Crisis Management And Ethical Considerations In M&a Transactions And Human Resources – Companies are judged on how they handle difficult times, such as the current coronavirus crisis. Giving is a positive step that some companies can take in times of crisis, but such actions can lead to negative reviews from sponsors. In a high-pressure situation, where the chances of losing sight are high, it is worth remembering that although emergencies and disasters require extraordinary measures, violations of compliance with ethical standards can put the organization at great risk.
When COVID-19 began to sweep the world, Michael, a senior sales representative for a small but growing healthcare biotech company, was alarmed to learn of a shortage of personal protective equipment (PPE) at his key account hospital. Alarmed to learn that workers were forced to reuse masks and wear thin plastic aprons instead of proper PPE, he wrote an email to his company’s health department requesting a meeting to discuss relief measures.
Crisis Management And Ethical Considerations In M&a Transactions And Human Resources
However, he quickly changed his mind when he realized that the grant program involved the approval of five senior managers from different workplaces. Sensing the absolute urgency, without waiting for a response, he immediately packed 20 boxes of candy—part of his company’s sales team supplies—and sent them to the hospital operations manager for immediate use. Given the critical situation and the lives threatened, he estimated that there was no time for lengthy negotiations and administration. Feeling that her company’s good deed and response deserved some attention and recognition, she contacted the head of communications to publish a donation story on LinkedIn.
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In many ways, Michael’s actions were a humane, admirable, response to the current crisis of COVID-19. However, his response raises concerns on many levels, including legal, reputational, and ethical. Like many industries that deal with public money, the health care sector has developed complex regulatory processes and procedures regarding charitable contributions from suppliers to ensure that employees and companies act in a fair and legal manner.
Many in the industry would argue that Michael’s actions are inconsistent with standard compliance requirements. Still, in his mind, the situation was so bad that he rightly took a shortcut and ignored the well-established procedures for doing something good.
Was he right from a compliance standpoint? Was he right from a moral point of view? Was this a matter of ethical choice and compromise choice?
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There are legitimate reasons for restrictions on charitable behavior – which can include monetary donations, equipment such as protective equipment and ventilators, or volunteer time from employees. These restrictions ensure that all actions taken benefit the philanthropy and are not used or perceived to be used to promote the donor’s commercial interests. Indeed, Michael’s first idea was to write to the Department of Medical Affairs—a profession that focused more on scientific principles and patient needs, not on commercial interests—to discuss ways to provide care in accordance with industry standard compliance requirements.like his recent actions.
While acknowledging the good intentions of some companies’ responses to the pandemic, and the urgent need for responses in many cases, senior leaders expressed concern about lax humanitarian practices and the resulting risk of future regulatory or legal action. So a little question
Organizations may want to rethink their ways of giving during this current crisis. How far should they adjust the strict procedures in place to ensure that they consistently meet high standards of ethics and integrity? These questions are of particular importance to healthcare companies in particular, but they also have broader applications. Organizations in many industries must consider the extent to which compliance rules and procedures must be changed—even temporarily—during a disaster response.
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Based on our research, including interviews with crisis response and compliance leaders, we have developed some key recommendations for all businesses struggling with how to provide relief to those affected by the crisis while maintaining business standards and ethics.
1. “Why are we doing this?” This is an important question that a company should ask itself before starting any philanthropic campaign. What supports the desire to help? Is the offer intended for consideration – are there any sales, networking or communication opportunities that could arise from the offer? Self-interest must prevail over commercial interests and images.
The question as to why Michael was so eager to send PPE to the hospital for his important account may be fueled by his eagerness to announce his company’s offering through LinkedIn. One has to wonder about his true motives and whether devotion really prevailed over commercial interests and images.
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2. Find “crisis mode” procedures. Senior management must communicate with various teams to understand the unique circumstances of the problem and determine a response plan. If this means, for example, relaxing or shortening the approval process, relevant senior management should be more involved in decision-making. A systematic review of existing procedures and the introduction of crisis procedures will reduce the perception that the policy is inadequate or too difficult to follow – or the risk that it may be completely ignored in times of crisis. Companies should also consider creating a separate document that outlines changes to compliance during a crisis and communicate this effectively to all employees.
Michael didn’t have any emergency procedures to deal with his emergency. If there was a release document outlining a formal process for grants during a crisis — for example, requiring the approval of two instead of five senior executives — I would have acted on that process instead of chasing myself.
However, when temporarily relaxing a strict process, it is important to ensure that the company’s ethical standards are still applied consistently. A company’s code of conduct is a good starting point for understanding the appropriate ethical standards, but senior managers must also have deep knowledge that reflects their good judgment and experience, as well as a rich appreciation of the company’s culture.
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3. Be careful who you donate to. Due to the COVID-19 pandemic, companies have taken a quick approach to donating money and products, as well as lending money for products and staff time. However, some lines should not be skipped. Companies must ensure that donations cannot be interpreted as an incentive or reward for sales, so it is important that concerns with sales and marketing are separated from the decision-making process. Decision makers should also ensure that any organization receiving assistance is identified on the basis of need – not as an organization their company would like to host or partner with.
Each donation must be evaluated and approved by people who know how to ensure that the idea of sacrifice overcomes commercial interests and images. Importantly, donations should be given to organizations, not individuals. In most cases, this will ensure that more people benefit from the company’s assistance and reduce the risk of the donation being seen as a gift. In Michael’s case, it would be difficult for his company to justify his offer since it came from a sales representative and, worse, he was not vetted by any senior management.
4. Review and adjust your sales goals and ensure your employees. The perception of sales force and the processes of ethical decision-making may be affected by the increased uncertainty and financial pressures of the global pandemic. For example, employees may be tempted to direct donations to commercially attractive recipients rather than those who really need them. We have already seen Michael’s actions raise concerns about the intent of the donation, as regulators may question whether it was a way to win business as opposed to showing discretion. But another question arises: What should managers do to ensure that employees stop and consider the consequences of negligent actions and avoid self-centeredness?
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There is a risk of corruption if your sales team believes that the company is focused on maintaining aggressive commercial goals before a crisis. Companies can address this by ensuring that their goals, while ambitious, are aligned with the realities of the problem. It is also important for top management to convince their sales force that working with the utmost integrity is part of the company’s culture. The message should be, “This is the time to be remembered as an ethical company,” not “We are under tremendous pressure to make compliance a priority.” The right tone on top has never been more important.
Michael may have been under pressure to meet sales targets, which may have affected his judgment. However, messages from senior management about maintaining moral dignity during a crisis may add valuable perspective. With a clear message from management, Michael may have wondered if his idea of helping his key account was ethical or putting the company at risk.
5. Write everything down. Clear documentation of any assistance provided is essential. Communication with
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