Post Covid-19 – "The New Normal” – Episode 2 -Executive Summary

by Staff Writer 05-05-2020 | 5:12 PM

News First -"Post Covid - The New Normal" By Chandra Jayaratne Perspectives, Outcomes and Recommendations from the Webinar on 22nd April 2020 Executive Summary

The response of the Private Sector must be to fall in line with the call of the government in the control of the virus; and the sector must support the lockdown; as well as strictly abide by the rules and processes that are stipulated to be to be in place upon resumption of work.
No Government, Business nor Individual could have imagined nor anticipated this calamity; the actual global coverage and the extent of the impact of this pandemic on societies at large is beyond the scope of normal Business Continuity Plans;
Now that this event has happened, the only option open is to take steps to minimize the impact on the citizens and business, and also its markets, resources and stakeholders.
It is very important that business leaders have hope for the future of the Nation, Its People and Business and whilst being safe to develop and practice tranquility of mind
Businesses must learn to live with this “New Normal” recognizing that liquidity is the primary goal; priority attention must be focused on realizing capital tied in finished goods, merchandising, raw materials and receivables, recognizing cash is critical for survival.
A lesson for business to learn is that managing/mitigating uncertainties, including unexpected/ once in hundred year type risks, must be a key management objective in an ever changing world; as a consequence, the business leaderships need to be in readiness to face constant change in life and life styles and associated changes in markets and buying behaviours and patterns: therefore business leaders need to be fit, agile, courageous, mindful and always professional.
Make every endeavor and strive to survive and remain relevant, even if the challenge continues for 6-9 months at a heightened level, with full recovery taking 18-24 months; recognize that pandemics without a vaccination option could well give rise to several such waves of debilitation, as the virus movement is not bound by borders.
Business Continuity Planning (BCP) associated successes will depend on the effective adoption of and adaptation by agile and thought leadership embedded businesses developing specific response strategies to fit the new post Covid Norms and Customer Expectations, with emphasis on liquidity and earliest free cash flow generation;
BCP processes must recognize the importance of employees, associates and distributors and retailers being effectively interwoven in to the new operational models to be adopted; and their commitments secured to introduce new models of engagement and remuneration, with a due restructure of the cash flow support/ guarantees / security cheques, margins and credit limits adopted in the distribution chain.
The Banks and financial houses must recognize that the security covering facilities and loans extended to impacted entities are mere buildings and assets without adequate resale value sans business acumen, staff and market connections; therefore bankers must be professional and willing to restructure facilities, evaluated and new facilities offered with empathy going well beyond normal levels of accommodation.
Private sector entities must as a priority look to direct distribution opportunities, including on-line and social media marketing, either engaged directly or through alliances, in serving the emerging norms of delivery to households.
Recognize that sectors of business like tourism, hotels, entertainment, restaurants, bars and travel will take longer to recover, due to air travel restrictions, insistence on quarantine and surveillance procedures post Covid. As this sector is operating without any revenue at present, nothing much can be done until the present airport closures, lockdowns/border closures and travel restrictions remain in place; therefore, other than striving to stay safe, retaining trained staff and network partners/alliances and remaining liquid in order to survive, nothing more can be done.
The suggestion to support tourists arriving in Sri Lanka with a technology leveraging ‘beginning to end risks and health/safety tracking systems’ appears to need further critical re- assessment.
Recognize that business must now commit to demonstrating by deeds and visible outcomes, its compliance with the delivery on Triple Bottom Line- People, Planet and Profit; Business leadership must commit to minimize the negative impact of the businesses on the environment and to positively contribute to reversing climate change, improving carbon foot print and ensuring the preservation of the ecology and environment as a whole. The business leaders who took nature for granted and as a free option to exploit at its own discretion, will need to address in remodeling their businesses, the fundamental question of ‘what are we in business for’ and ‘with which priority stakeholders in mind for due return/satisfaction’..
In all sectors of business, the retention of key staff and associates will be the biggest challenge; especially when the period of challenge gets extended: all stakeholders must collectively support voluntary pay reductions and accommodate changes in working arrangements
The business leaders must be conscious that in the back drop of reduced demand and consumer buying power within a heightened competition atmosphere, the cost of raw materials (especially those imported) will increase and will necessitate strict cost control and productivity quality enhancements.
It is also important for business leaders to begin operations early, having strategically looked at all available market and distribution options as the market is only suppressed and not totally destroyed. However, business leaders need to be aware that consumers will henceforth begin to question the value of brands (ie. vs. generics), the perceived better quality of products, and what real sustainable benefits and needs are being satisfied by the products and services and thus become more cost benefit conscious.
With the crisis bringing up significant new innovations and creative ideas and emergence of new creative talents from established businesses, entrepreneurs and youth first time innovators, the private sector and venture capitalists must support these innovations and develop new business opportunities out of them
The private sector leaders individually in their businesses; and collectively as a private sector; must respond by taking every available change management, innovation and restructure options to optimize/enhance cost efficiency, productivity and quality of products and services; and become ready to compete internationally on cost/quality/logistics and service delivery parameters; and assist the State to similarly restructure State services, businesses and institutions via public private partnerships and technology/digital transformations
Staggered start of resumption of work in a well-planned basis is essential to assure flattening of the impact curve: therefore
- Beginning with only a small segment of the work-force, being engaged must be considered
- Prioritizing and selecting lines of business and products/services to be started first must be based on
  - safety and virus control needs,
  - customer/market retentions,
  - export order satisfaction,
  - brand/customer relationship protection and
  - free cash flow generation and
  - exploiting emerging niche opportunities with innovations/creativity and change management, by initiating new products and services in demand both locally and in the export markets which can be developed using available in house facilities/material/supply lines (eg. Personal Protective Equipment, masks/ surgical and other gowns and re-useable protective clothing, health care items, disinfectants, hand washes and sanitizers and even beauty care products for persons planning on returning to offices post lockdown)
  - future niche market opportunities exploitation recognizing the changes in market, buying habits /patterns and preferences and
  - Recognition of need to reduce the dependence on existing markets especially in Europe/USA ,which markets are likely to remain impacted at a heightened level over the next 24 months
  - Be conscious of the Trade Barriers , new Trade Rules and new certifications and documentations that may be imposed by importing and exporting States
- Accurately developed best estimates of cash flows and liquidity/solvency maintenance minimum reserves under different scenarios ( Best/Worst and hopeful), must be computed for the next 3-6 months, 12 months and 24 months; and immediate arrangements of bank and financial funds facilities support must be negotiated to accommodate any shortfall.
- Special attention needs to be paid to assure continuity of supply chain support on an uninterrupted basis; and here the sensitivity of effective and well co-ordinated support via local port operations will be key; assuring that these operations are not negatively impacted by lower levels of transshipment cargoes emanating from India and Bangladesh and this limits shipping lines calling over.
- Adopting different and out of the box Workforce Engagement models must be explored, including
  - Continuous shifts and days off with marginal over time for extra hours
  - Working from home
  - Part time /seasonal work
  - Flexible working options (where days/hours of work are flexed or a part of the services are rendered from the business premises and the other part from home – A survey revealed that 70% of the respondents preferred such a model)
  - Assessed output rated and productivity and direct revenue generation incentive share based models
  - Outsourced operations with modular suppliers
  - New alliances and joint ventures for beginning to end supply chain strengthening
  - Employees becoming self-employed and serving multiple businesses assisted by the employers and venture capitalists
- The Private Sector in re-stating businesses must ensure
  - Businesses themselves should assist with the testing of work force
  - Strict social distancing and workers being required to wear at all times appropriate personal protective equipment,
  - New models, rules and arrangements must be introduced in welfare/meal/tea rooms and washrooms
  - Effective sanitation processes and regular options for hand washing and use of disinfectants must be in place

The State must recognize that, without effective and proactive facilitation support , the Private sector initiatives to reverse the decline in the real economy, demand for products/service and attempt to enhance buying power in the community and prevent inflation and cost increases led unhealthy competition squeezing out value addition opportunities, will not succeed and therefore;

Government control action, State led facilitation support, extension of prioritized stimulus packages and effective extension/accommodation of working capital and business restructure finance, moratoriums and concessionary terms by Banks and Financial intuitions will be key to assure business survival and their earliest recovery
The State must introduce essential reforms and at the earliest institute service optimization measures to facilitate ease of business yielding competitiveness advantage enhancement options to be exercised by the private sector in using state services: special attention needs to be paid to implement proactive restructure of state services leveraging digital transformation options.

The availability of uninterrupted essential services to industry, agriculture, plantations, importers and exporters (especially in the sensitive area of’ beginning to end linked supply chain management’) requires well co-ordinated collective facilitation by several stakeholders: here it is important to recognize that services supply associations are split in to segments and all must be effectively networked to ensure smooth and uninterrupted operations.
State financial help to the poor and marginalized segments must be expanded to cover daily wage earning community of workers as well as highly impacted business sectors and their associated extended service providers eg, travel, transport, entertainment providers and SME’s in in tourism including restaurant/bars and boutiques, as well as expatriate workers in highly impacted sectors like tourism.
Where fiscal space allows, the State introduced stimulus package must include reimbursing for 6 months, at least 50% of the basic remuneration of employees drawing less than Rs. 40,000/= in Covid impacted businesses unable to bear such costs recognizing that such impacted persons have no other ‘safety nets’.
The State must address the need for an insurance or other safety net scheme to be established, where temporarily laid off or made redundant persons due to agreed causes, are able to claim for a limited period of time a part of his basic remuneration.
State to recognize that new export market opportunities in goods and services, as well as technology partnerships, foreign direct investments, long term contracting and even supply chain related letter of credit and associated bank documentation acceptances are influenced to a significant extent by national sovereign ratings, FATF 40 related jurisdictional risks, Transparency /Opacity indices, ease of doing business, openness indices and other country ratings on financial and political risk assessment criteria; the State must commit to improve these ratings by strategic action
The government’s immediate attention is required to modernize and overhaul archaic labour laws and practices, including allowing involuntary pay cuts and temporary layoffs in special circumstances, especially to prevent redundancies and winding up of business.
The State forex earning from expatriate Sri Lankans will fall short of targets as many of them are deployed in sectors of operation significantly impacted by the pandemic.
The State needs to re-visit the taxation and revenue generation recent policy changes, bearing in mind the additional fiscal space essentially required post Covid and to effectively manage fiscal deficit and external debt management challenges. Without consistent tax policies being assured by the State, where investors can rely on and invest with certainty, FDI/Local investor sentiments cannot be positively impacted.
State must assure that real stakeholders of the economy are represented in the Task Forces and are able to bring up the real issues and potential best option solutions