APRIL 04 2023
2022 was dominated by the Ukraine war and high levels of global inflation that affected not only national economies but also individual companies. In this view, Peter Thorninger, Operating Partner, Head of Operations Advisory at Nordic Capital, shares four recommendations for companies to consider when facing macro uncertainty and seeking productivity gains.
1. Leveraging the people toolbox to retain the best talent
During times of inflation, companies are under significant pressure to control their costs. But at the same time, never is it more important to ensure that the best people are in the right roles guiding the company through challenging conditions. It is a difficult balancing act that puts pressure on most management teams.
Peter Thorninger highlights that management teams and leaders with a clear vision and strategy have a greater opportunity to install confidence across the organisation and create a sense of belonging. During 2022, many companies had to lay off employees and, in this environment, employees may feel insecure. Therefore, management must stick to the vision and strategy and create a sense of belonging. Earlier this year, Nordic Capital launched its first CEO Accelerator Programme, aimed at strengthening leadership skills within our portfolio companies.
In parallel to ensuring clear and visionary leadership, additional attention should be paid to core people processes to drive efficient operations and be an attractive workplace. Careful recruitment routines, performance-based feedback, performance-driven salary regulation, tracking and responding to employee engagement, training and management support are all important tools to leverage to ensure companies have the best people willing to develop the business, now and in the future.
2. Creating value through strategic procurement
Procurement is an integral part of many companies’ response to the current macro context, tasked with a clear mandate to protect margins and manage supply chain risks. At Nordic Capital, effective sourcing and strategic procurement is key. It is managed by a dedicated team who work closely with portfolio companies to deliver value in this area; from developing talent through Nordic Capital’s Academy, to supporting the digitalisation of the function with Nordic Capital’s customised Source-2-Contract tool.
3. Nearshoring to create more efficiency
During the pandemic, companies with offshore production faced a far more complex situation than companies with production closer to home. Utilising suitable suppliers is highly important, and it can be achieved by expanding supplier networks or optimising inventory management. With more effective local sourcing, companies can become more agile, reduce costs and enhance their ESG performance. Nearshoring also limits exposure to geo-political turmoil and longer, more complex distribution networks.
4. Digitalisation and the use of data to accelerate growth
With revenue protection more critical than ever, it is essential for management to have as much visibility as possible. Nordic Capital-backed company, Regnology, a leading international provider of innovative regulatory, risk and supervisory technology solutions has implemented a powerful modern data lake-based analytics platform, covering all company functions. With the insights provided, Regnology has made a significant margin increase in one year. The platform allows the company to track relevant KPIs, from customer satisfaction to Annual Contract Value. Everyone at the company has access to the analytics platform, enabling data driven decision-making across the organisation. Peter Thorninger encourage companies to increasingly use digitalisation and data to optimise the customer experience, maximise cost control and achieve greater financial performance going forward.
Concluding thoughts
While economic challenges are not a new phenomenon, the beginning of 2023 brought additional uncertainty for businesses. Whether it is by retaining the best people, implementing more strategic procurement processes, localising suppliers or maximising data usage, now is the time for competitive companies to take action to protect profitability and make productivity gains.
