Watch the webinar
Today's webinar took the form of a conversation between the CBI’s own Director-General, Dame Carolyn Fairbairn, and the CEO of Unilever, Alan Jope. The main point of discussion was reopening – and how to do it. Unilever already has a lot of experience in this area, as it has either kept operations going or returned them to something-like-normal around the world, so we were grateful to hear Alan’s insights. Here are the key takeaways:
- The significance of the Prime Minister’s statement
- Our principles for reopening
- How Unilever exemplifies these principles
- The shortage of personal protective equipment (PPE)… or not?
- Thinking of the new future.
The significance of the PM’s statement
Boris Johnson returned to the podium yesterday, for the first time in a month, to deliver the government’s daily coronavirus briefing. But it was a “significant press conference” for other reasons, as Carolyn explained.
Not only did Johnson confirm that we are now past the peak of the virus, he also “signalled that there would be a plan set out next week for the cautious reopening of the economy”.
The CBI, which has been deep in discussions with the Treasury and the Department for Business Energy & Industrial Strategy (BEIS), is in a position to know what some of this planning will look like.
This week, said Carolyn, the government has been “really accelerating” the new workplace-by-workplace guidance for reopening. Originally, we expected this to cover about six or seven different environments, from offices to factories to call centres. But now, thanks in large part to feedback from the business community, it will be “something like ten” – and is likely to be published next week.
Carolyn added that business feedback has been crucial in general – and amplified by the CBI: “Because we’ve been working very closely with BEIS on this [guidance], it is going to reflect much of the best practice that’s already available. We’ve been able to feed in some of those very practical suggestions… like wider walkways on construction sites.”
Principles for reopening
Carolyn also outlined the CBI’s five principles for the next phase of the recovery, which she also touched on in an article for the Financial Times yesterday.
- “We mustn’t let this be a trade-off between health and the economy.” For the economy to recovery successfully, then the public and employees need to know that it is reopening safely. At all times, “it does have to be safety first”.
- “A collaborative approach is crucial to making it work.” Where the CBI has witnessed successful outcomes, they’ve almost always involved close conversation between businesses, employees and employee representatives, healthcare experts, politicians, and other stakeholders.
- “It’s going to have to be phased.” Some businesses will have to reopen at different times and at different paces than others. “Understanding where you come if going to be an important consideration.
- “Flexibility within a framework.” Businesses need guidance on how to reopen safely – but that guidance must be flexible and open, rather than strict and prescriptive, so that businesses can make it work in their own specific environments.
- “Let’s build back better.” It isn’t too early – in fact, it’s probably the right time – to think about how we want the new economy to operate; greener, more advanced, more prosperous.
Carolyn explained how some of these principles might be enshrined within the government’s policies – including in its economic support package. For example, the Job Retention Scheme (JRS) could, in effect, split into “two furlough schemes”. One, much like the current one, that is designed for “hibernation”, for those businesses that will need to be shut down for longer. And another that’s geared towards “reanimation”, which could include partial and tapered furloughs.
How Unilever exemplifies these principles
Safety first, collaboration, phasing… it was striking how many of Unilever’s actions, as Alan described them to us, demonstrate these principles for reopening.
He told, for example, of the company’s approach to its factories around the world. It has been “more nuanced”, he said, than just “factories open, factories closed”. Unilever has operated on a five-tier system, where Tier 1 represents “business as usual” and Tier 5 “a community-wide outbreak of coronavirus”. Each tier has different levels of openness and different protocols associated with it.
“We have found that the protocols for social distancing in factories where you’re mixing stuff and putting it into packs,” he continued, “is quite easy to set up…. The devil is in the transition points… Shift changes, cafeterias, cleaning.”
And that’s just the factories. Unilever has had to apply different protocols for its different types of workers. “90% of our office staff are working from home,” said Alan. “Rather successfully, I must say.”
One of the main ingredients in Unilever’s successful, nuanced approach has been communication, mixed with a degree of flexibility: “If people don’t want to come to work, we will continue to pay them, they don’t have to come to work…. If they have family commitments, we are absolutely clear: that comes first…. There have to be conversations.”
The PPE shortage… or not?
Unilever is emphasising social responsibility throughout the crisis. Alan revealed that the company hasn’t taken any money from the government – in large part because “we don’t think we need it…. It’s a luxury that we can take that position.”
The company is also using its “very strong balance sheet” to help fund everything from hospitals in Africa to hand sanitisers for the NHS.
On the subject of PPE more generally, Alan made a surprising but reassuring point: “Masks, gloves, basic overalls, eye protection… there is no global shortage at all.” In fact, he went on to say: “If anyone wants 5 million masks, we can get them to you in 10 days’ time. Drop me a note.” His point was that “if you look beyond the immediate boundaries of the UK, and particularly to China, there’s tonnes of PPE available”. It’s relatively easy for a company with “global reach”, like Unilever, to access it.
As Carolyn said, this is a “powerful message” – particularly as the CBI continues its effort to source more PPE for UK businesses. Alan suggested that the Unilever and the CBI might be able to collaborate in this area. Watch this space.
Thinking of the new future
The final minutes of the webinar focused on the final one of the CBI’s five principles for reopening: “Let’s build back better.”
Alan made the point that “normally, big step-changes – improvements – in equality only happen after wars or big crises”. And he hopes that the current crisis will do likewise: “Teachers, nurses, delivery people need to be properly rewarded for the work they do.”
He also revealed that Unilever has split its executive team in half, with one half thinking of the “here and now”, and the other thinking precisely about “the new future”. Alan continued: “It’s going to be digital everything, so we’re making sure we’re digitising every element of Unilever… Home and cocooning are more important, so we’ll be reprioritising our inventory… We will never again see Unilever HQ with the same occupancy levels as before the crisis.”
Key questions we answered:
- To Carolyn, what is the CBI hearing from companies that are starting to re-open?
- More and more firms are starting to think about restart on a trial basis, operating a fraction of a production line or a few stores initially.
- But there is interdependency across sectors - in terms of who is open or not across the supply chain, and ongoing government restrictions impacting some sectors, or parts of organisations, more than others, e.g. ban on mass gatherings - continues to be an issue for many firms.
- There are no simple answers, but a need for continued, close collaboration between government. and business. We need to work carefully, and cautiously, to protect health and the economy.
- To Carolyn, is there any more you can say around this idea of building back better?
- The immediate priority for government and firms is to ensure the economy is strong and ready for a sustainable recovery across UK. This is a substantive undertaking, with the economic scarring and disruption to businesses’ operations created by Covid-19 potentially taking several years to undo.
- Yet, the post-Covid-19 recovery also affords the UK the opportunity to think longer-term and utilise the restart to build back stronger, with a more resilient economy with key foundations for future.
- For example, the crisis has accelerated companies’ digital strategies, with firms reporting they are up to eight years ahead of where they would have been.
- Flexible working has also increased exponentially. Businesses are now considering what this means for their long-term workforce planning.
- On sustainability, the financial crisis arguably led to a reduced focus on climate change action. Could this crisis offer chance to fast-track decarbonisation plans?
- To Alan, how are Unilever handling the crisis?
- Unilever believe in a multi-stakeholder model for our business. On 13 March we announced a global, mandatory work from home notice for all our office staff. Our first reflex was to take care of our people. Looking after supply was our next focus.
- Then we worried about how we adjust to new patterns of demand and community.
- We have around 150,000 on the direct payroll, 70,000 office workers, 50,000 factory employees and around 20,000 field sales staff.
- All our office workers are working from home. 221 factories around the world are continuing to run.
- We are trying to get the field salespeople to work virtually where possible. But when they have to go out to stores, they must follow strict social distancing protocols.
- We have a five-tiered system depending on how safe a factory is. Government tends to take a ‘closed or open’ binary view. We think it is more nuanced. This ranges from level 1 being ‘businesses as usual’ to level 5 being ‘community-level infection’ inside the factory.
- We have instilled clear signage across our factories, including clear two-metre lines on the floor to mark the distance employees need to adhere to.
- We think the key to protecting our workers is through focusing on the transition points. That is, the entry and exit from the factory sites.
- We enforce temperature checking for employees entering our spaces. We also have shift rotas installed. The tricky bit is not on the daily operation of the factory, it is in areas where many congregate, such as cafeterias.
- Companies need to think very carefully about the protocols they have in place when a Covid-19 case is detected in their workplace. That is crucial.
- To Alan, how do you instil confidence around the use of workplace cafeterias, the interaction between staff shifts, and what is your approach on things like masks and testing?
- In factories it is obvious when we are creating safe and dangerous conditions and we trust our employees to follow their instincts. We are in voluntary mode at the moment. If people do not want to come to work, they do not have to. We will continue to pay them.
- If we see an opportunity to upgrade safety, we will do it straight away.
- We appreciate that some people are working from home in less than ideal conditions.
- To Alan, on the partial reopening of businesses, let’s say you are allowed to bring 25% of people back to your office but are paying full rent. You are effectively being asked to do something that is uneconomic, a prescription for bankruptcy but also a key step towards reopening. Do you understand how this is a problem?
- We are having to tell government those practical stories about what it is to run a viable business operating at half capacity, and how we create an environment that makes it affordable for businesses to bring people back. We want the government to seriously consider a flexible furlough scheme.
- If we don’t do this, we could have businesses choosing to close – due to the new cliff edge coming at the end of June.
- We are making the case to Treasury that this flexibility has to be designed now to give companies the confidence to keep their employees on and reopen in a phased and sustainable way.
- To Alan, how are Unilever dealing with their suppliers during this crisis?
- We committed to donate 150 million euros worth of safety products, hygiene, sanitisers etc. Most of this has been given away.
- We committed that nobody in Unilever would lose their jobs for three months. We also decided to include, in this pledge, workers such as security guards, cafeteria workers and cleaners who work for a third party.
- We have 500 million euros of working capital available, mostly for prompt payment of small suppliers who will face cashflow problems.
- We want the infrastructure we rely on to be vibrant and well when we come out of this, so it isn’t just an altruistic consideration.
- We will extend credit to our customers in certain circumstances, but the majority of that working capital is to keep our suppliers afloat.
- To Alan, you said there is not a PPE shortage in the world. This is interesting because companies are worried about taking PPE if it deprives healthcare workers who need it. Why are you sure there isn’t a shortage of PPE?
- Eye protection, masks, overalls and gloves are not in worldwide short supply. If anyone wants 5 million masks, we can get them for you in 10 days’ time.
- The government are working with us but there is significant worldwide capacity on these kinds of PPE.
- On testing, we were able to source the tests that determine whether you have the Coronavirus. We sourced 700,000 testing kits that we are sending to 14 countries around the world where the capacity for testing is low and likely to stay low. In those countries, we will test people who have symptoms and their dependants.
- We are a big employer in Africa where the health infrastructure is weak. We are building hospitals there in anticipation of an outbreak.
- If the CBI wants to get a consortium of big companies to supply the PPE, we would be happy to help.
- I don’t think any employer should take a chance on employee wellbeing for fear of depriving health workers of that equipment. There is plenty available. The idea there isn’t is a myth.
- To Alan, are you planning for a return to office work?
- We have split our top executive team in half, with one trying to reimagine a new future. We are going into a recession so value will be important for people. We have to digitise every element of Unilever and there will be a reprioritisation of our portfolio to focus on hygiene.
- It has taken us seven weeks to get to 70% occupancy of our offices in China.
- In terms of our London office, I don’t think we will ever again see the same level of occupancy that we did before the crisis. Some people have thrived working from home.
- We are using big data to keep an eye on the intensity of how people are working. We do this because we want to keep track of those who have not got a good work life balance and are struggling to switch off.