What Will the Post-Pandemic Board of Directors Look Like?
Companies need boards built to exercise collaborative oversight with diverse skill sets.
The pandemic and other recent events are presenting new challenges for public and private companies alike, from supply chain risks to heightened shareholder concern about environmental, social and corporate governance issues. Many large organizations will need to rethink their board makeup in the new normal. The background experience and knowledge that have traditionally been sought after in board directors may not be sufficient to lead today's companies into the future.
Public and private company boards have an opportunity to press the “reset” button to reenvision the future and evolve their skill set, strategy and operations to better align with changes in the market, the business and regulations.
In a post-pandemic world, board directors will also need to work more closely with management as they collaboratively navigate uncharted territory and plan for what lies ahead.
Board collaboration with management
McKinsey Global Surveys have found “the best boards go beyond fiduciary responsibilities to take a more active role in constructively challenging and providing input on a broader range of matters... Strong collaboration between the CEO and board chair can help define a broad and forward-looking board agenda, one that, rather than pressuring management to maximize short-term shareholder value, instead helps the company thrive for years.”
The pandemic and other recent challenges have drawn more attention to the need for the dynamics between management and board directors to undergo a sea change. Public and private companies will need to move to more collaborative oversight and governance wherein all parties are working together to determine how best to position the company for future success.
While the role of a board has traditionally been more focused on strategy, today’s boards will have to go forward hand in hand with management to also share input on tactics, addressing issues ranging from risk management to technology and innovation.
Evolving board competencies
In order for boards to exercise effective oversight and governance on these emerging issues, public and private companies may need to rethink their board competencies to “future-proof” their board. Leaders should be asking themselves, “What are the competencies our directors will need now that they didn't need in the past?”
For example, skill sets such as process automation and areas of experience such as environmental, social and corporate governance are becoming increasingly valuable. Other areas of focus that are increasing in importance include: remote work, cascading third-party risk, cash and liquidity management, M&A transactions and valuations, business continuity planning, crisis management, management succession and business agility.
In addition, soft skills such as creativity, critical thinking, complex problem solving, communication and an agile mindset are quickly becoming must-have attributes for today’s board directors.
The following are eight specific areas of expertise that should be present on the post-pandemic board:
- Government partnerships and procurement
- Supply chain and contingency planning
- Risk management
- Environmental, social and governance (ESG)
- Human resources and communications
- Transformation and process redesign
- Technology, including automation and remote work applications
- Finance and accounting (cash management, liquidity and M&A valuation)
While there is a lot of uncertainty about what the new normal holds for public and private companies, one thing that is certain is change. Boards must adapt to changes in the market, the business and regulations if they want their companies to not only survive but thrive through current challenges and beyond.
Ivan Garces, CPA/CFF, CFE, CAMS, is a principal and risk advisory services chair at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S. You can reach Ivan at firstname.lastname@example.org. Glenn Davis, CPA, is a risk advisory services director at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S. You can reach Glenn at email@example.com.