Diligent Interview: What Lessons Have Boards Learned from COVID-19?
The Diligent Institute asked for my thoughts on 5 key Corporate Governance Questions of 2020. I hope these early observations are helpful to others in the short-term … and as we redefine excellence in board service in the New Normal coming post-pandemic.
Diligent: How Has the COVID-19 Pandemic Changed Corporate Governance?
Donna Wells: We have decided to meet with a much faster cadence. Rather than the typical quarterly board meetings interspersed with committee calls and meetings, we chose to meet monthly to make sure we were keeping up as significant new information was coming in. We were in frequent discussions to make sure that the board and management were in sync and informed.”
Diligent: What Pandemic-Era Board Governance Practices and Mindsets Will Be Permanent?
What we’ve learned from the pandemic, economic crisis, and social justice crisis this year is that a number of boardroom conversations can be more valuable when we take a more Agile and less Waterfall approach to corporate governance.
The shift my boards have made to shorter, more informal, and more frequent meetings could be permanent. We’ve seen multiple benefits, similar to those that technology companies achieved when they transitioned from Waterfall to Agile software development. In Waterfall software development, you build out a detailed set of requirements for each feature, and only after 3, 6, or even 18 months do you get to see a finished product. Under Agile software development, the Product, Design, and Engineering teams collaborate in real time to create and ship features quickly, so your solutions are timelier and more relevant, and you learn in-market and faster. These are two very different approaches to the same problem.
Looking back, it seems odd that we thought every boardroom discussion should be held in the same way: in person and only every three months. Certainly, some board conversations lend themselves to a quarterly cadence, but for those that don’t, we need to adapt.”
Diligent: How have Boards Adapted to the Challenge of Governing All-Remote Organizations?
Donna Wells: When the pandemic first hit, several of my boards were concerned that we’d lose momentum in our ongoing board refreshment process. We initially thought there was no way we could properly evaluate and select a new board member without having met with them face to face. We were also worried about the company adding very senior leaders, for the same reason. Well,
My companies have now added board members and senior executives who they’ve interviewed and onboarded 100% virtually and, so far, that’s worked out very well. The pandemic forced a mind-shift, of course. But now that board members have become confident in making critical decisions based on virtual-only experiences, I don’t think there’s any going back. It’s a new tool in our toolbox going forward.
Diligent: How Has COVID-19 Changed Risk Management and Strategic Planning?
Donna Wells: (Laughing) Well, people are going to take business continuity exercises much more seriously in the future!
“Boards now understand, at a visceral level, how much more fragile our strategic and operating landscape has become over the past 20+ years. We’re living the direct impact that social justice, public health, and climate change issues can have on shareholder value.”
Boards are expanding their oversight of these potentially existential threats…and demanding more management focus … than they were before the pandemic hit.”
Diligent: Which Response to COVID-19 Makes You the Proudest of Your Organization?
Donna Wells: Every one of my companies managed to go virtual within a matter of days. The effort and flexibility that took impressed me greatly; I’ve never been prouder to be associated with the board of my companies. There were many moments that illustrated how dedicated our teams are and represented silver linings in an otherwise awful situation.
“I think we’ve learned that we are more nimble, flexible, and capable than we gave ourselves credit for. The leadership teams I work with have absolutely risen to the challenge.”
Full article, written by Kira Ciccarelli here: https://www.diligentinstitute.com/wp-content/uploads/2020/12/20201204-Ask-a-Director-Report-3-1.pdf