by Jeff Webb
For the past several decades large corporations operating in the United States have made business decisions significantly influenced by the widely held belief they have social responsibilities that extend beyond their fiduciary responsibility to maximize profits.
The current economic slowdown created by the Coronavirus pandemic presents every company in the country–and particularly large multinationals–the opportunity to demonstrate by their actions that they are the good corporate citizens they have claimed to be.
Doing good deeds in a community has long been considered the best demonstration of corporate social responsibility. Now the most important thing companies can do is first, protect their own employees, and second, protect their business partners–the vendors and contractors that help enable their businesses to operate as successful companies.
The president’s declaration of a national emergency on Friday, combined with the shutting down of virtually every event in the country that involves crowds of almost any size, have confirmed this economic crisis.
No one knows how severe the peak of this pandemic in the United States, which as of Sunday has already caused the deaths of at least 59 of our fellow country men, will be. Estimates from public health care experts and epidemiologists range from very concerning to alarming.
We don’t really know how big this will get, and everyone is watching the pandemic’s growth rate day-by-day, hour-by-hour.
We do know that our actions over the next few days and weeks can limit the public health and economic damage from this pandemic.
Appearing on ABC’s This Week on Sunday, Anthony Fauci, head of the National Institute of Allergies and Infectious Diseases, floated a trial balloon that virtually every aspect of the country should shut down for the next 14 days. Administration officials do not float such trial balloons lightly.
For the next two weeks to two months, almost everything in the United States is shutting down–schools, churches, and non-essential businesses.
This coming shutdown will negatively effect virtually every company in our country.
The only retail establishments likely to be open will be grocery stores, pharmacies, and gas stations.
On Sunday, Secretary of Treasury Mnuchin sounded a relatively optimistic note, stating that we are likely to enter a period of economic slowdown but unlikely to enter a recession:
We’re clearly going to have a slowdown,” Mnuchin said, while adding that “later in the year, obviously the economic activity will pick up as we confront this virus.”
Peter Navarro, a top trade adviser to President Donald Trump, separately told the Fox Business network that “I think the decisions we make over the next week or two will determine whether we have a significant downturn or not.”
Several experts have predicted that the consequences of the far-reaching pandemic — which has led to temporary business closings, travel bans and cancellations and a slowdown in consumer activity — are likely to plunge the US into recession.
But with all these vital businesses and institutions shutting down, Mnuchin’s optimism appears to be more hopeful than realistic.
In any event, here are two key recommendations all companies should consider.
- Don’t fire anyone.
- Don’t cut off vendors.
Don’t Fire Anyone
Make other expense cuts before you turn to personnel.
If you have to deal with compensation to meet immediate cash flow needs, consider across the board cuts to payroll rather than firing people.
How big those cuts will need to be will depend on the circumstances of your business. Share the pain.
From a social responsibility standpoint your employees have been loyal to the company, and have helped build it. Abandoning them when things get tough is patently unfair.
Don’t Cut Off Your Vendors
You need them to survive, so they will be around to provide goods and services your business will need when you are ready to expand after this current crisis is over.
Work together as partners to manage your inventory levels, payments, and cash flow to ensure you have a healthy relationship post-crisis.
If you cut off or squeeze vendors, you may force them to lay off their employees, who in turn will be cutting or reducing their own personal spending, which only contributes to a spiraling contagion of economic contraction.
Companies that treat their employees, customers and vendors with empathy and compassion in this challenging time truly demonstrate the type of social responsibility they have advocated.
This is a once-in-a-century economic crisis, and decisive, immediate common sense actions like these by business executives across the nation, along with other key actions by banks, the federal government, and state governments, give us the best chance to save our economy, civic society, and country.
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Jeff Webb is a Memphis entrepreneur and founder of the political organization American Populists.