Contingency Planning
‘I was a bit shocked to read about Adolf Merckle’s suicide yesterday. You just don’t see this sort of thing coming and I cannot even fathom the reasoning behind it. This has sent tremors through the market and certainly his holding company into dis-array for a while. It also reminded me of other similar events surrounding the last economic downturn , and that was kind of the ‘final straw’ that prompted this post. With many of the same signs and issues occurring as they did in the tech collapse of 2000-2002, few are eager to look at the downside, but it is time to spend a few minutes and verify contingency plans within your organization. It is a New Year, and what’s more a bright sunny day in Phoenix, so while it feels a bit incongruous to be talking about disaster recovery and such, it is a good time for you to give it a little thought. I am not really going into the issues of natural disaster, rather economic disaster. Nor am I focused on executives who need to consider change in management, but for the general well being of the people who work in your company whose livelihood and personal information may be dependent upon some degree of continuity. Files: Budget in advance for the storage of sensitive information. I am not just talking about electronic data, but all of the legal, contract, HR and other files that contain sensitive information. Pre-pay for files to be housed off site and stored safely. This is typically not that expensive, and in the event that the company changes hands or goes out of business, could become essential- but when the need is clear, it might already be too late. What you don’t want is contracts, accounting information, and employee files getting chucked in a dumpster. It happens, and it happened a lot in 2001, only this time there are regulatory fines if you get caught. If you are not doing this today, look into it. Many of the services provide destruction services at the end of term so the data is safely disposed of. Executive transition: Executives leave, and sometimes in unexpected ways. I am not trying to make fun here but point out that in stressful times, people look to change their situation. In tough economic climates, executives leave for what is perceived to be a safer place to work. As a board, HR department or executive team, think about the risks and have a basic plan of action in the event that any of the key staff leaves the company. Executive departure can stall incoming revenue, business partnerships, financing and even sale. There may not be a lot you can do, but better to be prepared. On-site and off-site backups: You are probably already doing this, so I will focus on an equally important issue: Verify your backups. In the tech collapse of 2001-2002, many firms went out of business without access to the data that formed the core business value. Backups could not be found or were unreadable. In many cases, their servers were ‘in hock’, locked up at the Colo facility with unpaid fees. This stalled the sale of assets and cost jobs that would have otherwise been offered had the data been available. So verify that the backups are complete and readable. If the backup are encrypted, make sure the key and de-cryption infrastructures is also available. Employees on Visas: I have seen some very uncomfortable moments for those employees on a Visa that are in a much more vulnerable situation. If this applies to you, go through a couple ‘what-if’ scenarios and have a plan to deal with the company shutting down, downsizing or being acquired. Press your HR team for assistance in this area. General Security: As a company begins to reduce staff, items walk out the door, from office supplies to computers. You really don’t want a laptop with customer data being sold on eBay, so you will want to tighten up on security. Physical security- make sure major assets are accounted for. Have your IT staff take inventory. Electronic security- Make sure you procedures are in place for shutting down accounts and snap-shotting the end point so there is no loss of data or correspondence. You may want to consider adding email filters to forward business related email, or re-routing telephone numbers. Startups: If you work for a startup, you want to take this advice a little more to heart. Startups by their very nature tend have less cash reserves, their margin for error is smaller, and their tolerance for both is higher. That means when things go bad, they do so very quickly. Most entrepreneurial CEO’s always figure the next deal is around the corner and are out of business the next day when it does not come. This leaves for some ugly exits where the employees do not get paid, benefits not covered and investors are wondering where all of the remaining assets are. If your revenues are not on the rise, then look for ways to cut costs at a company and individual level. Look to eliminate things you deem wasteful. Demand that management be forthright with you on what they are doing to cut costs and what a realistic run rate is. Set expectations with supervisors that you will be more tightly focus on priorities, but doing less with less. Without these steps, life devolves into a Dilbert cartoon. Personal Development: On a positive note, downturn s offer opportunity, and are a great time to expand your horizons. As companies try to perform the same functions with fewer resources, it is an opportunity to offer your assistance in areas you are interested in and broaden your skill set and increase your value. Education and training is also a great for this, providing a distraction form the daily grind and a good motivator as well. Try to contain your exposure to bad economic news if possible; I used
