What happens to culture in a crisis?

How do boards effectively monitor organisational culture with more employees working remotely? An AICD roundtable with leading directors discuss the issues.

With millions of Australians working from home, how boards stay connected to their organisations is one of many issues for directors, said Karen Moses FAICD, a director of Boral, Orica, Charter Hall and Snowy Hydro at the recent roundtable hosted by the AICD and AFR BOSS in late April. “The challenge we’ve got around remote working is: how do boards stay connected to culture and how the organisation is faring? We can’t do site visits. We can’t do corridor talks, all those things that would typically give you a line of sight into the pulse of the organisation. That is a puzzle for us to walk through.”

Also speaking at the roundtable were Richard Goyder AO FAICD, chair of Qantas, Woodside and the AFL; Christine Bartlett MAICD, director of Sigma Healthcare, Mirvac, iCare and TAL; Zlatko Todorcevski FAICD, director of Coles and The Star Entertainment Group and deputy chair of Adelaide Brighton; and AICD managing director and CEO Angus Armour FAICD.

Moses called for a staged response to the health and economic crises and said industries that can work from home should continue to do so because “it creates the space for others” who can’t. She urged boards and management to “create that environment where people can tell their stories”.

She also pointed to new consumer habits, saying, “there is a cocooning happening” and that people were considering how to create “a safe place for myself” and creating an uptake in takeaway food deliveries and streaming services. “Freedom doesn’t necessary mean going out to restaurants. Freedom might be more about what do we do around our home and how we set that up. There will be a shift in consumer behaviour.”

Less red tape

Todorcevski called on the government to reduce red tape for business, particularly after business has shown it can react quickly and work well with the states. Inconsistent regulations between Canberra and state governments, inefficient taxes such as fringe benefits tax and conflicting environmental regulations were among the things he would like to see changed.

“This is a massive opportunity for us to get that red tape reduction agenda back in front of government,” said Todorcevski. “It would be great to come out of this pandemic experience with a rejuvenated view on how to remove some of those barriers to making business more efficient. We know it can be done.”

Moses warned that there could be more regulation, saying, “The more that governments step into providing economic support to companies, we know that only happens with more regulation. There is no doubt that when things settle, businesses will be asked about how they were held to account and how they were supported. We certainly don’t need more red tape.”

Slow recovery

Regarding the economic recovery, Goyder said he was worried about “layering debt on debt”.

“It’s going to be a really challenging period. I don’t think any of us know how challenging at the moment, but I don’t subscribe to a V-shape recovery. Large businesses, such as Qantas and Woodside or large sporting organisations, can’t hibernate. Every month we operate, we are creating more leverage, which is going to need to be repaid.”

Other directors agreed on the unlikelihood of a V-shape recovery. Even as restrictions are lifted, consumers “are going to be thinking about more risk factors such as health uncertainty and debt,” warned Goyder. “If you have more debt or less security around your own employment, that transcends to discretionary spend.”

Bartlett said it would be a long time before unemployment levels, expected to exceed 10 per cent, would drop to the levels seen before COVID-19.

Business continuity plans

Bartlett said that while her boards had done scenario planning for a pandemic, “the speed and the depth of it, and not just the local impact, but the global impact,” had been surprising.

“We hadn’t modelled anything of that size and scale,” said Bartlett. “If I think about the organisations I’m involved with, a business continuity plan allowed for a second [work] site. It didn’t actually take into account having all your office staff working from home. That [was] something we hadn’t actually stress tested before. Going forward, directors will take a much greater interest in the business continuity plan.”

Bartlett noted a big issue for directors was the expense of D&O insurance, with rising costs making it unaffordable and harder to get for some. “We haven’t seen the full impact of the pricing with the pandemic,” she said, adding that directors were working “a lot harder than before”, with meetings doubling and trebling in March.