Evolution or revolution? Board capability in a post-COVID world
The COVID-19 pandemic has undeniably generated substantial impacts in the way we all live and work. During this time we have observed significant shifts in both the thinking and approach of senior business leaders, and through this piece of work we aim to explore this further to better understand the impact on these individuals and their organisations. We chose to focus on the Board level and spoke with Chairs and Non-Executive Directors primarily from FTSE 100 and 250 organisations.
Our aim was to gain a strategic view from the top, understand challenges and learnings and establish insight into future prioritisation and approaches. Amongst our questions we considered four key areas: Whether the pandemic has really driven fundamental change or rather accelerated evolution that was already in progress; What key learnings have been identified by Board leaders in response to the pandemic; How Boards have adapted in approach and in thinking over this period and; What priority people and purpose have in the boardroom.
Each chapter also includes specific insight and observations from our Saxton Bampfylde consultants who are experts in Executive Search and senior leadership development.
Board capability in a post-COVID world
For 35 years Saxton Bampfylde has been finding, supporting and guiding leaders across multiple sectors and industries. Never in that time has anything had such an impact on how we all live and work as the COVID-19 pandemic. This black swan event has been completely transformational in so many ways.
Whether this will be a short-lived transformation or whether it will bring permanent changes to the way we work, live and play is yet to be seen, but describing it as “epoch defining” is no exaggeration.
Looking broadly across the whole working environment there is one overwhelming ‘enabler’ that has kept the world moving forward: technology. In its multiple forms, technology has brought about a level of innovation, a maintenance of communication and an opportunity for collaboration that would be utterly inconceivable otherwise. Throughout the duration of the pandemic, digital innovation has moved at a pace which was previously unimaginable: the need to survive has driven progress far beyond anyone’s expectations.
From the boardroom to the mailroom, COVID’s impact has been felt across every corner of every organisation. We have been in this together, but the challenges, opportunities, approaches or feelings have varied considerably. COVID-19 has generated new conversations and considerations at all levels, and we have seen this clearly amongst the leaders we have been working, talking and collaborating with.
Through this piece, we want to present material that is useful and relevant for all those navigating Non-Executive and Executive roles both now and in the future. Our hope is that this generates further discussion, as well as prompting reflection, deliberation and response.
We express our sincere thanks to all contributors for sharing their thoughts, experiences and insights so candidly. Any feedback on the themes explored and the insights raised would be warmly welcomed.
The great accelerator or the transformative innovator?
“I see it as an acceleration rather than innovation. If your counterfactual is disaster what is there to lose?”
COVID and its far-reaching impacts were not predicted by any of the businesses we spoke to; even by those who had the potential threat of a pandemic on their risk registers. It has generated a huge variety of emotions and reactions, but those we talked to were emphatic about the overwhelmingly positive and proactive responses from both their Executive and Non-Executive teams from the outset. It has highlighted, above all, that teams and individuals can demonstrate resilience, agility and flexibility when it is needed most. They can work together for a common goal of survival.
After the initial shock of a global pandemic being declared, survival-mode shifted quickly to innovation and transformation. Businesses moved rapidly to adapt and adopt new systems, alter operational and strategic approaches and re-focus priorities. Leaders were forced to develop thinking beyond the pandemic, carefully considering their organisations people and purpose so they could adapt for the future.
“Covid was very helpful to increase the tempo on Boards. Really made us look at planning and the big challenges. Brought that into focus.”
No organisation has welcomed the disruption of COVID but it certainly brought a more focused lens through which to view themselves. Indeed, there are those for whom it has presented an unanticipated cause for self-examination. For many, this has been an opportunity to reset: a chance to adopt, even in the shorter term, a more dynamic and flexible approach at the most senior level.
Many recognised that a shift in approach was already underway prior to the pandemic, but the enforced impacts of COVID sped the whole process up. This is certainly true in the case of technological adoption and more flexible ways of working, with vast numbers successfully transitioning to working from home almost overnight.
At Board level, technology brought with it new ways of interacting and delivering effectively. This has afforded Boards “a fleetness of foot” previously unknown, with the result that they, and in particular Chairs, are more nimble, flexible and accessible. This has been essential for supporting the Executive team: it has meant less travel time, fewer diary restrictions and more flexibility to lend support. The capabilities provided by the technology have been vast, allowing communication to go on seamlessly for many organisations. It has, however, required a shift in how and when Boards interact, as well as testing the chairing capabilities in a new format. It was noted that it also has extended the working day, blurring the work/life space for Non-Executive Directors (NEDs), and Chairs. Most have embraced and welcomed the technology, whilst acknowledging its limitations.
There is no doubt that this move to digital forms of communication will change Board engagement forever, allowing a hybrid mix of in-person and virtual meetings, with potentially shorter meetings or sub-committee groups being allocated discussion points. However, each Chair we talked to stressed the importance of some face-to-face interaction: that is imperative as we move forward.
The huge value that comes from the “non-agenda time” obtained during coffee breaks, dinners or lunches cannot be underestimated. Indeed, for the vast majority of people, learning, sharing and talking more freely and without schedule often brings out the very best. It is hugely important for NEDs to have the time to chat and familiarise themselves with colleagues in a way that is just not possible through video technology.
Stepping (way) out of the comfort zone
“We will have a different perspective on risk. Pandemic has had a transformational impact on this.”
There was a feeling across a number of our conversations that prior to the pandemic, Boards had become too formulaic in their approach to risk management. It was mooted that the approach to risk management had become “normalised” or too standardised pre-pandemic and that this was both an unhelpful and potentially perilous path to go down. A more “left-field or creative approach to risk” is important to encourage and is a welcome result of COVID. There was a strong sense that the challenges presented by risk ought to be embraced and not feared, and indeed that this would bring opportunity and be beneficial for businesses. While risk is connected to a regulatory environment which is more stringent for certain sectors than others, it should not be an excuse to stifle creativity and innovation around risk planning and management.
Taking time to reflect on the actions taken during the pandemic will be imperative and will require a broader discussion about how teams can and do identify risks and mitigate against them. Planning or even over-planning, with a mindset “that things will only get worse”, as we face a longer period of uncertainty, was a reality of the short to medium term future that many Chairs recognised. It is an area that should be closely considered in the future and will need attention from a skills and experience perspective when assembling risk committees, and indeed from the Chair directly.
“There are loads of Boards who simply weren’t ready for this.”
COVID has shone a light on the cracks in many organisations. It was clear to many early on, that the role of the Board was one that must be agreed upon and stuck to right from the outset. For most, it was self-evident that the Board should not be running the organisation: that is the job and function of the Executive. However, it was acknowledged that this has not been easy learning for some Non-Executives, especially in a time of such crisis. Yet, this attitude had to be overcome as quickly as possible, and the Boards that considered their response to have been most effective were those that put fluidity and support of the Executive as the absolute priority.
Whether it is innovation, acceleration of the inevitable, or just clarification of what really is important, there was an overwhelming consensus amongst interviewees that COVID has brought emphasis to the fundamental priorities in the boardroom. We shall explore these priorities further in our upcoming chapters.
Chapter 1 – Saxton Bampfylde view
The shift towards a virtual operating model has been fascinating to watch (and experience) from the search perspective. In particular, it has been interesting to see Boards quickly shift to effectively recruit and onboard new members without having ever met them. We have had to adapt our processes to allow more time and different contexts for candidates and clients to engage and this has been challenging but successful. However, almost exclusively our clients acknowledge that going forward they would like a more hybrid arrangement. Working more virtually opens up the possible recruitment pool in an exciting way, but face-to-face time for the Board and the engagement that occurs outside of meetings has been missed and certainly should not be lost altogether.
We now find Boards coming to us with a much broader perspective on risk which goes beyond the requisite members of an audit and risk committee. Boards want leaders who can think beyond the risk register already in place and who ensure the Board is right not just for the here and now, but for where the organisation wants to be in the future.
There has also been a drive to find digital leaders to sit on Boards although exactly what this means differs hugely from sector to sector and will continue to develop, we believe, as our lives continue to become more digitally dominated.
Trust in me, trust in you
“It was NOT about us: not about the non-execs.”
The importance of trust was emphasised in every conversation we had. It was highlighted in many forms: trust amongst the Board to work together thoughtfully and supportively; a deep trust by the Board in the Executive; trust in the employees and respect for their resilience in face of deeply challenging times and with varying personal challenges exacerbated by the situation; and the ability to generate trust from customers, shareholders, regulators and financial institutions by reassuring them that the situation was being effectively and efficiently managed.
In many organisations, the transformation in working models was so significant that it required a rewriting of rule books when it came to processes and planning. This required a trusting and trustworthy team to deliver this successfully. Forecasts became non-essential or even were removed in place of shorter-term scenario planning.
Scenarios were discussed and considered, and actions taken, often quickly and without time for lengthy deliberation. These decisions were the responsibility of the Executive team: this was very clear from our conversations. In times of crisis (and arguably also in more ‘business as usual’ times), the Executive sets the pace and the Board is the support team: there to offer advice, facilitate discussion and act as a sounding board, using collective experience and insight. The Board is not there to interfere or expect a briefing on every decision.
Putting trust to the test
“Covid has been an extreme way of testing our trust in Execs.”
This clear dynamic between the Executive and the Board was highlighted and embraced throughout our discussions. It was noted that many relationships have been enhanced – especially those between Chairs and the Executive – and respect on both sides of the table has grown. Silos that may have existed have broken down: the notion of ‘them and us’ has dissipated as a result of the pandemic, with a much stronger emphasis on working in a collegiate manner to move forward as a team.
Praise was heaped on Executive teams and their achievements in successfully navigating (for the most part) such a challenging environment. The resilience and adaptability they have shown reinforced for many why they hold the positions they do, and it was with much gratification – and even relief – that Boards could acknowledge they had been right in their appointments. However, there were instances where the Executive(s) in charge had not been right for the new context they found themselves in, as the Board didn’t feel sufficiently trusting in their approach and felt a greater need to be involved. One interviewee observed this, explaining: “If you feel you need to do the Exec job then you need to change the Execs”. While there were examples of this type of change through the COVID period, this was a rare occurrence, and carried with it the additional challenges of appointing and onboarding remotely in a precarious operating environment. We were told of examples where this was done well, but interviewees also emphasised the far greater preference for face-to-face interaction when going through this process – both at Executive and Non-Executive level.
“Boards have become very supervisory, very remote, very Zoom.”
There were those who perceived Boards as having become increasingly more ‘tick-box’ in their function over recent years due to constraints from increased regulation and governance stipulations. This created a blocker for some organisations in harnessing the strategic insight, value of experience and knowledge which is essential from a Board in a time of crisis.
In addition to this, there was recognition that the visibility of some Non-Executive members, beyond the Chair, had waned somewhat without a regular input to the Executive and therefore the Board had less say on certain matters. The idea that “some Non-Execs felt disenfranchised” was mooted and this is something that will have to be addressed clearly when a more normal cadence of Board operation returns. In contrast, however, there were also cases where it was felt NEDs were “too keen to be involved in day-to-day operations”. This too is unhelpful in ensuring the Board has proper strategic oversight rather than being overly operationally focused, and should be discouraged.
The pandemic has presented challenges too with Board visibility slipping amongst staff in certain organisations. This is perhaps to be expected in a time with fewer face-to-face visits able to take place, a greater emphasis on the operational and personnel areas, and the Board taking a more supportive, consultative role behind the Exec team. As a more normal state of affairs returns, it was acknowledged that a concerted effort to increase visibility from all Non-Execs will be required. Conversely, there were those who felt that the Board role had actually become more visible, or as one put it “more obviously relevant in eyes of staff”, with a more discernible role across the organisation than before. This was a welcome validation of Board activity and purpose, demonstrating value and effectiveness to a wider group beyond the Executive team. This observation was, however, accompanied by a cautionary note that Boards should not actively be looking to become more involved in all areas of the business: their role must remain strategic and advisory, not operational and supervisory.
Playbooks are out the window
“We need to be open and honest. There is no playbook.”
For PLC businesses, market updates were put on hold throughout the initial stages of the pandemic as it just wasn’t possible to accurately and authoritatively share information. The ongoing operation of the business and its people became priority number one.
However, there remained a need to provide reassurance externally and ensure stakeholder trust. From all our interviewees, there was a recognition that an increased effort and frequency in communication was undertaken, particularly in the early months of the pandemic. This held a clear mandate of transparent and open information sharing with staff, shareholders, customers and stakeholders. The effectiveness of this communication was considered a success by many, while others acknowledged that it maybe took more time to establish than it should and will need more work as we move forward into post-pandemic recovery. There is no doubt that this will remain a vital and permanent element of operational and strategic approaches.
The Board’s role in communication delivery and support continues to be significant, particularly with certain stakeholders. In many cases the Chair and Board act as conduits in communication with shareholders, government, regulators and financial institutions. This has become even more strategically important because of COVID and has been met with positive feedback internally and externally. This can be a useful way of removing certain pressure from the Executive team in an agreed and collaborative manner, while maximising the experience and capabilities of the Board.
There can be no doubt that the dial has moved on open and regular communication, leaving no room for a standard one-size-fits-all approach. Authentic communications are essential: a deliberate acknowledgement that reflects the emphasis on supporting a purposeful society which expects and wants clearer commitments from business towards future sustainability.
“The pandemic has brought into sharp focus the social licence that we have and exist by. It is important that every company recognises the impact it can make on society and that it acts on it.”
Chapter 2 – Saxton Bampfylde view
Communication, both internally and externally, has been a significant priority for the Boards we have worked with over the last year and many have had to rethink previous ways of operating. The increased focus on external engagement, which was beginning even prior to the pandemic, has changed how we undertake search, Board review and advisory work. Increasingly, we are being asked to engage in briefings with external stakeholders as part of a Chair or Board member search or to build a piece of stakeholder engagement assessment into our Board reviews so that both internal and external views are taken into consideration. Going forward, we anticipate this will continue and indeed increase. Previously, the encouragement to engage externally was coming from us, but we believe that this will become a much more proactive push from the Boards we work with, and we welcome that.
Prioritising purpose and people
“If you have the right purpose it is even more relevant in crisis time. The leadership must live that purpose.”
A purposeful organisation should have people and the planet firmly in its viewfinder. The pandemic has brought these two fundamental areas closer to the forefront than they have been in many years.
The emphasis on purpose in business has been growing substantially in recent years, but for some organisations it has been harder to define and subsequently communicate. There is no doubt the pandemic has brought this into sharp focus for many businesses, and particularly in their boardrooms, despite some suggestions that often ‘purpose’ is seen as being more akin to a ”marketing strapline.”
In many of our conversations there was a clear spotlight on purpose, however there were mixed views on how well-developed or defined it was for their respective organisations. Some felt the journey towards generating more purpose-focused organisations was only at its beginning, however the vast majority saw it as essential, with one interviewee stating: “without a focus on people and purpose, businesses are not going to survive this.”
As a result of the pandemic, many businesses have witnessed a far greater need to explain what an organisation is there to do and why. If a business has been unsuccessful in communicating that, it is going to have a much more challenging time attracting customers, investment and support from people and shareholders.
To successfully define and, perhaps more importantly, articulate the purpose to its people, an organisation must have a clear view of its culture. Traditionally culture development and implementation comes from the Executive – indeed “CEOs are the culture carriers” according to one interviewee – but it has certainly become an area of interest and one to keep a watchful eye on at a Board level. A culture based on authenticity, with coherent and comprehensive communication will be significant for businesses as they emerge and look to retain and develop their staff. This culture will carry into external communities and customers and must be an area the Board is considerate of, demonstrating an extension of this culture through their own activities and approach. Even for those organisations that have been satisfied that they have the culture piece right, it must continually be reviewed and questioned to ensure it remains appropriate and relevant.
A people culture
“Our people as a priority must be a focus for the future: this will make for better companies and Boards moving forward.”
People are fundamental in business, both from an internal and external perspective. This is not new thinking but is something that many interviewees felt seemed to have slipped down the priority list pre-pandemic.
Without people working hard and committing to businesses despite the challenges of COVID-19, the outlook could have been very different for these organisations. The majority have transitioned almost overnight to working from home – an atypical and less than ideal situation for many. This, coupled with pressures of home schooling, caring, or personal health challenges, were substantial challenges for many to operate through, exacerbating stress and anxiety levels.
There is no doubt that working practices and models need to be addressed. There will be a call for more flexibility and consideration of people’s personal as well as professional circumstances as we move forward from the pandemic. It has been proven that home working is perfectly possible across a variety of sectors and industries – technology has shown us that – but it is also vital to balance this with productive businesses and an environment that allows for development. This will be a balancing act going forwards, something that will no doubt be front and centre for Boards working alongside the Exec team to work to get it right.
“Working from home is not a panacea. The osmosis of learning is lost.”
There was little appetite amongst those we spoke to for a full-time shift to home working, but there was much discussion about consolidation of office space and the need to streamline office attendance. This must be accompanied by mechanisms that allow for knowledge sharing, team building and people development. There were those who felt that moving forward may continue to require a more prescriptive approach, perhaps with more rigorous hours setting and clear requirements for office time being mandated by business leaders. This “back to the future” approach conjured images of clocking in and out, but it was felt that to regain some sense of normality for people and the overall business this may be necessary at the beginning. The idea of being more rigid in the return to work did not resonate with all, however, with many recognising that a phased, people-centred return to workspaces would need to be balanced against business priority.
Whatever form the return to the boardroom and office takes, there is a far greater role for Human Resources teams and their inputs both at Executive and Board level. This must be a priority and set the tone culturally in the post-pandemic period. It will be vital to get this right from the outset to help organisations emerge positively and with strength into the future.
People, and particularly their mental well-being, are now a clear Board priority. This is important right across the entire organisation, however it was noted too in the context of the Executive team who have shouldered much of the responsibility and challenge of the pandemic leaving many physically, mentally and emotionally strained.
The pandemic has clearly driven this prioritisation of staff mental and physical well-being, and it seems clear that this will be a permanent feature of Board focus in the years to come.
Aligning with the planet
“We need to look after the planet and our people. That is what the pandemic has shown us.”
The impact of climate change is unavoidable across all industries and sectors. A wave of momentum is growing in support of this across the globe, and business has a significant part to play. The pandemic has brought this into sharp focus, and it cannot – and indeed should not – be ignored or underestimated. To do so is a huge risk, not only to business, but to the population and the planet.
“We must show more responsibility towards climate change: this will have a bigger impact than COVID ever has or will.”
This point was particularly emphasised in relation to the Environmental, Social and Governance (ESG) agenda and its vital place within the boardroom. Commitment to ESG is increasingly a must-have element of corporate strategy-setting which must be measurable and reported upon accordingly and reassuringly. If not taken seriously, it was suggested that this would have not only negative internal and external community impacts with support and trust faltering, but that this could create real and substantial financial and societal implications for organisations. Most of those we spoke to were comfortable that this was moving in the right direction, if not firmly embedded already.
There was a pronounced emphasis in our conversations that ESG must be approached in an authentic and real-world manner to deliver meaningful outcomes. One commentator articulated that: “it has to be about doing the right things and reporting those, rather than the reporting driving our actions”. At Board level, it was acknowledged that businesses exist by social license and that they have an obligation in how they behave which directly impacts on society. They need to be held to account, it was argued, and the majority we talked to expect that they will be by their staff, customers and shareholders. The organisations that emerge from this most successfully will be those able to show true leadership, demonstrable purpose and a relevance that resonates beyond their own business.
Saxton Bampfylde view:
The past year has forced serious reflection across all communities and we have been intrigued to see how candidates’ views have shifted regarding the types of organisation they want to work with and the style of Boards they want to join. Amongst the leaders we have worked with there has been an increased openness to considering different sectors to those they may have typically leant towards in search of organisations which genuinely put purpose beyond pure profit. Our candidates are much more interested in the Board response to ESG, which is a clear priority. Within our Board review work, the ESG agenda has been gaining momentum since before the pandemic with many Boards expanding to incorporate measures and assess what they are doing well, what could be done better, and how to effectively drive the sustainability agenda from the top.
Finding the right ‘fit’ at Board level has always been an interesting challenge in the work we do, and it is a key driver in the way we have built our processes to allow for chemistry checks and the client and candidates to do their due diligence. This has been harder to achieve in a virtual setting and has required more time and investment from the Chair, in particular. An interesting by-product that has arisen from this is an appetite for Board members to carry out psychological assessments to test their own fit with the Board and the Executive. This has always been a standard part of our approach in Executive recruitment, but it was not something we saw widely adopted at Board level – with perhaps the exception of family-owned firms who have always placed an extremely strong emphasis on ‘fit’. Even as we move away from entirely virtual recruitment processes, it will be interesting to see how the adoption of methods and tools such as psychometric assessment will be used to better support Board makeup and ensure there is the right balance of perspectives around the table.
Building a Board for the future
“We want those NEDs with very little ego, who put the success of the company as the priority.”
As a future beyond the pandemic starts to take shape, Boards everywhere are thinking about what this means for them. There have been multiple learnings at Board-level and we have looked in some detail at a number of those in earlier chapters. We want to conclude this piece by considering how these learnings translate into the optimum shape and make-up of Boards for the future.
Succession planning for NEDs in a post-COVID world is going to be very important. There will be those businesses which will evolve more naturally and others that need to transform quite dramatically, changing business models or potentially restructuring financially. Both scenarios will drive some level of change at Board level. It will be imperative to find and utilise NEDs who reflect and demonstrate an organisation’s values as businesses continue to face challenging times ahead economically, politically and socially.
There are specific areas that have become increasingly in demand over recent years and heightened particularly during the pandemic. Opinions varied about the need to find and onboard NEDs who specialise in certain areas, or whether it was preferable “to buy in the skill” from external consultants. One interviewee cautioned against bringing in “one club golfers” – that is to say NEDs with very specific skills – as it was felt they do not bring enough value to a Board overall.
However, another cautionary voice urged Boards to be careful that they weren’t made up of “too many generalists’’. There is a fine balancing act between who you have as a permanent NED and the skills you buy in or introduce on a temporary basis. This requires a considered, and potentially new approach to the review and analysis of the Board skills matrix.
When considering the type of skills and experience that have greater place on the Board of the future, we have collated the feedback from our interviewees, and outlined below, those considered most important.
While this is not a complete shopping list of all Board requirements, these are areas that will clearly be a focus for NED recruitment in the future. This growing list could potentially require Boards to increase in size and that was not necessarily a welcome suggestion. PLC Boards tend to be deliberately lean, making them more agile and flexible. They are designed as such to move at pace with the business. In other private and public sector organisations, Boards may be bigger and therefore have the capacity to bring in a wider variety of skills and experience. This will be an area to watch as Boards evolve in the future.
Board of the future – the new look skills matrix
“A Board needs to be cognitively diverse.”
The emphasis on diversity within a Board has been elevated in interesting ways during the pandemic. Balancing the Board experience and skill with a regular ‘refresh’ approach to cross check and review against certain areas is no doubt exceptionally valuable. For example: balance of skills; generational spread; diversity; technical knowledge; and experience. One interviewee observed: “Boards benefit an awful lot from people with a variety of ages”, but it is difficult to find those with current Executive experience as time commitments put a significant barrier in place to make this generational diversity feasible for the majority of Boards.
Similarly, cognitive diversity has become even more significant: a balance of different mindsets creates a level of positive tension and drives greater creativity at the table. The lack of certainty arising around the pandemic highlighted more than ever that some people, no matter their age or experience, can simply take it more in their stride. As one interviewee said: “if everyone needs certainty you are going to have a real challenge as a Board”. This feels particularly prescient in the short to medium term future, as complexity and uncertainty continues to be the order of the day.
However, many argued that it is important to have those who find uncertainty uncomfortable represented on a Board. This may, it was suggested, better echo how employees below management level are feeling; a viewpoint that is important to have reflected at Board level. Decisions in the past year have had to be made rapidly and not always with sufficient evidence and, while that is not optimal, it is a reality of operating in a crisis situation. This is an uncomfortable place for certain types of individual who operate much more effectively in a ‘normal’ state of business. Neither is right or wrong, but there must be enough diversity of reaction and capacity to accept both ways of responding. Only by striking this balance can organisations bring effective consensus and collaboration to establish a way forward.
Technology has brought about the realisation that people can participate from anywhere: they don’t have to be present physically all the time. This presents a far greater opportunity for geographic diversity – “NED selection does not need to be so London-centric anymore” – and opportunity to bring in those from other communities, backgrounds and life experiences. It brings the opportunity to identify NEDS with disabilities who are less able to travel or those from disadvantaged communities who aren’t based in central locations. It cannot mean “no travel”, however, as many of our interviewees argued that face-to-face interactions cannot be wholly replaced, but it has been clearly proven that being present physically need not be a requirement for every Board member at every meeting.
On the clock: the changing commitment of a NED
The time commitments of a NED will require review as new routines for Boards are developed. The past year has been considered extraordinary, and the demands on time, for Chairs particularly, has been substantial. This is a feeling common across Boards, with the expectation of “being always on” becoming the norm. No one has disputed that this has been necessary to navigate through the pandemic, but it has brought in a different cadence: a need to be more flexible, with quicker, less formal calls and meetings, and far less requirement to read extensive briefing papers.
However, as face-to- face meetings are reinstated, and reporting becomes ‘normalised’ again, there were those who urged caution to realistically consider what a Chair and the NEDs can consume and analyse effectively: “More concise and tailored papers will help Board decision making and benefit the Executive”. This is certainly an area where balance will need to be struck, and where the agility and fleetness of foot achieved so well during the pandemic can present a real learning for the future.
Chapter 3 – Saxton Bampfylde view
Striking the right balance of skills and experience around the Board table is critical. This is achieved best when a Chair commits to regular skills audits and is consciously thinking about gaps and succession planning of Board members. Equally as critical for a Board is to ensure diversity of thought and lived experience round the table, and in the past year we have witnessed a greater focus amongst Boards to make sure they are representative of the populations they serve.
We’ve seen a relatively high level of Board churn as we have approached the other side of this pandemic. This is a result of people coming to the end of their official terms which, in many cases, were extended during the crisis, or, for many senior leaders, the realisation or acceptance that they were ‘over-boarded’. It is interesting that while clients have often used different measures for determining over-boarding, there is always a strong emphasis on a Non-Executive’s commercial board activity. The huge impact of the pandemic on the charity and cultural sectors has led to a significant demand on the time of their Board members often in multiples of what might have been indicated in the initial role description.
As we come to the other side of this pandemic our advice to any prospective Board members, is to consider their entire portfolio, taking into account all commitments and not specifically the commercial activity. We do encourage Boards to think about this in a holistic way – in our experience, candidates with a balanced portfolio are able to bring different cross-sector perspectives and valuable learnings to bear on their work and this should not be underestimated.
“It is an epoch-changing event, but it won’t change business forever.”
The COVID pandemic has had dramatic impacts right across the world. It has brought challenges that could not have been predicted, even with the best risk planning in place. However, with that challenge, there has been a chance to test and stretch businesses and their leadership teams, and an opportunity if not the necessity, for innovation.
For business, as in society more broadly, there is much change to come as vaccines are administered and with the hope that COVID becomes controllable. Its toll will continue to be felt far and wide, and its impacts, both negative and positive, must be addressed to move forward purposefully. In the UK, we are in an evolutionary phase as the impacts of Brexit start to become more apparent and as various sectors adapt to what this will mean. Beyond the UK there are multiple geo-political challenges, as well as clear environmental issues that will continue to create pressure in the business environment.
The pandemic has forced self-reflection, considering what has been done well and what could have been done differently and, in some cases, better. One observer was keen to highlight that in their mind “businesses are far more agile than we ever gave them credit for” and this has been positively demonstrated by many organisations during this period. This agility was largely made possible by greater adoption of technology, but it was also a mindset approach and willingness to innovate rapidly which must be positively acknowledged and attributed across businesses.
“Meeting physically is going to be essential to help Boards prosper.”
There is no denying that there is work to do to bring Board members closer together again: physically primarily, but also in a collaborative team-working sense too. It is so important for Boards to have the chance to interact more naturally in a physical environment, as that is gradually reintroduced, to encourage a more balanced level of responsibility and activity overall. The physical gathering of Boards will be important to see how dynamics have evolved, to integrate newer members more easily and understand what gaps might need to be filled. While it is not expected that there will be a complete return to physical meetings, there must be no underestimation of why Boards do work so well and much of that is based on having an equitable and accessible forum for each member.
For the Chairs we have spoken to, the pandemic has brought a sharp focus to key areas and made them review with more clarity their own roles, and those of their Board colleagues – both Executive and Non-Executive – and indeed the overall function of a Board with each other. The need to maintain the right level of support and co-operation between the operational and governance functions must also be finely balanced with a clear distinction between the two to allow them to fulfil the roles for which they have been appointed.
“Boards must absolutely remain relevant in the future.”
As we begin to move forward, there is a real need for measured and strategic long-term views, but new challenges will arise as will new opportunities. Indeed, one interviewee shrewdly dubbed this impact the “Darwinism which Capitalism throws up!” The external pressures from shareholders, regulation and market demands must be balanced by the Board as this will set a benchmark for businesses as they emerge from this period.
There is cause for optimism as organisations emerge stronger post-pandemic, having taken the opportunity to focus, identify new opportunities, and consider how they might make advances in the future. We must move forward with a more enlightened but realistic view of risk: not everything can be planned for, but the pandemic has shown that scenarios can be considered more imaginatively and with different parameters.
“The pandemic has accelerated how much we need to think about the type of society we want to live in and what we need to give up. We need to socialise this appropriately. The future is going to be an exchange and we need to be clear about that.”
There is one area of risk where it very little flexibility can be shown: financial liquidity must be prioritised. There is no longer room for high leverage it was argued – “cash remains king” – a sore point for some and certainly a big learning during the COVID crisis. An ongoing commitment to strong financial performance and liquidity must remain paramount in order to de-risk and drive business, especially for PLCs. Boards must ensure financial stability remains a strategic priority without losing the ability to be innovative and evolve into the future.
As we look to the future, we can be sure that the broad base of commercial business will continue. There are of course some individual businesses that will not survive the impacts of COVID-19, and there will be sectors significantly impacted in the long term. However, the overall function of business in our society will remain. As business continues it must also change however, with more focus on organisational purpose. The impact of the pandemic on climate and communities must be central to that purpose.
Senior leaders have the opportunity, and indeed the responsibility, to really learn from the past year and better assess their own potential and that of their organisations. The emphasis on people and wellbeing through open and transparent communication has been brought into sharp focus and feels here to stay. And certainly, there must be a greater emphasis on trust – from top to bottom, outside and inside – to move forward together to build better businesses with people and the prosperity of the planet at the centre of the picture.
Conclusion – Saxton Bampfylde view
The last year has been an exceptional time to work with Boards and observe them change and adapt at a speed previously unforeseen. The best Boards will emerge stronger and more resilient, growing from the lessons learned: greater adaptability; better relationships with the Executive; and a stronger focus on their people and purpose, among others.
We look forward to working with our clients to help identify and develop future-focused leaders who can provide the strategic leadership businesses need as they emerge from this crisis into a new and different looking future.
Questions for the Board to ask themselves
- Have we been able to operate more efficiently and effectively?
- Can and should we continue adopting these operational methods as a Board?
- How do we consider risk as a Board? Can we honestly step back from tick boxes and think more innovatively?
- Are we prepared enough for another black swan event?
- What is our role as a Board?
- Are we operating in the Executive sphere?
- Are we being constructive, supportive and not obstructive to the Executive?
- Do we trust this Executive to deliver all scenarios we are mapping?
- Are we communicating clearly with our communities?
- Can we clearly define our purpose? Are we putting enough emphasis on this?
- Are we considering all our people and communities in our strategic planning?
- How open and transparent are we being? Is it enough?
- How embedded is ESG and are we living up to our commitments?
- Do we have the right balance of current experience in our NEDs?
- Do we have enough resilience, agility and flexibility in our Board?
- Is my Board the right size? If not, can we change that?
- Is my Board divergent enough in its thinking?
In producing this piece, we were privileged to have the opportunity to speak to 30 senior Chairs, mainly across FTSE 100 and 250 organisations. We asked them to consider the extent to which the COVID pandemic has impacted the function, role and strategic priorities of Boards in the short to medium term.
To help give our report balance, we spoke to people from a range of industries, with experience covering a broad spectrum of different sectors represented across the London FTSE and in our business community more broadly.
Interviews were conducted in true COVID-style over Zoom, Teams and by telephone through a period of five weeks in early 2021.
Our questions were open-ended to give participants the opportunity to freely explore their thoughts and to provide their particular views. To encourage our contributors to speak openly and honestly, we assured anonymity. This ensured that we were gathering their genuine thoughts, observations and learnings. We have incorporated anonymous quotes throughout this piece to give an indication of thought and response.
Who we spoke to
We would like to thank all those senior leaders who gave up their time to take part in this piece of work. They shared their thoughts and insights openly and honestly and demonstrated passion and pride for the organisations they represent. We recognise the time pressures faced daily and we are very grateful that they were able to be part of this project.