Paul Holmes 18 May 2020 // 5:20AM GMT
“Ensuring the health and safety of our people and our communities is our highest priority as the United States quickly mobilizes to slow the spread of Covid-19,” said McDonald’s.
“The health and safety of our employees is our highest priority,“ pledged chemical giant DuPont.
“The health and safety of our employees, customers and partners remain our number one priority and we are working hard to make sure that we minimize the risks related to the spread of Covid-19,” added industrial and transportation company ABB.
Statements such as those appeared frequently during the first phase of the Covid-19 pandemic, as companies around the world reacted swiftly and decisively—often more swiftly and decisively than their national governments—to the threat that the novel coronavirus posed to their employees.
Putting People First
When we spoke with corporate reputation experts during the early days of the crisis, there was near unanimity that this was the correct approach.
“Employees have been the number one priority for all of our clients—inform them, protect them, support them,” said Mark Shadle, managing director of global public affairs at Zeno Group.
“The key drivers of corporate reputation in this crisis are employees, their perception of how companies treat them, keep them safe, put them ahead of profits, reflect their values and inspire them by being part of the solution,” agreed Micho Spring, chair of the global corporate practice at Weber Shandwick.
The firm’s research showed that 79% of workers said their employer puts safety first, and 77% felt their employers’ response was exactly what it should be.
Many companies made a commitment to protecting their employees:
- Pepsi increased pay for front-line workers and extended benefits for those quarantined or caring for sick family members;
- Starbucks pledged higher hourly wages for employees who continued to work and “catastrophe pay” for those who unable or unwilling to work;
- Cisco CEO Chuck Robbins told staff not to worry about losing their jobs and urged other companies in a financial position to absorb coronavirus costs to follow that example;
- Google and Facebook offered extended emergency leave to parents struggling to deal with disruptions to their family schedules;
- Comacst CEO Brian Roberts committed $500 million to support employees as quarantines temporarily shut down some of the cable giant’s business units;
- ServiceNow’s CEO Bill McDermott committed to no layoffs and salary protection. “We want our employees focused on supporting our customers, not worried about their own jobs,” he said.
There was a consensus that policies such as these would pay dividends in the long run. Lorna Friedman, senior partner in the global health business at the consultancy Mercer, told the Society for Human Resource Management, “’People first’ is the mantra we think is most important when it comes to leading the workforce" during the pandemic. “People will remember the goodwill and reputational value of trying to do the right thing.”
“This is a moment in time that has caused businesses and their leaders to think hard about their purpose, what good leadership looks like and what really matters,” said Kirsty Graham, CEO of Edelman Public Affairs. “Their employees, customers and stakeholders will remember who took what action, and how it made them feel.”
By mid-April, it was clear that politicians and some business leaders were growing impatient with the lockdown that had been imposed to protect American workers.
At the time, we wrote: “Leaders from politics and business can meet and talk and decide as much as they want, but the reality (one that has been absent from many of the discussions around this topic) is that the American economy won’t restart until ordinary people—employees, consumers, and communities—decide they are ready for it to restart….
“While President Trump can declare the American economy is open again, and governors can lift the various restrictions they have imposed, and business can throw open their doors, none of them can force employees or customers to walk through those open doors until they feel safe.”
And it is clear that, for now, most Americans do not feel safe. They clearly oppose the reopening of restaurants, retail stores and other businesses, according to a recent Washington Post-University of Maryland poll. More than half (54%) of US employees say they are worried about exposure to Covid-19 at their job, according to a survey frrom Eagle Hill Consulting. And a new Washington Post poll found that nearly 60% of Americans fear infecting their families as a result of working outside their homes during the pandemic.
It appeared that many senior business leaders understood that this was the case. "If people don’t have confidence that it’s safe to go out and go to your job or go to a store, they’re just not going to go regardless of what the government says,” Joshua Bolten, CEO of the Business Roundtable, told CNBC.
"If we don’t get this right, the public health and economic costs could become even more daunting," Suzanne Clark, president of the US Chamber of Commerce CEO, wrote in a USA Today op-ed. “We’ve seen examples from around the world of countries reopening without taking the necessary precautions, and businesses have been forced to shut back down.”
JP Morgan Chase CEO Jamie Dimon took a balanced approach to reopening during an April conference call with analysts: “A rational plan to get back to work is a good thing to do, and hopefully it will be sooner rather than later,” he said “But it won’t be May. We’re talking about June, July, August, something like that… The turn-on will be regional and by company, all following standards and best health practices,”
Dimon appeared to understand that employees could only be expected to return to work when they felt it was safe to do so, when sufficient testing was in place, and when hospitals have sufficient capacity so that “you’re not worried that you can’t get every American who does get sick the best possible medical advice.”
But while business leaders in general appeared to be adopting a sensible, long-term view of re-opening (at least compared to the White House), some individual companies were beginning to change the tone of their communications—and to make decisions that clearly indicated that employees were no longer a priority.
Disney, for example, said it was furloughing 100,000 workers—but that it would maintain its generous executive compensation program (executive chairman Bob Iger stands to make $40 million this year) in place. Asked about the decision, a Disney spokesperson told the FT: “I suggest you look up the definitions of ‘publicly traded company’ and ‘fiduciary duty.’”
It should go without saying that there is nothing in the definition of fiduciary responsibility that required companies to demand sacrifices from its workforce while continuing to pay exorbitant bonuses to wealthy executives. Indeed, half way through last year America’s leading CEOs appeared to be in broad agreement that it was important to balance the needs of shareholders with those of other key stakeholder groups.
That consensus should be more important now that ever, with ordinary workers facing an unprecedented threat to their lives and their livelihoods and with public scrutiny intensified by the crisis. Instead, many companies are demonstrating that their commitment to a more equitable approach was mere lip service—that the sacrifices required during this pandemic will not be shared by those at the top.
Supermarket chain Kroger, meanwhile, suspended the "hero" pay with which it had been supplementing employees' salaries during the first weeks of the lockdown, although CEO Rodney McMullen and other top executives will still receive their own bonuses, believed to be worth north of $20 million.
And the Washington Post spotlighted a handful of companies—Caterpillar, Stanley Black & Decker, Steelcase, World Wrestling Entertainment, and one-time CSR leader Levi Strauss—that had laid off or furloughed staff while paying massive dividends to shareholder. “As thousands of their workers were filing for unemployment benefits, these companies rewarded their shareholders with more than $700 million in cash dividends,” the paper reported.
“In a downturn like this, the first thing a company should do is give up any distributions to shareholders,” William Lazonick, an emeritus economics professor at the University of Massachusetts, told the Post. “But in a crisis, companies will differ. Some will care… and some will rob the workers, who should expect that their continued employment will be the company’s first concern.”
All Risk, No Reward
Perhaps the most striking example of what might happen next is taking place in the nation’s meat processing plants.
Smithfield Foods, owned by Hong Kong-based WH Group, is the largest pork processor in the world and now its meat processing plant in Sioux Falls, South Dakota, is the largest epicenter for coronavirus cases in the United States with about 735 employees testing positive. Across the United States, about 170 meat processing plants have experienced COVID-19 outbreaks, with more than 9,000 people falling ill.
But just days after Smithfield’s Sioux Falls plant was closed, Tyson Foods—which has experienced outbreaks at its own plants—paid for a full-page ad in The New York Times, The Washington Post and the Arkansas Democrat-Gazette, warning that the “the food supply chain is breaking," insisting that “millions of animals—chickens, pigs and cattle—will be depopulated because of the closure of our processing facilities," and claiming that "there will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed.”
Days later, President Trump signed an executive order that classifies meat processing plants as essential infrastructure under the Defense Production Act, mandating the plants stay open and—as the Washington Post editorial board pointed out—allowing the president to control the production and distribution of products and supplies during a national emergency.
To ensure that employees have no alternative but to put their lives at risk, several Republican state governments are asking businesses to report employees who refuse to return to their jobs so that their unemployment benefits can be terminated. And to make sure workers have no recourse in the event that they contract the coronavirus, congressional Republicans have made liability protections for business owners their top demand in negotiations for the next coronavirus relief package. And, needless to say, Trump’s Labor Department has declined to aggressively enforce CDC guidelines that would provide some minimum protections in the workplace.
“People should never be expected to put their lives at risk by going to work,” said Stuart Appelbaum, president of the Retail, Wholesale & Department Store Union. “If they can’t be assured of their safety, they have every right to make their concerns heard by their employers.”
As Elliott Hannon, writing at Slate, explained: “The return to work order puts many workers in the meat processing industry in an impossible position: They need their jobs and the pay checks that come with them… but they also don’t want their health and safety to be sacrificed in the name of economic gains.
“As has been the case throughout the pandemic so far, those bearing the economic brunt of the virus have been the country’s paycheck-to-paycheck class.”
The meat processing industry experience indicated that if American companies want to jeopardize the health and safety of their workers, the current administration will do everything in its power to help them evade any consequences for their actions.
But even if there are few legal consequences for re-opening without proper regard to worker safety, companies need to be aware that there will be reputational consequences to the way they handle the return to work. Indeed, in the absence of government protections for workers, companies need to hold themselves to even higher standards of ethics and decency.
Employees will remember—and so with consumers and other stakeholders. About three quarters (73%) of respondents to a recent GfK survey say the way companies conduct themselves during the crisis will impact whether they do business with those brands or retailers in the future.
(And for many of them, the way companies treat their most vulnerable employees will be even more impactful.)
That means companies need to listen to their employees’ concerns and meet their expectations regarding safety measures. The Eagle Hill survey cited earlier found that a majority of workers want to see access to protective equipment like gloves, masks and hand sanitizer (58%); mandating employees with symptoms stay home (55%); and the widespread availability of Covid-19 tests (53%).
It also means that they need to continue the messaging that was ubiquitous during the early days of the crisis: that “the health and safety of our employees is our highest priority.”
Living up to that pledge will be even more important going forward than it was back then.