How Dilmah is taking care of family business against the coronavirus

Dilmah, the global Sri Lankan family tea producing business, has moved swiftly to safeguard its workforce and adapt its manufacturing when confronted by the coronavirus, and calls for humane family values to recalibrate the post-Covid-19 world.

Dilhan C Fernando, the next generation chief executive of Dilmah and Dilmah Conservation, was asked by CampdenFB to discuss how the brand is strategising its way through the pandemic crisis. The youngest son of Dilmah founder Merrill J Fernando said the family business has been co-ordinating its response in a three-pronged approach: with wholesalers, mobile operators and banks to support its employees; with national health authorities to support public testing for the virus using cutting-edge biotechnology, and with customers to reassure them of the continuation of trade.

The family’s refortified philanthropic wing of Dilmah, the MJF Charitable Foundation, of which Fernando is a trustee, is also taking the initiative in the provision of protective clothing and test kits and reinforcing its welfare systems at the grassroots for staff and their families.

Looking ahead to when the coronavirus subsides, Fernando said family businesses should take the lead in becoming a “force for good” to define a kinder society.

“Family businesses have greater ability to meet this necessity than corporations, as they are founded on values that go beyond profit, structured to be able to respond and also know that beyond the conventional definition of success lies the far greater achievement of significance.”

What impacts have there been on the Dilmah family business to date because of the coronavirus pandemic, in terms of production, investments, growth and staff?

There is no individual or business that has escaped the devastating impact of the coronavirus pandemic and the precautions made necessary by its ferocious spread. Sri Lanka was relatively quick in reacting, following medical advice with a national lockdown. That was a priority with greater importance than any commercial consideration as a result of which we suspended operations across our tea manufacturing and ancillary businesses. Resplendent Ceylon, the leisure business that my brother Malik manages, was particularly hard hit and that was unavoidable given the impact of the virus on travel generally.

Our government imposed a mandatory quarantine for all arrivals into Sri Lanka and that has helped in reducing the spread of the virus. Last week we resumed manufacture with a skeleton team and at a significantly reduced pace. On the tea plantations, picking has started with workers maintaining distance from each other while we move cautiously to resume supply of tea.

How are you managing these impacts?

In any crisis the first priority must be the people in a business and given the strict nature of the curfew, the priority was to ensure that our staff were safe and had access to food and medicine. On our tea gardens we were able to arrange for supplies from wholesalers to ensure that our workforce did not suffer from a lack of essential supplies. We have worked with mobile operators and banks to ensure that wages reach our workers while additionally paying a bonus of one month’s salary on account of both the traditional Sri Lankan New Year and the difficulty that many of our team will be facing at this time.

The second dimension to our response is in support we are trying to give to our government, in particular the medical services, in scaling up to meet the crisis. This is being done in the form of financial and logistical assistance in procuring test kits, securing a gene sequencer to help our Medical Research Institute diagnose and react to future variations of the coronavirus or other epidemics more rapidly. We are also working on mobilising the business community via UNGC Network Sri Lanka, to have a co-ordinated response from the business community, to the current crisis. Finally, we are working at mitigating the commercial impact of this crisis to the greatest extent possible by communicating with our customers to confirm our resilience and support them.

What has been the toughest decision the family has had to make and why?

None of the decisions we have had to make so far have been very difficult since there is a clear guideline for response to the virus and it is simply preventing the spread of the virus at this stage.  Our focus is to ensure that from our tea gardens to offices, hotels and my father, ensure that social distancing and related precautions are respected. The difficult decisions are likely to come later when some businesses may need to review their operating model and realign with the post-Covid norm. Having implemented the short term requirements according to the guidelines issued by our government, we are now focusing on medium and long term planning connected with the community and our businesses.

Any successful methods of mitigation or advice you would recommend to your peers in family businesses who are dealing with the pandemic?

The short-term measures that are required to stabilise the situation are clear and we follow World Health Organisation and government guidelines where those are concerned. For the next stage, my advice is connected with an approach that most family businesses will consider normal—we need to ensure the safety of our team, and work towards realigning our businesses towards a new, post Covid-19 norm.

I think it is clear that the world will never revert to what we knew as normal in 2019—nor should it; blame for Covid-19 is too easily laid with a family in Wuhan, while it is symptomatic of much deeper issues in our society. The arrogance of mankind and the relentless pursuit of profit or power, usually both, has made it acceptable for the world to tolerate the consequences without too much discomfort. I pray that every family business will use this enforced global pause to reflect and plan around reality.

The economic system in which we operated tolerated externalities that in a post Covid-19 world must be considered intolerable. In place of the brutal system that accepted global growth at the expense of growing inequality, tolerated increasing emissions at the expense of rising global temperatures and disproportionate impact on the poorest of the poor and a host of related phenomena including infant mortality, lack of access to basic education etc, we need to recalibrate and define a kinder, more humane system. Our advice is therefore that we should not resume business as usual, but form a “force for good” on the understanding that good is a norm, and should not be an exception.

Family businesses have greater ability to meet this necessity than corporations, as they are founded on values that go beyond profit, structured to be able to respond and also know that beyond the conventional definition of success lies the far greater achievement of significance. We need to be significant as family businesses and reject the narrow and unsustainable direction that most of the world has pursued pre-Covid. We need to focus on a fresh definition of business that emphasises purpose in social, environmental and economic context.

Are you seeing extra demand from the community on the philanthropic work of the MJF Charitable Foundation? If so, how are you strategising the foundation’s sustainable response?

I hear from many economists and marketers about ethical consumerism, and that corporate philanthropy can deliver benefit. This is true in theory but the reality is very different and it starts with why and how we choose to help. To deliver genuine and impactful outcomes in humanitarian and environmental service, we felt we needed to go beyond sending cheques to organisations that support charismatic and newsworthy causes.

We took a decision on this nearly 20 years ago, when my father wanted to scale up the activities of his Merrill J Fernando Charitable Foundation and take its work beyond our workers and their families, to the wider community. That decision was to disconnect the foundation and its work with any marketing or brand objectives of our company since it was evident that any alignment of brand and philanthropy would come at the expense of the latter.

Seeing the desperate need of many great humanitarian organisations for funding and their own survival as well as the irony that to survive they needed to market themselves, using funds that should be directed toward the causes they represent, we established our own team and built a plan. That focussed on operating where the beneficiaries are least served and have no recourse to other forms of assistance. This meant building facilities in remote areas of Sri Lanka, serving groups like widows affected by conflict, children with cerebral palsy, down syndrome, communities in the North and East of Sri Lanka where unemployment is contributing to a lack of basic education and the many implications of that lack of education.

My father’s principle of sharing a minimum 10% of our pre-tax earnings was increased by 50% last year in recognition of the growing challenge of inequality and the urgency of action in the rural economy and many other parts of our community. Naturally we share our philosophy of making business a matter of human service with our customers and show them the tangible outcome of that philosophy in the form of our Purpose publication. That has however not delivered what consumer trend analyst suggest and that is fine with us since our objective is not to derive commercial advantage from what we believe to be an obligation of every business.

As for the MJF Foundation’s response to the current situation, we are in the short-term working on supporting the government in the provision of protective clothing including N95 masks, test kits for Covid-19 diagnosis, in the medium term supporting the installation of equipment that will enhance Sri Lanka’s capacity to identify strains of coronavirus with gene sequencing technology. Where our team are concerned, our short-term activities are focused on delivery of food and wages, in particularly to the plantation sector where curfew has restricted both.

In the medium term we are strengthening our staff welfare systems to ensure that workers and their families have access to essential supplies at a reduced cost. We are involved with both UNGC Network Sri Lanka and Biodiversity Sri Lanka in sharing our learnings, best practice from others in supporting the change in mindset that I have suggested above. There is much more to come although the present lockdown has restricted our ability to progress the medium and long-term initiatives.