In this time of crisis leaders must put people first, writes Hubert Joly for Harvard Business Review.
The manner in which business leaders react to the coronavirus pandemic will determine whether it is their “finest hour” or their downfall. It is a time for putting people before profit.
“Right now, purpose matters most,” writes Hubert Joly, former CEO of Best Buy and Carlson.
In August 2019, 181 CEOs signed the Business Roundtable Statement on the Purpose of a Corporation, committing to lead their companies for the benefit of all stakeholders – not just shareholders.
“I have found the leaders that I have spoken with to be incredibly purpose-driven, with a clear human focus,” writes Joly.
Joly praises businesses for their “clear, consistent, and transparent communication with workers”, restricting business travel, encouraging and facilitating working from home and offering paid time off for sick employees or those with children impacted by school closures. Best Buy is offering its staff access to affordable childcare and mental health support.
This crisis is going to “hurt the bottom line”, but laying people off would be “shortsighted”. Instead, companies should consider the long term and look for other solutions, e.g. reducing working hours, temporary pay cuts or furloughing employees.
Many companies are acting in the interests of their customers.
Grocery stores and pharmacies are continuing to operate, but they are acting responsibly by taking measures such as reducing opening hours to allow for store cleaning, limiting the flow of customers into their stores and introducing special time slots for the most vulnerable to shop.
Meanwhile, non-essential stores, such as Apple, Nike and Ralph Lauren, are shutting down.
Some major companies are looking out for the interests of their suppliers. For example, Amazon has set up a $5m fund to assist small businesses near its headquarters.
Businesses are also acting in the interests of the wider community. For example, LVHM is repurposing cosmetics and perfume plants usually used by the likes of Dior, Guerlain and Givenchy to produce hand sanitiser that it is providing free of charge to public hospitals in France.
A TIME TO STEP UP
“This is a time when performance is not defined by a company’s share price or whether it will hit its EPS guidance,” writes Joly. “This is a time when performance will be judged by how a company and its leadership serve everyone and fulfil a higher purpose – and specifically how they have shown up and met the requirements and expectations of its multiple stakeholders.”