When the storm subsides
When the storm subsides
Catharina Mannerfelt, partner at Alumni and expert in board effectiveness and development, discusses the challenges that the pandemic has presented in the boardroom and the drivers for change that it highlights.
The online boardroom
Last year, almost overnight, work environments changed. The casual chats around the coffee pot and the unplanned stroll through departments with their chance encounters were swept away in favour of strictly scheduled meetings through digital platforms. Everything, including the boardroom, moved online. Everyone is missing the social advantages associated with the freedom and spontaneity of a working day spent in the company of others. Chairs and their team of non-executives are no exception. In principle the online board is still effective, but the dynamics are more complex with the natural cues of body language and intent blunted or rendered invisible through the lens of a webcam. Personal drivers and motivations are harder to convey and mutual understanding is made more difficult to reach. Being time-poor and problem rich, combined with working in unfamiliar ways and locations, has placed significant burden on boards and in particular Chairs who have a remit to coalesce their members around the strategic agenda. As for those who also hold executive roles - there exists an unenviable level of pressure.
“There is a significant possibility that in this new reality of purely digital meetings, boards will be hampered from finding the right fit for new roles without face to face, relaxed dialogue.”
There are also particular difficulties for organisations with newly appointed CEOs or those whose CEO is not making the grade. How can the board create an optimal working relationship with the executive team without a richness of interactions? The level of new appointments to the board appears to have changed little during the pandemic as many businesses, particularly those in the Nordic regions, had decided upon their role changes in the first quarter of 2020. However, getting to know those new appointments and reaching a consensus on the direction of travel is no longer as easy as it once was.
Alumni has seen a slow trend towards increasing functional diversity within the boardroom, and appointments being determined for specific expertise rather than the traditional skills of financial and regulatory expertise. In the last few years, we have even seen talented senior management jumping several rungs up the ladder to the boardroom to expand on their specific skills such as digital. A large part of knowing the succession pipeline happens through incidental meetings and unplanned conversations. There is a significant possibility that in this new reality of purely digital meetings, boards will be hampered from finding the right fit for new roles without face to face, relaxed dialogue.
Where to focus?
Controlling risk whether it be financial, ESG, cyber, human capital or political, remains at the heart of a well-functioning board. However, the pandemic created a shockwave that threw risk management into sharp relief. Organisations and their boards are left asking themselves whether being better prepared for the current levels of financial risk would have significantly altered their business position today? Will businesses wait for an extreme weather event to push climate change further up the boardroom agenda? Or should the boardroom be making a plan now? Organisations at the leading edge of change, such as those in the Energy sector, are certainly giving it due diligence, but for most others the threat remains too far on the horizon to spare limited board resources. If Covid teaches us anything it is that being prepared will make for better outcomes than blissful ignorance.
One day soon this pandemic will pass, and successful boards will be those that have kept their eye on their future strategy and business goals and not just got lost in their reactivity to the current situation. Some organisations have taken this further and moved decisively to action a dual-centred approach by splitting the board and executive roles into two distinct teams – one for ‘here-and-now’, and one to manage ‘business-as-usual’. One thing is for sure, the pandemic will be creating plentiful amounts of hindsight for boards to reflect on at their leisure.
Boardroom connectivity needs to be wider and deeper
Many organisations feel that if they entered the pandemic with better board dynamics it would have smoothed the path of the crisis for them. It has most certainly highlighted the need for well-functioning boards that use effective communication both between themselves, the executive team and the business more widely. Alumni has an excellent reputation for providing boardroom analysis and feedback that generates better communication and continuous improvement, but we have observed that 2020 was not the year for boards to be significantly investing in themselves and their effectiveness. Boards are still committed to being the best that they can but the evaluations that are taking place are on a smaller scale. The benefit and insight arising from being regularly assessed using rigorous qualitative and quantitative methodologies is certain to return to the boardroom, if not this year then next. Building and growing on the capabilities of board members and creating a stronger team can only help with building resilience into the business regardless of where the next risk comes from.
“For the majority of organisations, the pandemic threw the relationship between the board and its executives into stark relief. ”
Never before had organisations required such immediate understanding and insight into the business. Boards are acknowledging that poor channels of communication and links to the wider business pose a significant ongoing risk.
The traditional funnelling of everything through the CEO may in itself be a source of unnecessary risk. Who would they leverage and lean on if the current CEO became ineffective or worse long-term sick? Digital meetings and the absence of casual interaction are clouding the board’s view of the chain of command and its efficacy. As a consequence, succession planning is certain to become a more pressing issue for every business in the short to mid-term. Now is the time for Boards to reach out and broaden their channels of communication with both the C-Suite and senior management. Although we hope it never happens, by creating and fortifying non-traditional links between the board and the wider business it will help them be better prepared for any future catastrophe that may befall them.
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