In the United States and the global economy as a whole, organizations are searching for the optimal avenue back toward more normalized operations and growth in the wake of the COVID-19 pandemic.
With this in mind, Weaver has compiled more insights for board members looking to guide their organizations in the uncertainty of the current business environment. Organizations will need strong, steady leadership and confident decision-makers to emerge from this unprecedented period stronger than ever.
The following five questions can serve as a guide for your upcoming board meetings, helping you convey preparedness and confidence regarding what lies ahead.
- What are our true business interruption and secondary costs as a result of the pandemic, and how has the pandemic impacted our company culture?
The economy seems to be on the rebound, but every industry is showing lasting effects of lengthy shutdowns. Obvious costs related to missed time, flattened demand and more have been identified. But has your organization considered the totality of your business interruption costs?
Management decisions need to be made regarding how to address rehiring if your work force was reduced, engage training and retraining, revise budgets and operational plans and more.
And then there is the concern about culture and how your workforce is managing uncertainty, less engagement and interaction, and challenges with feeling empowered and staying motivated while working in a remote environment. While you may be communicating the importance of connection in a remote environment and saying all the right things on video calls and team meetings, has your organization considered employee satisfaction and anxiety about what the future workplace may look like?
In short, your true business interruption costs aren’t just the surface-level details. They could show themselves over the course of years as operational changes and initiatives related to recovery unfold, and it’s critical to cast a wide net in evaluating them. For example, the cost of laying off experienced workers during the pandemic and then training other workers during the recovery should be considered as indirect but possibly significant business interruption losses.
- We’ve recently made (or are considering) an acquisition; how do we effectively integrate acquired operations into our organization?
As exciting as it is to acquire a new company, new risks are always presented by such transactions.
Beyond integrating the acquired company, you’ll need a thorough plan for proving that the value promised by the acquisition materializes into real-world benefits.
It’s time to begin examining how your organization has handled the acquisition as it relates to the identity of the acquired company, the status of the company’s “human capital,” the weaving in and streamlining of transactional processes, the elimination of fraud risk, governance and much more.
- Are we taking the right steps to mitigate risks and provide the appropriate board oversight in the current environment?
Given current uncertainties, including the impact of elections, forthcoming regulatory and legislative changes, and evolving strategies and operations, boards should be especially focused on risk management issues.
The importance of a board’s responsibility for monitoring primary risks and compliance issues facing their organization is ever present. Caremark claims, which allege board oversight failures, were famously reinforced by the Delaware court system in 2019, and again in recent months, through multiple unrelated cases. The most notable of these is associated with the Blue Bell listeria outbreak, in which it was determined that the board had failed in its oversight of mission critical risks associated with food safety, resulting in fines and a hefty settlement. The lesson for boards of directors is that specific board-level procedures are needed to not only identify risks, but also to monitor and mitigate risks, including legal compliance.
To ensure that the board is fulfilling its responsibilities regarding risk management, board members should be asking questions that go beyond just being aware of the risks themselves and their assessed significance, but how they could/do impact the organization and what the company is doing to mitigate and monitor those risks. The effectiveness of these mitigation activities should be evaluated and discussed to better understand the residual risk to the company.
- Does the company have an ESG program? If so, how is its ESG disclosure program designed? Are we set up for future success?
Many investors and stakeholders are placing more emphasis than ever before on environmental, social and governance (ESG) topics.
Though ESG reporting to the SEC and other regulatory bodies in the U.S. has remained mostly voluntary, that doesn’t erase this burgeoning cornerstone of investor-desired information.
The combination of increased demand from investors for ESG-specific disclosures and the absence of regulated ESG-specific guidelines has created a unique risk for reporting entities, making it critical that you develop a plan to deliver transparency, maximize opportunities and manage risks related to ESG information.
- Does our board of directors composition reflect our current needs and overall commitment to diversity?
As the organization evolves and changes, it is important to continually evaluate the skill set represented among board members. Do board members have the background and skills to address current business demands and conditions? If not, the board should consider how to recruit members to add the right skills to the board.
It’s difficult to project a commitment to diversity if the upper echelons of your organization lack it.
Strong, capable leaders come from a variety of backgrounds and exhibit societal differences beyond race, gender and beliefs, which typically constitute surface-level thinking about diversity in the workplace.
Put in the work to identify where your organization can benefit from diversity among leaders in terms of differing economic backgrounds, educational levels, career experience, and more. Dig deeper to find real diversity that expands your organization’s possibilities.
Weaver offers information and insights to prepare for your next board meeting. We can help you ask the right questions and determine appropriate plans of action based on topics and trends as they unfold. Subscribe to our monthly insights for articles and information to help you review your organization’s operations and prepare for change in an uncertain world.
Resilience and Recovery Resources
Read related articles and reference materials to help you equip your team and organization for recovery and resilience. If you need assistance in crafting your team's response to current market events, please contact our Weaver professionals as we are here to assist you during this time.
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