How things look today
The global consequences of what happened in the Chinese province of Wuhan at the end of last year will change the way both us as individuals, and the businesses we work for, act and react forever.
COVID-19 and the dramatic effect it has now had in every corner of society means that organisations are going to have to prepare for global markets to be far more cautious and increasingly volatile, with cases like the current pandemic predicted to become more common as we move through the 21st century at breakneck speed.
Hopefully as COVID's impact lessens and global economies start the long, bumpy road to recovery, we will start to see businesses develop and change the way they are able to adapt to significant events both domestically and internationally. Organisations will need to create a truly agile way of working which will have minimal impact on both their employees and their customers – and this has already begun.
As a headhunter specializing in placing non-executive directors (NEDs) and chairs in multiple sectors across Europe, I have been noticing some fascinating changes at the board level since the start of March. I wanted to explore further: how has the role of the non-executive board changed post-COVID-19?
In my role, I have the privilege to speak to some of the most successful NEDs, advisors and chairs from across the UK and Europe who over the past six months have developed an opinion on what the future of board-level activity and responsibility will look like. There's been a vast array of perspectives, with one commonly held opinion - that there has been a step-change in board activity which is yet to be fully defined.
In August I interviewed Alison Gill, an ex-psychologist and Olympic athlete who is now the co-founder and CEO of BVALCO – a consultancy focusing on reviewing the health and readiness of boards of businesses of all shapes and sizes, from FTSE 100 to charities. Alison, who recently carried out over 20 interviews with board members on the impact of COVID-19, said that many non-executives had to get far more involved with the financial and operational sides of their businesses through the crisis than they would normally. Interestingly, despite this increased involvement the majority remarked that the non-executives’ relationships with their executive teams have improved as a result.
Alison‘s research indicated that the boards with more developed governance systems typically fared much better than those without during the pandemic – unsurprisingly, this opinion is also supported by a recent report written by Croci, Hertig, Khoja and Lan on "The Advisory and Monitoring roles of the Board", which concluded that advice-oriented boards fare better in times of crisis than their monitoring-orientated counterparts.
Plural chair and serial entrepreneur Patrick Dunne, who I also spoke to in August, highlighted the difference in board behaviour. Effective boards learn to act as a "pressure-valve" during difficult times, applying pressure when needed and also releasing it when tension is too high. Patrick went on to describe how COVID-19 had an impact on some of the organisations he chairs. Soon after COVID began to surface, the board created a nucleus sub-board of a few core individuals who would deal with the immediate and most urgent commercial issues whilst the wider board would continue to help plan the long-term strategy for the business.
What does this mean for the future of the non-executive board?
In Patrick's eyes, the relationship between the executive and non-executive boards are always shifting – as he puts it, this complex dynamic is an "active Venn diagram" where activities and responsibilities overlap somewhere in the middle.
The organisations that have performed best in this crisis have had the most overlap on this imaginary Venn, and were able to react and respond to market conditions the quickest and most efficiently. The organisations who have struggled most have held a "just-in-time" mentality according to Patrick, with little or no slack in resources at either executive or non-executive levels. Crises like the 2008 recession or this year’s COVID-19 outbreak typically uncover areas where boards lack contingency plans.
The wider impact of an over-stretched and fatigued NED board cannot be understated – it means a strained executive board lacking vital strategic support, which impacts not only morale and leadership at the senior level, but creates growing discontent and potential disillusionment within the business’ internal culture.
Having spoken to Alison, Patrick and multiple other NED and chair contacts over the past few months, I have concluded that to be a truly successful and stable non-executive board – able to weather inevitable changes in market conditions – it should have:
Members who have the capacity to easily increase/decrease their influence and time commitment when necessary
A constantly changing level of influence and responsibility determined by the executive team
The ability to create dedicated sub-boards quickly in an emergency and relieve pressure from the executive team
A thorough understanding of their impact on wider company culture
Strong governance structure in place to help mitigate risk of responsibility gaps during a crisis
If you have an opinion on the above and would like to discuss this topic further, you are a NED and looking for your next opportunity, or you are an organisation looking for additional board-level support, please don't hesitate to reach out to me at firstname.lastname@example.org so we can arrange an introductory conversation.