Coronavirus: The damaging impact on SMEs

A fifth of the UK's workforce could be off sick.

by Elizabeth Howlett and Francis Churchill
Last Updated: 06 Mar 2020
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Coronavirus

As the number of confirmed cases of coronavirus in the UK hits 90 and Europe's largest regional airline Flybe sinks into administration, placing some of the blame on the outbreak, Goldman Sachs warns the country could be pushed to the brink of recession in the coming months.

According to the government’s action plan, released earlier this week, a fifth of the UK’s workforce could be off sick at one time. It urges companies to enact “business continuity plans” and build their resilience.

But for many SMEs – particularly those in the hospitality, events and tourism sectors where job roles are less flexible – this has already meant making layoffs. Tracey Hudson, director at The HR Dept, says many of her clients were already making “quite dramatic changes” to their workforces. “I haven’t seen so many queries about layoffs for quite a few years [since the recession] – that shows the gravity of the impact coronavirus is having on the SME market.”

In the events sector in particular, Hudson points out the workforce is not “the kind of staff who can work from home – they are just people who turn up and run events”, meaning when business slows down there are very few alternatives to layoffs or redundancies.

Peter Cappelli, professor of management and director of the Center for Human Resources at Wharton University of Pennsylvania, says the immediate challenge facing UK organisations was to decide on an attendance policy. “Huge numbers of people are likely to feel they have the virus, even when they don't, and stay home,” he warns.

Cappelli advises organisations to establish what jobs “could be done from home and which can only be done in the office”, and develop a back-up plan so there is cover for those in self-isolation. “At what point would it be cheaper to shut down altogether than to operate with a skeleton crew and risk bad outcomes?” he adds.

Many companies, including Goldman Sachs, Toyota, Nestlé and JPMorgan, have put a moratorium on business travel. Other employers are advising their workforces to avoid any face-to-face meetings where possible, while some have gone as far as asking employees about their non-work related travel plans over the next three months. “We’ve had a lot of employers [that’ve] wanted to dictate where their employees can travel to,” says The HR Dept’s Hudson.

“Companies need to be open and honest and transparent,” she adds. “If you think people should be cancelling holiday then put it into a document and just share it with everybody, because actually you’ve got employees who are worrying about what happens if this is still happening in the summer.” 

Hudson says that bosses have also raised concerns that a minority of workers are lying to take advantage of self-isolation policies. She advises employers to err on the side of caution, and to trust employees: “If you have evidence to the contrary, then you can take disciplinary action.” 

This is an edited article from our sister title People Management 

Image credit: d3sign via Getty Images

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