“The Hope Pandemic” series addresses the changing business climate and how we can go digital and shape a new world of sustainability, kindness and community.
We all know that the American economy works well because of high consumer spending. The correlation is tight – whenever consumer spending drops, the economy slumps.
So as the Covid-19 pandemic prompts governments to introduce stimulus packages, they need to plan their spending wisely, focusing especially on the specific problem of mitigating job loss – because job losses leads to drop in consumer spending.
It’s a simple equation, and governments need to unlock this very specific gnarl. Don’t throw just give people ‘cash payments’ to support them because they’ll sit on them as protection against anticipated job loss to weather the recession.
Look at how it affects the SME. The problem of cash flow is a serious one that can shutter a business in no time. The first thing a business will do to stay afloat is that they do let people go. This sets off a vicious cycle: as more and more people lose jobs and reduce their own spending, more jobs are lost.
The idea is to nip this in the bud early! One recommendation that has gained some traction in discussion circles is for stimulus packages to include long term government-backed, low interest loans to cover payroll. Only payroll.
By sustaining payroll we enable people to continue working and providing for their families, and to continue spending on rent, food, school etc.
This is why we must, at all cost, focus on keeping businesses running.
As we enter a period of uncertain
economic activity we should refrain from knee-jerk decisions.
A few friends have been made redundant and they are in a state of shell shock.
Rather than all out termination, companies should consider furloughs. This is where staffer is given unpaid leave for a specific period after which he or she may be called back, or terminated permanently.
Furloughing may be a kinder way to reduce cost because it leaves a window open: those furloughed are allowed, and even encouraged during the hiatus to find part time work or full employment elsewhere.
At the same time it gives employers wider berth to assess the situation and, if things get better, to rapidly restore the status quo ante.
Those of us in marketing know that when times are tough the marketing budget is always the first to go. What’s different about this epic downturn is that it crosses all sectors and occupations – except frontline healthcare, which is understaffed and overwhelmed.
Ideally entities should try to ride the wave. Or shift staff to other positions (even at reduced pay) or imagine this… give staff an option to join the company’s relief efforts for the community.
Now, that’s the kind of brand building no marketing can ever buy.