Well Connected Boards will outperform during this Coronavirus pandemic
Being well-connected today is a far cry from pre-Cadbury Report days back in the 1980s when it often meant having a City grandee on the board. Now it is about having up-to-date technological capabilities combined with high quality stakeholder relationships and, crucially, the two being harnessed together.
Technology is as good as the people
Modern systems are naturally needed for good customer interface and managing the business effectively, especially when working remotely, and particular attention has to be paid to robust cyber security and GDPR controls. When systems failures occur, however, they are often due to human error or disgruntled employees. Well trained highly engaged teams committed to maintaining controls are therefore vital. Coronavirus has led to a flurry of change and boards must also decide post lockdown how to build on their newfound ability to innovate at pace and which new approaches offer long-term value. Many will probably increase remote working with potentially significant cost savings on buildings but this will necessitate initiatives to maintain a strong team culture. Overhead savings in work-based travel are also on the cards.
Good stakeholder relationships start in the boardroom
Good stakeholder relationships start in the boardroom with those between the independent NEDs and executive directors as teams and between key pairings such as the Chair and CEO. A well-connected board will currently be offering a high level of support to management recognising the enormous challenges presented by Covid-19, firstly in going into lockdown and even moreso coming out of it well, but it will be balanced by constructive challenge, not least where there is a need to strengthen technology or enhance the quality of stakeholder relationships. In addition, both the executive and independent directors need strong capabilities in both technology and people skills, areas of expertise often at a premium in the boardroom.
Transparency, fairness and genuine care determine stakeholder relationships
Strong stakeholder relationships require ongoing transparency by the board on the current circumstances of the business and its likely future prospects as well as fair treatment of the different stakeholders in terms of how necessary sacrifices are shared whether it be job losses or pay cuts for employees or cuts in dividends and share buy-backs for shareholders. Above all, it is crucial executive directors lead by example in terms of their own remuneration. Long after the crisis, stakeholders will remember how they were treated when they were at their most vulnerable. Primary emphasis should be placed on the team’s physical and mental well-being and recognising worries over job and financial security. The board also needs a clear well communicated sense of purpose to inspire stakeholders to accept the tough times now in order to secure the benefits of a brighter future.
Focus on technology and people a journey not a destination
Boards not currently well connected on both the people and technology axis need to address urgently how to remedy their shortcomings so as to close the gap with their better performing competitors whose learning and confidence will have increased substantially during Covid-19. If allowed to continue unchecked it may soon become an unbridgeable chasm. Being a well-connected board, however, is a journey not destination and even those currently doing well can improve and are likely to be amongst the keenest to do so.
Anthony Carey is a partner in Mazars and head of its UK Board Practice