The meeting has been called. All the directors are in attendance and anxious to hear an update on when operations will return to normal and when supply chains can get back up to speed. They also want to get more clarity on the financial impact of the coronavirus going forward. But when they ask the CEO to brief them on these matters, he ends up being surprisingly candid. He is not sure.
In light of the rapidly spreading coronavirus, experts say, CEOs are working in a new environment of ambiguity. The longer the outbreak lasts, the more uncertain any sort of business projection for this year—and possibly into early next year—becomes. But the question remains: how should a board respond?
Tierney Remick, vice chairman of Korn Ferry’s Board and CEO Services practice, says in times of crisis the board’s main job is to support management—not overly direct, manage, or consider past solutions as certain now. It’s a subtle but important distinction for boards in such chaotic times. “The board’s role is to be available and responsive and help management think through optionality,” says Remick.
The coronavirus’s rapid spread around the world underscores the importance of transparency at all levels of firms. Kirsta Anderson, Korn Ferry’s global leader for culture and engagement, says that while employees and boards naturally have questions, there are simply too many unknowns for leaders to provide answers with any certitude. Leaders who try to try to answer tough questions with wrong replies could make matters worse, she says. “They know that there isn’t a simple answer, and if you pretend, then you make them feel unheard,” she says.
History shows that during crises, executives can benefit from such openness, says Jack Ablin, chief investment officer at Cresset Capital in Chicago. “Shareholders and the community at large will respect and reward leaders who play their cards open,” he says. “It goes a long way to bolstering credibility.”
It also helps bolster collaboration and healthy dialogue between boards and leadership. Without doubt, in times of crisis it is not only all hands on deck for management but for boards as well. “Everyone needs to work together as a seamless team when information is not forthcoming, to think about ways to consider problems differently,” says Remick.
But Remick says there is a delicate tightrope boards must walk between supporting or giving the impression that it lacks confidence in management. It’s important to be mindful that the context of the relationship between the board and CEO doesn’t change. “Most companies don’t have all the answers and are working through different scenarios to get through this time,” says Remick. “They need to collaborate with boards to find solutions.”