Steve Jordan talks to Yann Blandy, CEO of Santa Fe, about his approach to dealing with the COVID crisis in a company that spans 41 countries.
Every company has had to find its own way through this current crisis, and most are still doing so. It’s hard for everyone, but I was interested to know how a company that operates in multiple locations, with the virus at different levels of severity and gestation, and wildly varying government regulation, approached the problem.
Yann Blandy was, of course, not in his office. Like many he was keeping travelling and contact with large groups of people to a minimum, so I spoke to him as he took a stroll by the shore near to his home in Stockholm. To the sound of seagulls crying punctuated our conversation accentuating the feeling that the world really has changed. Maybe, in some ways, for the better.
Keeping hold of the cash
I wondered what actions he had taken as soon as he realised that the virus was going to pose a major problem. He said that as soon as he realised what was happening in China, his objective was to secure the health of his staff and assignees, and to then secure the health of the business. “This required the implementing of the company’s Business Continuation Plan and the adoption of new operating procedures that we had to roll out from China, through Asia and then onto the rest of the world,” he said. “This was essentially about establishing how bad the situation could get and then securing as much cash as possible so that we could manage it. That we did almost immediately.”
Securing the cash was achieved in four separate ways: permanent savings, temporary savings, deferred payments and borrowing.
“Permanent savings came by reducing a number of positions, where we had to.” Yann explained that this involved losing some people and not making some planned appointments. This reduced the overall workforce by around 100 people (6%). It also included cancelling some planned investments. “This gave us about 20% of what we were trying to achieve,” he said.
Temporary savings were achieved by taking advantage of the various government support programmes and asking staff to take salary cuts. “We asked staff to reduce their salaries by around 20% with management asked to cut further. My deputy CEO and I reduced our salaries by 50% initially. We had good participation across the business.”
The company was able to defer the payment of some taxes and other payments. It also asked for extended credit from some suppliers. Borrowings came from government-backed loans. Santa Fe also asked its bank to extend additional lines of credit, which was achieved successfully.
“All in all this amounted to a significant amount of cash that we were able to free up pretty quickly,” said Yann. He added that he was also working on the disposal of some assets which he hoped to finalise in the coming months.
Securing the service
There were an immediate set of actions that Santa Fe considered essential for continuous service delivery and to face the unusual challenges that customers were posing. “We had to make sure that we were flexible and being commercial without being greedy whilst taking into account new costs that were involved as we planned to restart operations. But the crisis has been very asymmetric. All of the countries are in different levels of opening or closing so we had to adapt the global principles of our business continuity plan to meet the needs in each market.”
Yann pointed out, for example, that China closed first and opened first but has not returned to normal levels because the rest of the world is still largely shut down. “The US was down, then up, then down again so all we now have is repatriating Americans,” Yann explained. “India has been very difficult too. With 41 different realities we have our global operation tool that allows us to monitor changes and helps us forecast how long it will take to move people to different places depending whether the market is open or closed.”
Santa Fe also reorganised its management team at this time to make it smaller and more agile. “This enabled us to make better decisions faster,” said Yann.
Forecasting the future
Finally, Yann and his team had to try to forecast the future and adjust the business to what they believed would be the new trading levels. Yann explained that they had spoken to customers, partners, agents and studied the economic environment to try to identify trends and establish whether they are short or long term. “They only thing we were sure of was that we didn’t know,” said Yann. “So, we tried to figure out some scenarios and which were more likely than others. Then we decided on the actions we would take in each scenario and established some ‘no regret’ actions that would apply whatever happened.”
The approach he used was to consider two scenarios as a matrix. One axis showed the way the pandemic has affected the way we live, the other the way we work. “So, let's say there is a big change in the way we work so that companies don't send assignees other than for major management positions. In this case we have reached peak mobility and we will be witnessing the repatriation of talent. But we haven't changed the way we live, so people still want to move globally for personal reasons. This means that we have to become a more consumer focused business.”
The other scenario assumes that people don't want to move because they are scared of the pandemic; they prefer to stay close to their families and the environment that they know best, but companies still want to send assignees abroad. “So, this means that we need to help companies provide extremely attractive packages to individuals to convince them to move their families with a high care, white glove service. It would be a completely different approach.”
Having done the work Yann admitted that they didn’t know which it would be or where on the matrix the industry would settle. “Right now, I wouldn’t bet my house on either scenario, but we are ready to conclude that demand is going to be subdued at least until the end of 2021 or, if you're pessimistic, to the beginning of 2023. We believe that the industry will be smaller by 20-30% long term. There may be something of a rebound next year but there is a trend towards a decreasing need for our services. There are some optimists that say that competition will also reduce. That's possible but it's only going to be positive if you have more competition going out of business than you have demand going down. And I'm not ready to bet that this will be the case. If the industry gets smaller then we most likely will need to get smaller so we will need to take some ‘no regret’ actions.”
I asked Yann what those ‘no regret’ actions might be, but he chose not to say. “I shall keep that to myself,” he said, “it is our recipe to survive in this climate.”
I was curious about what Yann felt had gone well and what did not. He said that he had been surprised at the speed with which they had been able to rebuild their forecasts and how accurate they had been. “We are not going back to the old ways in the future,” he said. He was also pleased with the way they had been able to execute those plans.
But perhaps mostly he was impressed with his staff, how they had established themselves working from home, bonded as a team and “walked the extra mile” to deliver outstanding service. “What's been fascinating to watch is that during April and May Santa Fe has reached the highest customer satisfaction that we've ever had,” Yann explained. “Customer demands in terms of complexity went up and our crews had to follow specific instructions and solve problems that they never faced before. It was new to everyone, so when we met those expectations, customer satisfaction went through the roof.”
What could have gone better? “Everyone would say the same: we could have done more, and we could have done it faster. Although nobody knows what's going to happen in the future, every senior leader nowadays has to make more decisions with less information. The pandemic has just made that more complicated.”
If there’s a second spike is Santa Fe in a stronger position that it was? “Operationally yes, because we know exactly what to do. But just like everyone else, seeing your revenues and profitability plunge doesn't make you stronger. Having lost one quarter, to lose another would not be great.”
Finally, I asked Yann about his thoughts on communication in the industry as the new ways of working have become established. Would he be jetting off around the world as much as in the past? “The future will not be as it was,” he said, “but it won’t stay as it is now either. It will be a balance.” He said that during the last three months he has been managing Santa Fe, a company that’s in 41 countries, from his apartment in Stockholm. There’s no way that I'm going back to travelling three or four days a week. It’s not going to happen.”
But he does miss the human contact and the team bonding. “There are gains and losses, but I strongly believe will have to find the right balance. Now we have office space for 1100 people, I don't think will need that in the future. If 30-50% work from home, I’m fine with that.”
Regarding conferences, he understands that they must take a break. “But they’ll be back.”