In 1918 there was a similar outbreak called influenza pandemic (HINI) that crippled the global economy and locked down businesses. Deaths were on the high side with about 50million people dying all over the world.
In US where data are fairly available about the pandemic, some business declined by as much as 70%, job losses were rampart, GDP went into the negative
However, in spite of the damage to global economy due to the lockdown, some companies and economies were able to pick up and normalized within short period than others. A close look at the reason behind this revealed a correlation with strategy employed by management.
[Also Read] COVID – 19: RE-OPENING THE ECONOMY
It will be right to say that if organizations could rebound faster even though that era was not as advanced in technology and social awareness as now, then businesses are more likely to recover faster in this era. It depends a lot on approach or “Management Style” employed.
I must say here that the strength of Management is simply tested in a situation like this when the unprecedented occur.
I know that following the disruption caused by the ongoing Covid -19 pandemic, what most business owners and management are concerned about now is how to still meet their financial projection for the year. Again, I say it is not a problem.
Few days ago the Central Bank of Nigeria promised good funding for some sectors that can create employment, which is a fantastic move. Areas CBN announced to fund are; Affordable Housing, Renewable energy, cutting edge research and light manufacturing. The aim of CBN is to chaos as the economy reopen. The only way CBN can achieve this aim is when companies have working system in place.
In my last article on the subject on reopening of the economy, I did highlight a few things management could implement to aid a quick pick up. In the same tone, I like to add that companies must concentrate on strengthening staff confidence and loyalty and then device a better payroll management.
Strengthening staff confidence and loyalty
We must understand that there is presently widespread fear of an impending mass lay-off. So the first thing management should think about is strengthening their staff confidence and loyalty. This is so important to keep their productivity optimal and enable the organization stabilize operation.
This is a time for organizations to shift from the traditional, stereotyped bureaucracy to a more engaging system of management. Companies should open up and get frontline staff involved in thinking the organization. This is where the “Cello – Pyramid Management System” fits into.
The concept talks about direct flow of communication from top to bottom without unnecessary interruption. It raises ‘frontline staff’ to ‘frontline managers’ irrespective of the level of education and desk.
With the entire personnel including the CEO synchronized into vertical and horizontal cells, research, strategic and tactical planning and implementation takes a holistic involvement including the junior staff who are at the bottom of the pyramid. While the system keeps the pyramid intact with final authority still remaining at the top, confidence and loyalty of the frontline force is greatly raised.
Still in my last article “Covid – 19: Re-opening the economy” I spoke about forfeiture of annual leave by staff. I said so because everybody will be needed to pull through the hard time. In the same vein am saying staff of organization should be ready to make some sacrifices this time in the area of salaries. Like I said before, some companies did not suspend salaries even with no revenue generated. So I propose what I called ‘Deferred Full Pay’
This is an interim salary adjustment to free more fund for companies to meet or prepare for unforeseen operational snag. This may be in form of sharp increase in cost of supplies or any other operational outflow. This is also important knowing that revenue will not jump but will rise gradually.
Take for instance the hypothetic company that have paid out N2bn in salary for 2months when income was not generated, how can such company still meet up with its cash flow for the year? Instead of going for external borrowing to sustain cash flow, staff salaries could be adjusted downward by 30% for 3 months.
After the 3 months deferment, management will return to full pay for another 3 to 4 months before the adjusted amount is returned to the staff.
I say In conclusion that open organization with all inclusive management system like the Cello – Pyramid, all these adjustment are with no resistance instead cooperation is almost sure.
Also, company managers should know that shrinking staff strength doesn’t show management ingenuity but only serve as a cheap way out which only harm the economy and keep the company stunted.
Jacob Ipogah is Principal Partner at Eco-Hoovers Consulting Limited and CEO, Continental Economy Magazine. He is a Banker and Economist. He is a member of the Association of Enterprise Risk Management Professionals and Fellow of International Association of People and Performance Development