What it takes to be a leader during the coronavirus crisis
Running a big company is never easy.
Spend too much on R&D and investors scream for not buying back stock. Do a massive share repo and people say you should be investing in the business. (Sometimes the same people complain about both.)
But that’s all piddly stuff now.
Today, CEOs are making decisions about whether people can put food on the table. About whether people get horribly sick. Or even die.
This is a time for leaders to be measured and defined. Did you step up? Or did you step down? Here’s some of the calculus:
Start with employees. CEOs need to keep them safe. But some of them have to go to work. They probably should be paid more. Others can work from home, and you need to try not to lay them off. Maybe cut their pay, but keep ‘em on the payroll.
And then you want to help. You want to give to hospitals, medical workers, food banks, the sick, the homeless, those in prison. They’re all coming to you with their hands out, and God knows, everyone of them has a once-in-a-lifetime case they’re making. How much money can your company afford to give?
And then there’s the business. Customers may desperately need product, or maybe desperately can’t pay. Suppliers, same thing. They might have nothing for you, the supply chain has dried up. Or they may want to get paid now, no terms, or even in advance.
And then you may want to pivot your operation to donating your food instead of selling it, or to making masks, or ventilators or hand sanitizer. And you want to do this before President Trump points his tweet gun at your head.
And then there are the wolves at your door. The bankers, the analysts and shareholders. They want to know, how bad is it going to be? Can you pay us? Is the dividend safe? What are you doing to keep the stock up?
Got insomnia yet?
Rare opportunity to step up
Thinking about all that. I touched base with a number of executives this week to see how they’re coping. I asked Facebook COO Sheryl Sandberg if it’s all a big balancing act.
“Not now,” she told me. “We think it's our responsibility in these economic times to step up and do as much as we can. How that impacts our business is just not what's most important here. We are paying all of our employees, all of our contractors, whether they can work, whether they can't work, whether they're home, whether they're sick, we have the ability to do that.”
And so are other big companies like Starbucks which just extended pay for employees while its stores are closed, provided enhanced mental health benefits and donated millions to fight COVID-19. And Walmart which is paying $550 million to hourly workers during the pandemic. And Hilton which is waiving its cancellation fees. And Microsoft which will continue to pay its hourly workers and its vendors’ too. Mars is committing $20 million to fight the disease. Sony is establishing a $100 million relief fund. (Oh! A competition!) And get this. CEOs are taking pay cuts—some to zero. The last time you saw that was when?
There are countless other examples too. Sure, these companies aren’t perfect. None of them are batting 1,000% here and maybe you think they’re doing it just to look good, but understand all this costs real money.
I asked Hans Vestberg the CEO of Verizon, Yahoo’s parent company who supervises me (a zillion levels up the org chart) along with 135,399 other employees, about prioritizing.
“I've tried to manage the four company stakeholders; employees, customers, society and shareholders and seeing that we have a fair balance,” said Vestberg, sporting a Verizon T-shirt during a Skype interview from his home. “In times like these when it's a crisis, how much time you spend can be a little bit tilted. In my morning sessions with my executive team, we go over the stakeholders to see what we can do for employees, what we are doing for customers. And we decide there with them what we to do for society. And then of course, any financial impact.”
What does that mean practically? Well, Vestberg is giving extra pay to mission critical employees who have to go into work, he’s giving customers more choices for free and along with his competitors big and small, signed the Keep Americans Connected Pledge, an FCC initiative to “ensure that Americans do not lose their broadband or telephone connectivity” because of the crisis.
Of course it helps when you’re a big bad telco, but smaller companies are stepping up, too. Andy Rieger, president of Kansas City, Mo.-based distillery J. Rieger & Co., was until recently solely producing spirits (including the intriguingly-named “Left for Dead.”) He’s now making hand sanitizer. “We threw some overproof gin in a spray bottle and people online said ‘I would buy that’,” Reiger said. Rieger is “keeping 60 [employees] gainfully employed. We’ve produced now close to 20,000 gallons of sanitizer.” This even though Rieger says his core revenue is down some 90% from where he’d like to be.
“When you have the opportunity to step up and do something to make a difference, you don’t get that very often,” Rieger says. “Do you buckle and crumble, or step up? It’s incredible what we’ve done, but we’ve also had moments. The first two weeks everyone was crying because we felt the weight of not just everything on our shoulders but [everything] happening around us. Now we’re in the hang of it, we got this.”
“[We] look at each other as family,” Rieger continues. “Something that we want to continue. If we can come together, survive this together, we do good not just for the community but for ourselves and the company as well. Everybody gets to continue what we loved doing before.”
Flexibility is critical now too.
In Sacramento, Amanda Blackwood, CEO of the Sacramento Metro Chamber of Commerce, says that a group of 10 local restaurants came together and turned into a catering service, creating pre-packaged dinners distributed to seniors in a community that can’t leave the house. The group worked with the local housing agency as well as the city.
“Are they profitable right now? Probably not” says Blackwood. “But they’re keeping employees busy and meeting the gap of food insecurity for vulnerable populations. Those guys did that in five days.”
Blackwood says grocery stories are trying to hire hospitality workers knowing that the surge that they’re experiencing in deliveries is a result of stay-at-home order, and that the workers will return to their old jobs when the hotel business gets back on its feet. And then there’s the Midtown Birthing Center. “Part of what they did is in-home training for home births,” she says. “For women giving birth right now, they may not be able to physically come to a facility.”
In the end though it all comes from the top.
“I certainly think it's a test of leadership,” says Anthony Scaramucci, the voluble founder and managing partner of investment firm Skybridge, (and briefly White House press communications secretary.) “I think good culture and good values are going to be represented right here. I tell people. Think about where you are going to be in a year or two when this is over. And how would you like to be defined in the crisis?”
If CEOs and leaders do the right thing, Scaramucci says, “it's going to be good for their culture. It's actually going to be long term, good for their customers. And people will reflect fondly about them years from now in terms of what they were doing in the breach, what they were doing in the war, were they acting valorously and with high integrity.”
The Mooch has a point.
Ask yourself, and your CEO too.
What did you do during the war?
This article was featured in a Saturday edition of the Morning Brief on April 4, 2020. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer.
Read the latest financial and business news from Yahoo Finance
Read more
