Targeted read for all board members
This is my third paper in a series that focuses on boards and their corporate governance arrangements. In this short article I question if the current corporate governance arrangement are fit for future purpose.
The Covid-19 pandemic and resulting lockdown in March 2020 forced organisations to do things differently, often requiring leadership to make significant decisions at speed. Unable to meet face to face, video conferencing calls replaced physical meetings. For many, the last six months was all about survival and for those still in business, the next six months will focus on recovery. This rapidly evolving environment will challenge boards more than ever to assess their priorities, and will need leaders who can step outside their comfort zone and embrace an unfamiliar future. Boards need to be ready to do more – significant challenge breeds opportunity. 2020/21 Annual Reports will make illuminating reading for business students for many years to come! How open and transparent will these documents be in reporting the impact of the pandemic? How will they further the role of the business in society?
Is your board ready to identify, seize and deliver new opportunities?
Most boards form committees to undertake work on their behalf, freeing up the board to focus on strategic issues. In turn, the committees can probe deeper into their respective areas to gain assurance. It is likely that the extent of the committee structure will be a function of the scope, size and complexity of the business. Articles of association or constitution and terms of reference provide the board and its committee structure the legitimacy to operate, adhering to the relevant corporate governance code / terms of authorisation. Is there a focus in this structure to explore, incubate and agree new opportunities? Are the governance arrangements sufficiently agile to ensure boards debate and decide, not debate and defer?
What should Boards be asking themselves?
It is the board’s responsibility to set the strategy for the organisation, but has it also set its own strategy for the future, detailing how it will best support the business going forward? Has the board considered its appetite for risk in setting an ambitious development plan? Has it performance assessed the organisation’s accuracy in forecasting, and has it used this knowledge in its contingency planning?
Do members need sharper listening and questing skills so they can better assure themselves, rather than accepting reassurance? How reflective of the digital revolution is the board; does it consider real time data? Does a 250 (plus) page board pack really lead to good governance and ultimately the best decisions? If remote meetings continue, what mechanisms are in place to ensure board members gain first-hand knowledge and understanding of business activities to play this into their own self-assurance?
Some boards extended non-executive director appointments during the lockdown period. Has the board assessed how this impacted succession planning? Has it reflected on any current and potential future skill gaps, taking into account any new direction the organisation may be taking? If remote meetings have been successful during the past months, could and should, this continue and be extended to enable a wider geographical net of potential board members? Would access to a broader talent base assist the board and the organisation to meet its future needs?
Does the governance structure constrain or enable? Does risk really lead audit? Is there clear agenda time for digital transformation, data management and cybersecurity? Has the board considered system resilience, continuity planning and its supply chain to ensure it consistently delivers on its performance targets? Does this ‘reach out’ include customers, influencers, national bodies and regulators in order to broaden its horizons, align its strategy and seek examples of best practice? Is there a clear staff voice at the board?