Biggest shift in 80 years as board members respond to ‘new normal’
COVID-19 has imposed two substantial challenges on boards over the past 3 months:
- 100% of board meetings have been run remotely as lockdowns were implemented across the country.
- A one in one-hundred year public health crisis has threatened the biggest economic downturn since the great depression.
Whilst boards have weathered many crises over time, the current challenges facing boards are the most impactful since World War 2 given previous challenges have typically been constrained to sectors, geographies or embedded in regulatory change with lead times allowing industries to prepare and adapt.
Talking with board members, and observing usage patterns in our software during the COVID period I have observed many changed behaviours. I don’t expect to see the majority of boards reverting back to old behaviours. Remote meetings are here to stay, not to the exclusion of in-person meetings, but as a solid proportion of all meetings going forward.
Ruth Medd, founder and chair of Woman on Boards, with 27,000 members, said to me recently “It’s a new world for boards and we won’t go back to the old ways”. She added that “Remote has its own challenges and board members need to work harder to achieve good outcomes”.
One of the core drivers is encapsulated in a comment, from a board member we spoke to recently: “It’s great. I don’t have to get up at 5am for an 8am flight and not get home until 8pm. My meeting and commitment to that board is over in a few more productive and efficient hours”.
There will be a significantly greater focus on risk going forward
Many boards are still responding to the economic situation as it continues to unfold, but I am expecting boards to re-examine their risk processes. Gartner reports that 88% of business leaders admitted their businesses were significantly unprepared for the impact of COVID-19, while just 2% said their business can continue as normal.
New tools for the New Normal
‘Lockdowns’ have forced many board members into crash courses in remote meeting technology. The majority of boards have one or two members who struggle with technology. Whilst I can recount many conversations over the past five years referring to ‘a dinosaur or two on the board’, more recently ‘we’ve spent some time training board members how to use video software over the past few months’, none were keen to be quoted for fear of offending.
Ruth Medd refers to “COVID-19 as having spirited better technologies and processes into board rooms”.
Whilst video conferencing was non-negotiable, board management tools such like BoardPro have also surged. BoardPro saw many hundreds of trial signups as part of a COVID-19 special offer to support the governance community in April. We saw six months’ worth of signups in a single month! We’ve also seen a 300% increase in attendance of our board member training sessions.
Donna Harvey, Operations manager at the Australia's CEO Challenge, told me about her board adopting BoardPro’s board software; She commented “Once everyone was on the same page with the new technology, everyone seems to be enjoying the raft of benefits from the central hub for all board documentation, through to no more chasing logistical details and outstanding tasks”.
We see that COVID-19 has imposed significant operating pressure and many boards have found standard desktop tools and ad hoc systems are inadequate in these times.
Ruth Medd also commented “these are hard times for management. They are checking in with remote staff, managing financial constraints, meeting with boards more frequently, reviewing building leases under new ‘work from home’ models and reconfiguring business models”. “Anything we can do to support them, we should be doing - including adding tools that streamline the board process”.
What is happening now is a rapid disruptive shift that is akin to what the iPad did for the adoption of corporate board portals for listed companies in the early 2000s. Board management software, with productivity at its core, is now at our fingertips.
Risk will focus minds
Governance risk responses to COVID-19 seem to fall into two broad categories:
- Organisations with immature governance reducing risk of failure
- More mature organisations upgrading processes for lower probability risks
Small to medium enterprise (SMEs) and smaller Not for profits (NFPs) typically eschew good governance in their foundational stages and develop it as the organisations grows and matures.
These less mature organisations are most vulnerable during the current crisis are now doubly exposed through both lack of resources, balance sheet strength and lack of governance maturity. Kerryn Newton, of Directors Australia says that “The regulators have made it clear, there will be some allowance for the times but COVID-19 is not a panacea excuse. Expect the ATO to take action.”
Peter Burns, director and business trainer, shared his experience of implementing governance practice at NFPs; “Great people, with great passion but some show up to a board meeting with little more than a PowerPoint presentation”.
Peter has long considered developing a basic governance process on the Microsoft platform for his clients, and on discovering BoardPro, rang his business partner and said “Stop, I’ve found it - it’s got everything we need and it’s affordable”.
Preparing for 1 in 100 year risks
At the other end of the scale, organisations with robust risk review processes are evaluating how to adapt for the type of 1 in 100 year event that no-one was really ready for. Ruth Medd says “We had a pandemic on our risk registers, but none of us were really fully prepared.” Kerryn Newton says “Lots of lessons have been learned about business continuity and crisis management.”
My sense at this time is that most organisations in BoardPro’s market, SMEs to Small Caps and NFPs, are still responding and adapting to the current environment.
Deeper consideration of identifying and mitigating COVID-19 type risks will be an emerging topic of discussion over coming months.