US management consulting firm, McKinsey and Company has released a report with their perspective on the evolving situation and implications of coronavirus, or COVID-19, on businesses.
The report outlines seven actions businesses of all kinds can take as guidelines to aid leaders through crisis management.
- Protect your employees
“The COVID-19 crisis has been emotionally challenging for many people, changing day-to-day life in unprecedented ways. For companies, business as usual is not an option. They can start by drawing up and executing a plan to support employees consistent with the most conservative guidelines that might apply and has trigger points for policy changes…we have seen provision of clear and simple language as well as autonomy to feel empowered. This is combined with establishing two-way communications that provide a safe place for employees to express if they are feeling unsafe, as well as monitoring adherence to updated policies.”
- Set up a cross-functional COVID-19 response team
“Companies should nominate a direct report to the CEO to lead the effort and should appoint members from every function and discipline to assist. Further, team members may need to step out of their day-to-day roles and dedicate time to virus response. A few workstreams will be common such as:
- Employees health, welfare and ability to perform their roles
- Financial stress-testing and development of a contingency plan
- Supply-chain monitoring, rapid response and long-term resiliency
- Marketing and sales responses to demand shocks
- Coordination and communication with relevant constituencies.”
- Liquidity should be sufficient to weather the storm
“Businesses need to define scenarios tailored to the company’s context. For the critical variables that will affect revenue and cost, they can define input numbers through analytics expert input. Companies should model their financials in each scenario and identify triggers that might impair liquidity. For each trigger, companies should define moves to stabilise the organisation in each scenario.”
- Stabilise the supply chain
“Companies need to define the extent and likely duration of their supply chain exposure to areas experiencing community transmission, including suppliers and inventory levels. Most companies are primarily focused on immediate stabilisation, given that most Chinese plants are currently in restart mode. They also need to consider rationing critical parts, pre-booking rail or air freight, using after-sales stock as a bridge until production restarts, gaining higher priority from suppliers and supporting supplier restarts.”
- Stay close to your customers
“Companies should invest in their core customer segments and anticipate behaviour. For example, in China, while consumer demand is down, it has not disappeared – people have shifted toward online shopping for all types of goods. Companies should invest in online as part of their push for omnichannel distribution.”
- Practice the plan
“Many top teams do not invest time in understanding what it takes to plan for disruptions until they are in one. This is where roundtables or simulations are invaluable to define and verify activations protocols, as well as ensure the actions needed to carry out the plan are fully understood and required investment is readily available.”
- Demonstrate purpose
“Businesses are only as strong as the communities of which they are a part. Companies need to figure out how to support response efforts – such as providing money, equipment or expertise.”
This article was first published on retailbiz.com.au