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POST-COVID GOVERNANCE
July 2020
While the country is struggling with the COVID crisis, many local businesses, large or small, are suffering from huge revenue losses and severe cash flow problems forcing many MSMEs to close shop. And those which are still operating are taking drastic measures to survive. Headcount reduction, salary cuts and shortened working hours are some of the more common solutions for survival. Many employees working from home are experiencing higher levels of stress because the lines between work and home have blurred. Even some restaurants appeal to the elderly not to ask for their usual senior citizen discounts. Accounts or loans payable to suppliers and fund providers are either being stretched, restructured or defaulted on. Private sector contributions to COVID-related assistance programs have dramatically affected budgets for social responsibility projects. Even government was forced to postpone tax receipts for two months to help people and businesses cope with the severe economic pressures.
With COVID costing lives and triggering economic recession, one wonders how much longer the people and the economy will suffer before things go back to “stable and normal”. The nagging question is: Where is governance in all of these?
In the recent ICD webinar on Business Resiliency, the point was made about what businesses can do when the Black Swan appears (like the completely unexpected COVID crisis which caught the world by surprise). The answer we proposed was to “go back to the basics” – analyze the crisis, design countermeasures and solutions, execute the mitigating action programs, communicate and get buy-in or acceptance of the solutions and ensure maintenance and sustainability of the efforts.
Before we know it, especially when the vaccines are made available, we will have survived this crisis. And when that happens what do we do? Do we go back to the old ways? Perhaps there are lessons to be learned?
For a long time now, we have seen malgoverned companies just focusing on making money with no regard for the other stakeholders. Employees are not paid their due and discrimination is prevalent. Customers are shortchanged with sub-standard quality of products and services. Suppliers are exploited with delayed payments of payables. There is no time and money for reaching out to the communities being served. And nobody thinks of protecting the environment. We are sick because our common home is sick. We do not hear the cry of the poor and Mother Earth, as Pope Francis said in his encyclical.
The crisis we are going through now is a wake-up call. We cannot go back to the old normal when the crisis is over. Well-governed companies and those who will survive this crisis will have to rethink their priorities. The Management Association of the Philippines, which has more than 1,000 C-level executives (CEO, COO, CFO, etc.) as members, is proposing to release later this year a Covenant for Shared Prosperity which addresses the global epidemic of inequality but which can also be a timely post-COVID governance strategy. The signatories to the covenant are expected to make the following commitments:
To recruit, train and develop their employees and managers to be the best that they can be irrespective of gender, alma mater, age, ethnicity and religion; provide just compensation and benefits; promote meritocracy and encourage work-life harmony;
To recruit, train and develop their employees and managers to be the best that they can be irrespective of gender, alma mater, age, ethnicity and religion; provide just compensation and benefits; promote meritocracy and encourage work-life harmony;
To provide only quality products and services that are of continuing value to their customers;
To treat their goods, service and funds providers fairly, ethically and with respect as they expect these suppliers to treat their own workers in their supply chain the same way;
To be actively involved in the communities where they operate in with particular attention to the needs of the disadvantaged in those communities;
To protect and preserve the environment for the benefit of current and future generations by employing environment-friendly technologies in all aspects of business operations; and
To deliver reasonable and just returns to and fair treatment of their controlling and non-controlling shareholders.
This is the way forward. ICD will support this MAP initiative. This is post-COVID governance.
