The purpose of business during a crisis

By Sandy MacDonald, Global Head of Sustainability at Standard Life Aberdeen 

For many businesses, the period from March to July was mostly dominated by a crisis management response to address the public health implications of the Coronavirus and the impact of lockdown restrictions on their operations and key stakeholders. 

As a picture begins to emerge of the medium and long-term implications of the pandemic, and the expected global recession, attention is now turning to the socio-economic implications of the pandemic too. 

The pandemic has highlighted and exacerbated many of the pre-existing social challenges in the UK. The groups of people who disproportionately were affected by poverty before are the same people whose vulnerability is exposed now. 

Young people are more than twice as likely to work for employers that have closed down; Black and Bangladeshi communities have been shown to be more at risk from the virus; women make up 77% of high risk workers, 80% of unpaid carers and 69% of low earners. 

The nature of the expected recession is significant, with some sectors expected to be much harder hit than others. Sectors like hospitality, tourism, and retail have a disproportionately high number of younger and other low-paid workers and this risks compounding challenges for those groups. 1 in 3 young people under-25 are employed within the three most affected sectors of travel, hospitality and retail. 

And even some of the mechanisms that exist to help advance social mobility and provide more equal opportunity have been shown to be flawed. For example, apprenticeships appear to be largely helping those with existing privilege more than those from disadvantaged backgrounds, as this recent report from the Social Mobility Commission highlighted. 

Times are tough, and the statistics are a damning indictment of the widened opportunity gap we now face. 

But even amid the challenges we face, there are opportunities too. After all, this isn’t just a pandemic, neither is it just a recession as a result of a pandemic, it’s a time of change. 

Already we’ve seen more change in consumer behaviour in the last 3 months, with more people shopping online, than ever before. We’ve seen record numbers of people working from home; and we’ve seen homeless people across the UK housed almost universally, for the first time ever.  

Now is the time to ensure this energy isn’t just confined to history during ‘that time we had a pandemic.’ But to reimagine the way the economy works, to accelerate digitisation and tech entrepreneurialism, to facilitate clean and green growth, to invest in some of the ‘left-behind’ towns that have struggled in recent years; and to drive forward many of the business-led solutions that have helped communities across the UK through this crisis.

This pandemic and likely recession is happening amid two tectonic shifts. Firstly, the shift from fossil fuels to renewables, and a technological shift - both require new skills for the future. And its important we don’t repeat the mistakes of the 1980s, and this time we anticipate the skills needed for the future, and re-train and up-skill young people, and people of all ages, for the jobs of the future. Furthermore, it's important we use these tectonic shifts in the economy, when they happen, in our key industries to be a change for good. 

This requires more than Government support, and while the Government has put forward impressive measures to protect jobs and opportunities in the short-term,  it requires business leadership for the long-term vision. 

As an active investment company, Standard Life Aberdeen is looking to identify high-quality UK companies of all sizes, with sustainable business models, who are mindful of their social and environmental impact and have the potential to reward patient, long-term investors. We believe in working with these companies to help them achieve their ambitions and provide the sustainable long-term returns that investors need. 

And ultimately, businesses doing good isn’t just the right thing to do, it’s also good business. 

So in a challenging economic climate, where many businesses have to take tough decisions, what do I mean by businesses taking leadership of the recovery? Ultimately, it’s about taking those tough decisions in a way that is mindful of its impact, but also what the economy will need to ‘build back better.’ 

Here are some key actions businesses can take to play a positive role in recovery: 

Maintain a strong pipeline

The first thing is to take a long-term view and don’t close off early careers and other supported employment pipelines. The company I work for inadvertently stopped recruiting into entry level roles in 2008 following the financial crisis. 

By 2010 we realised the challenges this was causing to the balance and diversity of our overall workforce. This isn’t just important for our own company, it is vital for the health of communities too. With Edinburgh’s concentration of financial services firms, ten years ago Edinburgh found itself being the worst performing local authority region in Scotland in terms of school leaver destinations. Some concerted cross-sectoral action and the introduction of the ‘Edinburgh Guarantee’ programme and that situation was thankfully reversed – but we’re determined to learn the mistakes of the past and manage things more sustainably this time. 

We have already announced we are continuing with our annual intake of school leaver and graduate recruitment this year. We can hope that last week’s announcement by the Chancellor of financial incentives will hopefully give firms of all sizes confidence and incentive to take on young people. In 2012, our company funded a pilot with the Prince’s Trust to deliver internships for young people at a range of organisations. We found that in most cases, once an employer had started recruiting young people they found the value of it was so significant that in time we were able to withdraw the wage subsidy and the connections and commitment to investing in youth remained. This scheme ultimately became what is now the Prince’s Trust’s ‘Get Hired!’ scheme to match young people to employers. 

Outreach and connection

Video technology offers opportunities to widen outreach and offer work experience and skills workshops to a wider range of people than might have been possible with physical work experience in the past. 

Last week, I spoke to a secondary school Head Teacher who brought home to me why this is so important right now. They have been working with some young people now leaving school for several years to prepare them, and connect them to, a career pathway that is now totally disrupted. There are young people having to rethink their entire future plans. Those of us in the world of work who can spare some time to help build connections, share our insights, and help someone navigate this context, should.

I also value especially the insight and expertise of charities and local government to support young people or other specific communities and demographics. Charities are important for ensuring the intentions of government and business plans to level up can genuinely reach everyone. Past experience, for example from the last recession, says that support schemes often tend to help those who already have some element of advantage and are most ‘job-ready’. You need to develop targeted approaches and partnerships to ensure all demographics are included and supported. Cross-sectoral partnership will also be vital to give us the best chance of responding to the current crisis as it continues to change and develop over time. In this vein, it’s vital that charities are part of the solution and benefit from secure, long-term funding that helps them maintain their services and support the people they help effectively.

Good work and a fair wage  

Apprenticeships are most useful when they lead to good jobs. One of the main challenges with the design of the apprenticeship levy has been that it really incentivises qualifications, not employment. It looks as though this is being recognised in the Chancellor’s scheme, with additional consideration being given to how to ensure firms retain people after an initial internship. 

I also believe strongly in the benefits of paying a real living wage at all levels. If we want to offer opportunities to people from all backgrounds, we have to recognise that people who don’t have wealth behind them can’t afford to take an apprenticeship route if it doesn’t cover the cost of living. The government has specifically said employers can top up the minimum wage arrangement  it is subsidising. 

A real living wage (as calculated by the Living Wage Foundation) isn’t only significant for younger workers. The past few months in lockdown have highlighted not only the vulnerability of many of our lowest paid workers, but also their value to us and how reliant we are on the work they do. With this insight fresh in our minds, it seems morally wrong that the key workers who’ve done so much for us should be unable to make ends meet or plan for the future of themselves and their families. 

The pandemic has not hit everyone equally. Some households have actually saved money over the past few months, but those whose jobs and income have been hit harder have seen any savings they had being eroded. The Coronavirus Financial Impact Tracker commissioned by Standard Life Foundation recently highlighted that four million families across the UK could be in financial difficulty by the end of this month.  A large degree of relative poverty in this country directly results from jobs that pay below the cost of living, and ultimately the cost of this just ends up hitting our society elsewhere.

While recognising it’s a really difficult time for businesses of all sizes and shapes, there is substantial evidence that where businesses can afford to pay a living wage, and offer secure work and predictable hours, they benefit from increased employee wellbeing, retention and productivity. In terms of wider fair work practices, firms are also going to have to be much more innovative in developing HR policies that enable supported, flexible working that meets the needs of family life and caring responsibilities without penalising employees who have these considerations.  

Leadership and culture

If you really want to benefit from having younger workers in your firm, don’t fall in to the trap of thinking only one side has something to teach, and the other is there to learn. In my experience we benefit hugely from having an engaged, diverse network of young people in our Company with the insight, experience and enthusiasm they bring to solving business challenges. 

If you’re not open to listening you’ll be missing out on one of the key benefits of a diverse workforce. We’re fortunate to have employee networks and reverse mentoring relationships covering cultural awareness, gender balance, armed forces and more.  At a time of disruption, structural change and transformation like this, diversity of thought and experience is particularly valuable. 

And again, this type of culture where everyone feels valued pays you back in engagement, advocacy and motivation from employees. We all know what it’s like when you feel someone really values what you have to bring - it makes going to work in the morning a different prospect altogether.

Tough decisions

Of course, there are many businesses and employers who – despite their best intentions and government funding available will have to take very tough decisions. We are entering a period where sometimes the most responsible action an employer can take will be an incredibly tough one, with negative consequences in people’s lives.

In this instance, then I hope it’s still possible to look at who’s impacted to ensure the impacts are distributed fairly, and that support and connections are in place to help. Companies will need to be brave in their choices.

I believe the actions listed above are ones that will be viewed positively by the majority of investors, the local community, your MP and more. But more importantly, every single young person who’s helped towards a better trajectory, who is given hope and opportunity rather than feeling forgotten, will have a ripple effect in their community. 

If ever there was a time for transformative action to ensure future generations can look back on what we did and see us as having been on ‘the right side of history’, surely this is it.