Vice Chairman, Co-Leader, Board Services
Ukraine: 5 Leadership Moves
The CEO learned about the Cold War, diplomacy, wartime struggles, and international relations … 30 years ago in business school. Now, a geopolitical crisis is unfolding in real time.
Over the past 30 years, there has been fighting in many parts of the world. But for the most part, the global economy was unaffected, as was commerce, and corporate leaders didn’t have to worry about the geopolitical machinations of great powers. That changed when Russia sent troops into Ukraine. Now these leaders, many of whom are exhausted from two years of managing through a global pandemic, are being asked to confront a new crisis, one they have no control over. “This is something that CEOs haven’t seen before,” says Ret. Lt. Gen. William Mayville Jr., a Korn Ferry consultant who during his military career was deputy commander for United States Cyber Command.
Even though most leaders haven’t been in management positions during this type of crisis, experts say some lessons they learned from managing through the COVID-19 pandemic can apply here: move fast, protect the health of employees, and maintain clear lines of communication. Korn Ferry canvassed experts across the world for their perspective on these and other positive actions leaders can take.
Ensure that your employees are OK.
Safety, of course, trumps anything else, experts say. Some companies have chartered flights to get employees and their families away from the region. Others have transferred employees to different offices. Leaders are also taking multiple actions to aid employees who can’t get out of the region, including using connections to deliver food and medical supplies. Some have bought satellite phones for employees in regions that have lost power.
A few firms have moved beyond safety to ensure that impacted employees can eventually resettle. They are printing out and storing documents, such as employment agreements, identification records, or real estate papers, giving these employees one less thing to be anxious about.
Get up to speed on geopolitics.
CEOs and board directors are paid to be risk managers, but outside of commodities-related businesses, most leaders in recent years could get by with only a basic understanding of Cold War-esque geopolitical risk. That period is over, experts say. A new era has started that, pending quick resolutions, could last for months or years.
As many did with COVID-19, leaders will need to consult outside experts this time selecting analysts with backgrounds in economics and international relations rather than public health and safety. Importantly, leaders should not just be fixated on what’s going on now but instead asking about the potential future consequences of current events, says Dennis Carey, a vice chair of Korn Ferry’s Board & CEO Services practice. “Getting a sense of what might happen will give leaders the ability to make more strategic decisions on future investments,” he says.
Decide what to do about business in the region.
Numerous companies have put their business with Russia on hold or are closing factories in Ukraine. For some companies, the decision is easy. But it’s a far more difficult decision for others, particularly consumer-product firms that both employ and sell to ordinary citizens in the region. Cutting employees off may not be an option. “If you have thousands of people on the ground, denying them their livelihood isn’t a humanitarian response,” says Juan Pablo González, Korn Ferry senior client partner and leader of the firm’s Professional Services practice.
A possible option: suspend or cancel business while continuing to pay employees for a time, Carey says. It’s also important to communicate with those employees and offer an objective source of information, something that they might not be getting from media outlets in the region. “Maintain communication and let them know what the rest of the world knows,” Carey says.
Companies most likely are also going to have to state a position one way or another, experts say, because their stakeholders are demanding one. “Employees are speaking very loudly to their management teams about this,” says Tierney Remick, vice chair of Korn Ferry’s Board & CEO Services practice.
Adjust supply chains and cost forecasts as needed.
While Russia is a major exporter of oil, natural gas, copper, and other minerals and both Russia and Ukraine are major suppliers of corn and wheat, not many US-based firms have their most important suppliers based in either country. However, experts say, companies have countless smaller suppliers—or suppliers to their suppliers—that have operations in those countries in particular and Eastern Europe in general. Companies should already have been monitoring this, says Cheryl D’Cruz Young, a Korn Ferry senior client partner who specializes in recruiting chief procurement officers. “Resiliency will be tested once again,” she says.
Much as they did during the initial waves of COVID, supply chain leaders should be searching for alternative suppliers of essential materials. That might mean shifting personnel around the world, as some suppliers close while other outlets open. The conflict also will almost certainly continue to push some commodity prices higher, D’Cruz Young says. Firms should be reevaluating their price forecasts; ultimately leaders also have to decide whether to eat those cost increases or try to pass them along to customers.
Shore up cybersecurity efforts.
During the war hackers have disrupted websites and other businesses across the world, and experts say there will be more to come. These attacks likely aren’t one-offs but coordinated efforts by nations, says Michael Franzino, leader of Korn Ferry’s Global Financial Services practice.
The attacks can also target seemingly benign systems that nonetheless have an outsized impact. Last spring, an attack on the billing system of a US pipeline company disrupted gasoline supplies for days. Leaders need to realize that, regardless of what business they are in or where they operate, they can get impacted. “The idea that you somehow are not connected to what’s going on here is a mistake,” says Mayville.
Mayville recommends that companies go beyond just being in compliance. Leaders should push for cyberattack rehearsal drills and sit down with their security leaders to go over plans. “You have to be ready,” Mayville says. “That’s a higher performance standard, and CEOs have to drive that higher standard.”