We mustn’t rush to condemn business leaders in a crisis

Rick Stein 
Rick Stein has drawn fire for not paying staff at his restaurants Credit: Andrew Crowley 

No one alive has tried to manage a company through a crisis such as this one  and chief executives are muddling through as best they can

Workers have been laid off without sufficient notice. Offices and shops have been kept open for longer than is strictly necessary. Social distancing restrictions have not been introduced quickly enough, and staff have been made to travel to work at peak times when the risk of infection is at its highest.

As the country struggles to operate an economy on lockdown, the search has already started for entrepreneurs and CEOs to blame, with the likes of Tim Martin at JD Wetherspoon and the restaurateur Rick Stein publicly pilloried for their decisions. We haven't started lynching them from the lamp-posts yet or organising show trials. But, heck, it is only week one. Let’s give it time. 

And yet, in truth, scapegoating individual business leaders is the last thing we should be doing. With plunging sales, and closed premises, companies are facing an extraordinarily complex situation. They are being forced to make lots of tough decisions in real time.

Some of them will behave terribly, and many more will make mistakes along the way. But few of us can honestly claim we would do any better. And the most important priority is to preserve as many companies as possible, because that is the only way the economy will ever be able to bounce back. 

There is certainly no shortage of criticism of some businesses out there. Tim Martin, already a controversial figure for his out-spoken views on Brexit, took a lot of flak first for trying to keep his pubs open and then for laying off staff immediately as they were forced to close.

A "diefordaunt" hashtag was big on Twitter for a couple of days among Waterstones staff as its CEO James Daunt tried to keep the chain open.

Rick Stein took a lot of criticism for not paying his staff until the government subsides for people on the payroll started to come through. The list goes on and on. 

Of course some of the criticism is completely deserved. Britannia Hotels behaved brutally in laying off staff at one hotel, and evicting them from accommodation, before the level of government support had even been announced.

Mike Ashley of Sports Direct managed to disgrace himself once again by keeping stores open and hiking the price of fitness equipment.

There has been some shocking behaviour among a few companies and tycoons. They have been greedy, short-sighted and callous. If they have permanently alienated their customers, and many have, they will deserve to pay a high price to pay for that. 

Others, however, have simply been confused. The have struggled to keep up with a fast-moving situation. They have made some decisions too slowly, and some too quickly. They have changed their minds, sent out contradictory messages, and often failed to do what might have been expected of them. In short, they have been muddling through, much as human beings often do when faced with very difficult, complex situations.

Before we rush to condemn them we have to keep in mind the extraordinary challenge just about every company is facing right now. Chains have been forced to close down completely with only a moment’s notice. Sales are collapsing overnight. Orders are being cancelled, supplies are drying up, and demand is changing by the minute. It is a uniquely difficult time. 

Take staff, for example. For many companies, the payroll accounts for 50pc or 60pc of turnover. Sometimes even more. It can amount to millions, even tens of millions, of pounds every month. When sales go down to zero, or get cut in half, it is often impossible to find that kind of money at short notice.

Very few companies keep that amount of cash sitting around in the bank (and if they did, a few weeks ago we would have been criticising them for not putting it to work more effectively). It might well be literally impossible for them to find the money to pay the wage bill until government support becomes available.

Likewise, hardly anyone knows how long you should keep an office open during a global pandemic, or what kind of shop counts as "vital" and what doesn’t. A few are obvious – such as pharmacies – but others – bike shops, for example – far less so. 

Before we pillory companies and tycoons, we should remember that very few of us would necessarily make better decisions. No one alive has tried to manage a company through a crisis such as this one. No one has had any preparation for it. No one has been trained, nor is there any manual they can consult. They are improvising as they go along because there isn’t any other choice.

The important point is surely this. The most important thing we can achieve over the next few weeks, apart from bringing the spread of the coronavirus under control, is to keep as many companies solvent, intact and functioning as possible.

Harsh though it may sound that is even more important than preserving jobs. Why? Because staff will get support if they need it, while companies won’t. And because people will find new jobs eventually, but when companies die they are gone forever.

People can criticise businesses on social media if they want to. Some of it is deserved. But most companies are simply doing their best during difficult times – and turning them into scapegoats doesn’t do anyone any good.