By Dr Jing Du, Lecturer in Finance
Birmingham Business School, University of Birmingham.
business leaders must learn promptly and effectively from the good experiences and methods of successful business recovery from others around the world.
The pandemic has brought a huge impact to the global economy, society and people’s lives. Companies have gradually entered a stage of recovery, a process which is showing positive trends. According to data released by the Chartered Institute of Purchasing and Supply in early August, the UK’s overall composite Purchasing Managers’ Index (PMI) rebounded to 57 in July, up from 47.7 in June, and the manufacturing PMI rebounded to 53.3, exceeding the threshold of 50.
However, various difficulties have been encountered in the process of business recovery, and the road to full recovery is still long. For example, the wave of ‘the Great Resignation’ is intensifying. The disruption to the industrial and supply chains has caused some risks and additional difficulties for business recovery. Factors such as the poor financial environment, management of corporations, and the lack of experience and ability of corporate leaders to respond to the pandemic also negatively affects recovery.
To improve corporate leadership, businesses will need to effectively solve the problem of employee trust. The pandemic has caused employees all over the world to have a variety of new concerns. For example, they may fear that they will catch COVID-19, their employers will decrease their wages, or that they could lose their jobs. Due to these worries, some employees may consider resignation. Therefore, building a trusting relationship with employees will allow them to feel more secured in their employment and less likely to leave.
Improving employee participation in the organisation’s decision-making processes could encourage workers to express their opinions and needs, leading to better trust in their employer. Under the conditions of the pandemic, it is necessary to take effective measures to prevent employees contracting COVID-19, pay more attention to changes in employees’ emotions, and provide prompt and positive guidance to help individual employees solve their difficulties more effectively. Leaders should be able to recognise and reward employees for their achievements and work progress in a timely manner so that employees feel a sense of appreciation. Employees who have a stronger relationship with, and higher opinion of, the company will be more efficient at work and they are more willing to make progress with the company and face difficulties together. Therefore, they are less likely to resign.
Furthermore, business leaders will need to be able to adapt quickly in the face of a crisis, and adjust considering conditions of the pandemic. By remaining in a consistent and robust position as a company, leaders can gain the trust and support of employees and retain, or even recruit, talent within their workforce.
During the pandemic, many companies have encountered financial difficulties in resuming production. Shown in data released by Begbies Traynor Group, the number of businesses in the UK in severe financial distress caused by the pandemic is 562,550, seeing a 17% increase in more serious critical business distress in the past quarter. According to the 2021 CFO Insights Survey (Tricor Group and FutureCFO) report, Chief Financial Officers (CFOs) should consider the following issues to have a speedy recovery in the post-pandemic era:
- Readjust operations to improve flexibility and reduce the impact of financial risks
- Optimise productions costs by reducing unnecessary expenses and carry out internal processes at lower costs
- Accelerate digital transformation and technology
- Reshape supply chain to further reduce costs and increase efficiency
Business leaders should also enhance their ability to learn from others and how to accurately interpret government support policies. An article entitled How Chinese Companies Have Responded to Coronavirus published in The Harvard Business Review points out that companies should seize the opportunity to learn from their counterparts in other regions that have responded to the pandemic earlier. It seems that China is in the early stages of an economic rebound, with many Chinese companies having moved beyond crisis response and entered recovery and post-recovery planning. Although China has its own political and administrative systems, many of the lessons can be applied broadly all over the world. For example, companies should proactively provide employees with a clear and safe working environment, use social media platforms to coordinate employees and partners, and reallocate labour flexibly to different activities. Therefore, business leaders must learn promptly and effectively from the good experiences and methods of successful business recovery from others around the world.
The British government has successively introduced a variety of supporting policies for companies, including subsidies for companies, employee wage subsidies, statutory sick pay enhancement scheme, reduction or delay in tax payments, discount loans and so on so forth. Companies should learn how to utilise these policies in a timely and accurate manner to promote corporate recovery process and keep their employees.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.