Impact of Covid-19 Containment on Organizational Performance
Abstract
The covid-19 pandemic is an unprecedented global crisis, affecting human health and economic welfare across the globe. It is first and foremost a health crisis, with governments around the world taking measures to contain the spread of the virus. The pandemic has also resulted in a planet wide economic slowdown, affecting trade investment, growth and employment. The World Health Organization (WHO) has declared a global public health emergency on covid-19 pandemic outbreak, and in response to this, nations affected by this scourge are enforcing strict measures to combat the virus. To understand the impact of these strict measures adopted by countries of the world, this study investigated the effect of Covid-19 pandemic outbreak on the performance of organizations in Nigeria. The Pandemic harms both the financial and non-financial performance of the organizations in Nigeria. It is concluded that the Covid-19 pandemic.
Introduction
The world is currently dealing with the reality of the Coronavirus (COVID-19) Pandemic, which has led to a huge economic loss for thousands of business organizations across the globe. This loss is out rightly attributed to the government’s order of shutting down business operations. In Nigeria, the measures include; increased media coverage for public awareness, home-quarantine measures and general lockdowns, social distancing, avoiding large gathering, travel bans, cancelling mass events, closing schools and universities, churches, mosques and shops etc. Therefore, against the backdrop of government lockdown and a halt of organizations activities, organizations financial and non-financial performances would be affected. Furthermore, it is important to understand the key words which are; covid-19 pandemic (corona virus), containment, organization, organizational performance.
CORONAVIRUS (COVID-19) PANDEMIC
The Corona virus disease also called COVID-19 emerged in December 2019 in China in Wuhan city in Hubei province of China (McKibbin & Fernando, 2020). This pandemic has spread across 210 countries and territories around the world and 2 international conveyances (Worldometers, 2020). Following the outbreak in China, the virus has recorded new epicentres for its outbreak, the United States of America, Spain, Italy, France and Germany, having confirmed cases of over a hundred thousand (Worldometers, 2020). Amidst, the risk posed by this virus on public health, the World Health Organization (WHO) has declared it as a global pandemic and calls for health sectors of the world and government to take it seriously. The spread of the infectious disease is still on the rise despite many efforts of the people and government of the nations to contain it.
There are uncertainties as to how the COVID-19 is transmitted, although most medical researcher and centers for disease control have noted that it is transmitted via a fluid contact with an infected person. They further noted that symptoms of the disease on an individual includes; sore throat, dry cough, fever, shortness of breath, and in the worse stage acute pneumonia and death. According to NCDC (2020), the incubation period for COVID-19 is between 2-14 days. Bai et al (2020) asserted that the reason for the high level of the spread of the virus on individuals across the globe is as a result of the symptomatic and asymptomatic nature. Failure to identify and properly manage both symptomatic and asymptomatic COVID-19 cases by mass/wide COVID-19 testing or screening of the population puts the race at risk. Also this would significantly affect the way of life of people, as well as organizations across the globe.
CONTAINMENT
Containment refers to an act or policy of limiting the expansion or spread of a natural disaster, contagious disease or other dangerous thing. In Nigeria, prior to the outbreak of covid-19 pandemic, the government have set out containment measures in order to limit the spread of the disease and they are as follows; increased media coverage for public awareness, home-quarantine measures and general lockdowns, social distancing, avoiding large gathering, travel bans, cancelling mass events, closing schools and universities, churches, mosques and shops etc
Impact of Covid-19 Containment on Organizational Performance
MEANING OF AN ORGANISATION
An organization refers to a company or other group of people that works together for a particular purpose. From this perspective, there are many types of organizations.
TYPES OF ORGANIZATION
- Business/trading organization
- Consumer/marketing/research organization
- Nonprofit/charitable/voluntary organization
- National/international/local organization
ORGANIZATIONAL PERFORMANCE
Theoretically for business organizations, the definition of organizational performance is hinged on the economic view of profit maximization of the organization and the stakeholders’ view of satisfying the need of a group or individuals who are affected by the activities of the same organization (Aifuwa, 2020). Leaning, on this exposition, the make-up of organizational performance is financial and non-financial performances (or strategic or operational performance).
Financial performance is a subjective measure of how an organization effectively and efficiently utilizes its assets to generate resources (Nnamani, Onyekwelu & Ugwu, 2017). The financial performance of an organization is classified in subsets of profitability performance (return on assets (ROA), return on equity (ROE), return on investment (ROI), economic value added (EVA), net income /revenue and earnings before interest, tax, depreciation and amortization margin (EBTIDA), market value performance (earnings per share (EPS), change in stock price, dividend yield, stock price volatility, market value added (MVA) and Tobin Q)while growth dimension of performance consists of market share growth, asset growth, net revenue growth, net income growth and many employees growths (Santos & Brito, 2012).
Non-financial performance measures include employee performance, social performance, corporate governance performance and environmental performance. Because of the study, both financial and non-financial performance of an organization, are measured qualitatively based on the perception of financial experts.
POTENTIAL DIRECT IMPACT ON BUSINESS ORGANIZATIONS
The organizations most directly affected by containment measures.
- Within service organizations:
EDUCATIONAL ORGANIZATIONS:
In an attempt to contain the spread of the COVID-19 pandemic the government, have temporally closed educational organizations and this has affected the performance of the educational organizations negatively. The well being and functioning of all parties involved and benefiting from educational systems is also affected. The closure of schools, colleges and universities not only interrupts the teaching for students in the country. The closure also coincides with a key assessment period and many exams have been postponed or cancelled. Internal assessments are perhaps thought to be less important and many have been simply cancelled. But there is to give information about the child’s progress for families and teachers. The loss of this information delays the recognition of both high potential and learning difficulties and can have harmful long- term consequences for the child.
Importantly, the lockdown of institutions not only affects internal assessments. All exams for the main public qualification such as; WAECSE, NECO, GCSEs and A levels have been cancelled.
This makes most educational institutions to adapt the process of shifting learning to a remote or online format. This is a new area for both teachers and students, and assessments will likely have larger measurement error than usual. But the success of online learning hinges on the use of high technology or low technology solu6tions, which are based on the reliability of local power supply, internet connectivity and digital skills of teachers, students, parents, and caretakers. But as pleasant as this may seem, students from under served low income communities will be left out and unable to access learning during this period.
In Nigeria many states have embarked on airing school lessons on radio and television and this is recommendable. But currently Nigeria has about 50% of her population living in poverty, with many citizens struggling to afford three square meals, especially at this time, despite the palliative measures by the government. This means that there are a lot of student who do not have access to either radio or television, coupled with the issue of erratic power supply, such students also have no internet access and no educational technological resources, a situation that is creating a gap in their academic performance for as long as this pandemic persists.
Obviously, COVID-19 is magnifying the educational inequity in Nigeria as only those with access to digital learning resources will keep learning in the comfort of their homes while those without access are left behind.
The careers of this year’s university graduates may also be severely affected by the COVID 19 pandemic. Because they have experienced major teaching interruptions in the final part of their studies, they are also experiencing major interruptions in their assessments, and finally they are likely to graduate at the beginning of a major global recession.
TRANSPORT AND TOURIST ORGANIZATIONS
The transport organizations are essential to social, economic development and guarantees mobility within and across the country. Tourism is a major driver of jobs and growth in a country. But COVID-19 has dramatically changed this. In order to curb the spread of COVID 19, the government placed restrictions on domestic transit and closed the borders. The transport and tourist organizations are losing money and many jobs have been cut as the employers are unable to pay. To some employees who are still working, their payments have been ceased until business situation improve. The low passenger demand results also in revenue loss to the economy.
HEALTH ORGANIZATIONS
The measures imposed by the government to contain the spread of COVID-19 pandemic, has impacted the performance of the health organizations in many ways. Most health organizations are unable to provide their patients with adequate treatment due to insufficient medical equipments. There is also a reduction in the supply of medications due to restrictions on movement. Most health organizations are under-funded and under –equipped. Most workers are on furlough and their payments are ceased. Some workers who are still in business acquire the protective equipments personally and most patients are being asked to provide protective equipments before there are treated.
Within product organizations:
Most of the product organizations including; electronics industry, chemical industry, transportation equipment industry, pharmaceutical industry, steel industry, fast moving consumer goods industry, textile industry etc. are all facing abnormalities in their organizational performance due to containment measures imposed by the government. In an attempt to contain the spread of the COVID 19 pandemic, the government imposed measures which disrupted the performance of the manufacturing organizations greatly.
The compulsory observance of social distancing including self isolation has resulted in reduced productivity since the organizations can no longer run on full capacity. Also the shutdown of worship, social events and recreation centers has lead to cancellation of orders and this affects most manufacturers greatly. Most of the organizations face decreased production output as a result of insufficient raw material. They are also furloughing their workers. Their supply chain has been disrupted and the demands are depressed. But other product organizations are increasing, shifting or relocating production to meet demand. This shows that the pandemic affected different product organizations in different ways.
Four phases of pandemic impact
As small businesses face the COVID-19 crisis, they travel through four phases, whether in succession or simultaneously. From shutdown to supply chain impacts and depressed demand, the cycle eventually moves to the recovery phase.
- Shutdown impacts have affected organizations where the pandemic led governments to adopt measures shutting down economic activity. Such containment efforts have hit hardest in tourism, travel, wholesale and retail, hospitality and entertainment. In the short run, governments in affected countries have focused on keeping SMEs in these sectors afloat.
- Supply chain disruptions have affected companies. The pandemic induced lockdowns in the country which have posed major impacts on production, imports and exports. Halts in production in
- Demand depression has occurred in the country where confinement reduced sales to consumers and businesses. But even when the health emergency begins to ease, business investment can remain low due to run-down savings. Households may reduce spending in the medium to long term to compensate for lower incomes during the pandemic period. Confidence might be low, credit overstretched, and bankruptcies among SMEs may follow.
- Recovery has begun gradually in instances where containment measures have been eased. The evolution of business recovery in the country depends on how the health situation evolves and on the depth and timing of the original suppression of demand. In the weeks after lockdowns cease, economic activity is likely to rebound sharply as people go back to buying products they have missed from their favorite small businesses.
The direct impact of lockdown measures is smaller in manufacturing sectors, some of which are less employment intensive. Complete shutdowns are occurring though in producers of transport equipment, often because of difficulties in obtaining necessary inputs from suppliers in other countries.
Taken together, the affected sectors account for between 30-40 per cent of total output in the economy. Allowing for only partial shut downs in some sectors. Small companies tend to be vulnerable during an economic crisis, in part because they have fewer resources with which to adapt to a changing context. Nearly two-thirds of micro and small firms reported that the crisis strongly affected their business operations, compared with about 40% of large companies.
One-fifth of the small and said they risked shutting down permanently within three months. In Nigeria, most businesses have been strongly affected by COVID-19, mostly involving reduced sales and difficulty accessing inputs.
In the first days of the pandemic, small and large companies across the world responded in similar ways. They took steps to protect employees and customers against infection, and communicated to clients about whether the business was going to close temporarily. Many firms also reached out for support from government, industry groups and business support networks.
Beyond these common immediate tasks, businesses diverged in their responses. Some adopted retreating strategies, drawing down their assets to get through the day. Many firms laid off some employees, sold off assets or took on new debt, all of which may hurt their long-term viability
Other companies followed a strategy of resilience, scaling down or adjusting the business temporarily in a manner that will allow it to resume fully later on. The most agile firms transformed themselves to fit the new situation, creating novel products such as designer masks or rapid testing technologies. When lockdowns prevented their businesses from opening, they loaned their workers to other active businesses in essential industries. Small firms that exported were significantly less likely to take the retreating approach than those that sold only domestically.
Manufacturing and agricultural businesses have higher sales as inventories are restocked and consumers make postponed purchases.
Yet the period of shutdown may permanently change production and demand. It is obvious that the economy have being reshaped by the pandemic. The measures aimed at containing the spread of COVID-19 have short-term consequences that risk undermining the social and economic fabric of the nation. They also threaten the survival of the small businesses that make up more than 70% of the labor force in country. Yet have the fewest assets with which to ride out the storm. SMEs face a bigger risk than larger firms of collapsing or being unable to compete. Yet because they employ so many people, the associated job loss would aggravate the economic downturn created by the pandemic.
The government has realized that small businesses act as a lynchpin connecting the pandemic to broader economic recession. In addition to addressing the health crisis, they have scrambled to alleviate the impact of COVID-19 on small firms, introducing policies to help them cope with the short-term financial risks and long-term business implications. If these measures succeed, they will reduce layoffs, prevent bankruptcy, encourage investments and help economy recover as soon as possible in the aftermath of the crisis.
From the foregoing, it can be seen that most businesses have currently adopted four long-term trends which will characterize the new normal on the horizon: an emphasis on resilience to shocks, embrace of digitalization opportunities, greater inclusiveness and sustainability.
Resilience: As countries focused on shoring up their SMEs when
COVID-19 began to spread, they learned a key lesson: the importance of fostering business resilience in good times, as it can strengthen the ability of firms to ride out crises, reduce the likelihood of bankruptcy and improve the state of the economy.
The economy is made up of thousands of small businesses. As employers and generators of value, they are the lynchpins that tie together modern-day capitalism.
Systems theory suggests that the ability of a system to survive under duress depends largely on the strength of its constituent parts. Making businesses more resilient to shocks, while strengthening the links among them and with their business ecosystem, will help the economy as a whole withstand the next storm.
The new normal will feature more efforts to enhance the resilience of SMEs. By diversifying, for example, small businesses can have suppliers and buyers to fall back on when one part of the business is exposed to a crisis.
Diversification is a valuable risk management strategy, whether for production, purchasing or sales. On the production side, manufacturers make different products and farmers plant different crops so that they will have income even if output or sales of one item collapse. Meanwhile, sourcing from multiple suppliers increases the chances that production can continue no matter what. Selling to several different buyers, through different channels, ensures that some markets remain available even if others shut down.
Saving profits can help provide a buffer for difficult periods. It also generates financial resources for investments in the technologies and skills needed to innovate and adapt in the face of change.
Small businesses can connect to industry associations, business support organizations and other actors in their business ecosystem to bolster their ability to cope. Building collaborative platforms among local industry actors for communicating, gathering information and solving problems helps to create an ecosystem and social forum in which participants can plan crisis responses and assist each other.
Public policy can play a role in encouraging the resilience of small businesses, for example by subsidizing investments in risk mitigating technologies and fostering economic and trade diversification. Policies can also encourage partnerships, cooperatives and research that foster the development of agile new strategies.
Participation in international trade can help to improve the resilience of businesses. On the demand side, sourcing from domestic and foreign suppliers secures more reliable access to inputs, so that inputs remain available if one supplier, location or transport route is shut off. On the supply side, selling to domestic buyers as well as exporting can help to ensure there is demand for output, and that price fluctuations at home are balanced by those abroad – and vice versa.
The resilience of SMEs also depends on the resilience of their ecosystems, such as business support institutions and local infrastructure, and the supply chains in which they operate.
Indications are that the current health crisis is likely to be followed by further disruptive change, including new technologies, trade tensions, climate impact and social change. Strategies that enhance resilience help small businesses to be competitive amid turmoil. That is why some businesses go one step further and build business cultures that are highly dynamic, innovative and agile. These businesses have chosen to adapt their business models to take advantage of the opportunities associated with the lockdown. .
Agile businesses have responded to the fact that while markets for some products are drying up, others are emerging. The surge in demand for designer face masks and comfort food are two such examples. In the country, apparel industry is reorganizing its businesses to produce medical masks, overcoats, caps and waterproof sterilized suits.
Digital: Digital technologies were ascendant before the pandemic hit, and during lockdowns whole parts of the economy shifted onto digital platforms. Tele-working, remote learning, teleconferencing, online health services, e-commerce and digital payments all kept the country going in the first half of 2020 in many places. The rapid rise in online opportunities encouraged many businesses to use the lockdown to improve their digital capabilities. Businesses already operating online reinforced their ability to manage the surge in demand for goods, and brick and mortar shops shifted resources to e-commerce as consumers shifted to online shopping.
In coming months and years, digital facilities will no longer be optional. Consumers, clients, business partners and workers will come to expect them as a matter of course. Cash payments and paper-based documents, such as invoices or pay slips, will become a thing of the past. Files that move onto the computing cloud will not migrate back to hard drives.
Conditions experienced during the COVID-19 lockdown may spur businesses to use big data analytics and artificial intelligence more in post-pandemic decision-making. These technologies can help companies deal with the kind of phenomena they struggled with during lockdown: rapidly shifting consumer demand and confidence, operational disruptions, uncertainty and redundancies in the workforce.
The digitalization of several core business operations raises a number of issues, especially for small businesses. While this shift to digital methods substantially increased the volume of data in the first half of 2020, it was not accompanied by a rise in the number of data center or their wider geographical spread. SMEs operating in a country that do not have local data center can face lack of availability and prohibitively high costs. In addition, data security is a significant challenge and is not guaranteed in the country. As more businesses upload data, there is a greater threat of cyber attacks. Moreover, where data privacy is not backed by strong institutional support and regulations, state measures for contact tracing, early warning surveillance However, market concentration among platforms and anti-competitive practices by some platforms can put developing country SMEs at a competitive disadvantage, reducing their profit margins and sometimes leading businesses to close down.
Most of the services offered to support small businesses such as trade missions, business matchmaking events and conferences – previously involved face-to-face meetings or large gatherings. Before the crisis, many business support institutions had begun to experiment with digital technologies to reduce costs and reach more people. This process will continue to accelerate. Meetings and some elements of business matchmaking can go digital through a combination of online platforms and videoconferencing facilities.
Inclusive: As is often the case with crises, COVID-19 has put the spotlight on those who are economically disadvantaged, such as informal sector workers, migrants and people in SMEs. Many have been deprived of even subsistence level income during economic lockdowns and have faced health and sanitary crises. This underscores the fact that lack of basic social security benefits poses a risk for vulnerable individuals and society as a whole. The same has been seen in developed countries around the gig economy.
Making economies more inclusive starts with decent jobs and social protection for all. SMEs, which account for about 70% of jobs and half of economic activity worldwide, can be vital in providing employment. Small businesses employ a disproportionate share of disadvantaged groups, including less qualified workers, young people and women.
With the inclusiveness of globalization already a matter of concern before the pandemic, it will be crucial to ensure that the recovery phase lifts all boats to maintain popular support for open economies. Policymakers have recognized that small businesses are particularly exposed to the risks arising from the COVID-19 crisis and have been quick to announce targeted support measures for small businesses and their employees. Efforts to expedite payments to small firms for goods and services delivered through the public procurement system can also help.
Both universal social protection and employer led initiatives can help improve their livelihoods.
The focus is likely to be on sustaining people’s health as the pandemic recedes, environmental concerns will also be high on the agenda, especially as evidence suggests that the sustainability is likely to be more important in the post-pandemic global economy, and retrofitting for COVID-19 sanitary requirements and environmental friendliness may be wise.
The key role of business support organizations
Business support organizations deliver services to and represent the interests of enterprises to promote their growth. They are chambers of commerce, sector associations, trade promotion organizations and investment promotion agencies, as well as cooperatives. When these organizations cooperate, they create growth opportunities for companies, competitive advantage for a country and help deliver economic, social and environmental objectives. To help firms deal with the crisis, business support organizations can provide information on COVID-19 from a business perspective, perhaps through a specialized webpage.
A business support organization can bring firms together, match business opportunities with a shared offer or common need, and test willingness to cooperate in ways that are neutral, fair and respect commercial sensitivities. Businesses working together can reduce costs through shared procurement, create economies of scale and access new opportunities by sharing knowledge and resources.
Good business support organizations benefit from their knowledge of business, their convening power and their credibility to represent micro and small businesses and make their needs known to policymakers and funders. For example, a bank and business support organization could promote an emergency bank loan with reduced collateral requirements for firms with a record of having engaged with a business support organization. Small enterprises underscore their greater capacity to ride out the storm. The fact from this analysis is that while big companies can afford to stay put and be resilient, small companies must adapt in an agile manner or collapse.
IMPACT ON THE NON-PROFIT ORGANIZATIONS
Like every industry, the necessary and vital quarantine to combat COVID 19 has had massive negative impact on the nonprofit sector. From the arts to human service group, nonprofit organizations are seeing revenue generation completely disappear many events get postponed or canceled and volunteer corps disappear in the wake of several mandated social distancing efforts to help prevent the spread of the COVID 19. There is also the emotional stress of not being able to fulfill their mission because they cannot have face to face time with their constituents or interact in a way that helps serve their members.
RELIGIOUS ORGANIZATION:
The COVID 19 has impacted religious organization in many ways including, cancellation of worship services of various faith, as well as cancellation of pilgrimages surrounding observances and festivals. Many churches, synagogues, mosques and temples have offered worship through live stream amidst the pandemic.
COVID 19 adversely affects the church in two ways. First, it stops public worship and affects church finances. Secondly, it demoralizes many believers. During the lockdown, there has not been public church worship in various churches and in order to cope with this, members were encouraged to begin home worship.
With regard to church finances, the setback is great. This is because as a church, it is considered inhuman to place demand of the payment of tithes and offerings at a critical time such as this. It is obvious that most people cannot go to work, buy or sell and some have not been salary. Paying salaries of church ministers and other categories of staff has been a huge challenge.
REFERRENCES
In Economics in the Time of COVID-19 (p. 115). CEPR Press.
Association Française de Normalisation. (2020). Barrier masks: Guide to minimum requirements, methods of testing,
making and use. Association Française de Normalisation.
Baldwin, R., & Tomiura, E. (2020). Thinking ahead about the trade impact of COVID-19. In Economics in the Time of
COVID-19 (p. 115). CEPR Press.
Bollinger, K., Mewes, H., Janssen, A., & Strasser, C. (2012). Facing the Impacts of Climate Change – Indian MSMEs and
Adaptation. GIZ New Delhi.
Borino, F., Rollo, V., & Solleder, O. (2020). The heterogeneous impact of COVID-19 on firms: Evidence from a global
survey (ITC Working Paper Series WP-02-2020.E). International Trade Centre.
Cancialosi, C. (2020, March 10). Organizational Agility And Resilience- Two Critical Sides
Of The Same Coin. Forbes. https://www.forbes.com/sites/chriscancialosi/2020/03/10/
organizational-agility-and-resiliencetwo-critical-sides-of-the-same-coin/#18c26f6d614a
Candelon, F., Reichert, T., Duranton, S., Charme di Carlo, R., & De Bondt, M. (2020). The Rise of the AI-Powered
Company in the Postcrisis World (p. 7). Boston Consulting Group.
Centre for International Governance Innovation. (2019). CIGI expert consultation on WTO reform. Centre for International
Governance Innovation.
Crick, F., Eskander, S. M. S. U., Fankhauser, S., & Diop, M. (2018). How do African SMEs respond to climate risks?
Evidence from Kenya and Senegal. World Development, 108, 157–168.
De Mey, N., & De Ridder, P. (2020). Shifts in the Low Touch Economy. Board of Innovation.
Deloitte. (2020). COVID-19: Managing supply chain risk and disruption. Deloitte.
Donor Committee for Enterprise Development. (2020). Using Private Sector Development to achieve a Green Recovery
in the context of the COVID-19 Pandemic. DCED Green Growth Working Group.
Dougherty-Choux, L., Terpstra, P., Kammila, S., & Kurukulasuriya, P. (2015). Adapting from the Ground Up: Enabling
Small Businesses to Adapt to Climate Change. UN Development Programme and World Resource Institute.
G20. (2020). G20 Trade and Investment Ministerial Meeting: Ministerial Statement. G20 Saudi Arabia 2020.
Gopinath, G. (2019). Dollar Dominance in Trade and Finance (Chapter 2). In Currencies, Capital and Central Bank
Balances (p. 29). Hoover Institution Press.
Gopinath, G., Boz, E., Casas, C., Díez, F., Gourinchas, P.-O., & Plagborg-Møller, M. (2016). Dominant Currency
Paradigm (No. w22943; p. w22943). National Bureau of Economic Research. https://doi.org/10.3386/w22943
Grenfell, R., & Drew, T. (2020, February 17). Here’s Why It’s Taking So Long to Develop a Vaccine For The New
Coronavirus. Science Alert. https://www.sciencealert.com/who-says-a-coronavirus-vaccine-is-18-months-away
Gunasekaran, A. (2011). Resilience and competitiveness of small and medium size enterprises: An empirical research
