From the front line: what are the top five questions that boards are asking themselves today?

It is now around a year since COVID-19 began to spread throughout the world. So, for many boards, this is a natural time of reflection; an opportunity to pause and reflect on the effectiveness of their governance and to consider whether certain topics require a different level of focus going forward.

What is clear is that while responding to COVID-19 is still a major concern for boards, it’s no longer the overwhelming focus. Today their biggest priority relates to how the pandemic has changed the competitive landscape and expectations of the company’s customers and employees. With these changes will come the need for a fresh look at the organization’s readiness to respond and thrive under these new conditions.

From talking to boards, it is clear they are asking themselves these five important questions:

1.     Have we built the right level of resilience into our organization? Last year, some organizations got caught out by the pandemic, particularly with respect to their supply chains. They were overly reliant on a small number of vendors, dependent on supply chains that were concentrated in one country or had limited visibility over where their components and raw materials actually came from. Achieving perfect resilience would be exorbitantly expensive. Nevertheless, there are cost-effective ways, such as inventory and capacity buffers, to ensure the resilience of their most critical suppliers and physical infrastructure such as factories. They can also maintain their financial resilience by ensuring continued access to capital.

2.     Where is the future of our sector heading and are we doing enough to ensure we’re heading in the same direction as our customers and competitors? The combination of COVID-19 and technological advancement has hugely accelerated business model change. We can already see major evolutions taking place within sectors such as consumer goods, media and entertainment, retail and technology as organizations adopt new digital tools, rethink their offerings and find new ways to serve their customers. Just one example of this is in healthcare. Prior to the pandemic, telehealth was limited and now it is an expectation and likely here to stay in many aspects of how we interact with the medical profession. To keep up with the pace of change, organizations must develop new distribution channels for their products and services and understand how they can meet their customers where their customers want to be met.

3.     How can we attract and retain talent given that ways of working have changed indelibly? Organizations need to consider whether they are doing enough to support health, personal resilience and wellbeing in an environment where at least some remote working will be the new norm. This requirement affects every element of their talent strategy, from recruitment and induction through to remuneration and benefits packages. They also need to find new approaches and tools for instilling a common organizational culture that we often find in an office environment, while accommodating the expectations of the workforce, which desires flexible ways of working. For example, in the past, a focus on culture was integrated into may of our in person events, whether bringing new people into the organization, celebrating success and in the day-to-day passive learning that took place when people were working side-by-side. Some of these opportunities will certainly come back, but we need to be purposeful and innovative in how culture is woven into our virtual working world.

Boards must also make progress on diversity and inclusion. Diversity across dimensions – talent and leadership – can produce a strong competitive advantage as multiple perspectives are seen as a key enabler of innovation. And this diversity of thought and experience should also be extended to the boardroom. Boards should continuously look to enhance their own competencies, practices and committee structure. Access to the right information and people, always an important board issue, is now more important than ever given the unprecedented uncertainty we are seeing in the business environment.

4.     How can we adapt our business strategy to make the organization more sustainable in the future? The World Economic Forum’s Global Risks Report 2021 lists environmental threats among the top risks facing the world today. Unsurprisingly, climate change has become an even more prominent item on the board agenda as a result of COVID-19, which has highlighted the far-reaching business implications of a systemic threat to human wellbeing. Organizations now have a huge opportunity to build on changing behaviors, such as the fall in business travel that has accompanied the pandemic, to further embed sustainability into their business strategies.   

5.     What impact will ongoing geopolitical change have on our business? We are living through a period of marked geopolitical change, which will invariably have implications for most organizations. The recent election of President Biden in the US is likely to have global repercussions in areas such as environmental practices, tax policy and international trade. A particular area of concern for many organizations will be how US-China trade relations play out over the coming months and years. Elections will take place in Germany later in 2021, which could impact on policy direction in Europe. Meanwhile, Brexit is already affecting the European trade landscape and forcing UK organizations that trade with the EU – and vice versa – to rethink what they do and how they do it. Even the introduction of new privacy regulations in a certain jurisdiction, requiring data to be housed within a given country, could potentially impact the flow of business.

All of these topics have led to a natural self-reflection, with boards questioning whether they have the right skills represented and the right governance structure in place to successfully fulfil the obligations of the board in this rapidly changing environment.

There is a huge amount for boards to consider right now. What’s more, in the absence of a crystal ball, it’s impossible for them to know how to best prepare their organizations for a highly uncertain future. Many are using scenario planning – but in a very agile way due to the speed of change. Mostly they are monitoring what’s happening within their organizations on a day-to-day basis while continually checking the pulse of the broader business environment for changes that might be coming down the line.

Thanks to the discovery of multiple vaccinations and the visible progress being made in rolling out the vaccine, boards can at last see light at the end of the tunnel in the health battle against COVID-19. That’s why they are now looking to the future, making plans, and thinking about how they can best equip their organizations to thrive in the new world that lies ahead.