More than a third of the planet's population is under some form of restriction. Many of us in parts of the world are working from home. Some of us are getting acquainted with remote working technology. Others perhaps not — DIY store shelves are emptying; nurseries are starting to look more like deserts. A colleague from a partner organisation, whose conference in Switzerland I was due to attend, informs me that the conference will now be a virtual conference. The changes in our ways of working forced on us by COVID-19 could also have a longer-term impact on the cost structures of businesses. Do I need an office to go to? It may be too early to judge, but the IT at home is working (kind of) and I can do what I would normally do in the office. I can meet with colleagues; I can access all the applications and files that I need. And right now, the IT whizzes in Silicon Valley are undoubtedly responding to the crisis by enhancing their remote working, meeting and conferencing technology solutions.
Long-term implications for real estate and leases
Now might be a good time for management accountants to revisit their office lease agreements. Better now than when you are back in the office cranking the handle, or at budget time when there’s no time to consider office costs other than as fixed.
Do I really need to endure the train commute twice a day just to work in an office? What if millions of us in our megacities could get to work without having to plunge into the subterranean world of metro systems? I would save two hours per day, which I could dedicate to firm or family, and some money.
What would be the impact on the coffee shops, sandwich shops, pubs, restaurants, barbers and hairdressers near our offices? Some of the neighbourhoods we live in are in slow decline as we do ever more online and spend ever more of our time in offices or getting to and from them. If workforces did more WFH would these neighbourhoods start to see more of our custom?
Will I need to physically attend conferences in the future? According to the experts, I will not be pumping 0.24 tonnes of carbon into our atmosphere by not going to Geneva for the conference, which is the equivalent of boiling 4,549 cups of coffee — even allowing for my increased intake while working from home, I couldn’t possibly consume that many cups.
More questions to shape your strategic response
As a good management accountant, you will also, no doubt, be thinking of the travel cost savings that could be made at your organisation. Saving money and saving the planet.
Our team’s objectives have been temporarily deprioritised to focus on COVID-19 related work. Should all management accountants be thinking about their organisations’ strategies, business and operating models now? Is your business responsive? How much of your operating model is outsourced and can these ‘managed service agreements’ (MSAs) be quickly flexed in a crisis?
Or are you stuck with burdensome contracts? What about your business model in a rapidly changing ecosystem? Think of the coffee shops in a wasteland of abandoned offices. Is your business resilient? Can it survive this crisis?
Ultimately, businesses fail not because they are unprofitable but because they run out of money. However you answered the above questions, having more of your cost base as variable would be a great start. You may not be able to immediately reduce fixed costs, but while you’re riding out this crisis you can start thinking about it for the next one.
Are workforces a fixed cost? Now that you have resolved to sort out the inflexibility of your office space and MSA fixed costs, your thoughts have drifted to your workforce. Good employers understand the value of their workforces and, particularly at a time of crisis, will want to protect jobs as much as they can. But as they feel the financial pinch of this crisis the question of cost will inevitably come up. Can you afford to keep everyone on, or should you fire people to save money in the short term?
Cynically, the calculus is a function of the pay and benefits costs remaining in the budget or anticipated crisis period and the severance costs. But the coronavirus pandemic isn’t going to last forever. Crises like these are temporary, and when they pass economies bounce back. When that happens, you’ll need these people again. As will every other organisation. And it will take time to get back up to full workforce strength and capability.
So, look at your employment contracts and think of ways to retain your workforce, their loyalty and their value to the organisation, while being able to temporarily reduce workforce-related cash outflow until the crisis is over.
According to Google Maps, my home is 15 km from the office. Would it make a difference if it was 100 km or 1,000 km away? The view might be different but that’s it.
Technology could make some of your business’s workforce ‘borderless’. In addition to cost advantages this could bring, time zones could help your business be up for more of each day; workforce diversity could enhance creativity; the availability of talent could be enhanced; regulatory differences could improve responsiveness; resilience could be enhanced in a crisis.
COVID-19 is the worst global crisis in our lifetime, but if you adopt new ways of working — and new ways of thinking about work — we can all get through this with the least disruption possible. The key is to keep an open mind to new approaches, an open heart for stressed-out colleagues and employees, and an open spot on your calendar to make a little time for yourself — when you work from home, you can forget to clock out. Don’t.
Now for some gardening.