We recently interviewed the Manufacturing Director of a large company who told us that in response to the COVID-19 pandemic he had gathered all his suppliers and told them frankly: “We’ll face this together. We share everything.”
This leader could easily have placed the entire burden of plummeting demand on the shoulders of suppliers by drastically lowering orders. Many companies are doing this globally. Instead he chose to share the load, by lowering external orders and his own production equally – something those suppliers will not forget.
At this time of unprecedented turbulence, the instinct for businesses may be to preserve their own interests, cutting off suppliers and cancelling purchasing contracts – however this won’t help them once the crisis is over.
Read more: SMEs feel the pain
Companies such as the above do far better during times of trouble, since some of their partners may already help them. More importantly, when the storm is over, they are surrounded by real partners – who remember their acts and are ready to help them – instead of being alone and on their knees.
What can you genuinely do for others?
You may feel that your clients are abandoning you at the moment and seem unable to help you in any way. But maybe you could do something for them?
Like the airline company which has sent an email to every client explaining that they are free to change their March trip to any destination and date in the next 12 months, whatever their fare type. Instead of cancelling their trip, customers will change their travel to a later date, stay loyal and hopefully come back time-after-time.
Finnish cleaning leader SOL’s main clients – hotels and cruise ships – were hit hard by the financial crash of 2009. From the very first signs of economic slowdown, SOL offered clients a 10% reduction, even though these prices were fixed by contract. This allowed the clients breathing room amidst rapidly diminishing cash reserves.
The same goes for employees. During crises, companies have a choice – view people as ‘human resources’ to be adjusted, or as human beings to be respected.
Large German-French company SEW-Usocome suffered a 30% drop in orders during the financial crisis of 2009, but was the only manufacturer not to lay anybody off or use furloughs. If salary cuts were needed, the executives promised to start with themselves and the managers. They also asked for a €14 million savings plan. Thanks to employee initiative this goal was met and at the end of January 2010, every worker received a bonus, despite orders still being down by 28%. Those employees never forgot.
Only the altruistic will survive
These examples may appear philanthropic, but they are not. These companies genuinely act for the common good of suppliers, clients and employees, transforming core processes to help others. As a consequence—not as a goal—they thrive.
Only companies which we call altruistic and do not give up on counterparts when times get hard, will emerge stronger from this COVID-19 crisis.
All crises end – that is what crises do. However many companies will break then. They will be unable to meet demand when it picks up, because suppliers will be gone, clients will have fled, employees will have been laid off.
Instead of burying their heads in the sand or acting with panicked self-interest, businesses must seize the chance to transform and altruistically act for others. Partners will remember and be there for them, both now and – crucially – the day after.
Management author Isaac Getz is a professor at ESCP Business School. Laurent Marbacher is an author and senior adviser to business leaders. Their book The Altruistic Corporation is forthcoming.