What challenges will boards face in 2021?
This article first appeared in the EconoTimes
Despite the vaccine programme being well under way boards face another year of uncertainty due to the pandemic. In fact, the challenges they face in 2021 are potentially greater than in 2020 as the ongoing pandemic has drained reserves of cash and resilience.
The health crisis will rumble on until most of the world is vaccinated. Until then we are likely to continue to play “whack a mole” on a national and international basis with outbreaks and potential new variants of COVID which could lead to lockdowns and stifle economic growth.
The economic crisis which has been created by the health emergency has led to job losses for many people, particularly in hospitality, travel and leisure. Also, many consumers are fearful to travel locally and further afield for goods and services – a fear that could outlast the end of the pandemic.
The health and economic situation is set to lead to social and political upheaval. We entered the pandemic with significant income disparity in our society. The pandemic has accentuated these stresses. For example, the young will demand change having borne the brunt of job losses, lost learning and opportunities due to the lockdowns. All these factors will pose additional challenges to boards over the coming months and years.
On top of this, boards are fatigued, having to be “always on” and adapting to new ways of working during the crisis. Many are frustrated at the length and the impact of lockdowns on their businesses and lives. The pandemic and Brexit have made it harder to plan ahead due to uncertainty. Lastly, they are fearful – specifically they fear failure.
Ask tough questions of company purpose
As the uncertainty continues, effective boards take control of the situation and ensure their organisation moves from survival to thriving. It’s a chance to challenge and revisit the company purpose. As part of this they need the courage to ask tough questions of their business model, such as why they exist, which could mean having unpalatable conversations with stakeholders. They then need to follow through on the decisions they make with conviction.
To provide an example of challenging purpose, shops and banks on the high street could ask themselves should they have a physical presence at all in the current climate?
It’s this challenging approach to assumptions and changing business models that provides a great opportunity for organisations to head in a different direction. In fact, it’s those boards that are resilient, agile, adaptable and have foresight who are best placed to see their organisation prosper. Usually it’s these boards that have the mindset to ask tough questions which will help identify a once in a lifetime opportunity to transform how their organisation operates in the current climate, to ensure it thrives. Now is a good time to push for change because many businesses, particularly those hit hard by the pandemic, will experience less resistance from stakeholders and wider audiences who will understand big changes are required to drive profitability.
Examples of those businesses that have quickly pivoted after spotting an opportunity during the current crisis, include Pernod Ricard and L’Oréal, who began to make hand sanitizer at the start of the pandemic. While businesses with foresight in the fashion sector switched to making much needed PPE.
CEO and board reviews
With so much going on in the external environment some boards have delayed or ignored the valuable process of self reflection, review and identification of areas for development. Regular reviews of the CEO and the board are always important, but perhaps even more so at times when performance is so critical. These can take place using an unconflicted third-party such as ourselves or internally. With the CEO at the sharp end of leading the business forward it is often best to start with an assessment of their performance, before moving onto a review of the board, both of which – if handled with best practice in mind – are very similar processes.
To ensure the CEO evaluation process delivers a vital 360-degree performance review, the board, CEO and their direct reports must reflect and provide feedback on the CEO’s performance and development needs. This requires qualitative and quantitative research based on face to face interviews, on a video call platform during the current climate, and an online survey.
At the end of the review there must be clarity on the next steps for the CEO, with deliverables agreed by all parties. And while any review will help the board clarify how to better help and support the current CEO, it may also prompt the board to consider if a different CEO is now needed to ensure the organisation delivers on the business strategy. After all, it will highlight if the CEO is fit to lead the organisation into 2021 and beyond in an uncertain world.
Uncertainty is set to remain a constant for the foreseeable future. But if boards ask tough questions of their company purpose and seize the opportunities that arise, keep their sights set firmly on the future and undertake reviews of the CEO and directors for assurance that they are operating as they should, they will be well placed to prosper at this challenging time.
Any boards struggling during the current crisis should get in touch with us and speak to one of our experienced consultants.