Tips for Managing Your Board’s Role in a Crisis

As we navigate these challenging times, theBoardlist is committed to ensuring you have the information you need to manage your board responsibilities effectively. In that spirit, I coordinated and moderated a virtual panel discussion via webinar last Friday on how boards can effectively manage through a crisis.

We were fortunate to have several experts join us for a discussion on crisis communications, legal issues related to duty of oversight in a crisis, mitigation, and recovery strategies as well as best practices for supporting employees:

• Karin Klein, Founding Partner, Bloomberg Beta
• Margit Wennmachers, Partner, Andreessen Horowitz
• Marina Tsatalis, Partner, Wilson Sonsini Goodrich Rosati
• Pat Wadors, Chief Talent Officer, Service Now, Board member at Zenefits, Accolade & El Camino Hospital

We had a large audience for our discussion with a number of insightful questions but since many of you weren’t able to join I wanted to share my key takeaways from the discussion.

• Know your role as a board member. As part of a board’s duties of oversight, board members must have a robust understanding of employee safety measures, internal and external communications, business continuity planning and risk mitigation strategies related to the crisis. The board has an obligation to play an active role in identifying and ensuring that any issue that might result in material harm to the organization are being addressed.
• Support the CEO. One of the most important things a board can do in times of crisis is to provide support for the CEO. It might be our natural inclination to jump in and roll up our sleeves in an effort to be helpful. In fact, what the CEO likely needs most is the space and permission to move quickly. However, the board can be helpful in providing information about what other organizations might be doing, a broad perspective and permission to course correct so that the CEO can be empowered to act decisively without being overburdened with the need for consensus.
• Develop worst/ middle/ best scenario planning. People tend to be optimistic about future financial performance, using something our panelists refer to as “magical thinking”. The board’s job is to stress test those assumptions to help ensure the company’s financial house is in order. Layering in some extreme scenarios and adjusting time horizons will be important in understanding the magnitude and areas of risk. Boards should take the worst-case scenario and reverse engineer decisions that need to be made at specific trigger points to ensure the long term viability of the company.
• Adjust your operating plans. As markets turn and funding sources dry up, companies need to be thinking differently about their financial positioning. In the startup world, companies should do what they can to secure two years of runway. Companies that survived the economic downturns of the early 2000s and 2008 adjusted their operating plans so that they could ride it out. They did this by making their runway last and ruthlessly prioritizing with a mindset of scarcity. As one panelist put it, “I am optimistic about the future but we need a plan to get there.”
• Honest, timely and transparent internal communications are more important now than ever. Be clear about what you have control of and center your communications around those factors. As information changes daily, it’s important to focus on what we know now, how we’re planning for uncertainty and to be transparent about those plans.
• Ethically capture business opportunities that arise from the crisis. Avoid tone-deaf actions and communications. Companies that are retooling to manufacture personal protective equipment or using company resources to identify disease hotspots that can be used to keep us safe are useful and ethical business opportunities created by this crisis. In making a decision about whether your company has an opportunity to be helpful in this environment, rely on your moral compass and the old adage: if you don’t want to read about it on the front page of the Wall Street Journal, don’t do it.
• Succession planning. Both the board and the management team, as well as other key employees, should have succession planning in place in the event that someone falls ill. If these plans do not already exist, take the time to develop them now.
• Adjust the cadence of board and management communications meetings as needed. Certainly, the frequent flow of accurate information is critical. Ideally, the board can find efficient ways to do this that enables management to act quickly and decisively. Many companies are setting up bi-weekly “check-in” calls for which the CEO does not need to prepare. They can serve as an opportunity to provide a quick update for the board and to get questions answered.
• Handle layoffs decisively and with grace. Our panelists offered some sage advice for how to handle layoffs with integrity so that companies can emerge from the crisis with their reputation as an employer intact. First, communicate your company’s plans with transparency and purpose. The more information employees have about how management is reacting to the crisis, the less anxious they are likely to feel. Second, give people a framework for how you’ll make decisions and where cuts will be made first. It’s critical that employees see that sacrifices are being made elsewhere (e.g., bonuses cut, expenses curtailed, hiring stopped, employees furloughed) before making the difficult decision to do a layoff. Third, telling people you are planning to make a layoff in the future only leads to increased anxiety. However, giving people notice and using the time to help them make the transition (e.g., understanding employment benefits, connecting them with other companies that may be hiring) is a graceful way to handle a layoff. Finally, to the extent possible, make layoffs once and as early as possible. This is exceptionally difficult given the fluidity of information in this situation but scenario planning and a good handle on the company’s financial position can be helpful if and when these decisions need to be made.

Overall, the board of directors will be an integral part of a company’s communications and continuity when facing any type of crisis. There is obviously not a playbook for COVID-19 crisis management, but the same rules as always apply for board members, to be honest, ethical and help make decisions that are in the best interest of the company that they support.