Entrepreneurial families have proven themselves agile in a crisis that has many enterprises ripping up their playbooks.
As nations take tentative steps to reopen economies, the world is learning to live with the aftereffects of a pandemic that will dictate how we live for months to come. Family enterprises are no exception.
The road ahead looks bumpy. The IMF predicts the global economy will contract by 3% this year. Enterprising families – nimble as they are – will have a raft of questions to ask. What if a second wave of coronavirus emerges? What if the extent of humanitarian damage is unimaginable?
We’re all embarking on the unthinkable, French President Emmanuel Macron told the Financial Times earlier this month in an interview in which he made a case for the humanization of capitalism.
“We all face the profound need to invent something new because that is all we can do,” he said.
Macron’s words may come to be prophetic. Central banks have pumped stratospheric amounts of liquidity into markets to counter the pandemic’s economic shocks. The world has rarely seen such a depth and breadth of emergency business loans, bail-out packages, and worker hand-outs.
Yet as national deficits spiral upwards, which they surely will in quarters to come, stimulus tools available to governments could get costlier or disappear altogether. What else can be done?
French multinational Danone, once controlled by the Riboud family, has done the unthinkable. Work at its factories has been altered by physical-distancing measures, and production has been retooled to address wildly shifting consumer demand.
Emmanuel Faber, Danone’s chief executive, announced in March that the group would guarantee all employment contracts and wages until June 30. Meanwhile, a $325 million lifeline is being extended to suppliers.
In rippling up Danone’s three-year plan, Faber demonstrated a rare recipe for leadership – one-part supreme benevolence, one-part short-term survival maneuvering.
Compassion is not new, but it would have been difficult a year ago to predict the depth of philanthropic initiatives we have seen in response to the coronavirus crisis.
Entrepreneurial families, in particular, have stepped up in countries ravaged by COVID-19. In Italy, the Della Valle family, who owns the luxury shoe brand Tod’s, has set up a €5 million fund for family members of healthcare workers who have died fighting the pandemic.
Help the Vulnerable
Since the pandemic, philanthropic donations have topped $8.3 billion worldwide, according to Candid, a foundation research group. A significant amount of donations has come in the form of family giving.
Luxury brand Ferragamo, owned by the eponymous family, is financing the renovation of two wards at I Fraticini hospital in Florence, which has been closed since 1996. The space will be dedicated to coronavirus patients.
On the other side of the Atlantic, skincare giant Estée Lauder Companies Inc. has donated $2 million to Doctors Without Borders to support the organization’s efforts to treat the virus in regions that lack resources.
In Canada, where more than 48,000 coronavirus cases have been recorded, Food Banks Canada is appealing for $150 million to help feed vulnerable Canadians.
“If frenzied stockpiling is what we’re seeing now during this period of uncertainty, then what happens should a recession hit?” says CEO Chris Hatch. “It would spell disaster for potentially millions of Canadians.”
A recession is coming, a growing number of economists warn as Canada’s economy is battered by the unprecedented slam of the coronavirus, financial market chaos and crashing oil prices.
So is more compassion. The Slaight Family Foundation is donating more than $3 million to four organizations focused on food in an initiative with Food Banks Canada. “This crisis has created challenges around food access, especially for the most vulnerable Canadians,” the charity says.
Support Local Communities
Privately-held Dare Foods Ltd. has joined in, donating 100,000 boxes of cookies to Food Banks Canada. “As a family-owned Canadian company, it’s important to us that we support our local communities,” says Peter Luik, the company president.
Canada’s charities are getting a $350 million boost of federal funding to help manage revenue gaps related to the pandemic, as the federal government weighs requests for billions more to help community groups meet surging demand for their services.
Much of the money will flow through three national groups, the United Way, the Red Cross and Community Foundations Canada.
Change has been sudden. Yet family businesses tend to have a more informal decision-making process which makes them nimble, and extraordinarily effective in disaster relief efforts.
They can think the unthinkable.