Supply chain disruptions have, of course, been a continuing source of economic consternation since the beginning of the pandemic. But they have been recently joined by more disturbing indications of service line limitations. For example, a major airline reduced its flight activity in order to reduce the strains caused by labor shortages and travel increases.
All this is not necessarily the recovery that was expected. The economy is indeed reopening, but in somewhat of a lurching, not upwardly linear manner. It’s injecting a level of financial unpredictability into the business recovery and planning process, to which corporate boards are unexpectedly being pressured to respond. And that calls on directors to maintain an enhanced awareness of the primary economic indicators, and their implications.
This is particularly the case with respect to directors serving on key committees such as strategic planning, finance and human capital, where economic trends are key reference points. It’s important that in these and other board forums, directors have some “big picture” sense of economic indicators if they’re going to be a resource to management, and provide informed input.
This doesn’t mean that board members need to dust off their old Paul Samuelson college textbooks, or log Department of Labor updates into their calendars. But it might mean adding a bit more “econ” updates to their summer reading lists, and periodically seeking the advice of their outside financial advisors.Management will appreciate the extra sets of “eyes” on the nutty economic data.