Chief executives and their boards of directors have gotten quite familiar with each other these past several months. Their usual cadence of quarterly or biannual meetings may have ramped up to once a week, or once a day during the early days of the Covid-19 pandemic. CEOs and boards have developed a deeper appreciation for how each other’s work and personal lives have been transformed by a global pandemic as well as the recent societal turbulence around issues of race, economics and justice.
As I have spoken with CEOs and directors these past few months, they have told me how much they now realize they really need each other. A good chief executive needs a strong board, and vice-versa. The understanding: We’re all in this together. Leadership teams and boards are working more as partners than I have ever witnessed, and I expect this to last for a while. It will be one of the silver linings of the year 2020.
As I continue to speak with CEOs in particular, I try to share some of my observations about what boards are going through today:
• They’re getting the message about diversity and social change. The killing of George Floyd and the following protests and social movements struck a chord with many CEOs and boards. Many companies have made considerable pledges to, for example, support black-owned businesses and promote diversity in their ranks. What will be important is to keep matters of diversity and inclusion on the board’s agenda permanently. There is justification in doing this, as these matters are usually tied to an organization’s mission and values. In concert with the CEO, the board should create short- and long-term objectives around diversity and supporting positive social change.
Interestingly, it was only a year ago that the Business Roundtable published its “Statement on the Purpose of a Corporation,” which urged businesses to expand their missions to serve all stakeholders (and society), and not just shareholders. The events of 2020 will be a true test case for whether corporations and other organizations will embrace this pledge. Boards will play a key role.
• Crisis brings out the best (and worst) in board members. I spoke with one board chair who told me that Covid-19 had truly brought out the best in her board—but it also really stretched some members to their limits. A few members struggled to manage their responsibilities to the board along with the turmoil going on in their personal and professional lives. Not all board members are cut out for crises, and as boards recruit new members in the future they will no doubt look for individuals who have proven themselves during challenging situations.
• It’s time to get serious about succession planning. CEO succession planning has always been a bit of a blind spot for many boards. When Covid-19 hit, they began playing the “what-if” game. What if our CEO got sick? What if the CEO’s successor did too? Boards began to look at succession planning two or three layers down from the CEO. Thankfully in all but the rarest case this won’t be necessary, but it has been a positive that boards are prioritizing succession planning for their CEO, as well as for other top executives and for the board chair, too. It’s better to be prepared.
• The Covid crisis may take its toll on tenure. Related to the above, boards may need to be more forgiving in terms of their expectations around tenure for CEOs and executive teams. Some executives are saying, “I’m going to get us through the crisis and then need to take a break.” Many executives have been energized by the challenges brought on by the pandemic – crises can bring on an adrenaline rush – but it is to be expected that many leaders will be worn out as well. Boards shouldn’t be surprised if executives who were close to retirement ask for their leave once the worst of the crisis has passed.
It has been said so many times, but we are living through unprecedented times. CEOs and boards have gotten to know each other much better than before, and hopefully this has been a positive experience for everyone involved—one that bodes well for the future.
