The basics of Contingency Planning – how to handle emergencies like a pro.

Whenever one talks of emergencies these days, the first thing that comes to mind is the way businesses were thrown into completely uncertain times during the COVID-19 pandemic. It’s been over a 100 years that the world has seen such a massive impact on every walk of life on a global scale. 

While lives were being fought for on ventilators, governments across the world breathed in oxygen into business through loans, subsidies and write-offs. MSMEs were the worst hit during the crisis, with several of them forced to shut shop, unable to bear the magnitude of loss, even with financial support.

One point that most experts agree with, is that if the pandemic has taught MSMEs anything, it is the importance of contingency planning. For this, we first need to understand what a contingency is and the purpose of such planning. 

The meaning and aim of contingency planning

Contingency is nothing but the preparation for an event that is predicted, but may or may not happen. The idea that has to be underlined here is preparation. Even though one can truly say with complete certainty that an event will occur and cause a particular set of problems, it is always wise to prepare a course of action that considers each challenge that may arise and devise solutions and alternatives to solve the crisis. This includes all aspects of a business - financial, operational and the most important aspect - talent or labour management. 

Let’s understand this in terms of the COVID-19 crisis. An MSME that is aware of contingency planning would have charted out the response of the business to the pandemic, not at the first or second wave, but at the time when news broke out in October 2019, that there is a possible threat of an illness that had already turned an epidemic in China and could affect a few countries in the near future. 

Considering the crucial role played by China in the global supply chain, the MSME would have already anticipated an impact on raw materials and other inputs and foreseen delays in order fulfilment. To circumvent the problem, the company would have begun the search for local suppliers. As the crisis spread to India and the government announced plans for a lockdown, the MSME would have known that the time was right to quickly upskill its workers in remote working, wherever possible. 

The ultimate aim of contingency planning, therefore, is to ensure the continuity of business functioning, especially at the time of crisis. While it may not be possible to completely eliminate negative impacts, with the right procedure in place, you can certainly reduce the harshness of the event on your operations and build resiliency in your company, as we saw in our previous blog, where we explored how digitisation is the main solution that helps an organisation face uncertain times. 

The COVID-19 pandemic is only an example. Businesses can routinely be subjected to several types of contingencies - natural disasters, labour unrest, unstable governments, frequent power cuts, logistical problems, accidents and so on.

The building blocks of contingency planning 

In a large corporation, the contingency team generally has senior representatives from leadership, operations, finance and HR. In a small company, these roles may be played by the MSME owner himself or herself. What’s important to understand here, however, is that human relationships play an extremely critical part in the way an organisation responds to a crisis. 

Let’s look closely at each of the three basic elements of a strong contingency plan:

1. Understanding what your employees want - Before you address your customers, it is crucial to look at your internal customers, i.e., your employees. Without their support and loyalty, there is little you can do to keep the ball rolling. Before you implement any strategy, it is important to understand what your employees feel and what they want.

For instance, say you are rebuilding your operations after a devastating earthquake. What your employees would expect is some financial support to address their family needs, probably even temporary shelters. If you meet these requirements, they will extend their loyalty to you. Taking care of your employees’ health and safety is the most fundamental thing you can do to build resilience - you will be able to overcome any challenge with a dedicated workforce that will stick with you through the tough times. 

2. Creating the right perception - Every event automatically gets people talking about how the company is going to handle that particular event or crisis. It is here that you have to be conscious and careful about what you communicate. The first task is to be transparent and clear with your stakeholders - you have to acknowledge the problem at hand, ask for their feedback about their concerns and then tell what your strategy is to address the issue.

In uncertain times, it is only human to look for reassurance. If you don’t address this most fundamental need, you will add to the already existing uncertainty and increase fear in the work environment - workers may quit if they don’t have a sense of security with your organisation, and customers will leave to those companies that promise solutions to overcome the crisis. 

3. Addressing business needs - Once you’ve taken care of the human aspect of the contingency plan, it is time to tackle the issue of business continuity, i.e., taking the steps to ensure that a business can function as routinely as possible in times of disruption. This can include tapping into alternate finance sources, training workers, hiring specialists, finding alternate suppliers - among other strategies. You have to evaluate, every step of the way, how your company is performing under stress, and truthfully communicate your position to your customers, so you can do your best to retain them.

For instance, if your shipment is delayed, not only should you proactively inform this to your customer, rather than wait to have them ask you about the status, you can also devise some methods to offset the burden on them - waive shipping charges, or some such arrangement that is keeping them satisfied, but not draining you even more in the process. 

The above three elements are overlapping, with feedback being the key factor that connects all of them. In any hour of crisis, it is critical to have your nose on the ground to handle concerns before they blow out of proportion, or add new confusions with miscommunication. This is also where technology comes in - a good Human Resources Management software will enable you to communicate effectively and collect feedback without delays. It can also keep things anonymous to protect your employees. 

Once you have laid the foundation with the above building blocks, it is time to craft the strategy of the contingency plan. Now, depending on the organisation and the industry, the plan for business continuity may take different forms. However, here are the key factors that any effective business plan will cover:

4. Building agility

From an HR perspective, while crafting a contingency plan, being agile simply means handing over the right tools to the right person so that the challenging times can be handled effectively. 

This could mean, for example, ensuring worker safety, deciding an emergency contact list, clearly defining roles that are critical to drive the business and assigning people to take charge, and the right teams to assist them. Without technology, these seemingly straightforward decisions can get exhausting to keep up with - in difficult times, it is easy to forget what was communicated to whom.

5. Modelling succession

As we’ve seen above, talent is the main weapon with which you fight business uncertainty. Even if you are an MSME, you can apply the same succession modelling principles that big HR companies use to redesign your teams, so that you can send the most able people in your company to handle the tasks that are of pressing importance and assign the less priority tasks to those with lesser experience. 

Times may be tough but as a business, you also need to keep an eye on the amount of strain your bottomline can take. Keeping costs low requires insights into how much you are spending and the effect that any changes you make in the organisation will have on other priorities such as payroll. This is where predictive analytics, with inbuilt models that can show you alternative scenarios of an evolving situation and how it affects your business, is of enormous help.

6. Training workers

The next point underscores an important aspect of contingency planning - when to plan. 

Often, MSMEs don’t realise the importance of planning for a crisis, even when there is no threat to the business environment. In fact, planning at the time of crisis may be a little too late, as you may not have the financial and technical bandwidth to train, retrain or upskill your employees on time. 

This is where technology is of assistance - you should make it standard practice in your organisation for workers to continuously upgrade their skills, achievable through a custom-made Learning Management System to suit your needs. With the onset of digitisation, you may have to retrain your staff to handle the same role in a different manner - a similar issue can crop up when you change or improve the level of technology in your business. At no point, however, should you lose sight of your business objectives.

7. Realigning new targets and reconnecting to communicate them

Just as roles change in an emergency situation, so do tasks and priorities. This can leave employees confused about how to approach their work. They may also have concerns of access, which can put a strain on your production line in the case of manufacturing companies, or the level of output to the client in terms of service companies. 

You can make the entire process easier by developing digital toolkits to help employees understand their changing work environments and find the right channel to address their concerns, without hassling you for every problem. The quicker and easier you make it for teams to talk to each other, the lesser will be your delays and errors. 

The success of your contingency plan therefore, depends on how well you balance three aspects - what your employees want, what your customers need and what your business objectives are. Without technology to provide you the necessary insights and support to power through harsh times, it seems near impossible to see light at the end of the tunnel.

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