The Covid-19-driven economic crisis will have very long-term consequences. In fact, the pandemic has already exposed weaknesses in the design and management of organisations. As organisations prepare to survive (and thrive), leaders and heads of organisations have one pertinent question to answer: “What will my organisation look like after the Covid-19 pandemic is over?”
Every organisation in 2025 will look vastly different from how it is looking in 2020. This kind of global disruption hasn’t been seen since World War II. Organisations have hence been designed on the assumptions of a relatively stable business environment (GDP grows, consumerism increases, capitalism is the dominant philosophy, business disruptions are either cyclical or contained in scale and scope). Many of these assumptions have already been challenged in the first quarter of 2020. Consumerism has had a forced halt; concepts of social security and universal basic income have taken centre stage and more disruptions could be expected. The pandemic has also magnified the impact of digitisation (automation, artificial intelligence, and machine learning) and changing expectations of employees (work-life balance, gender equality at work, multiple careers in a lifetime, asset-light preferences, job security not being the dominant motive). Also, organisation design has been relatively static for a long time, despite the revolution in information availability and ease of sharing. However, the trends are already changing and will continue to get impacted further. In the post Covid-19 world, as businesses strive to remain relevant and emerge successful, they will see three changes in their organisations.
Organisation structures: Simpler, flatter, and virtual
‘Simple’ is what businesses should focus on now. With the ease of accessibility to teams and information, organisations can do with fewer supervisory layers in between the doers and the decision makers. Matrix organisations have added tremendous costs and reduced agility. Organisations can ill-afford both—significant simplification is to be expected. Organisations can outsource everything except the really core functions and run their business with 30%-40% of the current manpower—for example, a consumer product brand should only keep really core functions like marketing, R&D, sales in-house, and outsource everything else including manufacturing, procurement, logistics, finance, and HR. Converting fixed costs to variable—even accounting for the extra costs of outsourcing is preferable—and helps in agility. Project-based organisations, teams organised around processes, and agile squads in the core processes will become more and more popular.
Working from home is about to become the ‘new normal’. More and more people will now have a permanent/alternate workplace at home. Companies will realise that it is easier to fund home office expenses (computer, webcam, workstation, Wi-Fi) of employees rather than create large office spaces. With at least 25% of the workforce expected to work from home, companies can rationalise 20% of their footprint easily. Finally, contingency planning was just a ritual for most companies. Not anymore. Moving ahead, it will be imperative for organisations to build robust processes and create dedicated roles for crisis and risk management.
People: Lean, flexible, resilient
It is all in the mind, as they say. Now is the time for organisations to move from a “what do I want for tomorrow” to “what do I really need now” mindset. In most cases, the answer will point towards redundant capacity. Not just 5%-10%, but as much as 25%-30%. With a bleak outlook, this capacity is not an asset but an unnecessary risk. Going forward, outsourced, on-contract, paid for outcomes, part-time models (corporate gig economy) should find far greater acceptance since they spread the liability and share the risk. Employee expectations have also changed—ask younger employees—they are not looking for lifelong employment, and usually do not have plans to work in a 9-to-5 job for 40 years. Work-life balance and backpacking through multiple careers appeals more. Most employees will welcome the more flexible, virtual models since these will match with their life goals.
Culture: Remote, digital, engaged
Working from home has made everyone (including governments and courts) realise that the importance of physical presence at workplaces is overrated. Virtual presence can be as effective and sometimes more efficient. Going forward, organisations should focus on the quality and commitment of human resource rather than their availability at the location. The digital revolution (e.g. IoT, AI, ML) is impacting every sector positively. The pandemic has exposed the weaknesses of manual, paper-based operations. Companies that were less digital in their ways of working have suffered and the digitally advanced organisations have been to respond in an agile manner (and even innovated). Marico launched a product for cleaning vegetables and fruits during the pandemic and Zomato has pivoted to distributing groceries. Many companies are experimenting with AI and ML to replicate/ learn repetitive human tasks (e.g. making travel bookings, compiling reports—anything for which an algorithm can be written) and IoT sensors are also now available for several parts of operations to enable remote monitoring and analysis. We expect even small organisations to entirely digitise their value chains. All large organisations should become completely paperless (procurement, finance, legal, compliance are the ones where it is needed the most) by 2025. At the same time, as more and more people work from home, work part-time or in other flexible arrangements, the amount of time spent on in-person interactions will lessen significantly. The limited physical interactions should therefore be disproportionately focussed on relationship building, apprenticeship, and bonding.
In summary, the Covid-19 crisis is likely to be a watershed event. Organisations will likely look vastly different in the next five years as they recover from this crisis and build themselves for a much more uncertain future.
Views are personal. The author is a senior partner with Kearney India.