20 tips for directors to be at their best during the crisis

Directors have obligations to themselves and their families as well as to their organisations.

Governance stories about COVID-19 are understandably focusing on technical issues such as continuous-disclosure obligations, meetings, financial solvency and capital raisings.

But there is also a deeply personal aspect to COVID-19 that directors must consider: how the threat could affect the health of their loved ones and themselves; how to govern when many are fearful; and leading during a crisis. Age is another consideration for the governance community. Federal Government advice says older people (60-plus) are more susceptible to getting sick with COVID-19.

The average age of non-executive directors in many Western countries is just above 60, according to executive search firm Spencer Stuart. Approximately 94 per cent of directors of companies in the US S&P 500 index are aged 50 or above, PwC data shows.

Aboriginal and Torres Strait Islander peoples (aged 50 or above) are also more susceptible to contracting the disease, according to Federal Government advice. That has health implications for older directors of indigenous organisations, particularly those in remote communities.

Younger female and male directors are also affected. Some have additional caring responsibilities for their parents or have children attending school digitally from home as a result of COVID-19.

Directors who have multiple board roles across the commercial and not-for-profit sectors will have to juggle greater demands on their time. Those who serve on boards of offshore companies – or Australian companies with interstate or overseas-based directors – could have to attend meetings and receive calls at unusual times.

Volunteer directors of not-for-profit organisations could face higher workloads; for example, those on school boards or on charities that experience an increase in service demand as people lose jobs and poverty and social problems intensify.

Moreover, working remotely could affect the physical and mental wellbeing of some directors, just as it could others who miss face-to-face interaction with their colleagues. Nobody should underestimate the challenges of working from home for long periods for those not used to it.

With that in mind, the Governance Leadership Centre asked governance consultants and non-executive directors about issues directors should consider now and in coming months.

Dr Vince Murdoch, of board consultant Murdoch Associates, notes: “(COVID-19) is a humanitarian health crisis greater than anything we have seen. It dwarfs what organisations typically think about VUCA (volatility, uncertainty, complexity and ambiguity). Employees, customers, suppliers, family, the elderly and children are frightened and uncertain, and might say or do things they otherwise wouldn’t. (Directors) will need to be resilient, kind, compassionate and wise in equal measure.”

Brian Stafford, CEO of Diligent Corporation, a leading provider of governance software, told the GLC: “While we’ve never experienced anything quite like this before, this isn’t the first time boards have had to help their companies respond to crises. Last year, our Diligent Institute asked five directors of leading public companies, ‘What should the role of an individual director be in a crisis situation?’ One answer that resonated was, ‘It must be authentic, genuine, and (the issue) must be responded to within a couple of hours’.”

Here is a snapshot of leadership-related issues directors should consider, divided into two sections: individual and collaborative board issues.

No list can cover every issue confronting boards right now, but the ideas below are a starting point for discussion:

Individual issues

1) Be health-advice exemplars

The adage that boards “set the tone from the top” is true with their response to COVID-19. Directors need to follow public-health advice for their safety and encourage others to do the same, says Murdoch. “Even if you are feeling healthy, reinforcing communications about the need for regular hand washing and social distancing to protect others (is important).”

2) Practice board hygiene

Although most boards would be working digitally now, and most directors from home, it pays to practise good hygiene before and after online board meetings. For example, disinfecting your iPad or smartphone after a long board meeting, says Murdoch.

3) Champion mental health

Some employees, suppliers, customers, other stakeholders and even fellow directors may wrestle with mental-health issues from the crisis in coming weeks or months, says Murdoch. “Make it as safe as possible for people to share their concerns. Give extra mental space where required. Ensure your organisation has access to professionals. Don’t be afraid to ask your fellow directors, ‘Are you OK?’ and then really listen.”

4) Be conscious of your own wellbeing

It’s natural for directors to put the organisation and its stakeholders before themselves during a crisis. Boards have a critical role in ensuring business continuity and sustainability, so it is imperative that directors remain physically and mentally healthy. If the crisis persists for months, directors, like everyone else, will need to consider their wellbeing from time to time and ensure they know who to turn to for support, if required.

5) Don’t be afraid to look foolish

Nobody knows for sure how COVID-19 will play out and organisations and governments are learning on the run. This is no time for directors to hold back with questions because they are worried about looking foolish in front of their peers. Mistakes during this crisis – from organisations, boards, governments and institutions – and leaders occasionally looking foolish in hindsight, are inevitable.

6) Be brave

Australians often don’t want to be seen to be over-reacting, says Murdoch. “The time to act in an exponentially worsening situation is long before it feels like you must. Directors should be brave in stepping into the arena and requiring urgent action (if needed).”

7) Be patient

Company director Diane Smith-Gander estimates director workloads have increased at least 20 per cent during the crisis. Extra board discussion and analysis has overtaken the time saved from fewer face-to-face meetings and no business travel. Like anybody who suddenly has a

larger workload and extra pressure, governance tensions could rise. Patience and empathy will be vital governance skills, particularly if the COVID-19 crisis persists for six months or longer.

8) Be flexible

The COVID-19 crisis has upended the diaries of directors across Australia. Some have told the GLC they are meeting much earlier or later in the day, taking extra calls, having greater digital communication with peers or rescheduling or condensing board meetings. Others are having to learn multiple software systems for video or audio conferences. A willingness to be as professionally flexible as possible is needed during volatile business conditions.

9) Digital communication: review and refine

Moving to full digital communication is a challenge for most professionals. Basics like how to ask questions online or comment need refining in a digital setting compared to a physical board meeting. Smith-Gander says the Chair of one of her boards brought structure to the meeting that suited its digital format and ensured everyone could participate. The board discussed the digital meeting’s effectiveness and any areas for improvement.

10) Develop your personal information set

Smith-Gander says directors should determine which business-information sources they find most valuable and narrow their information set, to avoid wasting time or being influenced on analysis or opinions that are less relevant or misinformed. Murdoch says directors should follow latest global health data and key sources such as the World Health Organisation.

Collaborative issues

11) Board/management back-ups

Ensure contingency plans are in place if a director or an executive contracts COVID-19. What would happen if the Chair or CEO gets sick? Or half the board gets the virus in the next six months? How would board committees that require a quorum of directors under the company’s constitution function? Ensure the organisation has advice on how the board could function under different health scenarios and back-ups for key individuals, if needed.

12) Consider stakeholder needs

There is a risk that some boards of listed companies revert primarily to the needs of shareholders and overlook those of employees, customers, suppliers and other stakeholders. This is not the time to abandon a focus on shareholder primacy or ESG. Consider how board decisions in fast-moving situations affect a range of stakeholders, including shareholders. Finding balance between different stakeholders is the art of good governance.

13) Support the CEO and executive team

Management teams across Australia are conducting scenario planning and wrestling with financial and human aspects of the crisis. Some have had to tell thousands of employees they are temporarily no longer employed. “Your CEO will be under immense pressure,” says Murdoch. “Many current CEOs will have limited (if any) experience of a crisis of this scale. The combination would overwhelm (some) so … ensure directors are united around supporting the efforts of the CEO and executive team. Of course, if directors have serious concerns about the approaches (executives) are taking, they should raise them with the Chair.”

14) Respect management’s role

In a separate story in this issue of the Governance Leadership Centre, company director Dr Vanessa Guthrie says there is a risk that some directors could do too much to help out and unwittingly get in the way of management with unnecessary information requests or suggestions. That is good advice. Directors of some smaller organisations may need a more “hands-on” role during crisis, but governance is not about day-to-day management.

15) Be responsive to management requests

“It’s critical that board members and senior management can be in regular communication with one another,” says Diligent’s Brian Stafford. “We’re in a rapidly evolving situation that is entirely new, and the ripple effects are going to be felt for years. From disruptions to supply chains and service delivery, the impact on the workforce, increased demand on infrastructures, to economic volatility, boards have to be readily available to advise senior management on strategy – and that strategy has to be exceptionally nimble.”

16) Establish strong board-communication protocols

As always, the Chair should be the main conduit to the CEO and responsible for updating the rest of the board. Murdoch advises: “If your Chair also chairs other organisations, check whether he or she would appreciate support in carrying out any aspects of his or her role during the crisis – possibly from one the senior directors or committee chairs.” More than ever, boards must speak with one voice and ensure communication is efficient and effective.

17) Ensure the board gets the information it needs

Stafford says the disruptions to life and commerce from COVID-19 are not something any organisation can be fully prepared for. “Every board and leadership team will need to have open channels for communication, and a streamlined way to get tactical information out to all critical parts of the business – even while most of them are likely working remotely.”

18) Avoid establishing unnecessary meetings/structures

Forming a temporary board/management working group to assess COVID 19’s impact on the organisation will suit many organisations. However, establishing a permanent committee or having a daily meeting could be overkill and runs the risk of slowing the board down – and bombarding the executive team with information requests.

19) Conduits for collaboration

It’s been said that wicked problems require a multi-disciplinary solution. With COVID-19, organisations might identify solutions through collaboration and working with other firms to create economic or social value. Board networks could be crucial in helping organisations across sectors in some instances come together for a common good.

20) Look forward

As management is consumed by daily issues relating to the crisis, boards can add value by considering their organisation’s longer-term opportunities and threats. Much will change as a result of COVID-19 and boards, which should always have a longer-term focus on evolving industry dynamics and trends, can help guide organisation strategy in this regard.