CEOs Need to be Planning for the “Next Normal” and “New Normal”

The Covid-19 pandemic is much more than a major health crisis that has produced massive business closures and job losses. It represents a “change agent” that will likely produce a range of impacts in Health Care, Education, Technology and in the world of Business. Some of these changes may be temporary but many of them will be permanent; they will remain long after a vaccine is found. Here are some examples of the changes taking place.

A recent study by Jonathan Dingel and Brent Neiman of the University of Chicago found that 37 percent of jobs in the U.S. can be performed from home. Webex, GoToMeetings, Microsoft Teams, Face Time and Zoom video conference calls are now a regular part of every day. While these services were in widespread use pre-Covid, they are being increasingly used by businesses, schools, churches, associations, and other organizations. Working from home has certain disadvantages (i.e. distractions, noise levels, inability to arrange impromptu face-to-face meetings with coworkers etc.) but it has certain inherent significant benefits (reduced travel time, fuel consumption and carbon emissions) that should provide many citizens with a better quality of life.

Just as important as the social and technological changes being driven by the pandemic are the changes taking place in the operations of specific business segments. Some industries (i.e. restaurants, travel, hospitality etc.) are being transformed as new processes and procedures are put in place to protect consumers and employees.

For example, restaurants are rearranging tables so their customers sit six feet apart, they are erecting plexiglass dividers to limit the exchange of potentially harmful respiratory droplets between patrons, or between patrons and employees, creating disposable menus, and ensuring their employees wear masks, gloves and other protective equipment. Similarly, airlines are making changes to their processes by performing temperature checks before passengers enter a departure gate, leaving the middle seats vacant on their flights and by more frequently sanitizing their planes.

Some companies have been facing an exceedingly difficult time and have had to close their doors (i.e. J. Crew, Neiman Marcus). As the pandemic continues, it is highly likely that companies large and small will not be able to pay their loans, their rent, and their employees. Other companies, whether in the manufacturing, distribution or service industries, are waking up to find that when they reopen their doors, the sales volumes of individual products and services will be affected by the pandemic and they will be required to make changes to protect the safety of their personnel and to survive.

On a more positive note, some essential businesses such as grocery stores are experiencing huge surges in business and are having to improve their ecommerce capabilities, provide curbside service and / or change their in-store procedures to ensure social distancing can be maintained.

At this point, forward thinking CEOs need to focus on two scenarios – - - the Next Normal (how to survive during the period while some employees return to work and a vaccine is being developed and manufactured), and during the New Normal (post-Covid 19 when everyone can be vaccinated).

Planning for the Next Normal

Bret Stevens, in an article in the May 17 New York Times, highlights that there are the “Remote” workers and the “Exposed” workers. The “Remote are, disproportionately, knowledge workers” (the 37 percent who can work from home), “mostly well educated, generally well paid. Their professional networks, and many of their personal ones, too, are with people who also work remotely.

That leaves the other roughly two-thirds. Call them “Exposed.” They include everyone — shop owner, waiter, cabdriver, sales associate, factory worker, nanny, flight attendant, and so on — for whom physical presence is a job requirement. They are, typically, less well educated, less well paid.

For the Remote, the lockdowns of the past two months have been stressful. For the Exposed, they have been catastrophic. For the Remote, another few weeks of lockdown is an irritant. For the Exposed, whose jobs are disappearing by the millions every week, it is a terror. For the Remote, Covid-19 is the grave new risk. For the exposed, it’s one of several. For the Remote, an image on the news of cars forming long lines at food banks is disconcerting. For the Exposed, that image is — or may very soon be — the rear bumper in front of you.”

No one knows how long it will take to produce a vaccine ready for widespread use. While President Trump has launched Operation Warp Speed to expedite the development of a vaccine, there are no guarantees that his team will be successful in such a short time. CEOs need to establish policies for these two groups of workers.

While many politicians, business executives and workers are keen to return to work, it is prudent to establish policies and procedures that reflect the safety requirements of the “Exposed” employees working in the Covid-19 Next Normal world. Looking at restaurants as one example, will all the pre-Covid-19 jobs be required if seating footprints must change? Will there be a requirement to retrain some personnel to reflect the changing work environment?

CEOs must also consider the changes taking place in the “Remote” world that will likely remain for years to come. The longer the “Remote” remain at home and /or return to work in a more limited, disciplined and safe manner, the more likely shopping and working from home, increased use of video conferences and other changes will have a more permanent effect. Clearly, these changes will have an impact on both commercial and personal real estate. Will companies reconsider the amount of office and / or retail space they require and reduce their footprints accordingly? Will people working in large, densely populated cities wish to remain in high-rise apartment buildings or will some move to the suburbs, particularly if they will likely be working from home more regularly in the future.

Planning for the New Normal

Smart CEOs need to discern those forces that will remain with us in some form post Covid-19. For the “Exposed” workers who lost their jobs and/or had to rely on government assistance cheques, how likely are they to be making “big ticket” purchases in the post Covid-19 world? In view of the vulnerability of many companies’ supply chains, will we see a move to reshoring or more local manufacturing? Some supply chains for meat and other products have been exposed as brittle and dangerous. What modifications need to be made to address these shortcomings? What numbers and types of people, “Remote” and “Exposed” will be required when we get to the New Normal world? Now is the time to be thinking about this range of issues.

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