Updated: December 8, 2020 7:43:17 pm
Written by Vikram Hosangady
The COVID-19 pandemic has reset the “new normal” and reminded businesses that they need to cope with a world of VUCA (volatility, uncertainty, complexity and ambiguity). From rethinking operations to reinventing processes, business leaders have a lot to do to cope with the crisis. They must also cope with geopolitical factors such as ongoing trade tensions and the onset of a global recession. The crisis has altered business growth sentiments among Indian CEOs too, and has been one of their toughest tests yet. This has resulted, already, in a significant shift in how they assess potential risks.
Business leaders in India have begun reassessing their approach. The findings of the “KPMG in India 2020 CEO Outlook: COVID-19 Special Edition” report corroborate this trend. They reveal that 90 per cent of CEOs in the country said that purpose dictated their approach to the pandemic, helping them understand what they needed to do to address the needs of their stakeholders.
This transition had, in fact, began even before the pandemic, with most organisations willing to look beyond profits and be purpose-driven to address the needs of society. Doing this to create long-term value for customers, employees, investors and communities, and thereby improve society, were the main objectives stated by most businesses. COVID-19 has simply enhanced their focus on these objectives.
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CEOs have had many important decisions to make in recent months – providing infrastructure to enable remote working and ensure business continuity; keeping employee morale high; implementing safety and hygiene protocols to bounce back when offices reopen, and more. The KPMG report found that 82 per cent of respondents said that purpose provided them a clear framework for making quick and effective COVID-19-related decisions.
Maintaining the trust of stakeholders is important for business in every situation. The economic shocks of the pandemic are still being felt by many business, and there is uncertainty about the extent to which economies and businesses will be able weather the slowdown. A purpose-driven approach gives CEOs the opportunity to carry their stakeholders through the crisis, thereby strengthening the trust they have built over the years.
Since the pandemic has affected people’s physical and mental health, the qualities of humility and empathy have become even more important than before. Given the atmosphere of uncertainty and the heightened fear for personal well-being, businesses have shown greater care and empathy towards suppliers, customers, employees, and their families. To combat the slowdown in earnings, CEOs have had to sharpen their focus on cost optimisation, cash management, and measures to cut their companies’ overheads. As many as 62 per cent CEOs took a salary cut, as part of cost optimisation initiatives. Many companies introduced benefits such as home office set-up allowance; skill trainings; fitness and mental wellness programs; and other initiatives for the benefit of employees working remotely.
Although only 33 per cent of Indian CEOs are confident about the growth of the domestic economy and only 42 per cent are optimistic about the growth prospects of their company, two things seem to have worked well for them during the pandemic. First, technology has enabled them to stay connected and keep the business running efficiently. Second, and more importantly, purpose has helped them gain the confidence of their stakeholders. This has helped their bottom line during these trying times and will continue to do so in the long run.
Business leaders will also need to adopt strategic measures to emerge stronger from this global crisis. Zero-based budgeting on discretionary spends for the next two or three years and questioning the very need for some of these spends could be one of the steps they can take. It will make them leaner and more profitable when growth returns. The importance of liquidity and the need to be reasonably leveraged is also a big lesson from this pandemic — something that companies should factor into their business plans for a resilient future.
The writer is partner and head, clients and markets, KPMG, India
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