CEO Forum – Covid-19 | Friday 3rd April

On 3^rd April Adam Brown and Michael Dickson hosted our second CEO Forum and saw 15 cross sector business leaders participate in an open and wide ranging discussion. This weekly forum has proved to be extremely popular and the next session will be at 13.00 on Thursday 9^th April.

Topics discussed included: response to government policy; experience with and access to banking and finance; HR and people challenges; planning for the future and possible innovations.

Policy and Government Messages

• CEOs and Managing Directors have a unique and difficult role to play in these circumstances, and the financial and operational challenges are not being made any easier due to the ambiguity and inconsistencies in Government communications and advice.  This is being felt at both Local and National levels, with inconsistencies between UK and Scottish Government advice. For example the Construction sector is deemed to be an essential industry in England but non-essential in Scotland.
• There is a sense that the government is relying on the moral argument for businesses to decide themselves whether to operate, rather than specifically instructing them whether or not to operate. An example was given by the CEO of a manufacturing business who decided to follow the government advice by the letter, remaining in full operation, and where the police subsequently arrived to shut down the site. When the officers were shown the advice on the government’s own website they decided to depart to “seek further clarification” and haven’t returned.
• All the CEOs agreed that too few industries are being deemed essential, especially to the long term financial and economic strength of the UK. With the government, rightly, having prioritised the health of the country over the past few weeks, there are now growing pressures to find a balance and focus more on the economic health of the country, before irreversible damage ensues.

Finance and Government Job Retention Scheme

• Time was spent discussing several finance options including traditional and fintech banking options and the government loan schemes (CBILS for £5-45m turnover businesses and CLBILS for £45-300m turnover), with the CLBILS seen as a much needed addition to the relief programme. Many of the CEOs shared their experiences with applications so far and offers to help others at an earlier stage were shared.
• Many businesses are experiencing a reduction in revenue that far exceeds their ability to cut costs. This is the case whether they utilise government relief programmes or not. An agricultural business commented that “You can’t furlough cows!” and this humorous example summed up the inability to reduce or recover costs sunk in certain assets or investments that predated this crisis or that ‘can’t be turned off’.
• A debate was had on the rationale of fairness on the subject of how to enact Furlough. This included the fairness of either topping up furloughed staff’s salaries or those not on furlough also taking a pay cut. There was a suggestion that this could be done proportionately to the money individuals would be saving from commute costs for example. When discussing furlough with staff it was agreed clarity, transparency and expectation management (timescales, length of commitments to a plan etc.) are crucial and, whilst this was an enlightening and helpful debate, it clearly showed that this issue is highly personal and specific to each individual business and their situation.
• We are now seeing significant uptake in the furlough programme and, worryingly, many CEOs believed that this could prove to only be a short-term reprieve on redundancies. If this is to believed, the UK could be on the precipice of mass unemployment and in other countries where furlough schemes are not on offer, UK companies have already made mass redundancies to their local staff bases.
• Many commented on the live discussions with auditors and their own status as a going concern. Auditors have so far been supportive with finding innovative solutions to challenges such as year end and how these can be approved in these circumstances.
• Real positives were discussed in regards to businesses and their relationships with their investors, whether private equity or institutional. There may be opportunities for acquisitive growth when the upturn comes and timing will be important.

HR & People

• It was felt that Social pressures, “fake news” and social media in general are not helping businesses keep a consistent line of communication and position on ‘essential’ work and workers. These outside influences are in fact driving fear, lower productivity and impacting absenteeism. Advice and colleague engagement methods were also discussed in regards to this, with some having seen a reduction in absenteeism after a purpose-led and consistent communication as to why the company’s work is essential.
• It was predicted that these Communications and HR issues are likely to continue and develop into other areas such as bereavement leave, counselling and even death in service claims. It is paramount that companies do all they can to ensure the wellbeing of their staff throughout this period and was agreed all that companies will be judged by future investors, customers and employees by how they act and speak at this time.
• Complex Reward and Remuneration conversations are already underway within many organisations in regards to the hours employees are able to work, annual leave and sickness policies and how to reward and manage performance at this time. A number of CEOs asked for their HRDs to join our HR and Reward Forum this week to share in these conversations.

The Future

• Having been in ‘crisis mode’ for the past 2-3 weeks, it is clear that the conversation is beginning to turn to the future. Boards are beginning to plan the rightsizing and where the business will focus its efforts. Examples were shared of new revenue streams being identified, new efficient ways of working being discovered and how companies felt their market and consumers may change their behaviours due to this.
• Company values are also being tested like never before. Looking after employees (including both physical and mental health) will become a higher profile value of all businesses, including those more “office-based” businesses that haven’t traditionally had to focus on this so strongly.
• Whilst there will be an inevitable bounce back, this is increasingly likely to be slower than was initially hoped. The previous levels for some industries may take a very long time to return e.g. Aviation, Hospitality and Tourism. Companies will be need to be leaner and more focused, which will hopefully result in greater profitability to build upon.
• There was discussion over what the “new normal” will look like in the future. Will businesses embrace home working and be able to cut their offices costs significantly? Will people want to attend large meetings, networking events, AGMS etc.? Will businesses have to allow or even encourage social distancing longer term?
• It was suggested that when re-building the economy, the government needs to ensure that the weaker businesses that were struggling before or always likely to fail are allowed to fail and that the greatest support is retained to prop up the stronger businesses who will struggle later in the cycle.
• There was a general hope that 2021 will be a boom year for many industries and that working together to encourage this is key!

The CEO Forums will be hosted on Zoom weekly with the core session lasting an hour, with a further 30 minutes available for informal discussion and networking for those who wish. For further details on this, or future events, please don’t hesitate to get in touch with Adam Brown or Michael Dickson:
adam@fwbparkbrown.com
michael@fwbparkbrown.com

For a downloadable copy of the above article please click here.

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FWB Park Brown
FWB Park Brown continues to deliver its full range of services which includes providing support and advice during the Covid- 19 Public Health and developing global economic crisis.
We have established a range of cross sector as well as sector focused discussion forums for Chairs, NEDs, CEOs and all the main business management disciplines.  We are also working closely with the Scottish HR Leadership Group to provide constructive support including discussion forums and Q & As.
Summaries of the discussions will be posted on our news section and also on LinkedIn.
For further information about any of these forums please contact us via enquiries@fwbparkbrown.com