Leading a company and workforce during a global crisis is not something I learned how to do in college or law school, and there’s been nothing quite like the COVID-19 outbreak in my professional career to prepare me for this. As with the novel virus making its way around the globe and wreaking havoc on financial markets, it's been very learn-as-we-go, while accepting there simply is no such thing as “business as usual.”
Everyone is asking the question, “What am I supposed to do?” It’s a question with a million variations, and just as many answers. For business leaders, this level of uncertainty makes responding to both the strategic and the tactical difficult, because we can no longer rely upon our historical experience or pattern recognition with any degree of confidence. Without a crystal ball, figuring out “What’s next?” is a moment-to-moment challenge.
Take, for example, the madness over the Paycheck Protection Program (PPP) Loans. The application process was confusing, at best, particularly for small businesses without easy access to the expertise required to submit a timely and accurate application that would fall squarely within the requirements of the CARES Act. And the aftermath? History is still being written, as more funds are being made available while funds already awarded are being rescinded, and investors hotly debate the morality of accepting government funding as well as the risks of being sued.
Most companies don’t have the luxury of time to sit around and pontificate, they must act so that their business can survive. Most cannot wait on federal funds to arrive before deploying tactics to stay in business and thus turn to the perfectly Vulcan concept of societal decision making: “The needs of the many outweigh the needs of the few or the one.” Otherwise stated, the call is to take whichever actions and make whatever sacrifices are necessary to enable the company as an entity to survive the crisis in the long run. But the key to knowing what your company needs to do to survive depends upon where your company falls along the 3-Tiered Stratification Model™ in a post-COVID world.
- In the top third are organizations thriving during the crisis, primarily because their industry has become an “essential” category like telehealth/digital wellbeing that is required as a result of the pandemic or because they are offering an innovative product or service that’s meeting a new need or burgeoning market created by the pandemic’s impact on lifestyle, like DIY at-home hair coloring or pre-prepped family meal kits. Sales are accelerating and they are continuing to plan for growth.
- Middle third organizations are companies that do not yet know how much they will be impacted by the pandemic. They have not seen benefits from it; in fact, it has likely hurt their business sales moderately to significantly. However, what is unclear is whether the hit to their sector will be quite temporary, meaning just a few months, or long term, meaning several quarters to a year. These businesses are characterized by taking a conservative or wait-and-see approach. They may have instituted certain cost reduction measures or have put significant controls on operational expenditures to provide air cover while things play out but have not made fundamental changes to business operations or personnel.
- Organizations in the lower third have experienced massive hits to revenue and sector-wide demand as a direct result of the Coronavirus. They’re struggling to find relevance and, aside from suffering short-term losses, are seriously assessing the long-term impact of the status quo and do not anticipate a rebound of their market until people are free to once again travel, gather together in groups, return to school, work, go to the mall and resume daily life without being tethered to their residence. Beyond the most obvious examples of Tier Three industries would be products and services one does not need when one spends the majority of their time at home such as dog walking, car rentals, and gym memberships.
If you work for a company like Instacart whose business is unable to keep up with new orders and is consequently looking to poach talent from anywhere it can to fill the 300,000 open roles created by soaring demand for home delivery resulting from the pandemic, then you are in a Tier One company. If you are somewhere that may have instituted a hiring freeze in a particular department like Google recently announced, but there are no widespread layoffs, you are likely in a Tier Two company. And if you work for a company like Kohl’s that just laid off 70% of its 122,000 person workforce, you are in a Tier Three enterprise.
Once you have identified the tier your employer fits into at this point in time, you can determine how to move forward and lead.
It is, of course, easiest at a Tier One company. The focus will be on recruiting and retaining top talent as well as on managing growth while minimizing burnout through holistic wellbeing. Surprisingly, the next easiest place to know how to move forward is at a Tier Three company. When demand has disappeared and it is clear that an industry is facing insurmountable market headwinds, cash must be conserved. There is no alternative to mass lay-offs or furloughs, plant closures, and expense slashing in these cases. The only choice is the manner in which this is carried out, and the degree of empathy shown to the newly unemployed. Can benefits be extended, can resources to assist with outplacement and filing for unemployment be made available, can access to emergency rent funds or food be provided? Can any of it be made less scary and can the stigma of having been let go be minimized through strong, supportive communication?
Knowing how to lead at a Tier Three company can prove the most challenging of them all. Employers here may wonder, “Do I talk openly to my employees about the uncertainty we are facing as a company or try to merely paint a rosy picture in hopes that no one worries? Should I share a vision of the future and explain the milestones we need to achieve together as a team, acknowledge that while there is risk, there will be great rewards and enlist employees in this shared goal to get people to commit and stay?”
Another option is of course to stick your head in the sand, say nothing and pretend no one notices. Or perhaps hope that everyone is too afraid to look around. But the truth is that your top talent is never afraid to look around and the Tier One companies are out there poaching, so beware.
At one California-based Tier Two company, the CEO told employees that while it was unclear how long it would take them to emerge from the current slowdown they were experiencing, that no one would be fired. The CEO would take no comp for up to 2 years to cover all salaries at the company if need be. That put everyone at ease even though there would be no bonuses. In exchange, the employees were asked to stay focused, keep doing great work, and have faith. Such bold action has a powerful emotional impact. It says, we are in this together. It says, I believe we are going to make it and I am putting my money where my mouth is.
How we lead in times of great uncertainty says a lot about our character. Hold on to your humanity and trust your instincts. You got this.