck Protection Program saved many businesses during the initial stages of this global crisis, today we are seeing larger or better capitalized companies purchase businesses with weaker balance sheets or family-owned businesses with no clear or family-owned businesses with no clear succession plans. When consolidation occurs, there are often ancillary benefits to an organization that has developed a long sales cycle based on relationship building. When an entity with existing client relationships is acquired, there will be a drop-off in clients. If you have been nurturing relationships with those clients – even though they weren’t yours, to begin with – you can be ready to act when the acquisition occurs.
Build flexibility into your work environment and redouble your efforts to recruit talent.
Tight labor markets are putting a considerable amount of upward pressure on wages, according to the State’s economic office. This is reflected in withholdings of personal income taxes. As such, new strategies are needed to ensure the pipeline is full of the labor our economy needs. There is a famous sales strategy called the ABC approach or Always Be Closing.
In this new era of tight labor markets, the phrase can be exported to the human resources side of a business and reclassified as ABR or Always Be Recruiting. Simply stated, managers at your organization must always be on the lookout for talent, even if you do not have a position for that talent right now. Employees are now in the driver’s seat when it comes to finding their next position. If you have been an active presence at job fairs, chamber of commerce events, industry trade shows, and a host of other venues – even those held virtually during the pandemic… – you stand a much better chance of being the go-to business when top talent decides to make a move. Simultaneously, you need to be doing everything you can to ensure that your best employees have no reason to look to a competitor for greener pastures. Of course, competitive pay and solid benefits will always lead the way in employee retention, but in a tight labor market, other critical elements of a good work environment will help keep your best people with you.
Build flexibility around remote work. It can be a net positive for both employee and employer. The old school philosophy of a supervisor needing to have a line of sight on their subordinates gave way to the fact that good employees are their own best motivators to be productive and successful. Virtual connectivity more than proved its value to all kinds of businesses. For colleagues who must come into the office or the shop, accommodation and understanding are crucial. If you are implementing a hybrid model where some work offsite and some are in-person, chances are your operation has more space than in the pre-pandemic world. Are you rethinking your space to provide a more comfortable and enjoyable work environment for those under your roof? If not, now is the time to put some thought into making that change. Another key strategy for retaining and attracting top talent is to be flexible in your job descriptions and definitions; putting people into narrowly defined boxes of skills and experiences is limiting. At Summit, we strongly believe first and foremost in the concept of hiring good people and then teaching them banking if they don‘t have industry knowledge. Many of our recent hires have been people entirely outside the banking industry. We know we can teach intelligent and motivated people how to become bankers, but we can’t teach them some of the innate skills they bring to us, such as critical thinking, communications, and interpersonal and problem-solving skills.
Be nimble, internally and externally.
Moving at the speed of business may be a catchy marketing phrase, but it still very much applies to today’s economic conditions. It’s important to note, however, that fast isn’t the same as nimble. Nimble to us means operating both proactively and reactively, by combining dexterity with speed. Often the difference between proactive and reactive is the ability to tack in a different direction. A nimble business can succeed even when immense challenges appear (like a global pandemic) and the company quickly, but intelligently, changes course midstride.
Create an authentic culture that accommodates growth and the people powering it.
Today’s consumers and employees are seeking a more meaningful connection with the brands they patronize and the place where they work. This need for connection has given rise to authenticity as a business trend in its own right. Authenticity helps to foster human connections because we like to see brands (and business leaders) prioritize important qualities like honesty, reliability, empathy, compassion, and humility. We want businesses to care about issues and stand for more than just turning a profit. Authenticity is all about ensuring your organization exists to serve a meaningful purpose. Purpose defines why the organization exists, not what the organization is or what it does, or for whom. A strong purpose has the promise of transformation or striving for something better – be it a better world, a better way to do something, or whatever is important to your organization and its people. At Summit, we strongly believe that creating an authentic culture that aligns with all of your colleagues will be the ultimate machine that produces growth. The economic factors exist and will continue to exist for well-run businesses to grow in 2023 and beyond. The key will be for business leaders to deliberately position their organizations to take advantage of current conditions.