Lockdown was, and it’s aftermath is, the leadership challenge of a generation. Our world has not just been shaken; it’s been permanently shifted. The pandemic has firmly put the quality of business leadership under the spotlight. Senior members of legal departments, board members or not, have an organisation-wide perspective on how businesses are adapting. Informed by your views, the aim of the Board of the Future survey is to get an insight into the boardroom; to establish if and how Covid-19 has changed priorities and how well boards are guiding businesses through a volatile, uncertain and complex landscape into the next decade of the twenty first century.
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Many of the UK’s governance reforms over the last decade were born of the global financial crisis of 2008, requiring greater transparency that extended to all areas of the business and giving a sharper focus on ethics and a wider consideration of stakeholder groups beyond shareholders. In July 2018 the Financial Reporting Council’s Corporate Governance Code contained an updated set of principles, which included the Board’s responsibility to establish the company’s purpose, value and strategy, to assess and monitor culture and to seek the views of the workplace. In Summer 2019 a group of leading CEO’s in the USA, the pre-eminent lobby ‘Business Roundtable’ signed a statement extending their definition of corporate purpose to embrace societal improvement, highlighting diversity, inclusion, ethics, trust and morality. Both highlight the importance of having a wider focus beyond profit and shareholder dividends for business longevity.
Paving the way
The last decade has also seen a more concentrated effort on risk management, but it would have been a rare board indeed to have had a pandemic as a regular item on the agenda. Futurist Richard Watson stated, ‘A pandemic has always been a case of when, not if, and was considered the most high impact wild card in scenario planning, but assigning a probability and preparing for it are wholly different things.’
However recent reforms did pave a way for dealing with the crisis. Had it happened a decade earlier, many companies would likely not have been thinking about the wellbeing of their employees to the extent they have been this year, nor been able to respond quickly. A sense of pulling through is a powerful sentiment to deal in an immediate crisis; pulling together is an entirely more cohesive force that businesses with a stronger culture of customer and employee care will have been able to draw on, to deal with the immediate and plan for the future.
A valid assessment of any board’s worth, is their quality of their flexibility, the ability to respond to change and challenge. As Charles Darwin wrote, ‘It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.’
The survey asks if the board has the most appropriate composition; if it is isolated or connected to those it represents. It also looks at trends evolving in our society and which are the priorities for the board. These include: climate change, diversity and inclusion, digitisation, workplace, workforce and culture for example. The trends were already in play pre-Covid; post-Covid they become even more integral to continued business success.
The tech revolution
Technology is a particular area of focus for the questions. From the Chartered Governance Institute (ICSA) in 2019, ‘a recent survey found that nearly half of respondents did not believe their boards have the appropriate resources to navigate the disruption caused by emerging technology.’
Technology has enabled businesses to adapt to the Government’s call to work from home; faith has grown in its ability to support us. There is potentially more fertile ground to open the door to more committed experiments with artificial intelligence, 3D printing, virtual and mixed reality for example. Extended application will further transform the work people will do, how and where they do it. It will also impact on existing business models and change how value is created and contribution evaluated. For a co-ordinated and cost-effective approach the digital journey needs to be driven from the top. Pre Covid, the prevailing view was that while the majority of businesses recognised the potential of further digitalisation, it was only a minority that had a strategy for further evolution. It will be interesting to see how Covid-19 might have changed this level of unpreparedness.
The future of work
Attention to the future workplace and workforce also come under scrutiny –engagement, diversity and flexibility for example. Covid-19 has created a new set of heroes, people in junior and less well-paid roles have stepped up to deal with the crisis and become more visible. Best practice governance requires that the employee voice is heard.
What’s next?
What are companies doing to capture this and act on it? Workplace diversity is also covered to examine the importance of this. The workplace was beginning to accommodate a much wider variety of age groups and this is likely to become much more commonplace. With savings and pensions damaged by Covid, full retirement is likely to be an increasingly unusual concept. How geared up is the business to adapt to this change? Covid-19 has also strengthened the case for agile and flexible working. If this becomes the more permanent aspect of working life that many expect, is the board able to adapt to the new challenges this will bring?
The Great Plague, the Great War, the Great Depression all affected the majority of the population in some way and changed the shape of society in the fourteenth, seventeenth and twentieth centuries. While it might be too early to name the period that will be defined by Covid-19, it isn’t too early to know that its impact will reach across the twenty-first century. Post-Covid success will be a test of the quality of UK plc and it’s speed of response and adaptability.