For company directors and board members, reading the business press has undoubtedly been a stressful experience over the past 18 months. Covid-19 has held a mirror up to the faces of companies across the market, brutally exposing the ability of business to adapt and survive in an environment where they have faced the same challenge expressed in different ways.
Many companies have adapted their business models to play a positive part in the pandemic. For example, in the early days of lockdown, fashion giant Burberry reconfigured part of their manufacturing facilities to produce PPE for the NHS as well as utilising their global supply chain to prioritise medical masks for NHS staff. They also donated to vaccine research and other charities, setting an example for other companies in the market.
Unfortunately, you only have to do a quick Google search to find examples of companies that have prioritised the preservation of profit at the cost of other less financially profitable activities. Practices such as continuing to pay out high levels of remuneration while claiming government support (JD Sports) and delays in paying suppliers on time (TUI) all reflect poorly on companies and can actively damage their brand.
Stakeholders: critical to survival
Why has there been such a divergent response of business towards Covid-19? In my view, one of the more significant reasons is the strength of a company’s purpose. A company with a clear and meaningful purpose that is embedded throughout the organisation will be highly equipped to adapt to an event as world-changing as Covid-19 as all employees will band together in understanding the role they play to help the company to withstand the impacts.
There is a growing recognition that ensuring that the company’s key stakeholders are protected is critical to its survival. At the executive and board level, purpose should ultimately drive strategic decision-making to ensure that everything a company does is aligned to it.
For employees, this could mean furloughing them or holding off redundancies for as long as possible. Paying suppliers on time and treating customers with respect and leniency where products, services rendered, and terms and conditions of sale are concerned are also positive ways to safeguard stakeholder relationships.
Companies that do this will not only burnish their reputations, but attract investment, greater business from customers, and ultimately profit more. Look no further than the example of the retailer Timpsons, who furloughed most of their staff when the first lockdown occurred and kept them on full pay by topping up the difference, an action that was entirely aligned within their corporate purpose.
Seeing how so many companies have acted in a kind, respectful, and compassionate manner since the pandemic began has given me hope that a sea-change in how companies both view and action their purpose is on the horizon. However, constant vigilance is required to ensure that this does not become a false dawn.
Amin Aboushagor is former policy adviser at the Institute of Directors. The author is writing in his personal capacity.