COVID-19: Game Plan for Founders and Leaders
COVID-19 has shaken our society and economy. For a majority of companies it has gone from business as usual to crisis-management. 85 % of businesses within Norway have responded that they are considering down-sizing. Combined with weak oil-prices and “closed borders” we are battling in a deep recession. In such uncertain times, employees look to leaders for actions. We will provide you with some insights on how to assess the situation and the risks, as well as suggestions of measures to take.
First order of business is to understand the impact and the level of risk your business is carrying. Typical areas of risk could include;
Reduced revenue due to restrictions or drop in market demand
Financial uncertainty and lack of control
Third party risks
Employees and retention
Loss of productivity in organization
The first step you need to take is to assess these and any other possible risks you are carrying, and identify the ones relevant to you - We will provide you with some insights on how to assess the situation, as well as suggestions of measures to take.
Is Revenue Dropping? Look To New Sources
Whilst most companies are revamping sales and following their standard approach for operations, others also enable a team to look for ways to take advantage of the situation.Gather a team of strategists and problem solvers within your organization and invite them for a brainstorming workshop. Let them identify new business opportunities, models or services that can effectively be implemented and impact the business short-term and long-term. This is not the time to build an equivalent to SpaceX. It should be feasible to implement within weeks. Don't overcomplicate - but pilot, test and evaluate the likability for the business innovation to impact. Before you conclude an internal crisis, you should look to other solutions, new sources of income and refocusing value creation in the organization.
Read more about how you can reignite your sales here.
Cut Excessive Cost
The natural instinct when drop of demand or revenue is to reduce risk liabilities through cost optimization. Identify critical infrastructure, software and suppliers, and cut/suspend the nice-to have. If you have not already optimized your cost base, this might be your silver lining.
Assess Financial Situation And Create Financial Window
Alongside your efforts to maintain business and keep costs down, you need to assess the overall financial risk for the company. Not all founders have the direct support of a CFO. To be able to get a clear understanding of the implications short-term and long-term, we recommend the following to reduce risk.
We have set up a tool-kit and a step-by step guide for financial planning here.
Develop Financial Scenarios
Understand the immediate and long-term impact of the crisis through developing financial scenarios and forecast planning. Do not be overly optimistic in this planning, as this will cause you to action late, and this can impact negatively. We suggest getting a rolling and real-time cash forecast which covers company specific data to assess areas of EBITDA risk. This forecast should at this time be at a week-by-week level or real-time, to enable you to make swift and informed decisions.
Define Action Plan Based On Scenarios
There is a time for everything - make sure you get this timing right. Use your financial forecast and scenarios to create a plan on when to make decisions and what to base them on. This will enable you to make faster decisions and also provides a time frame for revenue increasing measures to have an impact.
Identify Third Party Risks
Many businesses are dependent on third parties in their daily operations. For some supply chain management will be critical in order to carry on business. As an example, the dependency on freight and supply network can quickly reduce the flow of critical components to your hardware. Others might have partners or service providers that are dependent on travel to deliver, or rely on being onsite. We suggest that you map all critical suppliers and understand the potential risks impact. One way to do this is by setting criteria based risk assessment for all critical suppliers, and further action towards identifying new partners or suppliers that can support you through the pandemic.
Prevent Loss Of Productivity
Most companies in Norway are experiencing radical decline in sales, and an increase in projects or services being stopped. This demands a re-set of priorities within the organization, and a constant monitoring of productivity and focus. The resetting of priorities should be impact related. We suggest that all business units re-visit or revise their OKR, targets or metrics to impact related work and focus. Each business unit leader should be reporting daily and weekly on activities and results. Targets should be short-term, to maximize focus and impact.
You will find best practices of remote work to maintain productivity here.
Communicate Clearly And Early
Make sure to include your employees in the process as early as possible. Make sure that your employees are aware of the situation, understand the impact and risk, and are brought in on the game plan to fix it. This will help you unite behind the plan, bring down uncertainty, increase productivity and reduce retention.
Many businesses are experiencing a shift in way of working, due to home office. It is very important that the shift in team activities, targets and metrics align with the new way of working, and that all employees are on board with this. Find some tips on how to manage remotely working teams effectively while maintaining culture here.
Employees And Retention
Once you have gained some overview of the impact you need to decide on a communication plan towards the organization. Some will most likely be impacted. Leading through a crisis is a communication game.
This is the time to call upon all leaders in the organization to rise to the occasion. There should be a clear alignment within management and organization in regards to the game-plan, focus and prioritization. All should have clarity on the developed scenarios. Management should engage in more frequent communication between themselves and towards the organization, to ensure a collective focus.
Crisis also triggers fear in an organization, and people respond differently to the unknown. Uncertainty can create lack of productivity through unnecessary noise or focus within the organization. Each business unit should therefore create daily or at a minimum weekly stand-up meetings to realign on the focus, and to boost shared accountability.
To avoid unnecessary noise or fear within the organization, establish a clear structure for how and when company updates will be shared within the organization. This creates some certainty and allows your team to focus on what they actually can impact. Be honest and truthful in your communication and be as transparent about all measures and actions taken or planned by management.
Utilisation Of Workforce
Management should assess the current utilisation of the workforce, and based on the re-set priorities of the company effectively look to temporary layoff. This is the time to think about the “big picture” and avoiding permanent layoffs. You know your financial run-way, and you need to be cynical and not emotional in your prioritization. Hopefully you have communicated properly from the start, which will make this process easier. If temporary layoff is the alternative, download our free Legal Tool Kit (incl. templates) or download our also free Support Kit For Temporary Laid Off Employees.
Hopefully this provided you with some relevant information, and some guidelines on how to act during the current crisis. To sum it up, these are the three steps you should take:
1. Assess the situation and the risk and identify the financial impact and scenarios you are looking at.
2. Communicate clearly, communicate widely and communicate early - unite the organisation behind the problem with a shared goal.
3. If push comes to shove, seek advice amongst peers, make clear and firm decision and remember to communicate. If you would like to receive expert advice, you can schedule a call with one of our consultants specialised in leadership and management or alternatively one of our sales and business consultants.