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Running head: DISEASE AND ITS EFFECT ON MULTINATIONALS

Disease and its Effect on Multinationals

Julia T. Zielinski, Camille D. Tilghman, Edward Hughes, &

Amanda Mejia

University of New Haven

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Running head: DISEASE AND ITS EFFECT ON MULTINATIONALS

Abstract

Throughout history, infectious diseases have had a close connection with multinational

business interests. In this paper we explain the value that different diseases have towards

multinational businesses. This is done through an analysis of several past and current

situations, examining the hurdles faced, and a guide of precautionary steps multinationals

should take in the occurrence of an epidemic. A review of literature revealed the complexity

of multinationals during an epidemic, social and economic outcomes, as well as health

precautions to be considered. Social and economic outcomes which correlate with a disease

should be a concern for multinational companies, considering the affect it has on corporate

productivity and human rights to health. The infectious diseases that we focused our research

on are HIV/AIDS, Ebola, Zika, Swine Flu, SARS and Coronavirus. The various infectious

diseases that have occurred throughout history and present day have greatly impacted many

aspects of society including multinational businesses.

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Running head: DISEASE AND ITS EFFECT ON MULTINATIONALS

Introduction

Disease and Its Effect on Multinationals

“A big concern is that the virus will spread quickly in Europe and the United States,

forcing consumers to stay home from work and not to mention avoiding stores, restaurants or

other businesses” (Eavis 2020). Whether it be the Coronavirus, HIV/AIDS, SARS, Swine Flu,

or Ebola, disease can consume any economy. Just as businesses did during the HIV/AIDS

outbreak, companies such as Facebook and Amazon are rethinking international travel for their

employees, while JetBlue Airlines and Alaska Airlines are eliminating trip cancellation fees in

the midst of a Coronavirus outbreak (Bhattarai 2020). These cancelled international

conferences, that took a lot of time and money to plan, will most likely never happen at all.

Cancelled trips also have an immense impact on hotel bookings. This a domino effect is what

can seriously hurt multinationals and the world economy.

Method

This paper is conceptual, and we will be using a metanalysis approach. The paper

will include multidisciplinary literature research including international human resource

management, medicine, and psychology. Specifically looking at scholarly journals, peer

reviewed journals, historically accurate books, and news articles to provide context and

insight into the topics.

Literature Review

A virus requires a living host cell to reproduce itself, otherwise it can’t survive. Once a

virus enters your body, it invades your cells, takes over the cell machinery, and duplicates

itself. After its duplication, the virus can become a viral disease when it “jumps” or transfers
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Running head: DISEASE AND ITS EFFECT ON MULTINATIONALS

from one host to another (Steckelberg 2017). When a virus becomes viral, it impacts not only

the country of origin, but countries abroad, societies, and multinational companies. There are

six major viral diseases that have impacted the global economy and multinational companies:

The Human Immunodeficiency Virus (HIV)/Acquired Immunodeficiency Syndrome (AIDS),

Severe Acute Respiratory Syndrome (SARS), Swine Flu, Ebola, Zika, and the Coronavirus.

These epidemics affected the world and economy negatively, but it taught multinational

companies how to respond to pandemics.

According to Daly (2000), HIV/AIDS impact on the workplace caused a decrease in

productivity, increased costs, and declining profits. Productivity lowered as absenteeism rates

and organizational disruption (staff turnover, loss of skills, loss of tacit knowledge, and

declining morale) increased. Costs increased because the demand for recruitment and training

raised due to staff turnover, a rise in life insurance and pensions from early death or retirement,

and the companies that offered health insurance and/or funeral aid. Bates & Thompson (2003)

share the same viewpoint about the costs of HIV/AIDS to businesses, but they believe there is

a tertiary cost; this is the damage to corporate reputations and the decline of product markets

and investor interest. In China, almost every company’s brand and image were affected. A

company was viewed negatively if they didn’t provide treatments to the ill. Multiple companies

also lost investor confidence in their business and access to capital, so their demand for goods

and services reduced drastically. This situation resembles today’s effects from the Coronavirus.

The world is now struggling with the most recent pandemic, the Coronavirus, properly

known as COVID-19. Research has suggested that a venereal disease with its origins in China

is not surprising one, as there has been a large increase in income growth, urbanization,

globalization and, especially zoonosis in the area (Wu, Perrings, Kinzig, Collins, Minteer, &
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Daszak 2020). The Coronavirus is affecting the world at a fast pace due to its high contagious

rate with no current vaccine. As a result, this virus has disrupted world-wide trade and supply

chains, depressed asset prices, and placed multinational companies in a tough position. Since

America is so reliant on China’s manufacturing economy, many US multinationals are feeling

the effects. Production plans for Apple are being postponed due to infected factory workers.

Starbucks Inc. and Levi Strauss & Co. have taken a massive financial loss and closed half of

their stores based in China. Levi’s is projected to lose about 3% of its annual revenue and has

restricted employee travel into China. Disney’s theme parks in Shangai and Hong Kong have

shut down; Disney’s operating income is expected to reduce by $175 million. This is less than

half of the multinationals affected (Areddy 2020; Kenvin 2020; Yaffe-Bellany 2020). These

two viruses have impacted multinationals greatly, so what are the lessons these companies have

learned? How do you respond appropriately to outbreaks?

From previous viral diseases, multinationals have learned how to become better

prepared. Daly (2000) believes HIV/AIDS taught businesses some key lessons. Businesses

must utilize low cost creative tools to ensure sustainability, undertake continual monitoring,

ensure there is a committed leadership and awareness, engage in a multi-pronged approach to

ensure effectiveness, and develop initiatives that matches the company’s strategic direction and

needs of the target audience (infected). The World Economic Forum & Harvard Global Health

Institute (2019) states there are three approaches to managing infectious disease risk: passive,

active, and advanced. A passive approach is the wait-and-see response strategy. The board has

no strategic threat management in place and low levels of awareness. Whereas the active

approach occurs when there is a basic outbreak response and business continuity plans. The

board and management have some awareness and there is a generic business disruption
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insurance coverage. The advanced approach is when there is active threat surveillance

occurring, a detailed response and continuity plans, active engagement in public-private

cooperation to mitigate risk, an active supply chain management, and a strong board-level

leadership. When HIV/AIDS occurred, most multinational companies adopted the passive to

active approach, but over time due to Ebola, SARS, Zika, and the Swine Flu, multinational

companies are utilizing the passive to advanced approach. Many multinational companies use

the wait-and-see approach when a virus first infiltrates a country, but after acknowledging its

dangers, multinationals step up. Once the outbreak is controlled, HR is actively ensuring

employees are educated with the disease, employees are insured, and reassuring employees that

everything will be fine.

HR has realized the fear of the disease being exposed is greater than the statistical odds,

so employees will be scared to report to work and become cautious. Woodward (2018)

recommends HR should be transparent about health risks, emphasize hygiene, schedule

employees in shifts, send ill workers home, and most importantly have a crisis plan. In

November 2005, the Deloite Center for Health Solutions reported that only 14% had

adequately planned for possible pandemic. Even though 85% of companies had a formal

disaster preparedness plan, only 18% reported completing their plan; this crisis plan should be

expressed towards employees for reassurance. After the epidemic, companies should expect

higher levels of absenteeism.

Findings

Some multinational companies have taken steps to reassure employees during the

current pandemic. For example, “as of March 8, a majority (61 percent) of employers have

developed a communication strategy related to Covid-19" (Kuener). While having a

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communication plan is a step in the right direction, a more in-depth planning is required since

only 13 percent of employers have a detailed COVID-19 plan (Kuener). Specificity matters

because of the severity of the disease.

Walmart, one of the largest multinational supermarkets, made headlines when they

implemented strict polices in response to the COVID-19 pandemic. Walmart’s response

included single employee entrance, temperature checks upon arrival to work, sanitization of all

carts throughout the day, company-wide 7am open to 8:30pm close, a thorough cleaning of the

facility every night, count and limit the number of shoppers in the store, put markers for a

social distancing line if shoppers are waiting to get in or waiting to be checked out, sanitize

wipes available near the shopping carts, employees required to wear masks, directional arrows

for customers to follow, Plexiglass dividers at all checkout stations, pay via mobile phone at

checkout counter through the Walmart app, and reserved the first hour of store opening to

senior citizens and healthcare workers only (Walmart Video).

Amazon, the largest online retailer in world, also implemented changes for their

employees. These included providing masks and gloves, installing over 2,000 handwashing

stations, hiring more janitorial staffers, hand sanitizers, sanitizing spray and wipes, made

certain employees “social distancing ambassadors” to enforce rules and help with temperature

checks (US Day One Blog). Othera policy changes included,

“In mid-March, it announced that employees could take unlimited time off without pay

(previously, they would be fired for more than taking a certain amount), and they would

receive up to two weeks of paid leave if they tested positive for COVID-19 or were placed in

quarantine. Later, the company raised pay by $2 per hour, doubled overtime pay, and gave

part-time workers paid time off. As the virus spread, Amazon moved warehouse break room
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tables apart, staggered shifts, canceled stand-up meetings, and made other adjustments to

enable greater distance between workers” (Dzieza 2020).

Planning for a major change, especially one such as preventing the spread of a

pandemic, is crucial; however, planning means nothing if not properly implemented. Workers

of Walmart reported being sent home-for wearing masks, because managers thought it was

scaring customers(Dayen 2020). Walmart Corporate could not support its subsidiaries. Even

ten days after Walmart announced changes, subsidiaries were unable to complete temperature

checks, nor have Plexiglas shields by checkout counter; and while there were signs up about

social distancing, there were no employees enforcing them between customers (Dayen 2020).

At Amazon, multiple employees complained and later protested about the lack of safety

equipment and the impossibility of keeping social distancing policies. Amazon also came

under fire by the press in mid-April for firing multiple employees for speaking out against the

working conditions (Davis 2020). These failings by Walmart and Amazon have led to

dangerous workspaces and have put the lives of customers and employees at risk. In times of

crisis, multinationals need to put safety above profit margins.

Suggested implementation plans/actions. The HR department plays a major role in

the creations of crisis management and business continuity plans. Work-from-home initiatives

and alternative flexi-work strategies should be implemented into a company’s crisis plan. A

tele-working policy should now be a part of every organization. In Asia, the Economist

Intelligence Unit (EIU) recommends multinationals to be flexible and protect revenue by

switching to alternative product lines, sourcing alternative suppliers, and focus on regions

exempt from strict quarantine measures (Syed 2020). Companies are introducing split-working

arrangements into the workforce for specific roles and functions.

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Effect of diseases, specifically COVID-19 (HR policies). Since COVID-19, remote

working, if applicable, has been the new normal, unless a business is considered “essential”.

Syed (2020) cites business continuity plans, managing flexible work arrangements, managing

employee communication, addressing employee concerns on workplace policies,

implementation of preventive measures, and reviewing current welfare policies are the main

challenges HR face. In addition, multinational companies are experiencing work disruptions

and jobless employees. HR departments are creating employee assistance programs and family

care support to boost employee welfare. The Department of Labor’s Wage and Hour Division

(WHD) has released the Families First Coronavirus Response Act (FFCRA). FFCRA, which is

now into effect until December 31st, requires certain employers to provide paid emergency sick

and medical leave for any reasons related to COVID-19 (US Department of Laber & Wage and

Hour Division 2020). This law applies to both teleworking and/or working employees. Now,

businesses must alter their existing paid leave policies and formulate new budgets for 2020.

Proposed guide for MNEs

Many multinational companies can find ways to continue doing business during a

pandemic. For example, some companies change the way they advertise. KFC, instead of

having a commercial where customers are eating and licking their fingers, adjusts their

advertising to follow “medical advice to avoid touching your face” (Handley 2020). Food

companies and restaurants should focus on delivery and accommodating to a pandemic

rules and regulations, even in their advertising campaigns. Other industries, such as car

dealerships, can offer delayed payments for anyone who has recently bought a car.

Specifically, Volkswagen will even waive the first six payments on your car if you have

lost your job due to the pandemic. Streaming services can offer lowered monthly
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payments to existing customers, or even a longer free-trial period for new customers.

Stephan Loerke, CEO of the World Federation of Advertisers says that “brands around the

world are adopting very human, often brave, approaches to supporting society at a time of

dire need” (Handley 2020). No matter what industry a company is in, there are many ways

it can continue to do business.

Section on our Recommendation

Due to the unpredictability of a pandemic and being unable to know how long it will last,

it is very difficult to be completely prepared. “There are significant differences between business

disruptions that are caused by natural, human-made, technology or operational failures and those

caused by pandemic events” (Americas 2020). Specific actions can be taken into consideration

which may help a multinational organization. Organizations should incorporate pandemic

planning into their management policies and procedures. The first priority of an organization

should be the health and safety of the employees. It is difficult for employees to get work

completed when they and their families are at risk. The following recommendations focus on the

health and wellbeing of a Multinational’s employees.

Companies must decide whether their employees are safe to work in person during the

pandemic event by monitoring the situation and recommendations of medical professionals and

the government to determine whether their businesses should remain open in-person. As we have

recently experienced with COVID-19, the government required non-essential businesses to close.

In a situation where a multinational company has an employee or employees living in another

country that is unsafe, they should work on moving that individual home or somewhere safe by

providing support and guidance for safe housing and transportation. “Multinational companies

have a keen interest in keeping staff healthy and in containing the spread of a disease, not only
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for the obvious reason of employee welfare but also to keep worldwide business operations

running, to minimize liability exposure and to avoid adverse publicity” (Shrm. 2020).

Throughout a pandemic, management should consistently communicate with employees

to check in on their health and wellbeing. If employees are working from home, this can be done

is through online video meetings, and business communication programs. Online video meetings

can easily be organized through programs like Skype, Zoom, and Google Hangouts. For day to

day communication to all employees, companies should use programs like Slack or send emails.

Companies can also offer expense-free virtual mental health services, which would help

employees manage any depression or anxiety that they may have during this difficult time.

If a business is remaining open, it is possible that employees may become sick and unable

to work. In the situation of a pandemic, Multinationals should grant Paid Time Off separate

from employees’ accrued annual leave that can be used with a doctor’s note. During the

COVID-19 pandemic, some workplaces are giving up to two weeks of paid leave for those with

symptoms who have tested positive and have a doctor’s note. This ensure that employees who

are sick will not return to the workplace for fear of running out of paid leave, which will help

prevent the spread of the pandemic to other employees.

After organizations overcome handling workplace absences, the next step is to determine

how to keep the business running smoothly in the case of a closure. If it is necessary to institute a

remote work situation, employees must be prepared to work from home. Using technology will

allow businesses to continue to function despite not being present in a workplace. Businesses

should prepare by setting up laptops, VPNs, and various virtual platforms to ensure smooth

communication and effectiveness.

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Throughout the course of a pandemic and afterwards, employers can ensure that the

business will survive by effectively communicating with employees. It is important to relay clear

and concise trainings, instructions, and updates regarding the changes in operating policies

throughout the process. This will ensure that the business and its employees are being supported

with and effective plan and can survive a pandemic.

Conclusion

For multinational organizations to continue to be truly successful through different

pandemics, they must value the important precautionary steps. The existence of these

different diseases and viruses could lead to many different social and economic problems

globally. Providing a healthy inclusive environment for employees to feel safe, will keep a

business in its best state so it can continue to grow. The opportunity of a safe and healthy

work life depends on what society and business does to control the diseases.

Appendix

Camille Amanda Julia Edward

Introduction
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Abstract
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Literature
Review Ö Ö
Findings &
Discussion Ö Ö
Method
Ö Ö
Conclusion
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References
Ö Ö Ö Ö
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