- Knowing where you’re starting from
- Thinking recovery beyond the company’s borders
- Don’t assume that everything will change or that everything will be as it was before
- Take into account the psychological impacts of containment
- Integrate a new decision-making framework
We also invite you to share this analysis during a webinar to be held on May 5th from 10 to 11 am
Chapter 1: Knowing where you’re starting from
The organization of the shutdown of the economic planet was immediate and facilitated
As soon as the containment measures were announced in the various countries, company managers, after relaying government instructions to their employees, were able to rely on two elements to secure their economic flows: an existing base of Business Continuity Plans (BCPs) and feedback from the first countries affected by the epidemic.
An existing BCP basis
Large companies are well accustomed to managing large-scale daily risks and dealing with various crises. A production chain can be interrupted for as many reasons as the failure of a supply circuit or a supplier, an accident on a machine in the production chain, a strike, a restructuring of the activity… Every industrial company must have a business continuity plan (BCP), regularly updated, enabling him to face various scenarios. The same applies to service activities such as banking. Even if the scope of government decisions and population containment is unprecedented, existing BCP processes to identify vital activities, non-vital activities, pre-established operating procedures and regulatory measures have been used.
For SMEs that are often less equipped with existing BCPs, managers have been working daily since mid-March on the rapid implementation and updating of a BCP to secure their business. They can count on the help of the industry, with many professional organisations regularly sharing their guides to help companies adapt their BCP. In fields as varied as those of the OPPBTP for the building and public works sector, the FCBA for the timber sector or the UNEP for landscape companies
Progressive return on experience
In Western Europe, companies experienced the situation of Chinese companies a month apart. This made it possible to anticipate certain actions and to set the pace of communication, and to benefit from feedback on measures implemented elsewhere. For a large company with subsidiaries in other countries, such as China or Italy, even a few days’ feedback from a subsidiary was valuable information.
The ability of companies to organise themselves to deal with the crisis in a structured manner made it possible to moderate the impact for many of them, even if state intervention in France, for example, put the economic burden on other, more institutional players. Digitalisation has also helped to make work organisation more fluid.
Digital transformation has provided the means to maintain the activity of many of the company’s business lines
The situation of massive telework is a good witness of a company’s digital maturity. Our customers, large SBF 120 companies, are today pleased to have made sufficient progress on document dematerialization, remote access to company resources, diversification of communication means, integration of business software, and especially on training and acculturation of teams to digital technology. They have thus been able to effortlessly resort to massive teleworking for the trades where this is possible without negatively impacting their productivity.
Clearly, the fact that every employee has been working for a long time on a computer, is able to connect to his mailbox from his smartphone and has access to his documents via a Cloud or a server accessible via VPN, is not new and the remote work induced by the confinement only justifies the commendable flexibility of these modes of work. But beyond office automation, confinement reinforces the deployment and democratization of communication tools via videoconferencing. These tools, although available for a long time in any professional office suite, were not yet systematically used – we consultants used to travel, sometimes far away, to our clients’ premises for the vast majority of meetings involving more than 5 interlocutors, and did not have the reflex to offer them a videoconference. Nevertheless, even if there is no substitute for human contact, if only for the subtle lessons of non-verbal communication in meetings, it is highly likely that the habit of remote meetings taken by the confined teleworker will durably change the behaviour of the confined worker in the future. Habit is second nature!
Beyond office automation and communication tools, the strong trend of the digitalized 21st century is the increasing development of professional software allowing all functions of the company to carry out their work remotely and in a different way. Corporate legal functions, which are culturally attached to working with paper documents rather than digital documents, individualized work rather than shared with everyone on a cloud network, human analysis of documents rather than assisted by Artificial Intelligence, are evolving very quickly towards the adoption of numerous digital tools, as we showed in our last study on the digital transformation of Legal Departments.
Today, the management of the most digitised companies, both in terms of tools and in terms of culture and team training, not only can seamlessly absorb the exercise of many jobs in a period of confinement, but also have the opportunity to make teleworking a lasting and sustainable productivity factor. Indeed, the lessons learned from this long period of forced, 100% computerized work will enable them to better dimension their work organization in the future by taking into account the massive feedback from their employees.
Focusing efforts on the company’s vital organs has made it possible to secure economic flows on the essentials
The EXCOM took their decisions on the efforts to be made to maintain the company’s essential economic flows according to 4 parameters::
- Control and governance capacity: based on the existing and updated BCP structures, the managers were able to activate the bodies and communication flows that allow the control of the activity. Depending on the mechanisms and managerial layers that can be activated, the teams may be more or less able to function
- Impact analysis of upstream – downstream supply chain flows: the analysis of the situation of suppliers, customers, distribution and production channels made it possible to determine the activities that could still be carried out
- Safety of people: depending on government recommendations and the degree of exposure of the various businesses, the safety of people faced with the risk of contamination but also with new safety risks linked to a drop in activity (reduction in maintenance, express changes in procedures, etc.) is an essential parameter in determining whether or not it is possible to continue an activity.
- Economic analysis on profitability: from an economic point of view, maintaining a flow of activity raises the question of income and profitability. With greatly reduced incoming income, and with short-time working, waiver of charges and postponement of deadlines, the calculation may conclude that there is a financial interest in suspending the activity altogether rather than maintaining it at the risk of not covering its costs.
On the basis of these 4 parameters, the EXCOMs make decisions taking into account another economic criterion, which is their commitment and their societal will to contribute to the fight against the Covid 19 crisis, from a health and/or economic point of view. Companies are thus led to create new governance systems, to tinker with temporary supply chain circuits, to create new personal safety systems and to invest economically without financial profitability.
The key for the EXCOMs is to know where they’re coming from
Confinement has placed the COMEXs in 4 different situations in France over the last 6 weeks. Depending on their degree of preparation and their reactivity to set up an effective BCP and to integrate the first feedback, depending on their degree of digitalization, the organizational conditions of the different companies to face the crisis are not the same. But even greater still are the differences due to the impacts generated by the disparities between types of activity. These create 4 different situations:
- A complete shutdown of the production tool. The consequence can be a high cost to restart the production tool or even its loss if it is stopped for too long. The main concern of these EXCOMs is to manage a minimum level of activity in order to avoid the destruction of the production tool. All activities with high continuous maintenance needs are concerned, such as transport, production plants, etc
- Operating losses due to a sharp decline in business volume. All companies with a minimum staff and minimum charges to pay even for a loss-making activity because it is deprived of its income. These are essentially the hotel and catering sector, business services (consulting, software, etc.). They make extensive use of short-time working and subsidies to survive, but the economic recovery remains uncertain.
- A continuity of activity weakly impacted by Covid-19 except on the supply chain. These companies do not have revenue problems during containment but their upstream supply chain is experiencing failures due to the disruption of supply circuits and their suppliers (e.g.: parts coming from China…) or on the contrary of downstream distribution circuits (e.g.: export difficulties on markets in pause such as the United States).
- Companies with increasing activity. These are companies responding to a need for company products (hydroalcoholic gels, masks…) or having a specific peak of activity by providing a service related to containment (e.g. BPI and banks with an unprecedented volume of files to be processed, small and large food distribution, delivery logistics, sports coaching…). For these companies, the current challenges are to know how to organise themselves in order to be able to meet the expectations of society while respecting an ethical code (not to increase prices), to ensure the safety of their teams in case of overwork or risk of contamination, and finally to properly size a gradual return to normal.
These 4 situations allow companies to measure their restart point at the end of containment. The most in decline are those that have experienced a complete stoppage of the production tool or operating losses due to a violent decrease in the volume of activity, especially if they are poorly digitized and have not managed to implement an effective BCP. The most advanced are those that have benefited from an increase in activity, succeeded in absorbing it and sizing the recovery. Between the two, those for which the progressive recovery of the activity of the players upstream and downstream of their supply chain will be sufficient to regain a sustainable activity
The 3 guiding principles to prepare for restart construction
- Running away from ready-made recipes. There’s no single plan to restart. The restart starting on May 11th requires operational action plans at a micro level that take into account the different starting points seen above, which are very different depending on the company
- To have a precise vision of the containment status of each operational entity of the company. There are as many situations as there are entities within the same company. Within the same company, some teams have worked more than ever, others have been on short-time working and sometimes the future of their activity is uncertain. The activities of large companies are very diversified, there are as many plans as there are types of activity and each entity has had a different history
- Build a plan for restarting the economic sectors. We will devote our next analysis, to be published tomorrow, to this issue..
How do you assess where your company stands? What to prepare now? What to do during the transition to recovery? How do you get back to scale? What are the other keys to a successful restart and business rebound?
Follow our news and join us on May 5, 2020 from 10 to 11 am for a webinar dedicated to this topic!