Covid-19: how can a good corporation survive?
Among the many consequences of the coronavirus pandemic is the reminder that business has a societal as well as an economic purpose. As the scale of the pandemic rapidly unfolded, a spotlight shone on societal purpose, in particular the steps companies were able to take to help their communities cope with the crisis.
In recent weeks, we have seen many examples of businesses that have repurposed operations to provide essential items such as PPE, hand sanitiser and ventilators. Supermarkets, pharmacies, warehouses and logistics businesses have radically altered working practices to enable basic societal needs to be met.
We have also seen widespread condemnation for those organisations that have been seen to treat stakeholders unfairly. From Britannia hotels, criticised at the start of the lockdown for firing live-in staff and requiring them to vacate their property, to organisations that have furloughed lowly paid workers while protecting the income of managers, star employees, partners and shareholders.
As governments start to consider how to ease the lockdown, businesses are contemplating the measures they will need to put in place to continue their operations. The brutal truth is that some may never reopen their doors, not because their business model or working practise were poor, but because their market is no longer there.
Building for the future
For many organisations, the current focus is ensuring business survival. Transparency and fairness around decision-making is vital. Getting it wrong can compound the costs and damage of the current crisis. For example, paying executive bonuses or dividends to shareholders while furloughing staff can rapidly become reputational issues as Disney has recently discovered.
Ensuring that those most able take the biggest burden of financing survival will generate loyalty among stakeholders whose livelihoods have been preserved. Highly remunerated staff should share and mitigate the financial burden by taking pay cuts; supplier pay terms can be shortened to ease pressure on cash flow and so protect businesses. Such steps strengthen the operation and build relationships for the future.
Treating stakeholders fairly
Management of the workforce requires careful consultation and consideration. Making sure that any schemes developed are applied fairly is key. Some employees may need to furlough because of family caring responsibilities, others may prefer a pay cut and the opportunity to redeploy or continue working in some capacity. Training may be an option in some businesses, presenting an opportunity to develop staff for the future.
Businesses are also learning about the need to manage workloads sensitively. Flexibility should be allowed for with those working from home while also juggling home-schooling or remote care for elderly relatives alongside work commitments.
The fair treatment of people who are newly hired, on probation, nearing retirement or between roles is also a real challenge. These may present ‘easy’ answers to businesses in financial distress, pushing people out who are perceived as less essential to business survival. But businesses should try to find solutions that protect the most vulnerable, are applied equally and ask those with the broadest shoulders to take on the larger share of the financial burden.
Government schemes in various countries can present a potential risk. Applying simply because a scheme exists may not be the right approach. Companies need to ensure that any application is carefully thought through to avoid an ill-judged application and the risks of fraudulent claims understood and mitigated.
Many hard decisions will need to be taken in the coming months. But a business that is guided by ethical principles, determined to do the right thing by all its stakeholders, will benefit in the long run. Sharing any burden in a fair and equitable way, treating affected stakeholders with respect and mitigating any impacts where possible, will help organisations emerge from the crisis with their reputations intact and their business more sustainable, ready to attract investment, customers and in time a growing workforce.
For those able to survive, the actions they take now should be designed to maintain reputation and trust, albeit maybe operating on a more modest scale or adapting to new markets. With companies facing considerable scrutiny for the actions they take, those in a position to do the right thing will be the ones to derive considerable benefit for the business and its reputation.