Crisis Management: Four Ways Your Board Can Add Value
Just as the COVID-19 pandemic highlighted the need for executive leaders to be well prepared as crisis managers, it served as a reminder of the value of a strong board of directors as an ally in transitioning out of chaos. With diverse experiences, historical perspectives, and myriad insights, board members can be essential to a successful corporate crisis management plan before, during, and after the crisis for all companies, public or private.
Boards, by their nature, are already well suited for crisis management. Board members are skilled and experienced in directing and overseeing the companies they serve, separating themselves from the day-to-day operations yet sharing the burden with Management.
They can support Management with short-term actions while assessing the longer-term impact on the company’s overall strategy, KPIs, workforce, and reputation.
Even before the onset of a crisis, boards play a critical role in a company’s preparedness efforts. We can see the value of preparedness in how companies emerged from previous downturns. After the 2008-09 financial crisis, for example, several companies prepared crisis management plans. Still, few were ready for a “black swan” event with a broad impact on employees, customers, supply chain, and more.
Readying a crisis management plan is a big test, but the board can make it even more robust by tasking management with pressure testing it and its assumptions. Here are four ways that a board can add value to your crisis management plans:
1. Risk management - While companies can respond quickly to market changes and pivot their offerings and business models, the board can provide guidance to improve the odds for success. Board members can be particularly useful in scenario planning to gauge what it will take to keep a company solvent and preserve its reputation during times of business disruption. Other critical issues for board members include overseeing the process of mitigating cyber-risks (including ransomware attacks of the kind that have made the headlines throughout the year) and providing guidance on addressing the challenges with recruiting, onboarding, and retaining employees, especially in an era of increased remote work.
2. Communications – Boards can help ensure that companies maintain effective and frequent communications with all their stakeholders, both internal and external, via clear communication channels. These stakeholders include employees, current and prospective customers, suppliers, distributors, regulators, investors/shareholders, and society. In addition, regular company updates on KPIs for the board enable board members to track company performance and focus on strategic discussions in the board meetings.
3. Succession Planning – Boards are keenly focused on keeping the executive bench stocked in case of departures. The COVID-19 pandemic highlighted the need for leadership succession planning and backup plans further down in the organization. Backup planning is especially critical for younger companies with lean staffing.
Example: A key employee at an early-stage private company got COVID-19. Despite being a small team, the company had taken the time to create a backup plan. As a result, they could distribute this employee’s responsibilities to other associates without missing a step.
4. Diversity – Increasing board diversity of gender, race, age, and functional and sector expertise, in a manner that is visible to the organization, has cultural, ethical, and fiscal benefits. In addition, in challenging situations, board diversity can improve the company’s performance by providing diverse perspectives and enhancing decision-making.
Companies with strong boards and good alignment between them and the management teams are best suited for transiting crises and emerging on a solid footing. They collectively think of successfully managing the situation and capitalizing on new opportunities arising from the crisis.
At your next board meeting, a discussion of these four areas could identify valuable opportunities that exist for your company.
ABOUT AMEETA SONI
Ameeta Soni has founded and held leadership and board roles with companies across multiple industries and technologies, helping raise over $100M in venture capital. She is Chief Marketing Officer at engage2learn, a Leeds Equity Partners portfolio company, where she focuses on delivering growth by developing and executing winning strategies. In addition, Ameeta serves on Maroon Venture Partners Fund’s investment committee and holds board roles with portfolio companies HomeBinder, Ompractice, and TOP the organic project. Previously, she was a board director of PlumChoice, now part of SquareTrade/Allstate. Ameeta earned her MBA from the University of Chicago, her MS from the University of Massachusetts, Amherst, and her BS from St. Stephen’s College.