01 Aug 2022

The Ukraine War: How to plan for the unthinkable

This article is based on a discussion at the Memcom Conference 2022, held in London on 29 June, which provided a forum for the leaders of membership bodies, trade associations and not for profit organisations to discuss the challenges arising from Russia’s invasion of Ukraine.

By Samantha White

In recent years, the membership sector has had to adapt to a continuous stream of challenges, from austerity to Brexit and COVID-19. Russia’s invasion of Ukraine in late February brought a new set of challenges. Those bodies with members and colleagues who were directly affected by the humanitarian crisis worked to support them however they could. Others turned their attention to the consequences summarised below:

Initial response
Organisations had to respond to rapidly changing member needs and demands for training on areas such as sanctions and risk. In light of the sanctions, those with operations in Russia had to shut them down, with an associated loss of income. Many faced a dilemma as to whether it was appropriate for them to make a public statement condemning the Russian government’s actions, and how that would sit with any bylaws on remaining apolitical.

Supply chain
Both Russia and Ukraine are export-based economies and the devastation wrought by the invasion, together with international sanctions on Russia, has disrupted the supply of key commodities to markets around the world. The scarcity of food-related exports (cereals, seed oils, fertiliser) and energy (fossil fuels), among others, has created inflationary pressures. Increasing prices puts pressure on wage settlements and salaries.

Cost volatility
In the UK, upward pressure on materials and labour costs was already affecting business post-Brexit. Membership bodies representing engineering and construction companies are acutely aware of hyper-inflation in their supply chain, and are concerned about potential insolvencies as these additional costs were not built into contracts. According to the Office for National Statistics (ONS), the material price index for building materials increased by 25.2% in April 2022 compared to the same month in the previous year.

As the cost-of-living rises, consumers’ discretionary spend (on items such as membership of a professional body) falls.

Mental health and wellbeing
The accumulation of crises and continued uncertainty is affecting mental health across the population. Membership bodies saw take-up of their employee support schemes increase during the pandemic, and a further increase in usage with the onset of the war. Team morale is down, and people feel disconcerted and exhausted.

For CEOs, there is a danger of burn out, as even more energy is required from them to maintain the level of intensity of the last couple of years and provide leadership in such challenging and uncertain circumstances.

Declining investment in the future
Companies are reporting that capacity for investment in innovation is being squeezed as return on investment has decreased to such an extent and margins have shrunk. The drive to achieve Net Zero appears to have been put to one side because of the immediacy of the hyperinflation problem. Plans to develop the next generation of leaders have also been affected, with lower investment in graduates and apprentices, as well as reduced emphasis on equality, diversity, and inclusion.

Panellists discuss the implications of the Russian invasion of Ukraine

How can membership organisations mitigate some of these effects?
Here are some of the steps leaders are taking:

• Conduct scenario planning for the longer-term impacts of the Ukraine War, particularly the economic and geopolitical uncertainties. Profiling and modelling can help you understand how your organisation might manage certain eventualities, should they arise.

• Think through your supply chain and trace it as far as you can to identify where the risks lie.

• Revisit your strategy and ask: Is it still relevant? Are the aims still appropriate in this new set of circumstances?

Organisational values (such as delivering public benefit) can act as a compass to aid decision making and help navigate these challenges.

• Adapt your business model to the new circumstances. This includes revenue budgets, financial planning and the investments that underpin that. Do you need to re- evaluate your organisation’s risk appetite?

• A dilemma shared across membership organisations is whether to raise subscription fees in line with inflation or prioritise maintaining member numbers. Articulate your value proposition in a way that is relevant to the circumstances your members are operating in. Demonstrate value for money so members see the benefit of investing their discretionary spend in renewal.

• This is not business as usual. Analyse your staff structure and the capability, competence, and knowledge available within the organisation. Have you got the right mix to enable you to be agile and resilient? This is particularly important when the volunteers on whom many professional bodies rely, are under greater pressure and may not be able to devote as much time and energy to the organisation as they did before.

• A strong purpose or ethical connection can align and engage both members and employees. Certainty about the organisation’s direction, what it is trying to achieve and the impact those activities have can boost staff engagement and retention.

• Membership organisations amply demonstrated their flexibility and adaptability during the pandemic. When organisations are agile, uncertainty is less threatening, and easier to cope with.

• Our organisations need to continue evolving and consider the world that we operate in. There are new ways of working and members have new priorities, so we will need to respond to and serve those new requirements. Member engagement is paramount. Listen to what they want and how you can deliver value for them.

This article was first published in haysmacintyre’s Professional Institutes and Membership Bodies Summer 2022 briefing.