Considerations for West Australian Organisations in response to COVID-19

 In Articles and case studies, Brendan Lannoye, Performance Improvement, Strategy & Planning

Click here to read to read the Executive Briefing on COVID-19.

As events continue to unfold in relation to the outbreak of COVID-19 around the world, Western Australian organisations need to ensure they are ready to deal with the threat.

Our understanding of the threat posed by COVID-19 is still developing. The fatality rate and the expected extent of the outbreak are still unknown. Broad scenarios are being projected, including ranges of between 1% and 80% of the Australian population becoming infected. What we do know is that it has the capacity to spread quickly, cause serious illness and threaten life.

Dealing with the huge variances of potential COVID-19 scenarios is a challenge that organisations should not shy away from. Fundamentally, the challenge for executives and management teams’ centres around planning with limited information. Under-reaction has the potential of spreading the virus through an organisation’s workforce – putting the well-being and lives of employees at risk. We have seen how slow reactions in Iran and initially in China caused significant hardship for the people living in those regions. However, companies should avoid over-reaction as well. For example, the panic buying of toilet paper by a small number of people has stoked fear amongst the general Australian population and has now created issues where there were no issues. The cost of over reaction is not just economic, but can also have a multiplier effect.

Management teams are tasked with making appropriate decisions at the right time in response to this outbreak. A useful exercise to approach this task is ‘Scenario analysis’. Scenario analysis helps organisations deal with future uncertainties by helping stakeholders to become aware of ‘weak signals’ and let them get better prepared to handle new situations. Scenarios that WA organisations should consider for COVID-19 include:

  • Large scale quarantine of staff
  • Closure of supply routes
  • Loss of key people due to illness
  • Limitations on FIFO operations
  • Sustained decrease in commodity demand
  • A drop in overseas visitors / students

Scenario analysis can help accelerate decision making. We know that the speed of response is a major factor in crisis management. Delays in decisions and, in turn communication, can lead to an information vacuum where stakeholders such as customers, employees and suppliers look to other sources of information if it is not forthcoming. Executives now need to fend off misinformation by efficiently making decisions and staying one step ahead of the fears of their stakeholders.

One particular aspect that Western Australian organisations should consider is the impact of COVID-19 on supply chains. As a large open economy, Australia is particularly dependent on international supply chains. We are starting to have more information on the effect of COVID-19 on production in mainland China. The timeline to transition from quarantine to restarting the economy in Hubei province appears to be somewhere close to three months. This information can be used to understand the potential effects on other economies impacted by COVID-19. Management teams can begin to forecast the potential impact on their supply chains by assessing the exposure of their supply chains to at risk regions.

supply chain

At Churchill Consulting, we have supported a wide spectrum of Western Australian businesses assess their supply chain risks and opportunities over the last 20 years. The risk posed by COVID-19 is in many ways no different to risks we have assessed in the past. Our tools and methodologies can help organisations quickly understand their risk exposure and devise mitigation plans to address those risks.

Assessment of supply chain risk is one of three practical steps that organisations can immediately take to address the current situation. Organisations should also consider the processes and technologies to be used if a quarantine on their workforce is imposed. Organisations can prepare for this by scheduling a planned “work from home day’’ to understand how they may be impacted by emergency ways of working. Google and Twitter have recently undertaken this exercise by requesting thousands of employees to work from home to help them understand the impacts on their businesses.

Finally, organisations should review existing HR policies to ensure they are fit for purpose. Employees will be interested in knowing how their pay and benefits will be affected if they are forced to self-isolate or become ill due to COVID-19. Scenarios such as required staff quarantine due to an outbreak at a local school should be considered. Policies in this situation can have a measurable impact on the outbreak. One study found that, in epidemics, guaranteed sick pay cut the spread of flu in America by 40%. Organisations should get ahead of employee fears by clearly communicating their positions on these points.

Meet the author

brendan-lannoye

Brendan Lannoye, Manager

Brendan is a management consultant professional with 7 years’ experience advising leading national and international organisations in the financial services sector.

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