Topics:   Leadership,Risk Management

Topics:   Leadership,Risk Management

May 29, 2020

Board Considerations for Reopening Business

May 29, 2020

Over the past weeks, politicians and business leaders have been leading the call for local officials to lift stay-at-home orders, suggesting that the economic disruption caused by such orders brings additional harm on top of the already significant health and safety effects of the COVID-19 pandemic. Reopening requires that senior management, in consultation with the board, make decisions about when, where, and how to do so safely and effectively. These decisions involve a wide scope of considerations such as opening offices and restarting nonessential travel, all while adapting to changing norms. Companies must balance between social and economic concerns, amid a mountain of uncertainty and lack of clear guidance from government. In this period, with a range of risks and limited information, it can be difficult for directors to know what choices to make for overcoming these myriad challenges. Directors should consider these five questions to determine when to reopen.

1. What are the underlying reasons to reopen?

The urgency for a speedy reopening will ultimately influence the analysis the board and management use to make the decision. In reopening, it is important to consider whether reopening could be delayed to a later date, or whether pre-COVID strategic initiatives and digital transformation can continue. When deciding to reopen, boards should consider the following items.

  • The financial and strategic implications of opening up now versus delaying for three months.
  • Customer spending habits, and whether the company can recoup lost revenue quickly.
  • Whether key competitors and suppliers are reopening.
  • The sentiment of the company’s employees concerning coming back into the workplace.

2. How do we determine what the right time frame is to reopen our business, and what criteria or triggers should we consider?

Reopening is often framed as a company-wide decision, but considering that different locations may have different rules, reopening will likely differ by geography. The decision of when and how to reopen will depend on local governments, how employees commute, spatial considerations of the work site, and the nature of the work performed. In navigating this, the board should consider the following items.

  • Engagement with governments at various levels to understand their expectations, guidance, and concerns for reopening.
  • Managing and creating a protocol for differing policies based on location.
  • Outreach and communication plans in the event of negative publicity.
  • The supply chain and the demand for the company’s goods and services.

3. When we decide to return to work, how can we best protect the health of our employees?

For the reopening to be successful and sustainable, employees’ health and safety must be addressed appropriately. A key factor in building widespread confidence among employees and the public will be reliable, widespread testing. Until then, interim guidance from the Centers for Disease Control and Prevention suggests social distancing, face coverings, and other practices to prevent the spread of COVID-19 in the workplace. When deciding how to protect employee health, boards should consider these items.

  • How the company has responded to employee safety and concerns thus far.
  • Where the company is able to enforce social distancing, and the plans for when they are unable.
  • The supply of personal protective equipment that the company has in stock.
  • Monitoring and testing employee health and well-being, and the company’s emergency response plan in the event of a workplace outbreak.

4. What are the ethical and legal issues that we must take into consideration?

The question of when it is safe to return to the office follows an equally important question: Who sets these standards? Government guidelines have been inconsistent or nonexistent. Currently debated in Washington now are questions surrounding legal liability for employee health. Until that guidance comes, companies will need to pay strict attention to the ethical and legal considerations of reopening, including these items.

  • The privacy and compliance implications of employee health monitoring systems.
  • The reporting process the board has set in place to see that issues with reopening and health practices are addressed in a timely manner.
  • Insurance coverage for events related to COVID-19.
  • Updating contracts to protect the company and the customer.
  • The supply chain and other vendor/customer relationships, to ensure adherence to applicable guidelines.
  • Plans and policies for employees that do not feel safe returning to work or resist abiding by company policy when on site.

5. How would we restart our company and adapt our workforce to operate effectively in this uncertain environment?

Understanding and communicating plans to address the sentiment of stakeholder expectations, abilities, and concerns are the first steps for reopening. In addition, consider broader infrastructure questions such as those pertaining to commuting, childcare, and access to necessities. Navigate the adaptation of the workforce by considering the items below.

  • The impact of COVID-19 on the company culture and whether any interventions are needed.
  • The internal and external communication plans to ensure an orderly and smooth reopening.
  • Working with stakeholders to ensure clear and consistent messaging to customers and the public about reopening.
  • Different approaches to reopening, such as A and B teams and remote-work models.
  • Employees who may be weary of getting back to work due to public transportation or childcare concerns.

Key Board Governance Considerations

Reopening brings with it reputational risks that may conflict with company values. Breaking stakeholder trust can be detrimental, but properly reopening can make a company stronger in the long run.  Considerations boards should follow when deciding the steps for reopening include comprehensive communication plans, whether the procedure to reopen will build trust with stakeholders, whether the board’s decision is made in the best interest of the company, and if the board’s actions are in the long-term interest of company strategy. COVID-19’s path is not certain, but with the necessary processes in place for reopening to be done correctly, a company can build lasting stakeholder trust and confidence.

Note: This article is excerpted from a larger NACD publication that can be found here.


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