In case of emergency, break glass: New priorities for governing boards
Tuesday, June 09, 2020 @ 1:13 PM | By Helle Bank Jorgensen
|Helle Bank Jorgensen|
In-house counsel, epidemiologists, the medical community, business leaders and heads of state remain uncertain about the expansion of testing capabilities, the development of antibody testing, the nature of immunity and potential innovation that may accelerate vaccination development.
The good news is that opportunities exist for those with enough foresight to position themselves in a post-COVID-19 world order. SMEs are continuing to rely on national/subnational fiscal stimuli, while large corporations are cutting spending, halting buybacks and cutting dividends to ensure continuous cash flows.
To respond to this time of economic ambivalence, we at Competent Boards posed four questions to our roster of 75 global leaders and board members. We wanted to know from them what they considered, in the middle of the pandemic, to be the highest priority short, medium and long-term considerations needed to help leaders.
Additionally, we inquired about what can be done when restarting tumultuous global markets that can lead to climate challenge solutions or advance the UN Sustainable Development Goals (SDGs).
They identified a number of steps that boards and companies can take to remain resilient, ensure business continuity and build for the future.
Highest priority short-term agenda items
Overwhelmingly, our global leaders identified the health and well-being of a company’s human capital as their highest priority. Providing support tools, flexible working hours and employee assistance programs that address increased stress of working and living in these circumstances. Further, protecting customers and suppliers are concerns that must be addressed.
Once a company has ensured the safety of its stakeholders, it is paramount it re-examines organizational focus. Operational agility will be key in adjusting to changing conditions and unknown customer behaviour. How companies can enable resilience, in addition to running fitter operations, should also be an important item of discussion on any board member’s agenda.
Additionally, leaders consider these to be the most important short-term agenda items:
- Staying calm: having a reflective and calculating mindset is of utmost importance in scenarios where there is limited information about causes, scope and expectations. This allows leaders to make the best decisions possible and reassure those they lead.
- Cash flow and liquidity management; having the available liquidity and equity to execute a new plan.
- Revise the company’s business continuity program and apply it to secure key dependencies from key employees, suppliers and customers.
- The role of the board: Boards should support and be aligned with the CEO and senior management team to make sure the goals of survival and long-term development are feasible and will sustain or improve the company’s reputation in the medium and long term.
- Boards must reassess frankly their role and attitudes. The way they have operated will probably no longer be as appropriate and innovative as what is now needed. This requires significant self-assessment.
- Intensive internal and external factual, evidence-based communication even when there is limited new information.
- Ensure that actions and ideas adhere to the core values of the company.
- Use adaptive planning: adapting plans to ever-changing circumstances. Accept that adaptive planning skills are probably not as adaptive as you readily assume them to be.
- On the key issues of environmental, social and governance (ESG): Operationalizing S, so we can still have E and G, and add another E for employees.
- Some companies may be able to reconfigure and retool their manufacturing to meet medical supply shortages. If your company is in such a position, this is important to address in the short term.
Remain resilient in midterm
Many leaders will be occupied with their company’s shorter-term survival strategies. However, it is imperative that leaders not lose sight of the medium and long term. The global faculty suggests that in order to remain resilient in the medium term, companies will need to adopt adaptive strategies while recognizing trends that will accelerate in the future, such as working from home, e-commerce and embracing digital tools. These will be a departure from the short-term safety habits that are unique to the COVID-19 pandemic.
Leaders of companies must also be able to identify key dependencies in their supply chains. This implies reimagining and resetting operations under new protocols and drawing inferences from a wide range of scenarios to determine what pathways, if implementable, will enhance performance, productivity and innovation.
The following actions and advice were also recommended as important to remain resilient in the midterm:
- Recognize the most vulnerable links in a company’s operations, and how you may wish to support them. Renegotiating key agreements to ensure business continuity is a high priority. It is crucial to consider while everything is changing, ways to continue to win the “hearts, minds and wallets” in a company’s core ecosystem.
- Create an evaluation plan and choice matrix based on plausible scenarios of the crisis, incorporating the emerging societal and business contexts and consulting diverse, key stakeholders and sector peers.
- Companies may need to accelerate their innovation cycles, as quick and modular responses are essential to keep up with the ever-changing environment.
- Consider how a business may mobilize capital received by a national/subnational fiscal stimulus.
- Do not lose sight of the company’s sustainability goals and disclosure/reporting standards. The medium term, which is often synonymous with restarting the business, must include the company’s sustainability agenda.
- Building trust with stakeholders and society: continued honest, authentic, authoritative communication, including dilemmas, doubts.
- Understand how ESG may be used as a differentiating factor in the medium term, and how it may be a proxy for more effective management during difficult situations.
- Study the benefits associated with insourcing and regionalizing the supply chain.
- Assess readiness for how the new “normal” may play out in unforeseen ways, to ensure that the board is prepared for an exit scenario post lockdown.
What leaders must anticipate to remain resilient
Remaining resilient means companies have an opportunity to refit their business models, not only to survive the pandemic, but to thrive with a business approach that can be aligned with the natural environment, and profit from opportunities that changes in social behaviour will have created.
This is the first of a two-part series. Read part two: In case of emergency, break glass: Purpose-driven corporations.
Helle Bank Jorgensen, email@example.com, is the CEO of Competent Boards Inc., which offers the global online Competent Boards Certificate Program, that helps leaders identify and proactively act upon material ESG, Climate and Sustainability risks and opportunities. She is an experienced board facilitator, board member and serves on His Royal Highness Prince of Wales A4S Global Expert Panel as well as WBCSD Governance & Internal Oversight High-Level Advisory Group. She is a business lawyer and state-authorized public accountant by training.
Photo credit / AlexLMX ISTOCKPHOTO.COM
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