We Asked Directors about their COVID-19 Response. Here’s What They Told Us.
Different organizations are impacted by the COVID-19 crisis in different ways, based on factors including sector, location, size, and liquidity. For some, the crisis poses an existential threat to their businesses, even to their business models. For others, the crisis has accelerated demand for their companies’ goods and services. Some companies are experiencing harm now but anticipate they will withstand the crisis and recover once the pandemic subsides. Without exception, every company has been impacted in some way, and corporate governance has had to adapt accordingly.
Boards and Executives Should “Triage” Important Decisions
Hospitals and healthcare providers are at the forefront of the fight against COVID-19 — obviously they are heavily impacted, and the stakes are incredibly high. As the chair of a major healthcare system, Jamie Orlikoff framed the governance changes his board has adopted recently.
“We’ve moved to an emergency [style] response to governance. This is a really important point — the components of high-quality governance are not fixed, and the relationship between management and the board is not a fixed line. Really effective boards have to be able to expand and adapt as appropriate. Inappropriate governance in normal times could be the best governance in crisis times.”
He was also able to provide more specificity about what that means practically for board meetings and decision-making
“In the board meetings, we are trying to do several things differently. First of all, it’s especially important not to be a burden to the CEO. We are taking routine items and the things that would normally occupy our time, and we either postpone them or move them to a consent agenda. So the first question is, can this get postponed? That’s for discussions, decisions, and committee meetings even. We apply a very different filter to separate the wheat from the chaff. What was wheat three months ago might be chaff now and might be chaff for the next couple of months. If there are things that have to be done but might not be critically important, then that’s where the expanded use of the consent agenda comes in.”
The Line between Management & Governance Might Blur (Temporarily)
This is not the first time it’s been necessary for companies to rethink governance “norms.” Eileen Kamerick dug into the all-important distinction between management and the board by drawing on her experience with a previous crisis.
“The whole idea of management versus governance has to adjust at various times. For example, in 2008?2009, I had just stepped onto a bank board, and the world turned upside down. The board very intentionally blurred the line from pure governance to helping manage. We needed to have more direct interaction with regulators and, due to the nature of the crisis, we needed to be more engaged on a day-to-day basis.”
She elaborated on what that might mean for organizations operating through the pandemic today. It’s important to keep a close eye on what is changing for the sake of expediency in order to enable a return to normal. Kamerick explains:
“Depending on the company, the COVID-19 outbreak may require some sort of step [for the board] into a higher degree of day-to-day management. It just varies based on the circumstances. But you have to make sure that you’re very intentional about it: “We realize we’re going beyond normal governance, and there is a point at which we have to go back to that.” But in the midst of the crisis, it might be more interaction and on different topics than would be typical given normal governance practices.”
Many boards have the ability to step up in this way: Directors bring unique skill sets, experiences, and perspectives, and from their particular vantage point can help the management team steer through the dangerous waters. Yiannis Petrides described how his board has increased activity during this time.
“The board has come together a lot closer during this crisis — we are having more frequent and deeper communications, and everything is happening in real time. In normal circumstances, there is a process, and we meet periodically. But in this crisis, the communication is ongoing, and that makes sense, because you have to make more decisions and you have to make them a lot faster than you usually would.”
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- Director Confidence Index |
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- Diversity, Equity and Inclusion |
- Economy |
- Environment, Social, Governance (ESG) |
- Executive Compensation |
- Executive Remuneration |
- Governance, Risk and Compliance (GRC) |
- Modern Governance |
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- Year in Review
Meet the Panelists
Eileen is currently serves on four boards: Associated Banc-Corp. (NYSE), Legg Mason Closed-End Mutual Funds (NYSE), Hochschild Mining, plc (LSE), and AIG Funds. She chairs three audit committees and one corporate governance committee. Previously, Eileen served on the Board of Directors for ServiceMaster, a Fortune 1000 services company, and Information Resources, Inc., a leading marketing data and analytics company, prior to the successful sale of both companies. She is an adjunct Professor of Law at The University of Chicago Law School, Washington University in St. Louis School of Law, and University of Iowa College of Law, where she teaches corporate finance, corporate governance, and compliance. Recently, Eileen was profiled as a “Director to Watch” in Directors & Boards magazine. She was also profiled in The Board Game: How Smart Women Become Corporate Directors. Women Inc. magazine named her one of 2019’s Most Influential Corporate Board Directors.
Jamie is currently the Chairperson of the board for the St. Charles Health System in Bend, Oregon.He is also President of Orlikoff & Associates, Inc., a consulting firm specializing in health care governance and leadership, strategy, quality, and organizational development. Jamie is the National Advisor on Governance and Leadership to the American Hospital Association and Health Forum and is the Senior Consultant to the Center for Healthcare Governance. He was named one of the 100 Most Influential People in Healthcare in the inaugural list by Modern Healthcare magazine. Jamie has consulted with hospitals in six countries, and since 1985 has worked with hospital and system governing boards to strengthen their overall effectiveness and their oversight of strategy and quality. He has written 15 books and over 100 articles.
Yiannis is a board member at Mytilineos S.A., a leading industrial company listed on the Greek stock exchange, and involved in the Energy and Mining sector. He is also a board member at Puig, a privately held company operating in the world of fashion and prestige fragrances, with a brand portfolio including Carolina Herrera, Paco Rabanne, Nina Ricci and Jean- Paul Gaultier. Additionally, Yiannis is currently Senior Industry Advisor for Frankfurt-based Triton private equity. Among other prior board positions, he was formerly Chair of the Supervisory Board at Refresco N.V., the world’s largest independent bottler for retailers and A-brands, with production in North America, Mexico, and Europe. Prior to serving on boards, Yiannis had 23 years of operating experience at Pepsi Co