As the government begins to wind down corporate financial support, the economic impact of the coronavirus pandemic will become more real. Many companies will need to change – some drastically. Restructuring and recapitalisations will continue to be high on the agenda for those whose survival depends on it. For others it is a matter of moving from crisis mode to ‘what next’.
Given society’s expectations of how we collectively get through this difficult period, as well as the social contract that comes with receiving Government support, companies will need to consider how they restructure or reorganise responsibly.
The way leaders engage with these issues, and in turn, their critical stakeholders, will not only determine success but also the reputational damage – or benefit – created through this situation. This will either set up a winning environment for the future or continue to be a handbrake on operational flexibility, the ability to attract talent and ultimately creating total stakeholder value.
Create a clear vision for the future
By explaining how the business is proactively stepping in to adapt to this new environment, as opposed to only defensively retrenching, leaders can create greater confidence in the company’s future – even with many challenges ahead. This strategic starting point should drive subsequent decisions like the resources needed to compete and the legacy capabilities an organisation needs to drop. Equally, this presents a golden opportunity for businesses to establish more ambitious social and environmental goals and reset their business in order to create broader stakeholder impact and support. Big changes are easier when the platform is burning but bravery and honesty are required when it’s not (yet).
Don’t rush – but don’t delay
Difficult decisions must be taken. Delays often allow problems to build up or create a longer lasting drift. While these situations are tough and under the glare of the stakeholder spotlight (with a desire to categorise businesses as sinners or saints) this can’t be a reason for delay. An outside perspective – unencumbered by internal bias – can help create greater comfort on the tough calls required and how quickly to move. ‘Corporate body language’, as we have termed it, is more important than ever.
Be open and empathetic
Sounds simple but harder in practice. These are sensitive issues, often wrapped in legal process with the need to address multiple, and often conflicting, stakeholders. This can result in corporate speak and platitudes rather than clear explanations and detailed rationale on the long-term need for change. The scale of problems created by Covid-19 are well known. People might not like it, but they get it. They will want to be told straight, while being treated properly given the circumstances. Without employee support success will be limited. They will therefore want to know how those at the top are also sharing some pain. How to articulate this in an honest way, so it sends the right signals about culture and leadership requires robust independent counsel.