A crisis is a major catastrophic event, or a series of escalating events, that threaten an organisation’s strategic objectives, reputation, or viability. Crises can be classified into two – routine and novel.
Routine events are the known risks for which organisations can plan and develop procedures – including taking out insurance, emplacing robust enterprise risk management frameworks, disaster recovery plans, etc. Novel crises are the risks that exhibit unusual frequency and impact. organisations typically don’t have plans for those events – hence the novelty. They may be a confluence of two or three events that strike at the same time. Or they may simply be too big or unusual to be imagined.
For novel events, there’s no experience to draw from to manage or lead in that type of crisis. In the absence of predetermined procedures, novel crises—whether they be natural disasters, cyber breaches, or malevolence such as terror attacks—can test the decision-making capacity and strategic-thinking ability of leadership. COVID-19 is a novel virus and what is called a “black swan event”- unpredictable beyond what is normally expected and has potentially severe consequences.
When dealing with a novel crisis, the CEO has to be mindful of falling into predictable reaction, including – excessive focus on the incident rather than responding and dealing with anticipated impact; inappropriate scoping of the scale and breath of the crisis and thus inability to fully anticipate and plan for impact; poor decision-making owing to inadequate or false information and dealing with an overload of information.
How then can the Board support the CEO through a crisis such as that precipitated by COVID-19?
Leadership that is decisive, yet sensitive and empathic. The CEO will require the wise counsel of Directors given their wealth of experience. Whilst no one has travelled this path before, Directors can draw on prior experience or even the experience garnered from sitting on other Boards to provide guidance to the CEO. The robustness of the Board’s composition and its diversity come to the fore here.
A heterogenous Board or one that is not sufficiently age diverse will lag behind a roundly diverse board. Agility and speed of decision making is also required at times like this. The bureaucracy of red tapes in seeking approval should be dispensed with. Directors should be available to meet at short notice. Virtual meetings which are easier and faster to set up have become the new normal and all requisite approvals – including amending Articles to give effect to this should be quickly put in place to ensure enforceability of decisions.
Directors can support the CEO by tapping into their networks to pursue high level contacts required for waivers, concessions and access.
Whilst being mindful of their fiduciary responsibilities to the enterprise, Directors should trust the CEO enough to allow him/her to act in what they consider to be in the best interest of the Company. This could entail reviewing the Delegation of Authority matrix to cede more authority to the CEO.
This of course presupposes that the Board is satisfied that the incumbent CEO has what is required to lead the organisation through the crisis. Whilst this is no time to replace an underperforming CEO, the Board may need to designate a “Crisis Manager” where the CEO requires support.
As much as possible, the Board should resist the urge to micromanage the CEO. Whilst it may be necessary to have more frequent meetings, the Board should be mindful of delving into purely operational matters.
Clearly, the frequency of Management Reporting will increase to ensure the Board is fully up to date with corporate response to the crisis. There has to be clarity as to the form, content and frequency of reporting. Similarly, whilst information is useful – especially relevant and accurate information, Directors should resist the urge to overload the CEO with information. Comparative information though well intentioned, could increase pressure on the CEO and be counterproductive. It is good practice to channel information through the Chairman who will be able to filter and determine which will be useful to the CEO.
These are unprecedented times and many CEOs are at their wits end and struggling to keep it all together. Emotional support by occasionally reaching out to just reassure the CEO of the Board’s support is priceless.
For the CEO, he or she needs to more than ever recognise their mortality and accordingly strengthen the bench to ensure there are worthy successors in the pipeline, improve processes that will reduce keyman risk across the organisation, pay attention to their health – physical and mental wellbeing. At times like this, it is okay to be vulnerable, keep decisions flexible and adaptable, recognising that no one has all the answers, communicate openly and sincerely with the team – be decisive, but inclusive and consult. Above all, exhale and breathe for this too shall pass!
Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to firstname.lastname@example.org