Millman, Cindy

Birmingham City University Open Access Repository

Business Continuity Strategies in the Post COVID Era

BCU Open Access

Business Continuity Strategies in the Post-Covid EraPresented by:Dr Emmanuel Aboagye-Nimo (Senior Lecturer, NTU)Dr Samuel Osei-Nimo (Senior Lecturer, BCU)Dr Cindy Millman (Assoc. Professor, BCU)Overview• Why do we need Business Continuity Strategies?• What is Business Resilience and why is it important now?• What is the impact on small construction firms?Key focus of presentation• Business resilience - how SMEs in the construction sector are surviving in the UK in the pandemic and support offered to the business leaders in these small firms in the construction sector.• Problem: One in 10 firms say there is a risk they will go bust because of coronavirus crisis as 40 per cent warn they have less than six months worth of cash reserves left (Office for National Statistics)Definitions• The usual definition of small and medium sized enterprises (SMEs) is any business with fewer than 250 employees. There were 5.9 million SMEs in the UK in 2019, which was over 99% of all businesses. • Micro-businesses have 0-9 employees. There were 5.6 million microbusinesses in the UK in 2019, accounting for 96% of all businesses.Business size Number of employeesMicro business Less than 10Small business Between 11 and 50Medium business Between 51 and 250Large business Between 251 and 1,000Enterprise More than 1,000Business strategies for entrepreneurialsmall firmsExisting models of strategic planning and suggests that they cannot adequately cope with environmental uncertainty (Anderson and Atkins, 2001)Definition of strategy:• A strategy is the pattern or plan that integrates an organization’s major goals, policies and action sequences into a cohesive whole (Quinn, 1980)However,• Mintzberg (1987) argues that Strategy is broader than ‘Planning’Planning = actions level (easier to articulate)Strategy = ideas level (transcends formal written planning documents)Approaches to strategy formation in small firms• Small firms go through stages – inception, survival, growth, expansion, and maturity• Some reach maturity without ever going through growth or expansion• Most small firms pursue survival strategies (Carland et al. 1984), and survival predominately depends upon a loyal customer base (Reider, 2008)• Most small and micro construction firms operate under informal business strategies (Aboagye-Nimo and Raiden, 2019)Crisis Management Strategies for SMEsCrisis Planning, Diagnosis, and Response • Small firms with proper crisis planning survive and recover better from crises events (Munoz et al., 2019)Suggestions:• SMEs need to adopt a comprehensive crisis warning system (Kurschus et al., 2015)• Leadership and HR strategies (Tannenbaum& Schmidt, 1957; Dent et al., 2018; Cheng, 2018)Business Continuity Strategies• Business continuity management is a formal process through which organizations establish specific structures, roles, processes and resources in order to anticipate and respond to acute operational interruptions (Herbane, 2013).• Resilience is an adaptive process and capacity of an organisation to address major acute and strategic challenges through responsiveness and reinvention to achieve organizational renewal.• Business survival and continuity and the continued presence of crises are inseparable in a contemporary view of resilience in an entrepreneurial setting.Business Continuity Strategy• Many studies that have been conducted on business continuity strategy among large manufacturing-based companies (Kepenach, 2007) and developed regions (Herbane, 2013).• Limited studies examining micro-enterprise in the less developed countriesMost studies on crisis management processes are focused on:• managing the impact of epidemic disease outbreak (e.g. Ritchie, 2003),• natural disaster (e.g. Flynn, 2007, Bresciani, et al, 2002; Fabeil, et al, 2019)• economic and financial crisis (Devece, Ortiz & Armengot, 2016)• inadvertent disaster and terrorisms (Cook, 2015) Resilience, Dynamic Learning and Strategic Renewal for SMEsResilience strategies require:• possessing a leadership mindset• adopting multiple crisis management practices• maintaining a good relationship and robust network• identifying threats and opportunities• taking actions promptly and flexibly(Simón-Moya et al. 2016; Irvine & Anderson, 2006)Different facets of resilience development (Madni and Jackson 2009)Policy changes in the UK during covid-19 pandemicIn the short-term - rapid responses to ensure SMEs can continue operating, to ease liquidity constraints and ensure continuity of employment (OECD, 2020). Public policy attention in UK - centred on mitigating the immediate effects of the Covid-19 crisis on SMEs. UK government policy measures enacted to date:• Furlough sick pay scheme (Short-term)• Covid-19 Business Interruption Loans scheme (short-term)• Coronavirus Job Retention Scheme (short-term)• UK’s Future Fund with budget of £250m for start-ups (long-term)Most firms favour financial programmes and tax waiversRicher nations spend more on recoveryImpact of Covid-19 on the construction sector• In the UK it has been shown that SMEs located in rural and remote parts of the UK face greater challenges accessing bank finance (Lee and Brown, 2017). • Delays • Reduced productivity• Budget overruns• Health risks• Low moraleGlobal impact of a pandemic• Coronavirus ‘a devastating blow for world economy’ – BBC • Covid-19 pandemic has cost the world's economy $3.8TRILLION 'and made 147 million people unemployed', study claims – University of Sydney• Coronavirus pandemic has delivered the fastest, deepest economic shock in history – The Guardian • COVID-19 to Plunge Global Economy into Worst Recession since World War II – The World BankExisting research:• suggests that formal strategic planning in SMEs results in improved performance • associates formal resilience-enhancing activities such as Business Continuity Planning with an improved ability for SMEs to respond and recover from acute crises• found that factors such as firm location, external crisis events, entrepreneurs’ personal networks, and their attitudes towards the formal prevention of a crisis, impact upon the resilience of organizations and their potential to prosper following a crisis.UK construction industry -Context• The UK construction industry is constantly berated for its underperformance (Fernie, Leiringer, & Thorpe, 2006). • Succession of government-backed reports have variously criticized the sector for its high costs, slow delivery, unsafe working practices and failure to innovate (e.g. Latham, 1994; Egan, 1998; Wolstenholme, 2009; Lord Young of Graffham, 2010).• Construction industry is a litmus test for UK economyTypologyBusiness size Number of employeesMicro business Less than 10Small business Between 11 and 50Medium business Between 51 and 250Large business Between 251 and 1,000Enterprise More than 1,000Professional Skilled tradesArchitects, Quantity Surveyors, Project managers, Civil engineers etcBricklayers, masons, carpenters, general labourers, etcReputation of the small builderNational HeadlinesConventional strategies in businessAmbitions of small construction businesses• Expansion into new territory• Global ambitions• Joint ventures• Organisational takeover• etcBusiness strategies for small construction firms• Approaching potential workers or recruits directly • Acting on recommendations• Enquiries by existing employees• Informal negotiations• Word of mouthSynergy in the supply chain“ We have had to keep 38 sites open during covid”“ We are only keeping the good ones”“If you were not with us during the crisis, we can’t let you back in”“You have no idea how helpful they have been”“The jobs can’t stop… I’d rather work”Solutions• Reinventing organisations• Reconnecting with previous supply chain• Adapting their services• Forming long term alliances• Pragmatic overlapping of project dates• Good customer service• Direct delivery• Adaptation• Temporary closure is not an optionComplete Reference list available upon request• Carland, J. W., Hoy, F., Boulton, W. R., & Carland, J. A. C. (1984) Differentiating entrepreneurs from small business owners: A conceptualization. Academy of Management Review. 9, 354-359.• Dent, P., Woo, R. & Cudworth, P. (2018) Crisis management for the resilient enterprise. Deloitte Insights.• Herbane, B. (2018): Rethinking organizational resilience and strategic renewal in SMEs, Entrepreneurship & Regional Development, Entrepreneurship & Regional Development: An International Journal. 1- 21. • Herbane, B. (2013) Exploring crisis management in UK small and medium-sized enterprises. Journal of Contingencies and Crisis Management 21 (2), 82–95. • ITC (2020) COVID-19: The great lockdown and its impact on small business. Geneva, International Trade Centre.• Kurschus, R. J., Sarapovas, T., & Cvilikas, A. (2015). The criteria to identify company's crisis in the SME sector. Engineering Economics, 26(2), 152-158.• Lee, N., & Brown, R. (2017) Innovation, SMEs and the liability of distance: the demand and supply of bank funding in UK peripheral regions. Journal of Economic Geography. 17(1), 233-260.• Madni, A. M. & Jackson, S. (2009) Towards a conceptual framework for resilience engineering. IEEE Systems Journal. 3 (2), 181-191.• Muñoz, P., Kimmitt, J., Kibler, E., & Farny, S. (2019) Living on the slopes: entrepreneurial preparedness in a context under continuous threat. Entrepreneurship & Regional Development. 31(5-6), 413-434.• OECD (2020). Coronavirus (COVID-19): SME policy responses. Available at: <http://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/> • Reider, R. (2008) Effective operations and controls for the privately held business. New York, John Wiley & Sons.• Simón-Moya, V., Revuelto-Taboada, L., & Ribeiro-Soriano, D. (2016) Influence of economic crisis on new SME survival: reality or fiction? Entrepreneurship & Regional Development, 28(1-2), 157-176.• Tannenbaum, R. & Schmidt, W. H. (1957). How to choose a leadership pattern. Harvard Business Review. March–April, 95-101.

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Business Continuity Strategies in the Post COVID Era

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