The coronavirus pandemic has quickly led to a collision between corporate values and corporate finances. Marriott may well view its employees as family, but when hotel bookings are down by 70% or more, what’s the company to do? What it did was furlough tens of thousands of employees. (Watch CEO Arne Sorenson’s emotional message to those employees here.)
Dallas Mavericks owner Mark Cuban took a different approach. When the NBA shut down earlier this month, he promised to pay all hourly employees in the Mavericks arena the same amount they would have made if the season had continued. I invited him to join me yesterday on Leadership Next, our new podcast (subscribe here), to tell how he did it. His answer: “I’m rich. I’m lucky. I’m blessed…It’s not going to cost me as much as it will cost those hourly employees. It was just the right thing to do.”
How about CEOs who don’t have the resources to be so generous? How should they lead in the face of this crisis? “There is no right way,” Cuban said. “If you can afford it, like I’ve told my portfolio companies, you keep on paying because it is the right thing to do. If you can’t afford it, then you have to communicate with your employees and stakeholders and tell them exactly why you are doing what you are doing.”
For small companies in the U.S.—less than 500 employees—help may come from the bill passed by the Senate early yesterday morning. It provides those companies loans that can be used to cover payroll for two months. If a company maintains its workforce at pre-virus levels, the loan will ultimately be forgiven. The goal is to keep more people in their jobs…although as we reported yesterday, this month already looks to be a record for new unemployment claims.
I asked Mark Cuban whether he plans to apply for government relief. “We haven’t decided yet,” he responded.
The folks at Just Capital are doing their best to keep track of companies that are stepping up to help employees and other stakeholders. They have created a “COVID-19 Corporate Response Tracker,” which you can view here. It looks at how big companies are dealing with sick leave, work from home policies, dependent care, community relief, and even CEO pay. Singled out for praise by the group: Target, which Just Capital says “stands out as one leading example” of aggressive policies “to support its workers.” Martin Whittaker, who runs Just Capital, has agreed to join us on the Leadership Next podcast in the next week or so, to talk about how companies are responding to the crisis. Stay tuned.
More news below. And be sure to read Shawn Tully’s analysis of whether the “Great Cessation” will be worse than the “Great Recession.”