The session was sponsored by PwC’s Governance Insight Center and was hosted by Paula Loop, the center’s leader, accompanied by Kevin Keegan, a partner at PwC.
Both experienced directors, Nina Henderson and Jim Hunt agree that when it became clear that COVID-19 was going to upend the businesses on whose boards they serve, it became an “all-hands-on-deck” situation involving shutting down sites and converting to a work-from-home model for most employees.
Hunt serves as chairman of the board for Caesars Entertainment Corporation, which had to completely shut down hospitality operations. He also sits on the board of Brown & Brown, Inc., and Penn Mutual Life Insurance Company, which had to ramp up services such as risk management because a crucial issue in the face of a pandemic. Henderson is a director at CNO Financial Group, IWG and Hekla Pharmaceuticals. These companies had a myriad of reactions, including complete closure to employees who were unable to travel.
Once the board was comfortable with how the pandemic was being addressed, Henderson says the directors shifted to weekly meetings that were, at most, an hour long in order to be sure management was more concerned about the work of the business and not that of the board.
And there has been plenty of work to do. Loop suggests that management should be concerned with moral, ethical and legal issues surrounding reopening. What’s more, there is reputational risk in reopening too early or too late. Both directors pointed out that every corporation is coming out with a “safety first” message.
“Part of the advice that I’ve heard given on one board of mine is don’t feel rushed to get everybody back into an office. Take the time that you need,” Hunt says. “Follow the guidance, be methodical and do what’s appropriate. While it’s nice that we can be together, what we’re learning is it’s not completely necessary. Give the senior team, particularly the CEO, the space in his or her leadership to continue to utilize those protocols and move back into the physical workforce as he or she determines is really necessary and appropriate for that business.”
Over a three-month period which began prior to the pandemic and continued as the crisis developed, PwC conducted a CFO pulse survey once every two weeks. As the ground shifted under executives, so did their answers. In the end, 50% of CFOs acknowledged that it will take at least three months to recover — “once the virus recedes,” Loop says. And while a majority say they believe they can provide a safe workplace, only 9% said business will return to normal by Q3; 21% in Q4; and 55% said 2021.
PwC’s Keegan points to technology investment areas that would help facilitate a distanced yet connected workforce.
“Obviously, a lot of that was in motion beforehand and the ROIs were getting more reasonable,” Keegan says. “But I think when the current risk is taken into account, the ROIs of those are increasing. So we’re definitely seeing directors helping the management team to prioritize those types of investments on a go-forward basis.”
“I don’t think any of the communications that have been begun virtually will go away,” Henderson says. “I think, in fact, they will continue to be enhanced. There’s no doubt that there will be great acceptance of a dispersed workforce, because now people really see it works.” This will also draw attention to a company’s real estate footprint and what brick and mortar is really necessary to run the business.
Henderson notes that while we were all used to being able to fly anywhere, and go on site to get to know businesses, “these kind of things are not going to happen now with real regularity.” But she says efforts must be made — even from a distance — to preserve corporate culture.
She recently helped hire a senior level employee at a company where she sits on the board. She was part of the interview process and a group interview was virtual.
“We did a virtual dinner party with him and his family. We tried to create what we would have done if we had brought him in to town.”
“We put a lot of time into it, spent a lot of time with him and he spent a lot of time with us. It’s the first hire I’ve made completely virtually.”