The work of boards and executives – and their relationship with each other – has adapted to suit the urgent needs of the Covid-19 crisis. Yet the fundamental role of the board remains: to make sure that there’s the right vision and strategy, the right resources and governance – even if the vision right now is simply to survive.
Boards and execs will be somewhere on this spectrum:
Ideally, you’ll be in the middle, with clear and well-understood roles and a healthy level of intersection, working together on the big things. In a less than ideal set-up, you might be operating in parallel universes or in the stressy muddle of trying to do each other’s jobs.
Finding the right balance of oversight and support through a period of high pressure is tough for boards. Some have formed Covid-19 sub-committees or task forces. Others have formed two groups drawn from execs, non-execs and/or trustees: one focused on the here and now, the “Resilience” phase; the other on “Recovery and Resurgence”. These approaches can work if you recognise the need to adapt again later to avoid the risk of groupthink that comes from a narrower and less diverse decision-making group, or the feeling of exclusion among those not in the inner sanctum.
During such intense periods of work, chairs have to find the right balance of effectiveness and pressure, pace and rigour, while being sensitive to the pressure that executives are under. The aim is to try and keep your board near the middle of this chart.
During the COVID-19 crisis, most boards haven’t needed to be told what the right thing to do is and have done their very best to balance the needs of stakeholders, recognising that people’s safety and wellbeing has been the top priority.
They have also been conscious that fresh approaches to risk management and building in resilience are now required. In future, I think there will be a greater focus on planning for consequences rather than for events, mitigation planning and achieving much greater levels of financial and operational resilience. Stretched balance sheets, over-complex supply chains and processes operating at capacity all increase an organisation’s fragility.
Decision-making is also likely to change. Classic strategy, annual plan and budget processes were already breaking down before the crisis. An overall vision and strategy to frame our decisions is still needed, but many boards have in practice been taking “lockstep” or “decision tree”-type approaches to investment, recruitment and other significant decisions for some time. In an increasingly volatile context, these approaches – where the executive has the freedom to proceed once certain preconditions have been met – provide greater clarity, flexibility and agility.
Welcome to the new decision-making
Not all decisions need to be taken in the same way. The “early, mid, late” approach has served well those who adopted it through the crisis. This is where you break big decisions down. First comes an early, short and focused discussion on the issues involved. Then, once the executive, perhaps with a non-exec buddy supporting them, has done some more detailed work and come back with a shortlist of potential choices, a mid-phase discussion is held where the board can be clear on preferences and parameters. Finally, the big decision is taken during a discussion with as much focus on whether the implementation plan is right as on the decision itself. This helps to avoid “smash and grab” decisions made in haste, and it often takes up less executive time.
Given the pace at which so many decisions have had to be taken – and without all of the facts at our disposal – hindsight is bound to reveal that we made some poor choices. One thing I intend to do as a chair is to make sure we take time as a board to reflect and learn – not just from the stinkers but also from the ones we got right.
The changing composition of boards
Given the big changes in both context and strategy, the composition of boards will need to change. In a crisis, we experience the joy of seeing new stars emerge and the frustration of realising that others have proven less robust and adaptable than expected. Many board members, especially the “overboarders” (people who sit on too many boards), may feel that the changed circumstances are not for them.
Boards will also need to change their ways of working. I anticipate the increased use of apps such as Board Intelligence and Diligent, as well as a permanent change in how we communicate and the nature of board papers. Yet we also need to be careful about some of these changes: just because we made it work in a crisis doesn’t mean it’s the best way to do things. And we mustn’t forget about the bigger issues, such as our diversity and inclusion and climate change agendas.
During this crisis, we have seen some terrific examples of leadership from the German Chancellor Angela Merkel and New Zealand Prime Minister Jacinda Ardern. They and others have combined calmness, empathy, a grip on the detail and clarity of communication, such that they have engendered a level of trust. They have also shown humility as well as confidence. They’ve not just had an eye on today, but the future. The leaders of many organisations have been personally challenged like never before and risen to the challenge.
We must all remember these wise words, often attributed to Maya Angelou: “They may forget what you said, and they may forget what you did, but they’ll never forget how you made them feel.”
Seven ways boards will change
1. There will be greater focus on planning for consequences, rather than for events.
2. Financial and operational resilience will be key.
3. Annual plans and budgets may give way to “lockstep” or “decision tree”-type approaches that enable greater flexibility.
4. Watch out for the emerging “early, mid, late” approach to decision-making, which seeks to break big decisions down into three phases.
5. The crisis will reveal your organisation’s new stars.
6. There’ll be more use of board apps and other forms of communications technology.
7. Contextual issues such as climate change and diversity will keep rising up the agenda.
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