Webinar reveals that leaders need to be decisive during Covid-19
Mark Godfrey and Ashley Francis share their leadership lessons from Covid-19 and lockdown.
On Wednesday 15 July, CFO South Africa hosted a webinar in which UCT executive director of finance Ashley Francis and Spar CFO Mark Godfrey shared how they are leading their businesses through the challenges of Covid-19.
CFO South Africa editor in chief Georgina Guedes kicked off the discussion with a look back at the months before lockdown, when Covid-19 was just a “weird pneumonia that was breaking out in China and South Africans felt that we were untouchable”.
When reality hit home
After a brief look into CFO South Africa’s leadership in response to the Covid-19 challenges, Georgina introduced Ashley and Mark, asking what moment the reality of the virus hit them.
Following President Cyril Ramaphosa’s address on 15 March, the UCT senior executive came together and discussed their next steps. Ashley explained that, at that time, they were still in complete denial.
“As we got closer to the twenty-seventh, we started realising that this was becoming real, but we were still in denial,” Ashley said. “Even as we entered the three weeks of lockdown I remember stepping out to go shopping and I’d never seen the roads that deserted, but I was still in denial. I kept thinking, ‘iIt's going to wash over, things will go back to normal.’”
The finance team started scenario planning over the Easter weekend. One scenario was that staff would return to work on 1 June and the other scenario was that they would only return in September. “As we started unpacking those scenarios, it really hit home, because June didn’t seem much of a reality and September, albeit a bit of a stretch, was somehow a reality.”
However, UCT’s estimated date that staff will return to the office has changed to next year.
Mark explained that he was in Europe in January and that it became very noticeable how the habits of travelers had changed. “The travelers coming in from the East were wearing masks, the Western travelers were quite ignorant as to what was going on.”
He explained that, with their Spar business in China, they had already heard some of the fallout of the virus, “but it was something that was happening elsewhere in the world and we were thinking down at the southern tip of Africa we weren’t going to feel it”.
Being an essential service, Spar has carried on trading throughout Covid-19 and lockdown. “Our crisis has been managing our staff’s health and safety, and trying to ensure that we manage the supply chain,” Mark said. “We felt the initial phases, having certain sectors of our business close – like liquor and cigarette sales. We were struggling to understand why the government wouldn’t let us sell rotisserie chickens and why our delis had to close.”
The time it really struck home for Mark was when Spar lost one of its staff in the Western Cape. “We’ve been fortunate so far that we’ve only suffered one loss within our organisation, but it was a chilling moment.”
Ashley said that, what has been important for UCT has been its leadership’s decisiveness during the crisis. There’s also always been an empathetic attitude towards students and staff.
“We also started a digitising process within the finance department in 2019 as part of our change management strategy,” Ashley said. “When we started getting into the lockdown, that messaging of change management and always being empathetic and decisive didn’t change.”
Agreeing that empathy is the right approach, Mark said that the Spar organisation has always prided itself on its culture of family values and the relationship that it has with its retailers.
He explained that these relationships have been critical, especially during this time of crisis. “You are going to need to rely on some of them.”
However, Mark said that being practical has also contributed to Spar’s resilience. “At a time like this, you realise your risk management system is not just best left to somebody else to make sure that you tick a box. You really need to apply your minds to it, and unfortunately it’s only in a time of crisis that you do suddenly realise that you haven’t necessarily given enough attention to something like your disaster recovery plans.”
He added that, even if CFOs assess their organisation’s identified risks now, none of those have included pandemic closures. “The closest we ever got was a massive fire destroying a business and having to operate in that format. We’ve almost had to adopt that thinking with Covid-19.”
Mark also believes that the most practical solution for CFOs is to make sure that their business’s balance sheet is stress tested at every opportunity. “You never know when you are going to hit a crisis and you suddenly find that your debt exposure or the structure of your balance sheet can expose you quite dramatically.”
Agreeing with the practical aspects CFOs need to be considering for their businesses to remain resilient during this time, Ashley said that the planning for cash management has to start on day one because it takes a long time to build up adequate cash in any business. “In order to build up cash in the business, there are many financial controls that need to be in place.”
What has worked for UCT is making sure that there is always cash in the business. “The CFO has to ensure the rest of the executive team won’t want to spend it simply because it’s there.”
Success during Covid-19
Mark said that, in the early phases of lockdown, the Spar executive team had daily councils of war to try and make sure that they were managing lockdown by putting the right protocols and guidance in place. “Looking back now, it was probably the fact that we had a minimum business disruption, despite the very little lead time before lockdown. So we’ve managed to keep our distribution business and logistics operations in place.”
Spar was also able to deliver its preliminary results five weeks into lockdown, with a number of the new IFRS standards being adopted for the first time.
UCT also released its financial results during lockdown, with almost the entire audit being done remotely. “We met all the deadlines and managed to achieve all our objectives, with accolades,” Ashley said. “It’s amazing to sit back as CFO and look at the team and understand how everyone just stepped up with professionalism, dedication and proficiency.”
He also believes that one of UCT’s massive successes is that it has been able to continue delivering on its academic project. “It has been a massive success to be able to adapt so quickly in order to ensure that every single student at UCT was able to work remotely as seamlessly as possible by procuring and distributing thousands of laptops to each of our students.”
Change after Covid-19
From a retail perspective, Mark said that Spar has seen online retailing really pick up as a result of Covid-19. “What we’ve probably achieved in the last three months has been greater than what we’ve done in the previous 20 years. For retailers, the biggest strategy change now is trying to manage online and how to make it part of their business model.”
Ashley believes that the academic model in universities will be different. He also believes that the choices students will be making regarding their education will be massively impacted by what they are experiencing during Covid-19.
Attendees then had the opportunity to ask Mark and Ashley questions around their leadership approach during Covid-19, which will be discussed in a follow-up article.