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A quick economic recovery is unlikely

As countries get ready to re-open their economies, history and current economic models suggest those looking for a quick rebound will be disappointed.

A man floolws the stock market with a phone and computer.
Economists are using models to try to determine what short- and long-term impacts the coronavirus pandemic will have on the global economy. (Unsplash / Jason Briscoe)

Predictions about the effects of the coronavirus pandemic on the world’s economy arrive almost daily. How can we make sense of them in the midst of this economic storm? After all, research shows that economic forecasts made during events such as SARS are often wildly inaccurate.

To calibrate current forecasts — such as the International Monetary Fund’s prediction of a 6.2 per cent decline in Gross Domestic Product for Canada — I’ve looked at the history of similar worldwide economic shocks, studied macroeconomics models and reviewed nearly 75 studies to better understand what might happen in a post-pandemic world.

The economic effects of 1918-20 flu

The influenza outbreak of 1918-20 killed at least 40 million people, or approximately two per cent of the world’s population. In Canada alone, at least 50,000 deaths were attributed to the flu, approaching the number of Canadian deaths in the First World War. Solid data about GDP did not exist for that era, so economic historians have to recreate economic measurements based on the data that was collected.

The most thorough study focuses on how the influenza pandemic 100 years ago affected Sweden. The Swedish study took advantage of the fact that the country kept very detailed data on causes of death, as well as having a history of accurate economic record-keeping dating back to the 1800s.

Sweden was a neutral country in the First World War, so unlike other Western nations, the war had limited impact on the country’s economy. The fatality rate from the flu in Sweden was comparable to most Western nations and its economy was similar to other developed countries.

The study of Sweden’s flu experience a century ago suggests there could be permanent negative long-term economic effects from the current pandemic. There was a decline in income from capital sources such as interest, dividends and rents of five per cent that lasted at least until 1929. This was a permanent decline not recovered once the flu pandemic passed.

Swedish poor never recovered

There was also an increase in absolute poverty for those Swedes at the bottom of the economic pyramid: enrolment in government-run “poorhouses” in higher flu-incidence regions jumped 11 per cent and did not decline over the next decade. There was some good news: while employment income was reduced during the crisis, it quickly rebounded to predicted normal levels.

A recent study attempts to measure the effects of the influenza on 1918-21 GDP. Harvard economist Robert Barro and his colleagues painstakingly put together a set of economic data that attempts to recreate what GDP in 42 countries would have been.

They have found that the flu was responsible for an additional six per cent decline in global GDP. The study concludes that the effects were reversed by 1921. This estimate of the flu’s historical GDP effects is strikingly similar to the IMF’s current prediction of six per cent reduction in GDP for Western economies as a result of the coronavirus pandemic.

Modelling economic effects of a pandemic

Beyond economic history, we can look at macroeconomic models of the global, regional or national economies that run scenarios about pandemic economic shocks.

One scenario by British economists and health science academics is particularly apt in light of COVID-19.

Their scenario models virus incidence and fatality rates close to the current best estimates and includes strong and early social distancing measures such as school closures and work-from-home arrangements that we see today in many countries fighting the pandemic.

Their model estimates a 21 per cent decline in U.K. GDP in the first full quarter of the pandemic, with a 4.45 per cent decline in GDP for first year. The model also suggests the time frame to economic recovery is about two years. The current IMF projection for the U.K. is a 6.5 per cent decline in annual GDP.

There is no doubt that COVID-19 is a major shock to the global economy. Across all the studies I reviewed, the conclusion of a significant decline in GDP in the order of 4.5 to six per cent with full recovery within two years seems to be well justified.

The economic history of the influenza pandemic 100 years ago suggests early easing of social distancing measures and the inability to develop an effective vaccine contributed to second and third flu waves. These waves might have greater effects on the modern service-based economy of Western nations than they did on the more agrarian economy of 100 years ago.

Economic history serves as a potential warning that the economy could get much worse if these measures are ignored.

It’s important to remember that GDP is a marker of a nation’s overall economic health. On an individual level, the effects may be more far-reaching and painful. There are financial and professional losses that may never be recovered.

The 1918-20 flu offers an important history lesson for the world’s current economic outlook: there may be significant declines in the returns to capital in the next decade, as well as relative increases in poverty for the neediest in our society.The Conversation

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Steven E. Salterio, Stephen JR Smith Chair of Accounting and Auditng, Professor of Business, Smith School of Business, Queen's University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Time to work on your company’s reset strategy

With the reopening of the economy on the horizon, companies must be ready to emerge from the crisis and seize their opportunities.

Reset button
Even though there is no solid timeline on reopening the economy, companies should plan ahead.

Some provinces and states have announced preliminary plans to ease restrictions and reopen their economies. While we may not all agree on when this should happen, at least from a business perspective it is good news. Regardless of when “reset” gets pressed in your organization, now is the time to determine what your next steps will look like. Don’t wait for permission before you start planning.

Politicians are using terms like “gradual”, “measured” and “safe” to describe their approach to removing coronavirus restrictions. Such language, we can anticipate, will have a number of operational implications. Conditions could include: 

  • Gatherings and groups larger than 30 (or pick a number) will remain prohibited, including crowds at sporting events, concerts and festivals.
  • Restaurants, salons and barbers may open to half of normal capacity, keeping in mind the above restriction on crowd sizes.
  • Stores will open, but with restrictions on the number of people permitted entry at one time.
  • Airlines, trains, buses and other transit may require passengers to wear masks (such restrictions already exist in some cases), while operating half-full or at partial capacity.

The sudden swell in activity may also lead to shortages as supply chains restart. Anticipate continued limits to masks and cleaning supplies, some food products and other materials. That retailers and others have done as well as they have managing inventories over the past two months without significant shortages is remarkable. It is a testament to preparation and crisis-management planning.

In the meantime, remember my colleague John Moore’s favourite line, that “cash is king”. Can you renegotiate your lease or find a less expensive or smaller footprint? Do you have inventory you can clear out? Consider a shoe retailer that has been deeply discounting its existing inventory by 50 per cent or more. This may result in some customers “buying ahead” and therefore not needing shoes later. The upside for the shoe retailer, however, is that it’s freeing up cash. Plus, people are buying shoes from this store now, rather than from another retailer later on.

All phasers on reset

With all that in mind, what might Reset Phase One look like for your organization? Think about what your processes will look like with a limited work crew. After all, you may not be able to afford to bring everyone back. Or the crowd-size restrictions noted above may limit your number of employees. If you are limited in the number of customers you can permit entry, can you speed processes up without significantly diminishing service, and thus optimize sales? I don’t think people will want to linger in the near term regardless, so they may appreciate the faster service.  

Consider the breadth of your offering as well. McDonald’s and Tim Hortons have shrunk their menus for takeout purposes during the pandemic (long overdue, people have heard me argue). What would your menu or service offering look like if you cut it in half? Look at your historical data showing what people buy most of and most often. Ask yourself, will we continue to have access to the materials and supplies necessary for that refined menu?

Retailers may also open by department, rather than the whole store. A home improvement store might start with the garden centre, patio furniture and outdoor building supplies. Other goods will remain available through a quickly improving online order and pickup system.

University semesters are essentially wrapped up at this point, with the spring/summer semester starting in May, and continuing a distance education model through the summer. Public schools, however, may consider bringing students back in alternating half-sized groups for the final month of classes. This would certainly be complicated. But it would give educators the opportunity to focus on some of their most important content for a short period, provide parents a break at home, and offer a huge morale boost for students getting to wrap up the year in person.

Some questions and thought starters as you map out Phase One of your comeback: 

  • Who will our first customers be? Will we focus on our historical “best” customers or members-only in certain operations? Or do we allow pent-up demand and marketing efforts to draw the general public?
  • Would a “welcome back” event be meaningful for people who have supported us in the past, and allow us to warm up through a soft opening?
  • Which employees will we call back first, given the customers or product line we want to focus on first?
  • Do we have inventory or access to the right supplies for that initial market?
  • Are our processes designed to support the Phase One opening?

Opportunity knocks

Individually, a crisis often provides opportunities to press “reset” in our careers as well. The pandemic may have emphasized the need to accelerate a plan we have had already, or highlighted a problem we didn’t know we had.

Challenges and needs have emerged in all operations, and organization may not have the expertise or resources to fill those needs. A friend and former teammate, John McDougall, used to say to me, ‘Give me your biggest problem!’  I often did, and he delivered, even when it was outside his role. Speak up and step up — there are some huge opportunities out there right now.

Crises create gaps and voids within organizations and the market as a whole. Those who fill those gaps will position themselves for growth and perhaps redefine that space. 

This article was first published by Smith Business Insight.

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Barry Cross is an assistant professor and Distinguished Faculty Fellow of Operations Strategy at Smith School of Business and bestselling author of Simple: Killing Complexity for a Lean and Agile Organization.

Helping local organizations navigate economic hardship

Smith School of Business partners with City of Kingston to support area businesses impacted by COVID-19.

Downtown Kingston
The Kingston Region Business Support Network is set to provide local organizations with assistance to navigate economic challenges posed by COVID-19.

Smith School of Business at Queen’s University is joining forces with the City of Kingston and Kingston Economic Development to provide student and faculty resources to help local businesses, not-for-profits, and social enterprises navigate and survive the impact of COVID-19.

“Our local businesses and not-for-profits are integral to the character of Kingston and the truth is they are struggling right now,” says Kingston Mayor Bryan Paterson. “They need every resource we can muster as a community, and so I’m very proud to see this program come together and so quickly. I believe this will serve as an incredible resource for our community.”

Under the banner of the Kingston Region Business Support Network, the effort offers free services, including student time and skills, and community classroom learning sessions with faculty on topics designed for local business needs.

“We are grateful to be a part of the Kingston community and are ready to help local organizations as they cope with the extraordinary impact of COVID-19,” says Brenda Brouwer, Dean, Smith School of Business. “These are our neighbours, friends, employers of our students, and the businesses, stores, and services we rely on day-to-day. We want to contribute what we can to help them through this difficult time.”

Tapping into Student Resources

Through a matching platform, interested businesses can tap into the time, expertise, and skills of Smith students, which can range from research, strategic planning, and digital development, to sales, marketing, design thinking, and applying for grants. Once registered, businesses are contacted by a student consultant to confirm specific needs and to match with appropriate resources.

Participating students come from across Smith’s programs, from undergraduate to professional masters and graduate level research programs, and bring a diverse range of skills and experience suited to assisting businesses small and large. Each student consultant is supported by a Smith faculty member.

Confronting COVID-19 Read more articles in this series

“Kingston is tremendously blessed to have the wealth of talent and expertise within our post-secondary institutions at Queen’s and St. Lawrence College,” says Donna Gillespie, Chief Executive Officer, Kingston Economic Development. “During these incredibly challenging business times, leveraging these assets and supporting our business community together is paramount to address immediate needs and how we, as a community can support and prepare businesses for the path to recovery.”

Community classrooms with experts

As part of Kingston Region Business Support Effort, Smith School of Business faculty and instructors will also host free webinars designed specifically for regional businesses to help tackle their day-to-day challenges.

The initial online Community Classroom Learning Sessions will take place on April 22 and April 29. Peter Gallant, Adjunct Assistant Professor of Strategy, Innovation, and Entrepreneurship will lead the first webinar entitled Cashflow During Coronavirus: Strategy and Tactics for Business Survival and Recovery in the Age of COVID-19. The second, entitled Anticipating the New Normal: Critical Changes to Plan Today will be led by Ken Wong, Associate Professor and Distinguished Professor of Marketing.

Registration for these sessions and information about future sessions can be found on the website. Planned topics will include negotiation with banks and creditors, and innovating and pivoting.

“The efforts being made by people and organizations across the Kingston region to respond to the challenges brought on by COVID-19 are inspiring,” says Patrick Deane, Queen’s Principal and Vice-Chancellor. “I am especially proud of our faculty, staff, and students who have been engaged on healthcare’s front lines, assisting local businesses, and contributing crucial research and development expertise to help our community through this difficult period.” 

Making the most of the summer

Queen’s online course offerings are proving to be very popular with students facing summers disrupted by COVID-19.

Photo of a person using a laptop.
Faculties at Queen's are seeing an increased demand for their popular online summer courses.

COVID-19 has abruptly changed summer plans for many students across Queen’s, as many employment and internship opportunities have been put on hold. To help students make the most of this unexpected gap, the university is ready to connect students with a host of popular online courses and programs around campus.

Arts and Science Online (ASO) has the largest enrolment out of the units offering online degree credit courses at Queen’s. It’s aiming to become even more accessible to students through measures like increasing enrolment caps for popular classes, extending the application deadline and start date for summer courses, and by expediting the application process for prospective students and visiting students from other universities, such as allowing them to submit unofficial transcripts to support their applications. To support the larger class sizes this summer, ASO will also be hiring an additional 40 graduate students as teaching assistants.

“From last year, there is already a 25 per cent increase in course enrolments in Arts and Science Online. We understand that many students suddenly need to find new plans for their summer, and we are working hard to make accommodations while maintaining the high level of education that we are known for. Whether students are looking to earn credits toward their degree or explore an interest, ASO has something for them,” says Bev King, Assistant Dean (Teaching and Learning), Faculty of Arts and Science.

Arts and Science Online has a long track record of offering innovative online education. Students in ASO can take courses in a wide variety of disciplines, including art history, drama, astronomy, computing, and psychology. Courses in ASO are taught by Queen’s faculty members who often teach in-person courses on similar topics. Their courses are open to Queen’s on-campus and distance students, and students from other higher-education institutions who apply.

Launching careers remotely

The Smith School of Business has also been making their programs more accessible for students facing a summer of physical distancing. Notably, they have adjusted their popular Graduate Diploma in Business (GDB) program so that it is now delivered remotely.

The GDB course is designed for recent graduates from any discipline and gives them a chance to build business skills that can help launch their careers. Credits earned in the program can also be transferred to a Smith MBA program, and completion of the program could qualify students for entry into other Master’s programs at Smith. Throughout the program, students also work with dedicated career coaches who provide mentorship and build important professional skills, such as communication, resiliency, and emotional intelligence.

“This is the seventh year for Smith’s Graduate Diploma in Business. In four intensive months over the summer, students gain a deeper confidence in all areas of business through ten masters level courses plus professional coaching, communications skills, training in high performance teams, career planning, and more so they stand out as a great job candidate,” said Jim Hamilton, Distinguished Faculty Fellow of Sales Management, and Director Graduate Diploma in Business at Smith. “We are excited this summer to deliver the program fully remotely using our teaching studio technology and virtual support. It will be a completely immersive and engaging experience that a student can do from anywhere.”

Health Sciences online

Like ASO, the online Bachelor of Health Sciences (BHSc) program is already seeing growing demand for its courses this summer. Compared to 2019, enrolments are already up 71 per cent. Queen’s undergraduates are driving most of this increase, but there are also many students from other institutions requesting to enroll.

To accommodate more students, the BHSc is adding more courses. Originally, the program planned to offer 18 courses, which was already an increase over the 15 offered in 2019. But now they will be adding 3 to 5 more courses on top of the 18. The preferences of students are being considered as the BHSc plans for this expansion. They have asked for feedback from students about which courses they are most interested in taking, and they have received over 100 responses so far.

“Seven years ago, the Faculty of Health Sciences made significant investments to develop state-of-the-art, fully online courses that would become the foundation of the Bachelor of Health Sciences program. The result is that we can now offer a diverse array of courses online, enabling us to respond to the student demand because of this COVID-19 pandemic. We are very pleased to be able to help the students out,” says Michael Adams, Director, Bachelor of Health Sciences.

The BHSc is designed for undergraduates who are interested in pursuing the health professions, and it offers online courses on a wide range of topics, including infectious diseases, pharmacology, physiology, and global health. This academic year, it launched an on-campus version of the program, which received over 4,000 applications for its first cohort.

Queen’s Faculty of Law

Having seen several years of steady growth for the Certificate in Law, the law school is continuing to see increases in enrolment in both individual courses and the Certificate program itself as the summer nears. Queen’s students represent about 60% of students in the program, but off-campus students, both undergraduates and lifelong learners, are a growing cohort for the program. Law 201, Introduction to Canadian Law, is a perennially popular course, but speciality courses such as Aboriginal Law and Intellectual Property are rapidly accruing interest and enrolments as May nears. 

“We have increased our caps for most courses, hiring more teaching assistants from our Juris Doctor and graduate students,” says Hugo Choquette, Academic Director of the Certificate in Law program. “We are continuing to invest in course renewals and improvements for the courses, and the quality of the courses are reflected in their growth both on- and off-campus. We’ve also extended our program enrolment deadline for Queen’s students by a week, to April 27, to accommodate this higher level interest.”

The Faculty’s online Graduate Diploma in Legal Services Management is also seeing growing interest among legal professionals with a series of courses to train legal professionals in business skills ranging from financial literacy to project management. One of its summer courses, LSM 840 – Working With Teams and Managing People – has proven especially relevant in the current context.

“The COVID-19 epidemic has, among other things, highlighted how important leadership and management skills are to weathering a crisis,” says Shai Dubey, Academic Director of the Graduate Diploma in Legal Services Management. “We’re reaching out to small and mid-sized law firms with a series of tools, created by the course developers, to help them with remote team management and mentoring, and seeing a strong positive response and interest in this course, as well as the other courses in the program.”

Exploring online programs

For more information about Arts and Science Online, visit the ASO website.  Learn more about the Graduate Diploma in Business on the program’s website, or find out about other programs that Smith delivers remotely on the school’s website. The website for the BHSc has information about both the online and on-campus versions of the program. 

If you are interested in summer online courses in other academic areas, see the website of the relevant faculty or school to learn more about their programs.

Setting up your virtual team for success

Expert advice for workplaces that have had remote work thrust upon them, without a chance to plan for it.

Woman working on comupter at home
More people are working from home during the COVID-19 pandemic, but it's not really a new trend. (Unsplash / Annie Spratt)

Remote work is the “new normal” as businesses navigate the coronavirus situation. But for some, such work isn’t that new. Over the last 10 years, remote work has grown by 91 per cent

More job seekers are looking for opportunities that provide flexibility and work-life balance. Some organizations favour remote work for its cost savings and because it lets them recruit from a wider talent pool. Virtual teams also allow businesses to bring together diverse disciplines, functions and cultures. That said, virtual teams aren’t without their hurdles. 

Smith Business Insight recently caught up with Shawna O’Grady, associate professor of organizational behaviour at Smith School of Business. O’Grady is an experienced team facilitator, formerly serving as director of team facilitation on Smith’s Executive MBA programs for 13 years. She also works with private- and public-sector clients on team building. With so many people now working remotely for the first time, she answers our questions about what virtual teams can expect, and how to make the transition.

What issues do organizations face as their people adjust to working together remotely?

In the best of times, virtual teams face several challenges. With the COVID-19 crisis, many organizations have had to move to remote work without having had the chance to plan its implementation. There’s often a lack of clarity around what people should be doing. The team needs to figure out a new set of norms around how to communicate. Leaders need to act quickly to ensure they connect everyone in the department through clear messaging. They need to help their teams understand the importance of re-aligning to ensure they are on the same page.   

Team members may also not have the right technological tools or skills. The current public-health crisis has many people suddenly working at home and needing to learn new technology in short time spans, with little training and without the traditional forms of support from teammates or colleagues. They may also be contending with the personal and social challenges of feeling isolated and distracted. As employees do their part to stop the spread of the coronavirus, they may also be dealing with the uniquely stressful challenge of having multiple people in the same household all working remotely. Leaders can help with understanding, compassion and empathy, recognizing not all employees face an easy time adjusting to remote working conditions. Providing links to resources available to assist may help employees remain committed to the team during difficult times.

What’s the No. 1 thing managers must do to ensure workplace efficiency?

In any crisis, it’s easy for people to become focused on what’s happening around them. To maintain efficiency, managers need to create a plan for what the department or team will focus on and how to deliver it. Next, they need to help each person understand what their role is in helping the team achieve its objectives. Each person should have a clear set of actions, such as “Maintain the Monday morning team meeting, except run it on Zoom,” or “Complete your one-on-ones bi-weekly by telephone.” Doing this is necessary to ensure employee commitment and results.  

How else should leaders adjust their approach?

Leadership plays a much greater role in this new working environment. Leaders who connect well, and connect often, will have the greatest success. It’s helpful for leaders to meet with employees using overlapping forms of technology. For example, it’s ideal to meet via video to allow for bonding and questions, and then follow up in writing by email to ensure the facts are communicated consistently to all employees.  

It’s also important for leaders to realize that there’s no “one size fits all” approach when it comes to how different employees will respond to their new virtual environment. Leaders who exhibit compassion, understanding and positivity will make their team’s adjustment to remote work much more likely to succeed. Recognizing those who are making progress with appreciation, and providing understanding to those who are struggling, will go far in keeping people united.   

What can individual team members do to stay motivated while working at home?

Employees may appear to lack motivation, when the real issue is that they aren’t clear what they are supposed to do. Or they aren’t trained properly, or they feel blocked because they are isolated and can’t get the answers they need to move forward. That’s why it’s very important for individual team members to “check in” frequently with their team leader and colleagues. If they have any questions or find themselves blocked on a project, they should immediately contact the person most likely to be able to help them. Evidence indicates that people are more reluctant to do this when they are working remotely.

Employees can also help themselves stay motivated and perform at a high level by making a plan and outlining priorities for each workday. They should also get some fresh air and exercise each day, keep the lines of communication—both formal and informal—open with teammates via videoconference, text and phone. Taking measures to limit distractions with a designated workspace or noise-cancelling headphones can also help.

What results can organizations expect in the move to a virtual setup?

The results can be very positive. An increasing number of organizations are already working with virtual teams—with great results. The difficulty in our current environment is that many organizations have had virtual work thrust upon them. They have not had the opportunity to think it through or plan properly. So, we can expect early results may be less than optimal until people learn and adapt. Most employees want to see their organization succeed. If they are given a chance to be part of something, they will jump at the opportunity. These days, it’s a remote opportunity, which is better than no opportunity at all.  

This article was first published by Smith Business Insight.

Queen’s alumna helping to protect frontline healthcare providers

Campaign led by Joanna Griffiths (Com’05) has raised more than $150,000 to purchase Personal Protection Equipment.

Joanna Griffiths
Joanna Griffiths (Com’05) is leading a campaign to raise funds to purchase Personal Protection Equipment for frontline healthcare workers during the coronavirus pandemic.

In the early days of the COVID-19 pandemic, Joanna Griffiths (Com’05), was talking with her brother, a doctor working in a Hamilton hospital. He mentioned that masks, gloves, and gowns, also known as personal protective equipment (PPE), were in short supply, and that his fellow frontline health-care workers in hospitals, shelters, and clinics across the country were growing desperate.

Fortunately, Griffiths was in a position to offer support. She is, after all, the founder of Knixwear, a women’s intimate apparel manufacturer, the sixth fastest growing company in Canada.

“My brother said he was really worried about their PPE supplies and wondered if we could help them get access to supplies through my network,” she recalls.

Griffiths and her team sprang into action. They reached out to their manufacturing contacts and vendors, and found them willing to lend a hand. The next step was to find the resources. “We decided to launch a Go Fund Me campaign so that we could just get ahead of things,” she says. “We started ordering supplies so that they could be here immediately while these broader initiatives were taking place.”

The campaign has raised more than $150,000. All money raised is going directly toward purchasing the items to donate. Knix and its partners will cover all costs associated with shipping and distributing the items.

Confronting COVID-19 Read more articles in this series

They are now ordering and distributing PPE items across the country and have set up a registry where health-care facilities in need can sign up. “We’ve had 40 institutions fill out the form and that’s across the country,” Griffiths says. This means hospital workers can safely treat COVID-19 patients without the risk of contracting and spreading the virus.

Griffiths recognizes her responsibility as someone in a position to help others. “We’ve done partnerships with the Canadian Breast Cancer Foundation and different organizations,” she says. “A couple of years ago, we launched a campaign called Faces of Fertility to facilitate conversations around fertility. We also have our Positive Returns Program. When you order a bra from us online, if it doesn’t fit or you don’t like it, we enable you to donate that to a local women’s shelter.”

“I think at the best of times, it’s every leader’s responsibility to give back to society,” she says. “And in times of crisis — and this really is a crisis — I think that responsibility increases.”

This article was first published on the Queen's Alumni website.

How will COVID-19 impact business in Canada?

More Confronting COVID-19 Stories

In a coronavirus world, cash will be king, wearing a mask might not be so bad, and economic recovery will (hopefully) be quick.

 

Economics of coronavirus

Coronavirus is like a storm about to hit. No one knows how bad it’s going to get — or not. For now, coronavirus looks like a problem that could last months. Across Canada, governments are enacting emergency measures as they prepare for a virus that has so far sickened more than 200,000 worldwide and killed more than 8,000.

As the number of Canadian cases ticks up, businesses and schools are closing and people are hunkering down at home, having cleaned out stores of hand sanitizers, medical masks and soap. Streets are emptying.

WEBINAR
On March 20, join Smith Business Insight and Queen’s Executive Education for a free 45-minute webinar offering an in-depth look at the immediate and long-term impacts of coronavirus on Canada. Featuring Smith finance professor Wei Wang, strategy and governance professor Scott Carson, and organizational behaviour professor Kate Rowbotham.
Register now to learn:
• What steps companies need to take to adapt over the next few months
• The biggest risks that businesses will face
• The long-term implications of coronavirus on the economy
• How government can help firms right now
• How to work with employees and keep them engaged
• Strategic opportunities that may be available to businesses coming out of the crisis
• Whether we can expect a quick recovery (or not)
Following the presentation, we’ll have time for Q&A with our speakers
REGISTER

Coronavirus will create a number of challenges for businesses. What are they? And how can companies best handle them? We asked five Smith School of Business professors to weigh in: marketing professors Laurence Ashworth and Monica LaBarge; finance professors Wei Wang and Louis Gagnon; and strategy and governance professor Scott Carson.

Here, they answer our pressing questions:

What impact do you see on Canadian companies in the weeks ahead with coronavirus?

Laurence Ashworth: The most significant will be a change in consumption habits. Consumers are likely to cancel or reduce travel, delay large expenditures and stockpile essentials. They are also likely to avoid business settings that involves groups, such as exercise classes, bars, restaurants and supermarkets. We will likely see more online shopping, and possibly increased consumption of in-home entertainment. In short, people are likely to engage in what they view as “protective behaviours”.

The extent to which people engage in these behaviours will depend, in part, on their perceptions of the likelihood of catching the disease and the perceived severity of it. These perceptions will not always be accurate. One factor I suspect may play a role in these perceptions will be knowing of someone who has contracted the disease, such as a friend or a friend of a friend. Anecdotal information of this kind is extremely powerful and will have a disproportionate impact on people’s perceptions of the coronavirus risk and exacerbate their protective behaviour.

What are some issues businesses will have to deal with?

Monica LaBarge: From both the customer and an employer/employee side, nobody wants to come in contact with someone who may have the virus. So there is likely to be both reduced demand as well as a reduced ability to provide services if people aren’t wanting to come into work. This may include social service agencies, such as food banks and mental health services, which provide really important services to vulnerable members of our communities. The need for such services doesn’t stop just because there is a virus; in fact, they may become even more important since those populations may not have the ability to either stockpile resources or a safe location to self-quarantine. 

What’s the No. 1 hurdle companies will have to overcome?

Wei Wang: The single biggest issue for firms will be a shock to their cash flows as consumers stop or delay buying. For businesses right now, cash is king. The more short-term liquidity a company has the better it will be able to survive the bad situation. So, companies should start securing lines of credit as soon as possible. Ideally they’ll need a runway that will last two quarters or even longer. Coronavirus will be a lot different than the last crisis because for companies it will be about taking a sudden hit to their cash flows. The longer this situation lasts, the more business failures we are going to see. 

How can businesses prepare themselves?

LaBarge: From a staffing perspective, they have to figure out how they’re going to handle the potential need to close—either because they think it’s the least risky move or if there’s a quarantine. Are they going to pay their workers via their sick leave? Or allow draw-downs on vacation? Or temporarily lay staff off and and potentially allow them to access employment insurance?—if that even will be allowed by government.

From a demand side, it may be a good time to run sales—which could be made available online—so people can buy now and pick up later, so as to maintain some sort of cash flow. For businesses like restaurants, I would suggest they keep one eye on the emergence of cases and another eye on their perishable inventory, so that if they do have to close temporarily they don’t experience significant losses on that front.

What can businesses and government do to ease people’s fears?

Ashworth: Businesses can offer consumers alternative methods of conducting business that don’t involve person-to-person contact. After all, this is the main thing consumers will be trying to avoid. More generally, business and government need to consider how to keep people acting normally—in other words, how to stop people feeling like they need to protect themselves so much, given that most people probably have inflated views of the risk. Information that helps people form accurate impressions is critical.

Contrary to what a good deal of health practitioners have been advising, it may be useful to allow consumers to practise even minimally effective protective behaviour, such as wearing face masks, because such activities will increase perceptions of protection, causing people to act more normally. Obviously we’d like people to practise effective protection too, such as hand washing and self-isolation when necessary, but, at the same time, a good deal of what we need to do is persuade people not to engage in drastic behaviours.

How can government help businesses overcome the economic downturn that coronavirus may cause?

Wang: Governments really need to take three steps to help businesses. First, both here in Canada and in the U.S., they need to contain the virus. If that means shutting down the country, then that’s what they need to do. So far, we’ve seen some businesses closing and others have remained open. If the virus continues to spread, this approach may not work, and more drastic measures will be required. One reason investors in America were so concerned at first was that the U.S. administration did not seem to be taking coronavirus seriously. That, of course, has now changed.

The next thing government needs to do is increase testing for coronavirus. Until we can find out for sure the number of cases, we won’t be able to get the virus under control. So the government should really fund more testing—bring back retired medical staff and set up temporary testing stations. The hospitals already have enough patients with other conditions to deal with.

The third step is financial support for businesses. Governments should be offering tax cuts and giving direct loans to small businesses to help them. We are starting to see fiscal stimulus packages from both countries but up until now what we saw was the Fed in the U.S. and the Bank of Canada cut interest rates. The problem with that strategy is it doesn’t really directly help many businesses. The biggest problem with coronavirus for most companies will be taking a hit on cash flow and a longer cash conversion cycle. Companies will have difficulty paying overheads, paying suppliers and perhaps making payments on their loans. So more direct support for businesses is what is required. If we have these three measures in place, we might be able to get over the worst of coronavirus in two months.

Can we expect a long or short economic recovery from coronavirus? 

Scott Carson: To give some strategic perspective, consider the fundamental structure of business relationships at the industry level. The basic competitive relationships among rival companies within industries are unchanged by the current situation. Businesses still compete on price, differentiation and the strategic use of resources.

What is being harmfully impacted is at the firm level. First, buyer behaviour is highly volatile, largely because of declining consumer confidence. Second, coronavirus is causing havoc with both production and transportation supply chains, requiring adjustments to current-period business plans. 

But these economic shocks are not permanent. They don’t represent structural changes to industries or a major rethinking of long-range corporate strategies. As with pandemics in the past, such as SARS in 2002-03, avian flu in 2006 and H1N1 in 2009, the duration is usually not much longer than a fiscal quarter, and the economic recovery is V-shaped—precipitously down, then rapidly back up. So, we should be confident that business activity will pick up and the economy will recover.

What will be some of the more long-term effects on businesses from coronavirus?

Louis Gagnon: If anything, the coronavirus should be reminding industry captains, such as Apple Inc.’s Tim Cook, that it is simply too dangerous to put all our eggs in one basket and tie our supply chains too closely to any specific country or region halfway across the world. Money managers have known for a long time that diversification across many stocks and sectors makes portfolios less vulnerable and pays off in the long run. This is a lesson which business leaders in other sectors of the economy need to learn as well, especially those who have chosen to export their manufacturing capacity to other countries to drive down their costs. This is basic risk management. 

 

 

 

 

 

 

 

Women CEOs negotiate better severance than men — for all the wrong reasons

As CEOs, women have it tougher than men. Their severance deals prove it. ​

Woman CEO listens to two other women
 Women CEOs face a much tougher road than their male counterparts. They’re more harshly judged and more likely to get fired.Tim Gouw / Unsplash)

Over the last 20 years, the number of female CEOs leading S&P 500 firms has increased fivefold. But it’s a deceiving figure: among large publicly traded firms, women still only make up six per cent of all CEOs.

One reason is that many qualified women are simply not interested in throwing their hats in the ring. One survey found that 64 per cent of men want to be appointed to top executive roles compared to only 36 per cent of women.

Why do women shy away? Some management experts say female CEO candidates do not feel they are playing on a level playing field, and that they’re more likely to be laid off than their male counterparts.

They are right to feel vulnerable. According to a recent study, female CEOs are 45 per cent more likely to be fired than their male counterparts. Previous research has shown that a man’s competence is often assumed in leadership roles while a woman’s competence is generally questioned. And female CEOs are more likely to be blamed when their organizations struggle, and are much more likely to be targeted by activist investors.

Rougher road

Female CEOs face a tougher road than male CEOs and they know it. You can see this play out when corporate boards try to recruit for the executive suite. Research I conducted with Felice Klein (Boise State University) and Cynthia Devers (Texas A&M University) examined whether pre-employment severance agreements reflect the heightened concern of prospective female CEOs that they are more vulnerable to being dismissed.

Severance agreements specify the amount paid out to the CEO in case of termination, and previous research has shown that they are used to insure the CEO against the risk of dismissal. As such, they offer a good measure of the perceived dismissal risk.

Given the well-publicized gender pay gap, most people would believe the severance agreements of male CEOs are larger than those of female CEOs. But we found that, in this case, the gender gap is reversed. Incoming female CEOs tend to negotiate much better severance agreements than men, but it’s for all the wrong reasons.

Our study was based on preliminary severance agreements between firms and newly appointed CEOs. It covered new CEOs of publicly traded U.S. corporations from 2007 to 2014, in all 870 cases.

We found that female CEOs tend to receive larger initial severance agreements than their male counterparts. The average contractual severance payment for incoming female CEOs is US$6.6 million versus $4.2 million for male CEOs. After controlling for other factors that affect the value of guaranteed severance payments, this “gender gap” remains significant.

You would think that women would be particularly cautious about leading struggling firms, and this shows up in our research. The gap in severance agreements is larger for firms with weakening performance or in cases where the previous CEO was terminated early.

The increase in the gender gap in these firms is driven by larger severance agreements for female CEOs; the severance agreements of male CEOs were no richer when men were appointed to struggling organizations.

More women in top positions reassures potential women CEOs that there is less risk of being terminated.
More women in top positions reassures potential women CEOs that there is less risk of being terminated. (Christina Wocintechchat / Unsplash)

More women, less risk

On the positive side, women considering a CEO position are apparently reassured by the presence of other female top executives. We found the gap in severance agreements was smaller in organizations that operate in industries with a greater number of female CEOs or that have at least one female director. In these cases, they clearly feel there is less risk that they will face biased evaluations of their performance.

There are messages here for both corporate boards and women considering senior executive positions.

The takeaway for boards is that if they really want to bring women into the executive suite, they can use the severance agreement as a recruiting tool to compensate women for the obstacles that they will inevitably face.

Workplace environment is critical

And as our study indicates, it is not enough to have a pipeline of qualified female candidates for the CEO role — the firm’s environment also plays a crucial role in reassuring female executives that their performance won’t be undervalued.

And for women, our research shows that they have more bargaining power in the employment negotiation process than they may have thought. We found that women are able to secure greater severance guarantees without trading cash — or incentive-based pay for severance. They identify the added risk and expect the reward for taking it on.

There’s also plenty of evidence to show that women CEOs are good for business. According to one study, public companies with women CEOs or chief financial officers were generally more profitable and produced better stock price performance than companies led by men.

Unfortunately for women, that performance does not seem to make their tenure any less risky.The Conversation

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Pierre Chaigneau is an Associate Professor at Smith School of Business, Queen's University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Capturing the Art of Research

Celebrating its fifth year, the Art of Research photo contest is open for submissions until March 12.

  • "Love Under the Microscope" by Dalila Villalobos, MD, Resident (Anatomical Pathology)
    "Love Under the Microscope" by Dalila Villalobos, MD, Resident (Anatomical Pathology)
  • "Santa Fina" by Una D'Elia, Faculty (Art History and Art Conservation)
    "Santa Fina" by Una D'Elia, Faculty (Art History and Art Conservation)
  • "A New Light" by Robert Cichocki, PhD Student (Civil Engineering)
    "A New Light" by Robert Cichocki, PhD Student (Civil Engineering)
  • "Window on a Window to the Universe" by Mark Chen, Faculty (Physics, Engineering Physics and Astronomy)
    "Window on a Window to the Universe" by Mark Chen, Faculty (Physics, Engineering Physics and Astronomy)
  • "Platinum Surface Electrochemistry" by Derek Esau, PhD Student (Chemistry)
    "Platinum Surface Electrochemistry" by Derek Esau, PhD Student (Chemistry)
  • "Keep Cool Boy - The Jets Aloft in West Side Story" by Tim Fort, Faculty (Dan School of Drama and Music)
    "Keep Cool Boy - The Jets Aloft in West Side Story" by Tim Fort, Faculty (Dan School of Drama and Music)
  • "Nano-dendrite Collision" by Hannah Dies, MD/PhD Student (Chemical Engineering)
    "Nano-dendrite Collision" by Hannah Dies, MD/PhD Student (Chemical Engineering)
  • "Exploring Worlds at Home" by James Xie, Undergraduate Student (Engineering Chemistry)
    "Exploring Worlds at Home" by James Xie, Undergraduate Student (Engineering Chemistry)

Researchers … ready your cameras. Returning for its fifth year, the Art of Research photo contest is looking to celebrate and creatively capture the research conducted by the Queen’s community.

RESEARCH@QUEEN’S 
Did you know that the university recently launched a new central website for Queen’s research? From in-depth features to the latest information on the university’s researchers, the site is a destination showcasing the impact of Queen’s research. Discover Research@Queen’s.

Hosted by the Office of the Vice-Principal (University Relations) and open to Queen’s faculty, staff, students, and alumni, the Art of Research provides a unique and accessible method of sharing ground-breaking research happening at the university. It also represents the diversity of Queen’s research, with winners representing multiple disciplines and submissions highlighting research happening at all career stages.

The contest is an opportunity for researchers to mobilize their research and spark curiosity. Visuals can create a more compelling and accessible research narrative. By looking at research from a different perspective, it is possible to find the beauty and art in any project.

Eligibility and Prizes

Any current Queen’s faculty, staff, student, or alumni are eligible to participate. Research depicted in the submissions must have been completed at Queen’s or while the submitter was affiliated with the university. More information about contest rules can be found on the Research@Queen’s website.

In addition to promotion across institutional channels and platforms, prizes of $500 will be awarded for the top submission in each of these categories:

Category Prizes

  • Community Collaborations: Research that partners with or supports communities or groups
  • Invisible Discoveries: Research unseen by the naked eye, hiding in plain sight, or only visible by using alternative methods of perception
  • Out in the Field: Research where it occurs, is documented, or discovered
  • Art in Action Prize: Research that is aesthetically or artistically transformed or research in motion as it happens
  • Best Description: To recognize the most creative and accessible description for an image
  • People’s Choice: Determined by an online vote by members of the Queen’s community

In honour of the fifth anniversary of the Art of Research photo contest, four special prizes of $500 each will be awarded to celebrate the diversity of research happening across the university.

  • The Innovation, Knowledge Mobilization, and Entrepreneurship Prize will be awarded to the submission that best demonstrates research that encompasses a spirit of the applied practices of innovation, entrepreneurship, and knowledge mobilization. (Sponsored by Partnerships and Innovation)
  • The Graduate Studies Prize will be awarded to the image submitted by a Queen’s graduate student or post-doctoral fellow that best embodies the School of Graduate Studies’ motto “Create an Impact.” (Sponsored by the School of Graduate Studies)
  • The Health Sciences Prize will be awarded to the image that best represents the Faculty’s mission of “ask questions, seek answers, advance care, and inspire change.” (Sponsored by the Faculty of Health Sciences)
  • The KGHRI Prize will be awarded to the image that best represents patient-oriented and clinical research. (Sponsored by Kingston General Health Research Institute (KGHRI))

The contest closes on March 12, 2020. The submission form can be found here and winning images from previous competitions are located on the Research@Queen’s website

New internal funding for research

Queen's Vice-Principal (Research) launches Wicked Ideas Competition.

Wicked problems are issues so complex and dependent on so many factors that it is hard to grasp what exactly the problems are or how to tackle them. Wicked ideas are needed to solve these problems, and demand the input of multiple disciplines, multiple perspectives, and relevant practical expertise.

The Vice-Principal (Research) has launched the Wicked Ideas competition as a pilot initiative to fund and support research collaborations that respond to local, national, and global challenges. Aligned with the concept of the Government of Canada’s New Frontiers in Research Fund – Exploration program, the competition “seeks to inspire projects that bring disciplines together beyond traditional disciplinary or common interdisciplinary approaches by research teams with the capacity to explore something new, which might fail but has the potential for significant impact.” Along with both disciplinary and interdisciplinary funding streams, the competition offers a “global challenge” stream, featuring climate change as a global challenge area.  Teams of researchers are invited to submit notices of intent by Feb. 3, 2020.

“This funding is designed to remove some of the financial barriers to high-risk, high-reward research, allowing scholars to push the boundaries of knowledge into uncharted territory,” says Dr. Kent Novakowski, Acting Vice-Principal (Research). “I greatly look forward to hearing about some of the paradigm-shifting ideas that come out of this new exploratory opportunity.”

Up to 15 teams will be awarded $75,000 each in the first phase of the competition in spring 2020. The 15 teams then will be eligible to compete for one of an additional five awards of up to $150,000 in the 2021 Wicked Ideas competition. The competition is open to all Queen's faculty across all disciplines. Co-investigators and team members also must be Queen's faculty members.

This is just one of several internal funding programs that have been launched by the Vice-Principal (Research) recently.  Other programs include the Queen’s Research Opportunities Fund (QROF) Post-doctoral Fund, as well as the Catalyst Fund – designed to enhance areas of research excellence by giving scholars an opportunity to accelerate their research programs.

A revised Prizes for Excellence in Research competition, which has recognized scholarly achievement at Queen’s since 1980, is set to launch soon.

More information about all of these programs, including terms of reference, is available on the Vice-Principal (Research) website.

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