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COVID-19 Brings An Entirely New Dimension To Risk Management

StrategyDriven Risk Management Article |Risk Management Strategy|COVID-19 Brings An Entirely New Dimension To Risk ManagementRisk management has always been an essential pillar of managing a successful company. But the current global pandemic is bringing it into sharp relief and showing many firms that their existing strategies simply aren’t up to the task.

In the past, executives planned for a range of common disaster scenarios: data loss, power outages, flooding, and financial collapse. For many, though, the current pandemic came out of left field. The majority of bosses didn’t see it coming. It wasn’t even on their radar.

COVID-19 is a “white swan” event, not a black swan, according to Nicholas Taleb, the man who came up with the definition. He points out that the world knew about the risk of a global pandemic but instead chose it to ignore it. In his view, the coronavirus that started in China is something that was a known risk (like an asteroid impact). Therefore, it was something that people could plan for.

He contrasts it with the experience during the financial crisis where nobody could see how events might play out (because of the complexity of the financial system).

Risk management, therefore, needs to change fundamentally. Companies can no longer go about their business, assuming that everything will continue as usual. We’re now living in a world where every executive knows that things can come to a screeching halt overnight with practically no warning. The challenge is to ensure that companies survive.

So, what changes are we likely to see?

StrategyDriven Risk Management Article |Risk Management Strategy|COVID-19 Brings An Entirely New Dimension To Risk ManagementCompanies Will Insure Against More Known Risks

Now that executives have had a taste of real risk, we’re going to see them increase their demand for business interruption insurance. More companies will want to know that they have a safety net, should something similar happen in the future. Furlough schemes protect workers, but they don’t provide comprehensive cover to allow companies to escape tricky market conditions following a disaster. Even with government support, a lot of companies we know and love today won’t be here in the future.

Companies Will Save More

Over the last decade, companies have borrowed a tremendous amount of money. Part of it has to do with their desire to boost their stock price, but a large part of it has to do with the fact that borrowing is now so much cheaper. Capital was once scarce, but today, we live with an abundance of the stuff. This fact pushed interest rates down to the point today where the average firm can borrow at a couple of percent, perhaps less.

The current crisis, however, has revealed to executives how dependent they are on lines of credit. If the money dries up in the future because of some catastrophic event, they will need to fall back on their reserves. And, currently, they don’t have much of those. Most firms are living on a knife-edge, unnecessarily.

Risk management practices are likely to change substantially, moving forward. Companies have had a taste of what an economic catastrophe looks like, and they’ll be planning so that they aren’t wrong-footed by the next one.

Turn to Multidimensional Employees for Identifying New Business Models

StrategyDriven Managing Your People Article |New Business Models|Turn to Multidimensional Employees for Identifying New Business ModelsCompanies can find untapped value in their employees when working to solve current challenges presented by the coronavirus pandemic. This involves utilizing a Make Your Case initiative that allows employees to apply their unused skillsets and connections in opening up new ways for their companies to operate.

Surprisingly, employers don’t often care to know about or think to utilize the stockpile of unused resources their employees bring. They tend to view skills outside of their employees’ job descriptions as irrelevant to the scope of normal business operations. It’s possible that employers simply don’t see the value that such extraneous abilities or connections can generate.

But given the shockwaves reverberating from the market disruption that’s taking place, many normal business models are no longer operational, and new models must emerge. Companies would benefit from turning to the untapped expertise of their multidimensional employees for new ideas through Make Your Case solutions to the rising challenges.

For example, in this unprecedented shelter-in-place environment, consider the value inherent in the information sharing taking place through social media. Networks of people are utilizing their own knowledge and past experiences to advise others on meeting the challenge of remaining isolated in their homes. People share their experiences of living through hurricanes, surviving in post-war Kosovo, and living in a remote outpost in Alaska, for example, as tried-and-true ideas for working and remaining connected in difficult circumstances. The social media forum is a plethora of innovative solutions not only for connecting with co-workers and customers while sheltering in the place, but also remaining socially connected — think virtual happy hours.

Compare the diverse and innovative social media postings with some of the messaging coming from companies during this pandemic. The emails and posts coming from the business sector lack variety, color and the ability to engage. Companies regularly communicate that they are aware of the hardships to customers, vendors and employees during this time. Yet, besides possible changes in delivery methods or product discounts, the companies’ information lacks flavor and innovation.

Yet many of the same people with clever ideas on social media also work for companies who could use some creativity to their approach. These very people have experience in dealing with work disruptions or isolation, and they’ve accumulated amazing personal, social, and professional capital that can be utilized by their companies in their organizational recalibration.

Companies often acknowledge the importance of diversity. Yet, they tend to overlook opportunities to explore the diversity of experiences and interests that employees bring beyond their work responsibilities. But involving more diverse ideas will help in responding to this crisis. Companies will benefit from understanding that the diversity of multidimensional employees’ perspectives can be of enormous value to them.

In Make Your Case initiatives, companies invite employees to utilize their multidimensional core and contribute their original perspectives on challenges that the company currently faces. The process is similar to design thinking, with a different emphasis for idea creation. Instead of brainstorming a creative new idea, employees reference their multidimensional experiences outside of work and employ them in a proposed solution.

The Make Your Case process involves:

1. Outline the idea. Employees initially summarize their idea through the filter of the company’s case challenge to ensure their understanding of the challenge and its context. Make Your Case company reviewers make sure the idea is grounded in the appropriate context before inviting authors to continue.

2. Describe applicability of the solution. The authors illustrate their idea with a personal story of how the solution worked in other settings. As their ideas come from outside the work setting, it’s important to treat the Make Your Case solution as a proposal that may need more specifics.

3. Share ideas for implementation. Using what they know of the company, the authors indicate which parts of their proposed solution can be implemented immediately, and which will need additional resources. Company reviewers who are now vested in the idea will likely help facilitate finding resources and funding to expedite implementation of the solution.

4. Fine-tune specifics. Together with company reviewers, the authors tailor specifics of their solution to the company challenge. This includes providing an action plan of how the solution will be carried out.

Make Your Case initiatives engage employees by inviting them to demonstrate their unique multidimensional cores. By providing their innovative solutions and helping to implement them in a way that addresses a pressing challenge, employees are given an opportunity to craft their own edge within the company.

The company benefits from a pipeline of solutions that have been tested in other contexts and tailored to the reality of this particular challenge.


About the Author

Julia Ivy, PhD Psych, PhD Mgmt, is a strategy and international business executive professor and faculty director at Northeastern University. Her area of expertise is in bridging strategy and psychology in the concept of personal strategy. In addition to her academic work, she acts as an executive coach for those facing the “What’s next?” challenge. Her new book is Crafting Your Edge for Today’s Job Market: Using the BE-EDGE Method for Consulting Cases and Capstone Projects (Emerald Publishing, Oct. 7, 2019). Learn more at be-edge.com.

Temporary lockdown: What to do if your business has been hit by coronavirus

StrategyDriven Tactical Execution and Managing Your Business Article |Coronavirus Lockdown|Temporary lockdown: What to do if your business has been hit by coronavirusAs we all know, the world is coming to something of a halt courtesy of the recent coronavirus outbreak.
To say that it is unprecedented would be an understatement of the highest regard. Many countries have insisted that businesses have to be shut down and for the economy as a whole, this has monumental repercussions.

For self-employed individuals, this is a scary time. It’s going to be difficult, and for the time being at least not many people are going to hold many answers. Sure, the government might be pledging various support packages, but it remains to be seen what sort of difference this will make.

Bearing this in mind, today’s article takes a look at three areas which you should be considering if your business is bracing itself for a lockdown (or has already). Again, it might be of little consolation for the time being, but by keeping an eye on these areas it might do your chances of prevailing out of the other side of coronavirus the world of good.

Consider your storage options

Like it or not, this might be a time where you have to close your main premises. Some companies will decide to do this to cut costs, while others might decide that they just aren’t getting the footfall to merit staying open.

However, if you sell tangible products, you still need somewhere to store items. This is where you need to research storage units, or alternative smaller office space, as your business gets through this period. Both of these solutions can save you money in the short-term.

Be as flexible as you can with your employees

As we keep being told, this is going to be an almightily tough time for everyone in the world. Jobs will be lost, and some people really will be struggling to financially survive.

This is where you need to offer as much flex to your employees as possible. Granted, you can’t put the future of your business at risk and there will be times where tough decisions have to be made, but whenever possible try and add a degree of flexibility with your workers. It might be offering them the chance to take unpaid leave now, or even take their annual leave. Some people will realize the difficult positions that businesses are currently in and will accept these decisions, if they at least know in the back of their mind that they will have a job waiting for them when this crisis is over.

Communicate to customers whenever possible

We’ve entered an era into the unknown; nobody has ever experienced this before and it means a lot of issues are up in the air.

This is the time where communication is key. We’ve gone past the stage where we can stay quiet and hope for the best, customers will want updates as to where your business stands on the virus. This will largely depend on the nature of the industry you are involved in. For some, it might be the occasional email about stock levels, while for others it might be reassurance about the steps you are taking to minimize the risk of the virus spreading. Either way, communication is key during this period – people still need to know that your business is operating.

Part Of The Team: Managing Employees Effectively During The Coronavirus

StrategyDriven Talent Management and Managing Your People Article |Coronavirus|Part Of The Team: Managing Employees Effectively During The CoronavirusIt is safe to say that many businesses have had to adapt really quickly to the current situation. Businesses that had no idea how to incorporate remote working have had to do it quickly. But while we’ve all discovered new ways of working we’ve had to figure out how to keep our employees motivated during this difficult time. While it might not be top of your priority list right now, happy employees will continue to be productive ones. But this also means that you’ve got to learn how to manage them. You may very well be concerned about the state of the business but what can we do to make sure that our employees feel part of the organization despite what is going on?

Avoid Ambiguity

If we are more transparent our employees will know where they stand. It can prove to be challenging, especially when we have numerous employees to liaise with. But if we can find blanket ways to keep our employees on the same page this will go to alleviate some fears. Now, the benefit of work tools like Slack and Zoom have come into their own, and if we can increase our platforms for communication, whether this is incorporating a Coronavirus text alert so our employees are as up-to-date as humanly possible or improving our communication tools, we can work better at managing their anxieties. As simple as it is, being transparent can prove difficult, especially if we are worried about how long this pandemic will last and if our business will survive. But it’s not just about communicating the good things; it’s about communicating the bad but incorporating action plans so our employees know what will happen should things get worse. Ambiguity will breed anxiety so let’s minimize it.

Checking In With Them On An Individual Basis

It’s not easy to check in with them on an individual basis but while you may very well be having daily briefings where you can see them all, sometimes employees feel they can’t speak out on such an open forum. When our employees have individual stresses it’s crucial to ensure that they are focused and happy. And checking in with them on a semi-regular basis isn’t just being a good leader but it’s being a good friend. And this is something that we have to relax right now. Running a business is always at the forefront of our minds but when our employees feel so worried that they can’t do their job properly we must figure out a way to lessen their worries by providing a sympathetic ear or a friendly shoulder. When we get into the habit of checking in on an individual basis, like a quick phone call, the more we do this the more our employees will feel that they can open up. Some employees will keep everything bottled up and feel that they can’t speak their fears because you are “the boss.” But now is the perfect opportunity to incorporate a culture of sympathy and support. What’s more, this should be the perfect time to make it last well beyond the end of this crisis.

Understand Your Individual Stresses

If you are a good boss you will do everything you can for your employees to minimize their fears. And while it’s fantastic that you are doing everything for them, are you neglecting your own needs? You may feel hell-bent on keeping the business afloat which means that you are working overtime. And while in one respect it’s a very useful distraction considering the current climate, you’ve also got to realize if you are working yourself to the bone.

Managing your employees during a crisis isn’t just about giving them everything they need but it’s about them recognizing that you are focused and professional. If they see that you look like you’re about to break, this won’t fill them with confidence, so you need to lead by example. And it’s a lesson that we all need to learn anyway. If you look after yourself you will look after everybody else much better. Take the opportunity every single day, not just to look at the company and employees, but also look at yourself and see if you are looking after yourself properly. One of the great benefits of working from home right now is that we can have more control over our diet and our downtime. Use this as the perfect opportunity to instill some better habits.

It’s a time of the precariousness but we can also so use this as an opportunity for some introspection. Your employees need your support and you have to give them what they need. And if you struggled to support them before, this can be the best opportunity to draw a line in the sand.

The Coronavirus Impact: How to sell your company to potential employees

StrategyDriven Managing Your People Article |Coronavirus|The Coronavirus Impact: How to sell your company to potential employeesUnless you are a business like a supermarket who is benefiting from the recent coronavirus outbreak, it would be fair to say that there are a lot of concerns in the world of business.

With more of the world coming under lockdown, it means that most income is radically reduced. Governments might be suggesting that tax relief and other financial benefits will be on their way to companies, but there’s no doubt that the situation is fragile to say the least.

From an employee’s perspective, there are all sorts of unanswered questions. The thought of moving job during this period is almost out of the question, for the simple reason that it’s such a risky plunge to enter a probation period which may end abruptly.

It means that any business (and there won’t be that many of them) who are looking to expand has a limited number of options. Today’s article will therefore look at some of the ways you can sell your opportunity to a potential employee, and boost your workforce amid this crisis.

Emphasize your long-term plans

As we have already alluded to, this is a period where employees are going to be very wary indeed. They know that this is a fast-paced market, and one that is going to be changing by the day.

It means that you can’t be talking about your plans over the next month or two, you need to be thinking longer-term. Admittedly, outlining your plans during the crisis is fine, but this is the time to sell-in your growth plans. While some businesses are stagnating, this might be the time where your company is putting in the legwork to come out the other side all the more stronger. Make sure anyone who is poised to join your company knows this.

Show off all of your benefits

Of course, the financial package is going to be the main thing on most people’s minds during this period. At the same time, there is more you can use to tempt individuals to join your firm.

One of these might be benefits. Granted, free gym and cinema membership might be dangerous territory in the current climate, but some companies will have alternative benefits like discounts at popular stores as an example. Make sure you use software to manage employee benefits so that this is outlined loud and clear to your workforce.

Be flexible with your contracts

Finally, make sure you’re not going to scare anybody away by being too stringent with your contracts. Generous probation periods need to be outlined, while you also need to be careful about how you are managing unpaid leave. We’ve seen some companies really upset their workforce by insisting that their employees take such leave and while such an approach might be necessary, it’s not a way to win future workers if that is your current aim. People will be looking out for these clauses more than ever before so where possible, we would urge you to be more relaxed than usual with your contracts.