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The effects of Covid-19 on boards and governance

October 2020

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.

This report outlines the initial findings and covers the following:

  • Risk mapping
  • Crisis management
  • The role of the board and board leadership
  • Lessons for boards of directors

Executive summary

Covid-19 severely challenged the risk and crisis management of many companies.

This was the first time that an external event has triggered a combination of risks which were previously considered as independent:

  • Health and safety
  • Discontinuity of supply
  • Decline of stock price
  • Drop in sales
  • Treasury gap

Economies were not impacted by the pandemic per se but by the decision of governments to control the pandemic through a global lockdown, which had an immediate impact on the level of global economic activity.

In some cases, members of top management were also physically affected and consequently unable to play their role, which would not have been considered in the matrix of risks.

Crisis management ability was tested in real life with potentially lethal consequences for some companies.

Covid-19 consequences differed between industries.

Some experienced severely negative impact (e.g. airlines, travel, automotive, retail), whereas others benefited from the lockdown (e.g. Big Tech, food). Not all companies were equally positioned in the fight against Covid-19.

Covid-19 amplified the strengths and the weaknesses of boards and management teams.

Some entered the crisis in better shape than others and were better prepared to fight thanks to efficient governance. For some, the crisis either revealed their potential or their fragility.

Covid-19 was an acid test of:

  • The board’s cohesion and solidarity
  • The board’s trust in management’s ability to deal with a crisis
  • The self-control and maturity of the board and the management
  • The efficiency of the board’s crisis management tools and processes
  • The ability to seize opportunities, for example, by taking over competitors in trouble
  • The robustness of succession planning
  • Employee engagement

This global crisis was significant for boards and management teams in two respects — risk and opportunity:


  • Protecting the balance sheet and business continuity;
  • Taking care of people and securing management’s stability;
  • Managing the stock price, profitability and liquidity;
  • Taking care of clients and suppliers and securing the supply chain;
  • Protecting against raiders;
  • Managing potential conflict between company and shareholder interests.

Opportunity — to be overseen by the board in a second phase:

  • After making sure that the company knows how to adequately react, anticipating the changes that the crisis will require going forward;
  • Preparing to emerge from the crisis;
  • Taking advantage of the opportunities generated by the crisis;
  • Rethinking the business model, the purpose of the company and the strategy

Covid-19 highlighted what makes a board successful in dealing with such a crisis:

  • Permanently challenging its crisis management processes by thinking the unthinkable and using scenario analysis rather than only relying on existing processes.
  • Testing the board’s behaviour in terms of its ability to work under stress and deteriorated working conditions, e.g.:
    1. Focusing on the immediate issues without getting lost in details.
    2. Staying unified and ensuring overall consistency between decisions made for the short term and the long term.
    3. Working efficiently with management to ensure an adequate and clean division of responsibilities between the two bodies without the board overloading management with unrealistic demands that slow down the decision process.
    4. Getting used to working remotely with secure communication channels.
    5. Celebrating management’s successes.
    6. Reimagining the future.
  • Having clear leadership at the board level which means the chair playing his or her role fully, but only that role.
  • Establishing adequate communication within the board and between the board and management, the external communication of the company remaining a management duty.
  • Providing emotional support to both management and employees. Performance assessment will come later — a crisis is not the right time to change the CEO.
  • Making sure that in dealing with the crisis, management decisions remain aligned with the company’s values.

Covid-19 highlighted what makes a successful chair:

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; a management duty.
  • 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; a management duty.
  • Should show real self-control and an ability to calm the debate when the company is under stress; a management duty.
  • Should make sure that the board stays united and that no board members are left behind; a management duty.
  • Should make sure that the board defines a wellarticulated 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.

In conclusion, the crisis challenged the board more with respect to its attitude than its role and duties.

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