Boards need to be much more active in ensuring the sustainability of their organisation. COVID-19 has shown that no country, never mind any organisation, was prepared for what has happened in the last five months.
In Breakfast Briefing #15, Donal Laverty, Consulting Partner at Baker Tilly Mooney Moore, shared his views on the impact that the pandemic has had on governance.
Donal opened his presentation by quoting Margaret Heffernan Unchartered
“the survivors of existential crises have huge wisdom, won at a high cost, about what we need in order to endure when the unexpected arrives. Just because we don’t know the future doesn’t mean we’re helpless”.
Donal continues: “Boards have historically focused their role as one of governance and accountability. While central to the needs and expectations of the users and stakeholders of the organisation, they have tended to be process and systems focused often with variable results. Recognising the comfort zone that is governance and accountability, I propose that post-COVID-19 the role of the Board needs to be a more pro-active, contributory role.”
In this context, Boards should think wider than just existing frameworks and risk management. What they have not been well prepared for that unknown piece in a risk matrix and Donal thinks that aspect is stewardship and it has been missing from a lot of boards. The ultimate accountability is about survivability and sustainability.
Reactive to proactive
“If a board or company successfully navigates one challenge it doesn’t necessarily mean that they’ll navigate the next one as successfully”, challenges Donal. “Boards have a historical tendency to focus on their role around governance and accountability which is crucial.”
There has been an over preoccupation with process and systems which is a comfort zone for boards in terms of governance and accountability. Post-COVID-19 boards need to be much more proactive.
There is an opportunity to really explore and focus on an innovative and pioneering element in terms of strategy and Donal thinks that boards know the risk perspective is probably going to change as well which suggests there’s a gap about the information provided to boards.
The Board has typically, historically focused on risk management, with the intention that this will protect reputation. Boards need to validate reputation, not protect it. Now is the time for Boards to be more closely and directly influential on their organisation’s reputation. Directors are ambassadors in society for the future their organisation chooses to pursue
If you would like to see the full presentation by Donal please see our YouTube recording.
Role of Chair: Bridge-Builder
The relationship between the chair and the chief executive in any board is pivotal at any time. But in these turbulent times, the interactions between the two are essential and are often the underestimated success factor. One of the chair’s critical roles is as the bridge-builder between the executives and non-executives.
There is an important aspect around planning for the recovery. In looking at the skills of boards and their development, a new type of non-executive will be required, for example:
- people who have strong networks
- people understanding about customer demand and consumer behaviour
- digital transformation
It is these combinations of skills and experiences that are going to feed into a board and board without those types of skills are going to have gaps in terms of their understanding of a new landscape.
Attendees at Golden Marzipan Breakfast Briefings will be familiar with our advice of Future Focus Teams.
Donal agrees: “it’s really incumbent upon boards that they’re looking towards the future. It’s not just a combination of oversight, insight and foresight; it’s that ability to you know to look down at the future and make those hard decisions.”
“This is a once in a lifetime opportunity to do things differently!”
To help board members, Donal has shared his list of ten critical questions he would be asking boards to ask themselves now. Here they are:
What did you do for your community?
Finally, we have seen many stories, good and bad, in the press and on TV about how organisations have reacted to the crisis.We hear, for example, about organisations who have completely shifted their operations to start making ventilators or PPE equipment. Their reputation has gone through the roof and so their contribution to society has been exponential.
Meanwhile, there are others, financially aware but socially aloof, who have taken government support and then miscommunication with their staff or customers.
Donal thinks that people will remember. The Board has a role in setting the tone: looking over the COVID19 hill to see what the environment is going to be like – in a year will your relationships and reputation have stood the test? “It’s a bit like the war – what did you do for your country? You should know what you did during this period and feel that you came out the other side with a strong sense of purpose.”
If you would like to join us for our Governance Round Table in September (date to be confirmed) to discuss these issues in more detail please contact email@example.com.