The success of every business is determined by how well decisions made by those entrusted to lead the business tally with the material, human and societal expectations of critical stakeholders. At both ends of organizational decisions are business targets and the tough calls made on personal principles. Playing at any of those ends generate unique effects with decisive consequences.
Appraising events in the past 12 weeks throw up questions of what businesses need to do when crisis hit the market. Across 20 of the world top economies, which represent 660 million of global work force, 30 million people have seen their sources of livelihood impacted tremendously, according to The Brookings Institution. Mopping statistics from developing countries, including Nigeria, will show a rare disaster.
Entrepreneurs, ranging from Chief Executive Officers of multi-nationals to small business troves still numbering daily traffic by finger counts, are thrown into ‘pandemic panic’. It is sort of ‘what do we do now since the cheques are not coming through’? ‘Do we sacrifice employees to trim our bills’? ‘If we sacrifice the employees, do we leave them out in the cold’?
Certainly something must give. Since business is no charity, sustaining the workforce depends on money consistently flowing through revenue channels. Aside health, tech and foods businesses, reality in every other sector is dismal.
In Nigeria, Africa’s richest man, Aliko Dangote, had N581 billion chopped off his cement business going by data provided by Nairametrics. French luxury-product magnate Bernalt Arnault saw his wealth sink by $30 billion as highlighted by MarketWatch. And Donald Trump business concerns were set back about $1 billion.
Lockdown isn’t the best time to be in sports, luxury merchandizing, travel, and hospitality businesses. It is a wreck. Pulling that wreck along until it will be fixed into shape will demand sacrifices from employees and the Chief Executive Officers.
That paints the picture of Brian Chesky, the founder of Airbnb. Having to cut around 25% of its workforce, Brian did something remarkable. Tracked by Forbes, he gave each of the 1,900 retrenched employees “a minimum of 14 weeks’ severance, accelerated equity vesting, an Apple laptop and 12 months of paid-for health care”.
Pushed to talk about that generous severance act, the founder said, “Business decisions maximize outcomes, whereas principled decisions are made regardless of the outcome.”
Not many people will agree with that action though. But in a world where capitalism is pushing the unfortunate people to the walls, making ROI-driven decisions where employees are concerned must be done with a touch of humanity. And this is why it matters:
- How you treat retrenched employees will serve as signals of what to expect, when the ships are down, to the employees you retained.
- That treatment will either motivate or depressed the remaining employees.
- If the retained employees feel secure, knowing you will treat them well, at least, when things go awry, they will work with you as ally or partners in a bid to keep the business afloat.
- Word-of-mouth especially when borne by the media in a conscientious society can turn against the business where it acted inhumanely while retrenching its workforce.
- Businesses that treat retrenched employees shabbily will make a beast out of the ones retained. Have you seen beasts of different natures in one cage before? The result is better imagined.
Founders or chief executive officers come from different backgrounds. Their courage to set out to build business must be applauded. However, each founder must realize that the decisions they make at this critical time will affect employees’ confidence and market sentiment. These two effects will contribute to the long term prospect of the business.