How can we start getting back to work in the wake of COVID-19?
143 days. That's the amount of time, as of this blog post, that those of us who work here in Austin, Texas, have been adjusting (and readjusting) to various levels of pandemic-related changes. It's pretty safe to say that on Friday, March 13, few people in Texas or anywhere else imagined that we'd be spending more of 2020 inside of our homes than out of it – especially where the workplace is concerned. We're navigating a so-called "new normal" that's actually far from it and while the initial panic the coronavirus inspired may have subsided the pandemic itself is showing no sign of going anywhere. It's clear: it's time to get back to work, even if that means working around the crisis. A little less clear? How business can allocate company resources during the process and stick the landing on the other side.
To answer this question, we looked to the people who are currently making those decisions – including our own CFO, Mike Murphy – to. to weigh in on everything from cost containment to coping with managing COVID-19 related workplace expenditures, and how organizations can work toward long-term success when the timeline we're all working with doesn't make it easy to even define what long-term is. How is our leadership team preparing for employees getting back to work in the wake of COVID-19?
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As organizations are getting back to work, Murphy says, they'll have three important tasks in front of them, the first of which is looking at the ebb and flow of cash coming in and going out of company coffers. This is the time to take a detailed, unflinching account of the costs and resources that have been affected – for better or worse – by the coronavirus.
"Your company's position matters more than anything else," Murphy explains. "Are you a cash in, cash out business? Understanding the basics of your cash flow is paramount. You've got to keep doing what you can to keep cash coming in."
For some companies, that's going to mean a cost-reduction strategy that requires organizational restructuring while for others, the solution will be – and already has been – as simple as shifting to teleworking model or reducing operational costs. Still others may have to completely revisit the products and services they offer and how they offer them to match changes to demand, supply line or delivery.
"Every company is different," according to Murphy. "Part of the nature of the beast is understanding what's important. And the most important thing is that you have to survive to fight another day."
Be Prepared to Adjust Your Resource Allocation Strategy - Getting Back to Work in the Wake of COVID-19
From there, Murphy continues, companies will have to revisit, rework or even rewrite their resource allocation plans completely for the time being. Inevitably, that will involve a cost containment plan. Whether finance leaders are looking at a situation that requires triage and repair or working proactively to prevent such a situation, Murphy says, cash is still king.
"You'll want to limit potential damage to your cash flows. Look at cost reduction [opportunities] here and there and make adjustments where you can to make sure you come out of this situation as a stronger company ready to meet the challenges of the day."
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The first priority when it comes to making cuts, says Murphy, is "Understanding the impact [the coronavirus] is having on your customers. You need to be able to adjust your business to meet the changing climate." From there, leadership will want to revisit non-operational costs and look at what can be eliminated. Working with vendors to renegotiate active contracts is another way to contain costs, suggests Murphy. "Look at areas outside of customer delivery and needs and see what you can do to reduce spend," he advises.
With so many companies shifting to a work from home model, operational expenditures usually earmarked for travel or real estate are good candidates for reduction or even diversion. Because it's crucial for companies to maintain financial health in "the new normal" for when it's time to "get back to normal", businesses should consider reinvestment alongside austerity. Once inbound cash flow and customer delivery is protected, redirecting allocations toward customer acquisition through marketing or business development may be a better option than simply slashing that cost entirely.
Focus on the Present but Approach Any Organizational Restructure with An Eye Toward the Future
"One of the biggest challenges for companies getting back to work is that we don't know what this economic lifecycle is going to be," Murphy acknowledges. Something we anticipated would be a brief footnote in 2020's year-in-review has turned out to be its own chapter, and no one can really say how long it will last.
Balancing economic need and worker safety has meant that organizations are working within state guidelines for lifting restrictions in order to reopen workplaces. By and large, those reopening guidelines are occurring in phases based not on a predetermined timeline but by taking other considerations – COVID-19 case numbers, primarily – in mind. That makes it difficult to create a black-and-white plan for the future. "It's hard to predict what's going to happen tomorrow, let alone at this time next year," says Murphy, "so budgets and forecasts need to be in real time." That means looking at the daily status of incoming and outgoing cash and creating budgets that have the flexibility to change by the week instead of the quarter. For now, says Murphy, "it's about being able to adjust to rapidly changing market trends and understanding where things are going."
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The one situation where companies will want to prioritize long-term needs and goals is when it comes to headcount. There are going to be situations where organizational restructures will have to occur, and that can mean staff reduction. "The first priority when it comes to adjusting headcount is making sure that it aligns with delivering the best you can to your customer – and get paid for it. You'll right-size your organization to meet those demands." He adds a caveat: "Part of that is also understanding that you can't just lay people off now and then expect to be able to turn around and hire everyone back three months from now."
Making careful adjustments to headcount goes back to understanding what's essential to your company's continued existence – it's core competencies – and how to best continue providing that to your customer. Sometimes, that may include making tough calls about staff reduction, but it will have all been for nothing if, when the time comes to ramp up again, you're left without the manpower to do it. "Layoffs should be a last resort," Murphy advises, "but it can be necessary when the first priority is 'live to fight another day'.
Why Outsourcing is Now More Relevant Than Ever
For many companies, outsourcing will be a critical tool and rising to meet the challenges Murphy lays out. It's always been a solution that allows businesses to focus on their core competencies, but it may just mean the difference between staying open for business and closing for good as we collectively move toward post-pandemic operations.
Back office operations represent a large portion of non-essential work for the majority of organizations. Moving these operations to an offshore location with a reputable partner allows for a substantive reduction in spend and won't require the wholesale elimination of in-house functions or the sacrifice of support channels that ultimately improve customer experience.
Because the way we do work in the new normal has largely shifted to a remote model in the past few months, the infrastructure for the virtual workplace has never been stronger. In the early stages of the pandemic, reputable providers concerned with worker safety were able to equip their team with the ability to work from home without sacrificing continuity or customer security. This means that organizations can partner with providers that are prepared to hit the ground running with a flexible solution that cuts cost without depleting value – remotely and safely.
Best of all, when everything begins to recover, the "new normal" looks more like the old one and we're able to collectively close the book on the coronavirus pandemic, virtual offshore teams will be able to operate at scale and meet growing demand. For now, more employees around the globe are getting back to work in the wake of COVID-19 following safety precautions.
Personiv has been partnering with businesses for 35 years to provide solutions just like these. Whether you're looking for skilled accounting support at half the cost, looking to build a virtual team to deliver quality customer support or need a strategy for your back office operations that saves money for the short term that's agile enough to scale in the long-term, we can help. Get in touch with one of our experts today to get started.