Dean & DeLuca, once a beacon of specialty foods across the country, is collapsing. Stores have closed—some because of unpaid rent. And, shelves are empty—as vendors have stopped extending credit and begun suing for hundreds of thousands of dollars of back invoices. At some shuttered locations, employees have not been paid — and, reportedly will not receive federally mandated compensation for the closure due to “unforeseeable circumstances” and the fact Dean & DeLuca is a
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“faltering company.”
Yet, just last month, Sorapoj Techakraisri, the CEO of Dean & DeLuca’s parent company, announced that the chain would soon open new stores in Asia. “The lack of financial resources make it very difficult for us to maintain the necessary investments to improve and keep our franchise competitive and attractive,” he told Bloomberg. “The U.S. has a very tough environment, but it doesn’t mean we will stop expansion in other regions.’’
It is irresponsible for Techakraisri to tout successes abroad while abandoning workers and vendors in the United States. Though most leaders will experience failure or crisis during their career (only 33% of businesses last a decade), challenges are no excuse for disregarding responsibilities. Here are three keys to responsible, human-centered leadership during times of crisis or financial struggle.
1. Act Thoughtfully & Decisivelyhether leaders are experiencing an environmental, economic, or public relations crisis, or attempting to navigate a business closure, their first step should be to slow down. “Resist the urge to do anything immediately,” wrote Tim Johnson in Crisis Leadership. Instead of rushing, leaders should focus on asking questions, ascertaining facts, assigning a crisis response team, and making a plan.
“If you are too quick to make a decision, you might be basing the decision on incorrect or inadequate information,” Rhoda Woo, leader of the U.S. Crisis Management practice at Deloitte & Touche LLP, told the Wall Street Journal. “Respond with thoughtful urgency,” added Marissa Levin, an organizational consultant, in Inc. “In a crisis, time is of the essence. However, there is no room for hasty, reactive responses. Leaders must quickly weigh all options and then commit to a plan of action that protects the organization's long-term interests.” In most cases, those long-term interests include human capital.
One noteworthy example is Southwest Airlines’ reaction to the terrorist attacks of September 11. Within days, the airline announced it would not lay off any employees, and would continue contributing to its profit-sharing plan. “We didn’t have time to do an economic analysis to figure out what the effects would be,” explained then-CEO James F. Parker. “We just had to make a gut decision based on what we thought was important.” Their inclinations were correct: In 2005, an academic study found that Southwest had the strongest post-9/11 recovery of 10 major U.S. airlines — mostly due to its “positive employee relationships” that “had been achieved and maintained over the long term.”
2. Be OpenMiscommunication, confusion, and feelings of betrayal often surface during an organization’s darkest hours. That is why leaders should prioritize clear and honest communication with team members, vendors, and customers. In the Harvard Business Review (HBR), Kenneth W. Freeman urged leaders to “communicate until it hurts.” “Keep people constantly informed all along the way,” he wrote. “Counter the rumor mill with frequent town meetings and forthrightly tell people the truth.”
Take the case of Toyota. In 2010, it was forced to recall 2.3 million vehicles because of issues with accelerator pedals. It responded to the crisis by hosting an AMA-style dialog on Digg (a popular platform at the time) with one of its executives. “Toyota wanted to be very transparent and talk to a wide audience,” Digg’s Chas Edwards told Adweek, “but not in a canned situation where Toyota’s PR and marketing teams shaped the conversation.” The resulting “Digg Dialogg” generated more than 1 million views in its first five days.
Even in situations where transparency cannot change a company’s trajectory, it can still bolster morale and public image. When the tech startup Buffer, for example, laid off 11% of its employees in 2016, founder and CEO Joel Gascoigne elucidated the process and reasoning in a detailed blog post. Reactions to Gascoigne’s approach were positive, with Kevin Kruse even citing it in his book Great Leaders Have No Rules as an example of the “right way to announce layoffs” (in stark contrast, he wrote, to Microsoft’s infamous 2014 memo).
3. Prioritize PeopleAs the above examples have shown, the most fundamental element of leading responsibly through crisis or failure is simple: Put people first. “It's about creating that kind of transparent environment and deeply caring about the folks who are with the company,” explained Mark Sinatra, founder of Staff One HR. This is especially true if there is no pathway toward restructuring or reskilling, and, as in the case of Dean & DeLuca, layoffs are inevitable.
“It really is all about the people,” wrote Sara Sutton, founder and CEO of FlexJobs in Inc. “Remember them throughout the process—in planning, breaking the news, and offering support… it pays to be kind.” Taking it a step further, Harvard Business School Professor Sandra Sucher said companies have an ethical obligation to help laid-off workers find new jobs. “If you liked the person well enough to keep them employed, you should care enough about them… to get them reemployed,” she told Quartz.
In this vein, even small companies can take bold measures. When Andrew Blickstein lost a major client and was forced to close his company, he laid off his entire staff of 18. “I could not afford to have them keep their jobs,” he recalled, “but I could help them keep their dignity.” In addition to a severance package, he allowed employees to take their laptops, and to use their company email address, desk, and fully-stocked office kitchen while they searched for new positions.
At every turn, it appears as if Dean & DeLuca’s leadership has not taken any of the aforementioned measures. As their profits have floundered they have acted recklessly and dishonestly, and they have neglected the employees and vendors who helped them build their business. Even leaders who are not in crisis should pay attention to their plight, because leading in a responsible way — that prioritizes people over profits — is the only route to long-lasting success.
