Returning To Work In Society’s New ‘Normal’

How companies should plan to return to work and emerge from COVID-19 stronger and smarter.

As the response to the COVID-19 pandemic progresses, many companies have established operational crisis management teams and adjusted to global restrictions on work and movement. Executives are now beginning to ask the question: How are we going to return to work?

As of April 2020, some countries are starting to ease restrictions, allowing for more freedom of movement and the reopening of specific industries. In the United States, The White House has announced guidelines for re-opening the nation in a three phased approach. These guidelines include thresholds for states to satisfy in the following areas: trajectory of reported symptoms; trajectory of reported cases; and ability for hospitals to care for patients and provide ongoing testing.

Additionally, multiple groups of governors have formed regional coalitions to coordinate reopening their states in a unified way. While it is challenging to predict when each country and U.S. state will begin to return to the workplace, many predictions point toward restrictions being lifted gradually over the next few months, depending on your location.

Regardless of precisely how governments decide to ease their restrictions, companies need to plan for an orderly and thoughtful approach to returning to work. There are three crucial steps to accomplishing this:

  1. Build a return-to-work plan.
  2. Work through the stages of partial and full operations.
  3. Increase resilience through monitoring for possible virus resurgence, completion of after-action reports, and program enhancements.

By doing this carefully and methodically, businesses can begin the process of restoring operations while also ensuring that they do not take one step forward and two steps backward in returning to work.


Build a return-to-work plan

Companies first need to consider the structure in which a return-to-work plan will be created. That structure will need to include identifying stakeholders; outlining authorities and decision trees; defining critical information requirements; identifying assumptions and variables; and, of course, creating detailed execution checklists for individual business units.

It’s essential to examine each part of the return-to-work program in detail:

  • Identifying stakeholders: Most of the critical stakeholders may already be members of the Crisis Management Team. Members should include representatives from major business units and support functions.  
  • Outlining authorities and decision trees: As your company prepares to make return-to-work decisions, it is important that a decision tree is outlined in advance and that the company agrees on who has the authorities to make those decisions. At a minimum, a company will need to answer three basic questions before returning to work. Those questions are:​
    • Can we do it? Is physical access possible through government easing of restrictions or landlord policies?
    • Should we do it? Is it safe for staff to commute to and occupy a given work site? Additionally, are there supplemental government restrictions like the required use of personal protective equipment (PPE) that the company must provide for occupants?
    • How will we do it? Who within the company makes the final decision to open a work site, and what are the steps (checklist items) the business units will need to follow? 
  • Defining indicators: Sometimes referred to as triggers or critical information requirements, these indicators will likely come in the form of the lifting of government orders or easement of agency (e.g., Centers for Disease Control and Prevention, World Health Organization) guidance. This type of information will indicate a country, state, city, or region is ready to begin the process for considering reopening non-essential work sites.
  • Identifying variables: Any lifting of work and movement restrictions will likely occur in a phased approach. Governments and agencies will closely monitor infection cases and use that information to determine next steps to further ease restrictions or revert to prior levels. Some of the variables companies will need to consider are:
    • Countries will only begin to ease work and movement restrictions when they see consistent reductions in new infections and are comfortable that they have available medical capabilities and hospital beds to handle any potential resurgence.
    • In the U.S., individual states will start to return to work in segments (coastal states first with interior states to follow). Additionally, state governors are likely to extend restrictions beyond federal government deadlines due to the differences in when peak infection cases are reached.
    • Restrictions are likely to remain in the workplace, and it is possible to see government orders that could require a reduction of in-person workforce by half, staggered work schedules, or some other measures to keep occupancy low while the effects of returning to work are measured in any potential new infection cases.
    • Guidance or government orders may include parameters around which segments of the population can work first (e.g., low-risk and immune persons may be allowed to return first, while higher-risk populations will be required to remain at home).
    • Some governments are requiring PPE for employees (e.g., China, France, and, in the U.S., New Jersey, New York, and some counties in California and Florida). In these cases, companies will need to prepare for and provide the required equipment before staff are allowed back into the work site. Lead times for this equipment can be very long, so advanced planning is required.
    • Manufacturing and pharmaceutical equipment may require re-calibration and, in some cases, re-certification by the Food and Drug Administration (or local equivalent). Lead times for these processes could extend many weeks or months.
    • Finally, companies will need to determine what other government regulations are required of them prior to opening a work site. For example, in Alameda County, California, there is currently a regulation requiring employers to post notifications to the buildings informing staff of the potential dangers that may still exist.
  • Creating detailed execution checklists: For individual business units, both business unit and support function checklists will need to be created to help ensure proper steps are completed prior to staff returning to a work site. Additionally, critical third parties must be accounted for when preparing to return to work.

Working through the four stages

A return-to-work plan should account for four main stages and allow for a clear roadmap in moving from a (1) current state, to a (2) partial or limited opening, to a (3) full resumption of operations at capacity. The fourth stage accounts for the need to continue to monitor for virus resurgence. This allows for a diagnosis of how the company performed during the crisis and how it will improve going forward.

The situation, objectives, indicators, and actions should be clearly defined for each of the four stages that a company expects to move through during the return-to-work process. Those elements are detailed as follows:

  • Situation – Parameters are established to help define the given stage. This is especially helpful in determining when a company can begin to move from the partial opening to the full opening stage.

According to World Health Organization director-general Tedros Adhanom Ghebreyesus: “The last thing any country needs is to open schools and businesses only to be forced to close them again because of a resurgence.”
Source: https://www.reuters.com/article/us-health-coronavirus-wuhan-secondwave/beware-second-waves-of-covid-19-if-lockdowns-eased-early-study-idUSKBN21D1M9

  • Objectives – A company articulates what is most important in each stage. It could be maintaining cash flow, re-establishing connections with clients and customers, re-evaluating supply chains, or completing a look back at the event with an eye toward future maturity.
  • Indicators – This information is gathered from both government orders and agency guidance. It informs the company what is or is not allowed from a movement, work, or health and safety perspective.
  • Actions – Finally, companies should outline how they will act within each stage. This may take the form of specific actions related to People, Process, and Technology.

The final stage of the return-to-work plan is to monitor and prepare. Here it is incumbent on companies to continue to monitor for any resurgence in the virus, identify changes to government restrictions and agency guidance, and better prepare the company to be more resilient toward future disruptions. This is also the stage where companies should do a “look back” to evaluate if any controls were relaxed during the work-from-home period.

There is growing concern among academics that a second wave of virus infection cases may occur later this year. Given that possibility, companies should take full advantage of the expected break over the summer and early fall months to begin to perform after-action reports and outline a plan for improvements. Those in highly regulated industries (e.g., Financial Services, Pharmaceutical) should further prepare for regulatory inquiries on how they are planning to address gaps. Regardless of industry, it is always better to show the Board and regulators (if any) that gaps have been self-identified, remediation programs outlined, and resources allocated.

This will also be the time for companies to build a consolidated operational resiliency function. In this environment, resiliency components are no longer siloed but are integrated and provide end-to-end recoverability regardless of the next business interruption.

Conclusion

As companies continue to navigate these uncharted waters, it is essential to understand that business may fundamentally change when we come out of this. A return to “business as usual” may also be a return to a new normal where we re-evaluate how we work, where we work, how we interact with customers, and where our products are made. Supply chains and concentration risks will be reassessed, and executives will begin to evaluate outsourcing and the use of low-cost locations with more of a risk lens and not merely a cost-cutting lens.

Like every systemic shock to the economy, winners and losers will emerge. One need only look to the long list of defunct internet companies from the late 1990s or the more recent list of white-heeled boutique banks that didn’t make it out of the 2008 financial crisis. In most cases, the firms that emerged had strong risk management programs and decisive leaders who executed on clearly defined recovery plans.

That is why now is the time for companies to begin working on the following three return-to-work steps:

  • Build a return-to-work plan.
  • Work through the stages of partial and full operations.
  • Increase resilience through monitoring for possible virus resurgence, completion of after-action reports, and program enhancements. 

Navigating Supply Chains Risks During COVID-19 Crisis

For many businesses, COVID-19 has already caused significant supply chain disruption. Others are bracing for impact. These disruptions—the extent of which remain to be seen—are likely to last until the outbreak is contained and the global economy starts to rebound.
 
While the novel coronavirus is front and center, it isn’t the only issue plaguing supply chains. Even before the virus became a pandemic, businesses had begun to re-evaluate their supply chains following the U.S. trade tensions of the past year.
 
We’ve summarized the top 4 supply chain issues driven by the recent disruption:
 

  • Supply shortages and increased prices: Factory shutdowns across the globe, and especially in China, have forced many businesses to rely on existing inventory stockpiles. Once affected factories can resume production, well-capitalized companies may get priority of limited supply. Unless alternate sources are secured, many companies will face supply shortages and likely increased prices when the time comes to replenish current inventories.   
  • Demand Shifts – Matching customer demand with supply and inventory investments has become more challenging during this time.   Essential goods and services are seeing demand spikes, packaging associated with takeout and home deliveries, while more discretionary goods and services are often seeing reduced demand in the short term.
  • Heightened transportation costs: Once suppliers are able to resume production, businesses will be eager to make up for lost time. This pent-up demand will likely strain the transportation services industry, driving prices up for businesses on top of premiums on limited supply.
  • Reputational impacts: Supplier disruptions, quarantines, travel restrictions, and workforce shortages can make it difficult or impossible for businesses to fulfill obligations to their customers. Failure to deliver—even if that failure is due to forces beyond the company’s control—can seriously harm a company’s reputation and may result in lost customers or even legal consequences. The way companies manage COVID-19 product or service shortages or delays will be an important dimension of longer-term brand preservation.

 
Despite the uncertainty surrounding the intensity and duration of disruption, there are reactive steps companies can take now to minimize the damage of this crisis or better prepare for future disruptions. To address immediate risk, companies should identify which Tier 1 suppliers are experiencing production slowdowns and look for alternatives—especially those that provide critical materials or goods—and likewise evaluate issues with Tier 2 and Tier 3 suppliers.  
 
Companies should also familiarize themselves with their insurance policies and understand the extent of their parametric coverage. For COVID-19 specifically, pay close attention to whether or not insurance coverage contains a Communicable Disease Exclusion.
 
Reactive steps taken now can help contain the damage or prepare companies for future disruptions, which do not generally come with a timetable. Looking ahead, companies should be proactive to guard against supply chain issues that result from ripple effects associated with this pandemic or future unexpected disruptions:  
 

  1. Diversify supplier geographies: If conversations around geographic diversification in supply chains aren’t already underway, now is the time. By shifting supply sources to a variety of countries and minimizing the dependence on a single location, companies have more flexibility when it comes to procurement and manufacturing. When evaluating changes to supply chain operations, it’s important to assess potential exit charges, permanent establishment status and the tax liabilities associated with the movement of functions and assets.
  2. Boost transparency: Implementing technologies such as cargo-tracking, cloud-based GPS and RFID can also help increase visibility into nearly every part of the supply chain. Real-time transparency can help companies more proactively identify specific areas of risk early on, or more quickly notice and respond to disruption that occurs. Use cases today have even revealed supply chain blind spots, or areas where supplies traveled that companies weren’t aware of. Data gleaned from these technologies are also critical as companies reassess their sales and operations planning, including optimizing production and distribution strategies, as well as inventory investments.
  3. Comprehensive risk assessments: The increased connectivity between an entity, its suppliers and customers has introduced risks throughout the supply chain that are exacerbated by disruptions. It’s up to each of these parties to identify, evaluate and address these risks—from security and privacy, to materials availability and quality—in order for the entire ecosystem to be adequately protected.

To help organizations and their suppliers, business partners, and distribution companies identify, evaluate, and address supply chain risks, the AICPA recently released a framework—SOC for Supply Chain. Organizations can use this framework to communicate relevant information to stakeholders about their risk management efforts related to the production and delivery of goods. A report that follows this framework can help businesses uncover weaknesses throughout their supply chains and ensure there are controls in place to address them, ultimately building trust with vendors, customers and business partners ahead of disruptions.

Federal Reserve unveils details of $2.3 trillion in programs to help support the economy

By Jeff Cox

The Federal Reserve on Thursday announced a bevy of new moves aimed at getting another $2.3 trillion of financing into businesses and revenue-pinched governments.

Stock futures jumped after the announcement, which came moments after the government reported that 6.6 million new jobless claims were filed last week.

Among the Fed’s measures were details regarding its Main Street business lending program and several other initiatives it is undertaking to backstop the reeling U.S. economy. The central bank also provided more detail on its market interventions, including plans to buy corporate bonds both at an investment-grade level as well as high-yield, or junk, bonds.

Under provisions outlined for the first time, the loans would be geared toward businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019. Principal and interest payments will be deferred for a year.

The Fed said the programs would total up to $2.3 trillion and include the Payroll Protection Program and other measures aimed at getting money to small businesses and bolstering municipal finances with a $500 billion lending program.

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” Fed Chairman Jerome  Powell said in a statement. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

The measures enhance an already-aggressive move by the Fed to keep markets functioning and support the economy, which has been handcuffed due to public health measures aimed at halting the coronavirus spread.

Money for business and government

The Main Street loans would be a minimum of $1 million and a maximum of either $25 million or an amount that “when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization,” whatever is less, the Fed said.

The Fed will purchase up to $600 billion in loans.

Terms would see an interest rate equal to the Fed’s Secure Overnight Financing Rate, currently 0.01%, plus 250-400 basis points with a four-year maturity. 

A special-purpose vehicle that Fed created jointly with the Treasury Department will purchase 95% of the loan while the financing institution would hold the other 5%.

In addition to the Main Street program aimed at midsize companies, the Fed also announced a move to “bolster the effectiveness” of the Payroll Protection Program by providing term finance to institutions lending through the PPP.

While the Fed already has entered the municipal bond market, the latest steps establish a new Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide a $35 billion backstop to the program to guard against potential losses.

The central bank also said it will expand three existing credit facilities aimed at increasing credit to households and businesses. The new effort will target $850 billion through the three facilities, a move backed by $85 billion in protection from the Treasury.

The Fed also expanded the type of collateral it will accept through one of the programs, known as the Term Asset-backed Loan Facility.

Cox, Jeff. “Federal Reserve unveils details of $2.3 trillion in programs to help support the economy.” CNBC, CNBC LLC, 9 April 2020, https://www.cnbc.com/2020/04/09/federal-reserve-unveils-details-of-its-much-anticipated-main-street-lending-program.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail