COVID-19: Could businesses have done better?

Blog by Franz Ferdinand Eiffe

COVID-19 has shown that some things can hit us out of the blue. The pandemic sent a shockwave through businesses all over the world and has brought massive changes to work organisation, internal communication and day-to-day operations for many companies. Doubtless, the depth of the pandemic’s impact on workplaces depended on many factors: the nature of the business, for instance, or the sector of activity. But are there any lessons to be learnt about the factors that helped some organisations to navigate through the crisis more smoothly than others?

Moving to remote working

Two-thirds of EU workplaces (with 10 or more employees) had to make major or moderate organisational changes in response to the pandemic, and almost 90% had to adjust the physical infrastructure on site, according to an online survey of EU companies conducted by Eurofound in November 2020. One of the most striking changes was the move to remote working: during the first wave of the pandemic in April 2020, in almost 60% of EU companies at least some employees switched to telework. In 2019, pre-pandemic, only a quarter of these companies had employees working from home.

However, the degree of preparation for such a massive change in work organisation varied considerably across companies and sectors. In-depth interviews with managers from the same sample of companies suggest that workplaces that had previously invested in digitalisation and provided their staff with laptops were much better equipped to smoothly transition to telework than workplaces that had to arrange this transition ad hoc.

However, not all workplaces supported their employees fully in the shift to telework. While almost 90% of companies allowed their staff to take office equipment home, fewer (60%) provided or paid for work equipment to be used at home. And just 20% compensated employees for utility and telecommunications bills. When employees themselves were asked about their experience of telework in a different Eurofound survey, less than half (47%) indicated that their employer had provided the equipment needed to work from home.

Coping with disruption

COVID-19’s impact was far-reaching, and it was harsh for many businesses. Almost half of EU companies (44%) reported that the pandemic had disrupted business at least partially, the most affected sectors being commerce, hospitality and services. An even higher proportion (53%) had to change their core business activities at least to some extent.

While a huge majority of staff remained motivated throughout the pandemic, according to the managers interviewed, less than half of the businesses expected to make a profit in 2020; in 2019, 78% had expected to do so. Government support helped businesses to keep afloat, and over 50% reported having made use of it in some way, particularly those that were affected by full or partial shutdowns. These measures were essentially designed to guarantee access to finance through loan guarantees and liquidity or to delay loan, tax and social security payments.

Lack of crisis management planning

Just a third of EU workplaces reported that they had had a crisis management or business contingency plan in place before the pandemic struck. As the figure below shows, big companies were twice as likely as small companies to have prepared such a plan.

Figure: Proportion of EU companies with a crisis or business contingency plan (%), by size, November 2020

Source: Eurofound, European Company Survey online follow-up 2020, weighted

Did that make a difference when they were confronted by the challenges posed by the COVID-19 crisis? The managers interviewed by Eurofound thought so, the sentiment being that such plans can give guidance to management when decisions must be taken quickly. The managing director of a medium-sized Austrian logistics company, for instance, noted that their crisis management and business continuity plans ‘helped substantially steering the real experience and the processes implemented since March 2020’. Having a plan meant that not everything had to be thought through from scratch: how to communicate with staff; what steps to follow when implementing ad hoc measures; how to keep clients on board.

Coincidence or not, fewer businesses that had such plans in place reported productivity losses in 2020 compared to those that had not, and fewer of them applied for public-support schemes.

People-centred companies better prepared

We can also detect a link between companies’ preparedness for a crisis and their approach to employee management. In previous work, Eurofound grouped European establishments based on the extent to which their management approach is people-centred: for example, whether employees have the scope to act independently, whether they have an influence on organisational decision-making, and whether there is an emphasis on training and learning. Companies that embrace this approach to a high degree were labelled ‘high investment, high involvement’, while those that were least people-centred were labelled ‘low investment, low involvement’.

Comparing these types in terms of crisis preparedness showed that around 40% of workplaces in the ‘high investment, high involvement’ type had crisis plans in place compared to only 20% of the ‘low investment, low involvement’ type.

Lesson to learn

Were the ‘high investment, high involvement’ companies well prepared because they had invested in their employees? Or did they think ahead and invest in their employees in order to be well prepared for challenging times? It’s the old chicken-and-egg situation, but does the direction of causation really matter? Crisis management should be something for all businesses to consider. Of course, big organisations are much more likely to have such plans, as more is at stake and they are less agile. But small and medium-sized enterprises can benefit from being well-prepared to manage in an emergency, and the data show that some of them did.

In the context of business, one conclusion can surely be drawn from COVID-19: crisis management should be on the agendas of all businesses, even if we don’t know what the next crisis will look like. Because whatever shape it takes, not starting from scratch when forced to react will constitute an advantage.

Further information: