John Bai can see the storm clouds coming, and he thinks that companies should be prepared.
Bai, an associate professor of finance at Northeastern University who studies financial technology and how firms adjust their decision-making around technology, says that the COVID-19 pandemic presaged the kind of heel-turn pivots firms will need in the future.
As extreme weather events become more common “in a warming world,” Bai and his co-authors write in a recent Harvard Business Review paper, “Your Company Will Need Remote Work as Extreme Weather Gets Worse,” remote work will increasingly provide a solution to maintaining business continuity.
“COVID-19’s a once-in-a-lifetime kind of event, hopefully,” Bai says. But the steps that many companies took during the pandemic — specifically, pivoting to remote work — extend to other situations, like extreme weather and natural disasters.
Extreme weather events often mean that it’s too dangerous for employees to travel to an office or other facility, but being remote-prepared means that a business doesn’t lose precious operation time when weather strikes, Bai says.
Of course, the exact nature of an extreme weather event — and the inherent unpredictability of such events — means that preparation produces better success on the average, and not in every specific case, he noted in an email.
But before looking at extreme weather, the researchers began their work by looking at how readily organizations were able to pivot to remote work during the COVID-19 pandemic.
To perform the research, Bai relied on an aggregator of job listings called Burning Glass Technologies, which “scrapes and gathers all the job postings that are online,” he says, and which has collected data since 2007 (with a two-year gap during the 2008-09 recession).
Bai used these job listings as a marker of “how much skill or how much labor a company is demanding, or trying to find to fill their needs,” he says.
This data was cross-listed against an “index which measures, in each occupation, how [quickly] can you make that particular job fully remote?”
“We’re trying to basically get a sense of, at the firm level, how much [of] a firm’s overall capability can be transformed online and converted to fully remote?”
“By merging those two datasets together,” Bai continues, they can now make a decent prognosis about “how capable a given firm is able to shift its entire functionality out” into remote operations.
What Bai quickly found was that, in the case of COVID-19, various metrics — including accounting and stock market performance — told the same story: “If you are a firm that is more ready to convert everything online, where your workers are able to work from home, then you ‘suffer’ less.”
Those firms that were better prepared to work remotely suffered less — performed better — in the unexpected environment of the COVID-19 lockdown. But this held true, the researchers found, for other unpredictable conditions as well, not just the pandemic.
Unlike the COVID-19 pandemic, which was effectively global, natural disasters strike different locations at different times, a fact that Bai could use in his analysis, comparing locations affected by a natural disaster or extreme weather event against those that weren’t.
The study focused on publicly traded firms, which are often larger by nature, but “the results are somewhat stronger for smaller, more geographically concentrated companies,” Bai wrote in an email. This is likely because larger, more distributed companies observe less of a difference when one location goes offline than smaller companies do.
“Preparedness that allows for work from home, and converting everything online when bad events hit — that has a universally beneficial side to it, regardless of the events we’re talking about,” Bai says.
Crucially, he says, “You’ve got to sow the seeds in good times.”
Some facilities were prepared for the lockdown that began with the COVID-19 pandemic. While call centers, for instance, were traditionally organized within large facilities like warehouses, some companies had already built the remote structure into their organizational capacity, in distributed networks.
“Certain call centers were able to maintain their function and interaction with customers almost undisrupted because of this preparedness and organizational capability,” Bai notes, while others were down for a prolonged period of time.
But the process takes coordination, Bai continues. “It’s a concerted effort. It’s not so easy as to give every one of your employees access to Zoom.”
Rather, he says, organizational preparedness needs to spread across the firm. And in some ways it’s easier in higher education than in other settings.
Universities often already have access to digital learning management systems that bring many of the regular functions of teaching — like submissions, grading and even discussion — online.
“Northeastern is actually a perfect example,” Bai says, “in terms of its capability to shift almost everything online” in response to the COVID-19 pandemic.
Now that Northeastern has this capability, he argues, it is better prepared to face future challenges, even when traveling to and from a campus might be difficult or dangerous.
“The ability to instantaneously, and almost overnight, transform everything to an online delivery method — that’s not something that every industry or firm is able to do.”
Noah Lloyd is a senior writer for Northeastern Global News and NGN Research. Email him at n.lloyd@northeastern.edu. Follow him on X/Twitter at @noahghola.