Tough times require tough decisions. Usually, this is an exhortation for making difficult tradeoffs and restoring profitability. However it is the humane and purposeful leader who makes the toughest call - putting people before profit.
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humane leaders put people first
The economic slowdown accompanying major crises puts great pressure on a company's revenues and profits. Extreme volatility in stock markets puts even greater focus on short term performance, and management is under pressure to show they mean business.
Companies respond with a slew of strategic and tactical measures, including restructuring the organisation, tweaking the supply chain, rationalising product lines, shedding parts of the business, acquiring others..Many of these make good economic sense. Unfortunately, they also impact people - employees, customers, suppliers, communities - just when they are at their most vulnerable.
According to Hubert Joly, during times of crisis, companies and leaders who follow the principles of purposeful and humane leadership will stand out and be judged favourably by their stakeholders:
" This is a time when performance is not defined by a company’s share price or whether it will hit its EPS guidance. This is a time when performance will be judged by how a company and its leadership serve everyone and fulfill a higher purpose —and specifically how they have shown up and met the requirements and expectations of its multiple stakeholders."
Employees
For most businesses, payroll is a significant part of overall cost, and letting people go is one of the levers available to management. From a humane perspective however, this should really be the measure of last resort. Moreover, from a long term perspective, losing talent and accumulated knowledge does not make sense.
A more nuanced and calibrated approach involving equitable across the board pay cuts, job-sharing, part-time work, sabbaticals, and furloughs should be seriously considered, before going for the nuclear option of massive lay-offs
For other companies, the challenge is keeping business going with a skeletal workforce, while a majority of employees are under quarantine or lockdown. Humane leadership calls for a more understanding, compassionate and inclusive approach to people- especially if they are working remotely
In any case employees face greater uncertainty, and are more exposed to the impact of the crisis than organisations are. Good leaders understand that they can play a significant role in equipping their people to navigate these difficult times. In a recent article, Amy Lesche-Kahle recommends leaders keep people well informed, make them feel valued, and help them focus on the key priorities.
Organizational leaders should communicate candidly and frequently (at least daily) about the current state of the business...If you’re not giving your employees regular updates, they’ll make up what they don’t know to fill the information vacuum
Team members need to hear regularly from their immediate team leaders, too, not just the highest-level organizational leader. Team leaders set the tone and serve as the voice of reality...
In normal circumstances, a weekly cadence for one-on-one conversations is the most powerful, but daily communication should be a requirement in these fraught times
Companies who put employees first might experience short-term negative impact; however the payoff in terms of greater engagement and loyalty, will pay rich dividends in the longer term.
Customers
During times of crises, most businesses revert to survival mode. And the first casualty of the decisions that follow, are the customers. It is not unusual during a crisis, for customers to feel underserved or even abandoned.
Humane leaders recognise that business exists to serve its customers, and they double down on ensuring they continue to do so in difficult times, when the customer has fewer choices.
Some examples of how customer focused businesses do things differently during difficult times include
Companies who put the focus where it should be - on serving their customers, will not only retain their customers, but reap benefits from greater customer loyalty and new customers who are attracted by their customer-centricity.
Suppliers
Globalised and highly interdependent supply networks mean that a company's ability to operate effectively and serve its customers, is critically dependent on its suppliers. So it makes good business sense to proactively ensure the health of your suppliers.
Humane companies and leaders go beyond looking at the situation transactionally. For most large organisations, the majority of suppliers are smaller, and less resilient to serious economic shock.
Enlightened companies extend support to their suppliers in these and and a number of other small but meaningful ways. While these actions won't reflect in the Company's financials, the deepening of partnerships and the goodwill generated will be of value in the long term.
Communities
Already, in serving its employees, customers, and suppliers companies are making significant contributions to society
However, it is heartening to see companies and individual leaders going over and beyond this to try and do more. Some recent examples, in response to COVID-19 pandemic illustrate what is possible:
Companies that proactively seek to engage and give back to the communities that host them, are usually amply rewarded. This might be in terms of a more supportive business environment, a less tenuous license to operate, or actual financial support. Long term, impact on their business is significantly positive.
It is time we change how we judge our leaders. We make heroes of leaders who, in pursuit of financial performance, make bold moves. These usually involve massive organisational change and hardship for people. It is time we celebrate humane leaders, who put people first - because they know that service comes before profit.
In a trade-off between profit and people, what does your conditioning, make you most likely to choose?
If you were to put people first, which stakeholder group do you feel most ready to serve? And least?
Image source : Tumisu via Pixabay
