Resilience in uncertain times

We are living unprecedented uncertain times. This situation affects everyone, all around the world, with dramatic consequences on our lives and the way we run our business.

Almost every sector of activity is hit, no matter the size of the business organisation even if SMEs or non-profit associations seem to be more vulnerable (particularly with respect to business continuity issues).

It is also a moment of truth for our leadership effectiveness and companies with a solid governance structure tend to be better prepared to absorb these shocks and turn them into opportunities. Crises are often a period to separate well run companies from the rest… 

Why? Because when management is supported by a strong board, it will help them to remain cool-headed and keep in mind the broad and long-term picture when taking short-term decisions. The World Economic Forum recently released a short paper on Stakeholder Principles in the Covid-19 era, inviting business leaders to be leaders of responsiveness and stewards of resilience. Without implemented effective governance principles, these goals are very difficult to achieve.

In moments of great uncertainty, the board’s role is to challenge and to support the executive team in an even more proactive and frequent way:

- Set priorities and act consequently. Safeguard the employees’ health is the most urgent issue, followed by the roll-out of the business continuity plan: how and to what extend can the business be continued, which are the different risks and how will they be managed (up-to-date dashboard). The board must challenge the management’s assumptions and make sure that all scenarios have been taken into account (including social expectations and societal responsibilities). The board must also ensure a clear and frequent communication internally, but also externally

- Maintain a long-term perspective: all decisions must be purposeful and well considered, in line with the company’s values. Profitability and ESG values should be considered in a holistic way, in order to assure a long-term sustainable value creation, that takes into account the likelihood of future crises (for instance linked to climate change). Actions have to be aligned with the fundamental reason of being. This ‘raison d’être’ sets the long-term direction which in turn defines the short-term strategies, and it is the responsibility of the board to empower management to act correspondently. 

We all remember the 2001 and 2008 crises and have learned how to resist in these specific situations. Most of the companies have implemented business continuity plans and risk management models. Today, we are facing the first of possibly repeating pandemic crises that we will have to cope with in the future. How should we deal with this? Companies with strong governance structures will try to take advantage of a crisis and reshape the future accordingly. Others should start enhancing core governance and reset some priorities, if they aim to be more resilient in the future.