Governance through a crisis: The four key lessons for boards from COVID-19
The pandemic has thrown so many new challenges at boards and organisations, disrupting and transforming business practices.
So how can organisations make the most of this challenging year and ensure they grab and retain the positives - the transformations, innovations and the advances?
Governance Institute of Australia and the Australian Institute of Company Directors have drilled down to examine the impact of COVID-19 on boards and to identify the key lessons from the pandemic, gathering insights from interviews with senior directors, survey responses and feedback from roundtables with governance and risk professionals.
These findings have been compiled in a new report ‘Governance through a crisis: Learning from COVID-19 - Lessons for now and beyond' that has just been released.
The report includes recommendations for directors and company secretaries across all industries and sectors, as well as tips for working effectively in the virtual environment and through a crisis.
The key findings will be discussed at a special joint webinar (complimentary for members) to be held this Friday.
In this feature article we explore the key lessons identified in the report and look at how these can be incorporated by boards and organisations now – and into the future.
Lesson #1: Virtual meetings are here to stay
The sudden move to online meetings wasn’t an easy transition for all organisations – but it seems they are here to stay. So how do we continue to adapt to this new high-tech world? And what’s the new e-meeting etiquette?
As the report explains, to be effective, online meetings need to be chaired differently with ground rules laid out clearly – and be ready to reassess the protocols as required.
CEO of Governance Institute Megan Motto said the most effective virtual meeting is one where the Chair and other participants are highly mindful of their behaviour during proceedings.
Consider: Are non-speakers on mute? Are your other devices switched to silent? And is your video function switched ‘on’ to ensure participants have the chance to read the body language and responses of other attendees?
“As this report has found, some workplaces have cleverly tried to adapt their meeting structures to take account of the lack of face-to face time, ensuring everyone has the chance to speak – and the chance to respond,” Ms Motto said.
Lesson #2: Crises require agile decision making
While the temptation for a board during tumultuous times may be to get hands on and more involved in the day-to-day mechanics of an organisation, it’s important to keep the focus on providing strategic oversight and support to management, the report found.
Good communication and effective information flows are also essential during a crisis.
“A strong process that sets out how situation updates are provided in a crisis, to whom they will be given and how often, should not be underestimated. The company secretary, working alongside the Chair and CEO, plays a key role in managing information flows,” the report states.
“The Chair also plays a crucial role in keeping other directors informed, particularly regarding how decisions have been received internally.”
Lesson #3: Contingency planning is a must
Boards and management working together to regularly stress-test contingency planning – for a range of scenarios, before a crisis strikes – has been highlighted as a major priority.
“Overwhelmingly businesses rose to the challenges presented by COVID-19 but, as the report highlights, a comprehensive continuity plan was lacking for many and will be essential in order to tackle future crises,” Ms Motto said.
“Planning precisely for a crisis is difficult, but ensuring you have the right scaffolding in place for when a crisis hits must now be a key focus for organisations.”
The report highlights the importance of having a fluid crisis plan that is a “blueprint not a rulebook.”
Lesson #4: Technology can elevate stakeholder voices
Engaging effectively with stakeholders during a crisis – whether they are staff, investors, or community members – is crucial.
And the board, working closely with management, plays a key part in driving these communications and disseminating the key messages of an organisation’s crisis response.
The use of various technology platforms has been assisting greatly in raising these voices and engagement of stakeholders during COVID-19, the report found.
Recommendations for directors and company secretaries from the report include:
- Boards should lessen, rather than add to, management workloads.
- Remember that minutes are now more important than ever.
- Shorter, more frequent board meetings are necessary in a crisis.
- The Chair and CEO must communicate openly and often.
- Crisis test relationships.
- Keep your stakeholders front of mind during a crisis.
The human element
While the disruption sparked by the crisis is likely to continue for some time, Ms Motto said it is heartening that the value of the ‘human element’ has been recognised amid the drive to keep business running smoothly.
The importance of spontaneous, informal interactions is highlighted in the report.
“As much as we have come to rely on technology, particularly at the moment when we can’t all meet face-to-face, it seems that even the best tech applications cannot replace those informal, sometimes fleeting – but valuable – in-person conversations,” Ms Motto said.
“It is essential that we continue to search for ways that we can protect and encourage those invaluable insights, knowledge and interactions that our colleagues and associates can bring to the boardroom table, and indeed to any meeting, as we move forward in this new pandemic world.”