Managing in a minefield or Capitalising upon a crisis?
What I, as a business leader, might do, and am doing, when faced with the challenge of leading a business through the 2020 Coronavirus (Covid-19) crisis
This page is simply me, Bob Bradley, founder and Managing Director of MD2MD, sharing some thoughts tips and tools relating to business leadership during the Coronavirus crisis 2020 that I’ve learnt from over twenty online MD2MD discussions in the last three weeks where the key challenges discussed by the business leaders in the peer group meetings has inevitably related to the Coronavirus crisis. These discussions do seem to have been extremely valuable in helping our members address this significant challenge and I thought it might help the wider Managing Director / business leader community if I tried to capture them. Please bear in mind though that as a result of my extensive collation, deduplication and editing process these observations end up being own thoughts, plagiarised and possibly misinterpreted from our insightful members. So please take them as thought provokers to help you decide what will work for your business rather than guaranteed to succeed advice that will be correct in all circumstances and however implemented!
This page was written mid April to share thinking from the first few weeks of the lockdown.
Discussions continued and a further page of tips as members began to look towards a restart are published here.
Enjoy, good luck and let me know what you think makes sense and what doesn’t. And if you have a moment later please let me know what you are doing and how it works. So we can share best practices as they emerge.
Bob Bradley Managing Director MD2MD 10th April 2020
I would manage quickly through five overlapping phases:
SURVIVE – Do what we need to do to make sure we have the cash to survive
SECURE the base – Quickly put in place arrangements (products, policies, processes and systems) that look after our existing staff, customers and suppliers.
THINK strategically – About the likely long term impact on our industry and our business and develop a strategy for success for the new normal
PLAN tactically – About how we respond flexibly and responsively to the situation now such that we are well placed for that new normal.
HELP others – Winning new business will, for many, be challenging at the moment, so instead use the crisis period to be helpful to those you can help. We all need to support each other and society at the moment. So just do what’s right. The bonus is that some good and valuable relationships might result too.
Furlough staff we couldn’t utilise effectively at the moment and
- pay them just the 80% we can recover from government as if we make up to 100%, those working feel unfairly treated
- furlough for the minimum three weeks at a time
- furlough different people on a three weekly rota, especially when necessary to cope with relationship continuity
- eg so that Jane handles Sue’s accounts while she is furloughed and then they swap so that Sue handles Jane’s accounts while Jan is furloughed
- follow redundancy best practice (see https://www.acas.org.uk/manage-staff-redundancies/select-employees-for-redundancy) in selecting which staff we would furlough, although in the circumstances we might (subject to legals) feel we could justify selection based on personal need / situation and not just on business need
- brief staff that furloughing is a positive sign. That you want to retain them to come back to work after the crisis. (Unsaid: otherwise you’d be making them redundant)
- brief staff that they are not expected to do any work, but are encouraged to keep in social contact with work colleagues and in addition to keeping safe, fit and healthy they are encouraged to develop themselves using online training.
- consider how we can help them, without telling them what to do, to return to work more effective and more productive than they were before the crisis.
- consider investing in fee based high quality training or whether the normally free and temporarily free offerings from TED, many universities and commercial organisations would be sufficient. Amongst others I’d look at the Udeour, Coursera, LinkedIn, Skillshare, Reed, QA, Open University, Khan Adadeour and the Open University
- put in place mechanisms to keep staff voluntarily engaged with colleagues, working and otherwise during furlough period. Ideas include an Online watercooler chat every day at say 10am. A weekly pub quiz every Friday afternoon. A weekly update email from the boss. A weekly call from the immediate
Address the challenges of lower workloads that, because of indivisible work and relationships, cannot be resolved simply through furloughing by
- being appropriately open with staff and asking for their support. Most people are finding most staff are being constructive, helpful and flexible and some are finding this is a good time to gain insights into the real motivations, drivers and personality of their staff.
Not assume an extension of furloughing beyond 31st May
- So be considering whether the likely impact on our business means a redundancy programme is necessary, or whether the opportunities created might mean a need to recruit quickly and effectively.
Put in place a hardship fund for employees in difficulty
- to be a supportive employer within a limited, or at least controlled, budget
- to avoid individual case by case decisions that might be seen as arbitrary
- If possible managed by the staff themselves
Ensure the business stands out and be seen as a leader (subject to funding and strategy)
- by investing now in building relationships with potential clients and potential staff
- so we are well placed when they are confident enough to buy or to change employer
Recognise that the uncertainties in short term forecasting and budgeting are very significant
- so invest more time in approximate scenario planning than in detailed line by line budgeting
- ie Rather than work through the detail for a single prediction (guess) of a drop in revenues of 60%, work through the tactics necessary if the drop was 40%, 60%, or 80%.
Whether we needed them or not we would check out the various support schemes that have been put in place.
If we were short of cash in an otherwise viable business, or maybe even if our business was fully viable we would apply for funding through the Coronavirus Business Interruption Loan Scheme (CBILS) noting that.
- The loan must be for a commercially viable business, it cannot fund losses
- That banks cannot ask for personal guarantees from directors for loans below £250k
- Banks can otherwise apply most of their normal commercial terms and there are no restrictions on interest
- Full details here: https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme
Deal with customers refusing to pay debts they acknowledge are due by considering
- Whether they can’t pay or simply won’t pay
- Their value to us as a customer
- Whether they can / will offer something in return for delayed payment
- Kick up a fuss and send a formal letter from lawyers or debt collectors promptly
- PR and Social Media action as many large companies pay attention to viral bad propaganda
- If they are a large and a supplier to government explore whether they have signed up to the Prompt Payment Code (often a requirement for winning government work) and if appropriate complain to the regulator as being disqualified could result in them losing government sector work. See: https://www.smallbusinesscommissioner.gov.uk/ppc/
Recognise that the economic impact of this crisis will be massive.
- The recession is likely to be very sharp and very deep.
- The crisis is likely to last up to a year
- Whilst the first peak is likely to be in April and by May we should be in a more relaxed mode, in past epidemics a second peak has occurred
- The second peak has in the past been worse than the first because the second time people are less compliant with lockdown type conditions
- The economy may pick up very quickly
- Pandemics like this have in the past led to a V shaped recession with a fast recovery not a U shaped one as we experienced from 2008/9.
Consider that the post crisis return to normal will be to a new normal.
- This is going to be a big reset and that the world will be materially different in 2021 to where it was in 2019.
- The world will have changed socially, culturally, politically and economically.
- The crisis may jolt the UK and world economy into a different dynamic
- Just as the second world war kickstarted the rebuilding of a highly successful industrial economy in Germany, this crisis may reshape the British (and other) economy significantly.
- It may finally tackle the productivity problem that economists perceive the UK has been stuck with.
Revisit our key assumptions about the business environment that underpin our business strategy
- Review research that might help me spot which sectors and industries that will gain (and lose) from the changes
- using tools such as PEST and SWOT analysis. (Ask me or google if you need those explained)
- Think carefully about where our industry / sector will be in a year’s time
- recognise that whilst for many demand is down, so is supply and the balance may have shifted the power in the business model
- eg It seems very likely that in twelve months time demand for online meetings and technologies and services to support that will permanently be significantly up on last year and that demand for business travel will be permanently significantly down.
Recognise that tough times often distinguish more clearly the well run businesses with good staff, customer and supplier relationships from the less strong businesses.
Spend time with our team being innovative and creative in exploring how can we turn this situation to our advantage -at least relatively:
- Develop a vision for how our world and business will be (different) in 2021 and explore how we can capitalise upon the opportunities of that new world.
- Explore how the ‘invisible hand’ of the market will operate for our industry
- Which of our competitors, customers and suppliers will be winners and losers as a result of those changes? Which businesses will go bust and which will be irrepairably damaged? And which will emerge as the new leaders?
- eg We have a member expecting competitors, government funding apart, to fail and is ready and waiting to buy their stock or their business.
- Consider the challenges and opportunities that will emerge
- eg We have one member who has cancelled a plan to take on additional office space and is instead planning how to introduce more remote working.
- Look carefully at diversification to maintain and grow revenues
- Is there an adjacent product or service that our customers would value that we could supply when they may be having difficulty getting from their existing customers.
- Should we bypass our channel and supply direct to the end customer while our channel is failing to operate or failing to pay?
Realise that we have more certainty about how our industry will look in 12-18 months than we have about what stage of the crisis we will be at in 4 weeks time. So consider the sequence of stages that will happen in getting to the new normal:
- And how we will respond at each stage. The direction of travel, the likely end result and the sequence of events is probably more predictable than the timing