by Shelly-Ann Mohammed, Head of ACCA Caribbean
“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.” Former White House chief of staff, Rahm Emanuel (2009-2010), President Barak Obama’s administration.
Do not waste this crisis
As we enter March 2020, the COVID-19 virus has infected over 329,624 people worldwide and caused 14,433 deaths. In the Caribbean, there are approximately 378 cases. This is a crisis, the scale of which can reorder society in dramatic ways, for better or worse. However, with every crisis there are opportunities to become innovative, more sophisticated and flexible with our use of technology.
COVID-19 is disrupting business and consumer behaviour on a massive scale. Businesses are focused on protecting employees, understanding risks to their business and managing supply chain. The public and private sector are scrambling to flatten the curve and minimise spread. The full economic consequences of this black swan event are still unclear but the implementation of drastic measures to contain the virus is precipitating change across industries.
This will be a defining leadership moment for government leaders around the Caribbean and for private sector CEO’s. Above all, the safety of our people should be paramount. This article will focus on employers and recommend specific actions that can be taken during this difficult time.
Phase 1: Activate first level crisis management contingency procedures
Protecting Employees: Employers should have already activated first level crisis management contingency procedures. Some measures can include:
Scenario planning for 3-6 month recession:
Employers should host scenario planning sessions with executives to brainstorm ideas, which can include:
Phase 2: Protect your financial position as much as possible.
Challenges will vary depending on the sector, for example, grocery stores will need to develop new measures to cope with a surge in foot traffic whereas other sectors such as retail will see a decline in traffic and revenue. This pandemic will be a relentless destroyer of brick-and-mortar businesses due to physical restrictions on movement, but it is simultaneously boosting almost anything that can be done online i.e. grocery/take-out meal deliveries, online learning etc. The world may see the shift from real to virtual go into overdrive. In the Caribbean, we have been slow to adapt to digital transformation but this provides a real opportunity for companies to develop online or direct to consumer services.
Employers may need to consider among other things:
Keep lines of communication frequent and open with employees on the company’s cash position. Employees are more likely to support various cost cutting measures if they are aware of the company’s position.
Alternatives to layoffs: During a crisis, it is inevitable that employers will contemplate or implement cost-cutting measures, which may include layoffs. Here are some alternatives* that could prevent mass layoffswhich can have a bigger impact on our small nation economies: *NB: review with lawyers to prevent potential legal action
Phase 3: Recovery and beyond
Employers need to plan for eventual recovery during the crisis. Competitive positions and customer relationships may have been significantly altered. For example, suppliers and customers may have been impacted financially and thus need looser payment terms. Assessment of the risk of deliveries being delayed or supply chain being significantly disrupted should be considered along with preparation in advance for a rebound in consumption once the epidemic has eased. Business partners may challenge or seek to renegotiate terms of contracts as they experience financial difficulty. This crisis will require focus, but employers must be mindful to protect the organisation from other threats like cyber-attacks (considering the increase in employees working from home) and fraud which often become more likely as criminals take advantage of an already bad situation.
Leaders must be proactive and agile. They must rise to the challenge, put their people first, innovate and communicate. These are indeed challenging times. Please continue to exercise personal responsibility and be safe above all else.
Author: Shelly-Ann Mohammed is the head of ACCA Caribbean. She is a lawyer with over 10 years of global experience and holds an MBA and Masters in Global Business from Oxford University.