I am sure that every board in the UK has held a meeting this week to discuss the implications of the corona virus for the business, workforce and wider community. These are sad meetings with challenging issues to discuss, plan for and ultimately decide. Every business and organisation across every sector is impacted by this crisis. How do we as a community of directors and leaders know that we are making good and sound decisions at this critical time? When this is over (and it will eventually end although we will have a vastly changed global business environment as a result) how can we ensure that we look back and say “we made the best decisions we could have made at that time”?
Turning to some basic principles* will at least help us know we are covering the right ground.
Acting in good faith feels like an inappropriate and overly technical term in this situation of economic and social crisis. For me, right now, acting in good faith must be wider and mean acting with integrity and compassion. If at the end of this we can look back and say that every challenging decision was made honestly, communicated openly and with compassion then we will all have served our community well.
Our decisions have to take account of so many things and the culture of the organisation has to be appropriate to deliver these goals. In promoting the success of our companies, how do we ensure the sustainability of our organisations in the long term and sadly, if we can’t achieve that, how do we manage business to its conclusion fairly for everyone involved?
How can we best serve our employees? Never before have employee relations been so important and now is the time for directors and leaders to communicate well with employees and discuss and share the problems we all face. All the more challenging when we consider that our entire workforce is working from home unless essentially required in the workplace. On top of that some employees are faced with the prospect of caring for children at home and not in school for the foreseeable future. How are we considering the physical and mental health of a workforce either social distancing or self-isolating? If we do not already have good arrangements in place to gather the opinions of employees these processes must be established immediately to allow us to take account of employee views in our planning and beyond.
These are unprecedented times - ensuring that employment contracts are honoured is the bare minimum requirement. We must think hard and be inventive about employment protection - consult our workforce and understand if there is any arrangement that would avoid redundancies. Listen with compassion and then, if unwelcome decisions have to be made, we can know we explored every available option.
Similarly, with our suppliers – let’s hope we are not all reaching for contracts and relying on clauses for recompense. As a business community we are better than that. Solutions lie in working together to explore acceptable compromises and to find ways for more businesses to survive together. More than ever it is important to discuss solutions with a wide stakeholder group working for the benefit of the community – and I use that term in a business, social and environmental context. It is essential in this wide community and during a crisis where everything is in the public interest that we maintain a high reputation for business conduct – collectively and individually.
This is a time of enormous uncertainty when decisions will have to be made with an element of risk. Decisions cannot just be about the bottom line and financial sustainability. Knowing if we have applied the correct balance to shareholder and stakeholder priorities may be very challenging. At such times doing the right thing – acting with integrity – is the main principle to guide us. While our customers, employees, suppliers, shareholders and others may challenge our business judgement we have to find a way to look back with the perfect vision that hindsight brings and say “we made the best decisions we could have made at that time”. We acted with integrity and compassion.
Director, Savendie & IoD Course Leader
20 March 2020
*Those of you currently wrestling with the challenges of s172 reporting will recognise these principles – one of our main directors’ duties. Considered in this context I hope they seem helpful and a sound basis for decision making rather than a demanding reporting exercise.
The Companies (Miscellaneous Reporting) Regulations 2018 requires companies meeting 2 out of 3 of the following:
- Turnover of more than £36m
- Balance sheet total of more than £18m
- More than 250 employees
To include a statement in the strategic report of how directors have complied with their duty to have regard to the matters in s172(1) (a) – (f) of the Companies Act 2006
Please note, this content is not produced by the IoD and therefore does not necessarily represent the views or thoughts of the organisation.