VUCA is an acronym developed by the U.S. Army War College in the late 1990's to describe their view of the future strategic environment.
It stands for volatility, uncertainty, complexity and ambiguity and we think this group of words does a pretty good job of describing today's business environment.
We also think this operating environment explains why a lot of small businesses are not hiring additional employees. Things are simply too uncertain and too volatile to take on additional risk.
Accounting Today's Private Companies Too Nervous to Hire covers a survey on private company hiring conducted by SageWorks. The chart below shows their results.
What's interesting is the two biggest responses both relate to VUCA. 31.7% of the respondents are worried about the economy in general and 21.7% are more risk adverse due to the Great Recession. Also interesting is the 3rd largest response, increased efficiency.
Combined, these are what I think of when I hear the term "the new normal". The business environment has become so uncertain and volatile that companies are going to be very hesitant about adding traditional employees. Instead, they are increasing efficiency and automation and using outsourcing and temporary workers.
Unfortunately, we don't see this changing anytime soon.
Steve,
Once again - spot on! I love the VUCA. Just back from AICPA Council & 125th celebration and a panel on how to fix the economy. I summed it up as saying we need government to focus on sustainability and creating a predictable environment for small businesses, or an anti-VUCA platform. No more debt ceiling crisis every six months, or massive healthcare changes that nobody understands the full impact of. Or taxmageedon debates about increasing tax rates retroactively with no ability to plan.
Yes, to sum it up, it is about leadership or lack thereof.
Let's start an anti-VUCA movement!
Posted by: Tom Hood | May 20, 2012 at 07:03 AM
I'm with you Tom, but I'm not sure our elected officials are up to the task.
Posted by: Steve King | May 23, 2012 at 01:56 PM