As the Covid-19 pandemic took hold, boards entered uncharted territory. Alongside management, they had to tackle a crisis of unprecedented magnitude. To understand how boards reacted and to identify the lessons that boards can learn in dealing with future crises, INSEAD and Spencer Stuart launched a survey of 2,000 board members mainly based in Europe.
The survey reveals that the crisis challenged the board more with respect to its attitude than its role and duties.
What follows are the key insights on the role of board leadership and lessons for boards of directors to consider in future.
The role of board leader
Covid-19 highlighted that a successful chair:
- Must always be prepared to guide the board through the unexpected. Even if the crisis had been foreseen, the response to it could not have been predicted;
- Should provide emotional support to the CEO and the management team by avoiding a situation in which board members bother them with unnecessary demands, and make sure that they focus on the right issues. The role of the chair is to help raise the executives’ game;
- Should show real self-control and an ability to calm the debate when the company is under stress;
- Should make sure that the board stays united and that no board members are left behind;
- Should make sure that the board defines a well-articulated and compelling purpose.
What are the lessons for the future?
The board should revisit the robustness of its processes in three areas:
1. Board operations
- Giving a clear mandate to management by clearly defining the division of roles with the board
- Challenging the risk mapping and the scenarios for the future
- Running an emergency plan
- Working under stress
- Creating a safe space for management without negative emotions
- Planning potential successions
- Operating new communication channels with high security standards
2. Relations with shareholders and stakeholders
- Shareholder support (dividend policy)
- Protection against raiders
- Relations with employees
3. Business model, strategy and succession planning
- Frame the post-crisis strategy to safeguard the future.
- The chair’s performance in dealing with the crisis should be assessed on his or her ability to:
- Align the board and management;
- Position the board at the right level and keep it united;
- Support and help the CEO;
- Keep an eye on the future.
- The board should support management during the peak of the crisis. Analysis of its performance will come later.
Source: The effects of Covid-19 on boards and governance (Spencer Stuart/INSEAD October 2020)