The board's role in a crisis

There is no instruction manual for a board facing a crisis, but there is a lot we can learn from others and past events. 
 
In this research project, we interviewed board chairs, directors, and chief executives to understand more about the role of the board during a crisis. Our research report not only outlines our key findings but is also a practical guide for board members and managers.

Key findings

  • 1.

    Be prepared

    Everyone now knows about the risks of a pandemic, but that is only one of many realistic and potentially catastrophic risks that organisations face. There will be future crises, and the board needs to ensure their organisation is prepared.

    It is not enough to just identify the risks: being prepared means ensuring management have adequately developed and tested risk mitigation and response plans, then trained and practiced using multiple scenarios. Practice exercises and testing are often neglected but are essential for a strong and adaptable response.

    For the board, preparation also means understanding and agreeing its own role and expectations. Our case studies revealed divergent views on the board’s role in the early stages of response, ranging from a relatively hands-off approach, to working very closely with management and adding as many minds to the crisis response as possible. By agreeing the preferred approach ahead of time the organisation can respond quickly and collectively
    to a crisis event.

  • 2.

    The early response: coach and guide your team, don't try to play the game for them

    The board can support management by providing guiderails for the response. It is critical for management and the board to be clear on roles and expectations from the start. Be clear about delegations and boundaries so that management understand when they can proceed at pace and when further consultation with the board is required. The board needs to be kept informed so they are ready and able to provide management with direction or guidance on critical matters. With management initially focused on response, the board can provide perspective and work on framing the post-response strategy and long-term recovery. If the board sees inappropriate responses or gaps, then by all means, raise these with management. The board, however, needs to be careful to avoid taking over, undermining management confidence, or adding unnecessary burden.

  • 3.

    Trust and relationships are critically important

    Maintaining relationships and building trust and confidence with key stakeholders will have a big influence on the recovery outcomes for your organisation. Words and actions need to align with the organisation’s core values and long-term reputation.

    Ensure the organisation’s communication is proactive, open and frequent, covering staff, customers, suppliers, and critical stakeholders.

    Crises can dramatically alter the stakeholder landscape with unanticipated levels of interest, influence and agendas. The board needs to ensure that the organisation is adequately anticipating and responding to these changes.

  • 4.

    Be agile in decision making

    A crisis requires rapid decision making in an environment of heightened uncertainty and risk. Decision making processes need to reflect these changed circumstances. This includes agreeing on principles to guide board and management decisions, greater delegations, increased reliance on qualitative information, and deliberately seeking and exploring alternative views to test thinking and harness the collective wisdom of the board.

  • 5.

    Prepare for the long haul

    Crises invariably last longer than initially anticipated and ripple out to have unforeseen ramifications on the business, either directly or through staff, customers or suppliers. The board has an important role in navigating the organisation through recovery by helping senior management to look up and over the horizon, and monitoring organisational health to ensure forward progress is sustainable.

  • 6.

    Amplify health and safety

    Health and safety risks are usually heightened during a crisis. While people may want to take heroic actions or trade-off health and safety to achieve quick results, the directors’ duties and liabilities are not suspended in a crisis. Rather than unwittingly accepting additional risk, extra care needs to be taken in health and safety awareness and decision making to reduce the risk of harm to the staff and public.

This research was undertaken by
Erica Seville and Richard Ball of Resilient Organisations Ltd.

For more information please contact:

Richard Ball
p: 64 (0)27 208 3532
e : [email protected]

This project was funded by QuakeCoRE and supported by the New Zealand Institute of Directors.

QuakeCoRE                       

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