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An economic and political crisis management plan

7 months ago

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There are two ways of approaching a national crisis, or for that matter any crisis in an organisation. The first is to completely go on a “war footing” and “hunker down in the bunker”, taking the crisis head-on and fighting it. The other is to ride things out, while at the same time bringing in several austerity measures in trying to balance and manage the situation. Both have their own merits and demerits. The “war footing” scenario is rather draconic, and can be quite repressive and demoralising to the organisation (or the general populace, in terms of a national crisis). But if the situation is so dire and critical, then perhaps it warrants such a response. The second “compromise response” would certainly soften the stress and mental anguish caused, but it can be slow in showing results.  The Sri Lankan situation There is no doubt that Sri Lanka is in the throes of the most serious economic crisis it has ever faced. This is further compounded by a simultaneous political crisis that is equally serious. There are acute shortages of all basic essentials such as food, gas, fuel, electricity, and medicines. The UN reports that some 5 million people in Sri Lanka are living in hunger, or a hand-to-mouth existence.  More concerning is that some 15% of children under the age of 12 are severely malnourished, as per the Global Nutrition Report, and the situation is going to get worse in the next few months, so we are sitting on a deadly time bomb. Therefore the situation currently is very dire, which in my view warrants the first option of a “war footing” approach.  Hence the need of the hour is a good crisis management plan. Crisis management strategy Let us delve into management practices on how to address such a situation. Of course, managing a crisis in an organisation is no doubt a far cry from managing a national crisis, but some of the fundamental principles will still be relevant. Having had a long career in tourism, where much of the period was spent in facing and managing one crisis after another, I can humbly profess to have some experience in this area.  Let us first list out the main elements of such an exercise that is usually followed in the private sector during a crisis, and then evaluate how the Government’s response to each stacks up.
  1. Accept and identify the crisis
  2. Fulfil the need for strong, decisive leadership and centralised control
  3. Set up a small senior crisis management team
  4. Implement the suspension of all capital expenditure
  5. Prune down all other non-essential recurrent expenditure
  6. Communicate honestly and clearly to all staff about the prevailing situation
  7. Ensure the crisis management team meets often to review the situation and progress
  8. Carefully explore and evaluate all possible survival strategies (income generation and cost management) and implement only those having a quick return
  9. Manage cash flows
These are time-tested and proven strategies that have been utilised in most organisations to successfully overcome crises. Now let’s study each of them in relation to what the Sri Lankan Government has so far done. The ground-level response by the Government
  1. Accept and identify the crisis
If you cannot accept that there is a crisis, then how can one manage it? This is the most critical area where there is serious failure by the Government. Basically, as I see it, the Government seems to still be in denial that such a grave crisis has befallen us. Yes, the Prime Minister has been painting some doomsday scenarios, but apart from that, everyone else in the Government seems to be oblivious to the fact we are hurtling towards a precipice (if not already there).   One needs only to watch some of the Parliamentary proceedings to comprehend the intellectual level of the Parliamentarians we have voted into power. No one has come up with a concise, step-by-step plan as to how this crisis can be managed. We only hear terms like the International Monetary Fund (IMF) and “friendly donor nations” being bandied about. Therefore sadly, and seriously for us, the Government is like an ostrich with its head buried in the sand.
  1. Fulfil the need for strong, decisive leadership and centralised control
During a crisis, there is no time for making decisions by consensus. There needs to be strong decisive leadership with centralised command. Of course, with the current political climate it is difficult to fathom out who is in charge, leave aside in full control. And because of the fragmented leadership structure, there are conflicting decisions being made, with confusing messages emanating.  There are decisions being made by different line ministries, the PM, and the President, without any co-ordination. The leadership has to speak in one voice during a crisis. So in this aspect too, the Government has failed miserably.
  1. Set up a small senior crisis management team
For fast, decisive decision-making, one needs not only strong leadership, but also a strong, united management team. Necessarily, this has to be small in size, as the speed of decision making in a team is inversely proportional to the number of members. I am not sure what sort of “team” drives the current decision-making process in the Government. The so-called Parliamentary Committees are infamous for procrastination. I think we have currently more than 20 ministers, and more are to be appointed, as I understand. In a crisis such as what we are experiencing now, do we need such a bevy of ministers, most of whom are utterly incompetent, uneducated, and unsuited for their respective posts?  Do we need a Minister of National Development when we do not have money to feed our people? Apart from the “general baggage” they carry, what is the cost of maintaining such ministers in an environment where every cent is precious to the economy? Who bears the cost of the fuel for cars and backup security vehicles, security personnel, parliamentary sittings and other allowances, etc.? 
  1. Implement the suspension of all capital expenditure
All expenditure of a capital nature has to be suspended during an economic crisis. This means that all development projects must be suspended. This is why it is impossible to comprehend the need for a Minister of National Development in this situation.  All ministries must be issued with a circular that no funds will be allocated for projects unless approved by the crisis team. All foreign travel, unless absolutely necessary, must be banned. However this is not what is happening now, with every ministry still going about with business as usual.
  1. Prune down all other non-essential recurrent expenditure
This is obvious but it should be done in a rational manner. What logic is there in the recent Cabinet proposal to declare Friday a holiday for public sector employees except for essential workers? The already bloated, highly inefficient Government sector will now work even less, and still get paid, when the need of the hour is greater efficiency and productivity!  The two-week work-from-home proposal may have some logic, provided the State employees really work from home and ensure that day-to-day routine work still gets done. With the prevailing work ethic and productivity levels in the State sector, it is difficult to think that this will be a success. 
  1. Communicate honestly and clearly to all regarding the prevailing situation
This is vital to gain the trust of your staff (or citizens). This is again one of the great failures of the Government. There is no one spokesman, with each minister trying to score brownie points, issuing statements that are actually downright wrong, and bordering on white lies.  How often have the poor citizens been promised that the fuel situation will return to normal in a few days, or that “very soon there will be no power cuts”. The population has completely lost all faith and credibility in the State communication system, fuelling widespread reliance on social media.
  1. Ensure the crisis management team meets often to review the situation and progress
During a crisis, there must be quick and decisive decision-making. Hence the core crisis team has to meet regularly to review all activities. With the Government not even having a proper crisis team in place, how can one expect regular meetings? After the disastrous 9 May riots, there was an urgent need for immediate evaluation of the situation to re-establish law and order. Parliament, the supreme body of the people, only met on 17 May, more than a week after the serious incidents that rocked the country.
  1. Explore and evaluate carefully all possible survival strategies (income generation and cost management) and implement only those having a quick return
There will be new innovative ideas that come up, which could mitigate the crisis and address some of the problems. Each of these ideas has to be carefully evaluated on a cost-benefit basis and speed of delivery. Only then should funding be forthcoming for implementation. Instead, we now have disjointed impractical schemes mooted by different ministers, some bordering on rank foolishness.  There is a proposal to allow Government servants to go abroad for work. I heard the discussion that took place with the President regarding this, where one official said that Japan would accept workers. In response to a question about how fast one could learn Japanese for this purpose, the answer was “a few months”. Those who know the complexity of the Japanese language will realise the utter foolishness of this statement.  Then there is the call to grow vegetables in home gardens. Maybe this is a good idea, but how long will this take? Will it address the current problem? And how much will it help relieve the shortage? I also saw another one of these massive roundtable discussions with the President regarding tourism. The President instructed all to find “innovative means of attracting tourists to Sri Lanka” – when tour operators cannot find enough fuel to transport tourists around, when hotels are struggling to maintain standards, when food menus are threadbare, when the little tourist movement is often disrupted due to roadblocks by protesting people, what a profound piece of advice to tourism stakeholders! All such large meetings are a sheer waste of time and resources.
  1. Manage cash flow
During a crisis, cash is king. And in a national economic crisis such as what we are facing now, this is of paramount importance. This is one area where at least there is some awareness of the exact magnitude of the cash shortfall in the short- and medium-term.   There have been bold decisions taken by the Central bank to try and manage the cash flow. But a more comprehensive plan is required, especially for the short-term requirements. It must be said that this is no easy task with everything else in total disarray as explained above, and everyone pulling in different directions. Conclusion In summary, the report card of the Government reads a woeful “F” in almost every aspect of crisis management. The many kneejerk, disjointed responses to the issues by the Government are only further compounding the crisis. The primary underlying reason of course is the complex political crisis that is entwined with the ongoing economic crisis. So it is evident that the political crisis has to be addressed along with the economic crisis, so as to allow clear management of the issues facing the country. This is the challenge that Sri Lanka is faced with now. I am no political analyst, so I will leave that to be unravelled by those who are more competent to do so.    (The writer has over 25 years’ experience in the hospitality industry, and is a Visiting Guest Lecturer to the Business School of Plymouth University of UK, as well as a Visiting Lecturer for the Final Year University of Plymouth degree programme being conducted in Sri Lanka) …………………….. The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication.

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