Decision making in the time of COVID-19
Has your family established a framework that will help your business emerge unscathed?
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.”