Shifting Sands: The Role Of The Board In A Crisis

Stephen Bampfylde shares his insights and observations specifically focused on the role of the Board and its evolution in the time of crisis.

Are there themes or trends, particularly emphasised in this time of crisis, which are emerging across board work requiring greater focus, insight or development from you and your team?

I think we have seen a number of particular changes since the beginning of this crisis. The most apparent of those, be it temporary or possibly more permanent, is the change in relationship and distance (beyond physical) between the board and the executives. For example, if you are on a board and your organisation is in crisis you need much more frequent oversight: waiting a month for the regular board update is simply far too long. We are seeing that in most organisations, planning horizons and board calls have been pulled in dramatically: daily for some and certainly bi-weekly for others.

Those organisations who thought they had a great plan at the beginning are in many cases finding that they are tearing that up and having to go much harder in terms of their planning and delivery strategies. Even those who were more cautious and took the approach of presuming the worst, planning scenarios for how bad it really could get before they would have to take serious action, are still having to review and recast their approaches regularly.

It is absolutely vital that board members are reassured about the approach of the business and have a clear view of the risk it is under. They need to maintain focus on organisational strategy and its operational implementation, however, the strategy itself has become one of day-to-day, week-to-week or month-to-month survival as opposed to looking longer-term. For many boards, it is here that operational and strategic implementation meet most acutely.

Overall, there is a huge sense from the board of needing to know numbers more than ever. For example, I am a trustee of a theatre and while it is closed you might think there is little to talk about, but I am speaking with the Director more now than I was when the theatre was fully functional. While these are extraordinarily challenging times and the support from the board is vital, there is also a danger of cutting across the freedom of operational responsibility which executives should have to run the business.

As we move forward in this current climate, it is important to assure executives that this modus operandi is temporary and not forever, but how temporary we cannot say right now. The pressures facing senior leaders have been increasingly challenging, but those are amplified by about 300 per cent currently! They are trying to keep a balance of operational control with the moral underpinning and cultural values of their respective organisations.

For those senior leaders the support of the board is essential to share that pressure. How board members, and the Chair in particular, can support the senior leader and other executives without getting in the way is what I am seeing boards wrestling with most significantly at the moment.

Can you expand on how you view the role of a board during a crisis?

I can see it becoming a much closer, constructive, critical friend role. It doesn’t help the executives to have a nervous bunch of non-executives who need more time and reassurance than ever before. They want and need constructive ideas and suggestions from the non-executives. This additional element to their role is generating a real hunger and interest amongst non-executives to know what their peers are doing and thinking to bring shared experience back to their organisations, where relevant. There is a much-heightened desire for engagement than I believe we have seen before.

The critical element becomes very important when executives are under the enormous levels of stress that they currently are. We all know that under stress people can occasionally miss things, so an increased element of oversight is crucial.

However, alongside the critical oversight, the friend piece is very important: at this point the isolation of the individual leader is reinforced hugely and the Chair needs to be someone to whom they can go and express their vulnerabilities and their concerns.

We know from our experience with psychological profiling, and particularly the Hogan suite of tests that we use, that when under stress and certainly extreme stress, people can revert naturally to type unless they either consciously recognise it or somebody else helps them recognise it. Where we have been able to do psychological work with the executive team, it is helpful for the Chair to know how best to support the executive, and what works best for them. Some chief executives are best supported by a daily call, some are best supported by nothing but a weekly call and an occasional email to check in.

In terms of the functioning and facilitating of a board, we are seeing almost every type of meeting happening virtually, even within Parliament and the Cabinet. In the aftermath of the lockdown, it will be a real question of how organisations will operate under a ‘new normal’. For boards this will be particularly acute, I believe.

Typically there is a bias towards wisdom when appointing non-executive directors, an attribute generally recognised as something developed with age and prior board experience, the majority of people on non-executive boards tend to be in the upper age limit. As such, sheltering and social distancing measures will likely remain in place longest for these individuals therefore this group will be amongst the last to return to working in a ‘normal’ way. There will also be limitations on many for travel, both domestically and internationally which will further restrict physical attendance at meetings. It would seem to me that boards are going to have to meet virtually for some time, whether that be in whole or in part.

One of the challenges this presents, and I don’t think we yet have full answers on this, is whether a move to virtual functioning is easier for a board that is already formed than it would be to create a new board or introduce new members. For many organisations there is a tradition of the non-executive collection having a board dinner together before a formal board meeting. How do you replicate that in some way? We hear of virtual drinks and of virtual dinners, but it isn’t quite the same. This is going to be an area that we will need to explore much further and work harder at.

Are boards coming under more scrutiny in this current crisis?

I think Chairs and Chief Executives up and down the country are very clear about which of their colleagues have stepped up and which have not. We are seeing more Chairs wanting to think about future succession to the board. Some will action it now while others will not feel they have the capacity to deal with succession planning until the immediate challenge of the crisis is over.

There is also a shift we are noticing in terms of appointing non-executives at this time. There are Chairs and boards still willing to go forward with non-executive recruitment without being able to physically meet the individuals, but they want more assurances. To that end, we have developed a psychological profiling piece specifically aimed at non-executives. Previously this was not considered of huge importance, but as appointments to the board are now potentially going to be made through only virtual meetings it is incredibly helpful to know more about candidates. Particularly this piece can look at how people respond under stress which is hugely important at the moment.

One area to consider is scrutiny of the viability of an organisation by both the board and future board prospects. This pandemic has emphasised the potential financial fragility of some organisations and to be on a board presents risks in a way it may never have done before. I do believe that there will be a substantial level of due diligence needed from existing and potential new non-executives in the future.

Has remuneration been affected for non-executives during this time?

There are circumstances where pay for non-executives is being reduced or cut, in the short term at least. For example, in family business or employee-owned business, where non-executives are prepared to assume an impact more closely aligned with that of the executive. In public companies we aren’t seeing board pay being cut yet.

How are you working with clients to establish more diverse boards?

As we have always done, we continue our work to better understand the diverse communities and the individuals within it. By and large, if you are a diverse candidate you don’t want to be labelled as such; you want to be treated as a candidate in your own right. We have outreach programmes and undertake research into the most talented individuals across a broad range of communities for example, we have just been shortlisted in the RIDI awards for the work we are doing with the UK Civil Service to establish a mentoring scheme to help support high-performing civil servants who have visible or non-visible disabilities. We then work to establish how can we get to know them, how can we help them prepare for board work and how can we advise them. This means we can bring them forward for a wider range of roles – not just for those positions looking for diverse candidates.

We expect to provide diverse shortlists but on the basis of equivalent quality. So even if we are not being asked for it, we are going to continue to do that work both because we think it is morally right but also because it is a fantastic source of advice and talent that is otherwise neglected.

As we move forward is there a greater demand for cross-industry experience at board level, than might have been the case previously?

I am not sure there will be as much demand for this as you might expect. I believe that the pandemic has emphasised the need to really understand how the water flows through the pipes in the organisation that you are involved in. If you come into the business and you don’t know it, there needs to be a seriously good induction programme very quickly for you to be able to contribute.

Do you think boards are well enough equipped to support the integration digital agenda as we move forward?

The two things we continue to be most asked for in non-executive directors and trustees are financial acumen and modern digital understanding. In terms of the digital piece, many boards go through the loop of thinking they want or need somebody younger and more digitally aware. However when they meet the 28 year old digital entrepreneur, for example, they realise that (obviously with some great exceptions) very often that person will not be able to contribute as a full trustee on more than one item on the agenda.

Boards needs someone who can talk across several areas, have depth in digital but offer breadth as well – a t-shaped experience and perspective.

In terms of your board work at Saxton Bampfylde how are you adapting to virtual working within your board-focused activity?

We are managing it well I believe. Our board practice has grown throughout the pandemic. We have actually seen a very positive outcome in terms of getting to know our candidates across more diverse communities than in the past. Everyone is at home and happier to chat, there is a sense of more time and space. I do fear that should it go on much longer people may become bored of this sole way of working and interacting, but just now people are happy to have the time and space to talk about their careers and to talk about how they want to lead their lives and move forward. I would say this is giving people the time to reassess what they want to do with their lives going forward. Some are thinking that they will travel less locally and internationally, not just in the short term but permanently. They have seen evidence that things can work virtually and that may become a more common change for non-executive roles in the future.

However, one of the things we are noticing is that we are seeing fewer serious board reviews at this time. Maybe it seems like a luxury that can be put off, or maybe it is part of a cycle, but I do also believe that there are many Chairs who are actually taking time to reflect and looking at their individual board members and considering if they are fulfilling their duties or if they need to be replaced in the future.

Everyone reacts differently to stress and some people are reverting to type, whether they be executive or non-executive. However, at the moment, organisations need their boards more than ever, and this is something that will have longer term impacts as we move forward. Succession planning is going to be key and my anticipation is that there will be a significant uptick and in demand for board reviews as the pandemic finishes.

How much influence does, or should, a board have in making sure an organisation is high performing both at this point in time and more generally?

I think the board should have very significant influence in determining the performance level across a whole range of metrics that they expect the executives to deliver to. I do think, even in the current climate, that they should leave it up to the executives to, by and large, decide how to get to that place. The board must always define the vision of where an organisation wants to get to and what kind of organisation it should be. This should be done in close collaboration with the executive, as they are the ones who need to move forward and implement it. Boards with strong cultures and high performance are those that are responding well and doing better than others right now. It is very hard to retrospectively impose a collaborative culture amongst the board and non-executives if it hasn’t existed before.

Is there a particular style of organisation you think others could stand to learn from in this time?

I would say family businesses have been comparatively well-equipped to handle the pandemic. Everybody is struggling, but historically family business boards have had a slightly closer relationship with the executives so that a shortened distance between the two functions was already in play anyway. Family businesses tend to be more cash positive and less reliant on external debt. They also tend towards being more risk averse and more agile than other types of organisation.

I also think that because family businesses particularly have a longer-term horizon, the concept of stewardship for a future generation is easy for them to understand as that is what they have all lived with. Focusing on having a business that is sustainable in the long-term whatever the situation currently being faced is a more natural tendency for this style of organisation than for many other business structures.

About the Author - Stephen Bampfylde is co-founder and Chairman of Saxton Bampfylde. He began his career working for IBM and Whitehall, where he spent nearly 10 years before moving into top level executive search. For 27 years he has been involved in the recruitment of executives to senior positions across all sectors.