The Board and the War in Eastern Europe

For the first time since the Cold War, directors everywhere in nearly every business are faced with a geopolitical crisis impacting their companies.

A UK-based consumer products firm had its board meeting completely planned out. Then the fighting in Eastern Europe started.

The directors ditched their agenda and focused exclusively on how the war in Ukraine would impact their employees and operations. They immediately directed management to do anything necessary to get their Ukraine-based employees out of harm’s way. Then they redid their strategic plan, recalculating what their business would look like if it couldn’t rely on its Eastern European revenues.

The last time many directors needed to care about the geopolitical machinations of great powers was the early 1990s, when most of today’s crop of directors were likely in the middle of their careers, perhaps one day aspiring to be on a board. Now these leaders, many of whom are already stretched from two years of navigating a global pandemic, are being asked to confront a new crisis, one they have no control over. “I think this is unfortunately a reminder of just how uncertain the global environment is,” says Ret. Lt. Gen. William Mayville Jr., a Korn Ferry consultant who during his military career was deputy commander for United States Cyber Command.

Directors don’t have control over what’s happening on the ground, but experts say they should take an active role in helping their executives steer through the crisis. Boards should be asking tough questions of management, including what the executives are doing to secure the safety of their employees, how their supply chains are being impacted, how the business can operate with commodity prices so much higher than they were a year ago, whether they should continue operations in Ukraine or Russia, and whether they should continue to pay employees there even if they shut operations down. 

Importantly, directors should be keeping an eye on the future of the business. They should be bringing in outside experts, such as economists or foreign policy analysts, not only to keep them abreast of what’s happening currently but also to give them a sense of the potential future consequences of current events, says Dennis Carey, a vice chair of Korn Ferry’s Board & CEO Services practice. “Getting a sense of what might happen will give leaders the ability to make more strategic decisions on future investments,” he says.

The bigger mission for boards will be in a couple of months, when the fighting may be settled, says Tierney Remick, a vice chair of Korn Ferry’s Board & CEO Services practice. Some likely questions they’ll face: What will business look like in Ukraine and Russia? If companies left, will they come back, and will they bring back employees who left the area? 

Meanwhile, as the crisis continues, companies most likely are going to have to state a position one way or another, experts say, because their stakeholders are demanding one. “Employees are speaking very loudly to their management teams about this,” Remick says. No matter how long the crisis lasts, Carey says, “directors should be in constant communication with their investors, employees, and clients to let them know what the organization is going to do.”