What should the role of an individual director be in a crisis situation?

Diligent Institute assembled a virtual panel of accomplished global board directors to answer critical questions about board service, good governance practices, and challenging boardroom situations.

At a Glance

While panelists discuss the importance of planning before a crisis occurs, they also offer advice for what to do once the crisis is at the company’s door. Individual directors should be ready step up as needed to support management and the board team.

Discussion

Betsy Atkins

The role of an individual director is to bring their unique experiences, pattern recognition, scar tissue, and lessons if they’ve been through a similar crisis. They should also bring their network of contacts and resources in solving the problem.

I also think that before a crisis, in today’s world, the board needs a social media response prepared and pre-approved for the ten most likely risks. If it isn’t one of those ten, it will be a variant. We’ve done ERM in the past, identified big enterprise risks and management’s response. The immediate, instant responses needed for social media response planning is missing on almost every board. Maybe it’s an oil spill, an active shooter situation, a kidnapping, a #metoo incident, or an industrial accident. Regardless of the situation, don’t be like United Airlines calling their lawyers two days later and sounding insincere “sorry, we killed the puppy in the overhead.” It must be authentic, genuine, and responded to within a couple of hours. Starbucks is the good example by responding to a racial bias incident by announcing companywide training the next day. An individual director can encourage the board to adopt this approach in advance pre-crisis planning.

Angela Brock-Kyle

Be available and be willing to roll up your sleeves and participate in the best way possible. Being engaged is step one. Step two is figuring out what you can do – different people have different skillsets and different contacts, so what each director can bring to the situation varies. Whether it’s bringing in experts, engaging with shareholders, formulating a quick response strategy, or doing something less glamorous to help the board team move forward, figure out what your contribution can and should be and get consensus on that from your colleagues whenever possible. For some directors, in some cases, the best contribution is to do nothing. A misstep in either direction, participating or not, could produce more serious problems.

Nora Denzel

The role of an individual director depends on the crisis and on the company. Hopefully, your board will have already had a discussion and everything that can be decided ahead of time has been decided. That starts with asking really good questions to pressure test management thinking. Management is typically so close to a crisis that your perspective as a board member looking in from the outside can be very helpful. When the crisis happens, it is likely going to be emotional and it will move quickly, so make as many decisions as you can ahead of time and utilize strong crisis communications firms who can help you through it.

Matt Hyde

Crisis management as a board member depends heavily on the situation, and in order to react appropriately you have to understand the organization very well. I can think of two different crisis situations from my career that had to be handled very differently. The first involved an unforeseeable tragedy. I was fortunate enough to have a very competent CEO at the helm of that organization and because of that, my role was mostly to stay out of his way. I also made it very clear to him that I was a resource and willing to drop everything to help as needed. Crises of that nature can be very emotional, so it is important to remain empathetic and supportive. A second type of crisis a board member might face is existential and long term, often involving operational mismanagement. In that case, it is important to be courageous and direct, to step up to solve the problem, and to demand appropriate changes. You have to worry less about hurt feelings in that situation. Crises come in infinite numbers of flavors, and as a director, you have to be ready to assess and respond as needed.

Stuart Sinclair

Directors should be sure that the board has done some kind of preparation and role playing for a crisis. We have adopted the American term “playbook.” If there is a complete disaster, who speaks for the company? Who meets every morning to discuss what’s in the newspapers? Who is managing the political dimension? Who’s on top of what regulators need to know?

Board members should keep out of the way a lot of the time. There is a temptation to say “oh I really need an update on this,” and some people think you need to be seen being busy in order to be involved. If there is a clear plan, keep your nose out of it and they will tell you when there is an appropriate update. Otherwise you’re just making noise. For example, in insurance and reinsurance when a big catastrophe occurs, everyone at the company knows that a remodel is needed, and if directors are demanding updates at various times it just creates false deadlines and doesn’t create value. The exception would be if you have unique expertise – if say, the banks have stopped lending money to you and you have a background and connections with one of them, or if there is a contamination in pharmaceuticals and you’ve been a scientist and worked in that area. The chair and CEO should be able to nominate a few non-executive directors and tell them “I need to lean on you with this task now, but everyone else, we will contact you as we see fit.”

Board Panelists

Betsy Atkins

Betsy is a Director on the Boards of Directors of Cognizant, Wynn Resorts, SI Green Realty, Schneider Electric, and Volvo Cars.

Angela Brock-Kyle

Angela is an Independent Trustee at Guggenheim Investments (Guggenheim/Rydex) and the YMCA Retirement Fund. She is also an Independent Director at Infinity Property and Casualty Corporation. She served previously as a board member at United Way and the Executive Women’s Golf Association.

Nora Denzel

Nora is currently a member of the Board of Directors at Advanced Micro Devices (AMD), Ericsson, and Talend SA, as well as a member of the Innovation Advisory Board at BBVA. She has previously served on a number of boards including Saba Software, Overland Storage, TimeSpring, YWCA of Silicon Valley.

Matt Hyde

Matt is currently the Chair of the Board of Directors at YMCA – USA. He is also a member of the board at Zumiez and the Executive Chairman at 5.11 Tactical.

Stuart Sinclair

Stuart is currently a Non-Executive Director at Lloyds Banking Group and Senior Independent Director at  QBE European Operations. His previous board roles include being a Non-Executive Director at Provident Financial Group and a Senior Independent Director at Swinton Insurance.

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