How SMEs can overcome the COVID-19 crisis
A guide to building a psychological ownership edge for SMEs
The COVID-19 crisis came like a tsunami, overwhelming everything in its path. Small and medium enterprises (SMEs), which form the backbone of most economies, may be among the first to go under as many lack the resources to withstand the onslaught.
However, SMEs possess inherent strengths and advantages over large corporations that can increase their agility and resilience, helping them overcome and even be amongst the first to bounce back when the tide turns. One key trait that is embedded within an SME’s DNA, but is often unrecognised, is a strong sense of ownership. This innate quality motivates SME owners to steward their companies with attentive passion, cultivate strong relationships with their stakeholders, and build a steadfast commitment to make the company thrive. In challenging times, it forms a good foundation to expediently shore up a defence to survive, and the base to quickly mount a recovery. This is the psychological ownership edge.
Defining psychological ownership
Psychological ownership drives one to identify with, take responsibility for, and form an attachment to their company. It can be understood as having an innate sense of responsibility and a high level of emotional connectedness. In the current climate, this translates into the tendency to act beyond enforced legislation and go the extra mile to reorganise business strategies, and reduce employee health risks and financial burdens.
Psychological ownership builds resilience
To function cohesively, drive growth and be resilient, SMEs should strive to nurture a shared mindset of psychological ownership amongst their key stakeholders.
Leaders can espouse psychological ownership by carefully developing and advocating an ownership culture amongst its employees. This is reflected in the actions of Dan Price, CEO of Seattle-based financial services company, Gravity Payments. He took the lead in cultivating an ownership mindset by engaging his employees in decision-making. Faced with the prospect of having to lay off 20 per cent of his workforce due to the COVID-19 crisis halving his company’s monthly revenue, Price took the unprecedented move of consulting with his employees on how to proceed. His employees unanimously decided to take a pay cut so that everyone could stay. However, individual employees had different financial needs which would not be served by a uniform pay cut. Hence, each employee was allowed to privately state how much of a pay cut he or she could afford to take. According to an article in Inc.com, it is projected that these voluntary pay cuts will effectively allow the company to survive another eight to 12 months without needing to lay off employees.
Instilling psychological ownership among external stakeholders is also crucial for SMEs as they exert considerable influence and pressure on companies (and often, vice-versa). Suppliers and customers, as well as the government, shareholders, investors and the external community are all part of the network of trust that company owners need to build via open communication and engagement. External stakeholders who share a strong sense of psychological ownership would be much more likely to take a unified stand and support the decisions of the SME when navigating this crisis.
Fostering psychological ownership
To foster a sense of psychological ownership, SMEs need to start with a careful assessment of the level of ownership within their organisations. With this understanding, owners can work towards cultivating and continually strengthening this attribute within their organisations. The following reflective questions are a good starting point for leaders to evaluate how ownership is being expressed and encouraged within their companies.
Fostering a sense of ownership among your employees
- Fostering a collective sense of ownership, especially in times of crisis:
Are the decisions you have made in response to the crisis based on your core values? How can you create a sense of job security among your employees? What other measures can you take to motivate your employees to take responsibility for the company’s survival and well-being in this crisis as they would their own? What measures has the company taken to ensure the well-being of its employees?
- Transparency in communicating measures to deal with the COVID-19 crisis:
Are you transparent in communicating the measures your company is taking to stay resilient? Do you ensure that there is an environment of psychological safety so your employees can share their thoughts on measures implemented, especially in this climate where there is a prevalent fear of displacement?
- Projecting beyond the crisis:
Take note of the tangible and intangible resources that you are capitalising on in planning for the long-term growth of your company in the midst of this crisis. Are you using this experience to build resilience for future crises?
Fostering an ownership mentality among stakeholders other than employees
- Identifying and engaging key stakeholders:
Have you identified your key stakeholders in the wider ecosystem in this time of crisis? How do you take into account their views when making strategic decisions?
- Communicating and building trust with stakeholders:
Do you ensure transparent communication with your external stakeholders? What measures do you have in place to build trust between your key stakeholders and company leadership in this crisis?
- Considering your business ecosystem:
Are your suppliers, investors and your community a part of your consideration as you plan your long-term strategy in overcoming this crisis, and for growth beyond the crisis?
COVID-19 will eventually pass, and when that happens, companies must ensure they are well-positioned for sustainable growth. Cultivating a mindset of psychological ownership will allow owners to build the necessary resilience and to steward their companies to thrive in the new normal. This is a key moment for SMEs to prove their mettle and even to create their legacy, proving that the darkest hour may also be, as Winston Churchill puts it, their “finest hour”.
The authors are Mr Ong Boon Hwee, Chief Executive Officer, Stewardship Asia Centre and Ms Veena Nair, Senior Research Editor, Stewardship Asia Centre.