This article by Michael Horowitz, Ph.D., System president and founder, originally appeared on Forbes.com.
Inflation has long been a thorny issue for leaders of small and medium-sized businesses and nonprofit organizations. While cost increases have slowed in recent months, the burden of inflation continues to take its toll. Now more than ever, organizations should be exploring creative ways to strengthen their resiliency against higher costs by focusing on ways to grow revenue, enhance productivity and reduce operating costs. Here are some tips to consider.
Embrace technology as a force multiplier.
Emerging technologies are an increasingly valuable tool to level the playing field for organizations seeking to manage costs more effectively.
At The Community Solution Education System, we deploy AI and other technologies to bolster productivity and manage our business and academic operations more efficiently. For example, we are developing methods to use AI to help identify students who may be struggling academically so we can help put them on a better path to degree completion. Similarly, we have developed a proprietary AI model to assess how each academic program across the System is performing in real time. This dashboard enables us to discern which programs are experiencing the highest student demand and which programs may need additional growth investment.
Technology can also empower employees to work together more efficiently, especially in hybrid and remote workforces. Cloud-based project management systems support our ethos of “radical cooperation” by enabling our remote teams to work together to advance key initiatives.
For organizations that may not be equipped to be first adopters when it comes to technology innovation, being a “fast follower” may be a good path forward. To identify promising new tech solutions, consider creating a dedicated task force of key internal and advisory leaders to evaluate tech utilized by competitors or peers and recommend whether they should be implemented in your own organization.
Avoid costly employee turnover by prioritizing satisfaction
In a world where employees have a multitude of choices of where they work, retaining your best team members is crucial for any organization’s long-term success. As many leaders know from experience, it is more cost-effective for an organization to retain top performers than constantly replace them.
However, with salaries trending upward and historically low unemployment, employees are looking for unique ways their employer can demonstrate a strong commitment to their satisfaction. Some creative ways organizations are doing this include offering increased PTO, fewer in-person meetings, access to flexible remote or hybrid work arrangements and even small cash incentives to motivate key performers who make exceptional contributions.
Our decision to transition to a fully remote environment has saved money for the organization, but it has also paid off by enabling us to target high-quality talent across the country. Additionally, we have been intentional in investing in professional development opportunities and career advancement pathways to demonstrate our commitment to growth and retention.
By providing numerous avenues for skill development and career advancement, organizations can help cultivate a loyal, long-tenured and motivated workforce.
Explore new ways to diversify and grow revenue
Unlike for-profit enterprises, nonprofits historically have had limited flexibility to offset higher costs through price increases. During periods of high inflation, fundraising and development initiatives targeted toward outside contributors are especially important to the success of most organizations. High inflation may require you to shift fundraising priorities toward institutional donors, including corporations, private foundations, government entities or local businesses.
Moreover, some organizations have successfully explored earned income opportunities such as hosting a conference or seminar, merchandise sales or licensing agreements as other ways to add revenue, especially in instances where the organization has a strong, recognizable brand.
Get creative with real estate
Another belt-tightening solution for organizations that own their real estate is to monetize these assets through a sale-leaseback arrangement that can help fund future operations. Alternatively, leasing unused space or subletting space to similar or partner organizations can be a way to reduce costs when necessary.
Conversely, organizations might want to consider taking advantage of the current weak commercial real estate climate by purchasing office space at a discounted price. It’s a great way to eliminate future lease payments and reduce annual operating costs, and you can leverage your board or other partners to help your organization secure the best financing.
Organizations can also explore shared workspace arrangements or co-location initiatives with other nonprofits to reduce overhead costs while fostering collaboration and resource sharing. By maximizing the utility of real estate assets, nonprofits can optimize financial resources and focus on advancing their mission. Of course, choosing to go fully remote is another cost-saving measure to consider.
Looking Ahead
During inflationary periods, the best-managed and most successful organizations will be those that remain data-driven and adaptable to changing economic conditions. Remaining vigilant about costs in both prosperous and challenging times will enhance your organization’s long-term sustainability. By embracing creativity, prioritizing employee satisfaction, diversifying revenue and optimizing real estate assets, organizations can navigate rising costs and thrive in the ever-changing economic landscape while also pursuing their mission.
