Skip to content

8 February, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • CEO legacy

      Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • cost-of-living crisis Aviva highlights cost-of-living crisis

      Fund calls for ‘mindful’ pay ratios, showing executive pay is now firmly an issue for...

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • mission zero

      Can the UK achieve net zero by 2050?

      To gain economic benefits, UK businesses will need resilient and flexible supply chains to provide...

    • governance recession

      What use is governance in a recession?

      Companies seeking competitive advantage in uncertain times will find that effective governance allows much sharper...

    • climate litigation

      Climate litigation: how 2022 will shape 2023

      This past year saw a rise in climate litigation, with a focus on the commercial...

  • Comment
      • View all
    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

    • climate change energy crisis Sustainability and climate change: the other energy crisis

      The world is addicted to cheap energy. We need to admit this and have the...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

    • NEDs role NEDs ‘needed more than ever’ in times of uncertainty

      The non-executive director’s role is to both challenge and listen to management, agreed the panel...

  • Careers
      • View all
      • Selection
      • Board Moves
    • CEO legacy Long-standing CEOs can leave a legacy of trouble for boards

      Performance and productivity can suffer after a long-tenured chief executive leaves the company, researchers find.

    • diversity talent pipeline News round-up: this week in governance

      Target diversity early; directors job market 'ossified'; US extends duty of oversight; 'kindness bias' hinders...

    • NED recruitment News round-up: this week in governance

      Your country needs NEDs; governance does not compute; financial firms get more women on board;...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Edelman Trust Barometer 2023

      2023 Edelman Trust Barometer

      The report is the result of the Edelman Trust Institute's research, which sampled more than...

    • Sophos 2023 Threat Report

      Barriers to entry for would-be cybercriminals are lower, with tools and tactics becoming available to...

    • The C-Suite Outlook 2023: On the Edge

      The Conference Board 2023 C-Suite Outlook survey reveals the events that C-suite executives see as...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

Warning over boardroom composition as businesses adapt to Covid-19

by Gavin Hinks on July 13, 2020

A report from ecoDa cautions that current boardroom composition may not “respond to the imperatives” of the post-pandemic business environment.

Boardroom meeting with diverse board members

Image: Rawpixel.com/Shutterstock

The trials placed on governments, economies and societies by Covid-19 are far from over, but it’s already clear that the pandemic is forcing organisations—and boardrooms—to adapt. One realisation is that current trends of boardroom composition may not be fit for purpose in this new environment.

That’s an observation made by experts brought together by ecoDa, the European association of institutes of directors, as it explored the impact of Covid-19 on boards and their practices through a series of web seminars.

Composition is not a new issue—indeed the experts were of the view that the pandemic has largely served to accelerate pre-existing trends rather than create new ones—but it is an important consideration for boards trying to adapt to challenges brought on by the coronavirus pandemic.

Behaviour and values

A report of the ecoDa proceedings says experts believe boards will need to modify the profiles for chief executive recruitment to ensure corporate leaders fully understand the new environment. But boards themselves may need further work.

“Boards’ composition is also crucial,” the report says. “More than ever board members are needed who can challenge and avoid cognitive bias when making decisions.

“It is not certain that the current composition of most boards is ideal for responding to the crisis. The motivations that supported the current composition might no longer necessarily respond to today’s imperatives.”

And that’s critical. What many observers have highlighted, including those on the ecoDa panels, is that things are changing and the pandemic has thrown a spotlight on those changes.

Leaders must demonstrate an ability for “emotional intelligence”, the experts concluded, so that they can “pursue a societal mission while making decisions that are necessary for the company”.

“In other words, companies willing to to build their social capital have to show that their decision-making is based on sound ethical and socially responsible principles.”

And this comes with a warning. “If companies’ behaviours are not consistent with their values, their persuasion power will decline and companies will face a societal backlash.”

‘Unprecedented dilemmas’

That’s significant food for thought. And their are further worries to contend with. “Directors will find themselves in unprecedented dilemmas where their business judgment will be put to the test and where they will have to challenge their own assumptions.”

Board members are under pressure. Indeed, ecoDa’s experts wonder if they may need to scale back, limiting the number of boards on which they serve. They have also found themselves closer to operational decision-making, as rapid developments required them “to be available on short notice… and actions taken quickly”.

Non-executives may have found themselves more hands-on, discussing crisis response plans as they evolve in real time.
But that is no reason, the ecoDa’s expect conclude to ignore the “long-term” prospects of their companies.

“Now more than ever, a long-term corona[virus] strategy and reset of the business plan are necessary,” the report says.

Relationships with shareholders may have been changed by the crisis too. In many countries changes in the law have enable companies to cut their formal contact time with shareholders, especially through annual general meetings. But communication with shareholders has remained as important as ever, especially transparency over “important information”.

The dynamic with shareholders may also have been transformed by the entry of debt holders to the stage after companies sought debt to see them through the crisis. That means boards striking a a difficult balance between their interest against shareholder.

“What is crucial within a company,” says the report, “is to remain consistent and to deliver the same message to the different investors.”

The crisis is not over. As it evolves boards will doubtless face new strains and new questions. But as the report shows, board members will need to be flexible and open-minded if companies are to emerge intact.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • Investment managers hesitant to embrace ethics as part of ESG
    March 21, 2022
    Business ethics on cogs

    Study finds investors shy away from direct talk of ethics, but some are assessing company culture as an indicator of ESG performance.

  • Investor activism set to enter 'golden age' as firms emerge from pandemic
    December 6, 2021
    Group of investors/shareholders in glass building

    Consultancy Alvarez & Marsal says 2022 will see a 10% boost in activism across Europe, with 148 companies at risk of targeting by activists.

  • EuropeanIssuers calls for EU law to apply to 'third country' companies
    December 17, 2021
    EU flag

    The proposal raises the possibility of the Corporate Sustainability Reporting Directive being applied to UK firms trading online in the EU.

  • New Zealand parliament to debate reform to directors’ duties
    October 6, 2021
    New Zealand parliament buildings in Wellington

    MPs in Wellington will examine a bill that would allow New Zealand’s directors to consider ESG issues as part of their company obligations.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

Board composition, board expertise, board skills, coronavirus, crisis management, ecoDa, ethics, strategy

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Investors favour votes against directors over say-on-climate proposals
  • Shell overhauls its board
  • ESG grows in importance as driver of M&As
  • What use is governance in a recession?
  • News round-up: this week in governance
 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|