Earlier this month, Renee McGowan, CEO Mercer Asia sat down with Georgina Lee, Growth and Experience Leader, Career, Mercer Australia, to share some observations in Asia – as many countries regain operational momentum – and how this insight might help Australian companies in the coming months.
Georgina: We thought it might be useful for Australian companies to hear from an expert in Asia given how the region has been managing COVID-19. How has this been playing out in Asia?
Renee: Our experience in Asia is that there are different phases to this pandemic and no two countries, cities or even organisations are in the same phase at the same time. We found that there are three key phases: reacting to the virus and lockdowns, regaining operational momentum, and rebounding for growth.
In the first phase, the impact of the virus is quick, dramatic and organisations and entire nations have had to focus exclusively on just how to react. In this phase the focus is on employee health and safety, meeting essential business services and ensuring business continuity.
I think this is where Australia was just 4-6 weeks ago. Today, I believe Australia is entering that next phase where the virus is now relatively contained and restrictions can ease.
Georgina: Did Asian companies already have pandemic Business Continuity Plans (BCP) in place or did they make decisions on the fly?
Renee: We studied many of our markets in Asia, including Hong Kong, China and Singapore and found that even when companies had comprehensive BCPs in place, it was senior management making the decisions during the reactive phase. BCP plans were still being referred to and certain tools used, but decision making needed to be fast and this meant reliance on senior managers making the call.
In a crisis, a decision has to be made quickly and then you move swiftly on to the next decision. This is the reaction phase, that is (usually) brief but also intense and chaotic.
Looking back, we saw that many large organisations did have pandemic plans in their BCPs but perhaps weren’t able to enact them as quickly and strongly as they should have. These plans were however more useful for the second phase of planning regarding return to offices and workplaces.
In Asia, the reaction phase really focused on colleague safety and the necessary precautions companies needed to take, such as supplying masks to meet government guidelines, hand sanitiser and cleaning products.
Georgina: Was that in the office? Were people not working remotely yet?
Renee: Companies varied a lot in the initial phase. Not many Asian countries went into full lockdown like we've seen in parts of Europe, US and Australia. It was really only the epicentre of China – in the Hubei province – where that happened immediately in early January. We then saw some different levels of closures across China and Hong Kong rolling out later in the month. Many markets in Asia continued to operate normally or with some changes to usual process/capacity until we saw a second wave of outbreaks in March/April, which significantly impacted South East Asia in particular.
Georgina: What has guided the return to work phase upon the initial chaos?
Renee: We looked into how companies might do away with the chaos of reacting and return to work on a sustainable basis. Many larger companies already had flexible working arrangements and had policies documented and communicated. They were out in front.
But there were many other companies who either had informal flexible working arrangements or none at all. For them it was really hard. A lot of companies in Asia needed help with how flexible working from home actually works. Then, given the sustained nature of the change to work patterns, companies are now looking at ensuring ongoing productivity is maintained.
And while large companies are a significant part of Mercer's world, the bulk of the economy is made up of small to medium enterprises (SMEs) that don’t have BCP plans or flexible working arrangements. So it was critical that we all help smaller companies to adapt, survive and thrive.
Georgina: How did organisations manage the heightened need for flexible work?
Renee: Most Asian countries and companies prefer face-to-face relationships. One of the challenges we had was moving to flexible working arrangements in cultures that don't typically choose to work that way.
And there are businesses that can't work from home either. It's really such a white-collar phenomena. While there are certainly white-collar companies where we are moving to flexible working arrangements, for some other clients, it simply wasn’t an option.
Take for example a large company that manufactures and distributes soft drinks. It faces multiple challenges: when to shut down its manufacturing plants? Who should be allowed to move around and distribute products? All of these things are problematic.
Georgina: How have companies changed their response as the pandemic evolves?
Renee: As time wore on, we realised this wasn't going to be short lived. The virus has waves of impact. In Asia, we had heavily impacted countries manage to get it all under control, only to then have a second wave.
We also had countries in South East Asia who didn't experience much of an impact in the first wave but are now heavily impacted in the second. We started to see the need for a variety of alternative working arrangements.
We advise companies to develop a playbook of the kinds of working arrangements that will work for them – so there’s more flexibility and it's not all on or all off.
As an example of alternate working arrangements – split teams work quite well. Mercer has split teams in operation at the moment in Hong Kong and Taiwan. It’s a mechanism for getting business-critical people into the office or at least getting a variety people to work.
Georgina: Can you talk a bit more about the split team concept? This might be useful for Australia when restrictions start to lift.
Renee: They're all different. Mercer in Singapore established a very robust split team model where they split everybody across every team, mixed everybody to sit in different locations and then split the teams across two different locations. Then, if you do have an issue in one location, half your workforce are safely contained in another.
The simpler version of that is to do split A and B which is what we do in Hong Kong. We split every team into A and B – with any duplicate roles split. ‘Split A’ works in the office and ‘Split B’ works at home. We do a deep clean on the weekend and then we swap the next week. I'd say most companies in Hong Kong have done that over the last few months.
Georgina: In Australia, it is too early to tell how well we’ve controlled this virus long term. For example, if we start lifting our restrictions, we could see more waves of infection. However, this means companies that think they’re too far behind actually have time to catch up and put actions in place for whatever might happen in the future.
Renee: The return to work phase is the critical part – companies need to make sure they’re proactively planning for every eventuality. The return to work phase could effectively mean alternate working arrangements for some months.
That’s why we recommend companies develop a playbook of all the different alternate arrangement that could work for them, a response to every incident and the communication ready to go if and when it happens.
Companies also need to assess the business-critical roles and scenario plan for the possibility that multiple business-critical roles could be impacted.
Georgina: We are seeing a rebound in China. What does rebounding to growth look like? What do companies need to do now to prepare for an effective rebound?
Renee: China got to this phase very quickly because it had a strict containment exercise. Once containment was confirmed, business started to whir up. Unfortunately the rest of the world was starting to be impacted by then.
Now, we have to navigate the impact of rebounding to growth through what is likely to be a pronounced global recession.
The immediate challenge for companies is how to sustain themselves, manage cash flows, keep people employed and have a business that’s solid and able to be scaled up when the economy comes back. This challenge is especially critical for most cash flow-reliant SMEs.
Georgina: Have you seen a lot of businesses of that size failing in the last few months in Asia?
Renee: Unfortunately, we have seen an increase in financial hardship and company bankruptcy in some areas. Some smaller businesses only have cash flow of around a month in front so it’s very hard to weather a crisis of this magnitude. Initially, we saw certain industries hit more directly – small businesses, retail, hospitality, restaurants; today the impact is very widespread.
Georgina: Are you seeing executive teams working more closely with the HR function?
Renee: I think we'll start to see companies differentiated by the strength of their HR functions. Those with strong HR professionals, proactive in planning and proactive in balancing business needs and employee needs, that’s going to make a huge difference.
If a company has a proactive HR department and they're in front of all these issues, they'll continue to run more smoothly than companies in a prolonged reactionary phase. HR strength will be critical, not only the quality of professionals but HR systems too.
Georgina: What three pieces of critical advice would you give to Australian companies as we ourselves go through the different phases of the pandemic?
Don’t be afraid to let your clients, customers and workforce know how you are faring.
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