Responding to the Covid-19 crisis - Insights from the board

Mar 26, 2020

The speed at which the Covid-19 crisis is continuing to escalate is testing the resilience of organisations in ways that are unprecedented. Boards and executive management need to work together to stay informed about the rapidly changing situation, ensure the continuity of business and the wellbeing of employees, customers and suppliers. Decision-making and management styles need to adapt to effectively manage the uncertainty and disruption caused by this pandemic.

Strong and effective leadership is required, and it is important to distinguish the roles expected of the board and executive management in this regard. The board has an important oversight role: monitoring, reviewing and ensuring executive management are taking appropriate actions in response to the crisis. At the same time, the board should be a source of advice and counsel to executive management, guiding and supporting their decision-making. While the board remains ultimately responsible for the organisation, the CEO and executive management are responsible for managing the day-to-day responses to the crisis, for managing the resources to ensure business continuity.

In recent days, I have discussed the present crisis with a number of executive and non-executive board members from organisations in various sectors of the economy, from charities sector to multinational corporations, and have summarised their experiences and insights under the four headings below.

1. Putting business continuity plans into action

While all board members interviewed said their organisation have a business continuity plan (BCP) in place, these range from a recently developed ‘to-do list’ in a charity to a sophisticated crisis-management process that is tested annually by a global financial services organisation. No plan survives the battlefield and all acknowledged that their BCP is not static. It is evolving in response to imperfections exposed on execution.

Some organisations seem to have underestimated the work and facilities required to enable employees to work remotely. The availability of hardware has been a big challenge. A board member of a large private company with a relatively mobile global workforce familiar with working from home on occasion, said they underestimated the additional challenges that arise when all employees are suddenly asked to do so five days a week. Challenges included ensuring staff have correct ergonomic guidance (e.g. desk and chair set up) and managing productivity expectations at a time when employees are being asked to manage both the priorities of work and the priorities of home.

Board members from organisations operating in a global marketplace shared insights from how they have been dealing with the crisis since its origins in December 2019. With parts of their operations either controlled directly in or outsourced to other parts of the world, they are closely monitoring what is happening globally. There is an additional challenge for these organisations to update their crisis response plans to respond according to the latest informed intelligence for each jurisdiction they operate in and ensure that the updates are disseminated and acted upon.

All see agility and innovation as being key to resilience and survival in these times. Examples from the charities sector include creating online funding campaigns to replace foregone income from street and corporate collections on national fundraising days, and redeploying people facing volunteers to reach out to vulnerable people by phone.

 2.  Don’t be a board in isolation

Though one board thought it best to cancel its meeting to allow management time and space to deal with the crisis (a decision it quickly reversed), all organisations reported regular and ongoing engagement between the board and executive management, including meetings, updates and liaison with individual board members. All board members interviewed are becoming increasingly familiar with video conferencing technologies such as Microsoft Teams, Zoom and Skype.

Some board members highlighted that while there are benefits to holding meetings digitally, there are new challenges, such as how to chair an online board meeting, prioritising the agenda to defer non-urgent (but important) management reports and presentations, and ensuring appropriate discipline in faster-paced decision making.

A global financial services organisation is providing more regular updates to its board during the crisis. Maintaining a focus on governance is vital amid the noise and haste. It already has strong governance and regulatory frameworks in place to deal with the pace of change in financial markets and for making big decisions. What is different now is the nature of these decisions, and this is where the depth and breadth of the board’s composition and skills come to the fore.

The work of governance functions including audit and risk management remains important and many organisations are virtually engaged with their statutory auditors and other external advisors.

3.  Ask the right questions

Our instinctive flight or fight response and natural desire to get past pain and discomfort can quickly, without a calming influence, lead to careless solo runs, wild decisions and poor judgement. There will be elements of the decision-making process during this crisis that will require collective input from the board, internal and external experts, as well as the executive management team. Having access to a diversity of ideas will improve the quality of the organisation’s responses.

As a board member of a food distribution company put it, the risks they have to manage in ensuring that supply chains remain open and products can be sourced, that there are sufficient employees available to work, and that employee and public safety concerns are addressed, were front and centre at their last meeting until another board member raised the question of reputational risk. This led to a discussion and concrete actions decided to ensure that measures, already in place, to prevent opportunistic practices such as price gouging, stockpiling, dealing with disreputable suppliers, bribery and corruption, were augmented and enhanced.

Executives and non-executive board members alike highlighted the benefits of a calming voice on the board and someone that cuts to the chase and focuses what is within the control of the organisation to action and influence.

4.  The post-pandemic world

Even if in survival mode, boards must acknowledge that firefighting alone will not ensure continuity and that opportunities for future benefits must be actively sought out. At this early stage, it is possible speculate on the changes the post-pandemic world will bring for businesses. For example, some organisations will revisit their business models by exploring online trading channels and changing payment handling/processing (card vs cash). More flexible working-from-home arrangements are likely to facilitate greater job satisfaction, employee retention widen the geographical net for recruiting talented people.

Each person I spoke to said that they will see at least one significant change in their business in the aftermath of the pandemic crisis, for example:

  • The shared experience of pulling together and surviving this will mean that kindness, solidarity, empathy and social responsibility will become stronger elements of organisational culture.
  • The availability of clear evidence, e.g. improved air quality, will support decisions in relation to the environmental and social impact of working from home, curbing non-essential travel, virtual trading, etc.
  • The social contract is being rewritten and the risk of sudden job losses arising from global ‘black swan’ events resulting in unprecedented state intervention will influence future government policy and taxation.

We are in uncharted territory and we should expect changes in business and society now and when we come through this crisis. As the crisis unfolds, new and important information is becoming available from various sources. Chartered Accountants Ireland regularly publishes relevant content on its website, as webinars, articles and checklists, for example collating pronouncements from government, regulators, Revenue/HMRC, listing authorities and registrars. There are also be regular updates relevant to the impact on members’ businesses of the Covid-19 outbreak.

Níall Fitzgerald FCA, Head of Ethics and Governance, Chartered Accountants Ireland

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