The coronavirus (COVID-19) pandemic has challenged even the most robust business continuity management programs, which are now faced with the sudden, urgent task of adapting everything from operations to people to the new reality of remote work.
In the latest episode of BTG Insights on Demand, business continuity expert Kathleen McGrorty joins Business Talent Group's Leah Hoffmann to discuss what executives should be doing to mitigate risk, create resilient business models, and protect their operations in the face of the pandemic.
Listen to the podcast below to hear her advice for maintaining critical business operations throughout the current public health crisis and developing a plan for what comes next. You can also read our lightly edited transcript of the chat.
Many business plans focus on protecting IT and facilities, not people. What is this crisis teaching us about what matters to a business?
Traditionally, business continuity focused on technology recovery—and the people aspect came along with that. So when you were looking at recovering your data center, you would look at recovering the people there, but the people were a second thought.
Over time, business continuity evolved into a methodology about planning for the effects of an event on the business itself, not just on technology. Those effects could be felt in terms of people or facilities or equipment. The current thinking has been to approach continuity planning as a series of high-level recovery actions in order to do what the core business does and keep it in business.
Especially at bigger companies, though, the economics of shareholders and investors can get in the way of making a comprehensive continuity plan. I think what people have discovered now with the coronavirus pandemic is that there is a whole scenario that business leaders tended to just take for granted—namely that the people would be there. There are some companies that planned for it. But I’m willing to bet that most companies never expected to go to this extreme of having no employees, of having no people on site. And it’s taken people by surprise.
Can you tell me a little more about the economic dynamic that’s at play here, where investors and shareholders get in the way of companies’ ability to create comprehensive plans?
Business continuity planning is considered a cost center. If you have shareholder or investor pressure, it usually ends up being shunted off to the side.
“We need to do that, it’s important, but we’re only going to give you this much budget.”
It’s not unusual to have only one or two people in a Fortune 100 company managing the entire continuity program.
Given that most companies don’t have plans that can fully address the coronavirus pandemic, what can the business continuity process teach us about how they should start to address the situation?
The first thing in my mind is the discipline of the way you put together a continuity plan. It starts with understanding the essential core processes of your business. What does that mean? It’s the absolute minimum in people, process, and technology that we need in order to stay open, serve our customers, and have cashflow. It’s not even about making a profit—it’s about staying open.
Many of the companies I’ve worked with didn’t really recognize that some of the ways they were doing business were inefficient until they looked at the higher level of, “What’s our essential core business?”
That sounds like a strategic question—what is our core businesses?
Yes, it is a strategic question. It’s a strategic question that is answered at a level of detail that most executives don’t have the patience for. However, without understanding some of that detail, you can’t match it to the essential core of a business or fit into a strategy. Developing continuity plans means having a top-down and a bottom-up awareness of what needs to be done, including who is appropriate to be on a crisis management team. Some CEOs believe that they’re the ones who will manage through a crisis, when in fact they’re probably not the best people to do it right now.
Why’s that?
Right now, CEOs are confused, and a lot of them don’t know what to do. I’m making generalities here, but they’re faced with having to make decisions about preserving their people, keeping their businesses open, and having something to say in the world that makes sense. They’re at a loss, and they also still have to make decisions about the business.
From a strategic level, what’s interesting is that we’re seeing the biggest businesses just fold. I don’t mean “fold” in terms of going out of business—I mean they’ve just shut the doors. Was it GM this week that shut their factories down?
That’s right, GM closed all manufacturing operations in North America.
Right. So to elevate this talk about the essential core to another level, what we’re looking at now is an impact to the United States’ central core process, namely the financial system. The core business process for the U.S. is our economic system, and it’s the backbone of how financial transactions are executed and the way we are connected with the globe. That process has just been broken. And it’s not just breaking down companies’ ability to stay in business—it’s preventing them from understanding what they need to do to figure out what their business will look like when this is over.
So how do you plan for a scenario in which your business is under an existential threat like this pandemic?
I’ve done facilitation at the executive level and what happens is, I’ll ask a question about scenario planning.
"What happens if you have no capital? What happens if you have no shareholders, no investors, and no customers?"
That’s pretty much the perfect storm that every business is in right now, no matter what their size. The hot dog vendor in New York has the same problem as your global Fortune 100, and in fact, the hot dog vendor may have an easier recovery just because of size. Everyone has to deal with the same thing. How do we bring this back up? And in what order do we bring it back up?
So from there it’s a sequencing question?
It’s a sequencing question, and we can learn from our IT disaster recovery plans. One of the things that IT disaster recovery plans do is they map out exactly step-by-step—one through 150—what has to come back, in what order, so as not to crash the system again. Because you can’t just say, “Okay, the bank’s open now,” and, “Okay, our plant’s open now, and lets everybody fire it on up and come back to business.”
When I think about executives who are trying to make decisions about how they’re going to reopen their business, I think they’re going to need people that they may not have spent a lot of time with to understand that order of operations. Is it the people that can reach out to customers and revive those relationships? Is it going to be working with our upstream and downstream suppliers, who may or may not have already been in touch with us? Do we just open the plant and start making cars again?
Each area is going to be looking, very self-interestedly, to keep its own citizens employed. But we don’t want to crash the system a second time because we’ve just turned things on when it wasn’t the right time to turn them on.
How can you plan for so many different unknowns?
I’m a visual person, and I sketched something on a pad while I was getting ready for our call. In the middle is the now, and next to it, there’s a future. But there’s also the past—as recently as last month, we were celebrating ridiculously low unemployment and a great stock market.
So when I sketch this out, I go, “Okay, so the now part is where we have a big thunderbolt.”
A CEO right now could assemble people who were really good understanding what was going on in the past and put them in the same room as people who are good at looking at the future. CEOs need to be open to the idea of making those teams and giving them the decision-making power to come up with a plan that will potentially create a new way of looking at the business.
We’re not talking huge teams, but it has to be a spread. It can’t be the same people from how we used to do business. You have to include people who have an idea about where the future lies.
It also gives us something positive to focus on at the time when there’s so much negative news—to say, “Things are changing, there’s going to be a lot of disruption, but there will also be opportunities.”
The people who can look at this as an opportunity to re-evaluate—I mean, who knew that healthcare was a business problem? Who knew that healthcare was an economic issue? It’s seen as a political issue, but if you don’t have any people, if you don’t have anything to keep them from disaster, then yeah, it’s an economic issue.
So what companies are saying now is that our people are really important. That’s great, but historically, employees have heard this before and been laid off. The fundamental trust between employers and employees has been broken for a really long time, and in the new economy, some of them are going to leave. There’s going to be a mass bleed-off of talent going somewhere else because they don’t feel any reason to stay connected.
That’s an interesting point. One of the things that we always have said is that more talent would choose independent work if not for the difficulty of finding benefits like healthcare and retirement. In other words, a stronger social safety net would power a lot of new ways of working. Maybe this crisis is the moment for that.
Yes. I believe that there are things that will be changed forever. One of those things is how the gig economy works. Another is commercial real estate. Right now, you look at traditional companies, and they have two, three, four floors of a building, and all the employees can be seen at one time. Well, now they’re being forced to work remotely, and the horse is already out of the barn. People are realizing that they can do some pretty high-level, sophisticated business with a toddler on their lap and make it work.
And when people realize that they can be productive outside the office, I think we’re going to see an uptick in the gig economy and in professionals going, “You know what? I’m going to throw my hat in the ring, and I think I can do this in three different places or three different industries.”
They might not have thought about that before because they were afraid to step out of their comfort zone. Now, they’ve been kicked out of their comfort zone. And this goes back to continuity and planning because even at the individual level, you need to have plan B. Plan B is basically the continuity plan for an individual. And when I first started studying the gig economy—how many years ago did the first explosion happen?
It’s been around for a long time, but I think we started to hear about the gig economy as a phrase maybe within the last decade or so.
Something like that. And the people that took the early opportunities are the ones that figured out how to do it successfully.
And the gig economy people that I know, that have done different things in business—some of my friends are in technology, some of them are in coaching—and they have been on this gig thing for five-plus years. And they love it. It’s a very positive experience for them and it’s a positive experience for the employer. Because it focuses everybody on what you are delivering, not where you are and how you are dressed.
Some people will look at this as the perfect opportunity to say "Oh I'm going to retool myself or reinvent myself." Now the next big word is going to be "reinvention."
If indeed the pandemic prompts top talent to reinvent themselves, whether by joining the gig economy or just finding a new employer, how do you think big companies can start planning for that?
This is a time for HR and continuity operations to look at the people aspect in a different way, namely through the lens of what people could work in what area normally—and then if it’s business-as-not-normal, how do we deal with that? It starts by capturing what they are doing right now. Start interviewing some of the people who are working from home and ask them, “What have you done? What do you do? How do you do it? Would you rather do it this way?” Talk to people in the moment and give them a chance to do everything from vent to add real information. It also needs to be seen that the corporation is moving towards something that could accommodate people in a different way than they did in the past.
The continuity people can help by organizing the thinking about what we do today, what's happening right now with the thunderbolt situation, and how do we make that into the way we look at our people in the future. How do we blend different locations, different work styles, into our new company?
Are there other work-related adaptations we’re making now that you think will stick with us in the future?
I think we’re going to get to a point of being really honest with what really happens with work in the United States. People say you need to have work-life balance. I know this because I’m a person for whom work and life are integrated. So I’ve always looked at it as work-life integration.
But while we call it a five-day work week, the statistics show that Americans work all the time. I think we’re going to come into a new honesty about work and about integrating our personal and our professional lives in a way that makes sense for us as individuals in service to our companies and our country.
And I would hope that executives would be open to the message that it is okay to love what you do and integrate it into your life. You might get up at 10:00 in the morning and work until 10:00 at night, with breaks, and nobody really cares. You’re integrating your work into your life and vice versa, and you’re making that space when you need it. And I believe that executives, HR professionals, and business continuity people are key to finding out how to structure something that works for everybody, so that if we have a situation like this again, we’ll be ready for it.
Are there things you think companies should avoid doing now?
I think that companies should avoid giving out too much good news. I know that there’s bad news out there, but to say that we’re going to come back and we’re going to be like we were—I would strongly advise against that. Nobody really believes we’re going to be back the way we were. So I think being super honest, at this point, is going to be good for companies. Maybe some people that aren’t used to working remotely can be made into a task force to look at the past and think about what the future could look like. Companies really should avoid promising something that they don't even know that they can deliver.
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