The COVID-19 Action Plan for Board Members

Boards need to think differently about their role right now. Typically, directors set corporate strategy and maintain oversight responsibility; they are a great sounding board for senior management, identifying critical issues by asking the right questions. In this moment, more may be demanded. Board members may need to partner with CEOs and leadership teams to help address the flood of issues facing them. This is a moment when “grey hair” and external perspectives have significant value.

Most CEOs have never been through an event like this, and many were not in a CEO position during the last crisis—they may now be in firefighting mode, dealing with issues directly in front of them, and board members are understandably reluctant to distract them. However, CEOs need advisors who have been through crises before, and who can roll up their sleeves to help.

The need for board members to play a more active role reflects the magnitude of the COVID-19 challenge. While the 2008 financial crisis was a massive shock, the impact of this pandemic is even greater. Containment measures have led to an unprecedented shutdown of economic activity with many businesses seeing the wholesale evaporation of their topline. The uncertainty around when and to what degree different elements of the global economy will come back online is significant.

In this fog, boards should focus on six areas where they can make a real difference. Ultimately an engaged board can help companies survive and position themselves for a robust recovery.

Let the CEO Know: “We can help lighten the load”

Directors need to let CEOs know that they understand the magnitude of the job ahead and that they are willing to roll their sleeves up and help where needed.

If the company needs help in negotiations with banks for example, directors can play a role. If the CEO needs a broad team to work with governments, either sorting through details on assistance for the company or offering company resources to aid in the government response, board members can assist. If the leadership team needs insight into their company’s industry or sector, board members—many of whom are directors and advisors to multiple companies—can supply a high-level view.

The message should be that CEOs should step back and look at their list of urgent tasks to see where board members can help or take the lead.

Reinforce That Protecting People is Paramount—While Helping with Difficult Trade-Offs

Job one for management is to ensure people are safe. This includes helping people transition to work-from-home arrangements and providing links to health care resources.

However, the company may face some difficult trade-offs in the weeks and months ahead—and the board can help CEOs manage that balancing act. Boards can, for example, help top management analyze whether, and for how long, the company can afford to pay those who are not working. If it becomes necessary to reduce the workforce, boards can help CEOs determine what other help they can offer, such as temporary cash advances or streamlined access to government resources.

At the same time, boards can help the CEO support task forces, for example in the critical area of employee support. The clear message should be that a broad system for managing the response must be established to prevent the CEO or a few top deputies from taking on too much at once.

Help Top Leadership with the Critical Job of Communication

The job of communicating with all stakeholders, including employees, customers, and investors, is a crucial one. Board members might help CEOs set up a team to manage this—and help directly if needed.

That communication should be based on a few principles. First, it should be honest and frequent. Companies need to share all relevant information—good or bad. They should avoid being overly confident or upbeat when it is not warranted. And they need to keep the lines of communication flowing—even when they do not have significant new information to share. Second, communication must reflect real empathy for the impact the pandemic is having on stakeholders and directly acknowledge what people are going through. Third, the company should continue to update people on the cumulative impact of the fast-moving outbreak. This includes information on which offices are closed, the number of people who are impacted by the closures and the actions the company has taken to provide assistance and support to employees. Fourth, companies should share success stores reflecting how colleagues are taking care of each other and helping customers. Those actions—and the sharing of such stories—strengthens and reinforces the culture in a way that is difficult to achieve in more settled times.

Drive a Conversation about Liquidity, Business Continuity, and Customer Engagement

Boards should ensure that the critical issues of liquidity, business continuity, and customer engagement are at the top of the CEO agenda. The board should request scenario analyses that test the bounds in all directions—considering both upside and “doomsday” scenarios, and should pressure-test the results. We have seen many executive teams be too incremental in their thinking and miss the big picture—the board can help the CEO look beyond mere excel spreadsheet exercises.

They should get a clear understanding of the company’s liquidity situation and the outlook for its access to capital—and monitor actions to enhance both. In some cases, for example, it might make sense to consider issuing a private investment in public equity (PIPE) to ensure a solid financial buffer. In addition, the company may want to draw down on credits lines before a potentially changing financial condition limits its ability to do so.

The board should also ensure that the company has taken steps to stabilize its supply chain, through bulking up inventory levels or supplies for example. And the company must reach out to customers to find out what it can do to help them—and to ask for assistance as well if it is needed.

Focus on Positioning for the Recovery

Boards can also play an invaluable role in helping CEOs keep their eye on the long-term while they manage the immediate impacts of the crisis. Companies that made some smart—but often painful—changes in the wake of the financial crisis emerged stronger, with many posting great performance in 2010. Companies that think ahead in this environment are likely to see a similar rebound.

There are a number of factors companies should focus on now to set them up for the long-term. They should do robust scenario-planning and develop strategies, including revenue management and pricing approaches, suited to different paths of economic recovery. They should also take a fresh look at their digital strategies to understand if they require adjustment. In particular, board members should be helping companies understand where they can accelerate the use of technology to reduce costs, improve revenue, and improve service.

Boards should also be assessing any company actions or responses in terms of potential reputational impact. In the days ahead there will be increased scrutiny of how companies responded to the crisis. Those that acted responsibly will have strengthened their standing with customers and investors. Those that took actions seen as self-serving or harmful to certain groups will pay a price.

Ensure the Sustainability Commitment

The Stakeholder Principles in the COVID Era, released by the World Economic Forum under its COVID-19 Action Platform, call on business leaders to rise to stakeholder statesmanship to help employees, consumers, suppliers, governments, society, and shareholders get through the crisis now—and mitigate prolonged widespread economic damage. They also assert that "we must continue our sustainability efforts unabated, to bring our world closer to achieving shared goals, including the Paris climate agreement and the United Nations Sustainable Development Agenda."  But, as the pandemic cascades across value chains and markets, the intense operating pressures businesses experience can understandably overwhelm the best intentions for stakeholder statesmanship. Indeed, stakeholders will judge companies by how well they handle the crisis and support the common good. Corporate reputations, their brands, and the loyalties of customers and suppliers will be enhanced or broken.

While it is hard to envision now, at some point the world will start to return to some level of normalcy. No doubt it will be a “new normal”—and it is impossible to predict what sorts of long-lasting impacts will be felt. What will not change, however, is the need for companies to be focused on ensuring their operations are sustainable and built on practices that promote positive environmental and social impact.

Boards can play an invaluable role in keeping sustainability at the top of the agenda. They can, for example, help management respond to the crisis in a way that reduces the business’s carbon footprint.

Many board members today led companies or other organizations through the 2008 financial crisis and learned some valuable lessons as a result. While there is no playbook for leading during this pandemic, board members can bring their experience to bear in helping CEOs manage the current crisis. To do that, they should step up and play a hands-on, partner role alongside senior management. If ever there was an “all hands on deck” moment, this is it.

Written in collaboration with my fellow board members and BCG advisors: Vicki Escarra, Kaye Foster, Maureen Mitchell, and Dave Young.