By Matthew Geekie
This year can be described in many ways, but ‘business as usual’ is certainly not one of them. Leaders across nearly every organization have been tested in unexpected and unprecedented ways. The combination of a global pandemic, an economic downturn, social unrest and a tense political environment has brought about complex challenges, requiring corporate boards and leadership teams to take decisive action in the midst of uncertainty.
While boards bear a significant responsibility for effective corporate governance under normal circumstances, the level of responsibility escalates during periods of crisis and uncertainty. Boards must ensure the company properly addresses the immediate needs of its stakeholders, while establishing a longer-term strategy for recovery and growth. Board members also serve as a source of reason, calm and stability, providing essential support and counsel for the leadership team. And they ensure key decisions are made in a manner consistent with the company’s values.
From a business perspective, this crisis served as a reminder that organizations must anticipate and plan for the worst when times are good. One of Graybar’s strengths is its long-term view, which shapes the way decisions are made, success is measured and the business is managed. For example, the company had just reported its eighth consecutive year of record sales when the pandemic hit. During each of those years, Graybar made responsible investments in people and technology to drive growth. Now, during the downturn, those investments are enabling the company to outperform its industry peers.
Because of its strong financial condition, Graybar has positioned itself well to weather the crisis. In fact, the company had ample lines of credit and drew down additional debt early in the pandemic, in case its customers encountered cash flow issues and were forced to delay payments. Graybar also acquired additional inventory to support customer needs, anticipating that supply chain disruptions could cause shortages of critical items.
The company’s large network of locations and employees enabled it to support customers from anywhere, providing the redundancy needed in case a location had to close due to illness or natural disaster. And its technology infrastructure was solid, allowing Graybar to ramp up virtual private network access for a large number of remote employees and upgrade its e-commerce platform. The company was able to take these critical steps to respond to the crisis because of its disciplined approach in the years leading up to it.
Facing the future Effective corporate governance requires directors to anticipate the wide range of potential risks to the company and those it serves, even during times of prosperity, when it can be tempting to get caught up in the exuberance of the moment. The last several years have been a period of economic growth. But what goes up generally comes back down, and even the best, most accurate forecasts cannot fully prepare organizations for the rapid impact of a global health and economic crisis like the current situation. Anticipating risks and taking proactive steps to protect the company and its stakeholders is vital to building a resilient organization that can stand the test of time.
While the business playbook in a crisis is relatively clear, the human impact of this pandemic was unlike any in recent history. People were afraid for their own health and safety, along with the safety of their families. Grocery store shelves were wiped out of basic necessities. Childcare options became scarce and schools shifted to online learning, leaving working parents with few alternatives. Essential employees, like many of those at Graybar, continued to come in to work to serve customers, and keeping everyone safe has been a top priority. All of this adds up to a climate of fear and uncertainty, which has lasted for several months, with no end in sight.
This pandemic affected every aspect of people’s lives. In the workplace, it has fundamentally changed how people interact with each other and will likely influence employee expectations and the nature of work for years to come.
It has also led to increased mental health issues, including depression, substance abuse and even suicidal thoughts and behaviors. Many leaders are not well prepared to address these issues today. But it is clear that focusing on the wellbeing of employees will be critical for boards and leadership teams, for both their organization’s short-term recovery and its long-term success.
Boards play a key role in helping their organization prepare for and navigate the wide array of business issues that arise from a crisis situation. Beyond the business playbook, boards must also ensure the wellbeing of employees is a priority for the leadership team. Looking ahead, a crisis situation further provides boards with valuable insight into organizational strengths and weaknesses, which helps define future business and governance priorities.