Last Friday (3/4/20) we hosted a forum for Chairs and Non Executives to discuss the impact Covid-19 was having on the companies they are involved with. Given the spread of interest, some 45 companies and organisations, mainly HQ’d in Scotland but also across the UK, were represented on the call. The forum was hosted by Willie Finlayson.
As the virus impacts global health and the global health of the economy, several contributors commented on the scale of the current crisis and the economic shock which will follow. Industrial production has in many cases collapsed or is near to collapse giving rise to a concern about how we recover. In some instances businesses have seen their revenues drop to nearly zero. There was broad agreement that we are not only heading for a severe recession, but that it will last for a prolonged period with some industries and sectors not recovering for a very long time. A very stark picture was unfortunately painted.
As a result the Chair / CEO relationship in a crisis was discussed in some detail and all agreed that more than ever it was vitally important to maximise the support offered to their CEOs, many of whom are working remotely from their teams for the first time in their lives. It was noted that some of the most experienced homeworkers are indeed the Non Executives and it was therefore key that all of this good and practical experience is passed on. All participants were unsurprisingly experiencing a greater intensity to these relationships.
It was noted that multiplier industries such as airlines are under enormous pressure and the question was posed whether the crisis would encourage greater economic nationalism. The discussion also touched on the topic of key industries and several participants explained that their companies had either stopped production entirely or partially. The financial pressures on those businesses are therefore obvious, as is the pressure on government with large amounts of employees being furloughed as a consequence. It was also pointed out that in some cases their competitors had not closed down and others explained how the problems had fed deep into their supply chains when part of it closes down.
Whilst there was considerable empathy and understanding with Government, it was also remarked that in some cases it was still difficult to interpret the guidelines. So far the overall view was that the UK Government was being more supportive than the Scottish one. One participant explained that they were told by Government “if they could manufacture safely then they should do so” but that at the same time this places a considerable decision making burden on management teams to judge this appropriately. The issue is compounded by the social and political pressures of closing premises and dealing with the often competing views on whether they should do so or not. Whether your business was a key industry was, at the time of discussion, very much still open to (too much) interpretation.
Several participants were also involved with businesses who are proving to be either robust in the crisis or even experiencing growth. Growth itself however can be challenging as it can be difficult to service customers and there is also the real concern about getting paid as the economic crisis hits what were previously considered to be good and reliable customers.
The conversation also turned to sport which is a sector several of our contributors are or have been involved in. Again a theme emerged that companies and organisations felt that they were being left to interpret Government guidelines and in some cases they felt that they had been given little or no guidance. Boards finding themselves in these circumstances are left to make extremely difficult judgements and arrive at decisions while trying also to take into account the full collateral impact.
While there were frustrations about some aspects of the Government response to date it was also acknowledged that they are navigating through uncharted waters. The level of funding by Government was also highlighted as was the long term impact of this on national debt and ultimately on taxation.
Interestingly it was noted that several companies had just completed funding rounds and the Chairs / NEDs involved were now preaching greater prudence – to be “canny with the cash flow” and certainly not to go on any kind of spending spree…
The global nature of this crisis was again highlighted with parts of Asia appearing to be coming back online at a time when Europe and the US remains in meltdown. This reinforced the difficulty of making decisions in these circumstances which are multi layered and complex. One of our contributors advised “it’s better to make decisions now which you can rescind later than to take no decisions” and another added “you’ve just got to accept that you won’t get all these decisions correct – but it is vital to show leadership and be decisive”.
There were areas of the financial services sector still talking about a V shaped recovery when for most other parts of the economy it was looking like at best a severe recession – a very flat U. In terms of the banking and insurance industries, the latter could expect to see a rise in workplace litigation whilst the former is already judged against the backdrop of the banking crisis and the level of government support they received. The question now is whether they will truly step up to support other parts of the economy.
It was concluded and acknowledged that we have experienced ‘10 years of cultural and business change in 10 days’ and whilst some of the digital enablement is very positive and could auger well for the future, there are a host of impacts which are deeply concerning and not just on the economy. The fragility of pension schemes is also likely to be further exposed and there will be questions over the security of data.
The Chair forum will continue during the crisis, particularly as the issues and challenges continue to develop and change day by day. If you would like to be involved please contact Willie Finlayson via firstname.lastname@example.org
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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 email@example.com