Providing leadership during a crisis should be a key consideration for every board, as directors are responsible for safeguarding the governance and viability of an organization.
However, finding the right balance between action and oversight is critical. The board should play a supportive, internal, and independent role while also ensuring that the organization is acting in the best interest of its stakeholders. In addition, boards are expected to act quickly when problems occur, making the role of governance before, during, and after crises as important as ever.
So what exactly is the role of a board during a crisis such as the COVID-19 outbreak, and how can directors use their remote leadership to support their organization? Here are 6 considerations to examine.
Boards need to take an active role, not just a reactionary one, when working through a crisis. However, directors should resist the temptation to jump in and hinder the management team’s ability to get their jobs done. According to research by Deloitte, boards provide the most value during a crisis when they provide critical oversight, long-term planning, and strategic support. They can also play a useful role in engaging with key stakeholders, such as government and business partners. And even when this kind of support must be given virtually, boards can still provide important remote leadership to an organization.
Boards should be primarily concerned with acting as a support for their organization during a crisis. Not only can directors provide confidence to key stakeholders, they can also be the “critical friend” that all CEOs need when working through difficult situations.
The ability for boards to do so relies on the strength of the relationship between the board and management teams, as well as the quality of information exchange between the two. To be successful, establish a process that determines how updates are provided, who is responsible for them, and how often updates are given.
The first priorities for boards who are exercising remote leadership during a time of crisis should be to ensure that both board members and employees are safe. In conjunction with the management team, ensure that employees have a safe working environment and flexible work arrangements, and then do the same for board members. Review and update your board bylaws to allow for virtual board meetings, and consider which video conferencing and board management software you’ll use to streamline remote board work. Because so many people are now working online only, it’s critical to establish proper means of secure collaboration and communication for your remote leadership team.
This is also the time to develop emergency plans. If employees must still be physically present at work, help the management team develop a plan should the workplace require quarantine. Consider also implementing an emergency succession plan in the event that the CEO or any other key leadership team members are unable to perform their duties.
Next, consider how the board can help with your organization’s crisis response plan. Start by having the board run through different scenarios and assess the organization’s ability to be prepared for different outcomes, then work with the executive team on different plans of action.
When helping to build your crisis communication plan, remember that it’s always best for organizations to communicate in one unified voice. Determine who will be the key spokesperson to communicate and send messages of assurance to customers, vendors, partners, donors, and the media. Be sure to monitor the day-to-day advice of your government bodies and consider it in your communications.
As you develop and execute your plans, involve different board committees and take advantage of board portal software to enable efficient communication and collaboration between board members.
In partnership with the CEO and executive team, evaluate the biggest risks and vulnerabilities that the organization is currently experiencing. Research how your government is helping organizations, and apply for any extra funding that’s available to you. Then, taking into account the impacts of the whole crisis, evaluate and update your organization’s project and product priorities to better align with the current situation.
When evaluating risks, make sure to monitor cash flow, capital expenses, and collections for liquidity risks. You may want to reduce or suspend dividend policies or downgrade or withdraw previous earnings guidance due to the unpredictability of COVID-19. Consider additions and revisions to risk factor disclosures, and review your directors’ and insurance policy language that may be impacted by financial distress or potential restructuring.
No organization wants to deal with a crisis, but sometimes, these kinds of events can enable organizational transformation for the better. According to Deloitte, this “new normal” may look very different in terms of governance, strategy, and regulation, but it can often expose new competitive advantages that were not viable before. Boards should be ready to support, direct, and be part of this change.
The board should be helping the CEO to determine what opportunities exist to transform and modernize operations, and they can also recommend new strategic investments that could help the organization succeed post crisis. Be on the lookout for restructuring within your industry, too, as mergers and acquisitions could have future implications for many organizations.
As you work through the crisis, consider the success of your organization’s response. Are your processes working? Is information flowing well, ensuring adequate and timely communication with stakeholders? Even if things aren’t going as well as they could, consider why things went wrong and what could be done to improve in the future.
Sometimes, crises such as this also require reorganization and recapitalization post crisis. Establish a plan to deal with these kinds of outcomes so that they can be dealt with in the best way possible.
As disruptions continue around the world, remember that the team at Aprio is ready to support you. Since 2003, we’ve been helping organizations across every industry run secure, virtual board meetings and connect remote leadership teams.
During the COVID-19 outbreak, we’re offering our board management software for free until July 31st for new customers looking to transition to remote board meetings. For our current customers, we’re also offering discounts on secondary portals and additional user licenses. Contact us to learn more.
“I wanted to let you know what a comfort it is, especially during this time of global crisis, to utilize Aprio to maintain the social distancing requirements necessary to ensure the health of all. Aprio will allow SPARK to conduct its meetings safely and securely and ensure that matters of election can be handled comfortably through polling. In this time of uncertainty and crisis, I’m very grateful for my relationship with Aprio and its extraordinary facilitators.”
– Carol Jaquish, President & CEO, SPARK the Energy Credit Union