Window of opportunity

FIRMS still standing must be thinking that the worst is over, after having seen the coronavirus pandemic sweep away many businesses in the past year. Renee McGowan, the new Asian head of leading consulting firm Mercer, says their troubles have only just begun.

It's understandable if the businesses are feeling relieved. They have survived not only a once-in-a-lifetime crisis that, according to experts, is dealing a more devastating blow on the global economy than the Great Depression of 1929, but also one that's upending how business is done and managed. Even the raison d'etre for going into business is called into question.

"Businesses had to find new ways of operating and surviving in minutes, not months," says the Hong Kong-based Ms McGowan in a Zoom interview. "Employees have had to grapple with drastic change and social void as they juggle home and worklife demands."

Business leadership is never more tested or needed, she adds, as chief executives, senior managers and department heads navigate the pandemic, shifting gears quickly to keep staff and clients safe, and to sustain their business.

A different kind of leadership

Appointed as Mercer's CEO Asia in late-2018, Ms McGowan - a business leader who has steered through several financial downturns - relocated from New York to Hong Kong last year for her role, arriving just before the anti-government protests hit the streets. She says: "Even the most seasoned among us struggled. The old playbook of command, control, predicting and managing to drive growth and market share has to take a backseat, as the new age of uncertainty calls for a different kind of leadership - one that balances economics with empathy and one that demands vulnerability and the courage to say 'I don't have all the answers'."

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At Mercer, where she has worked for 18 years, Ms McGowan's immediate concern was for the health and safety of her staff across 11 locations in the region, as Covid-19 started to spread in end-March. "Weighing on my mind was also the lives of our clients and their millions of employees in Asia," she recalls.

Yet, challenging as it was in the initial months of the outbreak, Ms McGowan - who had expected the pandemic to be confined to Asia and short-lived, lasting perhaps till the middle of the year - sees even tougher months (if not years) to come.

Businesses in those early days were focused on responding to Covid-19, which Mercer calls the "respond" phase. Depending on how hard hit the industry or sector is, most of the survivors in this first phase, Ms McGowan reckons, are now in the second "return" phase; some have progressed to the final "reinvent" phase.

"In some parts of the world, like in Europe, they may be back in the 'respond' phase," she says. "The progression isn't linear, given how unpredictable circumstances are."

In the "return" phase, businesses would be looking for ways to get back to the new normal and where to focus their efforts to bring employees back "safely, effectively and energetically". The "reinvent" phase is when businesses "must define themselves through more sustainable practices and new ways of working".

Businesses were essentially in crisis management mode in the "respond" phase, says Ms McGowan, who is no stranger to dealing with disasters, having been involved in supporting relief efforts in Indonesia during the 2004 tsunami.

"It's easy to stay in crisis management mode," she continues. "It's very authoritarian. It's quick decision-making and you can get into a comfortable rhythm when things start to run smoothly."

But it's harder "in the reinvent phase when businesses must see beyond uncertainties to determine what they need to do in order to thrive, and how to invest (to achieve it)".

Ms McGowan believes there's plenty of work to do and details to sort out here: installing new policies and practices to protect workers; assessing performance and making sure people in the firm are focusing on the right things; designing a flexible working space; re-examining core business models; transforming the organisation, which she says would be the most challenging.

"The window to master your own destiny is small," she says, adding that if businesses don't seize the opportunity fast enough, their competitors will. "You need a growth mindset, agility and adaptability wherever your business may be along the performance curve."

Asia in recovery mode

The window of opportunity is already opening for businesses in Asia, which is way ahead on the recovery path.

The coronavirus was first detected in the region and because this is where it all started, it's the first to take the necessary actions to tame the spread of the virus. And more important, Asia is firmer and more disciplined than others in sticking to the painful and restrictive measures rolled out to fight Covid-19.

"So if you have nations that are quick and cautious and everybody tries to do the right thing, then I think they're successful at containing it," Ms McGowan says. "Certainly it's a different story in Europe and the US. They're looking at a second wave."

Yet it begs the question: How far can Asia go it alone - how big the market is there for Asian businesses that succeed in reinventing themselves to tap when the rest of the world, especially the rich markets of Europe and America, are still left behind?

Even in Asia, places like Hong Kong, South Korea and Japan, which have made much progress to stabilise the situation, are seeing a resurgence in the number of Covid-19 cases recently.

"Yes, global uncertainties will curtail the extent and pace of economic recovery in Asia," concedes Ms McGowan who oversees Mercer's business in Japan, China, Hong Kong, Taiwan and the Asean countries. But she adds: "That said, Asia is extremely diverse and the impact of Covid-19 on economies as we've seen has been uneven. We've seen a relatively optimistic bounce-back in China and Korea. In these markets as well as Taiwan, Japan, Singapore and Hong Kong where the virus is 'under control', we see businesses positioning themselves for the recovery."

Economic interdependence

The interdependence of many economies in the region - an inter-dependence that will be further intensified by changing globalisation patterns - also offers plenty of business opportunities. What's more, Ms McGowan indicates, Asia is on track to account for over half of the world's gross domestic product in purchasing power parity terms by 2040. Already 60 per cent of Asia's trade is inter-Asian.

"There's no doubt economies that are more dependent on external demand will take longer to recover, but there's no reason for companies to wait to make themselves more resilient, more adaptable and agile and more ready for what's to come," she argues.

There's no question that the world will eventually get back on its feet, but when? When a vaccine is found and a programme is put in place to distribute it globally, which could happen sooner, in her view.

A vaccine offers the best solution, because Covid-19 can then be treated like the common flu - and there will be a faster recovery. "It will take a lot of time to roll it out and there will still be disruption while that's happening, but the world will be able to rebound and grow by 2022," predicts Ms McGowan who is optimistic that the recovery will be "better and stronger".

If there's no vaccine, then the world will have to find a way to live with the virus and businesses will take longer to bounce back, she says. They would have to figure out how to keep supply chain operations safe and provide for contingencies. Governments would have to strike more travel bubble deals to revive tourism and boost trade.

Ms McGowan thinks these can be done. "We've continued to learn better ways to manage it (the pandemic)," she says. "Cases are going up enormously, but the strain on the healthcare system right now isn't as much as it was in March."

Vaccine or no, and regardless of their efficacy, Ms McGowan believes the world before Covid-19 is lost forever, with no return for businesses to the world they once knew.

That world, in fact, was already changing prior to the arrival of the virus and the pandemic has only speeded up and reinforced the pivots. One of the changes already happening is that more and more companies are leaning towards protecting and advancing the interests of all their stakeholders - employees, customers, community - and not just their shareholders.

Ms McGowan recalls that the movement started in 2019, when 184 chief executives of major US corporations in the Business Roundtable redefined a company's purpose to be one that promotes an economy which serves all Americans. A year later, "stakeholder capitalism" was elevated to a global goal at the World Economic Forum in Davos.

"(So) companies were already beginning to embrace purpose on a broader scale, recognising that the most profitable companies are not the most profit-focused," she says. "The notion of profit and purpose being called for a company could be a very powerful shift going forward."

What the social and economic challenges posed by Covid-19 crisis have done is to highlight how the private sector can play a key role in supporting communities, particularly the underprivileged and vulnerable groups, Ms McGowan says. "It's taught companies crucial ESG (environmental, social and governance) lessons and the importance of stakeholder capitalism. I believe it'll drive a new wave of ESG awareness and adoption, and see companies build back better with more inclusive and responsible practices."

The pandemic has also confirmed that flexible working and working remotely works. In the Asia-Pacific region, she estimates, more than half of the employers here expect more than 25 per cent of their workforce to continue working from home - a big shift from the pre-Covid-19 days when under 25 per cent had 25 per cent of their workers working remotely.

"This new way of working requires companies to rethink their people strategies and processes - for example how productivity is measured and how office space is used going forward," Ms McGowan says. "It also means they can expand their talent base beyond traditional sources, which may involve a reset of their global mobility strategies as well as related compensation and benefit policies."

According to her, some corporates are still focused on returning to business as usual as quickly as possible, while others are seizing the opportunities thrown up by the massive changes and new realities that the coronavirus helped usher in. "They are rethinking their strategy and business models to make sure that they're delivering what customers need in the way that they're going to need in this so-called new normal. I believe strongly that what companies do in the next 12 months will define them for decades to come."

Simpler and agile structure

Mercer has already identified some key imperatives they should follow - and Ms McGowan has seen some businesses already executing them. One critical task is to transform the organisation and work design of businesses. "They'll need simpler and agile structure for quicker response time," she says. This may mean introducing more flexibility into business models and building up data on people's skills so that talent can be deployed faster and flexibly.

Another imperative is to embrace technology for business transformation, which will entail practising reskilling and upskilling to enable workers to catch up with new technology.

"Traditionally, companies invested in technology or digitalisation as a way to change business models, but all that have been done in addition to running the business," Ms McGowan points out. "All these (investing in technology and digitalisation) they did on the side. The primary focus has always been on running the business. Now they (technology and digitalisation) are at the forefront."

In urging businesses to put in place a more centric leadership culture - the third imperative - she believes that leadership styles should shift to be in tune with the empowering of local leaders and improved communication.

And not least is the need to cultivate health and well-being at the workplace. "Mental health has been called the hidden crisis of the pandemic," Ms McGowan says. "There's growing recognition that well-being extends beyond the physical to include social, financial and mental."

RENEE MCGOWAN

Asia CEO, Mercer

Born in Melbourne, Australia

Bachelor of Arts and Commerce, Monash University, Australia

Career highlights

Prior to Mercer:

Stints with Colonial Bank (Melbourne), NMG Consulting (Singapore), and Willis Towers Watson (London)

Previous roles in Mercer (since 2002):

Global Head of Individual Wealth (New York); CXO and CMO (Pacific); Head of Product Development (Pacific); Global Client Manager (London)

Since Oct 2018:

Asia CEO, Mercer

Other highlights

Recognised as an Employee Benefits Top Women in Benefit Advising (US);

Top 10 CMOs in Australia for two years in a row;

Mentor of entrepreneurs in developing nations as part of the Cherie Blaire Foundation's Mentoring Women in Business Programme;

Awarded a Humanitarian Overseas Service Medal by Australian government for delivering humanitarian services overseas