Every aspect of business will have to change – and companies should prepare for crises as the new reality
For decades, company boards worldwide have been accustomed to navigating an interdependent and globalized world with a wide variety of reactions and strategies. But with the global dynamics that we find ourselves in now – shaped by rapidly evolving markets that are volatile and complex, disruptive new technologies, and geopolitical challenges that influence economic upturns and downturns – we can be certain that dealing with the unexpected is the new norm.
The current coronavirus crisis, while unprecedented in modern history, is proof that boards should be dealing with crises as the new reality, wherein an ad-hoc or crisis-driven, short-term approach is now obsolete. Focusing on the immediate reaction to imminent threats can increase the risk of a self-fulfilling prophecy model, which doesn’t help corporations adopt a quick recovery model.
When looking toward the aftermath of the global coronavirus pandemic, a lesson that we can take away is that every aspect of business will have to change, and previous reliable systems may now be untenable in today’s evolving business climate.
In contrast, new agile boards that prioritize strategy — where clarity and aligned, integrated leadership are secured and where trust and collective intelligence are built — are those that will prevail in the world to come.
How can a company board tell whether its members are up to the challenge? Based on my 25 years of experience helping almost every kind of board through crises, here are several themes worth considering.
Being Open To Change
Digital technology is not the only influencer of organizations. The introduction and implementation of changes to corporate governance, elective codes, and compliance regulations all have an impact not only on companies but on their boards, as well. Boards that are resistant to change will eventually be rendered dysfunctional, and the corporation will pay the price.
Board members have a responsibility to stay up-to-date and informed. If they do not, they will be faced with additional complexities and will be recreating solutions rather than learning from where others failed.
Speaking Up – And Speaking Out
The board should ensure that members are both proactive and involved. Shareholders must not hold back if they feel the board is headed in the wrong direction. Steps can be taken to rehabilitate a troubled board, but it may be necessary to remove individuals or dissolve the board entirely to make way for proactive change.
Digitalizing Enterprise Governance
Proper enterprise governance is essential, and digitalizing governance processes is the way of the future. A board must use and embrace technology and innovation in the boardroom for business success. Implementing an Enterprise Governance System (EGS) equips board members with the tools to effectively engage and have access to pertinent information. Boardroom technology means board members can identify and address issues as they arise and from an informed perspective.
Establishing A Crisis Team
Too much weight shouldn’t be put onto crisis planning. What boards should be focusing on instead is laying out the processes that the board and management will use in times of crisis. A functional, fast-acting crisis team that facilitates channels of communications needs to be put into place before any issue arises.
Define A Unifying Recovery Effort
Disconnected initiatives by different business units could have conflicting priorities and hinder recovery. A central point of authority is required to oversee the prioritization of critical business processes across the organization to align with the company’s strategic objectives and to base that prioritization on the greatest risks to the company.
Reinforce A Positive Culture
The board can inspire the right kind of practice and attitude throughout the company. A positive organizational culture will support a faster recovery from crisis and will come out stronger than ever.
Keep Communication Open
Internal and external communication are key to pursuing business continuity, employee engagement, and performance. Channels of communication between board and management — and management and shareholders, employees, customers, and stakeholders, as well as with law enforcement and regulators — need to be prepared long before they are adopted.
When a major crisis hits, it can cause an entire industry to refocus on that particular risk and solutions. Every crisis that emerges is an opportunity to take stock and to develop, and boards – particularly those of multinational corporations – need to be equipped with the proper tools not just to weather this current crisis but to be prepared for the future.
About the Author:
Panos Manolopoulos is the Managing Partner of the Dubai office and one of the main shareholders in Stanton Chase Dubai, United Arab Emirates; Bucharest, Romania; and Moscow, Russia.