How Can the Board Support Management During the COVID-19 Pandemic (3/3)
This is the third article of the trilogy on the topic of Board and Management roles and responsibilities during and after the pandemic. Article 1/3 focused on the role definition for Management and the Board. Article 2/3 offered key strategic questions for the Board to discuss with Management.
This article provides additional perspectives and considerations on Board and Management roles and responsibilities during three distinct business phases:
How to react to the crisis;
How to position the company for the rebound;
How to ensure success in the post COVID-19 business environment.
I will summarize my main takeaways distilled from several articles written by Deloitte and McKinsey & Company. I have referenced these sources below for a comprehensive review of each of the concepts I will now present.
Roles, responsibilities and focus shift as companies deal through the crisis. A clear division of roles and mandates between the Board and Management is key to avoid distraction and unnecessary conflicts, make collaboration seamless and create long-term value.
As companies navigate from today’s “turbulence” toward tomorrow’s “unknown” the Board and Management will act differently across three distinct phases:
Resolve and Resilience: reacting to the crisis
Return and Reconstruct: positioning for the rebound
Reimagine and Reform: ensuring sustainable success post COVID-19
I will now elaborate on each of these three phases.
Resolve and Resilience: Today most companies and Boards are still reacting to the crisis and supporting the on-going business. “Resolve and Resilience” become the guiding principles during this phase. Here are some examples.
The Board’s priority must be to support Management’s crisis response actions while safeguarding the longer-term shareholder and stakeholder interests. Management’s crisis response team is responsible for employee safety, protecting the balance sheet and interacting with suppliers and customers to ensure business continuity. Furthermore, the crisis team should be ready to come up with tactical responses as new business issues emerge or risks escalate. The Board should frequently review and discuss with Management the on-going crisis action plans and readiness to stay ahead of the evolving crisis.
The Board can help manage the external expectations by engaging with select stakeholders. Members of the Board may decide to maintain an open dialogue with other stakeholders, regulators, investors and even activists and ask for their views and perspectives. These actions will ease the pressure and help the Management team focus on running the business and staying nimble to deal with new challenges.
The Board should support Management in addressing immediate operational risks, securing cash flow and financial stability. However, it is up to the Board not to lose sight of the long-term priorities such as maintaining relevant competitive advantage, and investing in digital transformation and customer experience improvements.
Members of the Board with experience in managing external shocks such as the aftermath of the attacks on 9/11 will be valuable sounding boards for a management team putting together actions plans during all the current uncertainty. Board directors’ insights can help constructively challenge business-continuity plans, alternative supply chain strategies, consumer engagements programs, and other.
Return and Reconstruct: As business conditions start to stabilize, the Board must ask Management to adopt a “Return and Reconstruct” mentality. Boards can add value by asking early on for alternative scenarios and detailed plans to maximize top and bottom-line growth in each of these possible scenarios.
As employees start returning to work, the Board should review plans for effective employee health and safety protocols. Management should discuss with the Board how to balance options to grow via new product introductions and increased production capacity while protecting the balance sheet, as capital markets may still not be fluid or abundant.
During this phase, it is critical to rethink and validate the product-market priorities, customer engagement or speed of technological innovation. Board should encourage Management to carry out a broad strategic re-evaluation and engage the Board in joint strategy sessions.
Board and Management should benchmark comparable organizations and ensure a robust HR plan is in place to assign the best talent to critical strategic initiatives and empower new leadership talent that may have emerged during the crisis.
Reimagine and Reform: As businesses start embracing the next normal and start preparing for the post COVID-19 business environment, they will enter the “Reimagine and Reform” phase.
During this phase, Board and Management should understand how industries, supply and value chains have changed as a result of the pandemic and how new consumer behaviors have now become the norm. This early insight can make a significant difference between leading or lagging in the future and will best position the company to thrive after the rebound.
This phase requires a reassessment and revalidation of the organization’s value proposition. The Board should ask Management to benchmark competitors’ strategies and where they are investing to grow the business or fill the gaps in their supply chain and distribution channels.
Also, during this phase it is likely for many companies to adopt a combination of remote and on-site working modality. On the one hand, this modality may result in greater access to talent, lower costs, improved employee experience and, in some cases, improved productivity.
But, on the other hand, it is important for the Board to review how Management intends to preserve or “re-write” the organizational norms that are the foundation for company culture and performance expectations. For instance, how the new work modality will preserve the elements of collaboration, cohesion and shared trust that are reinforced when working in one location and with frequent in-person interactions.
These insights, discussions and best practices will be the foundation for Management to recommend the necessary strategies, tactical actions and key performance indicators to sustainably grow revenue and bottom line in the new market place.
It is conceivable that the current business model may have to be “re-imagined and reformed” as a result of all these considerations and discussions.
This concludes the three article series on how the Board and Management should collaborate during and after the COVID-19 pandemic to achieve long-term value creation and sustainable success.
Please refer below to the original Deloitte and McKinsey & Company articles: