How organisations have stepped up in 2020

Stakeholder engagement

Putting people first

Many businesses have had to make difficult decisions and reduce headcount during the Covid-19 pandemic. We have seen a lot of engagement from clients considering alternatives to redundancy in order to protect their employees as best they can whilst weathering the crisis. There has been real recognition of the value of employees and their roles. Examples from our clients are:

• Zero-hour contracts: Offering employees zero-hour contracts rather than redundancy and guaranteeing employees that they will be paid for a minimum number of hours each month, whether they have worked for the business in that period or not. In one case the client even reconfigured its business model, using these zero-hours workers as a temporary resourcing solution for other parts of the group and third parties.  Our client’s clear purpose in implementing these alternatives was not to make money, but to look after their people.

• Collective consultations: In some cases, as a result of the pandemic, businesses have had to conduct a number of collective consultations for redundancy which have involved appointing employee representatives. Following redundancies, one of our clients decided to conduct an employee engagement survey, and following the results of the survey, decided to set up an employee representative body to help improve communication and engagement with their employees going forward.

• Demonstrating values: In other instances, businesses have been demonstrating their values internally. For example, we have seen companies put a real emphasis on wellbeing at work, with businesses offering employees support through various means, such as a ‘Mental Health Day’ to take as extra holiday, or investing in online mindfulness or fitness programmes for employees to take part in either together or individually. Now more than ever, employees are considering the role their employer plays in its industry and whether it truly has a focus on its people. Where businesses have turned both outward and inward to demonstrate their values, morale and productivity in the workplace has inevitably improved.

As well as focussing on employees, we have also seen an increasing focus on customer centricity for all businesses that need to understand and get close to clients, examples of which feature below.

Doing the right thing

There has been real scrutiny of the actions of businesses during the pandemic and businesses need to be aware of the distinct absence of nuance in the Court of public opinion. However, there is a real opportunity for businesses to be seen to be ‘doing the right thing’ and we have seen our clients taking up such opportunities. For instance:

• • Paying back furlough money
  • Creditors and debtors finding commercial resolutions rather than rushing into litigating cases. This offers a supportive lending market
  • Retailers extending returns policies, which has improved customer relations
  • Providing customer refunds on motor insurance payments to reflect lower vehicle use, sharing the associated reduced cost of claims.

The financial implications of these gestures are in many cases significant, but the financial impact is balanced against the fact that businesses are improving customer satisfaction and also receiving positive publicity for their actions.

• Creating a shared identity – Businesses and their employees have all been placed in a very difficult situation, however, there has been a sense that we are ‘all in this together’. People have been learning a lot about the businesses they work in. The Head of Legal at a large retailer shared with us how he was more connected to the business as a result of working very closely with them on fundamental operational issues. Management teams are being more open and transparent enabling their people to gain a better understanding about what their business is and how it operates. Sustaining this will reap dividends going forward.

• Sharing data responsibly – We work with utilities companies and the pandemic has accelerated their plans to share data and use it responsibly. Utilities companies, local government, healthcare providers and supermarkets are good examples of where this has been done. An acceleration of this has been driven by public interest health objectives, rather than commercial objectives (even though commercial objectives are also being met). Data sharing is a sensitive issue, often unpopular as it is often done irresponsibly. But public interest data sharing has been carried out in a responsible way which has showcased how using data can be positive when done in an appropriate manner.

• Recognition of important charity work – In our work with charities we have seen consistent recognition and appreciation of the vital work charities are doing.

Strategic review

• Rethinking operations – Our media clients have had to be really agile and flexible, employing ‘blue sky thinking’ in their approach to content production and distribution, as production teams and actors often can’t be in the same room to film. With huge uptake in media consumption as demonstrated by the high Ofcom statistics from the first lockdown, the previously well-oiled process has had to be rapidly adapted. Out of this comes a ‘we can do this’ attitude when needs must. The outcome of this should be more openness to change and being more agile, after all, people are at home wanting content.

• Accelerated growth – We have seen an enhanced continuation of a theme within Private Equity (“PE”) of a buy and build strategy to growth within PE portfolio companies. We had witnessed this trend within the industry over the past few years where Private Equity acquires an established business with a strong management team as a platform of accretive growth by acquisition. This response to competition for prime assets where non-Private Equity backed competitors may not be so well funded. Bolt-on transactions can offer quick access to new markets, quick boosts to value of portfolios, providing a platform for quicker growth and maybe even an opportunistic change of strategy or diversification. Over the past three years we have acted on over 50 bolt-on acquisitions for PE houses and are busier than ever with more on the horizon.

• Route to market – The pandemic has caused businesses to revaluate their route to market. Clearly those businesses with a strong online and digital presence, rather than just a physical presence have been more resistant to the effects of the pandemic.

• One of our clients, a large UK retailer, has introduced a click and collect service as a result of the pandemic which has enabled them to reach a whole new customer base and is a service they intend to continue using in the future. We know of one high street jeweller has used potentially redundant staff to host online consultations.

The FD of a food business shared that the lack of events and hospitality in their industry is levelling up the playing field for smaller operators and is also revealing who is really skilled at developing new business.

One of our entertainment clients has recently released some free online content just to get people watching. They have been digitalising their content and looking in their archives for previously recorded shows and interviews which have been shared as podcasts; there is a clear trend in businesses looking to digitalise their offering. Previously, theatres measured their success on tickets sold for ‘bums on seats’ whereas now it is about digital content and digital streams. Another thing is that they are promoting and marketing the CDs and soundtracks to the different shows that they have put on and they have an online shop for merchandise, so they have had to think about ‘modernising’.

In terms of banking and finance, broadening the range of lenders and increasing competition has been a pre-pandemic strategic objective of policy makers and industry for some time. As a result of the government-backed loan schemes (such as CBILS and BBLS) lenders who are accredited with the British Business Bank have been able to extend their product range and market reach to customers they have not previously lent to. The lender’s risk has been mitigated somewhat by the Government guarantees but the impact has been significant. Critical liquidity has been available to allow viable businesses to survive and adapt.

• Confidence in the market – In terms of Private Equity, we have been pleased to report that we have witnessed a return of confidence to the markets, and a bounce back since late July of M&A activity driven by opportunity rather than crisis. The most active sectors are those you would expect, technology and healthcare, but also other industries where opportunities are starting to present themselves as a result of the pandemic, for instance insurance.

• Focussing on the important issues – The crisis has meant that businesses are focussing on the real issues. The most successful businesses are quickly identifying issues which cannot easily be commercially resolved and finding ways to resolve disputes, including through the Courts (an option which has been available throughout). Businesses still have the full range of resolution options available to them but, rightly, they are testing the extent of their commercially acceptable limits at a much earlier stage.

• Streamlining – Businesses, largely through necessity, have had to undertake restructuring and streamlining exercises. Whilst for many this has been a difficult process, ultimately, this makes them more profitable and where exit is the goal, more attractive for potential buyers.

• Time to think – With some daily distractions removed (not least travel time), many businesses have had the time to think about projects which have been on the back burner for a while and get them done.

One of our retail clients have brought forward their plans to move away from a store-based credit application system to an online store-card system which is quicker and easier to apply for, more flexible in terms of the credit on offer and involves the lender, rather than our client, taking more of the regulatory risk.

Another client has undertaken a review of their supply chain which was a project that would not have been a business priority prior to the pandemic. They are looking at all business areas and thinking about what they have been doing and reassessing whether it is the right decision/approach for them. Identifying areas where they want more flexibility and addressing these (property/real estate strategy, for example).