With the ease of lockdown in most countries across the world, many businesses are having to consider re-opening for business. For countries like Nigeria that are still dealing with containing the virus, the decision to re-open has to be balanced against the need to protect health and safety of employees, clients and customers. The economic cost of lockdown and other restrictions has no doubt hit hard on individuals, businesses, communities and some have said this could cause further harm beyond the threat to health and life that COVID-19 presents.
Management and Boards will now have to make decisions about when, where, and how to reopen their companies. These will include the process of opening offices, stores, factories, and warehouses and planning for the resumption of business activities such as non-essential travel and customer/client meetings. Beyond the challenges of adapting to what the new norms of business may be—from workplaces and public transportation to consumer behaviour and the accelerated adoption of technology— companies will need to find a way to reconcile the protection of the physical health of individuals with the financial health of the Company and the broader economy.
The continued uncertainty that businesses face may be paralyzing for some executives and Boards, not to mention employees. The lack of clear guidance from government, the wide range of possible scenarios, and the magnitude of the risk make the decision to reopen business particularly challenging. Yet all business decisions are a balancing act of actions based on limited information and a range of risks. And so, to help Boards think through these challenges, the National Association of Corporate Directors offers some guidance on what Directors, working with their senior management, should consider in taking the decision to reopen.
For many companies, the question about reopening is around when, rather than whether, to reopen. While principally driven by health concerns, the urgency around reopening will affect the analysis the Board and Management use to reach the final decision. Understanding that urgency and what needs to happen now as opposed to what could be delayed to a later date, are important considerations as Boards think about the path forward. Boards will want to revisit pre-COVID-19 strategic decisions and assumptions and consider whether current initiatives, such as digital transformation, should be accelerated to help ensure success in the COVID-19 world.
What are the financial implications of remaining closed or virtual only versus opening now, versus opening in the next three months, versus opening later? Is the Company’s industry or business model such that the reopening costs are high and would create risk if the decision to reopen is reversed? For example, the airline industry, where airplanes will need to be made flight ready again, staffed, and deployed to begin flying. These activities require a significant financial investment upfront in order to reopen.
Another question the Board should ask is if reopening allows the Company to quickly resume revenue generation and strengthen financial position. Is there clear evidence that customers in the Company’s industry are ready to spend again and would reopening better allow the Company meet this pent up demand? How does the crisis impact corporate strategy going forward? Will reopening allow the Company resume critical functions and strategic initiatives that were stalled or slowed down because of the lockdown?
The Board should also consider the Company’s relationship with customers, suppliers, and other business partners such as joint ventures or portfolio companies as well as what key competitors are doing.
Equally critical is to gauge workforce sentiment. How well has Management communicated with employees during the lockdown? The Board should encourage Management to communicate the idea of reopening to the workforce and receive feedback from employees in this regard. Many employees would like to go back to the office given the challenges (mostly infrastructure deficiencies in a country like Nigeria) of working from home, just as many are concerned about their health and safety at the workplace and from commuting.
Commerce is a global phenomenon, but it happens locally—in the store, warehouse, or office. The question of reopening may often be framed as an enterprise-wide proposition but will more likely be driven by local conditions at respective factories, stores, and offices, and in the surrounding communities. In this regard, companies will need to consider the immediate environment they operate in when taking a decision to re-open. In Nigeria, the rate of infection has not been uniform across the States and as such the Company’s location in a State that is at the top of the infection table of COVID-19 cases will likely need to be treated differently than an office located in a State that has very few cases of infected persons.
Questions about how employees commute to the office, the concentration of employees in the workplace from the perspective of social distancing and the nature of the work performed will inform the decisions made around when and how to reopen. Complicating these decisions may be conflicting guidance from different levels of government – the States and Federal governments. The Board will have to streamline such guidance and manage stakeholder expectations. It will be necessary to engage with governments at various levels to understand their reopening expectations, concerns, and guidelines. Many CEOs are getting support in this regard from entities such as the Nigerian Employers Consultative Association which has played a significant advocacy role in helping to shape guidance from government in re-opening businesses.
The Board also needs to review the communications plan or policy and ensure that one is in place if not the case. This is critical as the company may need to deal with negative publicity for reopening – particularly if a staff member gets infected with the virus in the process. A few companies have had to deal with this and have handled the resultant publicity with varying degrees of success.
(to be continued)
Reference – Board Consideration For Reopening Business – National Association of Corporate Directors
Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng