Covid-19 Pandemic Crisis; Reorganise smartly while you can!

We are living in a VUCA world; Volatile, Uncertain, Complex and Ambiguous! So, how do you reorganize your company in the context of an uncertain future? Forget the blunt big axe, here are 5 quick tips.

By Herman Rutgers, FIBO Ambassador

Quite a few companies in our sector have already taken (serious) action. Gold’s Gym, 24Hour Fitness, Soulcycle, Equinox, and Pure Gym Group are just a few big name examples in the fitness ecosystem who are reorganizing/restructuring (a friendly word for downsizing) and reviewing their overall strategy in the current Corona impacted economy. Whether you are a big health club chain, an independent club operator or a supplier to clubs, my advice in relation to reorganizations is: if you have not studied it yet, do it now!

But how do you go about the reorganization or restructuring of a company?

Here follow 5 possible ways and I use a symbolic “tool” or instrument to illustrate each of them: the options are; the binoculars, the blunt axe, the surgical knife, the home trainer and intuition.

The Binoculars (Vision)

Since the outbreak of the global pandemic early this year, managers and business people have had more than their hands full with keeping their companies alive; dealing with sudden forced closure, communicating with and motivating staff and members, implementing C-19 protocols, re-arranging the layout and flow of the clubs, dealing with cashflow problems, refinancing, implementing cost savings, dealing with staffing issues and furloughs, negotiating with officials, suppliers and landlords, creating online programming, etc. etc.

But at the same time, a leader needs to use a bigger lens in order to predict what the future looks like; take out your binoculars and try to see what the lay of the land will be after the C-19 crisis is over, how will the consumer and the market be different….and start focusing on how your company needs to be positioned for that different future. You need to reorganize and reposition your business in the knowledge that you don’t know how long this crisis will last…. You are forced to make 100% of the decisions with 50% of the information at hand!

But the questions you need to ask yourself to redefine your strategy are no different from before the crisis, the fundamentals are the same; what do your current and future customers want – now and in the future?

The world was already changing but the C-19 pandemic has accelerated certain developments like digital, e-commerce, the need to be agile.

Your strategy needs to be flexible as changes will occur more frequently…. Turbulence may happen more often.

The Blunt Axe (Cutting Staff)

The business buzz words of 2020 are “scaling up” and “scaling down”…. Staffing has become a flexible thing; more business meant more staff and vice versa. Unfortunately, many businesses were forced to lay off staff when the lockdowns hit our sector. Luckily in many European countries governments provided financial support to ease the pain with furlough schemes and other monetary assistance.

In this scenario we are talking about cutting entire departments, stop doing certain activities or permanently closing clubs that were already losing money before the C-19 crisis started…. In larger organizations it could mean moving from in-house departments to outsourcing or cutting out management layers; making the organization flatter.  

Most managers have a difficult time reducing their staff, many whom have been loyal and good workers…but if it is about the survival of the company, drastic and painful measures across the board are necessary in order to survive.

When you have to cut in your organization, try to stay in the “fat” and do not cut into the “muscle” of your organization…as we all know muscles make you stronger.

An important point to realize for leaders is that it is very important to have transparent and frequent communication with employees. Don’t be afraid to share your challenges and difficult dilemmas in this crisis with your teams; openness and honesty will; be highly appreciated and rewarded.

The surgical knife (Operational Finetuning)

Contrary to the previous one here the reduction in staff is small and targeted. An example is the announcement of Pure Gym Group on November 16, 2020 to not re-open all of their 15 Polish Fitness World clubs after the close down and to withdraw all activities from that country.      

Also it could mean to stop investing in certain activities and put money in developing other ones (e.g. video on demand or and improved app). Innovation and investment for the future should not be stopped…it is the lifeline for the future. Many operators have shown creativity and agility during the crisis. With limitations for indoor activities many operators have started to program outdoor activities and others have expanded their opening hours to 24/7 in order to create extra options for their members.

The “hometrainer” (Talent Development)

The human capital of your company is always of key importance but even more so in a crisis situation where initiative and teamwork are crucial. Talent development and continuous learning are always important. If you want to reorganize you need to know the strengths and weaknesses of your staff and make sure they work on further developing their strong points and improve on their weaker points. In these crisis times it is also a good idea to move people around and let them thrive in other departments or positions (“job rotation”). In these tough times you will also see as leader who of your team members roll up their sleeves and go the extra mile. Also, in working from home; who shows the most energy and creativity and adaptation to the new situations. Use this time to let people do online courses and develop their skills…look at possibilities to hire new people from outside the sector. Many good people from the hospitality (hotel/restaurant) and airline sector are now unemployed and they may be very fit for our sector. Continue to invest in your people!

Intuition (Your Gut Feeling)

In any reorganization, think through all the aspects, study various scenarios and get expert help. But in the end as an owner or manager you must, in making a decision not only use the “ratio” but also your “gut feeling” about what is the right thing to do. The best decision is where both the mind and the soul feel good about it.

“Purpose” is also a buzz word these days but it is very important and relevant. In any reorganization you need to stay close to your values.  You need to be able to explain why the world is a bit better place because what you do in your company. And that is not just financial or increasing shareholder value….