The Covid-19 pandemic, the most severe crisis boards are facing for at least 75 years, is testing many businesses to their limits. Some will fail, others will be severely weakened, but the best-led, the most well-connected, will emerge with substantially enhanced long-term potential.
How well connected are you? The defining question for boards responding to Coronavirus
Being well connected in 2020 is, however, a far cry from the pre-Cadbury Report days when it often meant having a City grandee on the board. Today, it is about a board having up-to-date technological capabilities combined with high-quality relationships with all key stakeholders and, crucially, these two aspects being harnessed in an integrated way to enable the business to build a winning market position.
Technology crucial for security, innovation, and engagement
Modern systems are clearly needed both in terms of their external interface with customers and in order to be able to manage the business effectively, including when working remotely. This calls for robust cybersecurity and GDPR controls. When systems failures occur, they are too often due to employee error and so having well trained teamed members with a commitment to maintaining controls is vital. So too is a team-orientated culture that encourages innovation so that there is a continual interest in finding new ways to engage with customers, be more efficient or to work together better. Coronavirus has led to a flurry of innovation and boards and leadership teams must consider how best to build on their newfound ability to innovate at pace post-lockdown as well as to decide which innovations made during lockdown offer long-term value. It is likely, for example, that many well-connected businesses will increase the extent of remote working compared to previously with potentially significant cost savings on buildings but this will need to be accompanied by initiatives to maintain a strong team culture. Greater use of webinars for customer engagement rather than physical events and more virtual meetings with less international travel also seem on the cards.
Good stakeholder relationships start in the boardroom
Good relationships with stakeholders start in the boardroom with those between the independent NEDs and executive directors and, within these teams, between key pairings such as the Chair and CEO. A well-connected board will at present be offering a high level of support to management recognising the challenges of moving into, operating within and now starting to move out of lockdown within a relatively short period, with timescales and rules varying across jurisdictions and with a high degree of uncertainty as to when the ‘new normal ‘will emerge and what it will look like. The support will, however, be accompanied by a constructive challenge – not least where there is a need to improve the technology or to enhance the quality of relationships with particular stakeholders or to ensure a better balance between them.
Transparency, fairness and genuine care determine stakeholder relationships
Developing strong relationships requires ongoing transparency on the current circumstances of the business and its likely future prospects as well as treating the different stakeholders fairly in terms of how necessary sacrifices are shared. Long after the crisis, stakeholders will remember how they were treated when they were at their most vulnerable. The board must also have a clear sense of purpose, and communicate it well, to inspire stakeholders with the prospects of a brighter future to help them get through the tough times now.
Building a fully committed workforce during Covid-19 involves placing primary emphasis on the team’s physical and mental well-being and recognising worries over job and financial security and in doing so being conscious of the varying personal and work-based circumstances of different groups of employees. This can be helped by using focused engagement tools to gain a thorough, properly segmented, insight into the workforce’s feelings about how the organisation is being run, what is felt to be going well and areas of concern.
The matrix in Figure 1 can help a board identify its current positioning and the risks of not being strong on both technology and people issues.
Figure 1 The Connected Board
Being weak on technology or people issues poses strong risks
To consider the dangers of being strong on technology but weak in building relationships with key stakeholders (Geeks), you only have to look at the fate of the social media giants as they have rushed to catch up with changing societal expectations of their role. It is no longer regarded as acceptable for them to just provide a high quality platform enabling people to communicate globally in new ways with each other, they are now also expected to prevent harmful communications getting on to their sites. Similarly, boards and leadership teams with great technology but poor employee relationships are unlikely to be able to provide leading-edge customer experience.
Conversely, those with strong longstanding relationships with customers and employees but unable to keep up with trends in technology (Old School) are increasingly finding they have no future. This has been starkly witnessed in recent times with a number of well-known retail outlets failing to develop a successful online offering. And little needs to be said about the prospects of those both weak on technology and in their relationships with one or more of their key stakeholders (Dinosaurs).
Focus on technology and people a journey not a destination
Boards not currently in the top right quadrant as connected boards need to address, as a matter of some urgency, what they need to do to move there quickly in order to close the gap with their better performing competitors whose learning and confidence will have increased significantly during Covid-19 and if allowed to continue unchecked may soon become unbridgeable. Being a connected board, however, is a journey not destination and even those currently in the top right quadrant can improve and are likely to be amongst the keenest to do so.
To help you understand how connected you are, these are questions you should be asking based on what you are learning during the Covid-19 crisis:
1. How up to date are your systems? How effectively are your systems being used by your teams?
2. How will you use technology differently in your business, in the future, both internally and in engaging with your customers? In which areas is experience showing it can be improved?
3. How robust are your cyber security and GDPR controls? What has been your experience of hacking/attempted hacking during lockdown?
4. How can you strengthen sustainable relationships with employees and enhance efficiency, eg better more regular communications, engagement surveys on crisis response, more flexible working, more virtual meetings, better focus on mental health?
5. How can you engage or work with customers more effectively, both on an individual basis and collectively, eg in the latter case through webinars? How can you improve information on customers, eg what they value most, which are the most important to your business?
6. How can you build relationships with your investors or other providers of finance, eg greater transparency, additional engagement with information better tailored to their needs?
7. What are the potential benefits to sustainable financial performance, and your carbon footprint, in terms of making better use of technology and enhancing stakeholder relationships, eg lower overheads due to less travel, increased revenues?
8. How is the board performing as a team during the crisis? How can you embed your key strengths? What are the main areas for development?
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Publication date: 02/06/2020 - Article written by Antony Carey, Mazars UK Partner