Few would argue that we are now living in a VUCA world. The acronym was coined by the U.S. Army in the 1990’s to describe the post-Cold War world (volatile, uncertain, complex and ambiguous). When external and unforeseen forces, such as a national emergency and the COVID-19 pandemic, cause a misalignment in an organization, boards and CEOs must rapidly adapt their strategy, processes, and people, around the evolving needs of their customers. Organizations that are agile and able to respond quickly will be primed to outmaneuver their competition and create a new future in which they can survive and thrive.
One of the most important and highest risk groups of individuals in our business ecosystem are boards of directors. We have been in close communication with our clients these last few weeks to support them as they plan to mitigate disruption at the board level. Based upon the actions of many clients, we are sharing a few takeaways that all boards can consider when navigating these uncharted waters.
Consciously Aim to Protect Culture and Chemistry in the Boardroom
A majority of our clients have opted to conduct their upcoming board meetings virtually, and some boards of prepared and progressive companies are considering virtual annual meetings. If in-person board meetings continue to be disrupted, it will be important for board members to exercise some of the best practices developed by successful virtual teams, such as setting a clear meeting agenda and agreeing on rules of engagement and discussion.
It is also key for board members to heighten their communication skills and emotional intelligence. If ever there is a time to over-communicate and ensure empathy is factored into decisions, it is now. Keep the lines of communication open with all board members. The Lead Director or Chair is regularly speaking with the CEO and possibly the Chairs of the committees (if actionable work is being done). However, board members can sometimes be the last to receive news. To ensure the culture of transparency and engagement remains top priority, make sure all board members are receiving timely information and kept in the loop on what is happening. Further, it is reasonable for boards to expect CEOs to provide daily (or more frequently) dashboards of key performance indicators and other news, so that communication remains up-to-date.
The robust discussions and the head nodding in agreement is lost, but the Lead Director can take a moment and describe what they are observing (Such as, “I see a lot of heads nodding in agreement but we will pause for questions in a moment.” Or “I see a number of people looking anxious to chime in. Please be patient and I will call on each of you.”)
Trust, transparency, and accountability can quickly erode inside a boardroom during a crisis. It is imperative for the Chair and Lead Directors to put a road map in place to ensure board effectiveness and impact while preventing self-interests from emerging. Conflicts are more difficult to resolve in boardrooms when directors do not have the necessary face time for clearing and resolving differences of opinions. How the internal board dynamics at BP quickly eroded during the Deepwater Horizon spill is a reminder of what could happen to those companies who are slow to respond.
Practice Using Technology
Some public company board members may not be adept at utilizing technology to attend meetings or engage in discussions virtually. It’s important to minimize discomfort and embarrassment by encouraging board members to practice or test their virtual capabilities ahead of meetings. Boards should have technology teams on-hand to equip and prepare directors and help troubleshoot technical issues. Directors should also practically prepare for virtual meetings – likely much longer than the telephone committee meetings they typically experience. Now is a good time to send your board members reminders of telephone etiquette. It may seem obvious but suggest that they prepare a pitcher of water or a pot of coffee and to have snacks readily available so they can remain engaged with the cadence of an audio or video conference. These types of little things can make a long meeting experience much more productive for those on the other side of the call. And remember to be near a power outlet and to use your mute button. Any distraction takes away from productive dialogue and critical decision making.
Minimize Any Potential Succession Disruption
Most management teams have developed contingency and succession plans for times like these. However, as the shock to the economic system is not fully known, it is imperative that boards take the time now to agree on and clearly identify the key positions and individuals that are critical to the success of the organization and begin the grooming process – and contingent grooming processes – sooner rather than later. Boards should not only have a comprehensive understanding of the leadership bench underneath those critical roles, but they should develop and continuously refresh a short list of external leadership options which can address any gaps in the succession plan. In addition, all boards should build their own director succession plans to ensure there is continuity with committee chair positions.
The next few weeks will undoubtedly be challenging times for boards.
Chemistry, performance, and decisiveness in virtual environments, and under stress, will be key to any board’s ability to be agile and responsive to customers. Having the right board composition can be critical at times like these, and boards that are effective and propel diverse thinking will find better solutions and be a step ahead.
About Our Board & CEO Services Practice
Our Board and CEO Services team partners with CEOs and boards to understand issues, assess opportunities, and strategically advise to ensure sustainable growth strategies are optimized. We are committed to executing an action plan that addresses sensitive and complex leadership needs and ensures clients are well positioned for the future. RSR offers trusted advisement rooted in years of experience and market knowledge. We excel at optimizing board and CEO effectiveness through transformative thinking about structure and operations. This helps us to engage closely with clients to drive greater accountability and enhanced performance. Our practice group leverages RSR Partners’ renowned experience in corporate governance with the firm’s industry and human capital consulting expertise to create an integrated and seamless approach. The range of services we provide to boards and CEOs include: