The Impact of COVID-19 in the Boardroom: A Survey

Recently, theBoardlist held a webinar on “Your Board’s Role in a Crisis”. Within 24 hours, registration was full. I suppose I should not have been surprised — none of us have been through this before, so naturally, we’re all looking for information about how best to play our roles.

But, this obvious hunger for information made me wonder just how prepared boards were for the crisis we are now experiencing. Of course, it would have been impossible to have predicted COVID-19 but I was curious to know whether boards were able to react quickly and effectively in the face of the chaos at the beginning of the pandemic.

So, we surveyed our community of board directors to understand the implications of COVID-19 for their boards. Here’s what we learned:

1. Nearly 40% of boards did not have risk mitigation plans in place prior to the crisis. This was the most surprising finding of all. Of course, it would have required clairvoyance to have predicted a global pandemic. However, thinking through the implications of a supply chain disruption or the impact of a significant economic downturn, for example, are core to any risk management strategy. Those boards that have a regular practice of identifying the biggest risks facing their business and thinking through how they will react to minimize the impact might not get it 100% right but are much more likely to be well-positioned to weather the storm. The companies that adhered to this best practice prior to the crisis are among the companies most likely to recover.
2. Boards have appropriately assumed the role of understanding mid- to long-term impact of the crisis on the business, but underestimate their role in providing emotional support for the CEO. When asked about their primary role during a crisis, directors appropriately focused on providing external perspective and information (50%), and scenario planning (22%). However, only 19% recognized the importance of providing emotional support for the CEO. At this time of extreme duress, a CEO’s ability to make good decisions is critical. Boards are uniquely positioned to provide support for the CEO with their experience, expertise, and deep knowledge of the company’s goals, objectives, and current standing. They are also uniquely positioned to support a CEO at what might be an unusually vulnerable time. One has to wonder whether this blindspot would be so prevalent if we had greater gender diversity on boards as empathy tends to be a marker of a female style of leadership.
3. Boards have changed how they communicate. But, unlike the rest of the workforce, these new ways of working may not carry over. Almost 40% of board directors think that their boards will still require in-person attendance at board meetings post-crisis. Of course, there is tremendous value in getting together in person, but we’ve all been surprised at how effectively we can communicate via video. The more boards embrace technology, the more possibilities open up for nimble, real-time communication which leads to better governance. Our ways of working have fundamentally shifted and I’d encourage boards to think about the right role for technology in their non-wartime processes.

Two types of boards will be able to navigate this crisis: those that were well-prepared to begin with and those that are able to adapt with best practices that will help them recover and weather future crises. Now more than ever, we realize that the only way to protect against the unexpected is to build a diverse board with a wide range of skills and expertise. If there’s any silver lining, it’s that we’ll learn from this crisis and be better prepared for the next.