What is Organizational Resilience? How to Assess Your Business’ Ability to Adapt
History is full of disruptive, world-changing events. Most recently, our world was upended by the COVID-19 pandemic. You can probably think of a few local or national organizations that simply did not survive the financial crisis that the pandemic created. Many of these organizations failed due to poor management and fragile resilience, as the pandemic quickly exposed organizational problems. Other companies adapted fairly well in the midst of adversity, such as dine-in restaurants offering delivery or retail stores providing curbside pickup. But what does it take for an organization to truly be resilient?
Business leaders are faced with challenges every day. They may not be on the same level as global crises, but the world continues to change. In 2023, leaders face choices like whether or not to implement more AI into their workflow, or how to combat the pressure of inflation costs on their bottom line.
In challenging times, it’s important for businesses to be adaptive and agile—not just the leader, but the entire organization.
Every company seeks to be more resilient in the wake of the COVID-19 pandemic. And organizational resilience is something that can be taught and learned. In this blog, we’ll cover what organizational resilience is, why it’s important, and how you can start developing it in your own workplace.
What is Organizational Resilience?
Organizational resilience is the ability of a business or company to adapt—whether that’s in the wake of a historic event or changing trends in leadership or management. While the topic has been researched for decades in multiple disciplines, it often comes to the forefront during unexpected events or disruptions.
Organizational resilience classifies an organization’s resilience level into the following categories:
- Fragile: Organizations that are not capable of enduring changing environments.
- Robust: Organizations that are capable of enduring everyday change, but not unexpected change.
- Resilient: Organizations capable of enduring expected and unexpected changing environments.
- Anti-fragile: Organizations capable of not only enduring expected and unexpected changing environments but actually prospering and strengthening in turbulent environments
It is important to understand organizational resilience is not simply strategic leadership. Organizational resilience is taking strategic leadership to a new level where all of the components of strategic leadership are in play, but resilience is added. It is a proactive approach to continually anticipating and reacting appropriately to unexpected events.
The Importance of Resilience
No matter what industry you work in, organizational resilience can mean the difference between a strong business and a bankrupt one. The World Economic Forum 2020 Future of Jobs Report illustrated the changing importance of skills, listing resilience in the top five with no previous listing. While the COVID-19 pandemic is the most recent crisis we can reference, other crises and critical events have also demanded organizations adapt. These include more recent events like rising inflation, the war in Ukraine, recession worries, and the labor shortage. Any of these events could spell the end for organizations that are ill-prepared.
But a resilient organization can handle any adversity. Post-pandemic, this kind of resilience and anti-fragility is highly sought after by employers and companies—because if an organization is not adaptable to change, it will lose its competitive edge amongst its peers.
Two key factors impact an organization’s resilience—stress tolerance and flexibility.
Stress tolerance is the ability of an organization to tolerate a certain threshold of stress. The higher that threshold, the more resilient the organization. Organizational stressors could include financial turmoil, lack of labor, or external crises.
Flexibility relates to an organization’s ability to adapt in the midst of adversity. A flexible organization is one that adapts to new technologies, manages unexpected challenges, and is flexible with its workforce (for example, offering hybrid and work-from-home opportunities for their employees.)
How is Organizational Resilience Measured?
Organizational resilience might seem too vague to track within a business. However, there are measurable variables that can determine whether or not your organization is resilient and anti-fragile. In our organizational resilience courses at Walsh College, we examine 12 factors that determine resilience.
1. Business Continuity or Continuity of Operations
Business continuity is a process that anticipates and manages potential threats to a business’s operations. A resilient organization will have protocols in place for business to continue as normal even in the midst of a crisis. These plans are typically used in more localized crises like power outages, natural disasters, equipment failures, or staff departures. A lack of a business continuity plan is a sure sign that an organization will not survive even a minor disruption to everyday business.
2. Crisis Management and Communication
Crisis management and communication is a leadership preparation and management approach to prepare and navigate potential crisis situations, ensuring resilience and anti-fragility. This aspect of resilience relies heavily on public relations responses to an internal crisis that could potentially damage the organization’s reputation.
3. Critical Environments
Critical environments ensure data centers and critical components for operational resilience are designed and built to ensure ongoing operations during unstable times. They are held to a specific standard of quality and environmental control, such as temperature, humidity, cleanliness, and lighting. Data centers and cloud storage are typical examples of critical environments that must continue operating even in a crisis.
4. Financial Health and Viability
Financial health and viability ensure an organization maintains a healthy financial position and culture. The key indicators of financial health and viability are liquidity, solvency, profitability, and operational efficiencies.
5. Human Resource Management
Human resource management is focused on organizational change to enhance performance. Human resources focus on hiring personnel with specific competencies and qualities to ensure and promote a culture of resilience.
6. Information & Communication Technology Continuity
Information and communication technology (ICT) continuity is focused on the protection and resilience of technology hardware and communication assets and operations. The malfunction of ICT systems is a crisis in and of itself and can be costly to an organization. Businesses should have protocols in place for maintaining ICT continuity.
7. Incident Response
Incident response is focused on planning effective responses to incidents and business emergencies. More specifically, incident response relates to how IT professionals respond to business-wide data breaches.
8. Information Security
Information security focuses on protecting the data assets of the organization. These are protective measures within an organization’s databases that prevent a security breach of sensitive information.
9. Legal, Audit, and Compliance
Legal, audit, and compliance enable a collection of best practices for the organization in the industry they operate. It is focused on managing different risks within the legal and business arenas.
10. Organizational Behavior
Organizational behavior is focused on studying attributes of resilient and anti-fragile organizations, intending to implement through the hiring of appropriate skilled and competent human capital.
11. Risk Management
Risk management is the identification, analysis, and response to risks for the organization. It involves coordination and strategic application of resources to minimize, manage and monitor risk.
12. Supply Chain Resilience
Supply chain resilience is focused on ensuring supply chains operate, despite growing disruptions and problems within global markets. Resilient organizations are able to pivot in the midst of supply chain disruptions.
Building Organizational Resilience
Now that we’ve covered how organizational resilience is measured, you might wonder how organizations can build resilience. Here are a few practical ways you can build resilience as an employee or business leader.
In an increasingly globalized world, cultural intelligence is a key factor of resilience. Cultural intelligence helps individuals cope better with change and create synergy from diversity—so no matter who is on your team, you are able to work together.
Organizations that manage risk well fare better than ones that make knee-jerk decisions in times of crisis. Effective risk management involves professionals on your team capable of risk forecasting and leadership that is able to make difficult decisions in the face of a crisis.
Organizations that do not adopt new technology typically do not survive. Now, with AI as an emerging technology, resilient organizations are finding ways to incorporate it into their workflow in a way that’s sustainable and not disruptive to their teams. These organizations have technology experts on their teams who aid in adopting new technology and educating the organization on them.
Resilient organizations communicate clearly—to both employees and stakeholders. Top-down communication should be strong and direct, and internal crises should be addressed in a timely manner.
Develop Your Resilience as a Leader
In this blog, we covered just a few things that make an organization resilient. We looked at what organizational resilience is, why it’s important, and how you can start implementing it in your business today. Organizational resilience is something that can be learned, and not just by experience. Walsh College now offers courses in organizational resilience that prepare students to respond to every challenge in the workplace. Learn more about our BBA and MBA programs to boost your organizational resilience and become the expert your organization needs.