Corporate leadership in COVID-19: Managing ‘the today’ to thriving in ‘the new normal’

Protecting employees’ health is not just the humane thing to do, but it also helps a business ramp back up more quickly when the risks subside – Pic by Shehan Gunasekara

As the governments of the world engage in a Herculean battle to contend with the guiles and wiles of COVID-19, there is close public scrutiny, at a micro level, of the manner in which Sri Lanka’s corporate leadership is handling this complex situation. The public is also inquisitive to know the true personality of corporate Sri Lanka.

The battle, itself, is quite complicated with multiple trigger points as governments seek the appropriate balancing of the tension between preserving lives, through curfews, lockdowns, social distancing and curtailment of free movement, and the facilitating of economic activity via trade, demand, consumption, supply chains and mobility. Without pooh-poohing the enormity of the challenges which the virus poses, I am confident that mankind will, ultimately, emerge victorious. 

Pundits believe it will take at least a year to a year-and-a-half to bring the situation under control and to establish a new era of normalcy, fashionably referred to these days as the New Normal. The behaviours forced on us, and government actions necessitated, by the corona pandemic have given rise to many questions about our ‘old normal’. Brene Brown, author, and thought leader, on leadership, best describes this in stating: “We will not go back to ‘normal’. Normal never was. Our pre-corona existence was not normal other than we normalised greed, inequity, exhaustion, depletion, extraction, disconnection, confusion, rage, hoarding, hate and lack. We should not long to return to them, my friends. We are being given the opportunity to stitch a new garment. One that fits all of humanity and nature.”

Politicians, activists, business leaders and society are all searching for the new normal. Whilst there are some indications of what it may look like, right now – its ‘definite’ definition appears to be as elusive as the Arthurian Holy Grail, the object which promised miraculous powers that provide happiness, eternal youth and sustenance in infinite abundance. 

In this environment of uncertainty, corporate leaders are being put under a magnifying glass by sceptical stakeholders eager to gauge the care, authenticity and vision which they have been, so proudly, proclaiming in annual reports and at other image enhancing public events. Parts of the public, which never bought into the corporate rhetoric, are keen to see whether these same leaders are willing to walk the talk when the chips are down. Will they do as they said they would do?

There is no aspect of our current life which is immune to the new normal. Even as governments and central banks around the world unleash fiscal and monetary stimuli of mind-boggling proportions and get more intimately involved in support of economies severely disrupted by the pandemic, questions are being asked as to whether our view that the state should stick to its core function of providing basic public services and acting as an enabler and regulator, leaving the rest to the market to determine, still holds true. 

Recent events make it very clear that, at least in the short to medium term, governments will have to intervene in many areas of economic life. Food and cash for the very poor, unemployment insurance payments, fiscal support for selected industries and businesses based on vulnerability and the ramp up of public expenditure are just a few examples of such involvement. 

Are markets the best barometers?

In searching for the new normal, questions are also being asked of the majority conventional belief that markets are the best barometers in allocating scarce resources in running a society. Because people will spend on things they need, the market has been regarded as the best available mechanism of matching supply with demand. COVID-19 has revealed the deficiency of this mechanism. For example, take the inadequacy of capacity in critical areas such as supply chains, healthcare and social care. If ‘market’ economics was effective, why is there not a reasonable equilibrium between supply and demand in these areas? 

Admittedly, COVID-19 is a ‘black swan’ event. But we must acknowledge that we ignored the warnings conveyed by many experts, panel discussions, webinars and ‘talk-shows’ re the possibility, and the consequent negative effects, of a virus such as COVID-19. Did our conventional market mechanics and other risk management mechanisms respond to the potential dangers? Why were we not proactive? Mainly, because of two reasons. Firstly, it is difficult to make money in most essential social services and secondly, jobs in many critical services are not those which are highest valued in society. 

The market mechanisms, as they have operated to now, pay highly for consultants, financial services specialists, investment bankers and advertising experts, just to name a few, but pay very little, in relative terms, for critical workers – say in the healthcare industry. As is now evident from the lifestyle forced on us by COVID-19, a lifestyle which some are beginning to value and like, the ‘glamour’ jobs are not essential. But, yet, because of market economics, as explained before, we did not, and we do not have adequate number of key workers in critical essential services. It is against this backdrop that reformists argue that our new normal must be a more humane system which shows agility and resilience in times of unplanned crises.

In addition to the aforesaid, there will be resetting of many macroeconomic indicators. Indicators such as budget deficits and debt as a percentage of GDP, foreign reserves to cover six months of imports et cetera are poppycock as governments intervene in a variety of ways irrespective of their financial positions. The apparent effectiveness of autocratic regimes in better containing the virus compared to that displayed by democratic regimes has significantly blurred our enchantment of populist regimes. 

Further, the utility value of what one possesses has increased while the utility value of what one does not possess has decreased. As was posted in Facebook recently: “It is not that the cost of living is high – but it is our lifestyle which is costly.” In this light, the priorities of governments and societies will undergo careful review and restatement. A whole new mind-set will evolve. 

The new normal

Social media advocates: “Nothing should go back to normal. Normal wasn’t working. If we go back to the way things were, we will have lost the lesson. May we rise-up and do better. Be better.”

The objective of this article is to present the leadership traits, behaviours, thoughts and actions which, I consider, are required in responding to the new normal of a corporate business world post COVID-19. 

The first and most important step in a crisis of this nature is for a leader to calm his mind. He/she must create ‘mind pictures’ of the roadmap which takes the company to its new destination. Shut out the noise. Clear the clutter. Take a deep breath. Enjoy a few hours of solitude. I am not advocating analysis paralysis. Yes – there may be some businesses where the solutions are obvious and the actions, therefore, requiring little debate – these being the ‘no-brainers’, whilst there may be others which require deeper study and a re-assessment against the future – the new normal. 

Did the business leaders who took early decisions re cost reduction by way of pay cuts and/or lay-offs pause to envision the new normal of the subject business? As social animals our primary instinct is to follow the herd without fully understanding the implications of the crisis on our specific business. We, often, tend to shoot from the hip and make bold statements which make us look ‘macho’ in the eyes of our peers. I sincerely hope such was not the case. 

There is no denying that leaders are obligated to make responsible decisions to keep their companies afloat. While cost-reduction is admittedly, a knee jerk reaction in most crisis situations, history has proved that, more often than not, those who managed the operational and financial effects of a crisis in a clear, compassionate, empathetic and holistic way, created more value for the company and emerged stronger, post the crisis and in the longer-term. 

To quote General James ‘Mad Dog’ Mattis, retired United States Marine General and the Secretary of Defence in the early Trump administration: “We’re flying blind into a very uncertain future. If you make plans or draw assumptions that don’t embrace that, you’re going to miss something.”

Having weighed the possible alternatives in his own mind, the leader’s next step would be to inspire a shared vision of the business in the hearts, and minds, of all the employees and other stakeholders. It is vital that all employees buy into the rationale behind the leadership thinking in the forward journey. Irrespective of the visions, missions and value statements, already known to stakeholders and the public, the COVID-19 crisis presents a golden opportunity for a corporate to review her raison d’etre and emphatically proclaim to the world her purpose across the areas of environment, society and governance in the new normal and her impact on the society. 

One only has to recollect the words and deeds of Winston Churchill, who led Britain to victory in the Second World War, and of Martin Luther King Jr. who spearheaded the Civil Rights Movement in the USA in the 1960s, to appreciate the permanence of the symbols of inspiration, courage, resilience, human concern and empathy they have left behind. Yes – the fire stays long after the event. When companies are centred on an authentic purpose, employees feel that their work has meaning. Employees who feel connected in such manner are much more likely to ride out the bad times and be there to help the company to recover from the crisis and grow when the situation assumes a sense of stability.

Further, there is evidence to confirm that transformation in a company driven by a clear purpose is more cohesive and effective. The COVID-19 crisis is a glorious moment for corporate leaders to announce, and showcase, the company’s desire to act in a manner which benefits all stakeholders – customers, employees, communities and shareholders included. I urge Sri Lanka’s corporate leaders to grab the opportunity.

Many are the times, not just during COVID-19 but even before, where I have encountered leaders who believe that if they admit that their company is facing turbulent times, it will scare away its better employees. While it may hold true, to some extent, where the subject company is an outlier in that specific industry, nothing could be further from the truth in this crisis. COVID-19 is a global pandemic affecting, by and large, in some form or shape, virtually, every conceivable business and industry. They are all subject to the same market risks. There may be just a handful of outliers. 

Leaders must realise that advances in information technology, and connectivity, have significantly enhanced the basic awareness, and knowledge, of human beings on any matter or event. Even at a basic level, everyone knows that certain sectors of the economy are harder hit than others due to changes in consumer behaviour caused by the virus. At the specific company levels, employees, both white collared and blue collared (guided/briefed by unions and works councils) are reasonably familiar with their company’s strengths and weaknesses in the current situation and the manner with which, and extent of how, the slowdown in the general economy and the increased uncertainty will impact their company. So, it does not pay for corporate leaders to be vague in conveying the company position. 

COVID-19’s unique, multi-faced effects

Notwithstanding the same, COVID-19’s unique, multi-faced effects have left even the more informed persons unsure about the real state of play. They look to their leaders for clear, transparent and honest communication. For them, the leader’s words and actions are a soothing balm which helps them to come to terms with the reality of the situation, cope with the associated emotions and bring context to their experiences. 

In this crisis, leaders are faced with infinitely complicated challenges and no easy answers. They are faced with tough decision on how to communicate complex issues to diverse audiences. As stated at the onset, they are under the spotlight as stakeholders closely gauge the care, authenticity, and purpose intrinsic in their messages. The highest priority of astute leaders must be to connect with anxious employees and communities on matters of immediate importance and provide reassurance on how the company intends to handle a murky future. 

Instead of forcing your employees to second-guess what might be in store for them, be utterly clear with them about the financial health of your firm and what goals you will prioritise. Avoid ‘we put our employees first’ type of statements if your planned actions appear to contradict it. If the new situation has spawned a different thinking – say so. A bitter pill is always sweeter than the sour lie. Authenticity is clear only if you are relentless in elevating, encouraging and stimulating debate about uncomfortable truths and tensions you may, otherwise, be tempted to sweep under the rug.

Irrespective of the sufficiency or insufficiency of their employees’ knowledge of the situation, the leaders of many prominent organisations in Sri Lanka did well by issuing an early statement of their thinking. However, what I was, and I am, still unsure is whether the action plans they outlined had adequately considered the likely features of the new normal. Most of the communications talked about pay cuts and potential down-sizing. Very little was said about how the crisis could be used to reposition the company to meet the challenges of the future. I agree that good leaders must seize the narrative at the outset. But it is important that they must also paint a compelling picture of the future that inspires others to persevere.

A Harvard Business Review Assessment of corporate performance during the past three recessions found that, of the 4,700 firms studied, those that cut costs fastest and deepest had the lowest probability of outperforming competitors when the economy recovered. As the study states, the group most likely to emerge from the recession as winners were those that struck the right balance between short- and long-term strategies by investing comprehensively in the future while selectively reducing costs to survive the recession. It is not surprising that corporate leadership in a crisis such as COVID-19 is faced with a duality. On the one hand the heart wants to be empathetic and compassionate while on the other, the head does not want the heart, with its natural softness, to disproportionately dilute the importance of long-term financial sustainability.

Contact-free economy

The business operating models of the future – the new normal, will vary from industry to industry. Early indications are that such models will embrace greater digitisation and automation in giving life to an exponential growth of a contact-free economy. The new models will be designed to be resilient and agile, be accommodative of increased state intervention and be more environmental, social and governance oriented. The crisis has shown us how to operate remotely. We are now more knowledgeable of the pros and cons of working from home (WFH). It has made us more conversant with, and confident of, online transactions and e-enabled connectivity. 

Having said all this, it is still too early for me to predict whether post COVID-19 will be a world of innovation, imagination and smarter institutions/platforms or whether it will be a world catering to a more sedate lifestyle where consumers are satisfied with less than more. But – there is one thing I am certain of. We, as mankind and as a business world, will respond to the crisis, recover from the crisis and thrive, post the crisis. I have been, I am, and I will be, an eternal optimist, in congruence with the observation made by Alexander Pope in his poem, ‘Essay on Man’; ‘Hope springs eternal in the human breast, Man never is-but always to be blest.’ 

Whatever the next actions, strategies or operating model employed, corporate leaders must always remind themselves that a company’s success, pre-crisis, during crisis or post-crisis is positively correlated to the extent of employee engagement and empowerment. Here too, leaders must recognise the implications of the emerging work arrangements. Working from home and online meetings are on the rise. While remote work programs have many advantages, they do have a notable downside in terms of engagement in that they impede the creation and entrenchment of a corporate culture because of the significantly lower social interaction of disjointed teams. Leaders must recognise nuances, such as these, and address them, in their employee engagement plans.

When faced with an overwhelming volume of critical sensitive decisions, corporate leaders tend to limit authority and tighten control. They may want to hold their cards close to their chests. They may take comfort in creating a closed circle of decision makers. They must be careful in not going to extremes in such thinking. In a dynamic situation, the over centralisation of decision-making will, invariably hamper the organisation’s ability to respond timeously and effectively. 

Effective leaders empower managers to make the best decisions they can within an overarching set of clear priorities and values. These values and priorities will include, amongst others, keeping employees safe and behaving ethically toward customers. Employees are a company’s powerful ambassadors. Make them live their ambassadorial roles with conviction. It is a known fact that employee loyalty increases, in general, in a time of crisis. Corporate leaders must leverage on these proven aspects.

Look after employees first

Corporate leaders can take heart from views expressed, very recently, by prominent investors, when interviewed, by FCLT Global (Focusing Capital on the Long-Term, Global) and McKinsey. Whilst recognising the short-term challenges faced by companies in, and the importance of, preserving cash, their primary advice was: “Look after employees first, followed by customers and suppliers. It will pay off in the long run, as each group will certainly remember how you treated them during this difficult time. The profits and dividends will come later if you make the right decisions and moves now.” 

They urged companies to take good care of their current employees within the available means, with emphasis on keeping employees working where possible, but only under the safest available conditions. They remarked that protecting employees’ health is not just the humane thing to do, but it also helps a business ramp back up more quickly when the risks subside. It is in this light, that I urge Sri Lanka’s corporate leaders to engage their employees in their cost-reduction plans and in their strategy discussion to the extent relevant. It is the persons at the rock face who best understand the minds of customers and suppliers. This is invaluable information in crafting the forward journey. 

However hard it is to devise a smart strategy; it is many times harder to get people to execute on that strategy. And a poorly executed strategy, no matter how clever, is worthless. Strategic thinking is not enough. Strategic acting is vital. The leader cannot do it alone. He needs his immediate team and that team’s team to act in unison. Get everyone involved and through that inculcate a sense of ownership and belonging.

Being a corporate leader in these unprecedented times of COVID-19 is a challenging one. The choices before her/him are tough to make even in good times, let alone in uncertain ones. However, one must see it as an opportunity to showcase her/his company personality and to prove her/his mettle. The outcomes of the decisions taken today will separate the ‘men’ from the ‘mice’. The lessons learnt and the experience in navigating this crisis, will serve one well in meeting, probably less demanding, but still important, longer-term challenges.

Corporate leaders in Sri Lanka must grasp the moment in conveying who they are and what they value and their commitment to stakeholders and society while strengthening their emotional resilience and that of their companies. These are the skills and actions that will make them unique in the years and decades ahead. Their approach today will define their tomorrow – the new normal.