The current crisis surrounding COVID-19 is unprecedented. That is likely the most repeated phrase we have all read or heard lately.
This enemy — COVID — is attacking us on two fronts. Obviously, many are filled with anxiety about their health and the health of their loved ones. Worldwide, over 360,000 have died from the disease, and in some pockets death rates are ticking up.
Furthermore, this disease has caused much economic anxiety. A record 20.5 million jobs were lost in the United States alone in April according to the Bureau of Labor Statistics. Those numbers, unfortunately, are quite understandable. With stay-at-home orders placed at the height of the pandemic in mid-March, many business deemed as “unessential” were forced to close their doors; and those who couldn’t afford to keep paying their employees were forced to furlough or lay off those staffs.
Despite these hard decisions, and as is the case with most scenarios, there are companies that are making these tough decisions while maintaining their employees’ commitment and understanding, and there are companies who have resorted to a cutthroat approach that will certainly leave their remaining staffs uneasy. In my circle of relationships, I have heard of these best and worst approaches, and this post is definitely a reaction to that.
Below, I highlight true stories of three different companies’ reactions to the economic impact of this novel coronavirus. The names of these firms have been withheld to protect the employees who shared these stories with me.
A Tale of Three Companies
1. A non-profit that employs about one hundred full time employees, and relies on visitors (making it impossible to earn revenue) was in quite a pinch when stay at home orders were issued. Many would understand if most of their employees faced unemployment shortly thereafter, but that was not the case. This specific organization, though, was focused on retaining as much staff as possible. In order to ensure their employees’ futures, their leaders cut all discretionary items from the budget (e.g. no more free coffee at the office), and cut salaries across the board. In a transparent meeting with the entire staff, the CEO explained his reasoning — all staff will be retained, but in order to do that, the company would have to make those salary cuts commensurate with the current salary. Those making the least amount would suffer a 5% reduction, while the CEO would take a 25% cut.
It’s not the choice this non-profit wanted to make, but the sacrifices made at the top created the best possible lemonade from the lemons the economy served up.
2. A consulting firm that specializes in helping companies with the back office (operations, accounting, etc.) is in a similar pickle. With companies complying with stay-at-home orders, the demand for consulting work has dwindled, too. As a result, the heads of this firm had to make a difficult decision regarding their work force, too. Unlike the aforementioned non-profit, this company believed that in order to survive through the pandemic, some deep cuts in staff were required. The result? A good number (will ask Josh about the percent) of its consultants were laid off. While understandable under the current circumstances, this is definitely not good for morale.
This firm, though, did offer a life preserver. For some of its laid-off employees, they offered employment, but at a demoted role along with a reduction in salary. Sure, those employees may be left feeling insulted, betrayed, or demoralized by the firm, but at the very least these demoted employees will have some income during the crisis.
3. The third firm is an engineering consulting firm that employs about 300–400 people, and like the other businesses was hit hard by COVID-19. Amid lockdown and shelter-in-place orders, the firm predicted that their bottom lines would be gravely affected. In mid-March, employees were sent home to work remotely from there. However, a couple of weeks into this normal, many employees were unpleasantly surprised with terrible news. They were losing their jobs.
The news is not all that surprising. With the number of job losses, it was only a matter time that this story would take this turn. This last firm, however, chose a rather peculiar date to provide this bad news — the last day of the month. This decision robbed employees of their employer-covered healthcare for the following month, and this rug was pulled from under their legs at this last minute.
Once again, the decision to lay off workers is unfortunately understandable. Even its timing is understandable when thinking with glasses whose lenses only see the bottom line.
This too shall pass
There’s a popular Persian adage — “This too shall pass.” It is meant to describe the human condition, and its purpose is to point our vision beyond this lifetime. Abraham Lincoln also quoted it in a story during a speech at the Wisconsin State Fair a year prior to his election as president.
Slavery was Lincoln’s “this.” Our “this” is COVID-19. This too shall pass.
Though this pandemic will pass, and there will be a vaccine eventually, our memories likely won’t. The three firms listed above provide a microcosm of the world of business at large. And the next chapter of each of those organizations’ story is rather predictable.
The non-profit’s decision with its employees will likely garner a good amount of loyalty from those same employees. If this crisis continues, and the organization has to make tougher decisions (e.g. layoffs), it won’t be celebrated; but the initial decision the leadership made will definitely be one that the remaining employees would trust.
That firm was backed into a corner, and they are wanting for revenue; but it did the right thing in a difficult time. Their employees will return that sacrifice.
