Day by the day the numbers are ever increasing. The tally is constantly rising at an alarming rate. Now Italy has been the latest of the nations to be impacted nay crippled by the unrelenting Wuhan Corona Virus also known as the Corona Virus. This article has not been written to pontificate on the “what ifs”, nor the “what shoulds”, instead the focus of this write up is principally centered around the sustainability of businesses moving forward. What effective managers of people and of businesses alike must be cognizant of as they prepare for the immediate change that is already upon them.
The reality of the Corona Virus has hit home on global tourism as well as air travel. Airlines alone are expected to lose close to USD100B in revenue this year (*WSJ, 26 Feb 2020), and the year has not even “landed” at its first financial quarter proverbial transit stop. The impact on local in-country tourism has been scathing as well. International trade fairs cancelled, conferences postponed, fashion shows without audiences (*CNN.com, 25 Feb 2020) and this inturn has a direct impact on the hospitality sector with hotel occupancy rates hitting an all time low coupled with an obsessive fear by rational thinking people of going to restaurants and other locations of public gatherings.
What was touted to be a China specific issue has now morphed into one impacting Europe, with, at the point of writing this Article, the American States of California, Maryland and Washington now declaring a State of Emergency. The pandemic has created havoc not only in the heartland of China, but in all nations across the globe. Manufacturing, trade, finance, construction are only some of the sectors that have been impacted and it is envisaged that they will be even more severely impacted moving forward.
Closer to home, the immediate ramifications to businesses in Malaysia are, in no order of priority, envisaged to be as follows:
a) a sudden reduction of tourist flow into the country, and that too impacting us smack on the Visit Malaysia Year 2020. The follow-on impact of this on the various interrelated sectors of the economy will be significant.
b) an abrupt slow down in component part supplies from China to our SMEs who inturn manufacture finished products for onwards sales;
c) the down sizing by SME businesses in particular, simply as they will be most hardest hit by this cataclysmic and totally unexpected downturn;
d) MNCs as well as the Govertment Linked Companies (GLCs) being significantly larger in size have the added benefits that come with that, namely ERP systems and Business Intelligence Systems which are able to provide indepth data analysis which in turn will be applied for colourful and rich forecasting of future demands. It is hoped that such forecasting are proactively and positively utilised to make the right decisions;
e) increased unemployment levels within the nation as businesses endeavor to stand their ground amidst the swirling waters around them;
f) possible societal wealth erosion due to the negative impacts of the downturn;
g) an ever weakening confidence levels in the minds of the citizens of the initiatives being carried out by the Government; and finally
h) within all this chaos, there lies a beacon of hope and opportunity to strive on the challenges that are being faced not only as a sector but as a nation at large.
Already initiatives are abound in an attempt to keep companies afloat, including but not limited to hiring freeze, wage cuts and reductions of full time employees (FTEs). Huge national stimulus packages are being announced by nearly all our neighbors to counter the contagion impact of the microscopic Corona Virus. Singapore unveiled a USD4.6B package, whilst Indonesia a USD742 million package. And Malaysia recently announced a USD4.76B package to lift the nation by its proverbial bootstraps and pump prime where required.
So in the wake of all this turmoil, financial instability, health concerns and future earnings, what can the Manager do for the people under her/his charge and importantly, for the business under her/his stewardship? Another all important question is how can the Manager strive for enhanced people well being initiatives during this trying time?
When asked of the esteemed members of the Regional Board of CMI Malaysia Chapter, thoughts and responses came in fast and furiously and they included:
1. Protect the employees and ensure their wellbeing as best as possible. This will ensure that frequent relevant and critical information is shared and so in turn keeping employees safe at all times. Human resource policies need to be reviewed and adapted cater for the current crisis situation;
2. Conducting a critical risk assessment on the impact corona virus on the local, regional, and global point of view against their business as it stands today. When conducting risk assessment, companies need to understand the hazards of the risk, risk consequences, probability of risk occurring and, characterizing the risks and its uncertainty. Apprise each risk from the following risk factors:
f) Environmental; and of course,
Companies would then have to establish a plan to address and mitigate the risks involved. Realignment of business and operational strategies against the identified risk is critical;
3. Revisit the Corporate Strategies, Business Plans and KPIs which were formulated late last year to instill a sense of realism into them given the events that have unfolded over the past 4 to 8 weeks;
4. Quickly reconsider the operational model of the business to look at cost to income ratios, productivity numbers, cost of sales and production respectively relative to predicted demand and the like. Given that in most businesses, people costs will be a significant contributor to the operating expenditure numbers, reviewing manpower numbers and aligning it to future demands will be critical to mid to longer term survivability;
5. Companies may need to realign their business strategies to the fiscal and monetary policies introduced by the Government. Alignment of business strategies against the Government stimulus package will be desired for companies to effectively ride through the current economic situation in this country;
6. During the crisis, it is pertinent that companies relook into the company finances. Maintaining positive cash flow is critical and a review of the debtors and creditors collections and payment methods is required to ensure cash flow in the company is sustainable during the economic crisis. Usage of bank loans and other banking facilities needs to be reviewed to ensure cash flow and interest cost are efficiently managed.
7. With the new way of conducting business comes new ways of measuring performance. The possible need for a whole set of leading business metrices is now crucial to sustainability. A quarterly based survival mode now seems to be the way forward, and this would mean keeping open and transparent dialogues with the supply chain operators of the business. In this way responses are more immediate vs being lagging and reactive in nature;
8. Look for real opportunities that will inevitably bubble within the cauldron of despair. Those business managers who have an eye for the unanticipated will be the ones driving success over the mid to longer term time horizon. Apart from looking into operational model, companies need to look at new opportunities that may arises from this crisis. Realignment of business plans to seize these opportunities arising from the crisis is an absolute necessity e.g. the reduction in consumers visiting or physically shopping at malls may result in the deployment of e-commerce strategies to conduct business and deliver goods directly to the consumer. Likewise, pharmaceutical related companies might realign and refocus their products to cater for the new demand for specific offerings which the Corona Virus has brought about with it;
9. With the speed of spread as well as the infectious rates of the Corona Virus, the need to have and effectively manage virtual teams have now become a simple but a prerequisite necessity. Whilst the concept of the virtual team has been around for decades, the limitations and constraints of physically meeting up to make decisions and subsequently operate business has just leap frogged effective virtual team management to pole position;
10. Set up cross functional teams which will have a matrix line reporting to various heads to immediately and proactively step in, in the event that there is a Corona Virus outbreak in the office. In this way, whilst some team members are out recuperating from the outbreak, others are stepping in to manage the “slack”;
11. Companies need to establish new or review existing business continuity plan (BCP) to reflect against the risks identified during the risk assessment process. This will ensure companies to continue to operate when certain identified risks established do occur.
12. Whilst the writing is on the wall vis the semblance of a tsunami wave of a global recession, the parting words of the Board Members are, “If your business can’t make money, just ensure that it does not lose money. With the clearing of the dust, those who survive are definitely set for a significantly brighter future”.
What has been highlighted above are pragmatic steps embedded with a dose of realism for Managers to consider for businesses and people under their charge. Whilst the immediate future seems somewhat dim, a beacon of light emanates from the not too distant shore. Ensuring that the ship sails on an even keel is crucial to its immediate survivability for it to dock in safety and subsequently resume its onward journey into the planful unknown.
Co-Authored by Taranjeet Singh (email@example.com) and Dr Seng Poh Chew (firstname.lastname@example.org), who are both Members of the Regional Board of CMI Malaysia Chapter respectively. Taranjeet Singh is also the CEO of Quantum Steppe Advisory, a boutique Human Capital Advisory firm with a regional presence.
a) WSJ, 26 Feb 2020
b) CNN.com, 25Feb 2020
c) “Corona Virus COVID-19: Facts & Insights”, McKinsey & Co, 28 Feb 2020CMI