Board members have to make themselves available for the CEO for any guidance. But your role is to select a great CEO. So, if you’ve done your job as a board member, the CEO will make the right calls, will be very actively involved in everything that’s happening. But as a board member, you should be more flexible, be available to chat with them. I would not be calling my CEO saying, “What are you doing?” A good CEO would be communicating that with you.
I always say to board members, be there, be available, but don’t be dictating what the CEO should do, unless you didn’t pick a good CEO. That’s a different situation. Board members should be very flexible with their time. CEOs are very busy with a lot of different constituents. If the CEO can talk tomorrow at 3 p.m., make it happen. So, you have to be available for the CEO. So that’s always my first point.
My second point is that it’s really a good time to build employee-customer goodwill. So what does that mean? No price-gouging. That’s horrible. Flexible policies as it relates to your employees, your customers. The big companies are saying to employees, “If you need to work at home, we’ll support you.”
It’s really a good time, no matter what size business, to build that goodwill, to be very open and flexible—and not mandate. I’ve met a couple of people, young people, and they’re like, “Well, my office is open.” I say, “Well, you have to do what you think is right, they’re not going to hold that against you.” But they’re worried about their paid time off, their sick pay. I always say, “You know what? Do what you feel is right, it’ll be figured out later.” So, that’s what I say to CEOs and board members supporting the CEO.
I would expect every company to have sent out some note to their directors to say, “This is what we’re doing. This is how we’re treating people, our employees, and we’ll keep you informed.” Whether they’re on a mailing list or it’s a special note, it doesn’t really matter. That’s always my advice. If a CEO asks, “What should I do?” I would say always err on the side of building good employee-customer goodwill.
The third point really is about cash. You have to maintain liquidity and the board could help here, whether it’s audit committee or finance committee people who have a good familiarity. The bigger companies, we’ve thought about this. First quarter dividend earnings are pretty much set. March is a big month. We’ll see. But second quarter, I would think companies could be running out of cash. It depends on the company. So the board can help the company, the CEO think about cash. The board member, you have to be there to be thinking about it, you have to be in touch with all the issues.
If you had a good framework—and boards are responsible for the enterprise risk management, whether it’s at the board or the audit level—if you have a good system, you’ve taken into account the extremes. Whether it’s product recalls or viruses. This whole situation can tell you if your ERM is particularly well-done, if it’s not holding up: have you identified risks like this? And then, of course, whenever you’ve identified risk, you always have an action plan for each one of those risks when it’s a good ERM system.
The companies that I’m associated with have great risk systems. You have to figure that out. I don’t think people should be redoing it, but they should be proactive.
The risk is you have got to keep the enterprise afloat. So, as a board member, what can you do to help the team keep it afloat? Whether it’s connections at the cash level, advice on what other people are doing, to help preserve customer loyalty and goodwill and employees. You just have to be on top of that, but I would not be redoing risk systems unless you didn’t have one, I guess. Some of the smaller companies might not have had one and now they’re in the middle of it. But good governance always asked for that.
Don’t Change Strategy, Refresh Strategy
Strategy is long-term, so I don’t think that it should be changed. That doesn’t mean that it shouldn’t be refreshed on schedule. I wouldn’t let anybody say, “Oh, we’re in the middle of a crisis, we’ll get to strategy in six months.” I would refresh it in the middle of this, if that’s on schedule. Strategy should be refreshed not just once a year, but all the time, but I would not be changing strategy. You have to be calm. You get through this, you figure it out. Short-term actions should be enacted, but the strategy should remain.
Strategy meetings could even be done virtually if they had to be, it depends on people’s schedules. We always had what I call snowstorm board meetings. I remember being on some boards in December, and we were snowed out, so we had a seven-hour board meeting on the phone. So, I don’t see any need to cancel any meetings, they should be held virtually. Board members can be read the material, can be attentive, help management. They’ve got to continue with all of that.
I think that you have to be aware and available and be in tune with what the issues are. I tell people don’t be distracted by the stock market. If you focus on customers and employees and cash, those are the right things to be focusing on right now.
There’ll be a lot that’ll be said and written about this. But for directors, the good news is we’re there and able, and we’ve had a lot of experience. We’ve seen a lot of stuff. You don’t want to make light of anything, but you’ve also seen things come—and you get through it. We’re there to help, to help everybody get through it. That’s the biggest challenge.