SINGAPORE (May 22): Many things in life are predictable — even when they are complicated. Indeed, science and innovation has been making the world more predictable for centuries. It has been a big investment area for humanity. Yet, despite everything we know, no one could have anticipated that 2020 would be the year when a virus would create sweeping public health and economic crises. It is a stark reminder that the world can still be an unpredictable place.
In this context, business leaders must set a course for the months and years ahead. Many industries have experienced the double impact of public health measures on their workforce, and the destruction of customer demand and declining revenue. Others have seen a surge in demand as customer behaviour changes. Whether these changes will be enduring is uncertain, and that is only heightened by the anxiety and caution that many organisations must now apply in their decision-making.
Mercer has been collecting and analysing data about the impact that Covid-19 is having. Our recent global pulse shows that many companies are taking a cautious approach. They continue to monitor the need for labour cost reductions, and for those who have already acted, hiring freezes are common. Some are considering if people should return to their place of work at all, given the enabling of remote working, and the huge cost savings it can reap. One in three respondents also perceived the biggest problems in the switch to remote working in the areas of effective people management and employee mental health. We have found that people are worried about job losses and pay cuts due to the economic slowdown, as well as experiencing isolation and overload.
In response to this, it is critical for organisations to create as much clarity as possible about what they will do, when and why. Leaders know the objective: simultaneously manage the health of their people, stakeholders and the financial health of their business. These aspects are essential for an organisation to maintain a sustainable role in any economy.
Our research suggests that many leaders also feel the need to emphasise stakeholder trust in their response plans. Leaders know that trust is hard-won and seek to be trusted to do the right thing. This is the critical currency of their relationships with anyone that matters to their business.
To create this clarity and to build trust, there are generally three critical areas of focus that organisations can look at:
· • Financial stability and optimisation: When unpredictability builds outside the organisation, leaders try to create as much internal stability as possible. This means focusing on essential products and services, driving efficiency projects (like digital working initiatives), managing risk and carefully recalibrating spending. As people are often one of the largest fixed costs, workforce actions are often considered. However, organisations need to think carefully about balancing the health of their business while maintaining the trust of their workforce.
· • Leading through uncertainty: People at all levels generally find unpredictability distracting and stressful. They look to leaders and the wider organisation community for support — fostering an adaptive culture is key. This means focusing on operational details, the quality of communication, employee empowerment, productivity, well-being and engagement.
· • Creating a new future, ready to rebound: Dramatic change is often an opportunity to re-evaluate priorities, and to adopt new practices that help organisations to be future-fit.
As leaders consider these focus areas, three main strategies emerge:
· • Resilience: most useful for organisations with an immediate need to adjust their cost base while maintaining productivity and reducing risk. They need to show strong and stable leadership while tightening budgets and maintaining operational integrity; help people manage risk in a responsible way and maintain the safety, well-being, commitment and productivity of employees. Key actions include:
· • Realignment: most useful for organisations expecting a change in their growth plans, including rethinking how to better align people to the new economic environment; changing ways of working and getting people engaged on new priorities. Key actions include:
· • Transformation: most useful for organisations that need to reconfigure their business to meet a new market reality, including focusing attention on critical businesses; driving process changes for enhanced efficiency, employee engagement and digital customer engagement. Key actions include:
Being adaptable and agile are at the heart of these strategies. It requires balancing a deep understanding of people, with insight into the economic reality and the impact of that on financial health. Good execution is as much about culture and trust as it is about processes and decisions. The Covid-19 crisis is highlighting the need for clarity and trust more than ever. Organisations and leaders who make the right decisions in the face of uncertainty will be trusted for years to come.
Lewis Garrad is partner & solutions leader at Mercer Singapore
