The coronavirus crisis is forcing businesses of all sizes to replan and reposition. The issues range from decisions on furloughing and redundancies to supply chain difficulties and coping with heavy financial losses. However, the biggest challenge may lie in maintaining customer loyalty.
Research conducted by US consultancy Edelman across 11 countries in April shows that the public think business could be doing a better job of responding to the crisis. CEOs are now seen as the least likely to be doing an “outstanding job” coping with the pandemic amongst national government leaders, academics, heads of nongovernmental organisations, and journalists.
“For the last six or seven years, business has generally been more trusted than government. In recent weeks this has changed dramatically, with government now the most trusted institution,” said Andrew Wilson, London-based executive director, purpose at Edelman.
Just 38% of those surveyed believe that businesses are doing a good job of putting people before profits, and only 39% believe that employers are effectively protecting employees’ financial wellbeing. Businesses that are seen to have acted in a fair and responsible manner during the pandemic are most likely to emerge with public trust on their side and will reap the benefits that this brings in terms of consumer loyalty.
Here are some of the key findings from Edelman’s research, and the lessons they may offer for businesses:
Protect your people
Fewer than half of respondents say that businesses are adequately protecting employees who are required to work outside of their homes, whilst 75% say CEOs should be cautious, even if it means waiting longer to reopen workplaces. There are a number of areas where businesses can prioritise their people. High on the list is protecting employees financially — government support is available in many countries. In some cases, job cuts will be necessary to ensure the survival of the business. Management accountants have a key role in making sure all options are considered and helping to effectively and empathetically communicate the reasoning to employees and other stakeholders.
Another key aspect to consider is the health and wellbeing of employees. Billions of people are isolated at home, some balancing work with educating children, others with health conditions that put them at greater risk. Businesses need to be cognizant of the new challenges facing employees and should consider whether they might be able to offer support; for example, through flexible working patterns or employee-assistance programmes.
Some governments, such as the UK’s, are starting to publish advice on how businesses should prioritise health and safety if they are reopening. “Do absolutely everything you can to protect employees when they are back to work,” Wilson said.
Put solutions ahead of sales
The Edelman study suggests that businesses should act in the following areas to build trust: donating equipment to support medical professionals, teachers, and carers; collaborating with competitors to develop faster responses to the pandemic; switching production to items in short supply, such as masks, ventilators, and hand sanitiser; and redefining goals around addressing the pandemic.
“If you have products and services which help people address the COVID pandemic, make these as widely available as possible,” Wilson said. “It’s not a moment for selling. It’s a moment for leadership.”
Supply chains are another area in the spotlight — only 38% of those surveyed think that businesses are adequately helping smaller suppliers and business customers stay afloat. “The financial burden is falling on suppliers in developing economies,” Wilson said. News outlets and social media have been quick to pass judgement on companies perceived to be harming suppliers, and leaders need to be aware of the potential reputational impact of decisions made in this area.
Do not underestimate the power of public perception
Public perception of a business, in terms of its actions and values, can have a major impact on the organisation. Research conducted in March by Edelman shows that one in three people have punished brands that they think are acting inappropriately during the crisis, while 65% of respondents say that the way brands behave during the pandemic will affect the likelihood of their being future customers.
Business leaders must ensure they remain aware of public sentiment during these difficult times. Companies seen to be taking advantage of the situation, or exploiting vulnerable customers, could find themselves punished by consumers and see their bottom line affected over coming years. Management accountants have a vital role to play in considering the potential future impacts of any decisions made now, in terms of advising on risk, planning for different scenarios, and choosing the path forward.
Look to the future
Consumers also want business to effectively prepare for the future as well. Fewer than half of those surveyed believe that businesses are doing a good job of preparing for eventual recovery. The priority now is saving lives, and this will come with a big bill. Those surveyed by Edelman are generally accepting of this fact — two-thirds say that saving lives should take precedence even if it means greater economic damage and a longer recovery time. Around two-thirds of those surveyed believe that the pandemic will lead to valuable innovations and changes for the better in how we live, work, and treat one another.
Businesses will be at the forefront of building this post-COVID-19 world. Some will be able to play a more overt role in addressing the global challenges; for example, through partnering with government to ensure vital services can resume or developing new technology to allow for the return of some form of normal. For many others, the greatest impact will be made through maintaining and increasing employment and driving wider economic growth.
- “How Will Your Company Recover After COVID-19?”
- “What Boards Can Do to Confront the Coronavirus”
- “FP&A Priorities During the COVID-19 Crisis”
- CIMA Insights: Lead With Mental Health in Mind During the COVID-19 Pandemic
- CIMA Insights: Maintaining Well-Being During the Age of Coronavirus
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit FM’s coronavirus resources page.
— Bryony Clear Hill is the associate manager–Ethics Awareness for CIMA and is based in the UK. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.