Crisis management is part of the job description for board members. While they may not be on the frontlines making masks or nursing patients, directors’ vast remit — high-level strategic oversight of an organisation’s viability, including its operational resilience, financial well-being, and reputation — mean they play a critical role when things go haywire.
But the variety of crises that organisations face has grown in recent years, from the economic shocks and geopolitical incidents of old, to the fast-spreading pandemics and cyber-attacks of today. And many boards are not prepared to adequately respond to these new threats.
Defining the role of the board
Crises can originate internally or externally, and the pace at which they unfold is variable. This affects the urgency of the response and the rhythm of how the crisis develops. For example, the gradual emergence of a critical strategic mistake will play out very differently to a natural disaster affecting one of your international offices.
Despite the variance in how crises present themselves, they can all be characterised by an acuteness of scrutiny, pressure, and organisational impact with a need for speed in decision-making, action, and communication. Critically, all crises demand a measured, rapid response that has been well planned prior to the event unfolding.
To navigate the challenge, boards need two things: clear information and a robust communication protocol that keeps stakeholders informed about what is happening. Constant communication between the CEO and board is critical; the CEO must keep the board informed as events unfold and should engage the board in evaluating alternative courses of action. This provides the CEO with the benefit of the board’s collective experience with crises at other companies.
Fundamentally, the board must adopt a supporting role for the executive team. As a result, the decision-making process needs to be exhaustive and collaborative. Rather than simply rubber-stamping management proposals, the board must draw on its wealth of experience and expertise to demonstrate alternative thinking and share insights that management may have missed. This will expose any flaws in the response to the crisis.
The board should not act as a spokesperson for an organisation unless confidence in the capability or integrity of the leadership team is in question. The highest responsibility of a board (and usually a last resort) is taking the reins from management and stepping into an executive role. While it remains an unlikely scenario (and most boards are not prepared to take on this role, given shareholder and press scrutiny), boards should plan for these events and agree their roles and responsibilities in advance, so that crucial time is not lost if this often unprecedented step needs to be taken.
Finally, in times of crisis, management teams are exposed to extreme scrutiny and aggressive shareholder demands. To enable clear thinking from management, the board needs to offer a sense of long-term perspective and encouragement to the executive team so that the organisation can continue to operate under pressure.
Strength in preparation
Navigating a crisis with success begins with appropriate preparation. Planning for ‘unknown unknowns’ requires protocol and strong leadership rather than a “playbook” approach with pre-agreed decisions. Unlike crises, playbooks are not dynamic and provide a false sense of security and narrow perspectives. Instead of a step-by- step guide on what to do, crisis management should focus on frameworks from which solid decisions can be approved, implemented and communicated. Only strong decision making, underpinned by strong protocols will create a plan that can move an organisation forward during a crisis.
Research undertaken by the National Association of Corporate Directors demonstrates that almost 50% of board members feel that their focus on known risks was a barrier to preparing for threats that may be hard or impossible to predict. Fewer than 20% of the individuals felt confident that management could handle these unforeseen risks.
One way to prepare for this is by creating a response model, so that should an unforeseen risk develop into a crisis, roles and responsibilities are clearly defined. This will assist the crisis effort by detailing why, when and how the organisation will respond. However, having a plan is only one step in coordinating the response. Assurance that the plan will be effective when needed can be gained by testing it in periods without crisis. This practice should form an integral part of the organisation’s wider resilience measures and begins with the board considering the answers to the following questions:
- Why is the plan being developed?
The purpose behind this question is to broadly consider the primary objectives of the plan, and likely outcomes if the plan is not developed.
- What is the plan?
Here, comprehensive response is required, where actions are developed in response to scenarios. Bear in mind that these are not rigid play-by-plays, but protocols around roles and responsibilities.
- Who is the plan for?
Identify the key individuals who will carry out the plan, and the key stakeholders who will be affected.
- When will the plan be activated?
Finally, address the triggers that will set the plan in motion. The idea is for all members of your board to be aligned to exactly when the response will be deployed.
Taking action now
Thinking broadly about your crisis response plan and how it will play out is a fantastic starting point. However, there are also more tangible actions that you can take to better prepare your board for a crisis. At Board Intelligence, we have identified three distinct steps that you can take:
1. Reassess your organisation’s priorities
Essential to managing a crisis, is having a united board that works towards the same goals. Clearly defining your organisational priorities helps to align your board to the same purpose, so that in times of crisis, it becomes easier to pull in the same direction. At Board Intelligence, we use our Six Conversations Model to identify and establish what issues make up the priorities of the board. It is likely that your priorities will change during a crisis but taking the time to define them first will empower your board to concentrate the efforts in the right places when they are needed the most.
2. Adapt your meeting agenda to support crisis management
Following a reassessment of your priorities, change your meeting agenda so that you are spending enough time on the important issues. This is especially pertinent if you have identified new priorities borne out of crisis. You can achieve this by removing as many administrative items as possible and reducing the number of regular updates coming to the board. Alternatively, these can be delegated to sub-committees. Critically, you must anticipate unforeseen issues that demand time on the agenda. As a good rule of thumb, allocate 20-30% of your agenda for these ad-hoc items, as crises rarely follow a designated pattern.
3. Simplify your decision-making process
Your organisation will need to respond with agility to developments during a crisis. If your decision-making process hinders your ability to act quickly, you will miss opportunities to mitigate damage. Simplification can be achieved in several ways:
- Reduce the number of forums. Commonly, the number of governance forums that need to sign off on proposals before they reach the board can be reduced. In a crisis, this will allow the management team to work quickly and with impact.
- Use technology to expedite information sharing. Situations can change rapidly in a crisis. Using technology to quickly share and collaborate on the latest reports means that valuable time is saved inside meetings where critical decisions have to be made.
- Ensure that you are meeting with enough regularity. For the duration of the crisis at least, it is important that your board are meeting with enough regularity to stay on top of the situation and maintain the ability to make decisions quickly. Increasing the frequency of meetings will reduce the amount of time spent on recapping ground that has been covered previously, allowing you to focus on the next pressing issue.
In summary, sufficient preparation for crisis is the best strategy to managing one. Ensure that your board has a clearly defined role and understands what is needed from them during a crisis. Crucially, you must maintain a flexible approach that allows you to make decisions without being restricted by a playbook. Finally, use the best-practice recommendations above to embed crisis readiness into your day-to-day operation.