The COVID-19 pandemic has created a global health and economic crisis that has placed us all on war footing, and companies are at the frontline. JUST Capital knows that companies face unprecedented operational and financial challenges and are making difficult decisions each day, including how to support their workers, customers, and communities in the face of declining revenues. We also know that each company, and each industry, is different and so options available to some may not be available to others. The stark reality is that the strategic decisions companies, along with the government and civil society, make today will ripple across our economic system for years to come.
JUST Capital has always aspired to elevate the values and priorities of the American people to help guide corporate decision making and just business behavior. In these trying times, as business leaders are struggling to understand what is “just,” we’ve created the following guiding principles. These are embedded in the very essence of stakeholder capitalism and built around five years of public opinion research on what constitutes just business behavior. They are meant to help guide CEOs and corporate leaders as they craft their strategic responses to the coronavirus pandemic and likely recession.
As a companion to these principles, JUST has also created an ongoing digital tracker of corporate responses to the COVID-19 crisis to assess what’s happening on the ground, elevate best practices, and share what good looks like in this rapidly shifting landscape. We’ve also highlighting how some of America’s largest companies have already embraced these principles in their initial responses to the coronavirus.
Here are our five leadership principles and how they connect to what we’re tracking:
1. Support Workers’ Health and Financial Security
JUST Capital’s polling shows that the American public’s top priority when it comes to just business practices is the treatment of workers. Americans believe companies should pay workers a fair and living wage, provide robust benefits, and maintain a safe work environment. These practices are even more crucial today as companies face unparalleled concerns about survival and protecting their workforce.
For too long, millions of workers in the United States have been financially insecure, with many living paycheck to paycheck. Despite the longest economic expansion in U.S. history, 40% of Americans can’t cover an unexpected expense of $400, according to the Federal Reserve. The coronavirus has shone a bright spotlight on the financial vulnerability of our workforce and the existing structural inequalities in our economy.
As companies respond to the ongoing pandemic, they should, as much as possible, prioritize the health and financial security of all their workers, especially their low- and middle-wage workers, who will experience the most economic hardship. And while circumstances are changing rapidly, there is much companies can do to support those workers today:
- Provide paid sick leave and family leave to all employees and contractors.
- Continue to pay hourly and contract workers during temporary business closures, or provide advance payment of future wages for as long as possible.
- Establish hazard pay for workers who are on the frontlines, such as those at grocery stores and pharmacies, who are at a high risk of exposure to coronavirus.
JUST Capital is tracking corporate announcements related to: paid sick leave, temporary closures, one-time bonuses, and treatment of vendor and contract workforces.
2. Adopt Practices to Minimize Job Loss
We also know from our polling that the American public places a high priority on companies creating and retaining quality, stable jobs in the U.S.
Work structures and arrangements are changing rapidly for many Americans. Some are working from home for the first time while caring for children who can’t attend school. Others are still working at their place of business but taking on new roles and responsibilities. In immediate responses to this new reality, many companies have proven to be nimble and innovative. Companies should also adopt a similar mindset as they prepare for a potential recession, exploring new work structures and practices in order to avoid layoffs and additional hardships for workers:
- Participate in a Short-Time Compensation program if located in one of the states that offer such a program, or adopt shift-sharing practices.
- Engage workforces to co-identify ways to reduce overhead operating costs, including shifting to a four-day work week.
- Investigate employee sharing and similar worker sharing strategies with other companies to identify skills and needs to keep businesses running and workers on the job.
- Develop just policies in the event that layoffs do occur, striving to provide adequate severance and meaningful outplacement services for workers.
JUST Capital is tracking companies’ announcements related to: work from home policies, layoffs and furloughs, outplacement services, and commitments to rehiring employees.
3. Put Workers First, and Work with Government to Do So
Government officials across the country are pursuing policies to stop the spread of coronavirus and minimize strains on our healthcare systems, families, communities, and businesses. Corporate America is well positioned to help implement efforts already underway and advocate for additional government interventions. While each company brings a unique voice and set of resources, there are a few actions that all companies can consider:
- Call on Congress to pass paid family and sick leave for all workers, regardless of whether they work for a small business or large corporation.
- Vow to direct government assistance or tax relief toward workers, using these funds to protect their earnings and jobs.
- Eliminate future buybacks if they accept any government assistance.
JUST Capital will soon be tracking companies’ announcements related to: stock buybacks.
4. Support Communities, Local Suppliers, and Customers
The American public wants companies to support the communities in which they operate through local sourcing and support, charitable giving, and paying a fair share of taxes. Companies should assess how strategic choices could better support their suppliers, the government, and community members. They can:
- Continue to pay suppliers as long as possible to make a long-term commitment to their business, recognizing that the economic health of suppliers, especially small businesses, is integral to company operations and the health of the national economy.
- Establish or contribute to emergency funds for local communities that are experiencing hardships as a result of coronavirus, and continue to support nonprofit partners contributing to relief efforts.
- Shift production where appropriate to create items needed to stem the crisis, such as ventilators, personal protective equipment for healthcare workers, and temporary hospitals.
- Consider cost reduction measures and special accommodations for customers, especially those with higher risk of infection, to ease social and economic burdens.
JUST Capital is tracking companies’ announcements related to: community support, participation in relief funds, customer services, and supply chain practices.
5. Have the C-Suite Lead by Example
Our polling has found Americans care deeply about ethical leadership, and we see that this is of utmost importance in a period of uncertainty. Also, nearly 60% of Americans believe that CEOs have a responsibility to take a public stand on important social issues. If there were ever an important social issue, supporting stakeholders in a crisis is it. CEOs and C-suite executives who are committed to practicing stakeholder capitalism should lead by example, vowing to be the first line of defense against a financial downturn. Leaders can:
- Consider adjusting salaries and forgoing bonuses for the year, redirecting those funds to retain and support their workers, especially those who are most vulnerable.
- Halt stock buybacks and dividend increases for the remainder of the crisis.
JUST Capital is tracking companies’ announcements related to: executive compensation and pay cuts, as well as buyback and dividend programs.
Bolster Resilience: For Your Company, Workers, and Communities
This once-in-a-generation moment is the opportunity for all CEOs who have pledged their commitment to purpose-driven leadership and serving all their stakeholders to put those values into practice. Adopting a stakeholder-oriented response to this pandemic is key to minimizing its public health and economic impacts, and will help companies bolster their resilience to weather an economic downturn.
When companies provide paid sick leave, workers can stay home and protect their customers and the community from the virus, while also maintaining their economic security. When workers are fairly compensated, they can continue to buy the products they need, benefitting the overall economy. When companies prioritize customers’ health and meet their changing needs, this better serves Americans and strengthens customer loyalty. When companies recognize the importance of maintaining the financial stability of their suppliers, local communities reap the benefits. And when business executives lead by example by reducing executive compensation and companies pursue creative frontline job solutions like shift-sharing, we can minimize job loss while restoring trust.
Each year, for the last three years, our polling has shown that 80% of Americans believe that companies don’t share their successes with their employees and instead prioritize shareholder needs above all other stakeholders. At this time, it is critical for companies to take this moment to demonstrate a new commitment to walking the talk on purpose-driven leadership and supporting their stakeholders. This will be the moment where companies define their future, and make choices now that should support a faster recovery and long-term competitive advantage.