Companies’ COVID-19 responses sway public perceptions
At the beginning of the COVID-19 pandemic, when many businesses largely shut down or went to remote work, some organizations and their leaders had to remain fully operational and were viewed more or less favorably depending on their safety precautions and compensation plans for their employees.
Moore School faculty Adam Steinbach and Audrey Korsgaard recently published research about companies’ efforts to protect essential workers during the COVID-19 pandemic and their impact on stakeholder sentiment. They also specifically looked at CEOs’ track record for prioritizing stakeholders and how that impacted stakeholders’ perspectives.
Published research: “Caring for their own: How firm actions to protect essential workers and CEO benevolence influenced stakeholder sentiment during the COVID-19 pandemic” — Journal of Applied Psychology, June 2021
Why it matters:
- Their research shows that responding to crisis situations with urgent action to protect employee well-being, as opposed to a meticulous but delayed response, is important for company leaders to consider.
- Compensation actions — like added “hero” pay or enhanced paid leave — were associated with a persistent rise in positive stakeholder sentiment. For CEOs with a track record for prioritizing stakeholders, positive stakeholder sentiment further increased.
- For organizations’ safety actions like signs encouraging social distancing or screenings for COVID-19 symptoms, stakeholders were not as easily swayed unless the CEO of the company offering the added protections was usually known for disregarding stakeholder concerns.
- Steinbach, Korsgaard and Kautz examined media coverage to determine companies’ responses to COVID-19, annual letters to shareholders for CEOs’ track records for prioritizing stakeholders, and all public Twitter posts mentioning the companies to examine stakeholder sentiment.
- The research team looked at 59 “consumer staples” companies from the stock market’s Standard & Poor’s 1,500 composite list who were considered essential and needed to remain operational despite the mass COVID-19 pandemic shutdown that began in March 2020.
- Steinbach and his colleagues scrutinized how stakeholders reacted over the subsequent two months to companies’ actions in that first two-week period of the pandemic.
“Our research demonstrates, first and foremost, that people were paying attention to essential workers during the pandemic and were quite responsive to whether the companies employing those workers were taking concrete action to protect their health and financial well-being. This is, perhaps, part of a larger movement in which people’s expectations of major companies are higher and more expansive than they have been traditionally, especially as it relates to their treatment of their employees,” Steinbach said.
About Adam Steinbach:
- Steinbach joined the Moore School’s management department in August 2016 as an assistant professor.
- His research centers on strategic management, specifically focusing on the psychological and compensation factors that motivate executive decisions and the impact of those decisions on various stakeholders.
- Steinbach teaches strategic management and corporate social responsibility at the undergraduate level.
- He earned his bachelor’s degree in finance from the University of Notre Dame and a doctorate from Michigan State University.
About Audrey Korsgaard:
- Korsgaard joined the Moore School’s management department in August 1991 as an assistant professor. She is now a management professor and director of the Riegel and Emory Human Resources Center.
- Her research encompasses trust, prosocial values and organizational justice as explanatory frameworks for understanding interpersonal and intragroup cooperation.
- Korsgaard teaches organizational behavior and organizational development and training at the undergraduate, master’s and doctoral levels.
- Korsgaard earned her bachelor’s degree in psychology from Rutgers University and a master’s and doctorate in psychology from New York University.
Steinbach and Korsgaard worked on this paper with Jason Kautz, a University of Texas at Dallas assistant professor of Organizations, Strategy and International Management. Kautz graduated with his Ph.D. from the Moore School in 2020.