How to be a stakeholder-driven company in a pandemic

The world is gripped by fear. The market is plunging. Governments are locking down cities. Many of us are refreshing news sites and Twitter to understand the latest update. Of course, I’m talking about the coronavirus, or COVID-19, an international pandemic that’s leaving everyone anxious.

There’s been much (welcome!) talk about stakeholder capitalism, purpose, and a commitment to workers in the last year, from the Business Roundtable’s new statement of purpose to its presence as a main topic in Davos. The reality is that this is the moment for companies to put stakeholder capitalism into practice – to demonstrate their commitment to an American public that is increasingly skeptical about promises (according to our polling, less than half of Americans currently trust large companies). Every company – from the 181 that signed the Business Roundtable’s pledge to those espousing purpose and a commitment to workers and communities – should be acting now. 

What should companies be doing?

First, paid sick leave. Every worker, regardless of classification, needs access to paid sick leave. And with too few tests available and concerns about hospital overuse, it can’t only be available when a worker has a proven case of COVID-19. We’re seeing announcements from companies like Walmart and Darden Restaurants on new sick leave policies. Fundamentally in this environment, workers need 14 days of leave. Companies should also press Congress to implement sick leave universally. This will level the playing field for those companies that are committed to doing the right thing for their workers and communities.

Second, we’re seeing many tech and white collar companies encourage or require employees to work from home. Those companies must also be thinking about their contractors, vendors, and suppliers. We’ve seen companies like Microsoft and Alphabet pledge to cover lost wages of hourly workers at their headquarters. Every company should include this as part of their calculation over the coming days and weeks. Stakeholder-run companies connect the interests of their workers to their suppliers and communities, and this is a critical example of that. 

And third: Companies need to know the financial security of their workforce and ask if their workers are making ends meet each month. JUST Capital can help with conducting a financial stress test. This is the moment where recommendations like storing up a month’s worth of food is simply not possible for workers in financial distress. We know that 40% of Americans can’t afford a $400 emergency and according to our initial estimates, 10.4 million people (of the 20 million overall) who work at Russell 1000 companies do not make enough to support a family of three, even with a spouse working part time. It goes without saying that a pandemic is one of those emergencies – necessitating that people obtain additional medication, food, and healthcare. 

More fundamentally, as a recession feels more likely, companies (and investors) must recognize that the last 10-plus years of growth, buybacks, and tax cuts can and must cover the costs of keeping jobs and workers in those jobs. There is some evidence that an investment in workers, rather than layoffs and cost-cutting measures, along with operational efficiencies and agility can support the long-term resilience of companies. Studies have also shown that stakeholder-driven small businesses, post-2008, were more likely to rebound due to their stakeholder approach in a downturn. 

This is a once-in-a-generation moment. Business leaders should be acting quickly to be sure they’ve defined their vision for and commitment to their workers, communities, suppliers, and long-term interest of investors. This is the social license to operate; this is stakeholder capitalism.

 

This article was written by Alison Omens from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.