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In the latest installment of the Salzburg Questions for Corporate Governance, Heather Laychak outlines six reasons for management to involve the board in order to quickly transition from “business as usual” to crisis management mode

This article is part of the series, the Salzburg Questions for Corporate Governance by the Salzburg Global Corporate Governance Forum

Earlier in my professional life, I worked in the emergency room (ER) of a Level 1 Trauma Center, where unforeseen circumstances and simultaneous crises were the norm. Speed, agility, prioritization, teamwork, and empowered decision-making were of critical importance in an environment where stakes were high.

This past year, Boards, senior leadership, and their organizations found themselves in an ER-like environment, confronted with multiple crises, requiring them to demonstrate these same operational attributes.

Companies had to quickly transition from “business as usual” to crisis management mode and respond to a myriad of economic, environmental, political, racial, and social disruptions in the midst of a global pandemic. One would be hard-pressed to find a crisis management or business continuity plan that included a scenario consisting of the cumulative crises that occurred this past year.

There is an African proverb, “If you want to go fast, go alone. If you want to go far, go together.” While speed is of the essence when responding to an existential threat or crisis, involving the Board at the onset and throughout the crisis is critical for several reasons.

• Management needs to immediately engage the Board to establish a common understanding of the threat or crisis and the “North Star” that will guide and inform decisions. In our company and I suspect many others, our "North Star" was and continues to be first and foremost, the safety, health and well-being of our people. It is also imperative that management share the near-term actions they intend to take, such as establishing a team dedicated solely to addressing the threat or crisis and determining the communication cadence with the Board.
• The Board is an invaluable resource to leverage given the breadth and depth of experience they bring. They can contribute to the solution space, provide guidance and support, and be called upon to assist with communication and engagement with the workforce, shareholders, and customers. Having a visibly united partnership with the Board will convey confidence and optimism.
• Management will likely find themselves needing to seek the Board’s support to hit the pause button and reprioritize the company’s strategic objectives and adjust timelines. There may also be implications for how the company and its leaders are evaluated and incentivized by the Board. Management should partner with the Board to address this.
• With company leadership consumed with crisis management and business continuity, the Board is in a unique position to focus on the company’s future. As Alvin Toffler, noted author of Future Shock, wrote, “The future always comes too fast and in the wrong order.”
• Winston Churchill is credited with first saying, “Never let a good crisis go to waste”. Existential threats often result in existential change. As organizations emerge from a crisis or overcome an existential threat, it is quite likely that they will not return to pre-crisis ways of operating. Management and their Board should actively engage and shape the future together.
• As the world transitions from crisis to recovery, company leadership and Boards alike should reflect on what they learned and the changes they made this past year that they would have otherwise thought to be impossible in a pre-pandemic world. Visionary leaders and Board Directors may find themselves contemplating new strategies and opportunities and ultimately emerge with more resilient, future-focused organizations.

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Heather Laychak is vice president and chief people officer for The Aerospace Corporation. She previously held Senior HR leadership roles at Mattel, Inc, Northrop Grumman and Robert Morris University. She is a Salzburg Global Fellow.

The Salzburg Questions for Corporate Governance is an online discussion series introduced and led by Fellows of the Salzburg Global Corporate Governance Forum. The articles and comments represent opinions of the authors and commenters, and do not necessarily represent the views of their corporations or institutions, nor of Salzburg Global Seminar. Readers are welcome to address any questions about this series to Forum Director, Charles E. Ehrlich: cehrlich@salzburgglobal.org. To receive a notification of when the next article is published, follow Salzburg Global Seminar on LinkedIn or sign up for email notifications here: www.salzburgglobal.org/go/corpgov/newsletter