Liftgy

8 Points to Remember While Designing an Effective Covid-19 Crisis Management Plan

Home /

As they say, if there is one thing certain in life, that’s uncertainty. Coronavirus is one of those things. We never saw it coming! I remember Bill Gates discussing something like Covid-19 on ‘TED TALKS’ way back in 2015. (https://www.youtube.com/watch?v=6Af6b_wyiwI) However, I feel we are paying the price to avoid his Warning !!

The world is going through turbulent times due to the outbreak of COVID-19. The corporate sector is facing unprecedented uncertainty they were never prepared for and are designing response plans to come out of it. Coronavirus has caused great havoc, claiming more than 3.07 Million precious lives globally as of April 23, 2021, and pulling down global GDP growth to an all-time low with the majority of nations reporting a negative growth rate.

The Impact of Covid-19 on the Corporate Sector:

Global firms are now faced with the dual challenge of meeting strategic goals & customer’s demands. Coronavirus will make the world remind of the situation faced at the time of the 2008 financial crisis with a fall in demand, reduction in consumer spendings, financial uncertainty, disruption in the supply chain, delay in investments, job losses, and restrictions in travel.

To overcome the retarding effects of the current situation, organizations must design an immediate crisis management plan to revive their mid & long-term financial results. The plan must do equal justice with employees, customers, cost, revenue, reputation, and stakeholders.

Points to Consider While designing an effective Crisis Management Plan:

Here are the key aspects of a well-thought Crisis Management Plan:

1. Layoffs: Might be Short-term Gain but Long-term Pain:

It is often seen that in the event of a crisis, the easiest way adopted by global companies to save cost is laying off their employees, Majority of them forgets once the crisis is over and it becomes business as usual, it will be a hard nut to crack for them to hire the employees. Furthermore, it will also negatively impact their brand image. Companies spend billions on corporate social responsibility to build their brand image and lose it all with one negative act. The factor that determines the triumph of a company is how much it values its employees. This is a time when the organizations have to be adaptable to the change and act in the best interest of their employees and profitability. Employers must brainstorm on developing alternative working arrangements to ensure swift operations of the business within the boundaries of labour laws. Companies must also come up with an employee support program and must prioritize the mental & physical health of their employees.

2. Mitigating Risk through Effective Communication:

It is of paramount importance to have clear, prompt, and transparent communications at the time of crisis as the company requires or may require ongoing support from employees, suppliers, regulatory bodies, investors, or customers. Transparent and prompt communication will keep customers updated with the new products, or discounts, keep clients aware of the company’s progress, and employees with the frequent changes in the company’s strategy. Proactive & well-planned communication will mitigate most of the business risks such as: production disruption, damage to brand image, legal cases, or liabilities due to disrupted obligations to the customers. To make this happen, technology has a decisive role to play. Technology can facilitate both face-to-face (F2F) & non-face-to-face communication. Companies must also plan for an increase in network usage and outage and design a contingency plan to meet any unforeseen circumstances.

3. Keep a ‘bird-eye on Budget Deficits:

Analyze the impact of the crisis on the budgets and the business plans. It is advisable to stress-test the financial plans for various possible situations that can be faced by the business in the short & long term and calculate its impact on financial performance. If the impact is minimum focus on being agile and revise business plans at regular intervals. If in case the business has been seriously impacted by the crisis, the firm must curtail its operating requirements, and reduce dependency on vendors and temporary workforce. The firm should also consider other options such as debt financing, credit support from investors or banks, near-term capital raising. It must also re-evaluate all the projects & costs associated and conduct feasibility analysis, analyze the cash-flow constraints. It is always advisable not to put any project on hold as it will not only impact the cash flow but also have a high restart cost later on. The company must come up with a proactive plan to generate sufficient cost savings for the current & future needs of the business.

4. Legal Challenges:

Firms usually face legal challenges and are prepared for them. However, this time situation is like never faced before. There can be disputes in employment laws, contractual terms, personal benefits, and customer-supplier contracts due to disruptions in the supply chain. To avoid any possibility of legal challenges, the company must conduct a frequent contract risk assessment to identify the problems early and take corrective action in advance. It is necessary to consult the legal team more frequently on potential liabilities, consult technology teams for security breaches, and business units on how to manage the communication effectively.

5. Evaluate Financial Implications:

The company’s finance teams must work towards designing effective cash-flow plans and early warning mechanisms to detect the disruptions in markets. Firms should also opt for scenario planning to evaluate the real effect on the company’s finances planning and liquidity. Amid crisis, it is also of prime importance to develop a well-though liquidity monitoring mechanism, negotiate financial terms with the clients, and take the utmost benefit of government incentives during the crisis. The company must also keep an eye on the changes in taxation, labor policies, compliance, and health & safety regulations.

6. Cyber Security

The situation created by COVID 19 will pressurize employers to adopt more remote work than ever before. This will also give an invitation to cyber threats. The company must have a dedicated, and quick response team to resolve these issues and make employees aware of every potential security threat such as phishing and data theft. The firm must also evolve security systems to avoid intrusion.

7. Frequent Monitoring of Business Continuity Plan 

It is of prime importance to re-evaluate the effectiveness of business continuity and recovery plans through frequent testing and updates.

8. Start Planning for the Recovery Phase

The companies must brainstorm on planning their recovery phase. this includes starting disrupted operations, taking preventive measures to curb the spread of the virus, production ramps, staffing requirements, and security issues.

 

Liftgy