COVID-19

As the coronavirus spread throughout the United States, schools nationwide were closed. Suddenly and unexpectedly, millions of parents became homeschoolers. Highlights for Children Inc., the venerable family-owned children’s magazine publisher, quickly put the word out about the free content it provides on its websites and social media, emphasizing that these materials are available for parents to use as learning resources.

“They can visit our social sites and find links to free content, including some free printables from our workbook series, Highlights Learning Big Fun. We have a wide array of activity ideas, recipes, science experiments, crafts, games and puzzles available on HighlightsKids.com, and also on our Highlights YouTube channel,” says Christine French Cully, the non-family editor-in-chief and chief purpose officer.

“Those things were already there. It was just a matter of pointing people to them and calling attention to them.”

“We tried to move quickly, but we also have been realistic that we need to find good ways to support people in an ongoing way, because we think this disruption will last,” says Kent Johnson Jr., the company’s fourth-generation CEO. “We don’t think of it as a sprint, we think of it as a marathon.”

“We’re actively working on packaging other content in ways that will be particularly easy for parents to use in this homeschool situation.”

Highlights.com also features content for parents, including video messages from Cully that provide “inspiration and support during this time,” she says.

“We know that right now, parents want and need resources. That’s our sweet spot. We have a huge library of content that we can curate in different ways. But we’re also able to offer parents some deeper reflection about the situation we’re in.

“We want parents to see that, as difficult as this is, there is a bright spot. There is an upside. This is an opportunity for us all to be reminded about what’s really important. It’s an opportunity for us to make some good memories with our kids, because they’re going to remember this for the rest of their lives. It’s an opportunity to help kids see some new ways to show kindness and compassion, and to help them understand what it’s like to make a little sacrifice for the greater good.

“There are lots of big life lessons that we can teach our children right now — how to cope with disappointment. You can become more resilient and practice optimism. We’re tackling it from that angle, as well.”

Johnson says there was no “hemming and hawing” about making material available free of charge. The staff are all now working from their homes.

“We’re trying to be as aggressive as we can in putting ourselves in the position of our customers, and trying to provide content through as many channels as we can to reach as many of those parents [as possible],” Johnson says. “We think parents are going to continue to purchase our products, but at this time, as we’re creating new content and adapting content, we’re just trying to get it to as many parents as possible, and not really worrying about it.”

Johnson is keeping his family in the loop about what the company is doing during the COVID-19 crisis. He recently recorded a video for shareholders.

“We’re trying to increase our frequency of communication so they know what’s going on and to keep us bonded together even though we’re spread out across the country.”

Plans for the family’s annual retreat, usually held in July at their homestead in Boyds Mills, Pa., are up in the air.

“As we’re doing with so many things, we’re trying to balance hope — optimism that maybe we’d be able to travel — but also the kind of realism that if we can’t, we certainly have to find a way to virtually bond, to keep our traditions,” Johnson says. “What I heard from our education committee is they absolutely want to try to do a virtual event, if we are not able to travel as a family.”

Last year, Cully received the “chief purpose officer” title. In that role, her primary responsibility is “to amplify the brand internally and externally,” she says. “We felt this urgency to get our message — our philosophy about kids — out in a bigger way.” When this period of self-isolation ends, she’ll be doing more public speaking.

“The company was founded 74 years ago by my great-grandparents,” Johnson explains. “They started the company to serve children and families. Over the years, we’ve always talked about being mission-driven and being purpose-driven.

“As I was thinking about sustaining the purpose and mission over the next 75 years, two things we wanted to achieve [through] Chris’s role. One, I wanted to create a deeper understanding of our purpose inside our organization, that would make it completely sustainable beyond all of our current careers. That was the internal. And externally, we realized that, given who we are and the trust and relationships we have in society, we could go beyond our products. Through partnerships, through advocacy, through speaking out, through using our voice, we could advance things that would be good for kids in other ways, beyond products.”

Little did they know how important that role would become as the pandemic transformed Americans’ lives.

“It’s been all purpose, 24/7 every day,” Cully says. “Unfortunately, it’s under these circumstances, but I’m glad we were ready to spring into action.”

The business and the family have a history of rising above challenges and hardships. Three years after Johnson’s great-grandparents, Garry and Caroline Myers, founded Highlights for Children, they ran out of money and had to borrow to stay afloat. Then in 1960, as they were in the process of transferring ownership to their son and daughter-in-law, the second-generation couple and a non-family vice president were killed in a plane crash. Garry and Caroline pressed on with the help of other family members, and non-family executives were hired so the business could continue.

“We’ve been through lots of challenges with the economy, challenges with change in society, and with our business,” Johnson says.

“We had to get through some very difficult times in the first decade. And then we’ve had family tragedies, we’ve had unexpected succession, we’ve had challenges to our business models. So I think for the family as a whole, but also for me as a leader, I’m trying to draw on everything I know about our history to build my resilience and faith and confidence that we’re going to get through this.

“This may be different, but we’re going to get through this crisis, because those before us got through crises, and because what we do for kids is so important that we have to get through this crisis for our customers.”

Highlights’ free resources

Here is a list of free resources that Highlights is offering online:

• Printable pages from Highlights Learning Big Fun workbooks
• Digital play on apps
• Free content on YouTube, which includes channels specifically for kids (see Highlights Kids, Highlights High Five, Highlights en Español and Highlights Hangout - as well as a channel specifically for grown-ups
• Free content on HighlightsKids.com, which features activities, games, crafts, recipes, science Q&As, the Highlights Hangout podcast and more
• Free crafts and activities to do at home, resources on skill development and articles geared toward parents on Highlights.com/Parents
 

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Mull Drilling Company, an independent oil and gas company based in Wichita, Kan., has been hit by “a double whammy,” says third-generation CEO Jennifer Mull Neuhaus.

COVID-19 has lowered demand for oil, which has affected oil prices. On top of that, the Russia-Saudi Arabia oil price war that began March 8 had already pushed down prices before the pandemic spread widely throughout the United States.

Mull Drilling, founded in 1954, employs about 35 people, plus some contractors. It operates primarily in the Mid-Continent and Rocky Mountain regions, with most of its exploration and production projects in Kansas and Eastern Colorado.

“We are considered an essential business, so our operations in the field have largely stayed the same in some respects, from a coronavirus standpoint,” Neuhaus says. “But because of oil price, we’ve had to shut in some wells and be really mindful of what’s economic and what isn’t at this price.”

Headquarters staff are working from home, Neuhaus says. Personnel working in the field generally don’t come into close contact with colleagues. “We have instructed them to do social distancing” as well as to limit contact with people in general. The policies the company has established are prudent “both from a standpoint of expense management as well as the coronavirus guidelines,” Neuhaus says.

“We don’t want to get people sick, but then also, we don’t want to be doing any unnecessary work on the wells.”

Neuhaus and her father, company chairman Lewis Mull, have discussed tough topics such as, “What are the levers that can be pulled, and in what order we pull them? What can we do to impact the least amount of people?

“We take very seriously that people buy houses and send kids to college based on the fact that they think they’re going to have a job with us, and so we do not take any decisions we’re making lightly at all.”

Neuhaus has been reaching out to family members who have ownership interest in the company as well as to another family entity that has been a partner with her family firm for 60 years.

“I’ve been making sure that I send them fairly frequent communications about what’s going on and the decisions that we’re making — not only how that will impact them, but also how it’ll potentially impact employees, should it get to that point,” she says.

The Mull family and their longtime partner have similar values, Neuhaus says. “Because they have a family business of their own, they too understand the nuance of taking care of your employees to the extent that is possible.

“I do think it’s hard for family businesses, [which] tend to be more close to their employees [than large corporations are]. These are hard decisions they’re making, and having to face and consider. It’s crazy times we’re living in right now.”

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Family-controlled and family-owned companies’ responses to the COVID-19 pandemic are receiving media attention.

Tim Boyle, president and CEO of publicly traded, family-controlled Columbia Sportswear, has cut his own salary to $10,000, The Oregonian reported. That’s a considerable reduction; the report said that in 2018, the most recent year for which data are available, Boyle received $3.3 million in total compensation.

At least 10 other Columbia Sportswear executives volunteered to take a 15% reduction in pay. The nearly 3,500 employees of the Portland, Ore.-based company are still being paid as usual, although the stores have been closed since March 16. As of March 28, the closures were expected to continue for at least another two weeks, according to The Oregonian.

Ford Motor Co., also publicly traded and family-controlled, announced March 30 that it would partner with GE Healthcare to make 50,000 ventilators in its Rawsonville Components Plant in Michigan between April 20 and July 4. Ford said that it would produce 50,000 ventilators in the first 100 days and then would be able to produce 30,000 ventilators per month as needed. Earlier, Ford and GE Healthcare announced a collaboration to produce a simplified ventilator design.

Meanwhile, H-E-B, a private, family-owned grocery chain based in San Antonio, Texas, was lauded in a Texas Monthly article for its comprehensive preparation for the pandemic. According to the report:

"The company began limiting the amounts of certain products customers were able to purchase in early March; extended its sick leave policy and implemented social distancing measures quickly; limited its hours to keep up with the needs of its stockers; added a coronavirus hotline for employees in need of assistance or information; and gave employees a $2 an hour raise on March 16, as those workers, many of whom are interacting with the public daily during this pandemic, began agitating for hazard pay." 

H-E-B, which operates 300 stores, has a director of emergency preparedness, Justen Noakes. The company first developed a pandemic plan in 2005 during the H5N1 outbreak in China, Noakes told Texas Monthly. It began working on a coronavirus response plan during the second week in January, he said.

H-E-B chairman and CEO Charles Butt is the grandson of Florence Butt, who founded the company in 1905.

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Family businesses are the backbone of our U.S. economy. Yet many are in serious jeopardy due to the unprecedented coronavirus pandemic. Most businesses are now experiencing significant revenue decreases. While some companies may be seeing volume increases, the overall impacts of the crisis are staggering. Virtually all family businesses must now adapt in order to survive.

Even with the newly announced government programs of financial support, family businesses must take immediate steps to change their management focus in order to navigate safely through this cataclysm.

Management teams have traditionally used financial metrics of profitability, return on investment and risk to manage their businesses. Under normal circumstances, these metrics provide companies with a sound roadmap for success. However, under current conditions, a profoundly different roadmap must be adopted as rapidly as possible.

Cash and cash flow are king
Simply stated, profitability is no longer your goal! Businesses fail from running out of cash, regardless of profits. Business leadership must reorient their primary focus to cash balances and cash flows. This is a big transition, given decades of successful business experience (and cemented paradigms) using traditional financial metrics. A cash focus leads to different decisions, which are counterintuitive to many management teams.

Analysis, planning and forecasting
The starting point is a deep financial analysis of your business to determine the drivers of cash generation and cash consumption, and the timing of each by activity. This will help provide your best roadmap for survival. The first step is to establish a project team to gather, analyze and produce this critical information.

Sources and uses of cash
The project team must define how each activity in your business impacts cash. Sales and related cost transactions have a daily effect on cash flow. Management of working capital impacts cash on a periodic or one-time basis. Dividing the business into four components allows different team members to simultaneously evaluate the effect of each activity on cash.

1. Working capital management. Sales and purchase cash flow cycles are a company’s lifeline. Start with analyzing your key working capital accounts — accounts receivable, accounts payable and inventories.

Accounts receivable. Determine your major customers’ payment cycles in terms of the number of days after shipment until you receive cash. Once determined, develop strategies to shorten the payment cycle. Possible actions include more aggressive collection follow-up, faster invoicing, shorter negotiated payment terms and collection of deposits upon receipt of a sales order. The key is to bring the cash in faster.

This is particularly important because the cash necessary for operations (payroll, vendor payments, administrative costs, financing costs, etc.) often is laid out before you receive payments from your customers.

Both increases and decreases in sales will have a direct impact on your cash balances, depending on your customer payment practices. So will the likelihood of slower payment cycles from customers due to financial distress. These changes can create a serious liquidity crisis for your company, so careful planning and receivables management is essential.

Accounts payable. Analyze accounts payable by similarly evaluating each major vendor’s impact on cash. Improve cash flow by renegotiating longer payment terms, eliminating early payment discounts, requesting purchase price discounts and extending payments until your supplier refuses to ship.

Inventories. Inventories consume cash and provide minimal collateral value for borrowing money via working capital loans. Businesses should evaluate each component of inventory in terms of cash consumption — raw materials, work-in-progress and finished goods. The objective is to increase inventory turnover and sell slow-moving and obsolete inventories as quickly as possible to generate cash.

2. Debt and capital management. Immediately restructure your debts and other obligations with your banks, other lenders and landlords to slow down cash outflows. Actions include making interest-only payments for existing debt, negotiating rent concessions or delays in payment, and using any other appropriate methods that keep cash in the business.

Negotiate additional credit facilities through working capital, fixed asset and mortgage loans. Draw cash from these loans to generate additional reserves for your business. Remember, once cash is gone and you really need more, you will not be able to get it! 

Projects with a greater than 180-day payback should be placed on hold, unless your business is not distressed and has excessive capital. The current business environment is too turbulent to justify spending cash, even for good projects, when the time horizon for payback could jeopardize the survival of the business.

3. Sales analysis. Examine the impact on cash of significant sales transactions. There are two issues to consider: (a) Are sales generating or consuming cash? (b) Will the cash received from a sale arrive before the business must pay for the variable costs required to produce the product? 

The first management action is to change the focus from customer “profitability” to the sales transaction’s “variable cash contribution margin.” This metric is calculated by subtracting variable costs of goods sold and any other variable administrative costs from revenues. The metric provides a good estimate of the cash generation or consumption associated with key sales transactions. When the number is positive, cash is eventually generated with each sale. If the number is negative, it is a permanent drain of cash and must be remedied or the business eliminated.

The second test calculates the actual timing of receipts and disbursement of cash associated with a sale. Cash must be received prior to the business paying for its costs if the sale is to generate a positive cash flow. If the transaction from a variable cash contribution margin is positive but cash is received after the payment of costs, the transaction becomes cash consuming for all such increases in sales, and cash generating for decreases in those sales. This is a totally different metric and counterintuitive to many, but accurate in understanding cash flow and its impact on your business.

Two solutions are to negotiate better payment terms with your vendors and customers to generate net cash flow from each sales transaction, and to establish a working capital line of credit to finance the timing shortfall between receipt and payment of cash. Amazon has been creating cash flow for years by paying vendors in 60 days on average while collecting cash via credit cards from customers on the day of shipment (no account receivables). If a customer’s sale results in a significant cash drain, you must consider whether to temporarily stop the business to protect your company’s cash.

4. Operating activities analysis. Another critical step is to evaluate your operating activities to determine if they are optimized from a cash generation and consumption perspective. Analyze all major functions of your business.

The following questions are a good starting point:

  • Is the operation efficient? Are there opportunities to reduce waste or improve productivity and thereby generate additional cash flow?
  • Could operations be consolidated to reduce the cash requirements of maintaining multiple plants, warehouses, machines, trucks, administrative offices, etc.?
  • Could a present activity or operation be outsourced to a lower cash “cost” supplier?
  • Are all activities essential during the current business cycle (e.g., administrative activities)?
  • Are there underutilized assets that could be sold to generate a one-time influx of cash?
  • Can assets such as a warehouse or truck fleet be sold and leased back to generate cash?

Interim management reporting system
The final step is to provide real-time cash information to management to support day-to-day decision making. A typical approach is to forecast cash daily for the first two weeks and weekly for the following 10 weeks to provide a rolling 12-week forecast. Update the forecasting system daily based on new information such as daily cash receipts and disbursements.

There is ample literature available on building cash flow forecasting models. These should be constructed on a detailed level — certainly for major customers and expenditures — and can readily be produced on Excel spreadsheets.

While history is a good starting point to initially forecast cash payment and receipt cycles, it is extremely difficult to accurately project cash needs 60 or 90 days into the future. Historical payment patterns are not good predictors of cash flow during times of distress. For example, a significant payment from your largest customer that normally arrives in 30 days might get stretched to 45 or 60 days.

Communication and transparency
Once management has shifted from a profit orientation to a cash flow orientation, business leadership has better tools to keep the company afloat. Proactive management of cash must become your key metric. Of course, you will need to continue to produce traditional financial statements, but your day-to-day management decisions must be driven by your new cash flow forecasting system.

With current cash flow information at their fingertips, your business leadership can better negotiate with bankers, landlords, customers, vendors, owners and others who rely upon your company’s longevity and financial well-being.

These are very challenging times. Taking immediate steps today to generate and protect your cash positions is a vital step for surviving to enjoy better times tomorrow.

George A. Isaac (www.GeorgeIsaac.com) is founder and president of GAI Capital Ltd., a family business consulting firm. He is the author of Your Business, Your Family, Your Legacy: Building a Multigenerational Family Business That Lasts.

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As the COVID-19 pandemic grew, nationwide retailer Harbor Freight Tools removed protective gear that could be used by medical professionals from its shelves and distribution centers. Then the company, which sells discount tools and equipment, put out a call to hospitals in the communities where it has stores, asking if they needed donations of N95 masks, face shields and nitrile gloves.

“Although we certainly won’t have enough of these supplies to fill everyone’s needs, we’re going to donate everything we’ve got,” wrote Eric Smidt, the company’s founder and owner, in a letter to the Harbor Freight community. “We’ve chosen to focus our efforts on hospitals with a 24-hour emergency room with the hope that we can help as many people as possible right now.”

The response was swift: “over 13,000 applications from hospitals and more than 43,000 email recommendations from customers,” Smidt wrote in an update. “Over the next several days, we will be shipping more than 44 million pair of nitrile gloves and hundreds of thousands of masks and face shields to hospitals in over 1,000 communities that our stores serve.”

Harbor Freight Tools was founded in 1977 by Smidt and his father. Today, it has about 20,000 employees nationwide and 1,035 stores, as well as an online business. The company is headquartered in Calabasas, Calif.

The business is considered essential because it provides tools to those sheltering at home as well as to the skilled tradespeople who keep other essential organizations running, according to a company spokesperson.

To keep operating, Harbor Freight has increased sanitization efforts in its stores, distribution centers and offices and is reminding customers to stay six feet apart. The company is providing paid sick leave to employees affected by the virus. 

The donation is just one part of the company’s and family’s philanthropy. Harbor Freight makes donations to K-12 education, first responders and veterans. The Smidt Foundation also makes donations in areas including the arts and skilled trade education. And in 2018, Eric and Susan Smidt and the Smidt Foundation announced a $50 million gift to Cedars-Sinai in Los Angeles to create the Smidt Heart Institute, which aims to advance research and innovative practices in cardiology and cardiovascular surgery. 

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During the first three weeks of March, Paul Darley, third-generation president, CEO and chairman of W.S. Darley & Co., kept a watchful eye on the spread of the COVID-19 coronavirus.

The company, founded in 1908 and based in Itasca, Ill. (about 27 miles northwest of downtown Chicago), serves a market that’s all about emergency preparedness. W.S. Darley manufactures fire engines, pumps and related equipment for first responders and distributes tactical equipment to the Department of Defense.

In addition to its Itasca headquarters, the company has manufacturing, engineering and R&D operations in Chippewa Falls, Wis., Janesville, Iowa and Grand Rapids, Mich.

As news of COVID-19’s arrival in the United States spread, Darley communicated frequently with employees. Excerpts from his emails between March 3 and March 20 are presented here, with very slight editing for spelling and punctuation.

The messages reflect a concern for the safety of team members and other stakeholders, as well as the family’s commitment to steward the business through difficult times. They also document the evolving state of knowledge about the virus.

***

March 3

Dear Team Darley,

We are continuing to monitor the coronavirus closely. The health of our employees and your families is of paramount importance to us.

Please err on the side of caution. Discuss with your manager(s) if in doubt. This is going to get a lot worse before it gets better.

For those attending tradeshows and in contact with the public, we ask that you follow the CDC recommendations:

• Fist bump rather than shake hands
• Wash your hands regularly with soap and use alcohol-based hand rubs
• Cover your nose and mount with tissue or inside your elbow with coughing or sneezing
• Avoid close contact with anyone with flu symptoms
• Avoid touching your eyes, nose and mouth whenever possible

If you have an office job and do not have access to the Darley network to work remotely, please communicate with [system administrator] John Long or [Defense Division IT administrator] Jim Berry this week and we can make arrangements for you to work from home in the event of a company shutdown.

We have put in place a social media campaign to alert our customers, employees, etc. with the latest news. Please monitor these sites.

If you come in contact with anyone who you feel may have infected you, please advise our HR department immediately and seek medical attention.

We are certainly not panicking, but the above precautionary measures should help us as we move forward. If you have any ideas or concerns, please don’t hesitate to reach out to me.

March 9

Dear Team Darley,

We continue to carefully monitor the coronavirus (CV) epidemic. Thank you to everyone who shared articles. A few of them are attached. Our social media sites are focused on sharing important articles. Please monitor those.

We are not panicking, but we are continuing to take worst-case scenarios into consideration with our planning. We will continue to keep you up to date on a regular basis. While we are praying for the best, we are preparing for the worst.

As a company, we are focused on 1) the well-being of our employees and your families and 2) preparing our business for significant business disruption.

1. Employee/stakeholder well-being

We have purchased additional bottles of hand gels, and new dispensing equipment.

Continue to practice social distancing where you can. Give others the fist bump or elbow tag. Wash your hands regularly. Don’t come in to work if you are not feeling well.

2. Preparing the company for significant business disruption

This epidemic will have a severe impact on our company’s performance this year. You’ve often heard me say, “Companies don’t go out of business because they lose money, they go out of business because they run out of cash.” We need everyone to be very cash-conscious and do what we can to conserve cash. This means focusing on our receivables, billing quickly, reducing unnecessary costs, etc.

We are immediately ceasing all non-critical hiring efforts. All new hires must be approved by a member of the executive team in writing. Any international travel must be approved by a member of the executive team. Any travel that can be postponed, should be. We are postponing all capital equipment projects.

We are working on getting additional CV protection equipment for our customers. Under no circumstances is anyone to quote a price higher than our normal traditional margins. The price gouging stories out there are terrible.

It’s going to get a lot worse before it gets better. Brace yourself for the opening of the stock market today. Oil prices just dropped over 30% overnight. Thank you for your assistance and cooperation during these times.

March 13

Dear Team Darley,

We just completed an emergency Board of Directors meeting and have met with our management teams. You know all the headlines, so I am not going to repeat them.

I realize some of you may view me as an alarmist on this, and that’s okay and it may be true, but that’s what I get paid to do…

While the symptoms of the virus may not be life-threatening for most people, the collateral economic damage to Darley will be problematic. Small businesses, like Darley, are most susceptible to failure in these types of conditions. If I’m alarming you, that’s okay too because all we all need to face the realities of what’s going on in the world and prepare for the worst. The ramifications are far-reaching for us, and it’s prudent for us to take precautionary and preemptive measures.

There is no blueprint on how to deal with this. Below are some of the steps/action items that are effective immediately:

• Visitors to Darley: Please do not invite any visitors to Darley. It is okay to keep current meeting commitments, but do not make any new appointments for people to visit us unless deemed critical and approved by an executive team member. Please reach out to guests at existing planned meetings at Darley and ask them to fill out and sign the “Visitor Travel Health Form” prior to their meeting. All visitors will be required to complete this form prior to entry to our offices. Our Director of First Impressions at each location will be responsible for collecting these forms. [The forms are] not required for delivery trucks.

• Visiting Customers/Vendors: Please do not set up new meetings. If you have existing meetings, call the other party and ask for their feelings on postponing.

• Air Travel: Please limit your work-related travel, especially on planes. Do not book new trips until you hear from us – hopefully within 30 days. Discuss currently planned trips with your supervisor. Please feel no obligation to make these trips. Where practical, consider driving to locations, rather than flying. If you must travel, try to avoid holding handrails, elevator buttons, etc. When greeting and leaving, do not shake hands. Politely give them the elbow or fist bump….
.
• Cash Preservation: We all need to watch our cash. There should be very few, if any, vendor prepayments. We are stopping capital projects. A member of the executive team must sign off on all new hires, etc.

•  Cleanliness:  For those who supervise our maintenance staff, please see that our maintenance people concentrate on cleaning bathrooms, kitchens, reception and other high-traffic areas. Make sure that the bathroom garbage is emptied often, extra paper towels are available, etc.

• Washing Hands: Here is a link on the correct way to wash your hands. You should wash them long enough to sing “Happy Birthday” to yourself.

• Coming in to Work: If you are not feeling well, take a Paid Time Off (PTO) day and do not come in. We are immediately implementing two policies: (a) If you have a fever, you may not return to the workplace for 24 hours after your fever has subsided, and (b) If you discover that someone in your family gets the CV, or if you suspect that you have been exposed, it is mandatory that you stay home. Do not come to work. Notify HR immediately. If you feel you may be in a high-risk group and are uncomfortable coming to work, please contact HR to discuss.

• Employees Who Use Computers: If we get to the point where you potentially have to work from home, you should now be set up with remote computer access and phone call forwarding. Thanks to John Long and Jim Berry, who have been doing an incredible job getting all office employees to be able to work remotely. Yesterday, I sat in on conference call with U.S. Congressman Adam Kinzinger and he is recommending that you have some supplies at home in the event of a quarantine.

• Employees Who Don’t Use Computers: If you don’t have a company computer, I am asking that our HR departments share printed copies of these updates. We would like to add as many employees as possible to these electronic communications. If you’re comfortable, please share your personal email address or cell phone to our HR department so that they can forward you these updates. If we are forced to close down manufacturing operations, we can easily communicate with you.

There is no playbook on a lot of this and we are trying to look at this from multiple views.

• Focus on Internal Processes:  Since business is slowing down, let’s use this as an opportunity to focus on internal process improvements. While our relationships overall as a company are strong, let’s rally around this and strengthen internal relationships. Sales teams should be proactive in calling and emailing customers. Let’s use this as a time to reach out to our customers in cordial manner, caring manner to see how they are doing, etc.

• Keep Long-Term Perspective: We have already seen a slowdown in business. Provided we don’t face a forced plant shutdown or major supply chain disruption, we have a lot of work ahead us in almost all areas.

The above is all very fluid and can change rapidly, and I realize a lot of you have questions and concerns. We are holding a company-wide conference call meeting tomorrow morning to discuss the above response plan and address any concerns you might have. The meeting will be recorded and available upon request. This is not mandatory.

If you have any concerns or ideas, please share them at the meeting or send them to me. Thanks for all who have shared your thoughts and ideas. 

We are postured well as we head into this crisis. Let’s not panic, but please err on the side of being health conscious for you and those around you.

March 14

Dear Team Darley,

Late yesterday, the Governor of Illinois and Mayor of Chicago have both recommended [that businesses close and have employees work remotely if possible].

For our Itasca employees, we will follow this recommendation and our Itasca office will officially be closed on Monday, but our doors will be open to a limited group of employees to help us process emergency orders for our first responder customers. If there is anyone who is comfortable coming in, it would be greatly appreciated, but absolutely no obligation. Your health and that of your family is our first priority. If you have children at home, please consider your family needs first. Our second priority is taking care of customers.

We are following the emergency closing policy from our employee handbook.

How long do you think Itasca and the other locations will be closed? We are uncertain, but we are planning on 2-3 weeks at this point. We will continually monitor and be transparent in our communications.

Why aren’t the other locations being closed now? Per the above, we are being guided by the CDC and recommendations of the local authorities. Your safety is paramount and if you are uncomfortable coming to work for any reason, we encourage you to stay home and notify HR and your manager. We all need to prepare now for a recommended or forced closings, as they are coming sooner than you think in our other areas. We have reached out to the union business agent and we will stay in close communication with them as things progress in Chippewa Falls.

What about those working from home? For non-exempt employees, if you work from home, use the attached simple log to document your time. Send the weekly log to your supervisor on Friday afternoon each week.

Will employees get paid during this time? For now, we will follow the Emergency Closing Policy. In addition, you can (a) work from home (part-time or full-time if enough work), (b) use PTO days or (c) take unpaid time off. We will monitor and have at least a short-term response for you by the end of next week. We are a family company and will do all we can to support our hard-working and dedicated employees. In our decision making, we will be guided by the same family values that have guided us for decades. We will continue to monitor what comes out of Washington. For anyone with immediate hardship, we encourage you to apply for assistance under the William J. Darley Employee Charity Fund. If you are currently donating a portion of your check to this fund, we would fully understand any employee who chooses to amend their weekly contribution.

We all need to work together: We are all in this together. We realize that everyone is under a lot of stress. As a whole, we get along great, but if there are differences between you and co-workers, let’s use this as a time to mend those relationships and form a stronger team.

Process improvements/customer contacts: To quote Paul Romer, a Stanford economist, during the last recession, “A crisis is a terrible thing to waste.”  Let’s use this time to work together on improving our processes. Reach out to your customers with thoughtful outreach.

Quarantine: As discussed at our town hall meeting this morning, we currently have three employees from our Itasca facility who have self-quarantined because either they are not feeling well or believe they may have been exposed to the CV. The incubation period is up to 14 days. If you should contract the CV, please report this immediately to our HR department.  If you feel you may have been infected, please follow the procedures outlined in the attached self-assessment for risk.

This is changing by the hour, and we are going to continue to be transparent and over communicate with you. Thank your you for your continued hard work, commitment to our company and employee well-being. This is all new to us, but one thing I know is we are going to get through this and come out stronger than ever. This is going to get worse before it gets better, and we will be here for you as we have the part 112 years. 

Go Team Darley!

March 17

Team Darley,

All things considered, things are still moving very smoothly for us. This may be the calm before the storm, so we all need to continue to proceed with caution and continue to take precautionary and preemptive measures and err on the side of safety for our employees.  That means social distancing, washing hands, not touching your face, limiting your movements, etc. and following the CDC recommendations for businesses. This is spreading quickly from the urban areas to our more remote locations.  What has occurred in Itasca is a harbinger for our other locations. All restaurants and bars are closed in Illinois and similar closures will most likely take place near you soon.

Some updates:

Coronavirus Task Force Team: We have set up a team with the purpose of disseminating information and addressing any questions that you might have. Please contact any member of this committee with questions or concerns that you may have.

Itasca HQ Status: If you can work from home, we ask that you do so. We have left our doors open to a limited group of employees to help us process emergency orders for our first responder customers. We had over 60% of our employees show up and work yesterday. Today has considerably less — about 20%. We are moved by your commitment, but stress again that there is absolutely no obligation to come to Darley. Your health and that of your family is our first priority. If you have children, elderly or sick people at home, please do not come in. You don’t need to provide a reason and we will fully understand. If you come to work, continue good health measures. If you are in the office, please eat at your desk.

Status of Other Locations: Managers at each location are preparing for a similar response, which will be individualized by location.

Meetings: There are to be no in-person meetings where people are within 6 feet of each other. Please be mindful of social distancing. Please use Microsoft Teams to hold your meetings.

Travel:  We are stopping all company travel by air and other means, and strongly discouraging all personal travel.

Coming to Work: You, your health and safety, and that of your families remains our top priority. All employees are permitted to take unpaid time off for any reason. This applies to employees at any location, if you chose not to come to work, we fully understand and respect your decision.  For our office employees, the attached document talks about the current options that you have if should chose not to come to work.  Again, if you or anyone in your family is not well, or if you think you may have been exposed to the CV, please stay home. If you have exhausted PTO days or believe staying at home creates a financial hardship, please communicate with a member of the Task Force and feel free to apply to the William J. Darley employee fund.

Please ask questions, there are no bad ones. Our business is sound, and we will be doing what is right as a family company. Over the years, we’ve seen our people really shine in challenging times, and I am confident that we will come out of this stronger than ever. We appreciate your patience and flexibility as we navigate these waters.

March 20

Team Darley,

As of today, we have no reported confirmed COVID-19 cases. We continue to be guided by the CDC Interim Guidance for Businesses and Employers and err on the side of safety for all our employees, but my direction is to act as if you and those around you are currently infected. As a reminder, you are under no obligation to come to work.

All three Itasca employees who self-quarantined have either tested negative or are feeling well and are working from home. We have one employee in our Chippewa Falls pump plant who recently returned to work after a cruise, and this person received a letter from the cruise ship saying someone on the ship had tested positive for the COVID-19. That person has self-quarantined.

Below is an update:

Itasca/Chippewa Falls/Iowa/Michigan employees: We continue to have about 15% of our workforce coming in to the office to handle essential processing and shipping of orders for our first responder customers. A lot of employees are working remotely, and most of our warehouse is at full staff, allowing us to fill emergency orders for our first responder customers. Many areas of Chicago are on shutdown, including our downtown Chicago WeWork office that had a person from another company test positive. This person did not work for Darley. Each location will be tailoring our response plans based on individual location needs at the time.

Remote employees: The state of California has issued “Stay at Home” requirements. Oak Park, Ill., is on a similar lockdown, and we anticipate more communities will adopt this very soon, including the state of Illinois, which may implement a “Shelter in Place” tomorrow. If you are working remotely during this time, we are going to do the right thing and properly log time worked. We are monitoring very closely if our employees can be exempt as “essential workers” because we serve first responders and conduct Department of Homeland Security and Department of Defense business. This would be voluntary, if allowed. We will keep you posted if employees should still come to work.

What to do if you think you have been exposed: Do not report to work. If you have concerns about possible exposure, we suggest you contact your healthcare provider for guidance on self-quarantine. Here is a link to the CDC Risk Assessment. We’ve also attached information from Johns Hopkins that addresses a lot of questions.

If we are forced to shut down, will we get paid? Under our emergency closing policy, we do offer non-union employees 3 days of Paid time Off. (PTO). I know you all have concerns about getting paid if or when we may have to close facilities and if you are unable to work remotely. Your first course of action should be to use your PTO if you have it, and some of you may even have some banked sick leave that can be used. If you are sick and have a short-term disability policy, you may find you have coverage there. We know many of you want to save these days for other more enjoyable purposes, but in these extraordinary times, this is exactly what these days are there for, so please use them. Employees have an option to take unpaid time off without any repercussions from Darley about missed time. 

We also expect to receive more guidance from the federal government about what aid they may be offering workers and what requirements they will ask employers to comply with. We will, as always, comply with all federal guidelines. Please see the attachment on the Family First Coronavirus Response Act, which the president signed on March 18. This is scheduled to go into effect in April and creates two forms of paid leave. The resources available from the government continue to evolve and vary by state, but we will continue to monitor the situation and share information that may benefit Darley employees in this crisis.

We are all going to feel the financial impact from this, and we have an eye toward watching out for those employees most in need. We certainly do not want to mislead anyone or overpromise, and ideally no one would need to worry about missing a paycheck, but we cannot make that statement without knowing how long this pandemic will last. I do hope you all feel like Darley has earned your trust through the years of your employment here. We talk about our Core Values a lot at Darley and in times like these, they could not be more important to all of us in our daily lives. Darley is committed to doing the best it can for our employees during this difficult time.

New orders: Our incoming orders are obviously slowing down a bit, but we have received several large orders this week that have been in the pipeline for a while. As expected, equipment orders are down roughly 75% and customer activity is down about the same.

Cash flow: We need everyone who is working to be focused on cash flow. We are in good shape so far, but we know that some customers are going to stop paying us. We need everyone to be mindful of any spending. How we bounce back as a company will be largely based on our cash flow position.

Industry communications: Attached is an updated message that will go on our website today to our suppliers and customers.

Internal communication: I know I may be overcommunicating, but I ask that we reduce non-essential emails that don’t add a substantive value. Before “replying all,” please ask yourself, “Is this something that everyone on this email needs to know?” If not, remove those who don’t need to see it. There is no need for “reply all” emails that say, “Thank you.” “You’re welcome.” “Great job” etc. We will continue to communicate regularly via email, but we are setting up a mass group text alerting system to communicate with employees. When you see “NRR” on emails, that means “no response requested.”

Thank you for your continued commitment to our employee safety, serving our customers and preserving cash flow. We are going to get through this as Team Darley.
 

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How is your family business managing in these challenging times? What are your strategies for running your business and connecting with your family when experts are urging social distancing? What are you doing to manage economic challenges? Are your family values guiding you as you develop your plans?

We want to hear from you! Please send a message to Editor-in-Chief Barbara Spector. You can either share your story in the email or request a telephone call.

Our mission during this global emergency is to connect family business owners. Thank you for sharing your experiences.

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A third-generation family business is front and center in the fight against COVID-19.

GOJO Industries developed Purell hand sanitizer in 1988 and the product is in dispensers in schools, building lobbies, bathrooms and hospitals around the world, as well as bottles in homes, briefcases and purses. As the coronavirus was discovered in the United States, there was a run on the product, which sold out completely in many cities.

The company, based in Akron, Ohio, was founded in 1946 by husband and wife Jerry and Goldie Lippman. Third-generation member Marcella Kanfer Rolnick is GOJO’s executive chair.

“Over the last few weeks, we have continued to see very significant increase in demand. Many millions of hand sanitizers, hand sanitizing wipes and hand soap are moving out our doors every day at a record pace,” said Samantha Williams, GOJO’s corporate communications senior director, in a statement. “We are identifying ways to increase capacity everyday as well. We have added shifts and have team members working overtime,” at plants in Ohio and France.

“We have increased production significantly and our GOJO team members are working hard to ensure people have the Purell and GOJO products they need. We have a demand surge preparedness team that runs in the background all the time, who have been fully activated and are coordinating our response to the increase in demand.”

As the manufacturer of hand sanitizers — an over-the-counter drug regulated by the FDA — GOJO representatives are not allowed to make claims about the efficacy of the company’s products against coronavirus or any other virus. Such a statement would be an off-label claim, which is prohibited under the FDA rules.

However, “While COVID-19 is a new strain of coronavirus, under the Environmental Protection Agency’s emerging pathogen guidance, our Purell surface spray can be used to kill COVID-19 on hard, nonporous surfaces when used in accordance with the directions and a one-minute contact time,” Williams said.

“We have experienced several demand surges in the past and some have gone on for many months,” Williams said. “Over the last few weeks, we have continued to see very significant increase in demand. Many millions of hand sanitizers, hand sanitizing wipes and hand soap are moving out our doors every day at a record pace. We are identifying ways to increase capacity everyday as well. We have added shifts and have team members working overtime — in accordance with our plans for situations like this.” 

 
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As the COVID-19 coronavirus spreads around the world, businesses must contend with a host of issues, including supply chain disruption and employee absences.

Family business owners who have developed a strong business board and created an effective family education program will be in a good position to weather the storm, say Kristi Daeda, president of the Family Business Consulting Group (FBCG), and Jean Meeks-Koch, a consultant with FBCG.

“One of the key responsibilities of the board is risk management,” Daeda says. “Having a functioning board that is looking at strategy and risk, and the external environment, is a really great asset to inform management’s decisions and behaviors.

“A good board will help management to think about these kinds of risks holistically and put a place a process for continuing to monitor those risks and for taking actions to mitigate the risks.” Independent board members with risk management experience in other organizations “can bring ideas and resources and creative approaches to the table,” Daeda says.

Meeks-Koch advises boards to conduct “fire drills” in which board members discuss how the company would handle various crisis scenarios. “Those are things that keep top management and the board really crisp and ready for action.”

“The advice I would give to boards is to look at emerging risks through fresh eyes,” Daeda says. Boards should consider the potential impacts of various risks and what might be done to control them.

If your family education programming emphasizes that your business has multiple stakeholders, you will be less likely to encounter rogue shareholders who complain about dividends during a crisis, when your top business priorities are your customers, suppliers and employees, Meeks-Koch says. “I like to [present] some scenarios on how those values could play out in their family system or in their governance.

“I ask my [clients], based on their family values, are you trying to create a people-first culture? Are you trying to be a profit-first culture? Are you trying to be a process-first culture?”

Daeda and Meeks-Koch offer some suggestions for family firms who are affected by COVID-19:

Review your family history and values. “Multigenerational family businesses have weathered challenges before,” Daeda points out. “Sometimes that viewpoint can give you a better perspective to work with in short-term decision making.

“In so many families, the values are implied in the stories that they tell about their history, like perseverance or ingenuity or leadership or focus, or giving back to the community, or caring for employees. Even if a family hasn’t codified the values, there’s still an opportunity to say, ‘When we’ve been in difficult situations before, what have been the values that have guided us, and what can we learn from what happened in the past that we might be able to apply as new challenges surface?’ ”

Consider your employees as individuals. Be aware that in a crisis, you may need to think of HR policies in terms of gray areas rather than black-and-white rules, Meeks-Koch says. For example, an employee with a compromised immune system may request permission to work from home.

Work together with your customers to solve problems. Tell your customers about your supply-chain issues and brainstorm solutions as a team, Meeks-Koch advises. If you can’t get a part from your usual source in China, but can obtain it domestically at a higher price, would the customer work with you on pricing?

Set the right tone. When speaking with family, employees, customers and other stakeholders, the business leader should project “reassurance, positivity and optimism,” Daeda says. “Be sensible about the way that you react to these situations, and the tone it portrays to the people around you, because employees and family members are looking to a leader to know how to feel about what’s going on.”

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Does your family business have a communicable illness plan? Unlike the disasters for which most companies are prepared, a pandemic will not primarily affect equipment and facilities, but rather the people companies depend on to produce products and services. Additionally, the current assumptions about a pandemic’s duration push the boundaries of most existing absence-from-work policies. Therefore, any company must thoroughly examine its human resource management practices and policies in order to refine and/or implement policies that address the long timeline of a pandemic event.

Pandemics pose a risk to businesses by threatening the employees organizations rely on to produce products and provide services. If your organization requires “employees in place” or customer traffic to function, it is susceptible to a pandemic.

History has taught us that during a pandemic, an organization’s workforce could be depleted by 40% or more at any given time. The estimated duration of pandemics gauges the impact and recovery period at 18 to 24 months. Leadership is tasked with pandemic planning oversight, direction, execution and response throughout the lifecycle of an event.

What is a communicable illness plan?
A communicable illness plan (CIP) focuses on describing expected actions of, as well as coordination among, your organization and locally based governmental and private sector entities, particularly those responsible for public health, health care and emergency response. Plan components should address:
• Awareness and communication
• Facility issues (e.g., visitors, social distancing, cleaning)
• Health and policy
• Specific actions, based on escalating scales of impact
• Continual learning
• Recovery

Issues that should be considered include whether or not a facility will be closed, or for how long, given unknown factors at the time of planning. Given the above, planning for and testing the viability of remote work in combination with social distancing become important aspects of any organization’s CIP.

Whether a facility will be closed, or for how long, is impossible to determine in advance because all pandemics are different in their scope and severity. However, communicable illness outbreaks often escalate in schools, and school closings are likely to happen early in a pandemic event. This creates childcare challenges and can cascade to employee absenteeism in all aspects of private and public business and services.

There could be significant disruption of public and privately owned critical infrastructure, including transportation, commerce, utilities, public safety and communications. Government agencies may have minimal resources available for on-site local assistance.

The heart of a communicable illness plan is to ensure you have a healthy workforce so your business can continue to run, no matter the crisis.

Considerations:
• What is your tolerance for absenteeism?
• At what point will absenteeism harm your business?
• How will you monitor an outbreak of absenteeism so that intervention can be made before your organization suffers?
• Do you have policies in place that will allow your business to operate continuously?

Visitor policies
Organizations must not only train employees but also keep in mind visitors entering and moving through facilities. A pandemic can last several weeks or months; how many visitors walk through your doors during that amount of time?

Can visitors be denied entry during a pandemic?
A business operator that is not normally open to the public can deny access during a pandemic. Prevention or delay of spreading a communicable illness may require companies to control both business and personal visitor access, in order to keep employees safe.

Can visitors be forced to wear masks?
During a pandemic, employers can ask their visitors to wear a mask, although many healthcare professionals may argue the merits of this practice.

Can visitors be questioned about previous exposure?
Visitors may be denied entry if they have traveled to an affected area within a specified time (period may vary, depending upon illness and condition) preceding their visit or if they have had close contact with a person who has been diagnosed with a communicable illness or if they appear symptomatic. Many organizations create a designated meeting room subject to stringent cleaning protocols.

Karen Masullo, chief marketing officer at i3 LLC, has experience in crisis management and has received certification from FEMA. i3 is a boutique private asset management family office (www.i3resources.com).

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