Governing in a crisis

Governing in a crisis

Hindsight is a wonderful thing for telling us what we COULD have done when we were in the middle of a crisis. But what do we, as business leaders, do right NOW during the COVID-19 pandemic to ensure that our businesses survive? Surrounded by uncertainty, how do we plan for the future and decide on what to do next? What will the new normal look like?

I always try to look through the governance lens when searching for answers. I don’t want knee-jerk reactions. I look for answers that consider both the short-term and long-term implications and provide a real sense of direction and leadership.

I mentioned that hindsight is a great teacher. So, what did we learn after the Walker Review following the 2008 banking crisis; the inquiry findings after the 2017 Grenfell tragedy; the findings of the White House commission following the BP oil spill in 2010; the Laming inquiry into the tragic death of Victoria Climbie in 2000 or the 2013 Francis Inquiry following apparently high mortality rates in an NHS trust?

Some damning comments from these, and other inquiries, are listed below. They make cautionary reading for leaders dealing with a major crisis. Let’s ensure we aren’t accused of incompetence, complacency or negligence.

• “There were a series of almost incredible failures in the days and hours leading up to the disaster.”

• “The companies involved in the disaster were operating under a ‘culture of complacency’ and need top-to-bottom reform.”

• “The judge described the failures of statutory and other agencies as ‘blinding incompetence’.”

• “This negligent financial management rendered the charity incapable of surviving any variance in its funding stream.”

• “All failed to properly investigate the case and little action was taken.”

• “The trustees were ‘negligent’ and ignored repeated warnings about the organisation’s financial health, MPs said as they outlined an ‘extraordinary catalogue of failures’ leading to the collapse.”

So, now I want to share four principles that we all need during a crisis. They are the need for strong leadership; an appropriate governance structure; a cognitively diverse team and the will and capacity to make swift decisions and act on them.

1. Strong Leadership

The first principle is strong, flexible and visible leadership, boards need to support the management in stressful and uncertain times. You should ensure that your leadership is positive, forward-looking, well-informed but decisive and you focus on getting people through the challenges. A strong leadership will be thinking about the post crisis strategy even in the midst of the crisis in order to provide the necessary confidence for management.

Before you do anything, you need to determine the scale of the actions that need to be taken and how far-reaching they will be. Get an angle on liquidity and solvency and how resilient you are as a business. Pulling together relevant, accurate facts will be crucial.

Decide who is in charge and don’t encroach on the the work of the executive team. The CEO is the chief crisis manager and communicator and the board operates in the background to provide oversight advice and support led by the Chair.

An example of strong leadership is how Martin Luther King Junior mobilised a nation when he led the African American civil rights movement in the United States. He was confronted by every obstacle imaginable but remained positive, strong and visible. His powerful communication skills are evidenced by how often his speeches and quotations are repeated more than 50 years later.

In his 1964 acceptance speech for the Nobel Peace Prize, King said that the civil rights movement, and his personal commitment to it, was grounded in optimism. He spoke of an ‘abiding faith in America and an audacious faith in the future of mankind’. He said: “I refuse to accept the view that mankind is so tragically bound to the starless midnight of racism and war that the bright daybreak of peace and brotherhood can never become a reality.”

Your role as a leader in a crisis is to help people get through it, to reassure them and give them the right perspective. Bad leadership just accelerates the crisis and it is unavoidable that it will be exposed.

2. Relevant Governance Structure

The second principle involves the governance structure and the importance of everyone having clear roles and responsibilities and understanding the boundaries. The CEO has oversight and a strategic role and should develop a core team of executives. The frequency of board meetings and committee meetings may have to change and the terms of reference of both. You may already have a crisis committee described in your business continuity procedures but we may need to scale up considerably the crisis operating model.

An example of this is the UK Government’s emergency COBRA meetings. COBRA stands for Cabinet Office Briefing Room A, which is where these meetings usually take place. As well as the Prime Minister, who usually chairs the meetings, they are attended by a cross-departmental range of senior ministers, security officials, military chiefs, emergency services leaders and civil servants. The attendees change according to the nature of the crisis. Medical and scientific experts have been brought in for coronavirus meetings.

Similarly, in your business or organisation you need to develop an extended team that will be brought in for specific responses. We typically ask the board, i.e. the non-executives, to stay strategic, to challenge the executive, to be ambassadors to all stakeholders and get to grips with the key risks. A crisis is the time to exercise all of those roles, but it is even more important to take a more collaborative approach than is normally expected. The board may need to dig a little bit deeper than normal when providing support and advice, but it is important to get the balance right so there is not interference. Non-executive directors may be required to join a particular ‘task and finish’ group and serve the organisation with their specialist skills.

3. Cognitively Diverse Team

To ensure that we have the right mix of skills and capabilities to address all of the challenges that are going to come about in a crisis, we need an effective team that we can leverage and use. Has anyone in the team been through a crisis before, 9/11 the global financial crisis, what can we learn from their expertise.

In his book, Good to Great, Jim Collins creates a memorable metaphor by comparing a business to a bus and its leader as the bus driver. He says you must always start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.

During a crisis, you can’t have hangers-on. Everyone needs to step up and be in alignment. We need to make the best use of the talent that we have, ensuring that we avoid the temptation to work only with the people with whom we are most comfortable. We don’t want group-think, but neither do we want conflict. There should be healthy collaborative tension. The governance structure, mentioned in the last principle, may not have all of the current leaders operating in their normal capacity. In times of crisis there will be key individuals who step up to the plate, from different disciplines or backgrounds. It is imperative that bureaucracy, or overly-rigid governance structures, don’t stop employees at all levels from being empowered to carry out their roles.

4. Decide and Act

It is important for the leadership to be open, authentic and accountable for their decisions. The board is the highest decision making authority in the organisation and they need to listen first, take everyone’s views and all the facts into account and then exercise good judgement to make a firm decision and take action.

Under this principle, a good leader will stand by their decisions, however difficult they are and however unpalatable they may be to others. In times of crisis, of the proportion of the current pandemic, where post-crisis things may not be the same again decisions need to be made about the business model and whether it is still fit for purpose. Considering the impact of virtual board meetings may lead to reduction in the requirement for office space, or changes to business travel changing the way work is carried out as an example.

Everyone is in this together and a good leader takes decisions in the knowledge that the buck stops with them.

Although I recommend that you don’t react impulsively to the crisis and make kneejerk decisions without gathering information, you must also act swiftly. Decisions must be made in a structured manner once all the relevant information has been gathered.

It’s impossible to know at this stage whether the UK Government’s decisions on actions to reduce and prevent the spread of coronavirus took too long. Only hindsight will tell us whether they were right or wrong.

In conclusion, here are a few tips to consider as you develop your plans for leading your business or organisation out of a crisis:

• Keep a cool head and stay in charge;
• Don’t burnout. Take care of yourself. It will get intense;
• Gather the right information quickly and educate yourself about the crisis;
• Ensure your business continuity plan is up to date;
• Communicate adequately with external and internal stakeholders;
• Ensure the leadership team stays on top of social media;
• Don’t hide the facts but ensure you separate them from emotions, which may run high;
• Every crisis has financial implications. Put together the financial mitigation strategy;
• Don’t react. Stay rational and systematic before making decisions;
• Adjust to the new reality, making sure you adjust your mental attitude;
• Be agile and swift to make adjustments once you’ve taken the time to analyse the new reality;
• Consult and learn from your peers;
• Be an authentic leader and practise what you preach;
• Ensure there are no surprises. Keep your board informed;
• Have empathy, sympathy and understanding for all stakeholders;
• Transparency and openness are important. Ensure you keep communicating effectively.