The world has fallen into the grips of the devastating effects of COVID-19, which has not only created havoc for peoples’ health but jeopardized the US, as well as, the global economy. The virus has affected certain industries, such as tourism and the airline industry, particularly hard, but it has also had a ripple effect, causing unexpected and surprising hardship to many other industries. But with meticulous planning and the implementation of innovative strategies, many countries are planning to reopen large portions of their economies in carefully planned “phases.” Businesses can focus on the most highly prioritized industries in order to resume normal day to day operations and functions helping their people and business owners’ bottom line to reduce the financial losses of this pandemic.
As most companies, small and large, have opted to digitalize their working activities, today’s new normal for businesses includes facing working-from-home difficulties, uncertain regulatory and compliance obligations, disrupted supply chains, cash flow problems, and navigating through the mechanics and intricacies of applying for new government financial assistance programs. In an online survey conducted by ET dated Apr. 14, 71 percent of respondents said their biggest fear was a global recession, up from 67 percent on March 30; 77 percent said they are looking at cost containment measures, and 65 percent are thinking about deferring or canceling investments. In this new and highly uncertain environment, companies are making, and will continue to have to make, tough decisions. The actions they take now must be tactical, but their focus should also align with the companies’ overall goals and objectives.
The keys to achieving success are advance preparation, agility, having accurate data, and a strong willingness to harvest good ideas from every layer of an enterprise. Much of a company and its decision makers focus on implementing tactical steps to preserve business value and on designing strategies for emerging stronger in the post Covid-19 economy. Some of these strategies include liquidity analysis, operational scenario planning, and an assessment of applying for the various government funded stimulus programs.
To help manage the current situation and implement the desired strategies for getting back firmly on the track of economy recovery, the need emerges to create separate plans and lines of responsibility for each area of a company’s business, and empowering key decision makers and management to act.
The key areas include:
- Crisis management
- Tax and trade
- Finance and liquidity
- Strategy and brand
The role of crisis management does not disappear in the stabilization wave period —
there will always be fires to fight, as new problems arise. Many leading companies have realized in the past few months that a dedicated crisis management team frees up other senior leaders to focus on the remaining five key areas. If senior leaders only focus only on solving problems, the outcome will be negative or lower than expected as these problems will take precedent and become time-consuming; nothing else will get done. Existing business continuity plans may not be capable of handling the fast-moving and unknown variables of an outbreak like COVID-19.
What you can do now:
- Develop incident management and scenario plans that are specific to this crisis
- Focus on accurate and reliable information, and effectively communicate to stakeholders on a regular basis
- Plan on how to meet government priorities in individual countries and minimize the risk of business disruptions
People are a company’s greatest asset, and at this time, your people will understandably be worried about their job security and their financial futures. Leadership and people in management will need to communicate clearly and regularly what steps they are taking to secure the financial well-being of their employees.
Cash flow and liquidity concerns are causing many companies to consider worker furloughs, layoffs, and terminations. These economic challenges are very real, and these actions are unavoidable, and a last resort, for some businesses. For many businesses, the best way we can help the economy is to keep our people gainfully employed at work. Cutting costs to preserve profits may serve only to sink us further into recession. Most companies will face the same tough choices. Workforce modeling can help businesses assess their options.
What you can do now:
- Attend to immediate global mobility concerns, such as reviewing travel rules, HR policies, and first-aid plans.
- Assess remote working strategy, including asking employees to temporarily work remotely if the organization is still in a government ordered lockdown, keeping in mind the health and safety concerns of your employees.
- At the time of eventual reopening, companies needs to focus on prevention protocols like maintaining social distancing, use of protective equipment during working hours, and periodic medical checkups for every employee to create a safe working environment.
- At the time of eventual reopening, a mandatory safety protocol should be conducted. Companies should conduct a medical checkup, ensuring that the condition of each employee is fit for working and not pose any health risks to other employees.
Tax and trade:
Governments across the globe are changing their tax regulations in response to COVID-19. The changes are affecting both direct and indirect taxes, and vary considerably from country to country. For companies that operate in multiple jurisdictions, keeping up with the changes may help the business survive. Reducing tax liabilities is one form of stimulus, and changes in tax rates and the extension of due dates can help companies conserve cash and manage their cash flow accordingly.
In addition, companies will have to weigh their liquidity options. Central banks are cutting interest rates, and governments are extending numerous grants and loans.
What you can do now:
- Effectively manage cash taxes, obtain available refunds and consider local government and tax authority measures in response to COVID-19.
- Consider taking actions to stabilize supply chains while bracing for an unpredictable revenue and profitability mix in key markets.
- Assess the resources your company needs to meet your ongoing direct and indirect tax compliance requirements.
Finance and liquidity:
Managing liquidity is a top priority for keeping companies solvent, and liquidity analysis and financial planning will help management with this objective. Businesses should review current cash needs and any foreign exchange reporting processes and controls, which might include hedging strategies.
What you can do now:
- Consider disclosures related to direct effects on the results of operations, as well as indirect and possible unexpected effects.
- Think about disclosures related to risks and uncertainties about the impact of COVID-19 on future reporting periods.
- Assess disclosures on the current and future impact of liquidity and capital resources.
Strategy and brand:
How do your customers view their prospects and your actions? Now is the time to protect your growth and profitability by getting a handle on what the market is doing and where it might go. You will need more frequent financial modeling forecasts, as the overall business environment and stock market remains highly uncertain. You might consider incorporating new models that take into account what happened during previous pandemics.
What you can do now:
- Consider accelerating and reassessing digital transformations as the shift to remotely working reveals gaps in IT infrastructure, workforce planning and digital skills.
- Protect growth and profitability through actions such as scenario planning, more frequent financial modeling forecasts to improve resiliency, and new models that incorporate the economic impacts of past pandemics.
- Take the pulse of your customers and get a feel for what they are most concerned or worried about, thinking through long-term considerations around shifts in core markets or business models as a result of the pandemic.
- Have contingency plans in place to take into account unforeseen circumstances
Guidelines for companies and office planning for reopening post-lockdown can include incorporating the following preventive measures in their safety handbook to assure the well-being of employees and the local community they are serving:
- The channels of communication should be kept transparent and strong to avoid any confusion.
- The supply of preventive and protective equipment, like masks, hand sanitizer, gloves and wipes, should be maintained by the delegated office authority.
- Social distancing measures as stated by health officials should be maintained in the workplace.
- Each office should have in place a ‘contact tracing’ process to determine the risk of being exposed to any health threat and to create a safety net for other employees.
- If an employee has been exposed to a family member who has tested positive for COVID-19, then he or she should be advised to work from home, along with paying proper attention to his or her health.
- If any employee develops any symptoms of COVID-19, then he or she should be sent home immediately, and health officials should be informed immediately to help the employee and his or her family to avoid any health consequences and threats. The office of the infected employee should be kept closed for a minimum of 14 days to avoid any transmission of the virus.
- If possible, a thermal scanner should be used by the office management at the time of admission in the office for the next few months on a regular basis to avoid any health threats for employees working in the office.
- The number of visitors should be kept to a minimum to avoid any health threats, and measures should be in place to adhere to social distancing guidelines.
- Staff who deal with costumers should be provided with protective equipment, along with the installation of Plexiglas.
- Team members should eat lunch at least six feet apart to maintain social distancing guidelines, along with abiding to the rules related to use of cafeterias, kitchen rooms, and meeting rooms.
- Maintaining a philosophy that preventive measures are better than cure policies, companies should consider remote working policies for employees who are capable of doing so, as this will help them be safe and not get exposed to the risk of health problems. A remote working policy is helpful for avoiding the risk of getting exposed to the virus for employees who have to work at the office and use public transportation as their primary mode of transportation.
- Offices and organizational planning to reopen post-lockdown should follow a philosophy of having empathy for people and the general public, to ensure their businesses follows a trajectory of safety and smoothness for their people and the local community they serve.