How Companies Can Become More Nimble During the Product Lifecycle

Product LifecycleThe majority of U.S. industrial product company CFOs have shared concerns that COVID-19 would impact their businesses negatively. For companies that develop and manufacture products, understanding the product lifecycle and how to work around crises like the COVID-19 pandemic can be effective to help improve the longevity and success of companies.

Market Development Stage

According to the Harvard Business Review (HBR), the first stage of the product lifecycle is market development. This normally happens when a company introduces a new product for sale. There is usually little demand at this point; instead, demand has to be cultivated among consumers.

Factors that impact the rate of introduction include the product’s novelty; how practical it is for consumers’ existing problems; and how the new product impacts the demand of existing products. For example, if there’s a proven cure for a chronic medical condition, the product would have a more effective ability to penetrate the market versus an unproven product – be it a medical device, cell phone, etc.

Market Growth Stage

HBR calls the second stage the market growth stage or takeoff stage. When a product is successful, it enters this stage because demand begins to grow exponentially due to consumers expressing interest in the new product.

From there, competitors looking to leverage the “used apple policy” will produce either knock-offs or improved versions of the new product. Businesses competing in this product category begin standing apart – via their product and/or brand. Ongoing adaptation is fluid and contingent based on what competitors are doing, normally through balancing pricing or optimizing distribution channels.

Market Maturity Stage

This stage sees equilibrium in consumer demand. The best way to understand when this is achieved is when the target demographics are consuming the intended products. Competing companies will focus on standing out in the market by providing niche solutions through customer service, comprehensive warranties, etc. Producers are maintaining relationships with distribution outlets for in-store product promotion and shelf space; also, more favorable distribution agreements normally occur during this stage.

Market Decline Stage

This stage is evident when consumers fall out of love with an item and stop buying it. As too much capacity for the product floods the market and fewer and fewer producers survive, businesses might propose mergers for survival.

Ways to Extend the Product Lifecycle

While the Covid-19 pandemic has taught everyone how to live and work as safely as possible, it’s also shown that businesses need to be constantly reviewing how they can make their product lifecycles more agile.

One way to extend the product lifecycle for a new product is by creating a positive, memorable first impression. An unfavorable first experience might create negative repercussions beyond what would be normal.

For example, how the product was delivered to the customer can make an impact on the customer’s experience. HBR gives the example of companies that produce home appliances. If a small, independent network of family-run appliance stores can deliver white glove service for customers (going above and beyond to make a lasting, positive first impression, including implementing COVID-19 safe practices), they can make a positive first impression. This will increase the likelihood of customers wanting to share their good experience with others.

However, when it comes to merchandising the product, using a more segmented distribution channel via independent appliance stores will take a lot more effort compared to larger, corporate resellers with turnkey distribution capabilities.

Another way, especially to be mindful of COVID-19 safety precautions, is to remove the chance for miscommunication. When working remotely and using chat and/or video conferencing tools, it is important to document all processes, including sample layouts and designs, to ensure different departments are on the same page.

Staying in communication with existing and potential clients is crucial for product launches – either new or enhanced versions. Looking at the next 90 days ahead, evaluate how each customer’s business is doing – are they fighting for survival or is it nearly business as usual? If a customer is all-hands-on-deck to get cashflow to stay in business, it might not be the right time for deployment. But if the new product or enhancement can increase efficiency, it might be right to contact them ASAP.

While every product lifecycle is unique, taking steps to become more nimble can potentially make the difference between a company surviving or thriving during a crisis.

Sources

https://www.pwc.com/us/en/library/covid-19/manufacturing-operations-strategy-coronavirus.html

https://www.pwc.com/us/en/library/covid-19/pwc-covid-19-cfo-pulse-survey.html

https://hbr.org/1965/11/exploit-the-product-life-cycle

Some Businesses Rely on Line of Credit to Escape Damages Caused by Pandemic

Line of Credit and Covid, Line of Credit PandemicAs businesses attempt to work their way through to a post-pandemic world, there are various means to bridge the financial gap. As recommended by the U.S. Small Business Administration (SBA), some companies can use a line of credit to reach international customers or opportunities outside the United States to make up for the damage COVID-19 caused with fewer domestic sales. How can businesses use a line of credit to increase their chance of survival and pivot to profitability as we move through 2021?

According to Debt.org, a business line of credit functions like any other line of credit that uses revolving debt. Businesses use a portion of their line of credit to meet financial obligations and repay based on the lender’s terms. Common lines of credit borrowing limits can range from $1,000 to $250,000 and are generally not secured against the business’ assets, accounts receivables, etc.

As a U.S. Bank study found, via the National Federation of Independent Businesses (NFIB), 82 percent of companies that go out of business do so because of inadequate cash flow management. The NFIB and U.S. Bank study explains that an inability to purchase inventory, satisfy employee payroll, on-board workers, or obtain some sort of financing increases the likelihood of a business failing.

However, businesses that are approved for and use a line of credit for meeting payroll, purchasing raw materials and items necessary to keep their business running (including rent or lease payments), greatly increases the business’s chance of survival. So, as revenues and profits shrink, employers can tap their line of credit to increase the chances of surviving.

Business Survivability Considerations

Continuous access to funds allows owners to have greater control over a business’s finances and helps them make better growth-driven decisions. For example, Noam Wasserman, a Harvard Business School professor, explains that oftentimes outside investors force founders out of their company – only half of founders were still the CEO three years after the business’s inception. If a line of credit gives the business enough financial flexibility, then the founders can stay in control.

Another way to leverage a line of credit is highlighted in the SBA export assistance programs due to COVID-19-related losses. Small business owners that export products directly, or indirectly to a third party that does the exporting, may be eligible.

Prior to a company completing a sale to an international client, or for prospecting for new international export markets, businesses can apply for a line of credit or a term note, up to $500,000, under the SBA’s Export Express loan program.

Through the SBA’s Export Working Capital loan program, approved applicants can obtain as much as $5 million in financing or a revolving line of credit related to the firm’s export-related business. This assistance also can help businesses better fulfill export orders as well as provide financial assistance for additional ex-U.S. sales. The financing can assist in keeping international orders through more favorable payment options for their foreign customers.

While there is never a guarantee that a business will survive, today’s companies that take advantage of different lending options, such as a line of credit, have a better chance to set themselves up for the post-COVID-19 recovery.

Sources

https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Personal Lines of Credit

Why Do Small Businesses Fail?

https://hbr.org/2008/02/the-founders-dilemma

How Businesses Can Adapt, Grow During COVID-19

Businesses Grow During COVID-19In order to survive – and even thrive – during these unprecedented times, small businesses have had to find new ways to make money. The UPS Store’s Small Biz Buzz survey found that 41 percent of small businesses in the United States took steps to modify their businesses in hopes of survival. Fifteen percent provided customers with curbside delivery options, 28 percent moved to online sales as their primary source of sales, and 65 percent made a concerted effort to grow their e-commerce capabilities.

More than 50 percent of those polled by a U.S. Census Bureau Small Business Pulse Survey said it would be at least half a year before pre-COVID levels of business come back. Looking at overall economic recovery, and we could be waiting five years or more for things to return to where they were before. When it comes to small businesses, it might take even more time; however, businesses that adapt will be more likely to succeed.

In order to increase the chances of the pivot being successful, Harvard Business Review recommends doing so based on the newly created conditions of the crisis. In the case of the pandemic, it’s created more telecommuting, disrupted supply chains, and required everyone to socially distance for work, leisure, and daily tasks. In light of these circumstances, there are three factors for a pivot to be successful.

Social Distancing Opportunities

With the pandemic demanding less contact, chiefly through social distancing, businesses must find ways to work around the new circumstances. One example is how dating websites have added video dating for users. Other examples include grocery stores limiting in-store customers, requiring workers and customers to wear masks, and adding more and wider delivery areas for groceries and other products.

Building on Original Business Concept

The second recommendation by HBR is that businesses examine how additional and different services or products complement the original business concept.

Let’s consider Airbnb; when travel and resulting bookings collapsed, the platform’s hosts received financial assistance that helped facilitate guest relations virtually. In a shift from its non-hotel lodging option via homeowners and apartment dwellers offering their abode for rent, Airbnb moved to provide hosts with the ability to hold online events, such as cooking classes, art therapy, virtual tours, or other activities.

Looking to the future and building on the opportunity for growth, tourists could learn about new places to travel and things to do and learn while visiting the new destination.

Adapting to Change by Adding Value

The final ingredient of a successful pivot, according to HBR, is that the move demonstrates how well a company can adapt, work through problems and adjust to market forces while proving profitable and resonating as a value in the consumer’s view.

Before the lockdown orders, Spotify placed a sizeable portion of its business model on having primarily free customers stream music on personal devices. Spotify would benefit in two ways – they wouldn’t have to send out Spotify-specific devices, along with relying on receiving advertisers’ income that free users would listen to in exchange for a free Spotify membership. However, when the pandemic hit, Spotify’s advertisers cut their marketing budgets, making this business model difficult for Spotify to sustain.

Spotify’s pivot offered podcasts for users from music artists, talk show hosts, celebrities, etc. By offering premium subscriptions for its podcasts, along with curated, niche programming, Spotify gave customers more control and a better value over previous media offerings.

While the pandemic doesn’t necessarily mean a “going out of business sign” for companies, it could spell the end of the road for those that don’t adapt to the new economy.

Sources

https://www.uschamber.com/co/start/strategy/metlife-us-chamber-small-business-index-covid-19

https://hbr.org/2020/07/how-businesses-have-successfully-pivoted-during-the-pandemic

https://www.uschamber.com/co/start/strategy/pivoting-your-business-to-survive-pandemic

How to Effectively On-board & Train Employees Virtually

How to Effectively On-board & Train Employees VirtuallyWith COVID-19 still requiring remote working, companies that effectively on-board new workers retain their workers longer, have better worker performance, and increase their profits by almost 100 percent, according to the U.S. Chamber of Commerce. However, there are many considerations that companies should take during this important process.

For remote orientations, a welcome package that discusses the company’s products or services can be emailed to attendees prior to the live introduction. It’s also imperative that essential employees for the new hires (training and supervisors, for example) and existing employees who they will be working with are on the virtual meeting for introductions.  

Other considerations include maintaining a sense of professionalism. If a company has a dress code, training managers should serve as an example by dressing appropriately and communicating the requirement to new hires. This also can apply to the physical background of remote workers – having a professional-looking environment with muted colors.

Equip Workers With Varied Communication Tools

While almost everyone uses email to communicate, Harvard Business Review (HBR) suggests that email should not be the sole method of communication for remote workers. Along with team communication platforms, video conferencing benefits workers because communicating with body language helps normalize the remote work experience. Video conferencing with recording capabilities also can be used for online training so that employees may access this resource at their own convenience.

Managing Virtual Communication

Regardless of how virtual employees communicate, there needs to be some structure to find the right balance for efficiency. Examples could include using instant messages for urgent but simple communication needs. When it comes to video conferencing, consider touching base for 10 to 15 minutes once a day for a check-in or feedback session. Determining communication frequency depends on when workers work (different time zones, staggered shifts, etc.) and what’s effective for managers and employees.

Schedule a check-in phone call – either once a day or perhaps once in the morning and once in the late afternoon. It can be modified depending on the individual or the type of worker, be it a call with a single employee or an entire group if they are used to working together.

HBR says that workers are heavily influenced on how to deal with abrupt changes or crises based on their leaders’ actions. Whether a manager is calm and collected or anxious and not in control, those they are supervising will act similarly. Regardless of the situation, managers who empathize with feelings of uncertainty and give verbal encouragement will impart a sense of confidence to the entire team.

Regardless of how social a person is during office hours, the lack of morning greetings, break room conversations, water cooler chat, and saying goodbye when leaving the office reinforces the isolation of working remotely – and that can affect anyone.

Therefore, weaving in time for employees to build rapport is also recommended by HBR. Whether it’s going around virtually to ask how everyone’s weekend was, or having the company deliver a meal to remote workers for a virtual office party, it’s been reported that these types of activities relieve feelings of isolation and garner goodwill with the company.

Businesses that take the appropriate steps to build and develop a balanced remote workforce can survive and thrive, but only by adapting to the very different demands of working virtually.

Sources

https://www.uschamber.com/co/run/human-resources/onboard-employees-during-covid-19

https://hbr.org/2020/03/a-guide-to-managing-your-newly-remote-workers  

Plan for Business Continuity if Second Wave of COVID Hits

With winter around the corner and the threat of seasonal viruses looming, a second wave of COVID-19 poses a real threat to our health and business operations, according to Johns Hopkins Medicine.

Statistics from the Centers for Disease Control and Prevention (CDC) reveal that the 2019-2020 flu season took 24,000 lives and sickened 39 million individuals. Then when we add the fact that there are children who might not be receiving vaccinations – be it for the measles, whooping cough, and others – due to COVID-19, the risk for infections multiply.

Based on these factors, there’s a real possibility of a second wave of COVID-19 and other seasonal illnesses impacting business operations for the worse.

As the State of Washington’s Department of Commerce explains, there are many things that businesses can do to prepare for a second wave of the coronavirus. Here are a few recommendations that can be applied and modified, depending on the type of business.

The Washington State Department of Commerce recommends businesses use their digital presence, such as email, a website, blog or social media, to inform and connect with customers. There’s a balance that companies need to find between marketing and selling products or services and not sounding tone-deaf to the situation that COVID-19 has created.

For example, by creating a brief blog or social media post, companies can acknowledge that COVID-19 is a stressful time for everyone, but the company will still be there for them. Explaining how they’re taking care of their employees (social distancing, letting employees work from home and/or take time off for themselves or family members) and how they’re welcoming customers in-store or making house calls (with masks, social distancing, using technology when appropriate), it can create empathy and promote a sense of goodwill.

Another way to leverage digital communication channels is to create a standalone email address to funnel visitor and customer questions regarding COVID-19 concerns.

Planning on how to deal with food that won’t be used is an important step for organizations that deal with mass quantities of food. For schools, colleges, or universities that were open but have closed or others that want to make contingencies to close, the Environmental Protection Agency (EPA) recommends a few different avenues to make good use of food that would otherwise spoil. Organizations should make plans to donate to food banks or food rescue organizations; and there is also the EPA’s Excess Food Opportunities Map, which can direct unused food to composting options for businesses.

Another way for companies to prepare for a second wave of COVID-19, as the State of Washington’s Department of Commerce points out, is to ensure all documents are up-to-date and accessible via hard copy and electronically. Example documents include minutes and resolutions from official business meetings, tax records – especially any recently filed quarterly estimate payments – and lists of vendors. Companies also should ensure that digital files are encrypted, protected by passwords and that the cloud provider has a firewall, security scanning, and continually addresses vulnerabilities. 

Business owners should have contingency plans to deal with supply chain issues. One way to mitigate supplier issues, according to McKinsey & Company, is to negotiate with existing suppliers that have cash or liquidity issues.

By offering essential suppliers with loans, often at attractive interest rates compared to lenders, as a way to keep suppliers in business, businesses may be able to negotiate for exclusive or high priority production agreements. This can be done while looking for alternate suppliers, either domestically or in other parts of the world.

While the second wave of COVID-19 is a real possibility, taking steps to prepare for any surge in cases will help companies increase their chances to make it out of the pandemic.

Sources

https://www.hopkinsmedicine.org/health/conditions-and-diseases/coronavirus/first-and-second-waves-of-coronavirus

https://www.epa.gov/coronavirus/recycling-and-sustainable-management-food-during-coronavirus-covid-19-public-health#02

A ‘Between Waves’ COVID-19 Planner for Small Businesses

https://www.mckinsey.com/business-functions/operations/our-insights/coronavirus-and-technology-supply-chains-how-to-restart-and-rebuild

https://www.epa.gov/coronavirus/recycling-and-sustainable-management-food-during-coronavirus-covid-19-public-health

Three Strategies Companies Can Implement to Recover Faster

Business COVID-19 Recover FasterSmall businesses nationwide were already facing cash problems before the COVID-19 pandemic, according to McKinsey & Company. The firm found that almost one-third of small businesses were either seeing losses or making just enough to stay in business, but not realizing profitability.

Looking at businesses selling essential and non-essential items, McKinsey & Company reports that before satisfying their “interest, taxes, depreciation and amortization” obligations and accountings, they were facing challenging times. When it comes to selling essential items, such as food, business owners in this industry only had margins of 5 percent. For businesses selling non-essential items, this sector saw margins of less than 10 percent.

Restaurants provide an example of one way that outfits can pivot and increase margins by modifying their business models. While the Harvard Business Review (HBR) explains that restaurants have created additional seating near the kitchen to maintain social distancing, other examples of business model changes include increasing takeout, delivery, and catering as a way to increase sales for businesses with limited in-store dining.

While these ideas are simply expanding upon existing models to make up for lost in-dining experiences, HBR offers another way that a restaurant can better distinguish its establishment: developing a subscription model for customers. By slimming down menu choices for more efficient and faster preparation, restaurants could give customers the option to receive a certain number of meals per week or day for a fixed price.

Increasing Margins

While there are different types of margins for business owners to keep an eye on, an important one is a gross margin and how it impacts a business’ bottom line. Since the onset of COVID-19, businesses have been trying to survive as we work our way through the pandemic.

Regardless of the type of product being sold, by reducing the number of options available to customers, businesses can increase their margins by still meeting customer demand for necessities while also getting better prices from their suppliers through larger orders. This strategy also can be applied with contract manufacturers.

Re-engineering products and the ingredients that go into them can help to increase margins. For example, if there is a variety of pre-packaged foods that sell for the same price, but there are specialty or costlier ingredients like meat instead of vegetables, pausing selling pre-packed meals with meat can increase profit margins.

McKinsey & Company explains that small businesses are able to increase their hygiene and safety protocols by encouraging and implementing contactless experiences. Along with reducing person-to-person contact by using mobile apps, restaurants also have made delivery and takeout a bigger part of their sales.

With small businesses like boutiques and farmers, HBR illustrates how these entities can explore different sales channels. With stores facing shortages and an inability to stock essential goods –  especially food items – small farmers saw an opportunity to reinvent their business models after restaurants and gourmet markets dropped purchases from them during the stay-at-home orders.

An investment in an online presence, shipping and logistics, and sustained sales and marketing efforts have real potential for businesses to become profitable as trends point to a direct-to-consumer model. However, going with a digital storefront such as Shopify and selling directly to retail customers, HBR pointed out that some farmers are able to capture local customers (15 miles or less). This shows how farmers have been able to migrate from one source of revenue to another.

While the pandemic is ongoing, these are just a few ways that companies can implement new strategies to generate cash flow and attempt to survive the COVID-19 pandemic. 

Sources

https://www.mckinsey.com/industries/public-and-social-sector/our-insights/us-small-business-recovery-after-the-covid-19-crisis

https://hbr.org/2020/07/how-businesses-have-successfully-pivoted-during-the-pandemic

How to Develop an Employee Leave Policy During COVID-19

Employee Leave Policy During COVID-19According to the United States Department of Labor’s Wage and Hour Division, the Families First Coronavirus Response Act addresses how select businesses must give their workers paid sick leave or expanded family and medical leave under permitted circumstances in light of COVID-19.

Effective starting April 1, 2020, the following will be in effect through Dec. 31, 2020.

1. If the worker cannot perform his duties because he is relegated to a quarantine, as mandated by a medical professional or a local, state or federal government, or if he is symptomatic with COVID-19 and seeking a diagnosis to confirm it, he is entitled to as many as 80 hours of paid sick leave at his normal rate of compensation.

OR

2. The worker may be due no less than 80 hours of paid sick leave at two-thirds of the worker’s normal compensation if the individual can’t perform her work duties because of a justifiable reason to look after another person required to quarantine – be it because of a doctor’s diagnosis or by a local, state or federal government order. It can also apply to an employee if she needs to care for a minor child (younger than 18 years old), if her school or daycare center is shuttered or otherwise unable to permit the minor child to attend due to the coronavirus.

The Act also includes as many as 10 additional weeks for expanded family and medical leave, paid at two-thirds the worker’s normal wages. This can occur where the worker, who has been an employee of the business for no less than 30 calendar days, cannot work because of a justifiable reason to look after a child due to closure of a school or daycare center.

Employees of both select public employers and private businesses that have fewer than 500 employees may be eligible for the expanded family and medical leave and paid sick leave from the FFCRA. However, this may not apply to select businesses with 50 or fewer workers. For example, small businesses with less than 50 workers may be exempt from the requirement to give leave for school or child care unavailability if fulfilling the leave requirements would put the business’ ability to survive at risk.

When it comes to federal employees, it’s important to note how the FFCRA changed their situation. For federal employees subject to Title II of the Family and Medical Leave Act, they are eligible for the aforementioned provision referring to paid sick leave. However, the COVID-19 amended family and medical leave provisions in the FFCRA are not the same for federal employees.

All workers of covered employers are eligible for two weeks of paid sick time for applicable grounds due to the coronavirus. Workers on the payroll for a minimum of 30 days may have up to 10 weeks of compensated family leave to look after minor dependents, based on the individual situation caused by the coronavirus.  

When Leave May Be Permitted

Workers are qualified to receive paid sick time, according to the FFCRA, if they can’t perform their duties, including remotely, due to any of the following circumstances.

  1. Under a local, state or federal quarantine or isolation mandate due to the coronavirus.
  2. A medical professional has recommended a patient quarantine himself because of COVID-19.
  3. An individual is symptomatic consistent with COVID-19 and seeking a medical opinion.
  4. The worker is caring for another person in either category 1 or 2.
  5. The employee is caring for a child whose school or daycare facility is shuttered or otherwise inaccessible due to the coronavirus.
  6. A worker is facing an almost identical condition detailed by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Workers, also in the FFCRA, are eligible for expanded family leave if they are looking after a child whose learning center or daycare is shuttered or otherwise inaccessible because of COVID-19.

When it comes to categories 1, 4 or 6, full-time workers are qualified to have 80 hours of leave. Part-time workers are eligible for calculated leave based upon an average of a 14-day time-frame.

For category 5, full-time workers are eligible for as many as 12 weeks of leave. This consists of two weeks of paid sick leave and an additional 10 weeks that are paid expanded family and medical leave – all 12 weeks at 40 hours per week.

When it comes to paid sick time under the FFCRA, it doesn’t carry over to the following year. Also, workers may not be compensated for untaken leave if they retire, leave voluntarily or involuntarily, or otherwise are no longer with their employer.

For the first three categories, workers on leave qualify for compensation at their normal rate or the prevailing minimum wage over a 14-day period, whichever rate is more.

For categories 4 and 6, workers on leave qualify for two-thirds of their normal compensation or the prevailing minimum wage, whichever rate is more (no more than $200 a day or $2,000 per two-week period).

For the fifth category, workers taking leave similarly qualify for two-thirds of their normal compensation or the prevailing minimum wage, whichever rate is more (no more than $200 per day or $2,000 over two weeks).

While each organization must do its due diligence to see how the law applies to its employees, this law gives businesses and workers more flexibility to balance work and family responsibilities.

Hiring in the Age of Coronavirus

Hiring in the Age of CoronavirusThe U.S. job market gained 2.5 million jobs during the month of May, dropping the unemployment rate to 13.3 percent, according to the U.S. Bureau of Labor Statistics. There’s likely been a lot of rehiring, with more to come as the economy continues reopening. However, until social distancing becomes a thing of the past, hiring effectively will take some pivoting during the pandemic.

Finding Candidates Virtually

Employers looking to interview and hire candidates can take advantage of LinkedIn during the pandemic. Along with providing a branding opportunity, the platform gives businesses a hybrid social media and marketing tool. Leveraging 1st Connections on LinkedIn, participating in discussion groups, demonstrating one’s industry knowledge, or simply looking for prospective candidates are effective uses of LinkedIn.

Much of the LinkedIn user base is comprised of people looking for work, either as an employee or on a contract basis. Businesses can reach and retain an audience by distributing content through LinkedIn. Along with taking advantage of using LinkedIn advertising, sharing new content with existing followers can be direct and unimpeded. The site also provides a connection to a business webpage to start the application process, in addition to listing the job requisites on the business’s LinkedIn profile.   

A good way to engage applicants virtually is by encouraging interested candidates to produce one-way video interviews through digital and social media requests that they can record on their own, detailing experience, education, etc. Then hiring managers can review these submitted videos remotely on their own time and arrange initial (or additional) interviews for select candidates. Other recommendations include refreshing job postings and posting links to jobs via the company’s social media.

Safely Finding and Interviewing Candidates

Because the ongoing pandemic requires certain safety practices, such as social distancing, interviewing candidates in-person might not be practical or safe. Instead, conducting interviews remotely is the next best thing. Speak with candidates over real-time video conferencing, such as Zoom or Skype.

A survey from Gartner found that 48 percent of employees will work at least some portion of the time remotely, post COVID-19. This is compared to 3 in 10 workers who performed some of their work remotely pre-pandemic. Gartner has a few ideas on how Human Resources professionals can on-board employees virtually to increase efficiency and optimize their performance.

Another way to help employees is to recommend different modes of communication. For example, if there are too many email exchanges when working on a project, it might be more effective to hold a brief virtual meeting.

When working remotely, especially for the long-term, employees might not have adequate technology at home. It might sound intuitive, but if the company is dropping off/sending laptops/phones/microphones to remote workers, they must first ensure that all software and apps are downloaded and working. While this may be a one-time use of time for employees, it’s an important point to reduce distractions for workers when they could be spending their time on productive work. As the University of California-Irvine found, it can take 23 minutes for someone to refocus their attention after being distracted. This shows just how destructive distractions are to workers, especially when they are working remotely and in a less structured environment.

Onboarding Recommendations During COVID-19

While the following recommendations are applicable for remote workers, they can be helpful even if there are employees in the office when social distancing is in force.

Leveraging video for new employees is a useful approach. Along with taking advantage of non-verbal language, this will help share information, schedule meetings, and build trust by facilitating the ability to ask questions. Video can be a good introductory meeting, with a follow-up email that provides links to resources, how-to guides, etc. Depending on how people learn, these resources will reinforce their knowledge.

While each organization will have different needs for work arrangements during the COVID-19 pandemic, businesses can use technology to work safely and efficiently during these times to maintain business continuity.

Sources

https://www.forbes.com/sites/vickyvalet/2020/03/12/working-from-home-during-the-coronavirus-pandemic-what-you-need-to-know/#5615d77d1421

https://www.bls.gov/news.release/empsit.nr0.htm

https://www.gartner.com/smarterwithgartner/9-tips-for-managing-remote-employees/

https://business.linkedin.com/marketing-solutions/blog/best-practices–thought-leadership/2016/5-free-ways-to-build-your-personal-brand-on-linkedin

Understanding the Federal Government’s Proposal for Opening Up Again

After seeing a peak and then a sustained decline in coronavirus cases, hospitalizations, and deaths resulting from COVID-19, the White House and the Centers for Disease Control and Prevention has rolled out a three-tier approach to get the nation back to its pre-coronavirus economic activities.

While this program is led by the Federal Government, it is ultimately up to governors how they will reopen states and localities. However, there are some universal criteria that states must follow to gradually reopen the economy.   

Before transitioning from the stay-at-home orders to the three phases, certain criteria must be met. In order to move to less restrictive phases, there must be a dropping trend of documented cases over 14 continuous days or a downward trajectory of positive tests as a percent of total tests over 14 continuous days, according to guidelines set out by the White House and the CDC. Once the initial gating criteria are met, the local government can move into phase one.

Phase One

This stage will permit establishments such as places of worship, movie theaters, restaurants, and sporting arenas to reopen if they abide by strict social distancing guidelines. Along with recommending stringent sanitation guidelines for permitted establishments to reopen, this phase also suggests telework for employees and minimizing nonessential travel.

Phase Two

Schools, daycare centers, and camps (and similar events) could resume, along with nonessential travel. Establishments permitted to reopen in phase one can remain open and are now permitted to relax their physical distancing to a moderate level. Bars can start reopening, with diminished standing-room occupancy, and gyms can stay open with strict distancing and sanitation protocols.   

Phase Three

This phase would come into force when the state and/or locality has no evidence of a relapse. Worksites would see normal staff protocols without restrictions. Large establishments will be able to function under limited social distancing protocols; gyms will operate with standard sanitation protocols; and bars would be able to run with increased standing room occupancy.

As states across the country are reopening, there are many preparations that businesses can implement to stay compliant with government mandates, including re-integrating their workforce and encouraging customers to return to establishments.

Sanitation

Along with social distancing, maintaining sanitation is equally important. Encouraging workers to wash their hands at every available opportunity, including upon arriving at work; before and after eating; after touching doors, desks, keyboards, and other materials; using the restrooms, etc.

Cleaning

Whether it’s an office environment or a retail/restaurant establishment, cleaning surfaces at least once a day is recommended, but more often for surfaces that are touched or used during the course of business. Examples of items to sanitize regularly throughout the day include handles, tables, elevator buttons, sinks, registers, and point of sale terminals.    

Signage

Reminding employees and visitors to go home if they have symptoms or have been exposed to the coronavirus through signage is recommended. A protocol to contact the front office based on these circumstances should be implemented.

Encouraging Telework

Identifying tasks suitable for telecommuting versus in-office is helpful for task completion, as well as promoting social distancing. Look at the perspective of work from two buckets – solitary or collaborative – and telecommuting and office time can be split accordingly. If an employee is tasked with writing reports, performing research, or calling experts, he or she could easily work from home. While collaborative work can be done remotely, it is better to be done at the office.

Other Considerations

Along with face masks, there are other ways to reduce the potential for coronavirus transmission. Offices and other establishments can have fewer seats in common rooms, using tape to mark 6 feet or more of distance. When it comes to hallways, one way to stop face-to-face exposure is to have one-way corridors. While it might create longer days, staggering shifts to reduce the number of people in the office and rearranging breaks would also reduce unnecessary employee-to-employee interactions.

Ditching cash as an accepted form of payment is another way to reduce the likelihood of coming into contact with the coronavirus on currency, along with encouraging social distancing since cash doesn’t need to be exchanged. Using online/digital payments or credit cards only is one way to accomplish this. Using designated entrances for workers (or customers), coupled with designated entrances and exits can help reduce opposing traffic and people meeting face-to-face.  

While research continues to create a vaccine and render the coronavirus harmless, until that happens, businesses have many tools to reopen their businesses for the foreseeable future.

Sources

https://www.whitehouse.gov/openingamerica/

Understanding the High-Low Method

Cost Accounting High-Low MethodWhen it comes to cost accounting, the high-low method is an approach that’s used to break mixed costs into either a variable or fixed cost. Although it’s straightforward, it’s important to do multiple analyses because outlier costs from the available data can sometimes misconstrue operating costs. This calculation occurs by looking at the periods with the most and least activity, as well as the total costs for both the high and low periods.

In order to get results for the high-low method, the variable cost and the fixed cost must be determined first. Once these are established, they are entered into the cost model formula.

Variable Cost is determined as follows:

VC = Highest Activity Cost – Lowest Activity Cost / Highest Activity Units – Lowest Activity Units

The next step is to calculate the Fixed Cost as follows:

FC = Highest Activity Cost – (VC x Highest Activity Units)

Now that the fixed and variable costs are known, the high-low cost can be determined:

High-Low Cost Model = Fixed Cost + (Variable Cost x Unit Activity)

Understanding it Through a Real-World Example

Looking at a furniture manufacturer, it’s good to focus on one product to see how the high-low method works:

The first step is to list production that includes each month, the product produced (let’s say it’s tables), and how much it cost to produce all tables each month. The list could be as follows:

Months Units Produced Total Cost ($)
January 153 6,650
February 106 5,653
March 120 6,185
April 126 6,120
May 100 4,888
June 133 6,650
July 113 5,852
August 93 4,988
September 153 6,783
October 166 7,382
November 146 6,783
December 160 7,581

The greatest output or activity for the furniture store happened in October when it produced the highest number of tables: 166 at a cost of $7,382. In August, the furniture store produced the fewest number of tables at 93, manufactured at a cost of $4,988.

Even though the cost may not be the greatest for the peak and valley of production, the corresponding costs for those respective figures is what will be used.

Now that we’ve identified the relevant data, the first task is to determine the variable cost.

VC = Total Cost of High Activity – Total Cost of Low Activity / Highest Activity Unit – Lowest Activity Unit

VC = $7,382 – $4,988 / 166 – 93  

VC = $2,394 / 73 = $32.80 per table

Then fixed costs must be calculated:

Total Cost = (VC x Units Produced) + Total Fixed Cost

$7,382 = ($32.80 x 166) + TFC

$7,382 = $5,444.80 + TFC

TFC = $7,382 – $5,444.80 = $1,937.20

It’s important to remember that variable costs are per unit.

Now that we have the total fixed cost, we can then create the total cost equation:

Total Cost = Total Fixed Cost + (VC x Units Produced)

Total Cost = $1,937.20 + ($32.80 x 166) = $7,382

This demonstrates the comprehensive costs for the tables made by the furniture store.

Further Considerations

The high-low method is a quick way to analyze costs. Since it only necessitates the peak and lulls of production data and costs, it can be done more often, along with helping companies plan with limited data to estimate future unit costs.

It’s important to run multiple types of cost analysis because high and low measurements might not give a full picture of costs. Although these two data points may not be the best overall picture of costs a business experiences at those volume levels, it can be an effective measurement until more data becomes available.