Remote/hybrid work: When change is forced upon industries

 

     The recent pandemic hit the world hard. There were the horrible direct effects of death and lingering illness. A colleague lost his mother and an uncle to the disease and many others grieved. But there were also many indirect effects. Industries that were associated with travel ground to a halt. Most industries found themselves in the position of being required to learn how to work remotely.

     Remote work was not created by the latest pandemic. Remote workers have existed for a long time. It has long been used and discussed but, without impetus to management for change, little had changed over the years.

     Within the "cottage industries" (textiles made an extensive use of such), people in their own homes would be assigned work that they were expected to make of a certain quality within a given time. The cottage industries extended the square footage of the factories by making use of a network of physical spaces.

     Beyond the cottage industries, a certain degree of remote/hybrid work has existed for many other areas that require, or allow, movement from place to place as part of the job. These job categories include customer support, article writing/journalism, sales, and other mobile-requisite tasks.

     Prior to the latest pandemic, however, little shifted from year to year.  The recent pandemic forced most businesses into a remote/hybrid situation. Forced change usually means difficult, and uncomfortable, change.

     What were the results? Some industries had travel an integral part of their business and they were hit hardest. Factories, which required people to be present, had difficulties. Newly created (not the ones that had already been in existence) remote education had very erratic results (my 3 sons' colleges were quite inept at handling such). Restaurants shifted to delivery but suffered from personnel problems. Many industries in which the product wasn't physical shifted to a "cottage industry" model. But the economy survived -- it did not all collapse. Most businesses found that they could survive, and some even thrive, with a remote workforce.

     Survival does not necessarily mean thriving. Could the company do as well, or better, in a remote situation? In some cases, the answer is yes as measured by output and revenue. What about long-term? Can they continue to grow, innovate, and produce in a remote situation? What about a hybrid situation? Is that an improvement or does it end up with some benefits, and some problems, of each?

     There isn't a single answer for companies. Much of the overhead pain of transition has already been taken. It is a good time for serious analysis and discussion; it is unlikely to be beneficial to try to quickly retreat to old models.

     An important part of evaluation and consideration is feedback on how well the process is working. In my next blog, I will talk about factors on judging success.

A Six Month Reserve: A good goal for everyone

     One of the first suggestions that a financial advisor gives when you sit down with her to determine a savings/investment plan is -- have six months net income in cash for emergencies. Just past tax time in the U.S., my reserves are down but I can squeak by for a number of months with no added luxuries (no purchases, no special food, no takeout/curbside food, no presents, ...)

     I am one of the lucky ones. As we are witnessing in the U.S. (and probably many other areas of the world) people do not have six months of reserves in general. In fact, most people don't even have one month of reserves in savings. Going even further, there are probably a lot of people that are out of money by the time they receive their next paycheck -- living "paycheck to paycheck".

     This is a primary side-effect of steadily growing income inequality. Back in my earlier blog on living wages, I put forth the way people can determine what is a living wage for a person in a given geographical area.  Many people in the U.S. do not make a living wage. If you don't have enough money to pay for all of your necessities, then you will NOT be able to save money in addition. When there is a little bit extra, it is so tempting to use it to buy something desired that has been postponed (perhaps for a very long time). The more people who do not make a living wage, the more people who CANNOT prepare a financial cushion to ride out a disaster (pandemic, economic recession or depression, long-term unemployment, ...).

     OK. You make a living wage. Do you have that six month reserve built up? No? Well, in the first place, it may take a long time to build up a six month reserve even if you put away 1/10 of your salary each month (or more, recommended if you are able). Second, problems happen -- health problems are particularly possible in the U.S. and, even if insured, they are a large financial drain. (If you are NOT insured, welcome to the world of bankruptcy.) Or perhaps your car broke down and needs major repairs. Your parents need to be moved to your home for you to take care of them? Lots of possibilities to drain the reserve and hard to build it up.

     Let's say that no disaster occurs and you have a bit extra each month beyond living expenses -- maybe even a bit more than living plus a few luxuries expenses. What do you do with that money? When I was growing up, I was always in a savings mode. My brother wasn't quite that way so I was around as his personal bank. He often paid me back but it could not be relied upon. In our schools (and, often, in our homes), we are not taught how to handle money -- how to budget, how to avoid usury, how to save, how to invest, and so forth. A lot of celebrities and sports stars fall into this trap -- live high but when they break a leg or lose their popularity, they have not saved while they could. Some do -- they should be the most revered role models and not the ones that spend the most and are the flashiest.

     These examples, and the above essay, are about individuals. What about businesses? Well, quite a few large, often multinational, corporations have "deep pockets" and can take care of expenses, and carry on with business, for months (sometimes years) -- which doesn't mean they may not make business adjustments in anticipation of near-term or long-term needs. Other businesses have a credit line upon which they can draw for a few months of survival. But the small business is really in much the same condition as an individual.

     Small businesses often have a very small profit margin. Similar to an individual, the required cash flow may be considered to be "living wage" -- with any profit above and beyond. They, also, should try to save 1/10 (or more) of the profit each month to build up a reserve. But, as it is with an individual, it will take a long time to build up multi-month reserves. And, even worse than with an individual, many other people's incomes are also dependent.

     And the moral of the story? People need living wages plus. People, and businesses, need financial training. And saving for the future, when possible, is a very important item for the budget.

Flattening that curve -- what does it mean?

[ Numbers are as accurate as possible at time of writing -- but continually changing]

     At this moment, much of the world is on "lockdown" -- isolated from one another and moving around only if a person is categorized as performing "essential" work or if a person must leave the house to perform an "essential" activity (obtain food, medicine, repair, ... as defined per state or country). An essential worker is a person who is performing that essential work.

     At the "front lines" are the medical workers, ambulance drivers, ERTs, and often police and fire department workers. Being at the front line means that you are being confronted, and working, with those who ARE sick -- not just someone who MIGHT be sick (which is about everyone). Others who are providing essential services -- grocery store workers, postal and delivery people, sanitation workers, truckers, agricultural and meat processing workers, pharmacists, people who work in take-out/curbside/delivery of food, and many others -- are interacting with people who might be sick. In some of these cases, because they are interacting with so many different people, their personal risk (and, indirectly, risk of their families and others with whom they may be in regular close contact) may be high.

     A total lockdown (nobody contacts anyone else), can stop the spread of a virus (in the current case, covid-19, but applicable to any viral pandemic). But such an absolute isolation would cause many deaths -- directly from the illness (not being able to go to a hospital) and indirectly from lack of food and other needed supplies. And testing would still be needed -- somehow -- to determine when it was safe to release the lockdown. Not an easy scenario and if you miss even one case before you ease the lockdown -- back to square one.

     So, we go towards the above, essential allowed, lockdowns. This cannot stop the spread of the virus but it can SLOOOOOW down the spread of the virus.

     Yes, until a vaccine is approved and administered, people will continue to get ill. Slowing down the spread is called "flattening the curve". The main reason for this is that if spread is allowed to go unchecked it will overwhelm the available healthcare system. The Center for Disease Control (CDC)  has the following diagram:

In simpler terms, the graph says that you want to delay the period at which you have the most active cases of people not being well AND you want that highest number of active cases to be as small as possible.

     Healthcare involves hospital space (beds), sufficient staff (doctors, nurses, administrative, ...), equipment (ventilators, masks, protection hoods, ...) and medicines. Overwhelming the capacity in any of these areas will put the "overflow" into danger mode. At that point, the staff will have to "triage" the infected people with treatment going to the most badly infected and the rest will have to hope to survive on their own.

     Much of the time, equipment and medicines are insufficient but there isn't much that a regular citizen can do about that situation. Staff, unfortunately, will fluctuate as people get sick and (hopefully) recover -- proper protective equipment can help with that. What people can best have an effect on is the number of infected cases -- and that can be done by reducing the chance of an infected person infecting other people.

     Hospital beds are easy to count, so lets use those numbers to determine the maximum "peak" of the curve that will not overwhelm the system. Note that lack of staff, equipment, and medicines may DECREASE the maximum that the healthcare system can handle.

     Let us say that, in my county, the hospitals have 617 beds (which should be close to accurate, according to noted average numbers of beds -- 1.9/1000 times 325 (my county has approximately 325,000 people)). Approximately 2/3 of those beds are already occupied at a given "normal" period of time. That leaves 207 beds available for emergency needs. If not too many health care workers get sick (such that we are unable to staff for a fully case load) then as long as the number of hospitalized cases stay under 207, it can be handled.

     One additional factor is what percentage of cases need to be hospitalized? All cases need to be identified and treated but not all require a hospital bed. Without universal, daily (or every two days), testing precise numbers are not possible -- because there is no way to know exactly how many people are infected. Some early reports indicated that MAYBE 1/5 of the cases need to be hospitalized. Therefore, a number greater than 1035 cases will overwhelm the number of hospital beds (1035 / 5 = 207) in my county. Recorded numbers (as of today) of cases for my county is 536 -- so we are not overwhelmed as of yet but our numbers continue to increase daily. We are still very much in danger.

     If we apply the same formulas to the situation in New York, we see (as of today) that there are approximately 270 hospital beds per 100,000 (2.7/1000). If 2/3 of these beds are already occupied, that leaves us with 90 beds per 100,000 As of today, there are 1302 cases per 100,000. 1/5 of 1302 is 260 expected hospitalized cases. We see that New York state has far exceeded the number of hospital beds (almost 3 times). And, New York may have 270 hospital beds per 100,000 for the STATE but hospital beds and cases are not equally spread out within the state. Thus, the New York City metro area is in much worse condition than what would be seen from the initial formula. That is why so many temporary hospital beds are being set up -- but just adding beds does not add equipment, medicine, or staff.

     What happens if we do exceed the number that can be handled? We can see that in areas of the country that have had cases rise out of control for too long. Death rates rise. In Italy, this has also happened. The same holds for cruise ships and other confined areas such as retirement homes.

     So, when can an "essentials only" lockdown be cleared? This is associated with the idea of "herd immunity" where the contagion factor (how easily the disease is passed along to others) is associated with how many people are no longer able to be infected (recovered or naturally immune or vaccinated). The contagion factor is improved by isolation and lockdown. There are too many factors involved for me to even venture a guess.

     In the Spanish Flu Pandemic (1918 through 1920), there were "waves" of infection. Lockdowns, followed by ease of restriction, followed by increasing infection, followed by lockdowns, followed by ease of restriction. Health care is potentially much better than in 1918 but many political and economic factors are involved with treatments and population restriction.

     As mentioned earlier, full accurate numbers are not available. We don't really know just how many people are, or have been, infected. We don't know how many people who have died and had their reasons marked down in error. But we do have ways to slow the rate of spread of infection and we have real world examples of what happens if the rate of infection overwhelms the healthcare available.

     Best of futures to all. Stay safe.