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.
1. 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 are 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.
Decision making can sometimes seem less like a consensus over the telephone or in a virtual environment.
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.
2. 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.
3. 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.
How We Can Help: RSR’s Crisis Response Team
We have formed a Crisis Response Team (CRT) to help our clients, especially boards and CEOs, through these turbulent times. The team is made up of seasoned board and CEO advisory consultants whose experience stems from guiding numerous organizations through crises. We have been preparing for years for these types of emergencies and are poised to help you find solutions and support.
Our tools were developed while advising boards during times of risk and turmoil.
Our team can provide temporary and long-term stop gap measures to be sure your business goes on uninterrupted. Investors will inevitably inquire about your organization’s emergency succession and fallback options. We are here to be sure that you are prepared to answer those questions intelligently and with depth and purpose. Our CRT team is ready to jump in right now with your boards and to join board meetings if that’s helpful. We will continue to stay close to our clients during this national emergency and pandemic and please don’t hesitate to reach out to any of us below if we can be of assistance.
Crisis Response Team for Boards and CEOs
|Barrett J. Stephens
+1 (203) 618-7022
|Carter L. Burgess
+1 (203) 618-7060
+1 (214) 445-4204
|Alan J. Renne
+1 (203) 618-7015
|Rebecca Holland New
|Gregory E. Lau
+1 (203) 618-7030