As technological, social and financial disruptions roil one industry after the next, boards of directors see the potential for crisis around every bend. Even the best corporate overseers recognize that prevention alone is not enough—boards must anticipate and be prepared to guide companies dealing with cyber breaches, radical shifts in markets, allegations of misconduct and more. The seven concepts that follow offer pragmatic and novel approaches to expand a board’s capacity for preempting and managing crises.
1. Really Get To Know The Organization
To avoid being blindsided by a crisis-worthy event, it is critical that the board know, truly, what is going on within the organization—and that means board members need access to management beyond the C-suite. Collectively, the board should feel assured that it has touch points up and down the organization, including with employees, customers and suppliers.
- Invite several different non-C-suite managers to meet with board members before or after regular board meetings.
- Encourage board members to have contact with non-C-suite managers by mentoring and/or working with them in the course of fulfilling board responsibilities. For instance, Audit Committee members may engage with various people on the finance team; Comp Committee members may interact with people on the HR team.
- Board members should visit with customers, channel partners and various suppliers from time to time.
2. Engage The Whole Board In Crisis Preparedness
The full board, not just the Risk Committee, has a responsibility to address risk comprehensively. Risk Management includes proactive planning and responsive strategies.
Annually, identify the big risks, no matter how many, that could be body blows to the company. The board should do a deep dive with management on each one—if this risk came to pass, what would we do?
3. Create A Culture of Respect
When it comes to internally generated crises, the best prevention is a strong culture. If the organization hasn’t already established comprehensive anti-harassment policies, that should be an urgent priority. Policies to consider include definitions of harassment, codes of conduct, requirements for anti-harassment training, and organizational responses to reported incidents. Many companies are rewriting compensation agreements to specify consequences of termination for harassment.
- Educate employees on unacceptable behaviors, company policies and codes of conduct. Inform business partners, too.
- Over-communicate about how reports of harassment and other unacceptable conduct will be handled; everyone in the organization needs to know the expectations and consequences.
- Make sure the board understands exactly how the company’s hotline process works—where does it start and stop, what gets reported to the board. Are the thresholds for reporting information to the board appropriate?
- If an incident arises, take swift action. Investigate independently. Be accountable for the process, determine the appropriate level of thoroughness and act decisively.
4. Set Ground Rules For Social Advocacy
The board needs to be aware of social advocacy positions that might be taken by the CEO or other executive leadership and help them avoid communications that can be misinterpreted and/or reflect inappropriately on the organization.
- Make sure that the organization has a well-defined and authentic statement of its mission and values. See that CEO involvement on social advocacy issues is aligned with mission-compatible activities.
- Reinforce with CEO and other public-facing executives that they should always consider the 360-degree audience—employees, customers, suppliers, partners—and stay on the relevant message.
- Consider establishing a formal policy about what may be communicated and authorize only specific people with media training to communicate about social issues.
5. Invest In Diversity, Equity & Inclusion
Research confirms that the most successful companies are diverse at every level, including the board. A diversity of perspectives can act like an inoculation against management gaffes or board blind spots, sparing the organization from embarrassing or costly mistakes.
- Work for diversity at all levels of the organization. As appropriate, use arguments such as the need for companies to reflect their customers, employees and other constituents and to create an environment where all voices are heard.
- When planning for board refreshment, diversity must be top of mind.
- Lobby for women and people of color to not only sit on the board but to lead board committees.
- Women and people of color, when in the minority as compared to a largely homogeneous majority group, often find that they have to repeat their ideas or that their perspectives goes unnoticed until someone from the majority group lays claim to it. Break this pattern by advocating for each other: Repeat or call attention to the contributions of other minority members. Be attentive to which, if any, voices are not being heard and see what you can do to bring attention to them.
6. Listen to Each Voice Before Making Decisions
All boards, but especially diverse boards, benefit from a tone of inclusivity in which everyone is encouraged to make their perspective known.
Suggestions for board chairs to implement:
- Institute a “round robin conversation” in which everyone is asked to share their opinion on a significant issue before a decision is made.
- For multi-day board meetings, try an overnight reflection: On the second morning of the meeting, each member shares the issue or issues they think are most important, while all other members remain in listening mode. “It takes almost an hour—probably the highest value hour we spend.”
- Have the executive session over dinner. You might even make a practice of bringing difficult topics to the board dinner. There’s something about sitting at the dinner table that encourages good manners and discourages lapses in civility.
- Facilitate social engagement between board members. Once people spend time together out of the boardroom, they generally became more collaborative and more respectful in board meetings. Building personal relationships makes it much easier to work as a team.
7. Have a Crisis Communications Plan
In the current climate, crisis must be assumed to be a “when” not “if,” so the board and management team should expect that at some point they will be communicating with employees, customers, partners and/or the general public following an incident. Remember, any time lag between an event and the communication is a communication in and of itself.
- Scenario planning events are very valuable. Crises are often things that you couldn’t predict so don’t be concerned about literally preparing for a specific incident; the value is in going through the experience of preparing for an unexpected event, identifying any weaknesses that need to be addressed and gaining insights about how to manage through a crisis.
- Review the organization’s whistle-blower policy. The CEO needs to make a point of letting people know about the company’s safe harbors and ensuring they feel comfortable using them. She or he can use messaging like, “Speak up! If you see something, say something—our team, culture, stock price and therefore our future might depend on it.”
- Build your reputation in calm times—if crisis hits, the public will have a positive perception of you as a good company, which will make it easier to achieve a fast recovery.
- Have a proactive process in place before the organization faces a difficult situation. Know who will communicate and how. With rare exception, get out as much information as quickly as possible; delaying often makes things worse.