Ten questions for boards in a Covid world

Directors have correctly been focussed on the very short term. In some cases that has meant survival thinking with serious implications on people. As the country heads slowly back to the new normal further issues need to be addressed. This short think piece suggests some questions, both crisis related and future focussed. The recent budget has allocated considerable funds to the sector, some to shore up and some to effect change for an unclear future. That money has likely brought some time. That time should be used to consider the future but not retreat to a past now departed.

#1 Is our relationship with management strong and clear?

Firstly, and importantly this is a time to provide support, help the team cope and show some bright spots in the dark sky; discuss and if possible, answer any specific questions and share experiences around managing people and organisations in times of crisis. But also ensuring we are not crowding. As one chair noted recently, it is not helpful if too many helpful people are trying to be helpful. There is a balance to be found between keeping the board informed while also giving the management team clear guidance and room to operate. The most useful role the board can play is to ask the right questions and to test management’s assumptions while appreciation for and encouragement of a hard-pressed team. It is likely that the chief executive’s performance targets and authorities will need to be adjusted. Also, the basis for their performance evaluation will have changed. Some boards are revisiting the chief executive’s mandate on a regular basis. Have we made clear our new information needs? That will vary by organisation, but most boards identify cash flow and employees’ wellbeing as primary targets of management attention. Some organisations may be concerned that the chief executive is challenged in the new environment and the skill set desirable at recruitment is no longer complete. If so, the board needs to consider how additional support and development can be quickly provided.

#2 How good is our communication?

A big part of crisis management is not leaving people to make up their own stories or hear things through the rumour mill. People appreciate honesty about what you don’t know, though they also want to know what you’re doing to get the answers. Boards and management will have different roles here. There will be an important balance between external and internal communication to ensure no one is left uninformed. The board will want key stakeholders kept up to speed and as such communication with them should now be a standing agenda item. Communicate often, elevate the narrative, and don’t declare victory too soon.

#3 Are we acting from within our value set?

Soft skills matter in hard environments. Small words or gestures have a big impact with the management team that is working hard to protect and resurrect the business. Boards that act fast to reinforce a strong, compassionate, and positive culture with both internal and external stakeholders stand to benefit the most post-crisis. There is certainly a question around organisations with strong balance sheets viewing people as cost to be cut rather than value to be retained.

#4 What was already in flux before Covid?

Crises accelerate change. There are decades where nothing happens, and there are weeks where decades happen. - Lenin This moment is what strategists call a structural break. It accelerates change already in progress. The tenuous nature of businesses struggling under the old model is suddenly brought into sharp relief. In the non-profit (for value) world a number of things were already evident including.

  • Too many competing entities providing similar or overlapping services
  • The need to partner, enter joint ventures, collaborate or merge
  • Impact of technology
  • Changing consumer and volunteer behaviour
  • Outdated structures and delivery models

Some of the above factors, and likely others, are now very real. Which ones are most relevant for you?

#5 How many possible futures do we foresee?

New Zealand appears to be better placed than many countries at present. But our future is ultimately connected to the rest of the world. As such no one really knows what that future looks like. The best we can do is consider a range of possible scenarios. Scenarios are not predictions, but rather possibilities to plan for and explore. They help expand our thinking so we can better anticipate and imagine what might happen. It is important to test the organisation’s capacity to operate in each scenario and the likely consequences of this possible future coming to pass. As part of this is it important to ask is if we have truly examined the full range of possibilities. Scenario planning by management can be rosy, based on past experience, not probabilities within a given future. Optimism bias is real and needs to be challenged.

#6 Can we trust this information?

The present world is strong on opinion, rather lighter on fact. Consultants, advisers, and professionals of every stripe are filling the ether with words. Some of it is undoubtedly useful but much of it is not and a great deal of sifting and scepticism is needed. In many cases the media is an unreliable source, social media even more so. There are plenty of vested interests positioning themselves in a confused work. Bias and self-interest are sadly prevalent. In testing information being presented (derived from a Cornell University decision making framework) this is a good check list at any time - is this information complete, accurate, verifiable, relevant, recent, objective? In most cases and certainly at present the answer will be no in some part. Boards then need to make probability judgements. Part of the information flow is gleaning what we have learned in recent weeks. Consider which aspects of the business should remain the same, which will briefly change, and which have been permanently disrupted – including consumer behaviours, public expectations, supply chains, and operating models. This will include remote working, digital solutions, attitudes to public spaces and travel.

#7 What should we stop doing?

This is the time to reflect on purpose. If we have to make tough decisions what is our frame of reference for that? The well-known marketing witticism is relevant, I know that fifty percent of my advertising spend is wasted, I just don’t know which half. The equivalent non-profit question is, which of our activities are having the greatest impact and how do we know? What is essential in delivering outcomes for our community/beneficiaries? What is non-negotiable, and alternatively what can we stop and say no to?  There are some useful models for this conversation but all of them presume clarity in purpose, planning and measurable specificity around costed outcomes. One lens is a critical review of growth. Many organisations have quietly added activities and programmes over the past ten to fifteen years. Often this has been as new lines of funding have opened up. This has resulted in organic rather than strategic growth. A useful exercise is to look at the cost structure of ten years back (CPI adjusted) and today. What additional benefit/outcomes have we achieved related to this additional cost? Can we even answer this question? In the commercial world if the cost of sales goes up say 30% then the impact on bottom line is expected to be significant. What is our analogous metric? If we cut that 30% increase in cost would it make any difference to the benefits we are generating and how do we know?

#8 How good is our story?

Competition for resource will accelerate. Short term funds are exactly that and a good portion of those are intended to structure a new future and not prop up an old one. There is a world of escalating need coming and many traditional funders may change priority. To prosper in this world needs clarity of purpose well communicated and backed up with evidence of impact. The concept of generally doing good while possibly true will no longer be enough. The question for boards is why anyone should provide resource to us ahead of others and how do we make that a compelling case.

#9 Are there changed practices that we should keep?

What new practices or processes have we been using during lockdown that we should keep in the future. Boards have adjusted to virtual meetings. Some have found that shorter more frequent meetings work better. Cost and time savings have been real.

#10 Are we ready for next time?

There is strong chance this will happen again. What have learned and how well are we prepared for another similar event. Boards should ensure business continuity plans are now sharp and clear and risk management and monitoring is more thorough than it was.

Final thoughts

Amongst the considerable commentary focussed on a post-Covid world there are four emerging priorities for the medium term: recovering revenue, rebuilding operations, rethinking the organisation, and accelerating the adoption of digital solutions. Above all - act decisively, don’t be a possum in the headlights.

Prepared by BoardWorks June 2020