23 May 2020
Econ 4.0: What is the future of work?
Here is a professional parable. A well-known medical doctor and a highly successful lawyer meet at a social event and strike up a conversation. Their discussion is constantly interrupted by people who recognise the doctor and keep asking him for medical advice. After an hour of this, the exasperated doctor asks the lawyer, “What do you do to stop people from asking you for legal advice when you are out of the office?”
“Of course, I give it to them,” the lawyer replies with a flourish. “But then, I send them a bill for my services.”
The doctor is shocked. “That is a terrible thing for you to do. All they are asking for is some friendly advice,” he says. The lawyer laughs. “My friend, there is no such thing as friendly service from a professional like me.”
The next day, the doctor is busy in his clinic and has forgotten about the conversation. Later that evening, his administrative clerk brings the day’s mail for the doctor to go through. There is a letter from the lawyer — a bill for “services rendered”.
That joke may not sound funny to most readers for two reasons. One, because “social events” are something that used to take place long ago, before the Covid-19 pandemic disrupted such gatherings of camaraderie. And two, which lawyer sends paper bills in the mail these days? Emailing an invoice is faster, cleaner and free.
Enough of professional fun. The pandemic has upended all this and stopped most of us from having fun. Even reminiscing about the “good old days” when we jostled with each other on our daily commutes to and from work seems like fun now. Here is the post-Covid-19 reality: no more offices, no more parties and, in some cases, no more work.
The cost of putting the genie back into the bottle is enormous. On March 27, Malaysia announced its largest economic stimulus package so far — RM250 billion — to help people and businesses deal with the pandemic. The package is in addition to the RM20 billion fiscal stimulus package announced in February. On April 6, the salary subsidies for small and medium enterprises (SMEs) under the Prihatin stimulus package was raised to RM13.8 billion from RM5.9 billion previously, with additional measures for all SMEs (those with fewer than 75 employees to those with more than 200 employees).
SMEs are the backbone of our economy and account for more than 33% of Malaysia’s GDP. There are more than 907,000 SMEs in the country, according to SME Corp Malaysia, the central coordinating agency under the Ministry of International Trade and Industry.
An overwhelming 76.5% of SMEs in Malaysia are micro-enterprises, or those with fewer than five employees and annual sales of less than RM300,000. A further 21.2% are small enterprises, with fewer than 75 staff and annual revenue of less than RM15 million. The final 2.3% are medium enterprises, with a headcount of between 75 and 200 and annual sales of between RM15 million and RM50 million.
In March, the World Bank and International Finance Corporation’s (IFC) board of directors approved an enhanced package of US$14 billion to assist companies and countries in responding to Covid-19. The package was aimed at strengthening national systems for public health preparedness, including disease containment, diagnosis and treatment. IFC, a member of the World Bank Group, would raise its Covid-19-related financing to US$8 billion (as part of the US$14 billion package), up from an earlier budget of US$6 billion.
Even before Covid-19, the dynamics of work had been changing at a rapid pace, putting a strain on many nations. “Digital business models and platforms are fundamentally restructuring how business is conducted. Cloud services are increasing the speed of tech change at a rate unthinkable” says Matt Cain, vice-president and distinguished analyst at Gartner Inc.
“At the same time, the nature of work is being transformed with new work patterns such as the gig economy and flatter organisation models while artificial intelligence (AI) is poised to transform how work is done.”
The rapid rise of ABC (AI, big data and cloud computing) could be used to augment the efforts of the workforce, rather than replace it. In a 2018 report, the World Economic Forum projected that while nearly a million jobs may be lost, another 1.75 million will be created.
“As machines take over repeatable tasks, roles could be redefined in ways that marry technology with human skills and advanced expertise in interpretation and service. Techniques such as design thinking can help organisations define roles that incorporate the new types of capabilities, skills, activities and practices needed to get the work done,” says Deloitte.
How can companies make this transition? “To make all of this happen successfully, we will likely need to change the way we conceive of work and develop the training our workforce needs to take on these new roles and assignments. Otherwise, we could find ourselves weighed down trying to apply legacy concepts and skills in the new and quickly emerging world of human-machine collaboration,” says Deloitte.
The future of work has likewise changed forever. What would be the economic impact if the pandemic continues to ravage economies over the medium term? Demand would suffer as consumers cut spending throughout the year. In the most affected sectors, the number of corporate layoffs and bankruptcies would rise throughout 2020.
“The financial system would suffer significant distress, but a full-scale banking crisis could be averted because of banks’ strong capitalisation and the macro-prudential supervision now in place. Fiscal and monetary policy responses prove insufficient to break the downward spiral,” according to a McKinsey study.
“The global economic impact would be severe, approaching the global financial crisis of 2008/09. GDP would contract significantly in most major economies in 2020, and recovery would begin only by 2Q2021.”
What can companies do now? The answer begins with a single, simple notion, as obvious as it is difficult: keeping calm. Amid any storm or crisis, staying calm is the first step, followed closely by its analogue: patience.
That advice comes from a recent white paper published by the IBM Institute for Business Value. What happens after that? How best do we act to protect ourselves, prepare for the future and even improve our positioning? Can there be a silver lining to this disruption?
Possible. To emerge stronger after this crisis, we need to be mindful of the steps we take, their implications and their larger purposes. To this end, IBM has distilled a set of measures and policies in an “action guide” to help leaders — both business and otherwise — deal with the four key components that impact them: employees, customers and partners, finance and operations, and the community in which they operate.
Your organisation’s workforce is your core asset, the talent that differentiates you from competitors, defines priorities and delivers outcomes. With Covid-19, that talent has been put at risk in terms of physical, emotional and financial health. Trying to help in one area, by encouraging remote work, for example, may exacerbate other issues, fuelling loneliness, isolation and fear in your staff.
Most organisations would by now have in place the basic tools to support, safeguard and communicate with their employees. A quick rundown of what should now be in place in your organisation:
A cross-functional leadership team to assess and address the fluid impacts of the pandemic, ranging from workplace and work-from-home adjustments to healthcare and financial questions.
A multi-channel communications platform to collaborate, including video, document sharing and instant messaging.
A regular cadence of outreach, including business continuity, email and websites (separate for employees and external stakeholders), new data and policy shifts, among others.
A contingency system for emergency communications, from “blast texts” to phone chains.
A feedback system from employees to evaluate the effectiveness of your business continuity, uncover missed areas and improve future contingency planning.
As with employees, most companies would by now have established policies and practices to support and communicate with their customers and partners. A quick rundown of what should be in place:
A reset of your “business as usual” communication activities so that customers and others are not receiving out-of-context or tone-deaf messaging.
Clear information about the cleanliness and health of your facilities and your products, as well as changes to business practices (locations, hours, delivery expectations and so on).
A communications strategy and specific cadence, including outreach from the CEO and other executives. One-on-one engagement with your most valued customers and partners. Do not underestimate the need for over-communication at this time.
A multi-channel mechanism for accessing and resolving questions. These should include consistent social media listening and appropriate response mechanisms.
A programme to solicit immediate feedback on your communications, activities, products and services to inform and improve your efforts.
Finance and operations
Three areas encapsulate this the most: supply chains, production lines and distribution channels. All three are dependent on each other and interdependent on others and the larger economy. Here is a rundown of the policies and practices your organisations should already have in place:
A crisis-management “control tower” that brings together key leaders to ensure a single point of response. Ensuring that a company-wide messaging platform is in place would be wise.
Robust digital platforms, optimised for spikes in volume with dependable order management and multi touchpoint fulfilment. Those that employ data to identify hyper-local patterns in demand, to match resources and need, would be a key differentiator.
An ongoing system of constant assessment of inventories, supply chains and your upstream ecosystem, paired with an early-warning system that expands to second and third levels of both supply and demand.
An ongoing exploration of staffing models. Leverage a variable workforce, including those that can be crowdsourced with new digital capabilities and automation/AI opportunities.
A clear assessment of profit-and-loss and balance-sheet implications, with a set of defined “tripwires,” and both short and mid-term plans to address any exposure.
Most organisations are already deeply engaged with their communities. In the Covid-19 era, they may have put in place policies and practices to increase their connection with their community:
An external communications plan to stay ahead and in control of the narrative, including the public, media, community, government leaders and fellow business leaders.
Forthright and transparent sharing of any company information or resources that could assist in containing and/or understanding the disease and its trajectory.
Consistent support of medical professionals and their recommendations while weeding out misinformation.
Efforts to support Covid-19 relief, financially and with goods and services.
Efforts to support other struggling businesses and organisations by sharing your own expertise.