The COVID-19 crisis is forcing companies to reexamine their impact on society and their responsibility to all their stakeholders—employees, customers, communities, and partners alike. Companies are under immense pressure to respond quickly and many have already responded to their stakeholders' most urgent needs. But leaders also recognize the nature of the crisis requires a measured, strategic response that will define how they are remembered, as FSG’s co-founder Mark Kramer noted in HBR.
As companies are beginning to think about the medium- and longer-term phases of their responses to the crisis, FSG is publishing a series of blogs that build on the initial guidance from our co-CEO, Greg Hills. Below, we share a framework we’re using ourselves and with clients to help companies think more holistically about their response. You likely have already reflected on many of the individual aspects of this framework; by sharing the elements together we hope to provide a guide for reflecting more comprehensively on the who—the stakeholders companies can serve, and the what—the levers for impact that companies have.
How can our company leverage our unique strengths to serve those most impacted by the crisis?
This deceptively simple question encapsulates the central considerations that should motivate a company’s response at this time. There are two core elements that should underpin every facet of your response:
- Identify and focus on those most impacted among your stakeholders. The COVID-19 crisis is already magnifying systemic disparities and is disproportionately impacting women, people of color, and low-income communities. As companies choose how to direct their limited business and philanthropic resources across their stakeholder groups, they should continually examine who among their stakeholders is most impacted and how best to serve them.
- Leverage your unique strengths. In the context of unprecedented aid packages from governments and a flurry of responses from seemingly every corporation, non-profit, and philanthropic organization, companies should focus on where they are uniquely positioned to have the greatest impact. This may mean focusing energy on R&D and production of life-saving products or concentrating efforts on supporting employees and communities that anchor operations. Every company has unique expertise, assets, and relationships, and focusing on these for the sake of maximizing impact (and not for the sake of “competitive differentiation”) should guide decisions.
Principles for Serving Stakeholders
How companies respond to the crisis will depend on their industry, expertise, and geography. However, regardless of a company’s profile, it will be important for them to consider comprehensively how the crisis affects all of their stakeholders—employees, communities, customers, and partners. We’ve identified four principles companies should consider as they seek to better understand the impact of the crisis on their stakeholders.
- Consider how your employees, communities, customers, and partners are affected at a time of crisis. Just like your company, each of your stakeholders is impacted by the current crisis—both independent of their relationship with your company (e.g., based on where they live, identity, prior health conditions) and because of their association with your company. Changes to your company’s operations impact each stakeholder group, and vice versa. Remote or reduced working schedules impact employee’s salaries as well as company productivity. Social distancing and travel restrictions affect your suppliers and distributors, and community level impacts can affect your customer’s needs, talent pipeline, and operating context. Applying a stakeholder lens to understanding the impact of the crisis will help your company better understand its full implications for your business and help you determine how best to respond.
- Apply an equity lens to identify those most impacted in each stakeholder group. The crisis is disproportionately affecting specific social groups across your stakeholders, including women, people of color, those with different abilities, low-income communities, and in particular people at the intersections of these populations, such as women of color with different abilities. In our recent webinar, corporate leaders from 3M, Truist, and Walmart reminded us that considering equity is a muscle that many companies are continuously challenged to develop under non-crisis conditions. During a crisis, the need for an equity lens is magnified as systemic disparities for your stakeholders are exacerbated. For example, if your company’s operations are anchored in communities regularly facing disproportionate challenges to access healthcare or education, those obstacles are going to be even stronger in the short- and long-term of the crisis. Listen to your stakeholders and rely on data to identify who is at the greatest risk among each of your stakeholder groups. Use the principles of targeted universalism to design solutions and look for opportunities to alleviate the impact on these specific groups that will also apply to and benefit everyone. For instance, policies designed to give greater attendance flexibility to immune-compromised or otherwise at-risk employees will also provide needed flexibility to employees with family-care responsibilities, and over the long-term can help companies retain workers and avoid costly hiring and training as the crisis subsides.
- Identify areas of interaction within and between your stakeholder groups. Designing solutions during this crisis is complex because of the interaction between your stakeholder groups, but these points of interaction can provide opportunities to amplify impact and can help to clarify where to focus. For example, retail companies are thinking not just about the independent risk faced by their employees or by their customers but the compounded risk when employees and customers interact and are responding by controlling the flow of customers and implementing barriers and distancing mechanisms between employees and customers. Additionally, small suppliers will feel the impact of reduced operations and in turn will contribute to a downturn in their local communities as their revenues decline. Supporting small suppliers with advanced payments can benefit suppliers and have a multiplier effect in communities. Focusing on these and other points of interaction can help companies prioritize their efforts to efficiently serve the needs of multiple stakeholders.
- Listen and source ideas from different levels of your company and across stakeholders. The pressure for companies to respond is high and executives are feeling it the most. This is a time for adaptive leadership, which requires seeing the big picture while embracing uncertainty and looking for new approaches. Executives and formal leaders within a company should play a “conductor” role and allow solutions to emerge from informal leaders at different levels within the company and within your stakeholder base. Talk to your suppliers and distributors about the challenges they are facing and how COVID-19 is affecting their employees and ecosystems. Listen to communities for ideas about how your company can best address the issues they are grappling with day-to-day. Leveraging lived experience and continually adapting, learning, and keeping an eye on the medium- and long-term will help ensure the relevance and sustainability of your response.
Considerations for Creating Impact
Companies have a range of tools at their disposal for responding to the crisis and for meeting the needs of those most impacted across their stakeholder groups. Once specific stakeholder needs are identified, the following questions can help leaders reflect on how their companies can respond holistically
Products and Operations:
- How can increased access to our products and services help alleviate the societal fallout from the crisis?
— At the most basic level, companies that produce PPE and life-saving drugs and devices are scaling up production to meet the increased immediate need. At the same time, other companies are alleviating the social fallout of the crisis in ways that are specific to their industries. For instance, edtech companies are providing free resources to schools and universities that have quickly pivoted to virtual education, and financial services companies are offering relief to consumers by waiving fees and deferring payments.
- How might we repurpose our operations, infrastructure, and back-office services?
— Notable examples of repurposed operational infrastructure include beverage companies producing hand sanitizer, hotels offering rooms for healthcare workers concerned about infecting their family members, and retailers such as L.L.Bean repurposing their distribution facilities to pack and sort food for food pantries. Other companies are collaborating to combine their unique strengths and infrastructure, such as a partnership between HCA Healthcare and Google Cloud to build a COVID-19 data portal with real-time hospital-level data.
— In addition to physical and technical infrastructure, companies can consider how to connect their staff to support those impacted by the crisis. Local organizations such as Volunteer Memphis and national groups such as VolunteerMatch are creating “skilled volunteer pools” that can help match employees with specific skills in areas such as IT, HR, and logistics with opportunities to help respond to the crisis
- How can our philanthropy be targeted and impactful where there is the greatest need?
— Companies can work with partners to ensure their philanthropy first reaches those most impacted. For example, Truist is working with Johns Hopkins and local United Ways to ensure that medical equipment and basic needs purchased with its philanthropy are going to those who need it most. Pooled philanthropic funds are also being created in cities including Seattle, New York City, Atlanta, and Houston.
- How should we balance near-term needs with the long-term impact of the crisis?
— Many corporate foundations established a strategic focus on issues that intersect with their business and where they are positioned to have the greatest impact. While many companies have rightly contributed to emergency relief and basic needs in the short term, corporate foundations that continue their work in their focus areas can provide support in unique areas that might otherwise be overlooked. Collaborating with existing grantees now will help sustain relationships and lay the groundwork for addressing the longer-term effects of the crisis in areas where they are best positioned to provide support.
- What policy barriers and mindsets are impacting our stakeholders during the crisis?
— Companies can use their powerful advocacy arms to work on behalf of their stakeholders, including small businesses and suppliers, industry partners, employees, and communities to help shape the government response so that it benefits the most impacted.
— Similarly, companies can use their internal and external communications to share factual and supportive information, resources, and messages about the crisis with their stakeholders. A recent Edelman poll found that employer communications are considered the most credible source of information, even above media and government.
- What channels and collaborations can best leverage our voice and expertise?
— As companies make sense of the implications of the crisis, voice and advocacy can be more effective through shared corporate platforms to provide a signal amidst the noise created by the outpouring of communications. For instance, the Business Roundtable has created a CEO Task Force that has developed a series of policy recommendations to inform the federal government’s response.
How you choose to respond will depend on your industry and company, but to the extent that you can leverage the full range of tools for impact at your disposal, and serve all of the audiences with whom you have influence, the more holistic and impactful your company’s response will be. We hope the framework, questions, and principles above are useful as you think about your company’s response and the broader implications of how you serve your stakeholders in the weeks, months, and years to come.
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