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Leadership in the time of Covid-19 for Family businesses

Rajiv Agarwal | Updated on April 06, 2020 Published on April 06, 2020

The recent pandemic has caught everyone by surprise. It’s effects have already demolished the revenues of the travel companies, cruises, airlines. Probably movie theatres, aircraft manufacturers and entertainment companies would be next. These big giants have been forced to go to their respective governments, seeking bailouts and reliefs. These companies will probably survive, due to their large size.

The worst impacted probably are the mid-sized family businesses who would be suddenly cut off from their customers and supply chains. Additionally, the burden of ceased operations with forced quarantine of the workforce, would make any reaction difficult. The criticality of certain areas like customer support, business continuity would also increase the pressure on the business who would have to make difficult decisions while ensuring the protection of the people.

What could family businesses do in such times? They would need to react and move fast even though the information may be incomplete.

Have a clear, visible leadership role

It is very important to define the leaders who would have to be visible during this crisis. Leaders cannot afford to go into hiding, or lock themselves up in various meetings, or be inaccessible.

Identify a core team, empower them and act fast and decisively

Internally, identify a core team of the most competent people and the various responsibility heads, and let them meet on a regular basis. Ensure that you have the most capable persons competent to handle the crisis on the team and dealing with the issues. This is a time, where capability would outrank organization structure. Eg maybe the supply chain person would be paramount in a manufacturing setup, or an HR person would be paramount in a services industry. It would help to empower them to resolve issues. The most important role that the leadership can play at this time, is to remove any obstacles that may come in the way of this core team. You don’t want fast execution hindered by bureaucratic processes. Since this event is an unforeseen event, the response may be unusual and the organization should not resist any attempts at unusual responses.

Release resources to the core team

The core team needs to identify all the stakeholder affected, and what it needs to do.The critical areas to be considered (the order may vary) are business continuity, employees safety, security of company assets, cash flow management, and supply chain management.

Communication Channels

The visibility and clear communication to the various stakeholders is critical. You can see multiple emails from various companies in the past few days, indicative of this. Your customers, suppliers and employees need to know what your intentions

are, and how you are addressing this.

Handling stakeholders: Your various stake holders need to know, due to the following reasons:

Customers: need to know what your plans are, to make their plans for supplies. Since all production flows are integrated, your operations getting affected could have disastrous results for them. It would make sense to reach out personally to the largest customers and let them know your plans. Alternately, other smaller customers could be mailed, in order to reach out fast. It is important to ensure that one behaves well and professionally with customers at this time, as they may remember how you dealt with them when the good times come back. And they may respond by taking their business to your competitors.

Employees: Similarly, need to know what the company has planned, and whether they should come to work, or work online. How will the company reach out to them? Also, will they get paid for the absence? I have advised many family owners reaching out to me, to ensure the continuity of payments, even if it has involved losses for the firms, since their employees may be hit the hardest. If you are working online, then who pays for the for laptops and internet connections ? the additional stress on the employees specially the front end ones, who would now be required to operate 24X7 has to be considered. Furhtermore, they would have to be quarantined to ensure their safety and security since they would be critical to business operations. Separating out teams, and ensuring that there is a backup for each person is advisable.

Suppliers: While suppliers may be dealing with their own set of issues, you cannot operate if your supplier shuts down. You will have to deal with this, perhaps setting up alternate supply chains if any, or working with your suppliers to ensure continuity. If you are in a critical industry and your supplier is not, then you have to figure out a way to still be in business. Eg if you need a sudden huge supply of laptops/desktops

and your local PC vendor shuts down, or the delivery channel is closed, you would face challenges.

On a different note, the total stoppage of all operations would have the maximum impact on the daily wage earners, help, street side vendors and other gig economy suppliers. I would encourage business families to buy from them, (properly sanitizing yourself and the products purchased) so that we can reach out to those struggling to eke out a living.

Internal family challenges

This is perhaps the biggest challenge, when the entire family is forced to quarantine themselves. This could perhaps be in the nature of a forced family holiday and members will have to reconcile being constantly in contact with each other. Responsibilities may have to redefined and elders would have to be taken care of, while the younger generation is probably bored out of their wits. The need for quiet areas for children studying online, or family members running their virtual conferences will put a severe strain on the need for family space and personal space. Family members would be wise to determine the need for distinct spaces where one can work or relax and work out schedules to accommodate everyone.

Need for funds: in times like these, the need for emergency funds is essential. Pooling in resources to ensure that the family is well provided for, is critical. Hoarding is not an answer, but ensure adequate stocks for a week is a good strategy.

Family businesses would be advised to over-react and ensure that they provide for worst case scenarios. Especially in trying times like this, it is perhaps better to be extremely cautious rather than risk. This is not the time to take risks, howsoever good the payoffs may be. It is the time to play safe, protect all the loved ones, ensure the safety of all those whom your business touch (not literally!) and plan on how to best deal with this situation.

 

Dr Rajiv Agarwal is a Professor - Strategy and Family Business at Bhartiya Vidya Bhavan's SPJIMR

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Published on April 06, 2020

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