We Asked Directors How They Are Handling Updates with Management throughout the COVID-19 Crisis. Here’s What They Told Us.
For boards to provide oversight and have foresight of what’s coming “around the corner,” they require timely and relevant information from their management teams. Frequent management updates are especially critical as situations evolve and decisions are required at a moment’s notice. However, during a crisis, directors do not want to distract or overburden their CEOs with requests for information, especially if the information isn’t time-sensitive, or only serves to satisfy directors’ curiosity. This balance can be difficult to strike and might be slightly different for each company. The virtual panel of directors provided some examples of benchmarks for CEO and board communications – both in terms of what topics the updates should cover, and how often they should occur.
Focus on the Most Critical Information for Now – Everything Else Should Wait
Yiannis Petrides provided an update model one of his boards has been using often to ensure the important information is covered.
“We first start with an update on people, in terms of health and safety. The second thing we cover is liquidity and cash management – clearly, in terms of the short-term impact, for now and over the next three months, those topics are top of mind. That’s likely true for all companies. Third item we talk about is the short-term action plan. Given the pandemic, we can’t operate the way we did before, so we are trying to make decisions that help with P&L and the balance sheet in the short-term but won’t hurt us or impact us too much in the long-term. The next item is capital investments and where we need to make cuts and freezes. And the last item is marketing and communications.”
Claudia Fan Munce also walked through some of the subjects her board gets regular information on from the management team.
“Most companies, certainly the ones that I am affiliated with, started immediately with the right focus: protecting people. The board wants that information first and foremost, from how we are providing a safe and sanitary environment for our employee and customers, including policies such as working from home and travel restrictions, to the company’s crisis communication plan to employees, clients, vendors, shareholders, etc. to provide clear and transparent guidance that is so critical for not just safety, but also to help manage the emotional stress in this crisis environment. Boards want to be informed and help assess these plans, but most importantly, to support the management in executing them in this highly fluid and stressful environment. Financial information is important in terms of cash liquidity, credit availability etc., to support the operational continuity to respond to this crisis versus profit. Technology is very important for business resilience; the board wants to know that our technology can support how we are working. We’re asking questions like, “do our people have the right tools to support working from home?” and “can we handle the bandwidth needed?” ”
Updates Should Be Frequent and Aligned with Public-Facing Communications
Both Petrides and Fan Munce provided insight into the frequency of board updates. Petrides said:
“For one of my companies, in terms of updates, the CEO meets with the management team virtually twice a week to get updates on the business. Then from a board perspective, we have board communications once a week. Obviously if something urgent comes up, then we have an ad hoc exchange by email.”
Fan Munce said:
“On average most of my boards have weekly e-mail communications on top of bi-weekly regularly scheduled update conference calls, but even with that frequency, every time the company is changing its operational response due to new information internally or externally, the board is engaged impromptu either via email from the CEO, or additional board calls. I’ve been impressed with how dedicated the board members are to this crisis as in almost all cases, people rearrange what they are doing and jump on the calls whenever it is needed.”
From a health system perspective, Jamie Orlikoff offered a different timeline.
“We do updates every two weeks – that’s a one-hour call with the board and it’s because of when our analysts predict the height of the pandemic will occur. It’s possible that if we get to peak, or get overwhelmed, then the update would go to once a week, then we can scale that back if the crisis passes.”
Eileen Kamerick suggested using the cadence of customer communications and public-facing interactions as guidelines for the timing of board updates.
“The frequency and content of the updates to the board depend on how customer-facing and immediate interactions are between the company and the public. The bank board I’m on has weekly calls. The silver and mining company has phone calls fairly often, but the sites are on lockdown so there aren’t the same kinds of issues as dealing with the public. The issues are very different as well. The bank was one of the first banks in the country to shut down lobbies—actually very early in the timeline of the spread—we received a lot of positive feedback and garnered a lot of goodwill for doing that. We maintained functionality for customer service, but we did not expose our people and our customers. It also helped limit the spread within the company to very small numbers. The silver and gold mining company with operations in Peru requires different discussions – people are making a living on a day-to-day basis so when the economy shuts down, it can be disastrous. We’ve been talking a lot about how to give back to the community as part of being a good corporate citizen.”
Do Not Overwhelm the Management Team
This guidance was shared in some form by all the directors in the virtual panel. While it’s well-understood by most directors, they stressed the importance of not overwhelming the CEO or management team during a crisis. Fan Munce put it very clearly:
“It is more important than ever that directors stay in the role of oversight and provide foresight for strategy, and not infringe on the execution of the operational responses. It is important that the board [members] don’t get in the way and add more burden to the management in this crisis. I know all of us as individuals are overwhelmed with uncertainty right now and want to engage as individuals just to make us feel a bit more in control, but we shouldn’t.”
Orlikoff suggested deliberately drawing a distinction between board meetings – where discussions and decisions take place – and CEO updates, where the primary goal is to communicate information to the board and answer director questions.
“The first guidance I gave to my CEO was very simply to distinguish update calls from board meetings. We don’t want to conflate the two and then during an update suddenly have a board member, in an attempt to be helpful, make a motion or suggest a resolution. Then the board might, however well-meaning, pass something that wouldn’t be well enough thought out or would consume the time of the CEO. One of the ways to draw that distinction is to make the point that the board only exists during a meeting, and can only act in that meeting, so if you make it clear that an update is not a board meeting, you can ask questions but you cannot give a directive or a motion.”
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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.
Claudia Fan Munce is a Venture Advisor at NEA, one of the largest and most active venture capital firms globally, as well as a board member at BestBuy, CoreLogic, and Bank of the West/BNP Paribas. Claudia is a seasoned board member, having served on the board of National Venture Capital Association (NVCA); Chairwoman of the board of the Global Corporate Venturing; Advisor Board of the American Association for the Advancement of Science; and many global organizations, such as the Latin American Venture Capital Association, Women in Leadership in Private Equity in China, Canadian Innovation Exchange, and the Savannah Fund in Africa. Claudia is frequently cited as a pioneer and leader in the corporate venture community and contributed to many articles and books on corporate innovation published in Businessweek, the Wall Street Journal, and the New York Times. She was named one of the 20 Most Powerful Players in the Silicon Valley by Worth magazine.
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.