RMCO: Actions and Problems your Company should know about
- Maslow Trainers & Consultants
- Jun 30, 2020
- 5 min read
The Covid-19 pandemic has by far been the worst series of incidents to have hit the 21st century. As the all-time unemployment rate in Malaysia hits a 25-year high in April 2020 at 5%, experts say that there is a possibility that it may even hit 6% by the end of 2020 (Source: AmBank Research). An estimated total of 778,800 individuals were recorded to be unemployed in April. Compared to 2019, that is a 48.8% increase of unemployment in the country. We cannot expect businesses to record figures that they were experiencing Pre-Covid 19. If you are not in sectors like E-Commerce, Healthcare & Medical Equipment, Consumer Goods or Home Entertainment & Social media, it is highly probable that your company has taken a hit during the Movement Control Order (MCO).
Times like these have exposed businesses that have been operating without a proper emergency plan, as it has clearly unmasked how businesses with weak cash flows have either gone under or have declared bankruptcy. Therefore, it is good to keep in mind what businesses can expect during the recovery stage and what problems that may come along with it. With the easing into the Recovery Movement Control Order (RMCO), more and more sectors are beginning to reopen with Standard Operating Procedures (S.O.P) introduced to curb the spread of the pandemic.
Image 1: Graph above shows the Unemployment Rate from 1995 to 2020 sourced from the Department of Statistics, Malaysia.
With the gradual re-opening of economies globally, businesses have to evolve to move forward past challenging times. No doubt that Covid-19 is one of the worst things to have hit the economy since previous notable years of recession. As such, organizations have to undertake risks in this mode of recovery so that they can remain competitive and relevant in the market. Therefore, key actions have to be embarked on for the survival and growth of the company.
Action 1: Proper planning is key
For the companies that survived or barely survived the pandemic, it is extremely vital for companies to plan their resources and tactics on how they can tackle this market. Firstly, if your company should have a Business Continuity Plan (BCP). This plan will help you to summarize activities and techniques to assist you in averting and salvaging the organization from probable threats to your business.
A BCP can but is not limited to helping you in:
• Maintaining the safety of your employees
• Diminishing the possibility of your premise spreading the virus
• Ensuring that a Contingency Plan is in place in case any employee has to be quarantined or are infected
• Setting alternative arrangements into place so that your business can continue to operate and interact with the necessary parties.
In fact, the most crucial part of this plan is first and foremost, is the health of employees. Employees are and will always be regarded as assets of the company and if even one asset is in jeopardy to the virus, it will endanger everyone in the organization.
Action 2: Embracing the Digital Transition
It is not too late to jump on the digital train because it is here to stay. According to Anna-Katrina Shedletsky in Forbes, “because of COVID-19, manufacturing will experience five years of innovation in the next 18 months”. Prior to this, many were sceptical on the transition to a digital environment because of factors like Return on Investment (ROI). It is difficult for companies to gauge something that exceeds cross-functional and business boundaries, change how a company goes to market, and often essentially restructure relations with clients and personnel.
Digital transformation efforts are constant and developing, which can render conventional business value calculations and financial management methods less useful. However, measuring success is vital to sustained investment. When deciding just how well digital transformation investments are doing, it is best to take a look at the overall portfolio rather than the projects within it. This is particularly important so that the underperformance of one particular project does not reflect negatively on the overarching efforts of IT. It also builds tolerance for the necessary risks that must be undertaken to achieve real digital transformation.
Even then, there will be some issues that businesses will face during the planning and recovery process of their business. Therefore, it is crucial for them to keep in mind the problems that may arise when it comes to the re-emerging from a slowdown. However, it is possible for companies to avoid or curb these problems if they conducted research beforehand. This will also help lessen the shock for companies that expect levels to go back to normal post-MCO.
Problem 1: Drop in Consumer Confidence
With the steady re-opening of economies, businesses will start to fill the vacant openings that they have closed during the MCO. However, this will likely only contribute a marginal increase in consumer spending due to the fear of a second wave or even a third wave of the pandemic. People are likely to keep a tight lid on their spending and increase their savings, with experts noting that a second wave is likely to hit the globe.
Even if the government were to reduce taxes in an effort to get consumers to spend more. However, if consumer confidence were low it would not have much effect anyway. Instead, the government of Malaysia has introduced the Short-Term Economic Recovery Plan with three core objectives; “Empower People, Propel Business & Stimulate the Economy”. With this plan, it is aimed at easing the economy back into the recovery (otherwise known as the expansion) phase of a business cycle. Having said that, companies should expect to reduce prices (slightly) for services or products that they provide in an order to maintain a stable sales quantity level.
Short-term Economic Recovery Plan
Image 2: Business Cycle of a country.
Problem 2: Undercutting on quality
Companies that are on the recovery run the risk of hiring employees that are under-qualified, just so that they can have short-term gains financially and save some time while they are at it. Companies that opt for this will either endanger the quality of their work or instead would be retrenching said employees and having once again needing to fill their roles.
Hiring the right employees from the start can help a company save:
• Cost in re-hiring
• Cost in training
• Time (in the long run)
• Their reputation
Therefore, it is better for companies to go through the recruitment and selection process as they have been doing before the pandemic but with an emphasis towards digital skills, as they move towards going digital was uncontrollably accelerated with lockdowns and quarantines. As such, it is more productive for companies to have employees to work from home rather than not working at all due to the incompetence of grasping technology.
All in all, Covid-19 has been the worst thing to have impacted the Malaysia economy since the Asian Financial Crisis (1998). Even so, the unemployment rate has never been higher than it has been since the pandemic hit. Therefore, with strict control and responsible actions from our citizens, we hope to see the number of infections drop so that the economy can jump back into operations as it has been pre-Covid-19. With the gradual re-opening of economies, the employment rate will gradually climb as the inverse will decline as well. The overall effect of the pandemic has impacted millions of lives financially, socially, medically and has already claimed tens of thousands of lives thus far. It’ll be years for us before we achieve full recovery from this pandemic in terms of infections and economically.
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