Companies too chicken, say employees

Employees say their companies are more shy of risk than they are themselves. So are timid businesses missing a trick?

by Dave Waller
Last Updated: 20 Jun 2011
The Risky Business Survey - carried out jointly by MT and Zurich Insurance across a range of business sizes and sectors - found a near 50-50 split between those individuals describing themselves as risk-averse and those saying they’re risk-takers; yet when asked how they perceived their company, only 31% of people thought their employer was comfortable taking a chance. You don’t have to be an Evil Knievel-style daredevil to see the problem here: calculated risks are the lifeblood of business, and companies which aren’t prepared to take much risk are unlikely to see much reward either.

Of course, it's easy to understand why companies may act somewhat timid right now, given the state of the economy. Excessive risk was blamed for the onset of the financial downturn in the first place, and since then the resultant cuts, credit shortages and lack of consumer confidence have all conspired to create an operating environment which offers little in the way of a safety net for more audacious moves. And that’s causing problems according to the survey’s 200-odd respondents, 51% of whom are directors, 22% managers (with 52% based in London and the South East, 22% in Scotland and the North). Indeed, 37% rated the state of the UK economy as the biggest risk to their company, so taking a big punt may be fairly low down the list of ‘safe options’ in the strategic lexicon at the moment.

But there’s surely an argument that says tough times are precisely the point at which you should go out on a limb – fortune favouring the brave and all that. While creating a world-threatening unsustainable property bubble may be the wrong kind of risk, a depressed market could be just the time to chance it on a new product or marketing strategy. 27% of respondents to the Risky Business Survey ranked existing competitors as the biggest threat to their firm’s success, so there could be no better time to make your firm really stand out from the crowd.

Employers might of course point out that it’s all well and good for employees to be chomping at the bit for the chance to take a risk - they’re not the ones having to manage the finances. When asked what the biggest risk their company is taking right now, raising funds and capital investment came out highest, at 24% and 22% respectively. And even after a couple of years of heavy rationalization, costs remain a worry - 25% of those surveyed ranked costs as the single factor that’s holding their businesses back the most.

So overall, still a pretty cautious and tentative picture then. Yet there is optimism out there: when asked about their views on the future fortunes of their company versus those of a year ago, 43% of respondents were more optimistic, compared to a mere 24% who were more pessimistic. If the slow and steady economic recovery is really going to get into gear, perhaps it’s time for a more glass-half-full approach to risk taking to work its way up to the boardroom?

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