The Board’s mandate is to oversee governance & risk management , protect the financial & other interests of stakeholders & ensure long term strength of business.
Effective crisis management involves quick decisions, transparent communication, strong leadership. So what should the Board do in a crisis situation such as Corona Virus? Should it be cal & carry on the business as usual or put a halt to profit & growth & focus on humane considerations ?
In such situations, even a small decision would have substantial impact on the organisation’s brand. So boards should focus on taking intelligent & thoughtful decisions. Cutting salaries, deferring appraisals & laying off should be wide across phenomena covering middle & senior management, C-suite & boards which can give the message that we are all in together.
During such turbulent times, the question arises how boards should be managing decision making & balancing long term growth with proactive responses. This is a time when boards should demonstrate its understanding of society & community & should be open to revisit the rewards & incentive policy.
In the financial services sector, boards of leading banks & financial institutions such as HSBC, Standard Chartered, Barclays have agreed to do away with their bonuses for the year 2020. Even C-suite of some leading start-ups have agreed for a 20% pay cut till June 2020. CEO(s) across multiple sectors are taking partial & full pay cuts in response to Pandemic. Some of the leading insurance companies have decided to scrap incentive based payouts. So some basic question arises:
- Should boards be suspending bonuses & dividend during his Corona Virus.
- Is it more appropriate to preserve cash & until the way forward is clear & make payments in 6 monthly duration.
- Where public backfire if they do not show restraint.
- When peoples are being furloughed & losing their jobs, will it be appropriate to still pay bonuses & incentives.
If the aforesaid questions appeal to you, then you are correctly positioned to secure a place in boards. Today’s boards are socially responsible while balancing long term business growth strategy with short term reactions. From a positive perspective, Coronavirus has led to innovation & pivoting existing business space to amplify core businesses. This is where board members are expected to demonstrate that they have both wealth of experience & leadership skills that count. These are opportunities that demand bringing skills & social competencies to the highest strategic level.
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