The coronavirus outbreak has presented a number of unexpected challenges for individuals and corporations alike, and now more than ever, companies can benefit from the kind of experienced judgement that well functioning boards can provide.
During these unstable times, companies will benefit most if the board can strike a balance between supporting and challenging the managerial teams still operating to ensure that they make the best possible decisions in the interest of the company. The main objectives of the board right now are to address the crisis and plan for what lies ahead.
Management teams ought to focus on protecting their employees and need to be able to make decisions quickly in order to do so. Management should also continue to be focused on the needs of the customer, as well as communicating with investors about the company’s performance during these times. Boards should be in charge of overseeing the company’s response to the crisis, as well as planning ahead beyond the immediate needs of employees and customers.
It is important to consider how the corporate climate will change when the worst of the pandemic is over. In post pandemic, not only will working conditions likely be different, consumers will likely exhibit different behaviors than they did before the crisis. Additionally, the structure and the values of the industry may have shifted, so thorough planning and adaptability is key.
During the crisis, leaders of big organizations are often seen as role models, so it is important for those on the board and members of upper management to act decisively and with purpose. While the board’s priority should be to support the management’s response to the crisis, it is also important that the board not overstep and encroach upon management’s operating role. Moreover, one of the most important responsibilities of the board during the crisis is to communicate with and to protect the interests of the investors and shareholders.
The board should ensure that the management’s model, for operating during the crisis, is scalable in the event that issues escalate. This includes designating a team to develop strategic crisis responses to a variety of scenarios, to ensure that the company has a plan in place for whatever happens in the future. The board should frequently review and discuss these action plans to make sure the company is equipped to deal with the crisis as conditions change.
The board should increase their leadership capacity. This includes reviewing communication plans and reputation management strategies, communicating with shareholders and managing investor expectations. These uncertain times also call for the reaffirming of clear succession and contingency plans, on behalf of the board.
It is likely that many members of the board and management already have experience in crisis management from working through other tumultuous times such as the period after 9/11 and the financial crisis of 2008. This experience can help to strengthen the board’s decision making, however biases that come from experience can be dangerous, so including a variety of perspectives in the decision making process remains paramount to the success of the board.
When the crisis begins to subside the board should make sure to engage on major decisions right off the bat–most importantly designing effective health and safety protocols to protect employees and monitoring the management team’s plans moving forward. The board should also review the company’s operating model and continue to engage and communicate with shareholders, post crisis and the board should reassess their value proposition and plan for the next crisis.
During the crisis the board should reconfirm their roles and responsibilities and make clear the division of roles and mandates between members. It is especially important during uncertain times to avoid the distraction of unnecessary conflicts. Directors may need to invest more time than normal on crisis management, which may mean a relaxing of the annual agenda. Communication between the board and management is paramount in order to ensure that the company can function effectively during and after the crisis.