10 Lessons From GE's Former GC on How to Step Up and Steer Companies Through Tough Times
Here are ten lessons that I learned at General Electric during the financial crisis and other periods of angst about how general counsel and their teams can help their companies navigate the coronavirus pandemic.
April 21, 2020 at 12:07 PM
6 minute read
Last week, the major banks kicked off the 1Q earnings season with economic outlooks so bleak as to vanquish any hope that this recession won't be a humdinger. With no snapback in sight, legal departments have to hunker down to steer their companies through a prolonged period of uncertainty and stress.
Here are ten lessons that I learned at General Electric during the financial crisis and other periods of angst about how general counsel and their teams can help their companies navigate the coronavirus pandemic.
1. Step Up and Be Decisive. Be an "enabling function" in the noblest sense. Make it possible for your company to perform as well as possible in extenuating circumstances. Manage risks sensibly instead of trying to avoid them altogether. Resist the lawyerly temptation to make things more complicated than they need to be.
Don't hedge your advice unnecessarily. Display the self-confidence necessary to make reasoned decisions in the face of imperfect information when that's the best you can get. Make judgment calls as soon as you responsibly can. Empower your team to make decisions too and trust them to know when issues need to be escalated.
2. Keep the Company Safe. Own up to the reality that colleagues are going to be under pressure (self-imposed or otherwise) to cross lines to improve short-term results. Work closely with the rest of the c-suite to leave no doubt at any level in your company that this crisis does not give anyone license to stray from your commitment to conduct your affairs with integrity no matter what. Be gracious but proactive about this.
Make a special point of encouraging employees to raise their concerns and ensuring it's safe for them to do so without fear of retaliation. They are your best imaginable "early warning system."
3. Make It Safe to Be Human. Most people are prone to make more mistakes when they are under stress. When people who are trying their best make honest mistakes, have their backs and make sure they are given a fair chance to learn from their mistakes. Stand up for the women and men on your team and defend your company against unfair criticism driven by the benefit of hindsight.
4. When Necessary, Slow Down the Room. Make sure that leaders are acting on the best available information and thinking through the long-term implications of decisions being made in the heat of the moment. Involve all the necessary stakeholders and insist that contrary views be given a fair hearing. When an issue is complicated, don't be afraid to ask the proverbial "dumb questions." (Trust me, others will be glad you did.)
At times, insisting upon sound processes will be in tension with the need for speed. But that's precisely why you're in the room. Don't allow unwise haste to be mistaken for decisiveness.
5. Be a Model Citizen. Do right by your stakeholders. Don't gouge vulnerable customers, suppliers or partners. Secure stimulus benefits only if your company really needs them (say, to avoid layoffs, minimize furloughs or keep plants open) and not just because they're available. Short-term gains at the expense of others, especially taxpayers, typically come at a prohibitive cost to a company's reputation in the long-term. Companies like Shake Shack and United Airlines are already seeing early signs of backlash.
6. Communicate, Communicate, Communicate. Embrace the latest technologies to keep your team abreast of what's happening at your company and what it means for them. Err in favor of inclusion and frequency. Be honest, authentic and transparent. Don't try to sugarcoat bad news. Don't make promises you can't be sure to keep.
Help the company's communications teams to do the same vis-à-vis the company's various internal and external stakeholders. Give the communications specialists practical guidance about legal considerations and then do whatever it takes to provide them with immediate and constructive feedback on drafts. In today's 24/7 world of Twitterdom, time is almost always of the essence and a company's reputation is often hanging in the balance.
7. Think Ahead. Make time for long-term planning. In this case, get to work right away with the right stakeholders on unmistakably clear guidelines for company personnel on the parameters for continuing to work from home when facilities are reopened and how to interact safely with others as social distancing requirements are relaxed. This is going to be more challenging than it sounds. In particular, get specialists going on how best to balance the medical privacy rights of employees against the wellbeing of those with whom they will be interacting.
8. Phone a Friend. Lean into experts. Bounce ideas off of colleagues and benchmark with peers. No one knows everything and a pandemic is no time to stand on ceremony. One of the most beneficial things I did was to set aside time each morning to call specialists to ask what important issues in their bailiwicks might be flying under my radar.
9. Reduce Costs. Don't try to plead immunity from the company's operational imperatives. Cut your fair share of costs without jeopardizing your ability to keep the company safe. Empower the team to do less with less by focusing on critical things and putting "nice to have's" on hold. Give clear guidance to outside counsel about your priorities and work with them to defer or forego work on less significant matters.
10. Be a Fair Client. You are likely to need more help from law firms than before the pandemic even though you can afford them less. This leaves them vulnerable too as they try to make their own payrolls and retain the lawyers working on your matters. So stay away from ultimatums. Don't slow pay or insist upon extended payment terms that you aren't prepared to afford to your own clients and customers.
Instead, engage law firms in candid but constructive discussions about ways to reduce expenses and preserve cash. Reward law firms that demonstrate a genuine commitment to partnership; do not resign yourself to "business as usual" with those that don't. This is a time to break paradigms. Try creative outcome-based fee arrangements that incentivize great work in return for deferred payments.
When the crisis is over, don't neglect which law firms stepped up. Award them new business at recovered post-crisis rates. Few things are as therapeutic for our profession as the power of the purse when it's deployed positively.
These are unsettling times. But today's in-house teams are ready for them.
Alex Dimitrief is a Partner at Zeughauser Group, where he advises legal departments and law firms on a wide range of strategic issues. He was the President & CEO of General Electric's Global Growth Organization in 2018 and previously served as the General Counsel of GE and GE Capital. The views in this piece are strictly his own.
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