Why construction firms should put their people first during the COVID-19 outbreak

Peter Johnson, chairman and founder of Vivalda Group
Peter Johnson, chairman and founder of Vivalda Group

Peter Johnson, chairman and founder of Vivalda Group, thinks the months of COVID-19 will be a defining period for many suppliers and contractors in the industry.

No business likes unexpected nasty surprises. And the roofing, cladding and insulation sector has had one hell of a shock in the last few weeks. Earlier this week [week commencing March 23], I wrote to my 150 employees telling them not to worry. I made a promise that whatever the coronavirus crisis throws at us, I will do what it takes to ensure they have food on the table and are able to pay their mortgage or rent.

The next few months will be hard enough for people working in construction without the added cloud hanging over them of potential lay-offs or unpredictable wages. I want my colleagues to know that we enter this emergency in the same state as we will eventually emerge – together. And if we’re forced to close one or all of our 11 UK branches, everyone will be paid in full, every month.

For Vivalda Group this can only be the right thing to do. We’re a private company with a straightforward shareholder ownership structure, which makes decision making quicker than that of listed companies.

Jack Welch, former chief executive officer of General Electric, popularised the idea of ‘shareholder value’ – a core strategy of many listed businesses to this day. To be fair, in good times this is often necessary.

However, the COVID-19 pandemic needs to bring about a rethink – does shareholder value mean slashing costs (i.e. staff numbers, branch closures) to preserve the bottom line and the dividend, or does it mean shareholders’ funds take the pain in order to maintain a great workforce during a crisis?

In trading terms, my business has now effectively written off 2020 as a lost year. Normal rules of engagement have been ripped up and a new mindset is required.

Financially, we’re in good shape. Unlike a lot of other construction related companies, we’re prudent enough to have cash in the bank and no borrowings. The directors are united in agreement that we stand by the entire team at Vivalda Group, and if doing so means our cash position has to take the shock well, if that is not what a cash position is for I don’t know what is.

Why are we doing this? Our people really are our greatest asset and without their skills, enthusiasm and dedication we’d be reduced to just a network of empty warehouses with CNC cutters, powder coating lines and fork-lift trucks lying idle. Standing by my team in their hour of need will pay dividends, moral as well as financial, when this crisis is over. I want to safeguard these amazing people who have served me loyally over the years – and if that means dipping deep into our savings, so be it.

There’s an even deeper moral purpose in here somewhere. Lucky not to be attracted to the typical trappings of wealth, I can now enact a philosophy that’s grown in my mind over recent years: how money can be targeted for the greater good. Make no mistake, we’ll always be a leading business that needs to show a profit, because without one, there’s no money, no jobs and no scope for moral philosophising. We’re not big on corporate ‘brand values’ or ‘mission statements’ here at Vivalda, but I’d like to think that if you asked anyone in the business, they’d know what we stood for and where we’re going.

The next few months are going to be tough, but I’m sticking with my people to get us through this.