Covid-19 has dealt the world a severe double whammy – a pandemic and its consequential economic crisis. When we published our book on stewardship entitled “ENTRUSTED” in November 2019, we began the first chapter with: “Our system of wealth creation is at the crossroads.” Today, just seven months later, the business landscape worldwide is battling the uncertainty and disruption wrought by Covid-19. Economies and businesses alike, in varied ways and degrees, are encountering an existential crisis. In this context, beyond pondering on wealth creation at an inflexion point, it is pertinent to ask: how is stewardship relevant, and in what ways are stewardship actions important to business organisations and leaders under the circumstances?
Is stewardship relevant in crisis? This question contemplates the practicality of stewardship. Is stewardship so theoretical that it finds itself not applicable when businesses are struggling for survival or bootstrapping themselves into recovery? Are the stewardship principles fair-weather concepts that are not useful in storms?
Not at all. Stewardship matters, in or out of crisis. In a crisis, sound stewardship may be the difference between a firm surviving or not, and how well it bounces back. A crisis, rather than side-lining stewardship, actually reinforces the stewardship imperatives.
Stewardship in action. Under the prevailing Covid-19 circumstances, stewardship concepts must now be translated into action in real-time. Walking the talk becomes the stewardship test; the positive impact of well-stewarded decisions will be clear over the short term, and they will no doubt prove themselves meaningful over the longer term.
As the crisis continues and the global economy suffers, businesses large and small must make tough decisions to survive these challenging times. Stewardship may be instrumental in guiding business leaders, owners and the board through the long crisis and recovery.
Let us delve into five key aspects of stewardship that vividly come alive in this crisis.
- Tackling dilemmas
Stewardship deals with the things that are subtle and complex. Stewardship matters are not usually black or white, they are often grey. That is because they involve dilemma, which by definition is not a choice between obviously good and bad options. If the choice is so clearly one and not the other, a no-brainer by definition, then it would not be a dilemma. While there are trade-offs, businesses obviously cannot choose one and ignore the others. Hence stewardship is the art of balancing, integrating, reconciling and resolving. (Quoted from ENTRUSTED.)
Dilemma, dilemma, dilemma. In this crisis situation, leaders encounter dilemmas at every corner. To shut down the economy to contain the virus spread or to lift the lockdown to save the economy. Cutting jobs to save costs vis-à-vis cutting costs to save jobs. In crisis management – between hoping for the best and preparing for the worst – the reality is that the extremity of either notion would not be practical, as hope alone is not a solution; nor is it useful to “worst-case” every issue with the result that things become overwhelmingly untenable.
The stewardship challenge is in exercising responsible leadership in the face of dilemmas, taking thoughtful decisions and pragmatic actions. Stewardship in crisis is about risk management, not total risk avoidance. Often, it is about choosing between two or more imperfect options, each with its costs and benefits, risks and rewards, upsides and downsides. In the Covid-19 situation, it is also about overcoming fear and building confidence, without becoming reckless or being paralysed. It is as much about finding the path to act based on data available, as making judgement calls. From macro-level decisions such as instituting nation-wide pandemic containment and economic policies, to micro-level actions taken by enterprises struggling with their business shutdown and recovery – leaders need to understand the complexity of tackling dilemmas and possess the will and wisdom to overcome them. This is a clear reflection of stewardship in action during crisis.
- Taking ownership
Successful and enduring businesses instil and nurture an ownership mentality. Owners and employees take responsibility and action, as well as develop a sense of collective pride to forge proactive and integrative solutions to complex problems and dynamic situations. They see the organisation as an extension of themselves, and act wholeheartedly with the interests of the company in mind. They engage and galvanise the diverse parts of the organisation towards a common goal with a collective sense of success and failure. Through a culture that emphasises personal as well as collective accountability, employees are clear about their individual roles, as well as shared responsibilities. Taking ownership over time translates in action: taking responsibility, taking care and taking pride. (Quoted from ENTRUSTED.)
In a widespread crisis like this, businesses may be hit in similar ways, but the diverse responses result in different outcomes. In this regard, businesses and leaders may be in the same storm, but they may not be in the same boat. That is because they have different attitudes and do not respond to the crisis in similar ways. As the saying goes: life is 10% of what happens and 90% of how you react to it. No-one can anticipate the sudden and devastating effects of the pandemic and the ensuing economic tsunami. But, like it or not, we are all in it. The situation is grave and the outlook uncertain. For leaders entrusted with responsibilities, the burden is heavy, and the situation challenging.
However, this is where the attitudinal paths, in terms of responses, diverge. Interestingly, as in any crisis, many with the benefit of perfect hindsight turn into armchair critics claiming what should have been the right course of action. Where stewardship makes a vital difference in attitude, during and after a crisis, is a strong sense of ownership. Steward leaders take ownership of the situation at hand. Good stewards expect the winds to change, and they are proactive in navigating a new course, even in choppy waters. Anyone can steer a ship when the sea is calm, but a leader takes the helm in a storm.
Taking responsibility for matters and people under one’s charge is the very essence of stewardship, which can be defined simply as “the responsible and wholehearted management of entrusted assets so as to pass them on in better condition”. In this Covid-19 crisis, we see the effects of ownership mentality displayed in many different ways: medical frontliners risking their lives to fulfil their duty, small business owners trying hard to retain their employees despite facing financial hardship, business leaders making sacrifices and implementing tough measures to keep their businesses afloat, and so on. In a crisis, taking ownership translates into taking responsibility and responsible action.
- Driven by purpose, anchored on values
Well-stewarded businesses establish clarity on the purpose of their existence. Their business decisions and operations are driven by a strong commitment to purpose, anchored on their values. These values, which are built, strengthened and passed down over time, are the fundamentals that act like compass bearings for the companies in action. The companies live out the organisational purpose and values consistently, so they are embedded in their communication, actions and the thinking processes of all stakeholders. (Quoted from ENTRUSTED.)
Businesses and economies everywhere have been negatively impacted. However, their reputation and governance need not suffer. In fact, reputation and confidence through good governance will be enhanced when businesses are seen to be acting on sound principles and effective management. In a crisis, leaders and organisations have to do the right things. But under pressure, what can guide them to do so? Clear purposes and strong core values, forged over time, will serve as a compass guiding leaders in stormy seas.
Companies like to have their corporate purpose and values articulated and promoted across various media. But when such corporate purposes and values can be validated, is in times of crisis. Do these stated purposes and values drive decisions, especially in tackling dilemmas? Do they evaporate into thin air when leaders are faced with putting talk into action? For instance, in good times, many leaders claim that people are the organisation’s most important asset. In the face of Covid-19, are they the first asset to be let go, to save costs? “Teamwork” features high in many organisations’ core values list. In a crisis, however, teamwork, or the lack of it, becomes clearly exposed in the company’s approach to facing the crisis together. Similarly, values such as lead by example, trust and accountability, are either authenticated as the basis for decision and action, or they are proven to be mere words that appear only in glossy annual reports and company collaterals. Successful and enduring companies often point to their experience in overcoming a crisis, as defining moments when their collective purpose and shared values are instrumental in charting their course, guiding their navigation and accounting for their resilience.
- Acting short term, thinking long term
Well-stewarded companies do not neglect long-term considerations in the face of pressure from increasing short-termism. They ensure that short-term decisions are in line with the long-term goals. They contemplate the long-term consequences of actions. They leverage their longstanding competitive advantages, so that they can continue the long-term development of the business. They look beyond short-term profitability and temporary gains. They focus on the preservation of intangible values for long-term success and legacy-building. (Quoted from ENTRUSTED.)
In the trying conditions under Covid-19, where survival may be the name of the game, it is hard to imagine anything beyond the short term. Long term is a luxury that many do not have, or so it seems. In a crisis, when things seem bleak, the ability to act today with tomorrow in mind, is precisely the mark of stewardship. Steward leaders have to be ambidextrous. They have to survive through current tough times, and yet take calculated risks for recovery and growth. In acting short term, they do not ignore the long-term implications of their actions. Beyond that, they also act on the understanding that times will change again, and when that happens, they will be in a position to rebound better and faster than others.
The saying “a rising tide lifts all boats” is generally true. But it may not be true that all boats will rise equally. In the wake of every crisis, the difference in the ability to recover, and to grow for the longer term, lies in their capacity and preparedness preserved while going through the short term.
In a crisis, agility and resilience are often cited as sorely needed by companies to survive and to thrive. But it is often forgotten that agility and resilience cannot be created overnight. They are evident in organisations that think long term, embedded and nurtured before, during and after a crisis. Yes, agility and resilience would make a difference among companies – however it is not only the presence (or absence) of those capabilities, but also the relative agility and resilience among companies (even within the same industries). Here again, we may be in the same storm, but not in the same boat. Some will be better able to turn setbacks into advantages. Some will bounce back faster and stronger – as the definition of agility and resilience suggests. The edge lies in the capacity, while acting short term, to think long term.
- Building trust with stakeholders, caring for society
Whatever their structures are, all businesses have varied stakeholders: (1) customers whose needs they must meet, (2) employees whose trust they must win, (3) suppliers whose support they must galvanise, (4) communities with whom they are inextricably linked, and (5) investors whose capital they must effectively deploy. Well-stewarded organisations are mindful of the importance of these relationships. They develop longstanding relationships with internal and external stakeholders. They leverage on such established relationships to resolve conflicts and meet challenges. They promote reciprocal trust, kindness and compassion, and foster win-win partnership. They adopt a broader definition of success to include doing well, doing good and doing right. They see businesses as an integral part of society. By giving back to society, non-economic wealth such as social capital, communal ties, reputation and core values will be preserved and transmitted. They collaborate with multiple parties to understand gaps, so as to give more meaningfully, promoting mutual benefits and building sustainable relationships. (Quoted from ENTRUSTED.)
We are truly in the worst of times, but through it we see glimpses of the best of times. Organisations and leaders behave and respond differently to the crisis. Steward-leaders see business as a part of society and not apart from it. They are also mindful of their relationships with their stakeholders. Despite fighting the storm, they remain aware of the needs of these relationships, including those of the larger community.
In essence, whether in crisis or not, stewardship is about “how a business thrives and sustains growth while enhancing the wealth of its stakeholders and the well-being of societies in which it operates, over the long term”. Whether in caring for their employees, or looking out for their suppliers, or being thoughtful of their customers – responsible organisations and leaders factor their needs and well-being into consideration while taking action. That manifests in multiple ways – from senior management taking a voluntary pay cut to sustain the job security of the people most affected, to companies taking necessary measures to enhance the safety of their customers, and organisations shifting operations to produce urgently needed equipment to meet the crisis.
During these anxious times, the heartening spots, which often go unnoticed, are the acts of many well-stewarded organisations going out of their way to support their stakeholders, and to benefit their communities. Such acts can be fully understood only by looking at their motivation. That is why in a crisis, the stewardship of responsible leaders and organisations will naturally move into action. Stewardship actions for good (causes), especially in crisis, contribute strongly to building trust and enhancing relationships for good (long term).
Harnessing stewardship. Stewardship is not only relevant but contributes significantly to companies and economies facing up to the crisis and overcoming it, in order to return to a path of growth. As we wrote on the last page of ENTRUSTED: we will need “the inventiveness of entrepreneurs, dynamism of companies and the adaptability of markets. We believe business can be, and must be a force for good; and we believe the challenges the world faces are best served through harnessing business’ resolve, creativity and resources.”
Ong Boon Hwee
First published on Stewardship Asia
Source: CC News Feed