In the midst of a health and economic crisis such as the COVID-19 pandemic, business owners and leaders find themselves scrambling to respond to immediate issues and directives at the same time that stakeholders’ emotions run high.
It’s times like these that demand leaders create a calm in the storm. Lives of employees, customers, suppliers, their families and the business depend on it.
These guiding principles and actions can help you lead your team through the rough waters ahead:
Data integrity: Ensure information gathered about the pandemic from outside the organization is corroborated and vetted and that mechanisms are put in place to continuously monitor and update your data.
Data-driven decision making: Take the time to review data and information and resist the temptation to react or act without data. Simultaneously, understand that decisions need to be made. Leaders recognize both. They actively seek out data and information, leverage the data for prompt decision making and know when the data gathered is sufficient.
Communication: Consistent communication with employees, suppliers and customers is crucial to help reduce uncertainty and maintain relationships long term.
Survival vs. sustainability: Balance the need for reductions and cuts while investing for recovery and growth in the future. Investment in maintaining and expanding customer relationships, research and development, and achieving long-lasting operational efficiencies sets the stage for life after the crisis.
Actions to Take
Fine-tune mission control: Now is the time to briefly pause and confirm that your mission control team:
• Is the right group of people.
• Understands what their roles and responsibilities are as communicators, leaders, stress-testers and tone-setters.
Internal Reporting: Sound business and financial reporting systems are crucial. Efforts should be made to ensure that base information continues to be gathered, analyzed and shared, including:
• Financial statements — Make getting your company’s financial statements current through March 2020 a top priority, whether internally by a competent team or with external assistance. Then stay on top of and use them.
• Sales tracking — Know where sales are coming from and which products and services are faring better than others to understand how customer needs are evolving and delivery channel effectiveness.
• Production/operations — Maintain the production and operational metrics used prior to COVID-19 but adapt measurements as needed.
Assess and plan: Mission control is responsible for implementing action plans and assessing where you are now, projecting what-if scenarios, and outlining courses of action. Brainstorm “what if?” for different levels of severity and duration. Assessments should include:
• Taking care of each other — How will you protect your workforce, set policies, communicate with your employees, anticipate contingencies and be mindful of the need for confidentiality? Consult an employment attorney to ensure you are in compliance with the changes made to paid sick leave and FMLA by the Families First Coronavirus Response Act.
• Workforce continuity — Consider options for keeping the work flowing, coordinate workload distribution and prepare for contingencies. Ensure vigilance in complying with governmental safer-at-home orders and CDC guidelines.
• Compensation — Consider pay or hours cuts and furloughs rather than across-the-board layoffs or terminations. Explore temporary cuts in benefits with your retirement plan and health insurance specialists.
• Meeting customer needs — Customers have needs. Create a mini-mission control team responsible for analyzing how customer needs are changing and how you can meet those needs. Invest in research and development now to be well positioned when the recovery arrives.
• Manage your supply chain — It is critical to communicate with your tier one and two suppliers to assess risks to your production. Research alternative resources for all your key inputs and prototype alternative materials.
• Watch the vulnerable ones — Identify vendors, particularly those vulnerable relative to their economic viability and prioritize contingency planning accordingly.
• Manage your inventory — Build current, near-term and long-term inventory forecasts, manage inventory on hand, and sell excess/obsolete components. Accept that you won’t have the “right” answer. Guess, then revisit and reassess.
• Operational efficiencies — Tap into the ingenuity of your team to identify, pilot and implement operational efficiencies. Consider to what degree your short-term changes can be converted into long-term competitive advantages.
Next, map out your assumptions for each of the scenarios and leverage mission control and other teams to devise response actions and action plans. Think through contingencies, triggers and pivots. Use virtual tools to brainstorm with your team and tap into the shared knowledge and desire to come out of the crisis stronger.
The next step is likely the most crucial — stress test the scenarios including the development of a cash flow projection. Break the financial forecast into pieces and map it out and tap into your advisory resources if needed. Don’t procrastinate. If you don’t do this exercise, you could be making uninformed, poor decisions.
Lean on your advisers: It’s time to connect with your key advisers to help you navigate the crisis. If you’re missing one of those types, it’s time to fill the void.
• Your accountant — Assistance with tax filing and deposits, financial forecasting, filings for available tax credits and deferrals, and other COVID-19-related resources.
• Your banker — Assistance with the SBA programs recently passed into law, your current line of credit, whether you can access more and whether provisions and covenants of existing loans might be modified.
• Your insurance providers — Prioritize insurance premium payments, understand claim triggers, assess life insurance policies, and coordinate any employee benefit policy changes carefully.
• Your Landlord — Explore rent abatement or deferral options while balancing the needs for operating cash in the business with the obligations of the real estate entity.
• Your personal financial planner — Update your financial plan with revised assumptions given the changes in the market.
Each of the tasks above, once undertaken, has the effect of calming the waters. The plans you make will not be perfect and could be wrong. That is not the point.
The benefit of the analysis and creating a plan is the planning process — the discoveries, conversations and ideas that come out of the process. With the plan in hand, you and your fellow leaders are in a better position to instill confidence in your customers, co-workers, suppliers and others that you are navigating the seas as best you can. You and your team will learn, adapt and create your calm in the storm.