The C-Suite: Stay calm and lead on
It’s make or break for leaders as employees look to them to show competence and empathy, writes John Connolly.
2 May 2020
The activists at Extinction Rebellion wrote about climate change: “These are times in which impossible things happen.”
The group could have been talking about the world since 2010: Donald Trump, Brexit, changing leaders and policies, revolts, social media, floods, bushfires, droughts, toilet paper riots and global anxiety. Negative interest rates seemed unusual until we got negative oil prices.
Three pandemics are now running together: the COVID-19 virus, the panic about the virus, and the business and economic implications. All are genuine crises. Each one needs different tactics. However, the common theme, apart from doing what’s necessary to survive, is leadership.
The COVID-19 pandemic is a crisis where trust is central to corporate and political survival. People at all levels of the organisation have had to change the way they work, interact professionally and socially, and often how they live.
Being directed to work from home is very different from choosing to work from home.
The three pandemics, the ongoing flood of bad news from around the world and a major change in how people work, and whether they will have work, are a serious recipe for mental health issues. Management and boards have a legal obligation for both the physical and mental health of their people.
But a good pandemic lifts (many) boats. Australians now rate supermarkets as the poster boys and girls for responding to the crisis. Even banks have lifted, although only from really terrible to not so terrible. This and recent crises have defined real leaders.
In the Western world some of the most financially undervalued people, such as healthcare, fire and police workers, have become the most socially valued. The most trusted leaders are not from politics or business but state and federal medical public servants.
One thing is certain. Everyone from employees to media, governments and investors is looking intensely at the leadership a company demonstrates. Experience tells us that very few chief executives or chairmen will actually lead.
In a crisis, employees and others make judgments about the competence of the boss. As we have seen with political leaders this is based less on what the leader says and more about what they do. Board and executive pay cuts are stellar examples.
The reality is that since 2010 the environment for business has become more toxic. Accountability has narrowed. Go back a couple of years, and it was all about companies and then about executives. Now it’s about directors. People want to see the directors go. That’s a serious big difference, and if you are a director of a large public company now you have to be thinking about the fact you’re much more accountable than you were before.
Directors must focus more deeply
The other reality is that impossible things affect boards and management at incredible speed. For two of our largest companies, the time between the crisis and the chairman and chief executive resigning was exactly six days. This movement from company to board to executives means directors must focus more deeply on what’s going on in the organisation, even though they may have concerns about blurring the line with management.
Companies are spending time and money focusing on reputation and communication but they should be working out if the issue is a communication problem or an operating problem. In many cases, 60 per cent of problems are operating problems, not communication problems. People being underpaid is not a communication problem, people not being cared for properly in nursing homes is not a communication problem.
The decision to take on an external leadership role is a strategic choice for companies. For some, particularly medium to small business, keeping your head down externally may be the right decision. But you have no choice internally: you must demonstrate leadership to your employees and others. In other crises we’ve seen the value of leadership, particularly in large companies.
Employees and often customers, suppliers and others look to the response from their leaders. They want to see what you say and do so they can judge how serious the virus is, what they should do about it, when to ask for help, where to go for help and reassurance on job security.
Here are some issues to consider in dealing with COVID-19
Government wants to be seen to work with the largest, customer-facing companies.
Co-operating with government and speaking out when they ask you to is not only good for leadership but good for government relations.It’s not only employees and the general public who are scared; boards and management feel the same way. Recognise your own feelings when you are discussing the issues and making decisions.
Leaders need to understand that this is an emotional issue. Rational explanations and reassurance need to be complemented by an emotional response. For most people, COVID-19 is more a financial and emotional issue than a health issue.
Be straight: anxiety and uncertainty are much worse than bad news. If you need to lay off people, deliver it with empathy but don’t try to sugar-coat it. Demonstrate how hard the decision was and how hard you are trying to help.
No one is overreacting: In fact, what we’ve seen is that some companies and some governments didn’t react quickly enough and still aren’t acknowledging how quickly business, government and the public need to move. Firm and clear decisions will generate trust and demonstrate leadership.
Face-to-face investor relations channels, particularly roadshows and investor conferences, will be shut down. Ensure you have a plan to maintain investor and shareholder communication and confidence when there is likely to be heightened interest from the investor community in how your organisation is managing the crises.
And finally, speaking from more than 40 years helping leaders in a crisis, if there’s only one thing you do, keep an appropriate paper trail.
This article first appeared in the April 2020 issue of The Deal