COVID-19 presents a big set of downside risks to be considered, to be sure. But it is also an opportunity for your company to shine, to showcase how it leads through crisis as compares to its peers. It’s a time of high visibility for your company to demonstrate that they are operationalizing their values and corporate culture.
From a boardroom standpoint, the first thing to do is to look at your company’s industry and assess how much specific financial exposure you might have. Ask management to present on how the crisis ripples through the organization in terms of supply chain, employees, etc. and come back with a recommendation.
Employees are anxious. This is the moment to reinforce your culture by keeping employees safe and signaling the company’s financial strength and commitment to job continuity—balanced with economic reality.
For example, if you are in the travel or hospitality industry you will have to make some early decisions on work schedules/partial layoffs/early vacation/sick day choices, as the entire travel and hospitality sector is down about 50-70% in some cases.
The board should ask management to come back with their best view of different scenarios in terms of duration of the crisis and intensity of negative impacts of the crisis on your business.
To spur this discussion, here are some questions the board may want to pose to management:
• What is the status of the supply chain and where will there be disruptions?
• What are we doing to keep employees safe? What are our policies, travel bans, etc.
• What other sourcing back up plans do we have?
• What is our ongoing communication strategy with all our constituencies: customers, employees, and community?
In times of crisis it is best to overcommunicate. The company should plan to send a weekly update to employees as they will be nervous and will want to understand the impact on the business, their job security, their personal safety and the company’s financial liability.
A weekly update from the CEO to the board will also be an important component of the crisis communication strategy. Either a quick phone call or email update will ensure the CEO and the board are aligned on ongoing strategy changes.
One concept that may be helpful is to ask the leadership team to come up with a dashboard with some specific topics that they are monitoring. Likely, the finance team is looking at the company’s balance sheet and cash liquidity. The company’s sales team is looking at revenue predictions and cancelations, etc.
Be sure all the specific internal and external audiences are clearly defined and that the company’s communication and compliance policies are refreshed.
In times like this, media outlets and financial analysts may start reaching out to middle management to get nonpublic information and insight. It would be good to reinforce/remind the organization about confidentiality, since communication needs to come in a cohesive, thoughtful voice from the leadership team and potentially coordinated with the board chair, lead director or others if and when appropriate.
There are some business questions that the board will want to discuss with management. This is the time when the audit committee will want to work closely with the CFO and external resources like auditors on financial reporting and disclosures—for example, where and when quarterly guidance will be communicated externally. There’s a balance to be struck between external transparency to investors vs. a risk of litigation on keeping information confidential.
While this crisis is significant, it also can be made into an opportunity for the company to show its values to employees, customers and investors. There’s a chance to take a negative and make it a positive by showing how your company leads and performs in a crisis.