As family firms have responded to the economic upheaval caused by the spread of COVID-19 to the United States, we've observed the following principles in operation:
⢠Transparency. Business leaders are consistently keeping family shareholders informed. They are providing a high-level overview of the board's recommendations and the steps being taken by management.
⢠Empathy. Family companies understand that each decision and each action impacts the households of all stakeholders, not just the shareholders. Communicating genuinely, plainly and empathically to all involved connects rather than divides stakeholder constituencies during the chaos.
⢠Decisive action rather than despair. Many family businesses moved quickly to conserve resources and adjust strategies. Their decisions and actions are based on urgency and not despair.
⢠Furloughs instead of layoffs. Family companies are looking for ways to stay connected with their employees. They expect that business will return and employment will resume. Many executives who are staying-on are talking significant reductions in salary until the crisis is over. There is a plan to restore the missed salary over time as benchmarks are hit.
⢠Emergency funds for employees. Many family companies have established a fund to provide emergency cash for employees.
⢠Cash on hand and a strong balance sheet. Family companies typically operate from a conservative position, building value over the long haul. As a result, balance sheets are strong, cash balances are high and lines of credit are deep.