Take-Aways for Boards of Directors from the COVID-19 Pandemic
The COVID-19 pandemic has tested businesses’ ability to respond to a crisis and deal with internal and external consequences. Many boards have effectively overseen companies through these extraordinary circumstances, guiding and adapting crisis management plans. Additionally, communications and transparency between boards, management, shareholders, and employees have been tested.
Post-pandemic, boards should stay focused on their key responsibilities of oversight of strategy, management, financial reporting and capital structure, and compliance. An active relationship between the board and management can enable a board to more quickly and effectively respond to various important topics, including health and safety needs. The way boards meet, and people work can also take lessons from actions during the pandemic.
My April article on crisis management plans covered the need for these plans to be ready and rehearsed. This is important due to the number of personnel involved, each with their own duties and lines of communication. Crisis management plans should be flexible enough to allow an organization to adapt them in real-time. The constant instability of the pandemic has stress-tested boards and organizations’ ability to respond to new circumstances. In the wake of COVID-19, I believe boards should place a new emphasis on proactively and regularly testing crisis management plans and ensuring that members of management are versed in the details of these infrequent but important efforts.
Board oversight should also be more attuned to employee health and safety — as well as workforce preferences. The pandemic has highlighted the need to move to remote work quickly. Many concerns about productivity with remote work have subsided. However, management teams will differ as to the efficacy of remote work. I believe that nothing replaces a group of people interacting in a work environment. I believe that 100% remote work is simply not as effective as when a meaningful amount of time is spent together. Nonetheless, some nine months and counting of limited business travel and largely remote work has certainly shown that some remote work and less travel can be very effective. Boards will need to increasingly weigh in on many issues involving the workplace.
For continued, high-quality employee engagement, boards should encourage managements to see that communication is proactive and tailored to the situation at hand. Boards will also have to weigh the reduced cost and increased flexibility of video conferences versus in-person board meetings. I expect that about 75% — or even more — of board meetings will be held in person once the pandemic abates.
With remote work and other challenges from operations to human resources, board oversight is as important as it has ever been. The pandemic’s difficulties have also presented boards with opportunities to help management teams rethink how to fully engage their workforces and run their companies most effectively and efficiently.
Jonathan F. Foster
Founder — Current Capital Partners LLC