There are many business adages that stand the test of time, ‘Cash is King’ being possibly the most relevant to businesses currently. In the boardrooms of many big businesses across the country board members sit, at a safe distance we hope, and take decisions to protect their businesses.
This is human nature and as such is understandable, but it also sets in motion a domino effect.
In March 2020 the most overused word on the planet has to be ‘unprecedented’, we are also in March 2020 witnessing an unprecedented cash flow crisis in hospitality, and in the world economy.
The consequences that will be felt by all businesses in hospitality are relative, and as such that is where the decision making in big businesses will have most impact across our hospitality industry.
For the board members of most big businesses the survival of that business will be their primary concern. The people who work with those businesses have their immediate futures in the hands of those board members. So, to a degree the interests of all within the business are similar, the consequences however are very different when considered on a personal level.
Most board members will not be concerned about paying their mortgages, rents, taxes, shopping bills or any other bills in the short term. Many workers will.
The announcement from JD Weatherspoon on Tuesday that they will not pay their 43,000 workers until the company was first reimbursed for their wages by the government was an all too graphic demonstration of self-interest.
The decision was taken yesterday to also not pay their suppliers.
JD Weatherspoon’s Finance Director Ben Whitley will undoubtedly feel totally justified in the decision, as will the rest of the board. Today’s current share price of JD Wetherspoon, up circa 5% from shoring up their cash flow position will further justify the decision from the financial market’s viewpoint.
But, what about the 43,00 people who worked for JD Wetherspoon before they were ‘released’ from their duties. They will have issues to deal with right now, and big ones from their perspective.
Do the actions of JD Wetherspoon = justification for the impact on 43,000 x workers + untold numbers of supplier’s?
If JD Wetherspoon sacrificed some of the cash flow benefits enjoyed by their balance sheet today, for 43,000 + acts of good will, part payments or any payments to workers and suppliers, would the good will benefits to JD Wetherspoon be of more long term value?
Brands that enjoy ‘good will equity’ with their customers, workers and suppliers also enjoy much wider long term balance sheet benefits.
The backlash on JD Wetherspoon has already taken an ugly turn with pubs being vandalised, assumingly by angry workers. Good will towards the company is evaporating and this will in all likelihood escalate.
Many decisions are being taken in haste and from a perspective that when we come out of the current situation, and only guesses on when that will be are possible, we will jump back into what was immediately. That seems naïve on many levels.
The current COVID-19 pandemic has seen ‘unprecedented’ used ad infinitum for very good reason, when we come out of the current situation things will be, very different.
An investment in good will now, could prove to be the best business decision the board of JD Wetherspoon ever takes.