The following is a column from Stark CEO Mick Raich:
How has your company responded to COVID-19? Did they have cash on hand to weather the storm? Was there infighting over how things changed? Did this affect your corporate bylaws and voting?
The big question here is: how did your company’s bylaws and leadership model benefit or hinder your response to COVID-19?
A good test of any system is stress. How well does the system respond to being stressed? COVID-19 and the governmental response is a good test of your corporate leadership. Many groups and systems were forced to sit down and make drastic cuts in payments and bonuses to keep things moving. These choices are guided by the bylaws and leadership of your company. Who votes and who has power to make decisions?
We are lucky enough to work with numerous clients around the nation, including those in health systems, universities, private practices and laboratories. It is interesting to see how they have responded to this crisis.
I see three distinct responses:
The first type of response was the bureaucratic response. These types did very little until things reached a breaking point and only then did they move forward with meetings and discussions on how to make changes concerning who to lay off, how to cut expenses, what to do with bonuses, etc. These corporations were usually larger and run by committee with at least 20 people trying to make themselves heard. Typically, they did not have a single strong leader and every decision was discussed and negotiated. The positive point here was they went slow and had buy-in for all their choices. However, the negative was they may have missed some fast-paced opportunities (early Payroll Protection Program loans, etc.).
The second approach I saw was a team approach driven by a strong leader. This approach gave the leader the power to make decisions and then work forward towards a consensus. This leader approach, if backed by a good solid set of managers, can act quickly and decisively to move forward in crisis. Many of our smaller clients have this approach, and while there may be some discussion on how to react (ie: who gets a pay cut or hourly cut) there is no “paralysis by analysis” and the machine moves forward quickly and responsively. The positive side of this model is the ability to act, while the negative side is that there may be some voices and choices that do not get to be heard. Therefore, opportunities could be missed.
Finally, the last approach is basically a dictatorial approach. This is a group or company led by one person who must make all the choices and move forward. The problem here is the whole company is built upon one person’s personality type. If they are slow to respond you can crash the whole company, or if they make bad choices those under them may react negatively.
It was interesting to hear how our various clients responded. Some made very good choices early on; their bylaws were solid and the foundation of the company allowed them to respond quickly. Others struggled making choices and we had to watch as things failed. (We saw this with many billing entities, an issue that will be covered in another article.)
The clients who responded best were those who had a strong process and a strong leadership team. These clients made choices and worked the problem as a team. To quote the United States Marines, “improvise, adapt and overcome.”
How is your company set for the next crisis? How will the leadership and team respond and what can you do to prevent making the mistakes you may have made? How can you learn from this?