This is the second article of a three part series on “How Can the Board Support Management During the Covid-19 Pandemic”. The previous article (1/3) covered the role definition of Management and the Board. Also, it discussed several relevant questions on working remotely, cyber security and governance priorities.

This article (2/3) will propose key strategic questions for the Board to discuss with Management on the following six topics:

1. Business Model

2. Customer experience

3. Supply Chain

4. Learning/ benchmarking/ innovation

5. Environmental, Social and Governance (ESG)

6. Internal Controls and financial reporting

1. Business Model:

Question: What does the new competitive market opportunity look like going forward, and what are the strategic and business model implications?

Firms will likely have to adjust to the pandemic’s impact on market demand for their products and services. Organizations that can digitize their offerings have will have to do so rapidly in order to compete. Businesses dependent on gatherings of people will need to revisit their business model. Furthermore, potential health regulations have to be considered. 

Given the level of uncertainty it may be useful to break planning periods down into smaller time frames so that Management can evaluate the market as it evolves, align operations against the new realities, and pivot accordingly. Most companies should also re-assess their liquidity and capital structure needs.

2. Customer Experience:

Question: How should Management assess the customer experience and adjust the product and service offerings accordingly to sustain and increase top-line growth?

As consumer needs and habits are constantly changing and the market is rapidly evolving it may be critical for companies to pivot and transform to effectively compete and win in the new marketplace. Does Management have a clear view of how the company will optimize the customer experience? Does the organization have the right people and skills in place to rapidly adapt? How is the company set up to reward a nimble and innovative culture?

3. Supply Chain: 

Question: What changes have to be made to the current supply chain to minimize disruptions and ensure greater reliability?

The risk of supply chain disruption has become a recurring topic in many boardrooms.  Failure to address this imminent risk opens up directors and executives alike to harsh criticism, given the effects of the pandemic. 

Companies should devote more discussion time to disruption risk scenarios as they evaluate the elements of quality, cost, and time. As they do so, variables such as changing customer preferences and new regulations requiring domestic or regional suppliers have to be factored in as well. 

4. Learning / benchmarking / innovation:

Question: What has the organization learned during the pandemic disruption? What can be learned when benchmarking competitors and emerging technologies? How should the company incorporate such learning? 

Relevant innovations, new sources of revenue, useful technologies, as well as flatter organizational structures, have enabled increased connectivity with customers, employees, suppliers, and partners. Companies should learn from digital leaders who have done very well during the pandemic. Benchmark and learn from digitally advanced competitors who manage costs through highly automated and easily scalable processes. 

Take advantage of the opportunities created by the uncertainty and volatility to accelerate innovation. Resist the temptation to have the organization fall back to the way it was. Leverage the innovative solutions, cost reductions, and process improvements that Management has achieved to become the catalyst for the company’s “new normal”.

5. Environmental, Social and Governance (ESG):

Question: How are evolving market expectations affecting the company’s environmental, social, and governance (ESG) strategy?

Directors should be well aware of the expectations by institutional investors and asset managers regarding the importance of ESG matters in addition to acceptable financial performance. Boards can expect continued stakeholder focus on relevant ESG metrics. 

The rise of stakeholder capitalism over shareholder capitalism is real, is here to stay and ties back to the critical fact that a firm needs social license to operate—not just a business license. Things that governments used to do, such as act to protect the environment, provide healthcare for the vulnerable, or combat homelessness and racism, now need to be part of enterprises’ ESG priorities. 

Successful boards may have the resolve to proactively intervene to ensure that progress is made toward meaningful and clear ESG metrics. If this is not a priority, some firms may not be able to retain their best employees, attract top directors, or maintain their ability to finance the business.

6. Internal Controls and financial reporting: 

Question: How does the company ensure robust internal controls over financial reporting as a result of the changes occurring in the business during COVID-19?

Severe economic downturns have historically led to financial reporting misstatements even in the well-managed companies. Layoffs, furloughs, changes in processes and workflows, transitioning to a remote workplace, and initiatives to focus on the customer can create opportunities for internal control deficiencies and even fraud. 

The audit committee should implement increased oversight and vigilance given the unusual issues around asset impairments, special government funding programs, going concerns, and new risk factors, in addition to any critical audit matters raised by the external auditors.

For further ideas on how the Board can further support Management during Covid-19 please refer to articles 1/3 and 3/3 of this three part series. 

Also, please refer to the NACD references and publications below:

https://www.nacdonline.org/

• Refer to articles on Covid-19; strategy; crisis communication and crisis management; cyber security and risk management

• Refer to articles by Jim DeLoach; Don Lowry; David Brown; Barton Edgerton; NACD - Adaptive Governance during COVID-19: A practical guide, et al.

COVID-19 has spread all over the world. Some sectors are slowly returning to a “new normal” while many others continue being heavily impacted and are struggling for survival. CEOs and their teams have never before been more in need of the foresight and seasoned judgment that a well-functioning board of directors can provide. This may well turn out to be the moment when a board proves its value or shows its flaws.

There are topics that board and committee chairs should prioritize and key questions that should be asked in every board meeting as the board and management steer their organizations through unprecedented uncertainty. Many board chairs and CEOs are looking for guidance from organizations like the National Association of Corporate Directors (NACD) on the new role they should play in these challenging times. Many articles have been published on topics such as board governance during COVID-19, crisis communication, crisis management, cyber security, risk management and strategy review and redefinition.

I will summarize several subject matter expert recommendations published by the NACD in a three-part series on the above-mentioned topics. This article (1/3) will highlight the role definition for the management team and the board. Also, what are some of the questions that should be asked and addressed while managing the effects of transitioning to a new workplace, a different business model and the impact on the organizational structure? 

1. The role of Management and the Board: Your CEO and the management team are under huge pressure to handle the rapidly evolving and potentially escalating issues the crisis is throwing at them. Management is responsible for developing and implementing the overall strategy to protect the health of the workforce and enable them to continue to work productively. Furthermore, management has to be vigilant of signs of mental fatigue among employees.

The board is responsible for advising the management team as it executes the company’s response to the crisis and monitors progress. The CEO’s job is tough enough at the moment. Boards should resist the urge to get overly hands-on. Rather they should follow the old saying: “nose in, fingers out”.  

2. Management’s internal communication plan: Communications are vital during any crisis. Communication is more than disclosure: it is about transparency. It is important to share with multiple stakeholders the impact of the crisis, however, the most important communication is for the benefit of the employees. What are their new objectives, the modified strategies and new action plans? Is there an appropriate sequence of communications from various leaders as to what is happening in other departments and business units so that employees are not feeling left in the dark? Do internal communications convey empathy to employees? Are they forward-looking and trustworthy to reassure everyone that employee commitment and contribution is very much valued and appreciated. 

The board should ask management to develop a strategic crisis-action plan that will guide the organization’s response over time and request the same standard reports on the up-to-date scenarios and actions that management reviews. These reports will keep the board abreast of the major issues the management team is working on, what new scenarios it is considering, and what actions it is planning to take.

3. Ask management about the company’s transition to a remote work environment. Highly nimble organizations can make the transition to a remote, work-from-home workplace relatively seamless—that is, among employees who can work remotely. But this transition can present formidable challenges to organizations that are anchored to their offices and physical facilities. During check-ins with management on crisis response, ask what the company is doing to support the technology, tools, and cultural challenges created by the sudden shift to virtual work, if applicable. 

Prior to the pandemic, most businesses were hesitant to allow widespread telework policies for their employees due to a variety of concerns, including technological risk and potentially reduced productivity. According to a study by the Brookings Institution, less than 25 percent of the US workforce worked some hours from home prior to the pandemic. This situation has drastically changed after most organizations have shifted to remote work only. 

Boards and management have to find a way to find a balance between protecting the security of the organization and allowing employees to carry out their duties while working from home through digital transformation. 

Two of the traditionally most difficult cyber security issues– malicious insiders and supply chain or third-party vendor services- come under increased pressure as organizations rapidly shift to remote-only day-to-day operations. As organizations adapt to telework, more are relying on third-party and teleworking cloud services to ensure business continuity.

Here are several cyber security questions for the Board to review with management:

• How many third parties have access to the company’s systems

• What controls are placed on them

• How does the Board receive actionable cyber-threat intelligence

• What is needed to fully include cyber security oversight in current supply chain management

• What steps will management take to distribute protocols for tracking incidents, roles, responsibilities and escalation procedures

• How are core business functions integrated into a cyber security response plan

• How often and effectively are employees being trained on cyber security threats and best practices

4. Which areas of business and oversight processes may need to be reassessed: In a recent study by the National Association of Corporate Directors (NACD), directors identified the following areas for their companies and boards to reassess:

• Remote working and alternative work schedules 

• Strategy—both short and long-term

• Crisis readiness and response 

• Supply-chain/third-party risk 

• Labor force, including automation and artificial intelligence 

• Balance sheet, use of capital for buybacks and dividends 

• Company’s risk profile and ERM processes 

Directors also mentioned several aspects of the current board’s operations, engagement, and effectiveness during COVID-19 as potential areas for improvement as follows:

• Understanding the company’s strategy and risk profile 

• Willingness to challenge management on fundamental assumptions regarding strategy and risk 

• Need for more frequent meetings and informational communications 

• Information flow and reports to the board 

• Allocation and coordination of risk oversight responsibilities among board committees 

For further ideas on how the Board can further support Management during Covid-19 please refer to future articles 2/3 and 3/3 of this three part series. 

Also, please refer to the NACD references and publications below:

https://www.nacdonline.org/

• Refer to articles on Covid-19; strategy; crisis communication and crisis management; cyber security and risk management

• Refer to articles by Jim DeLoach; Don Lowry; David Brown; Barton Edgerton; NACD - Adaptive Governance during COVID-19: A practical guide, et al.

The need to adhere to social and physical distancing for personal and public health safety makes one-on-one training or coaching of individuals and teams impossible. 

Some companies are using VR (virtual reality) training to overcome the hurdle of proximity. On-line, virtual reality learning and training has some of the following benefits:

1. It appeals to a variety of individual learning styles;

2. It offers experiences to promote repetition and retention

3. It eliminates health and safety risk concerns

4. It reduces time and travel constraints and allows for scalability

5. It could be applied across a variety of industries.

If VR training is not applicable to your business or is not readily available, please find below ten tips on how to effectively and remotely train and coach your team. 

Availability: One of the most important things to remember about coaching and communicating remotely is to make yourself available. Think of how many questions you answer or problems you help solve when employees pop into your office. Be sure to check in regularly and set up recurring calls. Make sure they know you are still around; your “virtual door” remains open; and you welcome their questions, opinions and strategy discussions as much as ever. Remind your team that you are there for them as a coach, troubleshooter and supporter. 

Tone of Voice: One of the hazards inherent in online communication is misunderstanding a person’s tone of voice. You say something you meant ironically, but your employee takes it literally. While this situation can seem funny after the fact it often isn’t a laughing matter in a professional setting.  So make sure you clarify doubts and that you are all on the same page before you conclude your virtual conversation. 

Become Tech-savvy: Ensure your team is well versed in using the technology needed to connect remotely. Tools such as chat, video conferencing and Zoom are great platforms for collaboration and creating that human connection. Check that your team is up to date on the use of these tools and have downloaded all the apps and plug-ins needed to avoid disruptions to your coaching activity. Best practices in the case of technology, is to get started on a platform you use often, and where technical support is readily available. Assume and anticipate that there will be technical glitches. Be prepared, it is part of the “new normal”.

Be intentional: Create a remote workforce atmosphere of engagement and genuine connection. Be intentional in preparing for the remote coaching culture. Establish clear expectations. Make each meeting count with intentional purpose and opportunities to engage and contribute in a variety of ways. Intentionality is an essential practice, particularly when we cannot  "see and be with others” in person.

Accountability and learning: One of the core benefits of a coaching model is the emphasis on action steps, followed by holding one another accountable for the actions, and sharing the learning from the actions taken. The virtual environment is more than suitable for accountability and continuous learning. 

Empowering versus micromanaging: Every individual works and learns at her own pace. Furthermore, what can be easily resolved when working together in the office might be more difficult when communicating remotely. Be respectful, show restraint and do not micromanage. Encourage your employees to update you regularly and to reach out when they feel the need for your guidance. 

Stay focused on goals, not activity: When leading and coaching teams remotely it is recommended that you focus on the goals you previously agreed to. Don't worry about what is being done at a given point in time. Be mindful that each member of your team has to manage multiple expectations and that working from home creates extraordinary distractions throughout the day. Focus therefore about what is being achieved. It is all about accomplishment, not activity.

Mission, values and outcome: When working remotely, employees miss out the regular office-human interaction. Support your team to remain aligned with the overall mission, the values that truly matter and the outcomes that are really important. This will help everyone remain motivated, creative and productive.

Build trust and intimacy: Team development and coaching improves team’s effectiveness and collaboration. It is about the relationship that is being created and nurtured. High performing teams understand that it is critical to create a deeper level of trust, honesty and connection. Focus on building trust and intimacy during your virtual sessions. 

Positive reinforcement, offering praise: It is easy to let employees know they are appreciated in a regular office environment. Working remotely, it is easier to forget how much a “thumbs up”, a “hand shake” or a “high five” mean to our team members. These gestures can go a long way in alleviating the extraordinary stress we are all experiencing. Make it a priority during your virtual sessions to offer positive reinforcement and public praise.

For further references on virtual reality learning and how to coach teams working remotely please consult the following references below:

www.realizellc.net

https://trainingindustry.com/articles/sales/how-to-coach-your-team-remotely/

https://www.hci.org/blog/coaching-and-engaging-your-remote-employees-online

https://www.forbes.com/sites/forbescoachescouncil/2018/05/30/top-15-tips-to-effectively-manage-remote-employees/#2fa57b21503c

https://teamcoachinginternational.com/six-challenges-coaching-virtual-teams/

https://blog.insideoutdev.com/4-tips-for-coaching-remote-employees

https://www.classvr.com/

https://unimersiv.com/

https://virtualspeech.com/blog/how-virtual-reality-can-improve-online-learning

https://virtualspeech.com/blog/how-virtual-reality-can-improve-online-learning