Many organizations are confronting unprecedented issues related to their bottom lines due to the impact of the COVID-19 pandemic. Companies across all sectors face a severe cash crunch with respect to running their daily operations due to the pandemic.
Reacting to the drop in revenues, many organizations out of necessity began trying to reduce overall costs. They looked at expenses to determine where reductions could be made without impacting the business too much.
The next option was salary reductions and, in many cases, a reduction in headcount. The resulting rise in unemployment has led to massive reduction in demand for many non-essential necessities. Offices and facilities are being affected, especially in commercial and private businesses.
Some years ago, the oil and gas industry had a substantial downturn. Companies responded by offering early retirement packages and layoffs to reduce headcount. But when the market rebounded, they found themselves with a resource and skills deficit. As a result, they had to scramble to find qualified skilled labor to fill the void. I’m afraid history will repeat itself in many maintenance and engineering departments when the COVID-19 pandemic subsides.
In our June 2020 issue, I wrote, “As if outsourcing wasn’t tough enough, the COVID-19 pandemic has further complicated the decisions maintenance and engineering managers must make.” The article advised managers that significant skills gaps could be looming. Well, things have gotten even more complex.
And the skills gap will only exacerbate a already huge problem for many facilities, especially those that rely on taxpayer dollars – deferred maintenance. Employing this strategy in order to reduce costs, meet budget funding levels or reallocate budget funds is a recipe for disaster.
The failure to perform needed repairs can lead to asset deterioration and ultimately asset impairment. Generally, a policy of continued deferred maintenance results in higher costs, higher failure rates and in some cases, health and safety problems.
Looking inside for efficiency
My first recommendation and most important recommendation for managers looking to find greater efficiency and avoid coronavirus-driven budget and staff cuts is to look internally for opportunities for improvement. I worked with a client in the commercial and private building sector during the 2007 housing crisis that was spending funds on internal issues that needed to be addressed and improved.
As one senior member told me, “It’s easy to hide the rocks in the stream in the spring, but in the late summer, they sure do rear their ugly heads.” He meant that when life is good, you can hide a lot of systemic issues, but when things slow down, that’s when they come up and bite you.
The company had a strategic mandate related to maintenance and engineering from the CEO to clean house, which included several activities:
• Cleanse the CMMS data to ensure integrity.
• Establish an accurate asset hierarchy.
• Perform preventive maintenance optimization workshops.
• Cross-train employees.
• Re-engineer work-management processes.
• Understand the material requirements to keep the facility functional.
• Renegotiate contracts so when the market does return, the company can operate from a position of strength.
And they did. The company didn’t furlough employees. They didn’t offer early retirement or reduce headcount. They simply repositioned employees to make small improvements so that when better times returned, not only did it thrive but it was in a much stronger position to achieve success.
Pandemic Protocol: Keep a Close Eye on the Bottom Line
During the Coronavirus Pandemic, Look to Efficiency
