The COVID-19 Coronavirus & Economic Implications: Are we really prepared?
The global stock markets have spiralled to their worst week since the Great Recession of 2008 - $5 trillion wiped off amid increased concerns of the COVID-19 Coronavirus (COVID -19) turning into a global pandemic.What does this mean for how COVID-19 will change the way we work in the near and long term and how businesses will cope with the catastrophic economic impacts that are emerging globally. Business response is in unchartered territory as they grapple with impacts and risks that were mostly theoretical so far. Most business leaders at the helm today weren’t around during the SARS or Ebola outbreak and are mostly responding on the go. Emergency response plans need to dusted off and re-visited. Coinbase, the cryptocurrency exchange has made its own plan to deal with the outbreak, public, to help other businesses.
The COVID-19 Coronavirus is a reality check.
If you weren’t already convinced how the global economic systems are intertwined, COVID -19 has demonstrated not just how connected but how vulnerable our capitalistic economies really are.The outbreak could cause a $30 billion loss just to the airline industry. The Chinese spent a mega $277 billion on travel and tourism in 2018, according to the WTO. They spend $180 million per month during peak travel months in New Zealand. They are now effectively grounded. The cruising industry wasn’t particularly thrilled by the Diamond Cruise fiasco that turned the cruise into a floating quarantine zone with over 700 cases of infection and 4 deaths. Most of China’s urban centres have turned into Ghost-towns (the graphs below are telling of this).
U.S. business activity in February fell to its lowest level in more than six years as companies pulled back on fears that China’s coronavirus outbreak would slow global growth, according to private survey data released Friday. — Wall Street Journal
Cathay Pacific Airways Ltd., Hong Kong’s flag carrier, has asked all its staff to take three weeks of unpaid leave. Singapore Airlines Ltd. joined other Asian carriers on Wednesday in unveiling its own plan to begin trimming costs amid the downturn. — Wall Street Journal
Coronavirus: Jaguar Land Rover is ‘shipping parts in suitcases’ — The company said it could start to run out of Chinese parts for its UK factories after two weeks. Sales in China — which had been key to the firm’s recent resurgence — have “completely stopped. It’s zero,” firm’s boss Ralf Speth said. “You don’t know whether the economy will catch up or whether this kind of loss is just a loss.”
China is also New Zealand’s key trading partner, accounting for 28% of its exports. The country also supplies raw materials for the world’s antibiotics that could have serious ramifications if the situation prolongs or worsens.
The COVID-19 Coronavirus in many ways has exposed the cracks in capitalism and institutions to deal with pandemics and climate emergencies. Businesses that are built on the foundations of mass, continued consumption and complex supply chains have to question their structure and practices.
If we were to create a Pandemic drill to test business preparedness mainly from a workforce and business structure point of view — what might this look like?
Would organisations be ready to deploy active communication protocols? This is where most organisations have begun to take action. Leadership teams are all thinking about how to actively communicate with their workforce — toeing the line between being alert and safe and avoiding a sense of panic among employees. A key outcome they seek is better communication of health advice, official and relevant data while mitigating spread of rumours and fake news.
Would employers rethink leave policies and employment contracts? Are your policies encouraging employees to stay home when sick? Would this lead to employee centric leave policies? Could leave be clubbed into paid time off to offer more flexibility? Will businesses factor in loss of productivity time in salaries and balance sheets as climate emergencies and pandemics become the norm?
Would employers consider shared workforces? What would skill profiles of such a workforce look like? For example could hospitality and tourism workers be trained in emergency response to shift focus when needs arise? Would this help business create sustainable projections for growth? Even intra-company teams — would a crisis like this encourage teams to develop core skills that are deployed across key business functions to encourage interoperability?
Would employers become a key stakeholder in helping families balance work and life? Though work restrictions are primarily in China, extended work from home, coupled with schools being closed will make a progressive employer think about how to support their employees holistically.
Will companies invest in infrastructure to make flexible working possible during calamities? And why not always? If you really could get away with flexible working now then could you consider flexible working as a permanent feature for your organisation? But key infrastructure issues need to be sorted — Do employees need training in remote working? Do they know how to use communication platforms and video conferencing? Can they share files remotely? Or have access to speciality equipment like extended monitors?
Would organisations consider a full blown ‘remote working’ drill? Just like we organise drills to test preparedness for an earthquake or fire, will businesses begin to implement an extended remote working drill, pretending their office was flooded or their city was an epicentre of a pandemic? Most companies do not understand the dynamics of remote working and it is definitely not a switch they turn on. How many companies clearly understand which jobs do people actually have to be in the office for? Would this understanding be possible without a real-life drill?
Sustained lower work-travel footprint? Do we really need to get on a flight for that 2 hour meeting. Businesses are banning all non-essential or all travel in some cases. Tech companies like Facebook and Workday, have cancelled conferences and sales meetings that were to draw thousands of people and are considering hosting a “virtual experience”. Some of the (forced) measures taken during COVID -19 will reduce business carbon footprint — is it necessary to go back to the old ways?
Will organisations act to seek greater visibility on stakeholders and supply chains? Organisations have poor visibility of talent maps and critical risks associated with long term disruptions to business as usual. They are even worse off when it comes to visibility of and engagement with their supply chain and stakeholders. How will this need impact the pandemic readiness plan?
Will pandemics and climate emergencies force businesses to take their foot off the pedal in the pursuit of never ending economic growth?What is the domino effect of your business on the wider economy and vice versa? These questions are only the beginning, focused on a every narrow slice of business complexity. Being prepared for a pandemic needs a serious re-think of every business assumption (including capitalism) we make as leaders.
PS: (Coincidently, The Johns Hopkins Center for Health Security, The World Economic Forum and the Bill and Melinda Gates Foundation hosted Event 201, “..a high-level pandemic exercise on October 18, 2019, in New York, NY to illustrated areas where public/private partnerships will be necessary during the response to a severe pandemic in order to diminish large-scale economic and societal consequences.”)