The COVID-19 viral disease is officially a pandemic now. As of 15 March, there are over 153,000 confirmed cases globally according to World Health Organisation, with 121 active cases in Singapore according to the Singapore Ministry of Health.
Whilst countries are stepping up mass closures to stem the spread of the virus, the impact is being felt across the world. For example, stock markets have witnessed large falls, with the Dow and the S&P 500 in the US recording their biggest one-day declines since 1987.
In the face of a rapidly evolving situation like this with many factors beyond control, many businesses, including those in Singapore, worry about their productivity and profitability. It is a difficult landscape for businesses – from the plummeting demand for travel and the tourism sector’s fear of a prolonged downturn, to the impact of citywide closures and quarantines on global supply chains and manufacturing. In addition, regulatory uncertainties across markets are further complicating future planning.
Yet, paradoxically, it may be firms’ internal processes – the things they could or thought they could control – that may determine their profitability and productivity during this time.
Unfortunately, many companies do not have a ready playbook to default to in this situation. According to Mercer, 51% of companies surveyed around the world had no previously established business continuity or pandemic preparedness plan. Instead, they are figuring out their responses as the situation changes daily. The idiosyncratic nature of the virus and its spread means that even when companies do have a general preparedness plan in place, that plan must be significantly altered to provide a comprehensive response to this particular event.
Everyday meetings are being held in conference rooms around the world (where offices haven’t been closed yet) assessing the appropriate response. The issues are wide ranging, from human resource management to strategic challenges to operational management and information technology. They are asking, amongst other things: Should we remain open? Can our company function effectively if employees work from home, if so, for how long? How can we provide benefits to help individuals with care-giving responsibilities? What should we do about events planned for the future? What is our position on travel? If our employees have to be quarantined, what should be our policies towards leave and compensation? How can we provide clients confidence in our products/services during this time? Do we institute the same policies for all our offices around the world or let each office tailor their own response? How do we continue operations amidst shortages? Will our IT systems support remote operations?
These challenges are complex and evolving. They cannot be addressed or solved by any single division or department of a firm. Time, energy, and resources are being spent daily by the company’s entire workforce – from the top managers to the frontline workers – to develop, establish, and execute a plan. And they will do it all over again tomorrow when the situation changes.
Whilst this is no doubt necessary, it also means that this is time, energy, and resources redirected from the routine operations of the business. In other words, COVID-19 could be making firms take their “eyes off the ball”. And research shows that responding to idiosyncratic events like this can lower short-term firm performance. Of courses, companies that have more slack can handle this more easily.
So, what should firms in Singapore and globally do in handling the COVID-19 pandemic?
The most important action is that they should be diligent about following and monitoring the situation locally, regionally, and globally. As part of this, they should adapt their responses as the environment around them changes. This will be costly, but they should also put in place internal processes that can help them navigate events like this moving forward.
Here are three steps they should be putting in place to help:
• The first step, even if firms had no business continuity plan at the onset, they should work quickly to determine, and importantly, institutionalise one. It may be many months before the situation stabilises, so it still pays to invest in planning.
• Second, employees should be made familiar with the plans quickly. Employees should not be expected to deal with an untested and unfamiliar system when the plan is triggered. Appropriate training, where needed, should be provided ahead of time.
• Third, firms should set expectations with all external entities. Clients, for example, should know how to reach you even if you are not working from the office. Suppliers must be informed of alternate delivery plans.
Taking these three steps today will not eliminate the costs of managing COVID-19 entirely, but they may help to lower it. Waiting until the order book is dry, supplies stop, or someone is infected to determine next steps will be too late – and the productivity and profitability costs for your company too high.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Srividya Jandhyala is an Associate Professor at ESSEC Business School, Singapore. Her research examines the relationship between businesses and governments. She publishes in a wide range of international peer-reviewed journals and her research has won several awards. Her work has been funded by international grants, including from the Strategy Research Foundation, the Initiative d’excellence Paris, and the ESSEC Foundation.