Ownership In Action:
When Crisis Tests Character

Real leadership isn’t measured by what you accomplish during good times—it’s revealed by how you act when everything starts to fall apart. Business philosopher Dov Seidman claims that how we behave in business can become a source of competitive advantage. A recent example of this was the Covid-19 pandemic, which separated the leaders who adopted convenient rules and technically-allowed actions from those who were guided by deeply held core values and focused on long-term relationships and success.

When the pandemic hit, corporate America faced its biggest test in decades. Overnight, revenue for many companies slowed to a trickle, operations paused, and uncertainty dominated management meetings. Given this uncertainty, some of our partners (tenants, lenders, vendors) seemed to adopt “situational values”, as they adjusted their behavior due to pandemic circumstances, rather than any core values they might have previously held. 

In our case, we received dozens of communications from our partners, including major retail tenants and lenders, during those early months. Knowing that our mom-and-pop tenants were truly struggling, our approach was to proactively pre-negotiate rent terms with them.

However, retailers  with billions in cash reserves and access to emergency funding sent us demands for rent deferrals, abatements, and concessions. Many major retailers, but not all,  essentially freaked out and stopped paying rent, treating us and other retail center owners as adversaries. In fact, we are decades-long partners with many of our tenants, and we  work diligently to keep the physical centers and buildings that our tenants occupy clean, well-maintained , safe, secure and well-trafficked. We continued to do so during this time period.

In contrast to these major retailers, most, but not all, of our lenders asked how they could help and what we needed to survive the shutdowns. There was a real dichotomy between groups – tenants and lenders. I believe treating landlord partners as adversaries was a poor way to respond in a crisis. 

And it was a fundamental failure of values-based leadership. Many retailers operated from what they could do (exercise contractual, and other, leverage) rather than what they should do (pick up the phone and have a conversation with us, their longtime business partners). The result was often a strained relationship. One lender squeezed us so needlessly that we made the business decision not to ever work with them again.

However, one partner, a tenant, stood apart. 

They were the only retailer who committed to pay all rents and charges regardless of circumstances. Their message to us was simple: 

“There has been a lot of discussion in the press about companies unwilling or unable to pay rent and making broad demands for concessions from landlords like you. Challenging times certainly call for unprecedented measures. I am writing to assure you that this is not [us]. We have a long standing tradition of honoring our obligations to landlords and that will not change even in the wake of the current pandemic. [We] understand that many of you are individuals or families whose relationship with us goes back decades to our earliest days. We recognize the hard-earned trust you have in us as your tenant”

They put their core values in action. They made this commitment not knowing how long the pandemic would last, or how deep the economic damage would be. They chose to govern themselves by what they ought to do, not by what they could do.

You might argue that they could afford this approach, because they’re a massive global corporation with deep pockets. That misses the point. Besides, numerous other tenants were successful retailers with billions in cash and easy access to Covid loans. These other retailers clearly had the means to honor their commitments.

The difference was in leadership, not the simple ability to pay rent. It was the difference between rule-based behavior and values-based behavior. This one tenant understood that how you behave during a crisis defines your reputation for years to come.

Instead of asking, “How much can we extract from this situation?” leaders should ask, “How can we create sustainable relationships while navigating this situation?”

At our company, we leaned into our core values throughout the pandemic. While our industry peers cut salaries due to lost management fees, we didn’t reduce anyone’s pay. We paid vendors in full, regardless of whether they could service our properties. 

These decisions cost us and our investors money in the short term, but they strengthened every relationship that matters to our long-term success. We were led by our core values, and the benefits of those actions are being felt today. (See my earlier blog post: The Power you Keep – https://bigv.com/insight/ownership-in-action/)

A crisis reveals one’s character, and there can be many such crises that have to be dealt with in business.The leaders who emerge stronger from difficult times are those who understand that sustainable competitive advantage comes not from exploiting temporary power, but from consistently acting on their core values. Our values are the principles we live by, particularly in moments of adversity and crisis.