Business ethics during Covid-19

Business ethics during Covid-19

In the world of SHEQ it isn’t uncommon to be sitting at the crossroads of ethics versus compliance. This paradigm will become all too familiar as we move through the current crisis. Marina Sander asks if we can relax a compliance stance in the name of “doing the right thing” – an ethical decision that may stretch the compliance boundaries (within an acceptable level of risk)

We have not experienced such a crisis in our lifetimes. September 11, 2001, was a traumatic event (with a tragic impact) but is not comparable to Covid-19. This pandemic is presenting all of us with enormous challenges. Our economy is being devastated by the need to ensure the health and safety of our country and of employees.

Companies must assess important stakeholder interests, employees, shareholders, communities and government. Businesses must lead from the top. This is an important moment for business leaders to navigate the crisis and bring their companies through it, to recover and not to compromise or neglect health and safety.

SHEQ should be the last place where costs are cut. Ethical business decision-making is critical for business. Ethics and SHEQ are not less important during this crisis; they are more important than ever.

Unemployment claims are skyrocketing. Businesses must make these decisions while balancing important stakeholder interests; the overarching concern should be health and safety.

Companies involved in the production of food manufacturing, retail stores, healthcare and suppliers face daily difficult choices, but where do you draw the line on the economic front?

Ethical considerations require leaders to take into account the health and safety of the community and the economic survival of employees, families and communities.

Businesses must weigh the impact of all of this and partner, reach out and coordinate with government entities to advance significant health and safety, economic and community needs.

Disruption to the supply chain caused by the spread of Covid-19 poses serious problems for all aspects of almost any business. It can also be a challenge to manage legal and commercial risks involving both suppliers and customers.

SHEQ, operations, sales and legal teams should coordinate their activities to ensure a proactive and integrated approach. Whether dealing with issues on the supply or demand side, communication of the steps taken and what you expect of your counterparty will be key to maintaining trust and confidence and mitigating the effects of Covid-19.

Ongoing action should be taken to evaluate the risks and possible steps to be implemented. But will the SHEQ team be able to master this function with limited staff?

The effects of Covid-19 will inevitably lead to disputes. It is therefore crucial to identify which contracts are likely to be most vulnerable to its impact.  Potential contractual issues include: force majeure, illegality, title and risk, exclusivity, time and or shipment periods, renegotiation and variation.

What is next, however? Without business resilience planning, recovery will take longer and be costlier.

Businesses must go back to basics. And that means understanding how to provide best-in-class customer service, taking care of employees and being resilient. These all depend on making sure that your business continuity is up to standard. While it is possible that you may not experience any disruption, it’s nevertheless advisable to plan for the future, because business disruptions are here to stay (for some time).

There was a time when “business continuity” meant carrying out disaster recovery drills and setting up duplicate data centres that could be brought online if the main data centre were temporarily unavailable. Those days are behind us now. Today we must think of continuity in a new light. The notion of having skeleton staff working or shift-working, or implementing succession planning for key people, has changed; having a fully functional SHEQ department taking care of these elements is more important than ever.

Covid-19 has already exposed the vulnerabilities of more than 90% of organisations and placed immense pressure on the supply chain.

Typically, it should not be a costly exercise to establish an effective business resilience plan. The costs of planning are typically measured in man-hours and are far outweighed by the opportunity costs of not planning. When needed, consultants can provide necessary expertise and help streamline efforts to maximise benefits and keep a consistent vision.

Ideally, one should analyse and prioritise business functions before a disruptive event, so as to eliminate in-the-moment decision making and help the business get back on its feet faster.

The coronavirus pandemic has radically changed demand for products and services in every sector, while exposing points of weakness and fragility in global supply chains and service networks.

Many people’s jobs have been fundamentally changed. The transition to the next normal is likely to accelerate trends that were already underway in many industries. Covid-19 will most probably be the best example ever of a stress test for a good business.

Let us look at another major event. The US airline industry experienced devastating losses in the wake of the September 11, 2001 terrorist attacks. The day after the attacks, the major airlines sought relief in the form of federal assistance. Fifteen billion dollars were allocated to the industry, yet, even with this help, the industry continued to lose millions of dollars daily.

In response, the airlines cut their flights by an average of 20% and laid off an average of 16% of their workforces in the weeks following the attacks. Some airlines emerged from this crisis resilient and strong, whereas others languished and even faced bankruptcy. The companies that survived the 9-11 tragedy were those that did not implement layoffs. Can we learn something from this?

Companies are better able to cope with a crisis when they maintain strong relational reserves and have adequate financial reserves needed to avoid layoffs. Many industries are cutting on SHEQ resources first: this is where people are retrenched, jobs are lost and costs are cut, but what will the effect be in the long run?

Survival or bankruptcy!

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Marina Sander

Marina Sander is an executive business management consultant for The World of Ethics Group. Her last 20 years have been paved by ethical business practices, legal compliance, operations management, innovation, education, corporate governance, and risk with every business partner whom she engages. She specialises in methods to embed ethics, quality, optimised business solutions, and world class management systems in every process within organisations. She has a passion for developing capabilities and delivering professional value-added solutions to business partners throughout their entire value chain.
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