As business conditions start to stabilise, a board should strive to lift management’s ambitions and position in their organisations to ride the waves of uncertainty rather than be overpowered by them. The severity of the disruption of the current crisis suggests that the path out will feel more like a reconstruction than a recovery. Leader boards can add value by pushing early for scenarios and robust plans to be prepared for the reconstruction phase.
But where to start? Professionals at McKinsey Global suggest the following steps towards reconstruction phase:
As employees are coming back to office, a board should confirm that effective health and safety protocols are in place and continue to oversee management’s integrated action plans. Some decisions are more complicated than they at first seem—for example, a government stimulus package might seem like a boon, but it can dilute shareholders’ equity and come with unexpected strings attached. The board should also closely monitor the management team’s evolving plans (such as slowing down new-product introductions and capacity expansions or accelerating resource reallocation) to ensure that these decisions do not overly weaken the balance sheet amid challenging capital-market conditions.
Many organisations will have to rethink their product market focus, customer engagement, or pace of technological innovation. During this period, a board should encourage management to undertake a broad strategic reevaluation that could entail embracing some bold moves. It can foster this process by requesting regular, joint strategy sessions with management to discuss various alternatives and scenarios.
A new strategy might require a broad review of an organisation’s operations. The board should trigger the discussion, share external perspectives on the operating models of comparable organisations, and provide constructive challenges. It should also encourage management to match critical talent to key strategic initiatives, especially new leadership talent that might emerge during the current crisis.
Maintaining an ongoing, open dialogue with key shareholders and other stakeholders should be a key board responsibility as business conditions change. Managing interactions with governments and regulators might be particularly vital at this time, especially if an organisation receives a stimulus package or other public assistance that entails commitments. Major investors, including activists, might also offer ideas for repositioning the organisation for the post pandemic era that the board and management should consider.