CEOs have had to step up and support employees as companies have been hit by the impact of the coronavirus. Photo / 123RF
CEOs have had to step up and support employees as companies have been hit by the impact of the coronavirus. Photo / 123RF
You might think that crises tend to bring out the worst in people, but that isn't reflected in how we view our leaders, at least. In fact, crises cause us to view leaders as more charismatic and effective than we normally do. This is probably why US href="https://www.politico.com/news/2020/03/19/trump-wartime-president-coronavirus-136892" rel="nofollow">presidents are almost universally re-elected in times of war. And research has shown that leaders who self-sacrifice tend to be seen as the most effective.
Following 9/11, I was so intrigued by crisis leadership that I did a study on the topic. In my research I found that leader self-sacrifice, such as cutting one's own salary or giving up one's own benefits, caused employees to feel more positively toward their leaders and more committed to their organizations during crises. This finding has been corroborated by additional research in the lab and field that suggests that when leaders demonstrate self-sacrificial behavior, it makes us see them as having higher moral values and as being a better role model — leading to better organisational outcomes.
More recently, we have seen CEOs step up to support their employees during this pandemic by pledging not to lay off employees — even those who cannot go into work. For example, even though all of Patagonia's stores are closed, CEO Rose Marcario announced that the company would continue to pay all employees, leading some to conclude that the values-driven organization will survive the pandemic while other organizations will fail. Other CEOs who have committed to no layoffs include those of Hearst, LinkedIn, Twitter and Square, Morgan Stanley, Citigroup Inc., Bank of America Corp., Visa, FedEx and Cisco Systems Inc.
So, what can leaders do in this time to support their employees and how can they be sure that their giving hits the mark? Effective measures fall into three categories: taking some of the same hits as your staff; giving with a larger purpose in mind; and being aggressively transparent even when it's hard.
Self-sacrifice is not just about the company doing what's right. If you're going to ask your employees to sacrifice, you need to sacrifice as well. If you expect your team to behave safely, you as a leader should behave safely. If you expect your team to get down in the trenches, you should be down there with them. No one likes the leader who throws his team on the front line while he sits in his office.
Marriott International CEO Arne Sorenson forfeited his salary for the year and is donating hotel rooms to front-line workers to help fight Covid-19. Marriott also asked its executives to sacrifice half their salaries and has furloughed many other employees. As a result, Marriott is still viewed — at least in the media — as an employer of choice despite its need to furlough employees.
In March Walt Disney Co. said that executive chairman Bob Iger would forgo his entire salary. Photo / AP
Other companies whose top leaders have cut their salaries include NBCUniversal, Uber, Delta and Yelp. In my own field of academia, highly paid deans, coaches and administrators at top universities like Harvard are taking pay cuts to help make up for the impending deficits that higher education is facing. Even world leaders, like Jacinda Ardern, New Zealand's prime minister, are taking pay cuts.
When you're a leader, sacrificing along with your employees could mean that they will be more committed to staying with the company during and after the crisis.
Give a purpose
Many organizations are offering services like free virtual tours or free learning tools for kids. Likewise, we have seen organizations step up to help provide resources needed to combat the effects of the pandemic. Tesla Inc., Toyota Motor Corp., Ford Motor Co. and General Motors Co. have shut down factories to make ventilators while Medtronic openly shared the software and specifications for its portable ventilators, allowing anyone to use them for free.
But whatever you give, it's important to tie the sacrifice to vision, mission and the values of your organization. When Salesforce co-CEO Marc Benioff pledged not to lay off any employees for 90 days, he tied it to the company's cultural value of ohana (family) and giving, asking that employees also continue to support the people they relied on before the crisis, such as house cleaners or dog walkers. Leaders should be clear about how their actions are consistent with the organisation's values.
The more cynical among us might infer that Johnson & Johnson's decision to invest a billion dollars to develop a Covid-19 vaccine was driven by profit. But when CEO Alex Gorsky tied the act to its responsibility to improve people's health, and the company announced that it would provide the vaccine on a "not-for-profit basis," the doubt likely turns to admiration.
Be aggressively transparent
In addition to explaining why they are making a sacrifice, leaders should be transparent about what that sacrifice amounts to. If a leader publicly donates 10% of her salary to a nonprofit, she should explain what the nonprofit is and how exactly the money will be used.
For example, Jack Dorsey, the CEO of Square and Twitter, is donating US$1 billion of his Square equity (28 per cent of his wealth) to fund Covid-19 relief. Not only is he giving away the money, but he also shared a Google Doc showing how the funds would be spent.
Voluntary transparency becomes key in this situation. The Walt Disney Co. CEO Bob Chapek is forgoing 50 per cent of his salary and other benefits as a result of Covid-19. But this decision came after pressure from a Disneyland union leader for information from leadership over concerns about the closing of Disney parks.
Even when we're not in a crisis, 84 per cent of employees think organizations are not doing enough to create transparency. But this comes at a cost to the organization. One study showed that organizations that were more transparent had higher productivity, innovation and retention than those that were more opaque. In contrast, increasing transparency can in fact build trust.
Crises create the opportunity for leaders to provide direction, meaning and support when followers need it the most. Learning that Columbia Sportswear Co. CEO Tim Boyle reduced his salary to US$10,000 while continuing to pay the company's employees or that Yum Brands Inc. CEO David Gibbs gave up his salary and gave $1,000 bonuses to the managers of his restaurants does more than lift the spirits of their employees. These various strains of research indicate that this type of sacrifice can improve morale and trust for the rest of us and ease the pain we are feeling in this time.
