Operating the board during the crisis…step up and take accountability

Moses Singo
Partner: Genesis Corporate Solutions

On Monday, we read about the important role of the C suite during the Pandemic, or any period of significant disruption where the rules of engagement fundamentally change.

How do boards operate during these periods? What are the roles and responsibilities of board members? The current crisis sheds light on the vital importance of a diverse board. A group with a breadth of experience, relevant industry and functional expertise, and a range of ages, genders, and backgrounds enables an organization to assess challenges from a variety of perspectives. Here is how a board can effectively play its role

We will discuss these, and other issues, in todays editorial which is the conclusion of the McKinsey report on adjusting to the new business paradigm that we currently face.

Reconfirm the board’s role and accountabilities
A clear division of roles and mandates between a board and management is paramount to make collaboration seamless and avoid the distraction of unnecessary conflicts. While the level of stress and pressure every individual is facing during the current crisis can be draining, a board needs to remain calm and focused.

Some decisions that take years of alignment in normal times may have to be passed in a matter of hours. All this will be difficult unless boards and management teams embrace seamless teamwork, trust, and mutual support. During this time, boards should make explicit that they are fully behind the management teams as they make some of the most difficult decisions of their careers.

All board members need to be on the same page during a crisis
Photo By: Canva

Adapt the board’s operating model to the crisis
During a crisis, a board has no choice but to adapt its working mode to the speed of events, requiring directors to invest significantly more time than normal and relax the annual agenda. Ongoing communication between boards and management teams is necessary for quick action on contingency planning, public announcements, strategy development, and other urgent matters. An ad hoc board-level crisis committee can help directors engage regularly with the crisis leader who reports to the CEO.

While some of the board’s heightened responsibilities—such as more frequent risk or policy reviews, financial-stability assessments, and governance-structure changes—can be absorbed by standing committees (including those for audit, risk, nomination and governance, and compensation), assessing the crisis’s strategic implications and the organization’s future direction needs to be handled jointly by the entire board, with collective accountability and frequent interaction.

The coronavirus pandemic is, first and foremost, an urgent health crisis affecting countless people around the globe. The scale of change—social, political, economic, and cultural—it may bring is immense.

To manage a crisis of this magnitude successfully, boards need to help management balance short-term priorities with long-term goals, actively engage with shareholders and other stakeholders, and support a fundamental rethinking of long-term strategies. Management teams may need boards to extend them a greater-than-normal level of trust so that leaders can rapidly respond to unprecedented conditions.

While oversight and control remain vital, board directors’ wisdom, insights, and experience have never been more important. Boards should seize this moment to step up their game and provide critically needed guidance to their organizations.

Executives have a lot on their plates at the moment
Photo By: Canva

Long-term implications for a board’s operating model
The changes to a board’s mode of operation ushered in by the Covid-19 pandemic may have a lasting impact. Here are some examples:

  • Board agenda. The pressure to become more involved in forward-looking strategic activities immediately may permanently change a board’s agenda. The board may appreciate the increased impact it can achieve through regular involvement in strategy development or early succession planning, for example, while management may value the ongoing input and challenge from the board.
  • Time commitment. The realization that board directors need to spend more time on board work may lead to a reduction in the number of boards an individual can sit on and may affect director remuneration. The additional time commitment may come in the form of new ad hoc committees or a general increase in a board’s involvement in forward looking activities, both within the organization and with outside stakeholders.
  • Virtual board meetings. Boards may start to recognize the advantage of holding at least some board meetings virtually, which may broaden the pool of prospective directors.
  • Team dynamics. The heightened collaboration and trust between a board and management team required to navigate the current crisis may produce a lasting shift in their dynamics, such as more informal information exchanges.
  • Diverse board composition. Boards with diverse experiences and backgrounds drawn from a variety of industries, functions, and geographic areas will have a distinct edge in effectively leading organizations through the current crisis. As a result, enhancing board diversity may become a high corporate priority.

Adjusting to these changes will take a lot of engagement and possibly some uncomfortable conversations regarding performance indicators. Establishing clear KPI’s is crucial. These have to be accompanied by a clear framework against which these metrics will be measured. This is why accountability needs to be the foundation stone upon which C Suite executives need to base their actions on in the future.

Moses Singo is a Partner at Genesis Corporate Solutions and is a Junior Business Rescue Practitioner.