A new era of board stewardship begins

Many organisations will need to transform themselves to overcome the systemic challenges and inequities that have surfaced during COVID-19. Change will require bold steps – and new skills – from board leadership. The time is now.

In December 2020, we published a series of director interviews and saw a world in flux: the pandemic was raging around the world and many markets were just entering a winter spike in cases, occasioning more lockdowns and reduced economic activity. At the same time, other economies were recovering, and several of the directors we interviewed, particularly those in China and Southeast Asia, were beginning to draw conclusions about what the pandemic has meant for their businesses, and about the critical decisions their boards have taken that make the difference between success and failure. More than three months on, things remain unclear for many countries. While vaccines have arrived for some, the pandemic has not abated, and it has become clear that the vaccination process and the road to recovery will both be long.

For boards of directors, the rhythm of virtual board and committee meetings continues. New directors are being recruited, interviewed, and onboarded in a completely virtual environment, and the traditional board dinner the night before a meeting has fallen away to, at best, a few minutes of banter into a webcam at the beginning of a videoconference as directors assemble around the virtual boardroom table. And this is just the surface logistics of serving on a board in 2021. Looming much larger are the changes in business models, ways of doing business, and ways of thinking that are being challenged by the extended pandemic.

One theme that has come through in interview after interview has been uncertainty about which of the many changes we have experienced will prove permanent, and which will evaporate as the world transitions to some kind of new normal. These are not easy calls to make: Get it wrong and your business model will be disadvantaged; get it right and you may save your organisation untold hours of time, energy, and resources. Tough decisions like these are why we have boards of directors in the first place. Strong and resilient boards will have the diversity of skills, backgrounds, and thought to make reasoned assumptions about the present and the future – and to constructively challenge management’s thinking – steering the organisation through turbulent times.

Another theme that has come through in many of our interviews has been the changing societal role of corporations. Many companies have stepped up to the plate over the last year, providing resources and support to local and national governments in contact tracing, material production, and vaccine distribution, to name just a few examples. Companies have had to confront increased demands from their employees and from the communities where they operate, and they’ve had to show goodwill, particularly where they may have received government support. And since last summer, many companies have taken public stands in the fight for racial justice, to an extent that would have been difficult to imagine a year or two ago. The degree to which an organisation pivots along this axis to meet all of its stakeholders’ needs is a real and recurring agenda item in many boardrooms today. And there is no single, one-size-fits-all approach to the discussion. How directors approach and frame these issues has been a clear window into the strengths of each board of directors. Boards that understand the importance of setting a clear and strong purpose for the organisation that senior leaders and employees can stand behind and that brings value to society in the long term will be increasingly vital.

“Companies have had to confront increased demands from their employees and from the communities where they operate, and they’ve had to show goodwill, particularly where they may have received government support.”

The Director Alert is published at Deloitte Insights. For more information, please visit www.deloitte.com/global