Things Business Organisations Should Do : Post Withdrawal of COVID19 Lock-down

On 1^st October, 2015, I had written a small article on “What if the World Dealt in Cash Only”. Looking back, I think it was meant for these critical times.

The link to the article is :
https://calibrecreators.blogspot.com/2015/01/what-if-world-dealt-in-cash-only.html

Let me clarify here, that by cash, I meant making immediate payment against goods and services just as you would when you buy anything across the counter.

In the aftermath of the Corona Virus pandemic where the global economy has taken a huge hit and whose consequences on every person in the chain is yet uncertain, I find this topic very relevant in today’s scenario and I will tell you why.  I have heard various business experts and economists talk about “Cash is King”.  I think the entire trade and economy cycle should be converted into instant payments system where credit period is minimal.  Only then will the whole business cycle book.  Yes, there may be sectors where credit is required like a Kirana store.  He has to stock-up to sell and till then, he has to invest money.  The amount require is also not small.  This also applies to Large Food chains.  The government should enforce stringent norms for businessmen who default on making payments within the credit period.

As soon as business comes back to normalcy, people would be struggling to re-start their businesses.  In my opinion, it is akin to starting from zero and making a fresh beginning.  It is well known that it will take a long time for the economic activity to pick up momentum and bring smiles again to everyone’s faces.  A separate study on the impact of economy is also on the anvil and hopefully, I will publish it soon.  But that is for later.

Now this article is also like an appeal to most businessmen and there are a few recommendations to the Government that will help the people to overcome the impact of the Corona Lock-down.  I am not an economist nor a financial expert but I bring my experiences and share my knowledge.

To make it simpler, I shall put them in bullet points:

1.    As a seller, do not increase your prices just to take advantage of scarcity or shortage of the product you deal with.  Keep up with honest pricing and I am sure your customer’s will love it.  It is your own countrymen who are been fleeced.  This will not only raise discontentment but you will lose long-term business. They may not come to you again unless you are in a monopolistic situation. 

2.    Also, as a seller, do not try to offload your goods at a huge discount in the hope of raising funds and bringing fresh stock.  People will try and take advantage of the situation and indulge in a lot of bargaining.  Yes, be a little flexible but do not reduce your prices too much.  Lowering your prices in a crisis situation will help people buy little of everything by spreading their thin resources.

3.    You may try to ask for your outstanding dues but we all know that most people have used up most of their working capital to pay their employees, for household expenditures, pay for rents, their EMIs and other routine liabilities.  As much as possible, be polite in your dealings and give them leverage to break-up their payments in small amounts if possible.   They will also require cash to get back on track and it is improper to demand your money.

4.    Do something similar if you have to make your payments.  Do not deny payment but say that you will pay it off over a period of time. Have a humane face.  They also need funds to meet their commitments.

5.    When you receive payment, do not hold it back or hoard it.  Pay up ahead to your suppliers and other people to whom dues are pending.  If you are in trade, gradually build your not but not fully in anticipation of a sudden demand.  Most likely, demand will gradually pick up as money starts rolling in.

6.    As a buyer, do not bargain with your vendor or seller for a few rupees or dollars or any currency.  Just as much as you need the money, he/she too needs the money to bounce back.  Together, we all will need support from each other to get the economy back on track.

7.    Banks will be willing to offer you financial assistance. Be very careful in how you plan because your EMIs will start immediately unless you work on No Credit basis.

8.    If you have taken advance for delivery of goods, do not default or delay the transportation.  Do not compromise on quality or quantity.  Be ethical.

9.    Keep aside a certain portion of your business revenue for contingencies to create a disaster management fund for your business and your family.  The future of business is going to be very uncertain.  New products, new services and new way of doing business will be the norm.

10.   In whatever economic activity you are engaged in, try to rework your business & sales strategy and identify leakages, delays, inefficiencies and try to develop and implement solutions.  Keep tweaking your strategy so that it is in sync with the times and you are not left out wondering why you were left behind.

11.   If you have not paid salaries to your employees in fully, it is very likely that they will ask for advances.  Try to accommodate their request because they also have to feed their families.

12.   On the day you start your business or office, don’t be in a hurry to start selling and finishing up pending tasks.   

Call your entire team, especially if you have a formal organisation for a meeting.  Most companies are doing this with regular conference calls to discuss the strategies.  If there is an HR function, ask them to organise a fun-activity like an ice-breaker or something that will enhancing the bonding. 

Take about one or two hours to hold discussions to take stock of the situation, plan everything.  More importantly, listen to their worries and woes that they are going through.  They will feel better and will find a voice.  In fact, they will be more than happy to express their sentiments.  Show empathy and also share your stories so that they know that you too have problems and have anxieties.  This will help re-build and strengthen relations that may have seen a downward slide.  Do not be in a hurry to talk about business and losses that you have suffered.  They are perhaps well aware of the situation and will have contemplated it over and over.  It is important to re-group, plan, re-strategise and re-organise your work.  

13.    During the lock-in period, you may have got the opportunity to think of new ideas, review your business function, look at best practices.  Now is the time to implement these new ideas which you can discuss with your team.  Get your team to discuss those ideas and get their inputs.  This will be very valuable and also help in building greater employee engagement.

14.    I am very sure that if you have built a good organisation and have good relations, you will not have to tell you employees to stretch themselves to put in extra hours of work.  They might be in a hurry to rush back home but most of them will look forward to completing their work and clear the backlog in return for job security or even otherwise.  In all probability, you will not have to tell or reprimand your team members for such an action. 

15.    Also tell them that salaries will not be affected.  Some highly paid employees may voluntarily offer to take a cut in their compensation so that the company can manage with the resources.  You can certainly pay them back at a later period for the cuts they have taken.  They should not have to forego the amount if the business is back to normal or if  you have not been affected by it.

16.    This is not the right time to tell them that their salary increases or performance bonuses will be affected.  Hopefully, your business will recover quickly well and you may not have to take such a drastic action.  Let’s hope that you do more better than earlier and you don’t have to pay them for their support and good performance.

17.    Also, request your employees to postpone all their casual leaves and annual holidays and I am sure they will reciprocate with an equal measure.  Tell them that this is the time of national calamity and crisis and we must all work to make up for the lost time.

18.    Ask your teams to focus on improving customer service.  This is the key and will give you an edge.

19.    Most customers will have complaints of maintenance or servicing because of no-service during the lock-down period and they must be prioritised and attended to.  During the lock-down period, be proactive.  It would be good if you reach out to your customers to find out they have any breakdowns or require repairs.  Tell them that your servicing team will be reaching out to them separately and soon as things open up.  This will be highly beneficial for your business and people will appreciate that gesture.  It will reduce their stress too.

20.    After this pandemic, people will be very sensitive about cleanliness, hygiene and sanitation.  Therefore, please make sure that you office, or business premises where your customers are attended to, is cleaned and there are no filthy areas.  Pay attention to detail.  Focus not just on your internal premises but try and get your access path or surroundings clean.  The Municipal Corporation workers who have never cleaned them in the past are not likely to do so in the future too.  Let’s extend our help to them.

21.    Keep sanitizers at the exit and all employees must maintain the hygiene standards until we are all out of the blue.

22.    The new normal will create demand for newer products.  It is likely that imports may be affected for short to medium term.  Try to shore up your manufacturing capacity to create new products and phased enhancement of manufacturing capacity.  This will help not only your business planning but help create additional employment and participate in the Make in India programme.  

23.    Since a lot of functions are to be operated form the office like Billing and accounts and other related activities, they could not be completed because it was not put on cloud.  You will have to consider establishing systems through which your employees can continue their operations from the remoteness of their homes.  Remote working will become the norm.

24.    It is expected that the office space requirement will greatly reduce due to the Work From Home system that has come into being and seems to be working well.  Corporates who were uncomfortable with this have tasted it and are already planning to downsize and reduce their outgo’s.  Space and rentals will be one such consideration.

25.    A major and important recommendation which I would like to make to the Government is this.  Immediately after withdrawal of the lock-down, most people will still not have monies in their hands to spend on essential items also. 

I recommend that the salary payment system must be converted to make it every weekend.  This may cause additional strain on the HR and Payroll functions but it will quickly push cash in the hands of a large number of people and will help in normalising the situation earlier than later.  This will also lead to decrease in anxieties faced by employees on account of shortage of cash.  Once they have cash in their hands, they will spend on consumption and this will help the economy to keep rolling. 

Payroll management companies may not have to enhance their capacities while some may need additional support for short time.  They may have to re-negotiate their terms for the adjustment period.

I would however, suggest that we make this a permanent feature and I am sure organisations will be able to cope up with the new system.  I am confident that once the system is streamlined, organisations will happily make this a permanent feature.  Of course, some industry will have their concerns that there will be a high level of employee turnover, especially at the daily wage-earner’s and contract labourers level because they will leave after receiving their weekly pay, affecting the business cycle.  I understand that this cannot be across all industries but I am sure it can be done in many industries and sectors.  We are currently not doing this because we are not used to that system but that is not much of an issue in the West.  Of course, the causes of success in this system are different.  We have a legacy to deal with but can be streamlined over a period of a couple of years.

As a result of this, the supply of goods and their reciprocal payment system will be streamlined and we will move to a limited short-term credit say of 3 to 7 days.  The Government will have to introduce some kind of legislation so that defaulters do not get a fee hand and they have a fear of the law.  This will mean that the government will have to strengthen the judicial machinery to take care of the litigations and complaints.

I wish that everything returns to normal situation and that we continue to follow the lessons learnt from and during the lock-down. 

The word “Corona” will not be forgotten a long time and at least the two generations will talk about just like our generation remembers the two World Wars or the Great Depression.

Best wishes.

Sarfaraz Lakhani

24^th April, 2020.