Topics:   Leadership,Risk Management

Topics:   Leadership,Risk Management

May 28, 2020

Lead Directors Emphasize Empathy, Employees During the COVID-19 Crisis

May 28, 2020

The term “unprecedented” has been used to describe the current pandemic and the impact it has had on society. While pundits might debate whether the COVID-19 crisis is so, it is undeniable that the breadth and depth of its consequences are severe, and that undoing its consequences will take time.

NACD, along with KPMG, recently convened 40 lead independent directors from leading American companies for a virtual meeting of the NACD Lead Director Steering Committee to discuss the role of the lead director during the crisis and through the recovery phase. The discussion covered a range of issues on which lead directors are engaged—from communicating with employees and other stakeholders to developing new ways of working with management and as a board—but the delegates continuously returned to one grounding theme: More than ever, we all need to be human.

In this crisis, the most important qualities for a lead director to possess are not the usual ones.

The discussion began around the increased effort and time that lead directors are now dedicating to their companies. A pulse survey of Steering Committee members found that nearly 60 percent of respondents were spending 5 to 10 hours more per week on their role. Further, 67 percent of respondents are spending more time speaking with the CEO and other members of the management team, both to ensure that the board has a regular and reliable flow of information and in order to provide support and guidance to the CEO as they navigate the crisis. As one delegate shared, “I’ve been engaged in frequent conversations with our CEO at least once a week. I try not to be overly intrusive—I don’t know their situation. They may have ill family and kids at home, and this is not a normal crisis where you can drop everything and live at the office and be all together. So I find myself reaching out and thanking individual members of management, too—trying to show more kindness and appreciation for what they are experiencing.”

The lead director’s energy is also focused on harnessing the collective knowledge of the board, helping to keep board members—all of whom are successful in their own rights and used to being in charge—focused on the task at hand and aligned around roles and responsibilities. “Like the business itself, the board and its lead director are under pressure. In the current environment, the lead director is facing heightened challenges, including navigating how to obtain information the board needs to discharge its oversight function, and helping structure that oversight, while taking into account management’s limited bandwidth. The role of the lead director continues to grow in importance,” shared Claudia Allen, senior advisor at KPMG’s Board Leadership Center.

Lead directors are further becoming increasingly involved with communications with stakeholders, most notably employees. As another delegate shared, “The CEO asked if I would record a video message to the employees on behalf of the board to reinforce that their safety and welfare is the number one concern of the board. I received a lot of comments from employees on the video. It’s important to let your employee base know how engaged you are as lead directors.”

Across all of these efforts and more that the lead director takes on, delegates underscored the importance of compassion, empathy, and patience as lead directors—and their boards—help guide the company through this crisis.

Lead directors need to get comfortable with leading through change.

There is an old maxim, “Change is the only constant in life.” This still rings true today, but as the lead director delegates all agreed, this crisis is accelerating change—in both speed and scope. Perhaps the most noticeable change comes in the use of technology and its incorporation into the core business. As Scott Flynn, leader of the KPMG Board Leadership Center, framed it, “Lead directors now have to be a part of a different conversation. They have to understand technology, understand a radically changing customer base, and be visionaries for how work will get done going forward. That’s no small task, but lead directors are perhaps best positioned to bring management and the board together around a common vision.” From enabling how work is done to how the business interfaces with its customers, businesses have gone from leveraging technology to better conduct business processes to depending on technology to conduct business altogether. Lead directors, more than simply supporting these efforts to change, must now embrace them and understand them at a fundamental business level.

Beyond technology, the crisis is bringing about a change in how boards relate to stakeholders. After employees, lead directors are helping their boards to think carefully about how they can engage with other stakeholders—from government to customers to advocacy organizations—effectively. This rapid shift in the focus of the board to these various stakeholders and the attention needed to consider how decisions they make will affect the stakeholders is consuming an increasing share of the board’s attention. And it is lead directors who are tasked with focusing on and prioritizing those conversations and communications.

It is not possible to predict what the lasting impacts of the COVID-19 pandemic will be. But the lead director participants all agreed that there will be significant differences in how business is conducted and in how boards discharge their duties going forward. It falls to the lead director to embrace those changes and to bring the board and management together in the interest of the company.

Realize that some employees are putting their lives on the line.

The lead director participants repeatedly came back to a grounding point in the discussion: The companies whose boards they lead are dependent on the employees that show up to work every day through this crisis. Whether at home, trying to care for children or ill relatives while managing work, or on the front lines enforcing social distancing and other safety measures for customers and staff in stores and workplaces, many employees are carrying a massive—and often hidden—burden. Some are risking their physical health for the company. Some are under enormous stress and psychological burden trying to balance competing pressures. Some employees, as has been made all too clear by recent events, are quite literally risking their lives to help ensure the health and safety of their colleagues and customers.

Through everything going on, lead directors must always be a voice for the employees. One lead director shared, “As a board, we talk about personal stories of our employees. We want to—need to—understand their experience and make sure we stay as connected as we can to them—especially now. We have also used this time to ask ourselves, ‘What does it mean to work for this company?’ The most critical work we do as a board is to help provide purpose and meaning to the folks that we work with every day. That realization has come to our board through this crisis, and it has made us a better board.”

While sentiment was strong among lead director participants that their boards and companies were resilient and would rise to the challenges they confront, there was also the acknowledgement that there are a number of critical outstanding questions:

  1. Will consumer demand return and, if so, when?
  2. Will the virus surge again in the fall?
  3. Has the way work is done changed forever?

Each of these questions is significant. Considered together, their answers reflect vastly different scenarios. As Bill McCracken, NACD’s chair, shared in closing, “It is incredibly difficult to solve a math problem with two equations and three variables. That’s what we’re facing with this pandemic. But lead directors are in their roles because they’re creative, they know the business, and they understand people. Stay focused on people; they will help you solve the business problems you face. But also stay focused on yourself. Your health is as important, too, as we work through this crisis.”

Note: The meeting was held using a modified version of the Chatham House Rule, under which participants’ quotes are not attributed to those individuals or their organizations, with the exception of cohosts.


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