Top-Shelf Tip No. 178:

"I always tried to turn every disaster into an opportunity."

John D. Rockefeller

Three Questions to Ask After A Disaster

The winter of 2014-15 will see below-normal temperatures for about three-quarters of the U.S. with snow storms similar to last year?s winter deluge, according to the 2015 edition of the Farmers? Almanac. Snow disruptions, or any disaster, can wreak havoc on a business, taking months to recover. Promotional Consultant Today shares these three questions to ask after a disaster.

1. What is the impact on your labor pool? For most companies, their ultimate competitive advantage lies in its employees. Employees are the repositories of intellectual capital and represent a significant investment in training. However, disasters can have a disproportionate impact on hourly employees. Damage to housing stock may encourage employees to relocate to other areas or seek higher-paying jobs to meet unanticipated expenses. Disasters also create new opportunities such as high-paying construction jobs. One need look no further than the mass-evacuation of the city of New Orleans following Hurricane Katrina for an example of the effect of disasters on local labor pools.

2. What is the impact on your supply chain? Disasters frequently create spot shortages of goods and services, particularly those related to reconstruction. They can also generate significant transportation infrastructure damage that can affect the delivery of goods. Large numbers of manufacturers go out of business following disasters either through destruction of their facilities or their inability to resume normal business operations. All of this suggests that the resources needed to continue business may not be readily available or may be spoken for by competitors. In the classic supply chain study of microchip shortages following a clean room fire, Nokia was able to secure all future production runs of the microchips in question and dealt a devastating blow to its competitor, Erickson.

3. What is the impact on your customer base? Disasters can frequently lead to demographic shifts that can alter your customer base. Demand for products and services can increase, decrease or be unaffected depending on the nature of these changes. Disaster may actually offer an opportunity for increased sales in some sectors. However, these changes can be temporary or permanent, so increasing capacity may be a risk. Following the Northridge earthquake in California, many of the existing population of middle-class, retired aerospace workers chose to relocate to other states. They were replaced by an influx of largely Hispanic immigrants. This demographic shift resulted in changed demand for products and services such as grocery items, clothing and restaurants.

Just considering immediate impacts can blind you to future problems. The long-term effects of a disaster can initially be very subtle and not manifest themselves for a considerable time. It is critical, therefore, to consider the potential impacts of a disaster on employees, suppliers and customers over an extended period.

Asking these three questions once is not sufficient. Disasters are complex and so are their effects. A good strategy needs to be reassessed periodically by asking the same questions again and again.

Source: Lucien G. Canton, CEM is a consultant specializing in preparing managers to lead better in crisis by understanding the human factors often overlooked in crisis planning. A popular speaker and lecturer, he is the author of the best-selling Emergency Management: Concepts and Strategies for Effective Programs.

Compiled by Cassandra Johnson

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