As much as the coronavirus has conspired to keep us apart, it’s also brought us together. Lockdowns and social distancing cannot suppress the humanity and spirit shining through in what has become a global fight—a battle we all have a stake in—to conquer this invisible enemy we call COVID-19.
Healthcare workers are the undeniable new heroes. People hold signs from their balconies, light candles, flash apartment lights, and applaud in unison to show support for those on the front lines working with incredible perseverance and determination to save lives.
There are others, too, who are doing the essential work of ensuring life moves forward by keeping their families fed, cared for, and safe. And there are others still who are working hard to keep their organizations afloat amid disruption and uncertainty, with the simple goal of coming out alive and well on the other side when this crisis finally passes.
These people are our employees—the source of success for every company. They’re the ones helping companies survive by continuing to deliver value to those who need it most: clients and customers.
Organizations need to ask themselves what they’re doing to protect their people in return, as well as what their actions reveal about their company’s soul—both now when confronted with crisis and later once we’ve finally emerged from the uncertainty and chaos.
Lead With Compassion
Before COVID-19 hit, a movement was already well underway at the Business Roundtable to redefine the purpose of a corporation. Companies should no longer advance only shareholder interests; instead, organizations must also “invest in their employees, protect the environment and deal fairly and ethically with their suppliers.”
How many companies globally are delivering on this multi-stakeholder model today? So far, just 35%, according to Mercer research. But notably, one in two companies are making this a focus this year.
Investing in employees in this uncertain environment we now find ourselves in means protecting and supporting them. Employees are understandably worried about losing their jobs. And while many companies can’t entirely protect their employees, many more can—and are.
Many large employers, such as Bank of America; Danone; Morgan Stanley; and our own parent company, Marsh & McLennan, are pledging not to lay off workers amid the coronavirus crisis. Automakers are pivoting their business models to try their hand at making ventilators, and various sportswear and apparel companies have shifted to sewing face masks for healthcare workers. The CEO of restaurant chain Texas Roadhouse has donated his 2020 salary and bonus, along with a substantial personal donation, to support employees facing unexpected financial costs. Delta Airlines has suspended dividends for shareholders, while McDonald’s has put its share repurpose on hold.
What these examples show us is that bringing compassion and empathy to decision-making—despite every tendency to focus on the economic side—is crucial. Future-focused leaders understand that how well their company bounces back from this crisis will depend mainly on how they treat their people. They know their employees, as well as their clients and communities, are watching to see whether they hold firm to their core beliefs and use their resources to protect jobs.
Now is the time to ensure core values are more than just words on a page—they are living, breathing actions that hold us accountable to all stakeholders, including ourselves.
Balance Empathy and Economics in Times of Crisis
In the United States, we are a few months into what will likely be a 12- to 18-month crisis. We know this downturn is different from the 2000 dot-com crash or the 2008 global financial crisis.
There’s a definite need now for organizations to balance economics with empathy by caring enough to place responsibility for their people and long-term futures above short-term gains.
The Real Cost of Layoffs
What you do now says a lot about who you are and what you stand for as an organization. Companies must challenge themselves to think beyond the present moment to the time when this pandemic finally ends. Is taking drastic action by reducing head count the right decision, especially if we consider that companies are responsible for providing health insurance to 55% of all insured people in the United States?
While a reduction in force may be unavoidable for some companies, layoffs should be the last resort. Most companies that lay off employees find themselves with the same number of staff within 18 months. And while layoffs can help bolster the bottom line in the immediate term, in the long run, impulsive steps usually cost a company more than it will save.
It’s estimated that each laid-off employee costs the company 50% of the person’s compensation and benefits for each week the position is vacant (even if other people are performing the duties) and 100% of the person’s compensation and benefits if the position is left open. Layoffs also come with hidden costs, such as lower morale, which can lead to reduced productivity, flight of top talent, and loss of intellectual property.
People will remember the actions organizations take at this critical time. It’s heartening to see compassion from leaders, with many companies openly acknowledging that their highest priority is their employees’ physical and financial well-being. Organizations that stay true to their purpose, and proactively explore alternative ways to help their people and their company through this crisis, will emerge ahead.
Disruption Brings Opportunity
Pandemic-driven disruption is prompting leaders to identify opportunities to pool or redirect their talent to avoid workforce reduction—moves that help them gain efficiencies and streamline operations. A few examples include:
- Redeploying talent to pockets of the business that are experiencing revenue growth, have fast rebound potential, or are focused on future growth streams;
- Exploiting new distribution channels or vertical markets to take market share from competitor firms that are pulling out or shutting down;
- Pivoting their product development to make items that are in high demand due to the pandemic; and
- Freezing bonuses and allowing employees to take sabbaticals or share rotating assignments.
These types of strategies deliver shareholder value while protecting the company’s workforce, creating flexible platforms to accelerate business to bounce back when the economy ramps up.
Get Ready to Accelerate
Keeping your business moving—and trying hard not to hit “pause”—will better position you to accelerate once the economy picks up again. Restarting from a standstill has energy costs, both psychological and commercial, that are exponentially higher than staying in constant motion, however slow.
While none of us know what will happen in the coming weeks and months, we can have a direct influence on how we treat our people, our most valuable asset. Continue to put compassion at the center of every workforce decision. Segmenting your employees can help you better understand the needs of different populations. Millennial workers newly facing job insecurity, for example, may have very different concerns than older workers who have just seen their 401(k) halved.
Our research shows that thriving employees are twice as likely to work for an organization that balances economics with empathy. Right now, that means health and safety first and business problems second. Finding the balance between protecting your company at the bottom of the market and keeping your key people in place will allow you to accelerate out when the market turns.
The changes we’re experiencing are disrupting our present and creating a new normal for how we live and work—ways we will not retreat from once we get through this pandemic. But some things won’t, and shouldn’t, change: Leaders need to have the courage and confidence to say, “COVID-19 may indelibly alter our world, but it will not change who we are as an organization.”
Here are three questions leaders should be asking themselves today to stay true to their purpose:
- What do we want our brand and reputation to look like when we come through this crisis?
- How do we manage costs now with the least impact on employees while positioning to capitalize on the upswing?
- How should HR’s role transform to ensure we have the right capabilities to respond in the future?
COVID-19 has exposed our vulnerabilities, but it’s also shown us our strengths. Most of us are in radically different working situations, yet we’re rising to the occasion, learning new ways to move business forward. We’re having better, more thoughtful interactions with each other. Discussions are deeper; more detailed; and, best of all, more personal, building trust and unity as we face adversity together.
But most importantly, what this crisis has shown us is the enduring power of a company’s soul. We will all win this fight with our collective, unwavering will to lead with compassion and empathy.
Susan Haberman is a senior partner and U.S. career business leader at Mercer. Rhonda Newman is a senior partner and central market career business leader at Mercer.