Recently senior members from BDO participated in a virtual discussion with community-based think-tank, Committee for Perth. The session covered the impact of COVID-19 on businesses and the community, and the role of culture and leadership in recovering from the virus. The discussion focused on the most effective business responses to the virus and actions companies should be taking to survive and thrive in the future.
Business response to COVID-19 crisis
The initial reaction of businesses to the COVID-19 crisis saw very different responses. Key aspects to business response were leadership style, core values and organisational culture. Effective business leaders responded swiftly to protect the community and workforce by implementing working from home policies. They communicated transparently with stakeholders and their response aligned strongly with company values.
BDO’s National People Advisory Partner, Jenine Waters, spoke of the responsibility of companies as corporate citizens. Jenine suggested the most effective framework for communicating with and understanding the needs of company stakeholders, should fall in this order:
- Community – including suppliers
Business leaders with this framework in mind responded quickly, pivoting their business models dramatically and reaching out directly to customers, employees, suppliers and shareholders.
Leaders reached out to customers quickly, asking how they can be supported during this time, taking the lead to alter the platform of communication to the virtual world. Attention then turned to employees and the best way to keep the business whole, attempting to ensure employment for staff in the long-term. Next, the discussions focused on the community and the role of business in protecting others, and finally, the focus moved to shareholders and how to protect that value.
Those businesses with less clarity on their vision and values raced to the shareholder impact without properly considering the first three. The major behaviours that emerged from this were either very quick decisions designed to protect shareholder value or in some cases complete decision inertia where they were unable to respond until they had no choice.
Focus on society
The crisis has forced us into isolation but in many ways, it has brought us together as a community. It has provided us with the opportunity to look through a new lens and clarified the ways in which our companies benefit from a thriving society. The successful businesses during the first stage of this crisis applied quick efficient and effective processes. The recovery should be viewed in a similar way; how do we look after our businesses a part of the broader community?
BDO’s Remuneration and Reward Managing Director, Allan Feinberg, suggested implementing an innovative equity based scheme. Providing deserving employees the chance to participate in sharing the value of the company. Allan said “by involving people with equity based schemes – it can create a situation where it sustains the social well-being of our society”.
For listed companies the provision of equity amongst deserving employees looks at two sides, getting our economy moving again and rewarding engaged employees with equity. Companies that do not have physical wealth to share can look at what value they want to create and who is helping create that value. If the business reaches a certain point, the value is shared; “if people are involved in value creation, there is always a basis to share it” said Allan.
The importance of values
Jenine Waters stated, “Values are not lived when times are good. Your values come to the core when you are in a crisis and when you are trying to make difficult decisions on a daily basis.” With a clear purpose and values, organisations are able to make much bolder decisions around innovative thinking.
Values created in easier times are being challenged by this crisis. Returning to company values creates certainty within the team. The message will not always be favourable, but aligning decisions with familiar company values will provide a level of conviction, even if the message is not what stakeholders want to hear. Pippa Hobson said “returning to company values each time a decision is made, creates certainty as to the way forward”.
The role of the board
The role of the board is to understand the vision and purpose of the company and where the business is going. Tough and exciting decisions that go beyond the normal agenda will be required, and those organisations that think differently will emerge stronger. The crisis will provide an opportunity to drive stimulating outcomes that will benefit the community as a whole.
Areas of focus for the board should be around incentivising employees, whether the customer base has changed and if it has changed, how to serve the new clientele.
Internal leadership is critical and it is a good time for an organisation to invest in change management. Reviewing the boardroom and the skills required for the business, will provide an opportunity for better decision-making and diversity.
Looking forward, discussion around the boardroom table will need to focus on scenario planning and testing. COVID-19 has reminded businesses how important this type of planning is as well as ensuring it is updated and regularly refreshed.
Now is the time to lean into what your vision is for the future. Recovery is in itself a positive. Focus on the desired outcome in both a business and community sense, and remember the purpose of the organisation.
It is time to focus on innovation and pivoting the business model to where the needs are. The focus should turn to what current customers will need during the recovery and how best to support new customer segments.
In recovering from the crisis we need to go back to the fundamentals; customers, people, community, shareholders. Companies that focus on their stakeholders in a systematic framework with the greater good mind, thinking beyond what they have done in the past, will emerge successful.
Finally, seek input and diversity from advisors to ensure the visibility of the entire picture and provide employees with power and permission to enforce the required changes by investing in them as a way forward. Give meaning to your values by basing decisions and actions around them.
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