How many companies will survive the current COVID-19 crisis? The Jury is still out there! Every day we hear about companies laying off staff and closing shops due to the current COVID-19 crisis. It has been predicted that the pandemic is here to stay which means more layoffs and company closures.
In my view, one of the most important pillars of culture is good corporate governance that enables organisation to respond to crisis without hinderance. My work experience in the corporate world and my roles exposed me to the importance of corporate governance in organisations. I worked for successful and failed organisations. The difference between the two is good and bad corporate governance.
Two examples of two organisations where I worked that were eventually taken over by other organisations were Peat Marwick Ani Ogunde & Co and International Merchant Bank Ltd which were leading audit firm and merchant bank respectively in the 80s and 90s. Those who know the stories of these two great institutions during their time will know exactly what I am talking about and hopefully will collaborate with me for us to document lessons learnt for future generations and posterity. They both failed due to poor corporate governance and bad culture resulting from their takeover by people without respect for corporate governance and culture. The Nigerian, business landscape is littered with casualties of poor corporate governance. Oceanic International Bank is another example of poor corporate governance.
I worked in Standard Bank for over 15 years because of the culture and good corporate governance which aligned to my personal values. I left at some point and came back to the organisation because the organisation I joined was owned by regional governments and I could not survive the culture. Therefore, no one should be surprised that Standard Bank has been in existence for over 150 years and in my view will continue to exist for a very long time if the current culture and corporate governance practice remain.
Most small and medium enterprises (SMEs) fail because they are owned by families with little regard for culture and corporate governance amongst other challenges such as inadequate financing. There are those that will survive their owners such as Dangote Group of companies because most of their subsidiaries are run by professionals and not family members. My advice to SMEs that want to survive the current economic crisis is to hire professionals to help manage their businesses.
A survey report conducted by 22 on Sloane in South Africa covering a period between 23-28 March 2020 (www.22onsloane.co/covid-19-impact-report/), revealed that over 55,000 SMMEs will not survive post COVID-19 with at least 42,350 workers losing their jobs. This is a big concern at a time that new jobs should be created. It is SMMEs with good corporate governance and solid financial backing that will likely survive the current crisis.
My parting gift is for companies that want to survive the current crisis to embrace good culture and corporate governance!