Few businesses around the world can claim to have been immune to the new coronavirus outbreak. With the death toll climbing rapidly, by 9 February the new coronavirus had caused more deaths than the SARS outbreak in 2003, which hit the global economy and devastated many businesses in Asia.
Today, the situation is more challenging as the world is smaller and more connected. China also has a larger role in the global economy and in spite of the virus being centered in China, it has impacted companies across multiple markets in Asia and beyond.
Exposure to the virus may directly impact staff, suppliers, investors and customers. However, fear, stoked by press and social media exaggeration and fake news, can be far more detrimental and far-reaching, potentially exposing businesses to reputational and legal risks, reduced financial and operational performance.
To handle any crisis quickly and effectively, business leaders need to focus on four key areas: business resilience, employee communications, investor engagement and corporate social responsibility.
Few companies are well prepared for comparatively rare events such as epidemics and pandemics, and even the best business continuity plans can prove inadequate.
It is important to stay grounded and focus on the organizational basics. While the general rule is to follow reliable expert advice from global and national health experts, it is equally important that you communicate with your staff, partners, investors and customers around your resilience plan, as ensuring key stakeholder support is critical. Do not be tempted to improvise due to public or media sentiment.
Business leaders are advised to maintain a firm grip on business fundamentals in order to keep your company competitive during the outbreak. How is this impacting your market, your supply chain, your insured risk, investor confidence and your regulatory environment? How would your business operations be impacted if dramatic containment measures were implemented? Do you have the right technology and systems to maintain business operations through remote working? While you may think you have the answers to all these questions, it is a good idea to have a timely review of them and to share them with your stakeholders as appropriate.
Hope for the best and prepare for the worst. Always prepare for extremes. Take the time to think through your approach to the toughest challenges and business decisions before a crisis hits.
At the same time, it is worth preparing for the “recovery” phase in addition to the “response” phase of the outbreak. How can you shorten the ‘time to recovery’ for your business and to bolster confidence among customers and investors when the outbreak ends?
Planning for the recovery phase may not strike many as a priority, but a good start to the recovery phase can give businesses a significant advantage. Recovery of business value and performance is the mark of true resilience.
Communicate with your employees
People factors loom large in the success of every business. Most business leaders are aware that employee communication is essential to build trust, engagement and performance. But what does employee communication need to address in a situation like this?
Global workforce travel restrictions have made communication difficult. This is further complicated by global and local recommendations regarding self-quarantine, “work from home” arrangements, as well as prolonged school closures.
Effective employee communication involves demonstrating empathy and appreciating the human impact of the coronavirus. Business leaders should not focus solely on policies and procedures, but also highlight that employees’ safety – and that of their friends and loved ones – is the most important concern.
Senior management is key to unlocking effective employee communications. You need to equip them with the right information to answer employee questions confidently and to convey the company’s approach accurately and consistently.
Keep your message clean and simple. Remember that employees want simple answers to simple questions. Can I work from home? How do I do that? Where can I and can’t I travel? Avoid messages with detailed policy descriptions that require decoding.
Communicate with your employees regularly and frequently, but ensure that such communication is meaningful, not just repetitive. Remember also that communication is about dialogue and exchange, not just broadcast – ask questions, promote sharing, and give employees opportunity to engage. If the situation changes suddenly, don’t wait for a scheduled communication to tell people, get the message out as soon as possible.
Engage with your investors
It is very difficult to predict how long the outbreak will last at this early stage. It is equally difficult to estimate the severity of the overall impact on a business. It’s for this reason that you should keep your investors informed on your views, your immediate actions and your long-term plan to take the business forward.
The golden rule to effective investor engagement is to be transparent. Communicate as openly as possible on the expected operational and financial impact on the business. Speak about the tangible impacts such as physical store closures and weakened supply chains, but at the same time, describe specific ways in which you will manage and mitigate the challenges of the current situation.
Investors look at numbers. They will urge you to provide earnings guidance or make predictions. Be very careful about making broad predictions or quantify potential impact. Instead, quantify historic direct end market exposure. If your business was disrupted by previous health outbreaks such as SARS, share your experience and tell investors how your company is prepared to respond today.
Remind investors why your business is effectively positioned medium to long term, despite a very challenging near term. Outline your competitive advantages. Speak about what makes the company resilient. Explain how your current growth strategy will deliver solid results over the long term.
In any case, reassuring investors through this period is challenging and will require clarity and an understanding of what to communicate, and when. However, a calm and effective communication plan can boost investor confidence and show your ability to manage through the current challenges.
Corporate Social Responsibility
Whilst it is tempting to focus purely on your business, you should also consider the broader picture and what you can do to help contain the spread of the coronavirus in the community.
A growing number of companies around the world are responding to calls to help governments and civil society contain the outbreak. While contributions can be made in the form of cash donations, in-kind donations such as medical supplies could be more useful in areas where large cash donations are difficult to absorb, manage and allocate.
Business leaders are advised to draw from the core of their business and tap into the expertise and skills of employees when providing practical assistance. For instance, McDonald’s and KFC are using their kitchens to help provide meals for medical staff working in hospitals. Alibaba Health and Ping An Good Doctor are making their telemedicine services free of charge, to help relieve pressure on the provincial health system.
Whatever you choose to do, find a credible partner and/or a non-governmental organization. Working in partnership is critical for optimizing the impact of your contribution, and for avoiding reputational potholes along the way.
In summary, while the coronavirus will bring short-term challenges to your business, through adopting the right approach – frequent, concise, transparent and proactive communications and actions – you can minimize the impact to your business and even build greater trust among your staff, your suppliers and your customers.
Brunswick is a strategic advisory firm focused on critical issues. We advise on critical issues at the centre of business, politics and society, and help our clients – the leaders of large, complex organizations – understand and navigate these interconnected worlds.