It’s an understatement: boards and senior executives had to pivot from their usual ways of working in the wake of COVID-19. The pandemic required leaders to “meet the moment” with swift, flexible yet calibrated responses for dealing with the global crisis.
But how exactly did the crisis impact board governance? And now that things are slowly returning to normal, are the changes that were implemented here to stay?
Let’s take a look.
WHAT HAS CHANGED & WHAT WILL STAY
1. Going Digital
A global McKinsey survey (with over 800 board directors and executives as respondents) showed that nearly all boards had to make structural changes to their operating models to manage the crisis. Of these changes, the most common was the investment in technology solutions to enable board collaboration.
Local lockdowns, quarantine requirements, complex travel logistics and other similar constraints made it nearly impossible for boards to meet in-person. Boards had to adopt digital solutions for crisis-management and to help execute their strategic mandate. Video-conferencing tools combined with board meeting management solutions, such as board portals, were integrated into board processes in the wake of the crisis. This has changed the way boards work, perhaps permanently.
It is difficult to imagine a scenario wherein boards, post-pandemic, abandon the investment they’ve made into such governance tools. This might be especially true for board portals. In fact, a 2019 Quinlan & Associates digital governance paper already stated that “board portals will ultimately become mainstream collaboration and workflow solution tools for boards worldwide.” With its adoption during the pandemic, there just might be no turning back.
More than at any other time in recent history, boards understand the criticality of ensuring they are able to function and lead their organisation through a crisis. Digital governance solutions allow them to do this.
2. Greater Time Commitment
Directors increased their overall time commitment for board work throughout the crisis. The McKinsey survey states that between 2019 to 2020, boards reported a nearly twenty percent increase in the average number of days spent on board work, and they expect this to increase even further between 2020 and 2021.
It’s easy to understand why. To navigate its way out of the pandemic, organisations required an “all-hands on deck” approach from the board and executives. For directors, this meant acquiring a deeper working knowledge of how the business operates. The more informed their understanding, the more value they had to offer. Boards also had to form ad-hoc crisis committees as part of its crisis management activities. With environmental conditions changing almost day-to-day, board members had to invest more time monitoring, assessing, and convening to address the immediate and long-term needs of the organisation.
This Harvard Business Review article states that while the frequency and intensity of meetings are likely to subside post-pandemic, new expectations will “inevitably require directors to spend more time on their role than has customarily been the case.” Perspectives on the board’s role has changed from that of a governing body who “rubber-stamps decisions” to one that is more involved in delivering high-impact decisions.
3. Flexible Agenda-Setting
In the McKinsey study, respondents indicated that the COVID-19 crisis placed more detailed topics on their meeting agendas, and that the annual process for setting strategy “which was a long-standing norm in the past—is no longer sufficient.”
In other words, the pandemic required flexibility when it came to meeting and agenda-setting for board meetings. With the situation changing almost on a daily basis, strategic priorities and topics needed to be shifted to account for new or emerging risks.
This agile approach to leadership will be important moving forward. As business conditions evolve and challenges persist, boards need to continue to leverage accurate, up-to-date information and respond accordingly. Adaptability can spell the difference between proactive success or organisational failure.
Once again, it is worth emphasising the benefits of digital governance solutions here. Board portals can help provide the board with the flexibility it requires by eliminating significant administrative considerations around meetings or agenda-setting. For example, Praxonomy’s board portal solution, Boardfolio, allows meetings to be scheduled and agendas to be created, updated or (re)distributed to board members in real-time, in a matter of clicks. While these features of board management software can be overlooked or downplayed, they factor in organising and structuring the business of the board—while allowing them to meet the demands of the moment.
4. Stronger Ties with Management
Boards revealed strengthened collaboration with management during the crisis. Whether deciding on how to best look out for the welfare of employees or how to address resource allocation concerns, management decisions regarding operations had substantial consequences that would have either seen the organisation through survival—or not. This has led management to turn to their boards. Many boards served as “critical friends” and “sources of support” for management to discuss tactical plans and their responses.
McKinsey states that important dynamic is here to stay. Companies will have to work towards more collaborative models of governance that focuses on how to best position the organisation for success. Boards will have to provide strategic input on tactical plans and work even more closely on issues around risk management, recovery options, innovation, and organisational purpose.
This article sums it up well: “The best boards go beyond fiduciary responsibilities to take a more active role in constructively challenging and providing input on a broader range of matters…Strong collaboration between the CEO and board chair can help define a broad and forward-looking board agenda, one that, rather than pressuring management to maximize short-term shareholder value, instead helps the company thrive for years.”
Governance beyond COVID-19 has boards working and functioning differently.
All signs point to “changes that signal increased value-enhancing board involvement,” as analysts state. With rapidly changing priorities and greater expectations from stakeholders, the director’s role has become a more demanding job. Effective boards will recognise that the bar for governance has never been higher, and that the narrative for organisational resilience cannot be written without embracing these new ways of governing.