Q&A with Assistant Professor of Management Michael Nalick
Like the rest of the planet, the business world is navigating uncharted waters thanks to the COVID-19 pandemic. As fears mount and uncertainty abounds, leaders’ skills and resolve are being tested in unprecedented ways. In an interview with the Daniels Newsroom, Michael Nalick, assistant professor of management at the Daniels College of Business, shared his insights on leadership, management and ethics amid an international crisis.
Q: What concerns you most about this crisis as it relates to business and corporate leadership?
A: The crisis has revealed a lot of mismanagement. While there are small- and medium-sized businesses that couldn’t prepare for something like this, there are larger corporations that could have prepared better. These corporations have been doing very well for a long time, but instead of acting in a financially responsible way during the good times, and stocking their financial reserves and credit lines, they spent a lot of money on stock buybacks and skyrocketing executive compensation. Such activities are not tied to providing a long-term competitive advantage. The virus has exposed some companies not acting in the best interests of their stockholders. While this situation is unprecedented, we’re seeing greed and unethical behavior. They [say] you can’t prepare for this, but you can to some extent. Our economy goes through bubbles and bursts. If an individual with a lot of money spends it recklessly, they garner very little sympathy. But businesses are doing the exact same thing and then crying out for help. Do you bail them out? And if you do, will they act the way they did before the crisis? Many of these large corporations know that when they get into trouble the government will be there to help.
Q: The pandemic is hitting some industries harder than others. What’s your advice for CEOs in the harder hit industries?
A: Think long-term. Don’t panic. Reassure your employees. For the companies that are slashing jobs, I would urge their CEOs to remember that if they have to ramp back up in two or three months, it could cost more to rehire employees. Consider the example you’re setting for your employees, your community and your stakeholders. Secure your company and finances as much as possible and strategize. You have to prepare for events like this and do risk analyses so you’re not caught off guard. A pandemic has always been a part of risk analyses.
Q: Is there a business leader who you consider a role model in this crisis?
A: I really like what the CEO of my wife’s company has done. Her name is Jaelynn Williams and she’s the CEO of Air Methods, a medical services company in Denver. She made a video that included her family and sent it to all her employees to reassure them. That builds morale because it’s interpersonal. That’s what we’re missing now in this crisis with social distancing. I thought that was a great example of what CEOs should be doing.
I like what Southwest Airlines’ CEO did when he announced that he was cutting his salary while other airlines like Delta, United and American announced that they were cutting flights and staff. CEOs can afford to take less compensation. If you say your company is in pain, and cut your workforce when your salary could probably cover 500 employees, it’s clear that you didn’t have to fire people. You should have made a personal sacrifice. Southwest Airlines’ CEO led by example and set himself and his company apart from the rest of the carriers.
Q: What actions must leaders take to weather a crisis like this?
A: Think about the cushions you’ve built into your company. What credit lines can you tap? If the government is giving out credit, you’d better take it. Tell stakeholders exactly what you’re doing to mitigate the problem. Be honest and transparent. Lack of transparency always signals that there’s a problem, while being transparent signals that you’re acting competently.
Q: What are you seeing in the media that either confirms your research or piques your interest?
A: I’ve always wondered whether we could have a functioning government during a time of crisis given our partisan nature as a country. If World War II happened now, could we come together and fight a common enemy? Could we develop solutions to a large-scale problem? Do we have the competence in our government needed to face challenges that confront us? In some areas the answer is ‘yes,’ and in others, it’s ‘no.’