How an ‘Employees First’ Pandemic Response Pays Off
September 21, 2020889 views0 comments
From the outset of the coronavirus pandemic, Sherry Bahrambeygui was sure of one time-honored adage: Take care of your employees, and they will take care of your business. Bahrambeygui, who is CEO of San Diego-based PriceSmart, a $3.3 billion operator of warehouse clubs, acted swiftly in February when the early signs of COVID-19 were visible.
A publicly traded company, PriceSmart operates 45 clubs in 13 different markets across the Caribbean, Central America and South America. Following the coronavirus outbreak, Bahrambeygui led her top management team to put in place remote working arrangements for employees in vulnerable circumstances, extending that by mid-March to most of its 9,000 employees, barring essential staff.
Bahrambeygui shared what she has learned from navigating the crisis during an interview with Wharton management professor Michael Useem as part of a new virtual event series titled “Leadership in the Wake of COVID-19: What Enterprise Leaders Will Need to Survive and Prosper in the Years Ahead.” The series is hosted by Knowledge@Wharton in partnership with the 2020 Wharton Leadership Conference, the Wharton Center for Human Resources, and the McNulty Leadership Program.
An edited transcript of the conversation follows.
Michael Useem: Sherry, let’s go back a couple of months. I think near February you were seeing the signs that the coronavirus was coming to your region. You referred to it as a kind of an existential moment for you and your company. Could you walk us through what you did? I was particularly impressed with the fact you asked your top team to meet with you every day, except for Easter Sunday.
Sherry Bahrambeygui: In February we started hearing about the threat of the coronavirus and the pandemic. As a CEO, you’re always responsible for looking around the corner and anticipating those things that people may not be focused on when they’re meeting their day-to-day responsibilities. But in a leadership position you’re always trying to look out for what might be out there, what could be threatening, and how to best protect your people and your company.
I don’t even think it was declared as a pandemic at that point, but when this virus started getting a lot of traction in the media, I made an effort to do a lot of reading about it. [I began following] what was happening in Europe and China, seeing how the trend was moving, trying to decide whether or not this was something that was going to sooner or later become a challenge for us in the U.S. and in the regions where PriceSmart operates.
I decided that we as a company … had to start thinking about what we would do, assuming that we were faced with the same threats. The first thing I recognized was that given how highly contagious [the disease] was, the ability to protect our employees and offsite them, and allow for remote work was very important.
[Remote work] was not part of our culture. In mid- to late February, I assembled my leadership team and started an action task force to review [the question]: If tomorrow you were told you can’t come back into your office, what impact would that have on you, and what you would need to be able to continue working?
This [covered] everything from our CFO, the ability to transact, move money, pay bills, and do buying, et cetera. So, they went off and came back and realized that this was no small undertaking. At some risk of being viewed as being a little bit of an alarmist at the time, I made sure that every employee in the two states where we have our U.S. employees — a thousand of them are in San Diego and Miami — had the ability to work from home.
The leadership of the company just kicked into action to make sure that we had the capabilities. One was the ability to work remotely. The other was that each leadership team member had to find and identify an alter ego so that if something were to happen to them, that person would step in for them.
At the beginning, people were skeptical about whether we would need to make much of a change at all, and that this was another influenza that was coming down the pike. We ordered all the equipment that was necessary, got everybody set up, and then by the beginning of the second week of March, I had everybody off-sited.
A lot of teaching and education happened before that, not only about the technology [for remote working], but about how to stay safe, and the importance of self-quarantining and minimizing exposure. Educating our employees about the health risks was really important, and convincing them that even though it hadn’t hit our shores in any meaningful way yet, it was something that was likely a challenge we were going to have to contend with.
When we off-sited, everything changed about the way we worked with each other. We had a whole series of meetings that I had [instituted] when I had become the CEO [in January 2019]. I had started making changes along the edges, because you don’t want to come in and be too disruptive at once. We have a lot of great people in our company with decades of experience, and I was coming in as a new person.
[The virus outbreak] was an opportunity for me to basically step back from the way we had been doing everything and the way we had communicated with each other and say, “If I were to look at the most effective way for us to communicate effectively, and to solve a problem in the shortest period of time, how would I have to do it?”
There are 16 people that covered the entire universe of the company. I concluded that if I could speak to them every morning, we would be able to figure it out from there. So, we abandoned all of our business review meetings and our weekly staff meetings. It also made us realize how many hours of meetings we were actually conducting every week.
With the cross collaboration that organically evolved as a result of this regular communication with all parts of the company, we had a 360-degree view as a team of what each other was doing. That was one of the most transformative moments for the company since I’ve been there. It has forever changed the way we do business and lead and make decisions for the company.
It’s been uniformly recognized how much time has been wasted, communication has gotten lost in translation when there have been pockets or silos or multiple meetings. Dedicating an hour or two every morning with each other during this crisis allowed us to be very quick, very nimble. It galvanized the group; it created a really strong bond, and as a result everybody was in problem-solving mode.
It didn’t take long before we went from triage mode to asking, “What do we need to do for the future?” — looking beyond this crisis [to see] where are the opportunities that could take us to the next level as a company.
That became a positive motivator, and we had traction to push forward things that we had been talking about for months, if not years. We were able to deliver on, and put into action, some initiatives in a matter of weeks that we otherwise thought were going to take months.
Useem: You were an early mover. You got on this, you had to invent your way forward. My guess is you were also looking over your shoulder a bit maybe at Costco, maybe at Walmart, and at others in the retail industry. Were there any practices that you had seen already used elsewhere that you decided either to avoid because they weren’t working, or to bring into your enterprise because they were?
Bahrambeygui: Frankly, I think we were a little ahead. I was paying attention to Costco. Costco and PriceSmart have a common DNA by heritage – the founders are common. I say we were ahead [of Costco] relatively speaking, because this virus spread to the U.S. before it was starting to have an impact in in the regions where we are, in Central America, the Caribbean, and South America.
I recall the notion of not doing demos with food, wiping down carts, and things like that. But it was more about our team collaborating and saying, “What are all the ways we can keep our members safe and our employees safe?” The guiding principle for us was: There is so much going on right now, and we’re in so many different markets, each with different governments that have different restrictions and different limitations. How can we simplify all of this?
Our first priority was our people, and our people meant our employees, their safety and wellbeing, and our members’ safety and wellbeing. [Then we focused on] making sure that we had the appropriate supply, the flow of goods to get to our members, and mitigating any supply chain disruption.
That mandate allowed us to implement online [sales, which] had been in the works for years. In a matter of weeks, we went live on that. Finally, [we were] making sure that capital and cash flow and cash management were being closely monitored.
Agility and Focus
Useem: You were a litigator, an investment manager and a stock broker. How did those experiences or the various mentors you’ve had help you prepare to react early to COVID-19, to get on it, and address the problem before it began to blow up in your face?
Bahrambeygui: You say it very nicely, but it’s no secret that I was an unconventional pick. I did not come from retail. I had been in numerous leadership positions in different arenas, and I did have the legal background. But there are two things that positioned me to be able to take this on, and handle it with some degree of confidence and ability to bring my groups together to support the effort.
The first was, frankly, values. To your point about mentors, Sol Price (founder of PriceSmart and its predecessor company, Price Club) was a tremendous mentor for me when I was a litigator and he was a client. [He instilled] this concept of your employees coming first. When you take care of them, they will take care of your members or your customers. When you take care of those two, your shareholders will be taken care of.
Also, the training you get as a trial lawyer is to be very analytical and ask a lot of questions. That curiosity and asking and asking and asking until you really narrow it down to specific answers, and not letting things float ambiguously, is very effective in getting to the bottom of things quickly. It’s very effective in holding people accountable.
Not coming from a retail background, I found that skillset has been helpful to me to know how to ask the right questions, to get a comfort level, and to make sure that all bases are covered. Also, as a trial lawyer you learn to work in a crisis mode. When you’re in trial for months at a time and stakes are high, [you need to have] the ability to focus really well when you’re under pressure, and when you’ve got adversaries.
In this situation, the adversary was the virus. It was an existential threat to us.
Changing Work Environment
Knowledge@Wharton: We have a number of good questions from the audience. The first one is, has this experience made you rethink in-person work as a cultural norm?
Bahrambeygui: Absolutely. The company has enjoyed many years of success, and there was an established mentality that you have to show up at work. That’s where you are held accountable, and that’s how people know you’re working. There’s a generational issue there, to be perfectly frank.
I’m the first female leader of the company, and I could tell when I first came in there were a lot of female employees who were asking about why we didn’t have more flexibility. I was slowly trying to get us to evolve, both because of the fact that it’s important for women, and it’s important for men who want to be involved with their family life and have [work-life] balance.
But it is also because the next generation expects this. If you want to attract the right talent and keep them, you’ve got to shift [your] mode of accountability. The onus is on the supervisor to be able to know what they’re expecting of their employee so that they get the value that they want from that employee delivered – as opposed to holding someone accountable just for showing up. Those are two different mindsets.
This necessity has allowed all of us to work remotely and see how effective we’ve become, and some might argue, more effective. Now I’m not saying it’s ideal to stay like this. But the fact that we’ve proven we’re capable of doing it goes a really long way. It will be used in [re-opening] our business.
I’ve decided that through the end of summer [our] people will continue to work remotely. And then as we open things up, people who are most vulnerable, are older or have underlying health conditions or are pregnant will be able to stay home. They will be required to come in only if there’s a business necessity.
In time, we will come up with rotating schedules that will incorporate social distancing, allow for outdoor meetings and new protocols. So, we’re going to transform our work environment absolutely, and I think it will be for the better.
Knowledge@Wharton: How have you kept track of your staff members’ wellbeing during this time?
Bahrambeygui: In the morning meetings, I have our head of HR there. We made sure that people knew that if they were showing symptoms or if they were living with someone who was showing symptoms, that they should not come to work. This was even before we [began] remote work. [Our] front line employees had to be managed completely differently. [We provided] the PPE that they required, with quarantining, contact tracing and mapping….
It’s sort of a waterfall approach. I keep track of my executive team, [they] keep track of the people that report to them, and so on. We’ve tried to remove all obstacles for people to be disincentivized, being open about the fact that they may have the illness, or that they’re having trouble, or that they may be having illnesses that are unrelated.
I’ve been very transparent with my own team. Frankly, the other day I shared my own personal experience. I think for years, especially as a female, there’s been this sense of having to constantly show that you’re 100% in control of everything. You can be, but we’re all still humans, and things happen, and life happens. For example, my own father had a major health issue, and I debated whether or not this was something I should share with the team. I decided I wanted to because I wanted to make sure they knew that I’m aware that things happen at home, and as a team we need to be there to support each other.
Knowledge@Wharton: You demonstrated a lot of foresight in all of this. One question from the audience is, has there been a significant change in your company culture as you’ve moved from being reactive to predictive?
Bahrambeygui: I’m constantly sending out articles and information, and encouraging [our employees] to share those materials when they find it relevant to their area of work. I think this has helped us become more external facing as a company, just by promoting a culture of being a student, a continual student. One of the silver linings in all of this is now there’s a lot more discussion about new ideas and new ways of doing things, and it’s much more of a group and collaborative dynamic.
Knowledge@Wharton: What has this crisis taught you the most about leadership?
Bahrambeygui: I think communication, being honest with your people, and with all of your constituents – your employees, your members, your shareholders, and in the case of a public company, being transparent. Letting them know when you don’t have the answer. Create an inviting environment for your team to find answers, to brainstorm together.
If you are not completely authentic in what you’re facing, whether it’s excitement about opportunity or concern about an existential threat, you will not get the best thinking at the table. When employees feel that their views are being valued and you’re being honest with them, they jump on board to help solve problems.