How organisations can survive COVID-19

[This article is the second in my COVID-19 series, helping organizations and people conquer the crisis. The first can be found here and the third can be found here.]

Organizations and businesses will be significantly impacted by government actions all around the world as they implement different levels of social distancing measures to curb the spread of COVID-19 and ‘flattening’ the curve.

South Korea has been successful in flattening the curve and stopping the spread of COVID-19.

After organizations have initially responded to COVID-19, they must now develop longer-term strategies and implement actions to keep their businesses running and survive the impact of COVID-19 on their operations, especially in during the acceleration phase of COVID-19.

Employees will have to quickly adapt to new ways of doing work as their employers grapple with short-term and long-term strategies to implement.

It will be a collaborative effort between employers and employees, both trying to adapt and survive COVID-19.

Levels of social distancing measures

The different levels of social distancing that governments are using can be described in the following manner, depending on the progression of an influenza pandemic:

Voluntary avoidance of crowded places — This involves avoiding crowded places.
Self-separation — This involves avoiding contact with others and staying home when possible.
Self-isolation — This involves voluntarily remaining under home quarantine and avoiding contact with others.
Total isolation — This involves not leaving your home, using public transportation, having supplies delivered rather than doing your errands, and, in the case that you do need to leave your home, wearing a mask and maintaining one to two meters distance from others.
Mandatory quarantine — This involves government imposed separation or restriction of movement of individuals, groups, or communities, for a defined period and in a location determined by a public health authority.

As governments ramped up efforts to contain the spread of COVID-19 during the early stages of the progression of an influenza pandemic, their actions have impacted businesses and organizations significantly. More so when organizations are still trying to stabilize their services after the initial response.

Importance of business continuity planning

For organizations that do not have business continuity plans, the initial shock can be rude.

ISO 22301:2019 Security and resilience — Business continuity management systems — Requirements is an International Standard for implementing and maintaining effective business continuity plans, systems, and processes. Keep the development of your business continuity plans practical and short.

Unfortunately, business continuity management has not been taken seriously by many organizations.

Assessment and categorizing of services

Businesses would have done their initial assessments of their services and categorize each of their services into the following categories:

Essential service that must continue (must continue).
Critical service that should continue (should continue).
Normal service that can continue until significant social distancing measures are activated and thereafter, the service could be postponed until further notice (continue until postponed).
Normal or business-as-usual service that can be postponed immediately (postpone immediately).

The criteria for assessing which services are essential and non-essential should be aligned with the organizations:

Mission — What do we do?
Vision — Where are we going?
Purpose — Why do we exist?

The criteria for assessing which services are essential and non-essential for public purpose organizations — public sector and not-for-profits — include:

Emergency response and health protection functions.
Front line services that protect and reduce risks to the health and safety of patients and clients.
Statutory functions and obligations.
Functions that maintain the financial sustainability of the organization, funded entities, and suppliers.
Community services that include education, homeless accommodation, judiciary, correctional facilities, etc.
Functions that meet central government requirements and processes (Parliament and Cabinet).

What are your essential services?

Essential services could include paid services that are delivered externally to your customers or internal corporate-type services like making payments to employees and maintaining the organization’s IT infrastructure.

It may also include new or additional services that must be created and delivered as part of the organization’s COVID-19 response.

Impact of social distancing measures

Depending on which COVID-19 response phase organizations find themselves in at the moment, the ever-changing social distancing measures implemented by governments can and do significantly impact the way businesses are managed and continue to operate.

But things are moving so quickly

Flexibility will be the key to survival.

Services initially categorized in the ‘must continue’ bucket can move to the ‘should continue’ or even the ‘postpone immediately’ bucket if externally imposed factors require significant flexibility and changes in service provisioning.

Changes to social distancing measures will significantly alter the type and breadth of services delivered by businesses and governments.

How can organizations respond to COVID-19?

How organizations respond to COVID-19 will heavily be influenced by the levels (or severability) of social distancing measures implemented by governments. These external limiting factors will play a significant role in determining what organizations can do internally.

The COVID-19 Response Framework, shown in Figure 1 below, provides useful guidance for organizations to proactively manage their response to COVID-19 beyond the initial actions already taken (or to be taken).

The framework is based on two factors:

COVID-19 response phases that correspond to the typical bell-curve infection or pandemic profile.
Levels of social distancing measures implemented by governments aimed at arresting the spread of COVID-19 and flattening the curve.

Figure 1 — COVID-19 Response Framework

The COVID-19 response cycle of action-maintain-resume will guide how organizations can respond effectively and continue to operate efficiently during COVID-19.

Apply the principles in this framework into your own business and organization. It gives various scenarios that should be considered as part of your organization’s strategic responses to COVID-19.

How ABC Company survived COVID-19

Let us use ABC Company, a fictitious company, to illustrate how the COVID-19 Response Framework can work for your organization.

Use the key questions in the framework to develop and implement your business and operational strategies as your organization transitions from one (pandemic) phase to another along the response cycle.

Your strategies will be influenced by the type and severability of social distancing measures implemented by your government.

Agile decision making adopted

Making decisions in an agile way means working iteratively, collaboratively, and with transparency.

During COVID-19, executives of ABC Company have released their reins and empower teams to make decisions.

Key employees and teams at ABC Company are regularly updated daily on the COVID-19 situation and on assigned tasks. They are encouraged to give feedback constantly.

Teams know what to do. They discuss issues together and come up with solutions.

A central coordinating group formed

The purpose of this coordinating group is to steer ABC Company operationally, serving as an important information center, managing risks, issues and responses, and aligning all internal stakeholders by centrally coordinating all internal COVID-19 responses and projects.

This will give a coordinated and integrated approach to ABC Company’s internal COVID-19 response, thus avoiding duplication of work and efforts across the organization.

This coordinating group can serve as the main source of information and a single source of truth where members discuss matters, creating communication and action plans, and aligning key messages.

ABC Company’s coordinating group could focus on the following deliverables:

Creating a threat-map dashboard — Using digital tools to create threat maps with real-time data imported from internal and public sources. For instance, location and numbers of employees working from home, list of essential services, critical employees required to perform essential services, and non-critical employee availability and mobility.
Establishing an employee deployment and mobility database — This database will capture skills and availability data from all employees across ABC Company. This will facilitate a centrally coordinated deployment of competent employees with the appropriate skills to perform essential services. A skills inventory survey is conducted to obtain the latest information on employees’ skills and their level of proficiency.
Developing an integrated whole-of-organization COVID-19 response plan — The coordinating group will regularly get updates from key internal stakeholders — ideally, at least twice a week. Its members can then integrate these reports into a plan to ensure that all teams coordinate their efforts and follow best practices.
Establishing a risk and issues log — While a threat map will make many risks visible, it will not capture every important development. If employees and teams become aware of any additional threats, issues, and risks, they can immediately log the information in a central database accessible to all employees anywhere, thus allowing the coordinating group to respond quickly with interventions and solutions.
Establishing a ‘self-declaration’ work-from-home database — This database will discharge ABC Company’s responsibility under the applicable occupational, health, and safety regulatory requirements. It also ensures that ABC Company’s duty of care obligations for the provision of a safe working environment, even whilst working from home, is maintained. Employees have an avenue to provide a ‘self-declaration’ that they have complied with all working-from-home policies and requirements, whilst ensuring that their homes are safe for carrying out ABC Company’s work.

Risk assessment and impact on the business

A central coordinating group listed possible impacts on ABC Company’s business including estimating the financial impact of COVID-19.

The impacts on ABC Company will likely be most significant in the following area:

Sales — Particularly when ABC Company does not have much online presence.
Staff availability — With people likely to be subject to restrictions on their movement, their ability to work will be curtailed.
Supply chain — ABC Company relies on suppliers from badly impacted parts of the world.
Finance — Particularly when ABC Company’s cash reserves are low.

Respond and stabilize operations

ABC Company is frantically stabilizing its operations by standing down non-essential and non-critical services after they have categorized their services and prioritized their resources.

The company has diverted its non-essential resources to deliver essential and critical services.

As the organization is moving from ‘initial response’ to ‘stabilize operations’ phase, the management team of ABC Company has been thinking about asking their employees to work remotely from home especially when their government introduces self-separation measures.

Financial statements update

ABC Company updated its financial statements as part of its initial response. A significant amount of information on its financial health and performance was gained by analyzing its financial statements through financial ratios.

This will enable ABC Company to make the best possible decisions in a difficult environment base on the most up-to-date information on the state of its business finances.

Remote working has its challenges

The management of ABC Company noted that employees working remotely from home using the Internet and limiting technological infrastructures do not have the same efficiencies as employees working in a well-equipped office.

The face-to-face element of doing business is lost with remote working and online meetings. Human relationships and connectivity are also lost.

Thriving with constant changes

Within a period of weeks, new self-isolation measures were introduced. This means that all employees of ABC Company should be working remotely from home.

There is mad scrambling by executives of ABC Company to find the appropriate IT systems, capacity, and infrastructure to enable their entire workforce to work remotely from home and to continue providing essential and critical services to their customers.

The business has to compete fiercely with other businesses requiring the same IT capability and capacity.

Reclassification, re-prioritization, and re-stabilization of services

ABC Company must continuously re-classify their services (as service models evolve), re-prioritize their resources, and re-stabilize their services in addition to maintaining some level of essential services as long as there are constant changes to social distancing measures implemented by their government.

This will be inevitable as the number of COVID-19 cases increases.

Talking to key suppliers

ABC Company is regularly talking to their key suppliers about their ability to deliver reliably during this crisis.

Additionally, ABC Company is regularly ensuring that the supplies required can be transported to its warehouses at the agreed or lower costs/prices.

Getting stuck in circles

Regular operational, resourcing and risk assessments must be conducted across the organization.

It is easy for ABC Company to get stuck in and in-between the two phases of ‘stabilize operations’ and ‘maintain essential services’.

ABC Company can struggle to cope, especially as cash flow gets tighter. For example, we have already seen many retail shops and hospitality outlets have suspended their operations for a period of weeks, leaving their employees without work and pay.

Thinking about business-as-usual activities

During the initial stages of the pandemic, as ABC Company stabilizes its operations, business-as-usual activities like corporate reporting or budgeting will take a back seat.

But if the peak of the infection or pandemic curve is prolonged, then ABC Company will have to think about a strip-down version of corporate reporting, budgeting, and planning processes.

These business-as-usual, corporate-type activities must still carry on in the background especially if there are compliance and regulatory obligations required of ABC Company.

Scaling down of services

Essential services that were once delivered by ABC Company face-to-face to its customer will likely be discontinued. They may even be significantly scaled-down as social distancing measures get tighter.

Instead, all customer engagements will have to be delivered by telephone. This will include new ways of using technology to stay in touch with customers and employees.

Adapting and changing the business model and operational plans

As a consequence of adapting to different pandemic phases, ABC Company must continuously pivot its business and service models and develop new operational plans on-the-run, in an agile way.

Service models must be changed to comply with mandatory social distancing requirements.

These constant changes will impact employee availability and service provisioning.

Scenario planning will be important

ABC Company has embarked on some scenario planning based on the following timelines:

Timeline 1 — One to two months of business impact.
Timeline 2 — Three to four months of business impact.
Timeline 3 — Four to six months of business impact.
Timeline 4 — More than six months of business impact.

The purpose of these scenarios is to determine whether ABC Company can survive operationally and financially over the short-term, medium-term and longer-term.

The assumptions that ABC Company used to produce its pre-COVID-19 budgets and financials are most likely no longer relevant.

ABC Company took its list of possible impacts of COVID-19 and re-did their budgets. It has included a range of unthinkable scenarios, such as a 50 to 80 percent decline in sales over three to six months and a critical supplier is unable to supply a key item for six weeks.

They have carefully considered how each of those scenarios impacts its cash flow and financial health of the organization.

Cash is king

ABC Company is forecasting their cash flow very conservatively, both in the short term and the next 12 months. It is restricting spending as much as possible.

It is finalizing what commitments they must meet — payroll, rent, committed contracts.

The organization has prepared a cash flow forecast, which is updated weekly.

Manage revenue streams

The market volatility and potential recession will no doubt have an impact on ABC Company’s revenue streams. More so when recession hits and customers are being more conservative.

As earned income streams are likely to be reduced, ABC Company is thinking through how they can mobilize most effectively now.

Generate liquidity from other sources

ABC Company has already secured a line of credit from its bank. It will draw down on it now to fund its operations.

There are outstanding debts that ABC Company needs to manage. It is paying attention to the financial covenants as many banks may have the right to call back the loan if organizations hit certain metrics of financial distress.

ABC Company is not waiting for this to happen and is communicating early with its bankers to discuss options.

Making an insurance claim

ABC Company has contacted its broker to immediately discuss what coverage it has and what options are available to it.

Unfortunately, business interruption insurance does not cover ABC Company’s precautionary actions of closing its business premises to visitors or customers. Business interruption coverage typically does not respond where you make the voluntary decision to close your own doors without direct physical damage or contamination on-site.

If there is a government closure of ABC Company’s facilities which results in an income loss, coverage will likely only apply if there is actual contamination or physical damage within a given radius of its location. This means that a precautionary shut down by the government would not likely trigger any insurance coverage for ABC Company.

The presence of coronavirus at a given location may be considered direct physical damage. This will depend on the facts, the wording in ABC Company’s insurance policy.

Generally, recovery for business income losses under these circumstances may not be a straightforward claim for ABC Company.

Not forgetting the health and safety of people

The health, safety, and wellbeing of employees and customers are important to ABC Company.

When additional personal protective equipment, hand-sanitizers, etc, can no longer be purchased and obtained immediately, more elements of their essential services will have to be transformed.

At some stage, executives of ABC Company will have no choice but to scale down the delivery of their essential services, some more than others.

The road to normalization

Where there is an indication that the pandemic curve is flattening, ABC Company must plan and prepare for the move from the ‘maintain’ phase to the ‘resume’ phase.

This is the road to normalization, the light at the end of the tunnel.

Knowing that this could be months away, ABC Company has already started preparing for it now.

Public purpose organizations are also impacted

Government departments and agencies and for-impact or for-purpose organizations will also experience similar challenges as ABC Company as they try to operationally survive COVID-19.

The key is to plan ahead. Organizations do not plan to fail, but the fail to plan.

Public purpose organizations will have to constantly re-stabilize their services and operations depending on the pandemic phase they find themselves in.

They do so by re-categorizing their services and re-prioritizing their available resources around changes to social distancing measures.

They also have to consider the limitations of a dispersed workforce working remotely as individuals without face-to-face interactions and possibly without good technology connectivity.

Opportunities for the public purpose sector to innovate

The public purpose sector organizations must evolve during COVID-19.

Different or innovative ways of public administration and service provisioning must be found and implemented when delivering essential public services.

There is heightened public expectation for governments to step up their game and take care of their citizens during these challenging times.

Role of central governments

Central governments and politicians must realize that the fluidity of what constitutes essential services will change week by week during a pandemic.

The makeup of these services will differ significantly based on the different levels of social distancing measures that are implemented progressively.

Bureaucratic mindsets and processes must also change to suit the times. Working in an agile way is key to quick decisions being made.

Different ways of working

The COVID-19 pandemic will force everyone to significantly rethink how they work, operate and deliver services and do business.

Businesses and governments must make bold decisions and technological investments.

They must take a risk in order to survive COVID0–19.

Services provided during COVID-19 will look so different when compared to pre-COVID-19 times.

Current business, operating and service models will have to change. These models will have to constantly evolve or transformed to suit the changing circumstances driven by COVID-19.

License to innovate

Everyone during COVID-19 has an open license to question existing or ‘old’ ways of doing work with a view to operating differently, efficiently, or innovatively.

This includes proactive regulatory approaches where there is legal protection from coronavirus-related lawsuits especially for those medical professionals acting in good faith.

New ways of doing work will definitely emerge.

Is there an end game in sight?

Any perfect response will not end the pandemic.

As long as COVID-19 persists somewhere, there is a likely chance that one infected traveler will reignite fresh sparks in countries that have already extinguished their fires.

The ‘new’ normal

When social distancing rules are gradually relaxed, organizations will have to get their business and operations up and running as ‘normal’ again.

Hopefully, this ‘new’ normal will look very different from the ‘old’ normal!