Businesses have a unique chance to rethink how they operate and to adapt to the new reality as economies around the world cautiously reopen.
Directors who are not part of a company’s executive management are particularly well positioned to play an important role as the economic and health impacts of the coronavirus pandemic push boards to transform businesses, reorganise supply chains, and shake up the workplace to help future-proof organisations.
They can ask challenging questions and act as a sounding board for executive directors as boards grapple with dismal trading conditions and patch weaknesses laid bare by the pandemic. Boards may also appreciate directors who are not part of management stepping up to offer expertise and support on projects or to chair emergency committees.
“Ask your board, ‘In five years’ time, what are we looking back on?’ That’s always a game-changer,” said Shirley Cooper, FCMA, CGMA, who has served as director on for-profit and not-for-profit boards. “It helps to shift the mind to new ground and open up clearer thinking of what we have come through.”
Cooper is a supply chain and procurement expert who wears multiple professional hats. They include sitting on the independent oversight board of the UK Ministry of Justice and serving as finance director for United Nations Women UK, which advocates for funding of gender equality programmes worldwide. Her everyday position is commercial and finance director at Tapestry Compliance. The UK law firm specialises in global share plans that large employers offer as incentive for employees to invest in the company.
The scramble for Chinese-made personal protective equipment at the beginning of the pandemic highlighted the inherent risk in complex processes. As the fallout continues, board-level strategic planning should focus firmly on supply chains, Cooper suggested.
In the UK, the looming exit from the EU meant that most large companies had seriously considered the impact of tariffs and new regulations on raw materials, components, or finished products from the trading bloc. But few had contingencies in place for a global event, she said. Small and midsize enterprises were at even greater risk.
Finance directors should now work in lockstep with procurement teams and invest in widely available technology to help identify the weakest points in their logistics, she said. “This now has to be front and centre because the weakest link in your supply chain is your hidden dependence.”
Shorter, simpler supply chains may result in higher costs but are essential for business continuity, Cooper said, noting the environmental benefits of reduced travel and transportation.
Lockdowns and shelter-at-home orders have turned parts of the workforce into temporary home workers, giving companies the chance to redesign the workplace and consider ways to reduce the number of people commuting to packed offices.
When countries started to shut down, many companies scrambled to ensure staff had laptops and secure software to work from home, and quickly replaced office meetings and business trips with videoconferences.
In many cases, it has proved such a runaway success that many companies will decide to reap the cost benefits from an agile, efficient, and decentralised workforce and allow staff to work at home permanently.
Greater flexibility should also help promote gender equality by allowing more men to take on tasks such as childcare, Cooper said.
Even once businesses reopen, the prospect of a global downturn will mean trading conditions remain weak for many.
Government business support and furlough programmes have helped keep companies afloat throughout the crisis, but many businesses are burdened by heavy debt, with retailers among those most likely to go under, Cooper said.
During times of high stress, it is important that CFOs and chief executives play an active role in keeping staff up to date on how companies are managing the crisis.
Companies will be tested down the track on how well they dealt with their customers and supported suppliers during the pandemic, she said. Also, many charities and organisations rely on corporate donations. Companies need to think twice before shaving these costs.
For some, the pandemic may provide an opportunity to take advantage of cheaper acquisitions, Cooper said. Regardless of their situation, though, all companies should take the chance to reassess their models and better prepare themselves to deal with whatever future disaster may be lurking around the corner.
“I’m hoping that we all think about what’s important, both personally and professionally,” she said. “Because if we don’t, we’ve missed an opportunity.”
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the pandemic, visit FM’s coronavirus resources page.
— Sophie Hares is a freelance writer based in Mexico. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.