Updated: May 5, 2020
I pose the question because we may be living through the worst times in our history. We are living through the 1980s, 911, 2008, Pearl Harbor, and the Spanish Flu all at once.
What has been your reaction to the crisis of 2020?
How have you supported your employees?
What was your crisis plan in January 2020, and what will it be in preparation for the next disaster?
One thing is for sure, the energy business is for risk takers and not for the faint at heart, but it is also a business that makes great leaders. It's time to shine and be that leader your hero(s) would be proud of, both now and in the future.
Be a leader and not just an individual contributor.
Do you remember the parable about the babies being thrown in the river?
As each baby was rescued, only one rescuer decided to go upstream to see who was throwing the babies in the water. The others developed plans to solve the problem once it happened and never stopped to figure out what was causing the problem. As leaders, you need to lead now and get ahead of the next pandemic, oil crisis, or whatever comes our way. Most of you are entrepreneurs, and I hope you see the possibilities of taking that walk upstream to get ahead of the next crisis. John Adams said that, "every problem is an opportunity in disguise."
Many of us are still in what brain researchers call our fight or flight mode. Snap out of it. The dust has settled some, and the reaction by most employers has been to cut their costs. Staff compensation, being the largest budget item, was reduced quickly. Hours were cut, then salaries, then time at work, and then jobs, and in many cases, not in this order.
I will ask you now and later, were you strategic?
Laying off staff is very difficult for both leaders, and the employee's impacted.
What has been and will be your plans moving forward?
Did you or will you strategically decide what departments and which people by their talents, tenure, etc. were or will be laid off?
When your organization comes back, will you have the right ability to get yourself back to full operational status?
For those you laid off or will lay off, did you let them go with empathy and kindness?
Did you spend time with them to communicate why you felt the cuts were necessary for survival?
Did you first look for other alternatives before letting someone go?
For example, did you first reduce their pay or days they work?
As an HR consultant, as expected, I have received many calls asking things like, can they reduce my pay 20%, 30%, and/or cut my days? The answer is yes, but with some consequences. The Texas Workforce Commission (TWC) gives employers guidelines about salary reductions. However, even with the instructions, even the majors have made deep cuts. It is better to get 70% of my old salary and continue getting healthcare benefits than be on unemployment and COBRA.
TWC says, "In deciding whether a reduction in earnings constitutes good cause connected with the work for quitting, the Commission starts with a general guideline known as the 20 percent rule" which holds that a reduction in earnings, whether from a cut in hours or rate of pay, of 20 percent or more will generally be sound cause for quitting.
In contrast, a reduction of less than 20 percent will not be a good cause. The further away from 20 percent, the wound is in either direction, the easier the decision will be for the Commission to make. When examining this issue, the Commission looks at the entire compensation package, so reductions in the rate of pay, hours, benefits, and perks all contribute toward 20%. Also, cuts of less than 20% can still provide a worker with reasonable cause to quit when coupled with other changes in the hiring agreement, such as a demotion or the assignment of inappropriate duties. For example, in one case, the Commission found the claimant did have reasonable cause to quit after a 7.2% reduction in pay because it was combined with a reassignment from her job in electronics assembly to a more strenuous position as a janitor.
These are unprecedented times. Laid-off workers and possibly those you once called independent contractors might receive unemployment benefits that are temporarily larger and longer than in the past. Hourly wage earners may earn more while receiving unemployment benefits than reduced hours working for you. I have talked about what an actual independent contractor is and is not. I hope that when this is all over, organizations do not have lots of Department of Labor (DOL) complaints due to inaccurate worker classifications.
Are you sure you have your employees classified as salary/exempt or hourly/nonexempt? I have written about this in the past.
The Permian Basin will make it through this, but I would like to present a few ideas as we move forward. If you can, let's think about recovery, like taking a long car trip. You are the dad or mom, and everyone relies on you to keep them safe. I read a book about Winston Churchill after attending an event at the Midland County Library, and there is a new book coming out about him by Erik Larson called, The Splendid and the Vile: A Saga of Churchill, Family, and Defiance During the Blitz." We are living in a Blitz of sorts, and you need to show no fear. It is a heavy burden to be the leader, but you can do it.
While you are preparing and making a long car trip, I would like to make these suggestions. Give your organization a checkup and review the essential functions. Sometimes we need to face the brutal truths about what is going well and what is not — also known as the meat and potatoes of your organization.
To begin with, do you have the best people in the right seats?
Have your employees go the extra mile?
Do your processes work in both good and bad times?
Strategically plan your route to recovery and pack what you need.
Have you retained the right staff, and what will be your compensation model be in the short and long term?
Do you have the HR staff to return, recruit, and retain staff to move forward and return your organization to pre-Blitz times?
Adjust your seat to make the ride comfortable and take care of yourself along the way because you are driving precious cargo. The cargo is your employees, and with the right staff on board, you will safely make it. Keep to the speed limit, don't travel too close to the car in front of you, and don't ever text and drive because distracted driving will get you off your game and may cause irrefutable damage. Stick to the strategic travel plan you made.
Who else can do the driving?
Have you done any succession planning?
What if you fall ill?
Who have you prepared to take over?
Have all of your department heads groomed their successors?
Lastly, even though gas is less expensive, maximize your mileage. Drive carefully without unnecessary starts and stops. Don't slam on the brakes or accelerate too quickly. Make the travel time matter while getting to your destination. Remember that time in the car together can be quality and not just quantity. Time is precious, and we cannot get it back.
We need great leaders, and there are many here in the Permian Basin. I want to shout out to Kirk Edwards and others that have stepped up early to turn things around for the Permian Basin. In mid-April, I began to write this article and started looking for the V-curve before releasing it in hopes of starting back and on the right side of the curve. I hope and pray that we all make it, and more than that, I hope we all remember and learn from the lessons of the day so that we may proactively prevent at least some of this from happening again. Remember, too, that you cannot please everyone.
Winston Churchill had many famous quotes, and this one is appropriate for all of us having to make difficult decisions. Criticism is always advantageous. I have derived continued benefit from criticism at all periods of my life, and I do not remember any time when I was ever short of it. (1914). Franklin Roosevelt had an even more famous quote for one of the most horrendous times in history. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour, our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves, which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.
(1933) "How will history remember you?"