Aug . 2020 .

Pandemic outcomes: planning 2022 in a strategic way.

It has been estimated that the consequences of the coronavirus will lead to the worst crisis in a century, bringing economic losses to the global economy of around US$ 90 trillion.

Alexandre Ribas

Pandemic outcomes: planning 2022 in a strategic way.

The start of the Covid – 19 pandemic was declared over a year ago. It is now possible to perform a more comprehensive analysis of what happened throughout the planet. People and companies had to reinvent themselves in the face of the restrictions of self-isolation.

Nevertheless, since Covid´s first impacts, it has been possible to witness the beginning of a heterogeneous recovery process. The resumption has happened in different ways, according to the size and/or industry, and it has also not being equal to consumers, depending largely on the specific social classes they belong to.

The effects of the pandemic around the world

It has been estimated that the consequences of the coronavirus will lead to the worst crisis in a century, bringing economic losses to the global economy of around US$ 90 trillion. More importantly, the effects will cause impact that will be felt in the long run, and in some countries the crisis will be deeper and last longer.

The pandemic has also hit the financial markets, generating a reduction of trust and in the availability of credit – both situations that affect companies of different sizes. According to research conducted by the Federal Reserve Bank of New York1, around fifty percent of small businesses have fewer than fifteen days worth of reserve cash-flow.

The challenges corporations face in the midst of the pandemic

The situation has also generated diverse impacts on companies. According to a study conducted by Omie2 – an ERP platform – healthcare companies witnessed an increase of 80% in their revenue. Besides healthcare, the real estate sector also presented an increase in revenue; tenfold for this sector

At the other end, companies working in the entertainment, culture and sports industries saw an average reduction of 76.1% on average. In the meantime, construction suffered a fall of 74.6% followed by air transport with a reduction of 60.9%

Other three events were also profoundly affected by the Covid-19 pandemic. They are as follows:

1. Reduction in people´s incomes

According to research carried out by Datafolha3, – at around 46% – almost half of Brazilians were affected by a reduction in their family income because of the pandemic. Additionally, 45% stated that their income was unchanged, whereas nine per cent saw an increase in their incomes.

2. Businesses closing down

In the first half of June 2020, 1.3 million companies (in Brazil, I suppose) had closed their doors – of which 39.4% declared the pandemic as the reason of the shutdown, according to Pesquisa Pulso Empresa4. This impact was felt on all industries, with figures being at 40.9% for retail companies, 39.4% for the service sector, 37.0% for construction, and 35,1% for manufacturing.

3. Fall on sales

The same research also highlighted the figures connected to a fall on sales and in the acquisition of services. For 46.8% of companies, there was a major reduction, while 26.9% declared having felt a minor or non-existing effect. Conversely, 26.1% reported an increase on sales.

And, how may companies grow in the face of these events?

The effects of the pandemic have demanded quick responses form corporations. Transformation was needed, such as the adoption of digital management solutions, or even, the use of digital online training schemes, which have brought about positive results by allowing for a better balance between personal and work life. But there are still many steps that companies can put into place so as to deal with future uncertainties.

Establishing emergency decision-making teams

It is important to establish decision-making teams for both temporary and urgent matters, regardless of company size. In this case it is worth mentioning the old saying “a problem shared is a problem halved”. This task force also speaks on behalf of the company. They communicate with staff, media and public authorities, such as healthcare agencies that may require information during the pandemic.

Developing a positive pattern of communication and having standardized production of documents

An information system is used to collect, transmit and analyze information regarding the pandemic. It delivers notices to personnel and company partners. The goal is to strengthen the management of information, therefore avoiding a negative impression of negligence.

A mechanism of communication can be carried out digitally, through platforms that bring together different teams in a company. It is also worth noting how the COVID-19 emergency has accelerated  the digital transformation in different companies. That process creates a scenario of opportunities, and companies that are able to use this opportunity will emerge stronger from the pandemic. 

Keeping the physical and mental well-being of associates

The mental well-being of associates as a topic has never been so hot. After one and a half years living under the most relevant health crisis (NT in a century), the concern of companies with their associates has increased. That is noticed in the search for solutions that care for each individual as a whole – physically and mentally.

Therefore, adopting flextime with adequate tech infrastructure is recommendation #1, but we should also consider new hybrid work models. However, besides that, the company may put in place a follow up system for monitoring the health of associates who are working from home.

For companies that must keep office work or work on premises, it is fundamental to maintain a safe working environment, where thorough cleaning and disinfection is carried out. Another important issue is to emphasize the awareness and education on science-based pandemic safety.

Developing response plans to the risks posed by the logistics of the supply chain

When it comes to the management of stocks, it is important for corporations to account account for the optimization of their product cycles; taking into consideration the effects that come as a consequence of the halt in consumption, the shortage of inputs, and the increase in financial costs associated with a pressure in cash-flow. Additionally, in economic sectors where production cycles are long, companies must prepare well in advance for a resumption of the market as the pandemic dies down. Let´s not forget that most supply chains were deeply affected and it will take some time for cycles to go back to normal. And this issue has lead to a scarcity of many inputs, which, in turn, causes and inflationary pressure at the demand end of the equation, something that is a cause of concern for some time to come.

Promoting ESG practices in companies

It is important to provide the adequate information and promotion regarding the implementation of corporate social responsibility in the areas of environmental, social, economic and job stability, and also to properly coordinate community and supplier relations. 

Companies that implement such measures, which – let´s be honest – are a mandatory course of action so we can build (and even enable) the future, are able to create a stronger brand, which, in turn, may turn out to be a benchmark for the industry and society as a whole. We have no future as a society if we don´t follow, together, the path towards ESG. 

Creating a data management plan in line with the national personal data protection regulations.

With the exponential growth in the usage of personal data, especially with the more widespread utilization of digital environments, it is paramount for companies (operating in Brazil) to create good data management tools that are aligned to the LGPD – Lei Geral de Proteção de Dados (General Data Portection Law). These tools should include employees, service providers, suppliers and partners in general.

For that end, it is essential that companies protect the confidentiality of personal data, as well as basic information of their staff, performing for example, control to the access, transmission, and use of such data.

Budget adjustments 

Ideally, companies should pay close attention to their cash-flow, adjusting the schedules of inflows and outflows to ensure they have adequate resources to match the rhythm of suppliers and workflows. And, besides, it is also vital to monitor the situation of imports and exports in the international market, and check for the need to look for alternative suppliers.

To that end, companies can develop a plan for an emergency scenario when it comes to their core suppliers. That includes future hedge contracts, international commerce and transport, as well as alternative suppliers.

Improving risk-management tools

It is important for companies to have in place, or to improve, their risk-management tools. They should pinpoint critical risk-areas and develop mitigation plans. In order to achieve this goal, relevant handbooks can be produced, and preparation tests (based on emergency scenarios) may be developed. It is also important to perform emergency simulations and training. Strengthening the risk management system is as important as dealing with negative events.

These are some real-life examples of how four companies of different industries have reinvented themselves:

1. Construction

An engineering company has come out with the FiqueEmCasa (StayAtHome) hashtag, while preparing its digital channels so that the whole process of purchasing condos as well as the production of relevant property paperwork could be made online. As a result, the company benefited from a 28% increase in sales, in comparison the first trimester of the previous year.

2. Service-providing app

So that the 1.5 million registered professionals in a service-providing app could keep working, the startup company launched a remote service – a new platform that allowed the services to be hired by video or voice calls. The tool was a way to keep providing help to customers who needed to deal with minor household tasks, at the same time helping registered professionals

3. Apparel retail

Having its high-street and mall locations closed, the six hundred employees at a male apparel brand started selling exclusively through the company´s online channels. The tool employed A.I. and enabled direct conversations through texting, Whatsapp, Facebook and email.

4. Logistics company

Specialized in e-commerce shipping, the company developed an app that allowed the customer to confirm having received the merchandise using voice commands, with no need of physical interaction between customer and the deliveryman. When the delivery takes place, the system is started from a safe distance.

In a scenario of economic instability, it is only natural that companies think of solutions to try to keep afloat. Retreating is a valid measure, but in the long run it may prove to be a hindrance. It is necessary to adapt the company to the new reality and seek innovation and new growth opportunities, making the best use of the opportunities that may arise. So, we invite you to chat with one of our specialists, so we can help you in this restructuring process.


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