Boards gave management — and themselves — high marks in the early months of their crisis response this spring. PwC’s Paula Loop highlights how to ensure those positives outlast the pandemic.
For even the most seasoned of directors, the COVID-19 pandemic has wrought a pace of change — and a level of economic and societal uncertainty — unlike anything they’ve experienced in their careers.
This May, PwC surveyed corporate directors about how their boards and their companies have responded to the COVID-19 pandemic. More than 250 public company directors offered their views on their own performance and that of their management teams, as well as potential future impacts of the pandemic.
While few companies planned for disruption of this scope, it was heartening to see a wide majority of directors praising management’s early-stage response.
- More than 95 percent of directors surveyed say their companies did a good or excellent job of dealing with issues such as interruptions in internal operations and supply chain disruptions.
- About 98 percent of directors say their companies did a good or excellent job managing the transition to remote work, and 97 percent said the same about the handling of employee relations overall.
- Even with the demands of board service increasing and meetings having no choice but to go virtual, 93 percent of directors say that the level of director engagement overall, and their own personal engagement, are both good or excellent. And 88 percent say the same of their ability to question or challenge management.
Maintaining this momentum and focus is essential to overcoming the challenges that still remain. Boards need to ensure that the company’s strategy can carry it through, no matter how long the pandemic and economic slowdown lasts, while keeping safety at the forefront for employees and customers.
Here’s how boards can remain engaged and help management prepare for what’s next.
Look at Your Business Strategy with Fresh Eyes
Now is the time for companies to examine what they might do differently to emerge stronger. Boards should consider all of the opportunities a post-pandemic environment may offer. Whether making supply chains more agile, adapting to changing consumer preferences or establishing more efficient working arrangements, companies can differentiate themselves from the pack in these areas.
Our survey found few directors in this mindset, particularly in two particular areas of potential opportunity. Just 10 percent of directors said their board was looking at increasing M&A — even as distressed potential targets proliferate. While most directors (71 percent) said increased flexibility to work remotely is expected to have a significant long-term business impact, far fewer — just 22 percent — said the same about reductions in office space.
Seize This Chance to Renew Your Culture
Uncover the stand-out behaviors that will help the company emerge from this crisis and double down on them. This is a unique opportunity to align policies and incentives to ensure the things that contributed positively to performance — like agility, faster decision-making, flattened hierarchies and transparent communication — outlast the pandemic.
And directors need to be mindful to not rest on early successes. Set strategies now for staying focused as the novelty of virtual meetings dissipates and boards go long periods without face-to-face contact. As boards and management continue to leverage technology to digitally transform how things get done, be sure to plan for the impact on company culture.
Learn by Example
Perform an assessment to consider whether your governance structure was effective for dealing with the pandemic. Beyond the substance of the company’s response, the response process itself should be examined.
- Did the company have the right crisis team, and was your crisis plan effective?
- Was it clear who had decision-making authority?
- Were communications effective and timely?
- Was the company agile enough to respond to feedback from its stakeholders and the market?
- Did management understand what competitors were doing, and were they able to respond quickly or even gain competitive advantage?
As this crisis continues to unfold, company stakeholders — employees, consumers, suppliers and investors — will expect more in the next wave and beyond. Whether through a self-assessment or an external, objective view that offers a new perspective from outside those who participated in the crisis response, take this opportunity to improve your preparedness. Doing so will result in a company that is more agile and responsive and better able to lead with confidence when the next disruption presents itself.