Collage of COVID-19 pandemic photos If a natural disaster struck your business tomorrow, whatwould happen in the days and hours that followed? (Illustration byChris NIcholls)

|

Uncertainty is a mainstay of modern business. While we may notbe able to predict the future, we can prepare for it. For CEOs andother business leaders, preparation begins with the acknowledgementthat future events will occur over which we have no control and forwhich we receive no warning.

|

During the past few months, we have been forced to confrontCOVID-19 and the enormity of the threat it represents, both to ourhealth and to our businesses. Yet the rise of a global pandemic isbut one of the many unknowns for which we must prepare. These runthe gamut, from economic recession to cyberattacks to naturaldisasters.

|

Related: Benefits in a new world

|

Events such as Hurricane Katrina and Tropical Storm Sandy revealhow unprepared many companies are for such trials. Would you havebeen? If a natural disaster struck your business tomorrow, whatwould happen in the days and hours that followed? Would you beready operationally? Logistically? Financially? Do you have anemergency plan that addresses all of the contingencies? Mostcompanies do not, and that has become obvious.

Preparation begins with cash reserves

One of the CEO's key pursuits is to get and spend money in theright way. Often missing from these considerations is how to alsosave money in the right way.

|

During the financial crisis of 2008 and 2009, nearly everybusiness owner across the United States faced dire circumstances.As the economy ground to a halt, the just-in-time revenue that manybusinesses relied upon to fund their operations during times ofprosperity dried up. Hardly anyone was buying anything, and eventhe most loyal customers stopped buying products or using servicesbecause they did not have the money to spend.

|

Everyone was making difficult decisions at this time. Thebusinesses that survived often did so largely because of their cashreserves. Nearly everyone tried cost-cutting and layoffs, whichhelped. But the recession was so deep that simply trimming expenseswas not enough. That experience affected me deeply, and it showedme that part of a CEO's responsibility for the numbers is to have acontingency plan in place if the bottom should fall out.

|

In chess, there is a word for placing your opponent in such aposition that you remove every single option she has except for themove you want her to make. In other words, you decide her moves inadvance, based on the circumstances you create. This is calledzugzwang.

|

I never want to have my options decided for me, and I don't wantthat for you, either. The only way to maintain your positionalfreedom in difficult business circumstances is to have a cashreserve built up for emergencies. If you are able to endure hardtimes, you will not be forced to lay off half your workforce toavoid bankruptcy.

|

In practice, cash reserves can intimidate some CEOs because theybelieve that capital should be put to use. The cash reserve doesnot necessarily prevent you from leveraging it, but when I suggestthat a business set aside a full year's worth of operatingexpenses, I often see looks of astonishment.

|

Building up that reserve might be difficult to do, but havingthat capital locked away is incredibly liberating. Even under theworst business conditions, no one will ever be able to force yourhand. That cash reserve, even if you never touch it for any reasonother than emergencies, is a huge source of freedom andautonomy.

|

It will ensure an accountant will never look at you and say,"You have to fire someone if you want to keep the doors open."Instead, you have a cushion to brace for problems and solve themlong before the wheels fall off.

|

According to Richard Neil, CEO of Springboard Benefits ofAtlanta, Georgia, having adequate cash reserves has helped hiscompany weather the storm:

|

"Given the current turmoil, no priority will be more importantthan having an accurate understanding of the cash required tosurvive. Many business leaders incorrectly assume that the problemswill be rectified quickly and underestimate the cash needed to makeit to the other side. Thankfully, our growth and capitalizationplan has positioned our company very well, enabling us to betternavigate the crisis."

Confronting the challenge

In a time of economic and social disruption, we all haveresponsibilities: to ourselves, to our families and to ourneighbors. But it is the business leader who has the greatestresponsibility. You must not only steer your company throughuncharted waters, but must also serve as a beacon in the community,a light towards which we can turn for assurance. For this tohappen, the CEO and other business leaders must adhere to certainpractices during a crisis.

Remain visible

We've seen it far too often: When bad times occur, leadersdisappear. Rather than step forward, they turn to their legal staffand communications department and ask them to draft a response.Press releases, emails and social media posts then go out. Themessage is almost always about how serious the company takes thecurrent situation; how the company is making every effort torespond; and how it is committed to supporting all of itsstakeholders during the crisis. The effort is always professionaland almost always rings hollow. Rather than a human response to ahuman tragedy, it sounds like an automated recording you get whenyou call the Department of Motor Vehicles.

|

The role of the leader is iconic. Many companies are identified,not by their products or services but by the individuals who leadthem. In a time of crisis, leadership means stepping to theforefront with total transparency.

|

Transparency requires leaders to communicate often andpersonally—not through proxies. For example, the CEO must clearlydemonstrate that he is following every aspect of the evolvingsituation and adjusting the company's response accordingly. The CEOmust be honest about what he knows and does not know. If necessary,the CEO must detail everything he and his team are doing to addressthe crisis. Members of the team should be introduced and allowed totake part in the public discussion.

|

Susan L. Combs, CEO of Combs & Company in New York City,recognized the importance of transparency when she was personallydiagnosed with COVID19:

|

"If I simply disappeared, it would not only have a damagingeffect on company morale, but create uncertainty with our clients.Instead, I decided to announce my condition on both Facebook and mypersonal blog, then leverage Zoom to hold online meetings where Iopenly discussed my progress. By doing so, I was able to reassuremy team as well as others who had also contracted the virus."

Be decisive

Modern business is driven by the numbers; facts and figures thatenable us to plot the trends that predict the outcomes. Beingdependent on the numbers, far too many CEOs and leaders are proneto suspend decisions for long stretches of time as they wait forthe full body of facts to emerge. Waiting for all of the facts tocome in before determining what to do is a mistake. Because acrisis is constantly evolving, it's never possible to have all thefacts.

|

Leaders cannot allow uncertainty to breed indecisiveness. Duringa crisis, a company's stakeholders want reassurance. And the onlyway for them to feel reassured is to know that the CEO andleadership is not only acting decisively, but with intent. Equallyimportant, the CEO must recognize that there is no single,all-encompassing decision. Some decisions will be incremental,others temporary.

|

The CEO may announce a work-from-home policy, implementcollaboration tools, or expand paid sick leave. What's mostimportant is that the CEO is seen by the company's stakeholders asbeing proactive and in charge, rather than simply reacting—oftentoo late—to events as they unfold.

|

For Mike de Koning, CEO of Allstate Benefits in Jacksonville,Florida, decisiveness meant quickly moving to a remote workingenvironment:

|

"I knew that if we moved slowly, our people would suffer. Toprevent that, I charged our executive team with providing ourentire staff with VPN access. People with laptops started workingfrom home immediately. The remainder were given new machines andtrained on how to login. Within three days, 97% of our staff wasworking online. It was an amazing team effort, and those weserve—brokers and policyholders—saw no service interruption."

Be compassionate

The rise of COVID-19 is not simply a business challenge, but ahuman tragedy that will impact the lives and health of virtuallyevery one of your company's stakeholders. This is why one of thekey responsibilities of leaders during a time of crisis is to havea positive impact on people's lives—not just economically, but on apersonal level.

|

Fear and isolation generate a variety of responses. Some peoplebecome angry, while others fall into depression. When this occurs,the fabric of society begins to shred. One of the roles of a leaderis to prevent the shredding. The key is maintaining the humantouch.

|

Mike Patton, CEO of Quandary Insurance in Denver, Colorado,believes that compassion extends beyond his company walls:

|

"As CEO, my responsibility is not only to my employees, but tomy community. I sit on the board of a local not-for-profit programthat conducts job training for homeless women. When COVID-19 hit,many of the graduates of this program were laid off. Rather thanwatch them suffer through economic hardship, we decided to run anonline auction. To date, the auction has raised more than $30,000to help these women through the crisis."

Leverage technology

With so many people either laid off or working from home,maintaining a connection can prove to be a challenge. With the aidof technology, it is a challenge the CEO can easily overcome.Today, we have a multitude of apps and platforms that enable us tohold online meetings, conferences and seminars. Many of thesecontain video functionality that allows us to see and hear theother participants.

|

Recognizing the need for the company's stakeholders to stayconnected, the CEO and other leaders can leverage these tools tobuild a virtual community in the midst of a crisis. The CEO canalso create a video blog where each week, he reaches out to hiscompany's virtual community, then invites comment and feedback. Thesolutions are many. All that is required is the will to make themhappen.

Emerge strong and united

COVID-19 has hit us hard. While we need to acknowledge itsdeadly effects, we must also not succumb to fear and paranoia.Throughout our nation's history, we have been confronted by crisesthat seemed insurmountable. And yet we not only overcame thosecrises, but emerged stronger and more united. Working together andwith the leadership of our country's businesses and leaders, wewill do so again.

|

Be well. Lead well.

|

Trey Taylor is the CEO of Taylor InsuranceServices, managing director of trinity | blue, an executivecoaching consultancy, and the founding partner of Ascend Partners,an equity investment vehicle focused on the employee benefitsspace.

|

Read more: 

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.