This article was originally published on Finsbury.com
While so much of what will happen as a result of the coronavirus pandemic is unknown, it is clear that this is a moment people won’t forget — and they won’t forget how companies chose to respond.
With wild volatility in the financial markets, disruptions in consumer behavior and supply chains, and an escalating host of workforce issues, we are entering a complex new phase of this crisis — one that presents many companies and other institutions with an increasingly difficult set of reputation, communication and employee engagement challenges.
With this in mind, CEOs, board members, CCOs and legal counsel have been asking us, “What’s next?” Here are six near-term issues we have been discussing:
Layoffs and economic disruptions In the immediate aftermath of COVID-19’s wider spread across the U.S. and Europe, companies have been doing what they can for employees, often by maintaining pay and putting off decisions on layoffs for at least two to four weeks. Still, unemployment claims in the U.S. are skyrocketing, and leading corporations have started to signal or announce impending layoffs, furloughs or wage and benefit cuts. As a hopeful surge in corporate idealism begins to collide more forcefully with the economic fallout of the pandemic, decisions will get harder and more urgent. It will be critical to plan communications around key changes carefully, thoughtfully and with great sensitivity to potential reactions from all stakeholders, including employees or contractors that companies have temporarily laid off and may hope to rehire in the future.
Health and safety for essential workers While countless millions of employees are now working from home, many — in industries from health care and law enforcement to transportation and food retail — are still doing essential jobs on the front lines. While nearly every company touts workforce safety as a top priority, worker voices are growing louder about perceived gaps in safety and health — and the media and other stakeholders are paying attention. Employers should be thinking now about what else they can be doing to be leaders on employee safety as well as how their actions today may affect their reputations over time. Will they be seen as having prioritized people above the bottom line, particularly under the harsh spotlight of unions, employee advocates and other activists? Are there liability and compliance-related litigation risks that companies should be preparing to manage?
Cybersecurity With systems stressed by an at-home workforce, business conducted on vulnerable personal devices and networks, and a sharp increase in phishing attacks, companies may feel the fallout from COVID-related cybersecurity issues for months to come. Having key personnel widely dispersed also makes effective cyber incident response more difficult, especially if digital networks and resources are disrupted. Yet stakeholders trust that companies have strong cybersecurity measures in place and will still expect a fast and accurate response to any incident. To meet these expectations, robust employee training, timely reminders and updated crisis planning are critical.
Executive pay Any company thinking about pushing through raises for senior executives in the current climate is taking on extraordinary reputational risk. Shared sacrifice continues to be the clear expectation among the public, the media and, we suspect, the financial community while the world goes through this period of extraordinary economic upheaval. When communicating about potential cuts in executive pay, companies should carefully consider potential reactions around total compensation and not just salaries. Management teams and boards may also want to demonstrate their continued confidence in their company’s path forward by making open market purchases of company stock at today’s prices.
Financial and operational restructurings As market gyrations, guidance revisions and decisions about whether to cancel dividend payments and stock buybacks continue, difficult changes like operational and financial restructurings are expected to move center stage. Companies that propose moves that could be seen as pulling much-needed capital from support for employees, reducing service for local communities or benefitting executives and shareholders at a particularly trying time should expect intense and visible public, media and regulatory scrutiny.
Community impact Seven months ago, CEOs from nearly 200 of the world’s largest companies declared their support for a fundamental shift in the role that businesses play in society — moving from “shareholder primacy” to a more expansive, stakeholder focus on the greater good. Companies everywhere have furthered that commitment, stepping up quickly to serve local citizens with expanded services. They are helping solve critical shortages by shifting production from automobiles, clothing and heavy machinery to personal protective equipment and ventilators. Being bold and being first pays dividends. The critical question now for companies is what will happen next – and how that will affect the wider communities in which they operate. If operations pause, will companies continue to support those who clean and maintain facilities, feed employees and keep buildings secure? Can local non-profits continue to rely on company support and to fill gaps in fundraising? A public that is more focused than ever on corporate values and purpose will be watching.