Is Covid-19 waking the world up to the necessity of a ‘Total Stakeholder Value’ system?

Richard Walker, MD of Iceland Foods, was fast out of the blocks on Covid-19: understanding that the most vulnerable of his company’s customer base needed help and being quick to provide it. By setting aside specific time for elderly and disabled customers to get essential supplies, he granted them exclusive access to Iceland’s products, and helped them avoid the impact of panic buyers (as well as providing a form of what we now know as “social distancing”). Where Iceland have led, others have followed.

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How companies respond to crisis is often a good indicator of their own maturity, the extent to which they see and manage people within their whole, human system, as a true source of value. Mature companies are more responsible because they view their workers, suppliers, customers and communities as more than just there to maximise their own financial gain.

A NY Times Editorial this week, under the headline “Companies Putting Profit Before Public Health”, created a stark, visual image of firms who provide their workers with sick pay, while castigating the non-payers who could well afford to pay this benefit. The argument here is not about promoting examples of corporate largesse but a simple case of responsible business working for the mutual interests of all stakeholders. For example, one outcome of not providing sick pay is that it encourages ‘presenteeism, where people are, or feel, forced to work when sick. For many of us who have done this, we know that presenteeism generally leads to poorer quality work, lower productivity, and can spread the problem of disease, by infecting both colleagues and customers. This is bad for business and communities. It is the kind of particular lesson, that if properly learnt, can help firms to start better understanding and begin navigating towards a healthier and more value-oriented relationship with their people.

Of course, having to manage business costs, especially in the face of such a rare and extreme occurrence, could make the difference between survival and collapse. Yet with many firms, their relative lack of maturity means that in addressing cost reduction, decision making does not encompass the crucial wider value consequences.

With Covid-19, a number firms in the UK and the US have taken drastic action to force their staff to take unpaid leave, or put them on zero-hours contracts; and have come in for sharp criticism as a consequence. Does cutting workers adrift, without proper consideration of the total human impact, actually make business sense? Is it a legitimate management response to a life-threatening and economically disastrous pandemic? Surely it has to be both, and unless capitalism wakes up to this, we are all worse off.

In the case of hospital cleaners walking off the job last week, after going unpaid for weeks, their pivotal role in providing one of the most critical tasks for patient and staff safety, i.e. ensuring cleanliness, assumes even greater importance. Mature firms already know that such job roles are innately valuable and some hospital wards include cleaners as part of their care team. Clean wards are essential but also being able to provide additional insight into improving patient care, adds significant value. Seeing cleaning staff walk out in the midst of this pandemic brings into focus how important it is to manage everyone in a total value context.

On a much more optimistic and positive note (in short supply at the moment) the Covid-19 crisis, as tragic as it is, could end up producing a lot of good, if it becomes the crucial catalyst that will finally herald the advent of a ‘Total Stakeholder Value’ form of capitalist system. 

The story of Tennessee brothers who were accused of a price gouging arbitrage, attempting to re-sell hand sanitiser, highlights the realities of a paradigm (and system) where profit maximisation predominates over stakeholder value concerns. Kentucky’s Attorney General is quoted as saying: “this is a time where we have to focus on helping our neighbors, not profiting from them.” The brothers have since donated their hand sanitiser. However, this story should be one to reflect on. The idea that people should be put above profit is fundamental. It transcends this current crisis and should be one of the valuable lessons we all learn for the longer term. 

For any system to work coherently, regardless of its size, requires a common purpose, one shared by everyone. The myriad of organisational failures arising from our current ‘system’ shows very clearly that it lacks one. However, individuals, organisations and governments have recently been re-shaping their actions and behaviours to address the global human crisis arising from climate change. This has been a slow and gradual change that has led to recent acceleration as the looming crisis has become reality in more of our lives – be it flooding, drought, or wildfires, for example. Covid-19 has brought us a different type of global crisis, where any delay or compromise in our actions has more immediate, catastrophic consequences. The world’s citizens now have a common purpose not seen in over hundred years, when Spanish Flu wreaked havoc and killed millions. Moreover, countries and their citizens around the world are now showing that actions and behaviours can shift quickly to avert the most disastrous outcomes.

At MI, we have sought to demonstrate that a world predicated and built on a system purposed to realise human value, will generate the best outcomes for us all. This is a societal value system that embeds whole system thinking and comprises key factors such as openness, collaboration, learning, trust, the pursuit of excellence, nurturing talent, and building the best environments in which all people can give their best and flourish. It is one where the benefits that arise are not mutually exclusive, where we do not need to trade off people (or our environment) for profit, and where firms have shown that better profit can be created by putting people at the centre of their purpose and strategy. Evidence that we have gathered to support this proposition continues to become stronger and more compelling as our work unfolds

The Covid-19 crisis is seeing many companies demonstrate a greater willingness to serve society that then enhances their own stakeholder value. From fast food firms providing free meals to children, to banks providing easy access to mortgage ‘holidays’, to manufacturers repurposing operations to produce medical devices or free hand sanitiser. Examples continue to grow. Perhaps then, this is a crisis that can galvanise us all to properly understand a better way forward? Where all actors – governments, organisations, and individuals are able to act in concert as a force for good. Where the interests of society, business and wider stakeholders are truly aligned in a system underpinned by a common purpose, explicitly linked to the creation of true Total Stakeholder Value.

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