Coronavirus was called a pandemic around March 11. That is not even that long ago, and it already feels like everything has shifted into chaos. If you consider the virus and its spread in terms of “order effects,” then “first-order” is health. Thankfully, it does seem like the younger members of our population might experience coronavirus mostly as a cold/flu -- but it could be very deadly to older members of the population, and we are already seeing that. A “second-order” effect is the economy and layoffs. Layoffs are already starting in several big industries. It’s going to be a challenge in the EU because many nations (such as Croatia) rely heavily on tourism. If travel is being restricted, it’s good for public health -- less spread -- but bad for the overall economy. Some are already claiming Europe has an “inability” to face this crisis.
Now, there are financial triggers and possibilities in place for the EU, including:
EU can decide to take measures, such as wage subsidies, suspension of payments of value-added taxes or social contributions. In addition, Member States can grant financial support directly to consumers, for example for canceled services or tickets that are not reimbursed by the operators concerned. Also, EU State aid rules enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid. Article 107(2)(b) TFEU enables Member States to compensate companies for the damage directly caused by exceptional occurrences, including measures in sectors such as aviation and tourism.
There are protections and potential bailout options in place. That is good.
But if you are a business owner, how do you manage in a time of crisis like this? What are the strategies?
Start with costs
You absolutely need to get a hold on costs first, because right now we don’t know exactly how long this will last. If it’s contained and the curve is flattened, it might be 6-10 weeks, as Bill Gates recently said. The worst-case scenario might be close to 18 months. Figuring out six weeks of costs vs. 18 months of costs is very different. Start now. This means:
- What are your options with employees?
- What are your options with vendors?
- What are your options to keep producing or maintain the core products/services while spending less?
This will vary by industry. If you need to lay people off or “furlough” them, please remember it’s a very emotional situation. You are removing some income from a person. They need it to live and pay bills. So if you need to do that to keep your business going, it is understandable -- but show empathy. You may have heard of your phones being let go (laid off) by text message or a quick email. We understand it is a chaotic time, but if you are removing someone from income, try to do it via a phone call or a face-to-face meeting.
Hopefully, this does not sound rude, but an uncertain crisis time is not a good time to hire new people.
First of all: hiring is a gamble. You may get someone awesome, but you may get someone who is not a good fit at all, and just was good during interviews.
Second: why hire a person you may need to fire again shortly if the virus persists? It is much better right now to work with contractors and outsourced teams, where the relationship can scale over time based on need.
Be open. Communicate. Be transparent.
A lot of people are scared and confused and they look to leadership to explain what is happening, how long it might last, what it means for their job and income, etc. Be as open and transparent as you can with both employees and vendors. Everyone knows things are going to be hard. People have accepted that already. They don’t want to be lied to at the same time. So be transparent with the people you deal with in business.
Overall leadership strategies
Here are 23 different ways to approach leadership, many of which are important for crisis times. Many of the lessons are from people who have built very large, successful businesses -- so there is good advice in there for all of us.
McKinsey consulting has also put together a great guide to the coronavirus and what business leaders need to know. This guide is especially important if your company is “leveraged,” meaning you use borrowed money to finance much of your assets. Heavily-leveraged companies are not set up well for an 18-month pandemic, but McKinsey has good advice on how to manage cost and risk in that time frame.
Korn Ferry, which has done 70 million evaluations of global business leaders, breaks effective crisis leadership into six categories:
- Anticipate– predicting what lies ahead
- Navigate– course correcting in real time
- Communicate– continually
- Listen– to what you don’t want to hear
- Learn– learning from experience to apply in the future
- Lead– improve yourself to elevate others
These are not easy, of course. Even No. 1 -- “Anticipate” -- is hard because right now no one knows what is coming next. But this is still a good list of steps to keep in mind. Korn Ferry also says to “start at the bottom” of Maslow’s hierarchy of needs, meaning basic needs. Think about it like this: if people are concerned about finding toilet paper and hand cleaners, they do not want to be getting emails from you about the six-month strategic plan. They are more concerned with the toilet paper. So remember that as you navigate this crisis.
And there have been 15 million articles already written on managing remote/work-from-home employees better, so we will not rewrite those articles here. Here is one guide. As with everything, it comes back to communication and clear goals -- and, as a leader, you need to put aside some of your assumptions and need for control. Just because you cannot see someone all day in their office does not mean they aren’t working hard. People work hard sitting at the beach; the location does not matter if people want to do a good job. Remember that.
The bottom line
This is going to be a hard time for everyone, especially for the next few months. Do the best you can to stay afloat and manage your costs in the short-term. In the long-term, let’s see where this goes and how long it lasts and what the biggest impacts are.
There is an opportunity here to change the entire culture of your business and how you approach customers and vendors, but most companies are not ready to worry about that right now -- just know that it’s a future possibility. For now, be strong and be safe. And if there are any core software development projects you need help with in the near-term, reach out and we would love to help.