April 8, 2020 – It started with at a conference in Zurich, where the company’s top sales executive felt a dry cough coming on. He took a red-eye flight to New York, and since he didn’t feel that badly, went straight to work to have a long-awaited sit-down with the company’s CEO. The next day, the feeling-fine CEO took her entire senior leadership team out for dinner. Two weeks later, the CFO landed in the hospital and two other senior leaders became bedbound with high fevers.
Yes, this is a nightmare scenario, but it points to a critical issue that experts say any company worldwide needs to consider, said Korn Ferry in a recent report. The highly contagious nature of the novel coronavirus, combined with the resulting COVID-19 symptoms for some, can potentially incapacitate anyone, from a first-year employee to the head of the entire company.
Boards and C-suites are developing emergency budgets and financing plans to keep the business afloat, but they may find themselves in a bind if they haven’t figured out who can step in if high-level people get sick. “Multiple leaders and roles may need backup simultaneously while at the same time the job market is frozen,” said Jane Stevenson, Korn Ferry’s global leader for CEO succession.
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Already at least one C-suite executive has died due to complications from COVID-19, while other executives and board directors are among the more than 1.27 million people around the world who have been infected, said Korn Ferry. Most large organizations have emergency plans for when the CEO or CFO are incapacitated temporarily, but boards are asking for more, wanting to know who can step up not only for other C-suite jobs but to jump into being plant managers, regional presidents and other critical roles, said Tierney Remick, vice chair of Korn Ferry’s board and CEO services practice. The stand-ins have to be able to handle critical roles for several weeks, depending on the severity of the illness.
Companies are going through their employee directories now, determining who is “ready enough” for what the military would call a battlefield promotion, Ms. Stevenson said. Organizations are also looking to bring in executives who may have recently retired from the company or industry. Experts say these understudies may be even more critical for businesses that have actually seen dramatic increases in business because of the coronavirus. Grocers, E-commerce firms, healthcare and other essential services organizations are often pushing beyond what they would normally consider full capacity, Ms. Remick said. “If you’re in business and running, you need to move to meet the needs of customers in real time right now,” she said.
There is also some worry that multiple people within the same division could be sick for weeks. A CFO and her three top lieutenants, for instance, may have all been exposed to the coronavirus at the same time. “If the depth chart isn’t strong enough, the organization’s public accounting firm may need to provide an ‘interim’ CFO,” said Alan Guarino, vice chair of Korn Ferry’s board and CEO services practice. That relationship brings its own wrinkle, he said, since the corporation, assuming it is public, has an obligation to be audited by an independent accountant. The company may need to hire a different accounting firm to ensure that independence.
Even if no one is sick now, experts say organizations should be reconfirming what roles are critical and whether there is an emergency plan with at least one, and preferably more than one, understudy, said Korn Ferry. Organizations can also consider whether the role can be divided, combined, or eliminated.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media