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CRISIS MANAGEMENT DURING THE CORONAVIRUS (COVID-19) OUTBREAK

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Page 1: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENTDURING THE CORONAVIRUS (COVID-19) OUTBREAK

Page 2: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT DURING THE CORONAVIRUS OUTBREAK

The coronavirus (COVID-19) has disrupted stock markets, supply chains and led to plant closures. Responsiveness, agility and implementing necessary changes have become decisive factors, particularly in the current phase.

The economy is facing new challenges. Business

processes, value chains and communication

measures must be reviewed and reassessed.

Companies need secure information, methods and

tools to create timely and sustainable responses to

the emergency:

- Ensure your stakeholders are safe and healthy.

- Implement strategies and measures that

safeguard your company performance potential,

sales, net assets, and liquidity.

- Initiate the stages, leading from the crisis of

today to the new normal that will emerge after

the battle against coronavirus has been won:

Resolve, Resilience, Return, Reimagination,

Return.2

Page 3: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

THREE SCENARIOS FOR COVID-19 The coronavirus’ economic impact

Source: McKinsey, COVID-19: Facts and Insights; PWC, Reactions to the Economic Impact of COVID-19, March 2020

Fast recovery and containment within a few weeks. It turns out that the virus is seasonal and can be stopped in spring and summer.

Current restrictions to freedom of movement, gatherings, and travel are effective and the number of cases is reduced again.

Economic decline until the end of Q1. Then a return to normalcy.

RAPID RECOVERYSeveral countries continue to lock themselves down, drastically restricting daily life, travel, and business.

Sectors such as airlines, tourism, and hotel/restaurants lose their summer business.

Other industries also experience an acute decline in business until mid/end of Q2.

GLOBAL SLOWDOWNWorst-case scenario. The virus continues to spread worldwide and cannot be contained by spring/summer. Health care systems are severely overburdened.

Global recessions, economic downturn, reduction of worldwide production and declining sales due to uncertainties and consumer restraint. Consequential damage to society as a whole and a sharp drop in consumption.

Consumer confidence doesn’t recover before Q3 (or later).

GLOBAL PANDEMIC AND RECESSION

3

CURRENT PREDICTION

Page 4: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

Time

CRISIS MANAGEMENT: THE CRISIS CURVEDifferent types of crisis

DAT

AD

RIV

EN

worsening crisis

Pu

blic

inte

rest

Sudden and totally unforeseen event

Goes quickly from latent to acute

ACUTE crisis

4

Slow, covert development

First signs in the latent crisis phase

Page 5: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT: THE CRISIS CURVEHow a crisis can proceed, with beginning, turning point, and end

DAT

AD

RIV

EN

Beginning End

Turning point

EndCh

ance

s o

f b

usi

nes

s su

rviv

al

Time

5

Page 6: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

THREE SCENARIOS FOR COVID-19 The coronavirus’ economic impact

Source: McKinsey, Impact of COVID-19, March 20206

Page 7: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

COVID-19: CHALLENGES

Obligation to inform

Health

Insecurity, fears

Remote work

Flexible working hours

Reduced work

Exemptions

Continued payment of wages

Compensation for quarantine measures

EmployeesAlternative delivery routes

Value chain

Standstill/interruptions

Delays

Contract disputes

Effects on customers

Supply ChainDecline in sales

Cash flow/liquidity bottlenecks

Government aid/financing

Loan issues

RevenueReduced capacity and resources in core areas, infrastructure and services

Breakdowns of entire locations

OPERATIONSTravel and mobility restrictions

Travel bans

Quarantines

Effects on recreational activities/social interactions

MOBILITyCompliance challenges

Regulation

7 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020

Page 8: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

Working from home is being tried out by many companies as a protective and preventative measure. Organizations around the world are adopting innovative solutions for remote working.

These measures will inevitably provide new opportunities for how we do business.

Accessibility of leadership:

Employees should know how and when they can

reach their superiors and project managers. It is

not about controlling the progress of work but

about ensuring that employees feel they are not

alone and receive support.

Assistance in task organization:

Provide employees with information and tips on

how to manage working from home. Through

management's coaching and mentoring,

employees have the opportunity to grow and

develop in their positions.

Flexible work time models

Soften the impact of the crisis with new work

time models if daily work slows down or

contracts fail to materialize. This could be

through reduced working hours, flexible holiday

leave, and overtime arrangements.

WORKING REMOTELYNew work options during the coronavirus outbreak

8

Page 9: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

ADDRESSING THE GROWING STRESSReport signs of distress related to COVID-19 in the United States

9 Souce McKinsey COVID-19 Consumer Survey 3/29/2020

Page 10: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT: STAGES OF LOSS/GRIEFThe Kübler-Ross Model

Co

rpo

rate

Per

form

ance

Time

CRISIS

Anger

Denial

Withdrawal

Bargaining

Agreement

This can‘t be happening!

We‘ll never make it!

Acceptance

We can do this!

10

Page 11: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

Goal-oriented management principlesto effectively manage corporate crises. Particularly in times of crisis, employee management and communication become top priority.

Soft skills, such as social competencies,

charisma, and building trust are essential in

times of crisis. Executives relinquish more

responsibility and take a goal-oriented approach

to leadership in order to minimize the initial

“chaos phase.”

It is about taking initiative and planning and

acting with foresight. The goal of leadership is

to bring chaos back into order. The management

process is governed by a feedback loop that

includes analyzing the situation, assessing the

situation, weighing possible courses of action,

making decisions, and monitoring.

LEADERSHIP PRINCIPLESEffective leadership during crises

32

15

4

Feedback Loop

Analysis/situational awareness

Possibilities for action

Situation assessment

Decisions/Resolutions

Monitoring

11

Page 12: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

Goal-oriented management principlesto effectively manage corporate crises. Particularly in times of crisis, employee management and communication become top priority.

Employees' Health: Recognize you have asymmetric

information vs. your team / employees.

Operations: Have a Plan B to ensure all operations can

continue across all levels.

Financial Planning: Run scenario planning, reduce

discretionary spending, and assess liquidity/cash.

Customers: Ramp up customer dialogue to understand

new challenges and how you can be part of the

solution.

Communications: Focus on communications across

internal and external audiences.

Strategic Opportunities: Prepare for opportunities

(acquisitions, talent); activists/sponsors are ramping

up on public situations.

LEADERSHIP PRIORITIESEffective leadership during crises

32

15

4

Feedback Loop

Analysis/situational awareness

Possibilities for action

Situation assessment

Decisions/Resolutions

Monitoring

12

Page 13: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

COVID-19: PRIORITIZED CHECK-LIST 1/2

1. Designate an executive response leader and cross-functional team with experience across the organization.

2. Evaluate your current state plans and incorporate elements of a crisis response plan

3. Map your internal and external stakeholders and information source.

CRISIS MANAGEMENT1. Establish processes and protocols to capture

current state of employees’ locations and work-related travel.

2. Develop business contingency plans for your employees, beginning with emergency health protocols such as sanitization, quarantine and evacuation, as well as healthcare access.

3. Define which functions must remain onsite and the protocols for remote working. Determine technology infrastructure and controls needed to support remote working at scale.

4. Define working assumptions for how changes in the external environment such as customer, pricing, and supply chain impact business, financial, and headcount planning.

WORKFORCE1. Host a working session with supply chain

functional areas to review risks and disruption and determine a mitigation plan.

2. Identify and implement changes to enhance your business continuity plans to better address the threats posed by COVID-19.

3. Determine whether alternative sources already exist in the current supplier base. If not, work to identify alternative sources, including locations.

4. Evaluate the supply pipeline, including intended destinations, and estimate when capacity may be available.

5. Identify key scenarios to evaluate those that are specific to COVID-19, such as supply disruption (including longevity), demand spikes and price impacts.

OPERATIONS AND SUPPLY CHAIN

13 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020

Page 14: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

COVID-19: PRIORITIZED CHECK-LIST 2/2

1. Determine your cash sources and needs for the next 90 days.

2. Identify a team to address the impact on each area of accounting operations and financial reporting.

3. Discuss with the disclosure committee any relevant actions to be taken.

4. Develop a communication plan for management, the board, and audit committee.

FINANCE AND LIQUIDITY1. Identify a leader to drive an assessment of your

strategy and innovation opportunities and define objectives.

2. Conduct a high-level assessment of the impacts of COVID-19 on your customers.

3. Conduct and analyze a threat assessment and begin identifying countermeasures and improvement levers that protect growth and profitability, which might include incentives or saving measures.

4. Define working assumptions for how changes in the external environment, such as customer, pricing and supply chain impact business, financial, and headcount planning.

5. Identify current product/service innovations underway.

STRATEGY AND BRAND

14 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020

Page 15: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT TEAMOperational security during a crisis

A crisis management team in the company increases operational security. Stringent crisis organization is essential for coping with crises.

Crisis management is separate from day-to-day business. The tasks it requires differ according to the company's area of business and the nature of the crisis, but can include:

− Information and resource management

− Coordinating all parties involved

− Allocating tasks and responsibilities

− Status reporting

− Arranging the preparation of premises/equipment

− Emergency planning

− Developing options for action

− Making future-oriented decisions

− Structural and operational organization

− Controlling measures taken

− Press and public relations work

− Putting together information for employees,suppliers, and customers

− Summarizing and visualizing the situation

− Documenting the crisis management process15

Page 16: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT: PROCESS

CLARIFy Analyze Strategize/Plan Implement Steer/Monitor

Management

• Identify the corporate crisis

• Accept the crisis and consequences

• Overcome fear, anxiety, and frustration

Employees

• Overcome fear and frustration

• Understand the emotional response

• Recover motivation and willingness to perform

Management

• Review and assess the situation

• Reassess goals

• Verify resources

Employees

• Participate

• Communicate

• Be available

Management

• Plan objectives

• Train the crisis team/plan crisis workshop

• Supplier and customer evaluation

• Develop scenarios

• Map milestones and phases

• Plan resources and measures

Management

• Clarify responsibility

• Create detailed resource plan

• Allocate tasks and implement measures

• Create schedule

• Create a feeling of accomplishment

Management

• Supervise projects

• Review projections/key figures

• Lead by example

• Evaluate and adapt measures

• Create a feeling of accomplishment

• Learn from lessons

IMPLEMENT IMMEDIATE MEASURES MEASURES/ACTION

ENVIRONMENTAL RISK MANAGEMENT

PROJECT AND CONFLICT MANAGEMENT

16

Page 17: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS COMMUNICATION: GUIDELINES

Adaptability

Crisis management must always include the willingness to adapt and improvise.

Limit the chaos phase as much as possible

Preparing clear procedures and structures for crisis management and communication is the best way to keep the initial chaos phase as short as possible.

Risk analysis and early warning systems

Risk analysis, weakness analysis, and early warning systems based on them increase your chances of identifying latent crises and stopping them from escalating into an acute crisis.

Target groups and contacts

Define the target groups for crisis communication, including your company's own employees. Establish and maintain contacts with the press/media, appropriate consultants, and scientific experts.

17

Page 18: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS COMMUNICATION: GUIDELINES

Consistent information

Ensure that all those in positions of responsibility have the same level of information.

Comprehensive communication

Keep the media and stakeholders informed as comprehensively, consistently, and truthfully as possible.

The importance of social media

Social media channels are just as important as more traditional means of communication.

Protect your image

Well-prepared, transparent, and clearly structured crisis communication protects against conjecture and can prevent permanent damage to your image.

18

Page 19: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

KEY ASPECTS OF RISK COMMUNICATIONFour principles of risk communication

Openness

This is essential to maintain a good level of trust and to safeguard your company’s reputation.

The reasons for decisions and risk assessments should be communicated clearly and in good time.

Transparency

Point out any areas of uncertainty and explain what they might mean.

Develop and publish recommendations for dealingwith such uncertainties.

Credibility and consistency

Reduce fear, anxiety, and risk perception by publishing trustworthy and credible information.

The main things are expertise, openness and honesty.

Open dialogue

The task of risk communication is to ensure dialogue in both directions and to take all interest groups into account.

Social media can be used to communicate risk and should be included in your risk management process.

19

Page 20: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

BASIC PRINCIPLES OF CRISIS COMMUNICATION

Speed

active

early

Integrity

factual

transparent

true

Comprehensibility

brief

simple

uncomplicated

visually interesting

Consistency

uniform

coordinated

continuous

1 2 3 4

20

Page 21: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS COMMUNICATION STRATEGYProactive or reactive communication

The company is directly and visibly affected by the crisis

Address both direct and indirect causes and effects of the crisis

Take responsibility

Explain the basis for crisis management actions

PROACTIVE COMMUNICATIONThe company expects little public attention

Cautious information policy

Crisis as such may not even go public

Risks: Losing control of information, trust, and credibility

The media seek other sources of information

REACTive CommuniCation

21

Page 22: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

ANALYSIS OF THE MARKET SITUATIONChecklist of basic questions to clarify the situation

1

2

3

4

5

What is the market in which the company operates and how can it be defined and marked out?

Who is involved in the sales process? What determines the behavior of this group?

Which competitors are currently active in the market?

Do public interest groups or other external stakeholdershave an impact on your company policy?

What is your company‘s current situation?What are your strengths and weaknesses? Where are the current risks?

22

Page 23: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

GAP ANALYSISDetermining the status quo with gap analysis

Target value, i.e. revenue

PLANNING HORIZON

STRATEGIC GAP

OPERATIONAL GAP

PRESENT DAY

POTENTIAL CORE BUSINESS

CORE BUSINESS

Zeit

23

Page 24: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

CRISIS MANAGEMENT: INCREASING LIQUIDITYImproving liquidity as a short-term goal

Increase capital stock

Short-term liquidity loan

Sell company / individual assetsCollect any open claims

Restructure debt

Standstill agreement with suppliers (deferral)

LIQUIDITYImproving liquidity

as a short-term goal

24

Page 25: CRISIS MANAGEMENT - visionplatforminc.com · CRISIS COMMUNICATION: GUIDELINES Adaptability Crisis management must always include the willingness to adapt and improvise. Limit the

Shari Burk

[email protected]

206.669.6158

Xavier Pereira

[email protected]

206.319.8550

www.visionplatform.io