We are witnessing a time of tremendous change worldwide. With the continuous spread of novel coronavirus, the countries across the world are grappling to curb its impact. The cascading effects of the global pandemic have shaken the global economy and businesses across various sectors are bearing the brunt of market crash with some near to closure. With no clarity as to when normal course of life resumes, the situation remains gloomy.
Considering the uncertain times, there are 2 most likely possibilities. Firstly, the situation may remain bad for 3-6 months (infact become worse in the immediate period), but followed by a quick “V” shape recovery, in which case, the economy recovers quickly, businesses come roaring back and the consumers forget that all this ever happened, though there are less and less people optimistic about such a scenario happening with each passing day. Most of the research and experts are pointing towards the second scenario, i.e. the economy and society suffer through a period of 6 months, and demand starts picking up slowly after, people and businesses start resuming activity intermittently, and eventually in a period of 3-6 months from then, things start getting back to their normalcy. In which case, we are talking about the whole of this year, i.e. 20-21 being virtually written off.
Either of these scenarios would require leaders to stand out as there is a popular belief that the world may not be the same ever again. With so much happening all around and companies’ future at stake, it calls for extraordinary leadership on the part of the CXO’s to ensure that they not only survive first, but also tide through with minimum damage and with maximum possible chance of capitalizing when the economy recovers. Now, I know this is far easier said than done, and it is only prudent to talk about survival, and may be too fanciful to talk about building strengths and looking at opportunities, but this is what life is all about isn’t it? Looking at opportunities when there exists none, and thinking differently than the herd.
Here are a few things that I would suggest that all leaders should keep in mind:
Bring down your cost structures
One need not over-emphasise the importance of this point. It is absolutely essential that the organizations and it’s leaders look at every cost very minutely at this time, and try and operate with as little as one can. Depending on whether you are manufacturing or a services business, your overall cost structure would be generally operating anywhere between 70%- 90%, and with revenues dropping to almost to half (even 80-90% in some businesses), one would need to look at each cost very minutely.
Start with your non-personnel cost first – rent, electricity, travel (anyways down to zero right now), marketing, business development and all such expenditures need to be relooked. One would have to look at personnel costs also carefully, as this will always be the highest for all organizations. Many organizations have already resorted to large scale layoffs for the non-essential staff or are resorting to deep pay-cuts. It is only recommended that the leaders look at it from a humane standpoint, and follow the mandate of the government in spirit. One would have to consider the implications of job losses, and the non-availability of jobs in the market for the affected ones at this point. I am hearing a lot of positive stories of organizations preferring organization wide salary reductions, implemented in the top down manner (with the junior most given the least pinch) as well as covering for the barest essentials for the employees (school fees for children, rentals and other household expenses), and trust me that will win over your people for the longest time.
Drive Operational Efficiencies, build frugality
I have been saying this over and over again, and a strong believer in driving efficiencies in tighter times. Generally, when the machinery is running full throttle, and growth is a given, it is easy to run a profligate business and not bother about efficiencies. But when the times are tough, it is all the more important to look at every business, every function, every process and look at efficiencies. It would not only help you bring down some of the costs further as I mentioned above, but more importantly help you run a far tighter ship, and make you absolutely ready and far sharper, when the iron is hot again.
It is also important to build a frugal mindset. Think of yourself as a business manager more than ever, and look at everything you do with that lens.
Build capabilities – will come in extremely handy
Also, these are times, where one has to keep the building blocks for the future in mind. Which is where building capabilities for the future are more critical than ever. Now there may be a counter argument to this that no one really knows the future in these uncertain times (eventually who would have thought of COVID), but nonetheless, which ever business you are in, it is important to do a little crystal ball gazing, and use internal resources for building capabilities in key areas. Especially if you have built reserves over the years, it is important to keep some of that aside and build strong capabilities in key areas. These will be weighed in gold when business activity picks up.
Plan for key skills now
In line with above, it is a little bit contrarian, but important nonetheless to look at some key skills for the future as well. While it may be all doom and gloom at the moment, and it is only natural that organizations and leaders will try and preserve the existing, it is still important to look at what you have internally at the moment. There may be skills which were anyways not present yesterday, but may become absolutely necessary tomorrow, for instance CIO/ CTO roles or digital transformation or analytics, risk, governance, fund raising and many more. You may be well advised to keep your eyes and ears open to such talent. There may also be good bargains available and you as leaders would be well advised to capitalize on this.
Keep a positive mind –set
Remember you are not alone in this. What you as organizations, as leaders and as employees are going through is not unique to you. Your industry may be slightly more impacted due to the nature of the business, but this pandemic has hit us all with equal force, across the globe, and no one is really spared. So no point fretting about it, or letting negativity creep. It is important to keep a positive mind-set, and try and be of more use to your company and the leadership. One has to assume more responsibilities in these times, and the least you can do is to spread a little bit of positivity and optimism, however little it may be. As they say, “This too shall pass”.
Again, it is of utmost importance to be as authentic as you can be in your communication. I have been saying this aloud, but the need for authentic leaders is and will be felt more than ever. Be honest, transparent, but more importantly thought through in your communication. Your teams, subordinates will be looking upto you as leaders for communication, direction and way forward. It is in times like that one gets the true test of leadership. It is in times like these that the “Men will be differentiated from the boys”. So communicate as authentically as you can. Your people will love you and stand with you, even if it means making small sacrifices for you and the organization. Infact, you will ensure long term longitivity and retention for your people.