Decoding business continuity and corporate spend management in times of crisis
‘You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before.’-Rahm Emanuel
The Covid-19 crisis falls exactly into this bracket. Today, businesses the world over are battling the impact of this global pandemic and the biggest questions that stare them in the face are-how do they ensure business continuity in this time of crisis? According to a survey by the Federation of Indian Chambers of Commerce & Industry (FICCI), the immediate impact of COVID-19 reveals that besides the direct impact on demand and supply of goods and services, businesses are also facing reduced cash flows due to slowing economic activity which in turn is having an impact on all payments including to those for employees, interest, loan repayments, and taxes.
A significant 53 percent of Indian businesses indicate the marked impact of the COVID-19 pandemic on business operations even at early stages. Moreover, the pandemic has significantly impacted the cash flow at organizations with almost 80 percent reporting a decrease in cash flow. Nearly 30 percent organizations have already put in place Work-from-Home policies for their employees and about 42 percent of the respondents feel that it could take up to 3 months for normalcy to return.
In such a scenario, how can organizations continue to provide a seamless employee experience to their employees despite the mandatory work from home (WFH) situation? Most importantly and urgently, how do they make sure expense management is on track given the strain this crisis has put on resources and capabilities. The crisis has affected even the most basic levels of an organization’s operational functioning, laying bare the need to re-strategize the building blocks of their employee experience strategy.
Take for instance, the routine tasks of employees filing their travel and reimbursements. As per Happay's CFO Benchmark study, 82% of respondents in the study stated that expense claims still had to be filed manually by attaching bills to paper vouchers. Some of the businesses have a semi-automated workflow where just the approvals can be taken online.
So for businesses that have not yet automated expense management, a crisis such as this makes spend management a challenge, severely impacting the employee experience of their employees in times of crisis. On account of the mandatory WFH situation as offices have shut down, employees can’t submit expenses physically nor can the transfer of expense documents can happen on account of the social distancing and contactless sharing complications.
Just like it is important to avoid physical handshakes, and close contact with each other, it is equally important to avoid the transfer of physical documents between employees to stop the viral infection from spreading within the organization. One of the most frequently transferred documents is Expense vouchers/bills. Each of the physical vouchers moves hands from employee to manager, and manager to finance, and in between by handlers/runners wherever required. So it transfers from 3 to 6 pairs of hands, for just one expense report filed. Given the fact that the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) is detectable for up to 24 hours on cardboard(or paper), the transfer of documents becomes a high risk.
While some companies may have resorted to scanning & sending it from the office scanner, but with WFH rapidly becoming the norm, finding scanners is a challenge. And even if some employees are lucky enough to have a shop nearby that provides a scanning service, it is still riskier for the employee to hand over the bills/vouchers, and get it back with possible contamination from the public scanner. Also, many companies don’t have a Mobile and cloud-ready spend management platform with OCR capabilities for a quick snap and upload of bills. Now with social distancing and lockdowns in place, even contactless sharing is out of the purview of many employees.
Strategizing spend management in crisis
Then again, the crisis itself has led to more expenses for employees arising out of the need for setting the operational infrastructure to work from home. Not all employees might have had a WFH operational structure ready beforehand and have had to invest in creating the extra bandwidth for it- be it in terms of Wi-Fi connections or virtual collaboration tools or the physical setup. These are not budgeted expenses. Added to these are some ad hoc purchases of disinfectant wipes, gloves, etc., which would also increase the Admin costs of companies categorized under essential services. Augmenting it further are the flight rescheduling & cancellations, last-minute flight bookings, hospital reimbursements, group insurance costs and hotel cancellations, which could make a significant impact on any company's bottom line.
Thus, for companies, this means relooking at their employee benefits strategy in order to make sure digital transfer of benefits happens seamlessly while at the same time they need to strategize expense management and ensure business continuity as working in a crisis mode becomes the new normal.
Varun Rathi, Co-founder & COO, Happay aptly says, “In such unprecedented times, CXOs need a flexible and fully automated spend management platform to keep a tight leash on Covid-19 spends before it spirals out of control. A platform with decent mobile and analytics capabilities, with real-time policy modification possibilities, should be preferred.”
The crisis thus requires businesses to take a deep and hard look at operational expense management. Cost optimization strategies need to be the focus area of HR leaders in order to drive efficiency, manage risk, maintain employee productivity at the same levels as before the crisis, and deliver a smooth and unbroken employee experience despite testing times.
What are some of the basic actions that can get you started?
As per Gartner, the first one of them is conducting scenario planning to assess the current and future impact of COVID-19 on your function in a structured way, applying reliable criteria. Based on likely scenarios, organizations need to define their response from a cost optimization perspective and accordingly plan and manage costs.
Develop a policy to heighten awareness among travelers of the costs they incur when changing business travel plans for personal reasons or on account of pandemic cases. For all expenses and ticket cancellation credits related to COVID-19 Cancelled Travel expense type, create an ‘expense type’ for proper tracking of Covid-19 Impact. This can work with both charges and credits and can help in keeping track of canceled travel during this time. For any unbudgeted/emergency expenses (such as purchases of disinfectant wipes, gloves, etc), create a new expense type for better visibility.
Protecting employee experience in times of crisis
However, at the same time, there is a need to protect employee experience and productivity during times of crisis. The responsibility of HR to drive talent outcomes, in fact, becomes even more critical during testing times. Productivity is directly impacted by employee experience and hence the need to deliver a good employee experience even in bad times. Take the case of expense management- a simple, intuitive expense management solution such as Happay can help you deliver the same superlative experience to your employees, be it good or bad times, enabling you to maintain similar levels of productivity as in normal times.
After all, as aptly stated by HBR, a crisis doesn’t imply immunity from performance management, and sooner or later markets will judge which companies managed the challenge most effectively. Nor is the Covid-19 crisis the last of the global crises to hit businesses. HBR’s research on the effectiveness of organizational responses to dynamic crises indicates that there is one variable that is most predictive of eventual success – preparation and preemption. And preparing for the next crisis now is likely to be much more effective than an ad hoc, reactive response when the crisis actually hits.
This is why, it is now that there is a dire need for businesses to relook at their expense management, benefits transfer, and employee experience strategies during a crisis situation. It is now that they need to re-strategize their employee benefits strategy and question whether they are in a position to ensure seamless operational expense management in times of crisis. It will be a changed world after Covid-19 and remote work is going to become an even bigger feature of our lives post the crisis. Hence now is the time to relook and reflect and build resilience in your systems and processes and to formulate your strategy on business continuity and expense management for the future world of work
Join us for an exclusive webcast in association with Happay on ‘Decoding business continuity and expense management in times of crisis’ on 7th April. Click here to register.
References:-
https://hbr.org/2020/02/lead-your-business-through-the-coronavirus-crisis
