It was a bolt from the blue! This pandemic has truly taken everybody to a surprise. The deadly germ didn't take much time to spread all across the globe after it originated in China in December last year. Around 3 million people living in more than 200 countries have been infected so far, out of which about 200,000 innocent lives were perished.
To the disbelief of many, countries which are known for having the best of the medical facilities, are also struggling to contain the notorious microorganism popularly known as COVID-19. The danger is, even after the four months of the outbreak, nobody really knows when the mankind will be able to win over the notorious enemy.
The World Health Organization (WHO) warned that this virus will be with us for a long time and therefore, we should be extremely careful and vigilant in managing this pandemic for the foreseeable future.
Given the dire situation, the immediate focus for everyone, including the businesses should be on saving lives. Business organisations should come forward to join hands with the government and other stakeholders to make sure there is enough testing facilities to isolate infected people and adequate treatment facilities for the diagnosed patients. They should also be thinking of how to collaborate with the concerned research organisations or academia to accelerate the research on inventing a vaccine, which will eradicate the virus for good from this world.
While carrying out their corporate social responsibilities, corporations are also looking for the ways and means to get the wheel of their operations up and running. In this regard, the top most priority is to ensure safety of the employees who are the most valuable resources.
Over the last fifty years, the mindset of the businesses with regards to employees has changed quite radically. Businesses in the 1970s were religiously following a doctrine of Nobel laurite economist Milton Friedman. He said: "The business's sole purpose is to generate profits for shareholders."
However, we saw a stunning turnaround in 2019, when the CEOs of the world's largest corporations in a business roundtable declared, "We commit to investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect."
Keeping this spirit in mind, amid unprecedented business disruption, a growing list of businesses have vowed to pay their employees, while their business operations are temporarily suspended. This is quite obvious that people are really worried about their future. Here comes the role of empathetic leaders to stand beside their employees.
To deal with this abnormal and unprecedented situation, corporations should first assess the situation and its impact carefully. IMF Chief Economist Geeta Gopinath described the present crisis as worse than the great depression of 1930's and the financial crisis of 2008.
According to IMF's latest forecast, the global GDP will fall by 3 per cent in 2020. Assuming that the pandemic improves in the second half of the year, economic activities start to take momentum, the global economy will grow by 5.8 per cent in 2021. The cumulative economic loss of 2020-21 will be nearly 9 trillion dollars. However, if the pandemic continues for a longer period, the global GDP will fall by further 3 per cent from the baseline assumption.
Businesses are facing multiple challenges both from demand and supply perspectives. Consumer spending has certainly plunged significantly as they are fearful, saving for the crisis, can't go out for spending and in some cases, especially in the developing countries, a large portion of them who rely on daily wages are simply out of pocket as they are unable to render their services.
On the other hand, because of lockdown in most of the countries, both primary supply chain, which deals with raw materials or intermediate goods, and the secondary supply chain, which deals with finished products, are facing enormous disruptions. All these challenges boil down to weaker revenue and increased cost.
So, what should the businesses do to face this challenging time?
Reputed consultancy firm McKinsey & Company has come up with a concept called 5R: Resolve, Resilience, Return, Reimagination and Reform to face the ongoing crisis.
Resolve: This refers to containment of the virus and its spread to safeguard lives and livelihoods. Business must ensure safety of their employees by taking measures like work from home. For business continuity, if someone needs to work outside, they will maintain proper safety guideline. In some cases, they should adopt online transaction, delivery at customers' doorstep etc. But first, stop the virus to spread.
Resilience: This health crisis is obviously leading towards a severe financial crisis. Organisations will suffer from cash crunch, shortages of working capital and ability to pay debt. To deal with these challenges business need to work with government and other stakeholders to ensure concessional financing, debt relief and even for grants.
Return: As the situation gets better businesses should plan for resumption of their operations in phase manners. Trying to do everything together after a longer shutdown can create chaos.
Reimagination: The world will definitely be different post-pandemic. Expectations of the customers, employees and other stakeholders will be different. Organisations should carefully evaluate these shifts of the mindset and take appropriate actions. This will include use of technology, setting up plants and distribution centers closer to the customers etc.
Reform: It is not unlikely that in some cases organisations have to reform their policies, processes to survive. This can even be changing their existing business models.
Businesses would require lots of efforts and imagination to survive. Charles Darwin, the famous scientist of all times, said it loudly, "It is not the strongest or the most intelligent who will survive; It is the one that is most adaptable to change."
The writer is chairman and managing director of BASF Bangladesh Limited