FCCS News & Insights

Uncertainty, Crisis & Renewal: The Board's Role

Governing an organization effectively becomes even more important – and challenging – during times of uncertainty and crisis. Given the pandemic sweeping the world, many boards are rightly concerned that their organizations continue to support their business and their stakeholders effectively. Boards are also recognizing that this is a time when organizational values are critical, and that stakeholders are watching how organizations execute on those values. During crisis, the board and its executive team need to be highly aligned, serving as effective strategic partners to ensure the organization weathers the crisis and comes through it stronger than ever.

Critical areas of focus for boards as their organizations, members/owners and stakeholders confront the current pandemic crisis include:

Business Continuity: Most organizations have implemented the business continuity plans they had in place to respond to crisis situations, maintaining close contact with their customers and working to maintain their organizational culture while employees work remotely. Looking forward, boards should ensure that their organizations’ crisis plans consider all possible scenarios rather than focusing only on probable scenarios so they are prepared to respond quickly and appropriately during Black Swan events like the current pandemic. Succession plans should also be examined and updated.

Risk Management: Boards should ensure that internal control processes remain in place and are being strengthened to accommodate the remote work environment. At the same time, other risks should also be assessed, including financial, strategic, operational and reputational risks. Boards should ensure that their organizations are and remain adequately capitalized to weather this and any future crisis, and should ask their management teams to create a dashboard of early warning signs to identify possible future crises.

Communication: During this crisis, organizations should be increasing their communication to customers by a factor of 10, taking the opportunity to reinforce the organization’s values and the strength of its culture. Stakeholders are looking for honesty and transparency, even when the news isn’t positive. Show concern, but focus on the positives and inspire optimism for the future – employees and customers need to know how the company will renew itself, become stronger and be better prepared for future crises. Most critically, ensure that communication is consistent across the organization including the board.

Focus on higher purpose: Research shows that companies that have done the work to discover and articulate their higher purpose show better results, particularly coming out of a crisis. Boards should work with management to ensure the organization’s higher purpose is communicated clearly to all stakeholders and underlies board and management decisions.

Maintain board engagement: With in-person board meetings widely cancelled, maintaining director engagement can be more challenging. Board chairs should continue to hold board meetings remotely, ensure that committees are continuing to meet, and reach out to each director for input about sensitivities and anxieties they’ve heard from stakeholders.

Response planning: Any crisis carries a degree of uncertainty that makes it difficult to plan long-term. Boards need to recognize and accept that their management teams need to plan in short bursts, responding quickly to the changing environment as information becomes available.

Questions for management: To maintain oversight, boards should ask their management teams regularly how the organization is managing its risks and internal controls, gathering critical information for decision making and communicating to its stakeholders. It should also ask the CEO what he or she needs from the board to manage through the crisis.

Looking forward: While it governs through the current crisis, the board should also be planning for the future including how the organization will become even stronger through its crisis response and how it will capitalize on any efficiencies identified during the crisis.

Lessons learned: As tempting as it may be to breathe a sigh of relief when a crisis passes, it’s essential that boards investigate their organization’s response and take steps to improve preparation and processes in advance of a future crisis.

To connect with Leslie Hilton, email her at leslie.hilton@fccservices.com. She looks forward to hearing from you! We’re here to help.