03 Jun 2020
Is your Board prepared for the future? Navigating COVID-19 and beyond
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Today’s COVID-19 crisis could lead boards and management to make important decisions with undesirable consequences.
Unprecedented, unpredictable, uncertainty—these are words associated with the COVID-19 pandemic. They contrast with those usually associated with effective decision-making by boards—measured, well-considered, calculated.
Boards and management report that the COVID-19 shock is a very challenging decision-making test from which they will need to learn. This unprecedented multi-faceted global shock has revealed limitations to societal and organizational resilience, with long-term repercussions for businesses, governments, and citizen-consumers.
Experts in CEO and board succession, board ESG education, and strategic foresight from three different organizations—Odgers Berndtson, Competent Boards, and Baker McKenzie—wrote this brief article with the express purpose of sharing a credible, unified view of their disciplines to assist boards navigating COVID-19 and beyond.
In a world unprepared for various impacts of the COVID19 global pandemic, how does a board prepare for future unpredictable uncertainty?
No New Normal
There will be no new normal after COVID-19. Challenges for organizational leadership include the aggregated effect of fragmented expertise that makes up an organization’s external and internal advisors—and how directors and managers consume, interpret and address advice provided.
Shareholder and stakeholder primacy issues are daunting. Today there is increasing complexity and conflict inherent in competing shareholder and stakeholder priorities in the short, medium, and long-term. There are essential proposals to expand the fiduciary duty concept to accommodate stakeholder issues, primarily environmental, social, and governance (ESG) matters.
As a consequence, stern shareholder and stakeholder expectations of directors—and outsized risks they face—continue to grow. The increasing cost of directors and officers (D&O) Insurance, an already stressed market, reflects insurers’ concerns about risks associated with being a director during and post the pandemic.
Unfortunately, a limited number of boards are competent enough to use insights effectively and to embrace the benefits of integrated thinking at a time of transformative change—the reason why board directors need to take into account integrated perspectives during a time of transformation.
External advisors should have a complement of hindsight, oversight, and foresight capabilities in their respective arsenals of domain expertise. These capabilities, including collaborating effectively with one another to develop a credible unified view, should materially improve boards’ ability to reduce risk and take advantage of opportunity in the COVID-19 context.
Hindsight – History should be a guide. The 2007-10 financial crisis provided opportunities to implement transformative changes for boards to challenge the status quo, including outdated organizational structures, business models, strategy, culture, and workforce norms and composition.
Oversight – Crises demand enhanced control. An effective board “manages management” during a crisis. It ensures that management clearly understands the impact of the disruption in their business context, supports the development of action plans, and monitors implementation.
Foresight – Navigating crises requires foresight. Foresight helps to test assumptions by developing and using scenarios so that organizations can prepare defensively and proactively to address conditions of turbulence, unpredictable uncertainty, novelty, and ambiguity. The CEO and board have an opportunity to develop their capacity to foresee the challenges posed by the external environment and to find ways to thrive. CEO succession planning redefines the required traits for the transformation that lies ahead.
Strategic foresight can be used four ways: to prepare your board and management for risks and opportunities, to evaluate your board’s effectiveness, to identify an appropriate mix of board competencies, and to define critical skills for board renewal.
Credible Unified View
A credible unified view linking board practice, board leadership education, and strategic foresight follow in the table below.
Boards require fresh approaches when facing disruption. The COVID-19 global pandemic places an even greater spotlight on the board effectiveness in supporting transformation. One strategic advantage boards cannot afford to explore having access to the right advisors who can collaborate across functional silos and offer an integrated view for boardroom debate and deliberation.
About the Authors
Partner, Board Practice
Mary Francia is a Partner in the Board Practice and based in the Atlanta office. She brings 25 years of international senior leadership experience and Management Consulting in Latin America, USA, and Europe Telecom and Consumer Electronics sectors. As a board advisor, she focuses on enhancing effective oversight at a time of transformation with board composition strategy and succession planning. Before joining Odgers Berndtson, Mary was a Management Consultant for market development, portfolio transformation, and risk management. Previously, she held strategy, marketing, and sales roles at Nokia, Royal Philips, Time Warner Cable, Flex, and Air-Liquide. Mary is a Certified Director in International Corporate Governance and holds a Bachelor in Business Administration and an MBA in International Business.
Helle Bank Jorgensen
CEO, Competent Boards
Helle Bank Jorgensen (Full Bio) is the CEO of Competent Boards, which offers the global online Competent Boards Certificate Program with a faculty of over 75 global board members, executives, and experts. She is a strategic, as well as operational, ESG adviser to boards, executives, and investors. As an experienced board facilitator and board member, she serves on His Royal Highness Prince of Wales A4S Global Expert Panel as well as WBCSD Governance & Internal Oversight High-Level Advisory Group. A business lawyer and state-authorized public accountant by training, Helle helps global companies and investors turn sustainability into strong financial results. She was the creator of the world’s first Green Account based on lifecycle assessment, as well as the world’s first Integrated Report. Helle has written numerous thought leader pieces, is a keynote speaker, and interviewed by global media outlets.
Futurist, Baker McKenzie
Sanjay Khanna (Full Bio) is Futurist at Baker McKenzie and Director of Whitespace Legal Collab, winner of a Financial Times Innovative Lawyers North America Award. The first futurist appointed to a global law firm, Sanjay advises leaders in business, government, and civil society on complex twenty-first-century risks and opportunities. A global megatrends and scenarios expert, Sanjay’s interdisciplinary background includes academic and industry collaborations in artificial intelligence and robotics; mobile and ubiquitous computing; ethics, law, future of work and smart cities; global health, public health, and public safety; and disaster risk reduction, environmental and climatic change. Media outlets featuring Sanjay include Financial Times, The Globe and Mail, Canadian Broadcasting Corporation, The Lawyer, and AMA Quarterly, the journal of the American Management Association. Recently, Sanjay was a member of a global Baker McKenzie team advising Canada’s Expert Panel on Sustainable Finance.