Ideas Made to Matter
6 insights on managing through crisis from MIT Sloan Management Review
The way people work has changed in dramatic ways since the COVID-19 pandemic started. Managing, monitoring, and motivating employees from afar has also proven to be a challenge. These insights from MIT Sloan Management Review provide guidance for corporate leaders navigating the new world of work.
Enable employees to transition to remote work
In a matter of weeks this spring, the U.S workforce shifted from 15% of employees working at home sometimes to 49% of employees working at home all the time. Many companies expect to keep employees at home for the foreseeable future, and industries such as finance are shifting to a model where the majority of workers are remote.
MIT Sloan senior lecturer and his coauthors offer five principles for effectively managing a distributed workforce.
- Frequent and consistent communication makes employees feel less disconnected from their organization. Common techniques include daily updates from the CEO, weekly email surveys, and semi-weekly virtual town halls.
- Supporting physical and mental health reduces social isolation. Personal check-ins seem to be more effective than virtual social activities, according to the authors’ survey of human resources leaders.
- Ensure productivity and engagement through frequent (but short) meetings and structured forums for sharing best practices.
- Allow for work-life flexibility by letting employees adjust their schedules to address family responsibilities. Make it easier to take paid time off, too.
- Keep an eye on strategic priorities — especially initiatives such as remote learning, digital transformation, and efficiency improvement that are linked to working from home.
4 ways to ensure high performance with a remote workforce
While it’s too soon to tell whether the workforce dispersed by COVID-19 will return to the office, it’s clear that traditional metrics for evaluating employee performance aren’t suitable for digital workflows. The companies that best seize the opportunity to learn from the current situation, according to MIT Sloan research fellow Michael Schrage, will rethink performance management to better measure how people and teams work together remotely.
Here are four recommendations for those managing a remote workforce for the foreseeable future:
- Create a shared perspective about what “high performance” means. Help employees manage their expectations around which work processes are tied to desired outcomes such as increased productivity.
- In the absence of formal in-person meetings, be clear about whether feedback is meant to help workers develop new skills or is part of a performance assessment.
- Commit to transparency. Tell workers what data is being collected and used to measure their contributions now that leadership can no longer “manage by walking around.”
- Develop clear key performance indicators that are linked to the organization’s new performance management objectives.
Use peer networks to improve decision-making
A crisis impacts the way that groups come together to make decisions. Time is of the essence, there are multiple points of view to consider — and, during the COVID-19 pandemic, groups that would ordinarily convene in person have been forced to meet remotely.
MIT Sloan’s and conducted two experiments in statistical analysis to determine how organizational structures influence collective decision-making. In both cases, participants earned higher scores when they were able to interact with a network of peers than they did when working alone — and they earned the highest scores when they could choose their collaborators.
In a real-world setting, this means allowing teams to reconfigure as needed to bring in additional expertise. For example, Ford’s pivot to manufacturing face shields for health workers required the quick assembly of a new network of decision-makers: Software designers, supply chain logistics experts, government affairs experts, and communications managers, in addition to engineers. In other words, dynamic networks are better adapted to crisis response than static organizational hierarchies.
6 strategies to manage supply chain shortfalls
Shortages of ventilators and personal protective equipment hindered health care’s response to COVID-19 — and showed the challenges of managing a supply chain in a crisis. MIT professor Yossi Sheffi examined several past disruptive events and offered a choice of tactics for managing supply chain disruption for today’s business leaders.
- Focus supplies on high-priority customers and/or high-margin products.
- Increase prices as a way to steer resources toward those who can create the most value. (But don’t increase too much, or else customers will think you’re price gouging.)
- Provide uniform allocations to all customers, whether it’s a percentage of previous order volume or a set number of items.
- Manage demand by increasing prices for items that use scarce supplies but lowering the price of items that use plentiful resources — and heavily market the latter.
- Modify products to use less of a scarce resource. (Expect pushback if this decision, say, lowers your beverage’s alcohol content.)
- Prioritize the needs of vulnerable customers, especially if a small supply or minor operational change for you is a lifeline for them.
The choice of tactics will depend on the expected short- and long-term impact on both the company and its customers. Of course, a strong balance sheet enables a company to operate from a position of strength and align its decisions with existing strategic imperatives.
Don’t ignore technology gaps amid crisis response
Due in part to its success in South Korea, contact tracing has been touted as a viable way to move the economy and the health care system forward in the United States. However, contact tracing typically requires smartphones, and more than half of Americans over the age of 80 — the population most vulnerable to COVID-19 — don’t have a smartphone. (In contrast, more than 90% of Americans under 50 have one.)
Most digital businesses rely on the network effect to grow; when they get enough users, a product or service becomes attractive and valuable. MIT Sloan professor and Occidental College professor Lesley Chiou argue that enough users is not enough in this case — responses to COVID-19 must consider the needs of technology laggards so all users are able to adopt a contact-tracing solution.
Plans to scale the implementation of contact tracing shouldn’t rely just on Bluetooth to detect proximity to another smartphone or push alerts to notify someone that a recent contact has tested positive for COVID-19. Such plans are particularly negligent of residents of nursing homes, which face some of the highest COVID-19 mortality rates in the U.S. and house more than 2 million of the nation’s seniors. Only by considering the needs of Americans without smartphones — and deploying inexpensive cellular technology in nursing homes — will a contract-tracing program prove to be a true solution.
How a proactive board can provide guidance in a crisis
Since boards of directors are removed from day-to-day operations, they are well positioned to help companies develop strategic plans for the weeks and months ahead. MIT Sloan professorand coauthor Rutger von Post describes a two-phase process for how boards can guide businesses through a crisis.
The first phase is immediate: Boards must evaluate which segments of the company face the greatest risk — whether it’s a supply chain being cut off, an entire business unit closing, or an IT system falling to defend against a cyberattack. As this evaluation happens, the board should ask management for an action plan that focuses both on immediate survival and on the uncertainty ahead, with supplemental plans that look as far as two years ahead.
The second phase is a long, hard look at the company’s strategy. Is the company prepared for the changes to industry and employment after COVID-19? Getting to an answer means pressing management hard in four key areas:
- Business structure. A company in a strong position could acquire competitors or expand its business; a weakened company may need to consider a poison pill, divestment, or merger.
- Personnel. The company must prepare to support a workforce that’s increasingly remote and that may need additional skill development to work in digital economy.
- Operations. Considerations should include a more diverse supply chain, technology to improve productivity, and more options for delivery and transportation.
- Consumer behavior. Consumption moved online during stay-at-home orders. As restrictions evolve, companies must prepare online platforms and in-person stores for the new normal.