What can we learn from virtual boardroom dynamics to shape future decision making?

As businesses decide how ‘remote working’ will be embraced in the ‘new norm’, we have assessed changes to, and the effectiveness of, Board operations seen during the C19 lockdown and identified some key questions that firms should consider about their Board rooms in the future.

Our discussions with various board members indicate that Boards’ have been effective in helping businesses navigate their immediate response to the pandemic, and in embracing the new, virtual ways Boards themselves are being asked to operate. Indeed the pandemic has driven many areas of innovation, connectivity and collaboration which, if understood and embedded, can enable Boards and firms to thrive in the new norm.

The key is to assess these new ways of working, identify and embed the advantages they bring and address any shortfalls in order to help Boards and firms survive and bounce forward from the pandemic. To assist this, we identify some areas of Board dynamics, priorities and composition that firms should seek to optimise in the ‘new normal’.

Board Dynamics

A key question is how do Chairs continue to ensure a rich and balanced debate in a virtual boardroom, when the formal dynamics and the subtleties of informal decision-making that occur in a physical meeting are no longer present.

Firms should assess whether the disparate location of members, and absence of pre-set seating of the room, creates a more level playing field and disperses ‘inner circles’? Some firms have flagged that video boardrooms have ‘democratised’ debate, with people more prepared to ask questions that are hard to ask in the physical Boardroom and with inner circles (often based on seating positions) less apparent. However, other firms have suggested that, without strong logistics and ground rules, remote proceedings can make wide debate harder and raise the risk that the loudest voice dominates views and talks over others’ perspectives. What is clear is that the role of the Chairman in facilitating a fair hearing for all views is even more important, as is the choice of Video Conferencing application, with packages (e.g. Webex) that allow all members to be seen at once supporting debate (and, in one instance, allowing the Chair to operate a ‘hands up’ approach to input).

Another linked issue is how the Chair, and other members, can spot non-verbal signalling of ideas or challenge – when video meetings mean that facial expression is the only body language that can be read. Again this may require the Chair to work harder to invite comment and encourage input, especially where there is a mix of cultures and communication styles in the room.

Board Priorities

Boards’ initial focus on the C19 pandemic has rightly been on the operational and people response to the crisis, and the economic impact on firms’ business plans, liquidity and solvency. It has evolved to start assessing whether firms’ strategies remain robust or require modification in the face of changing customer behaviour, different employee working practices and locations, accelerated digitalisation and changes to supply chain management and the overall value chain.

Consequently, as businesses navigate the multiple economic and social demands that the crisis brings to the fore, an increasingly important issue will be how Boards set ‘guard rails’ to focus the organisation on its most pressing priorities and values. As part of this Boards should consider whether sufficient thought is given to strategic (and non-COVID) issues, alongside the current – understandable and appropriate – focus on short-term and operational issues.

In addition, as leaders need to quickly assess imperfect information, take actions and manage any unintended consequences, another key challenge for Boards will be to continue to provide the support and debate needed for rigorous decisions, whilst remaining sufficiently agility to respond to the ever-changing landscape.

Board Presence

In order to fully meet this challenge, Boards will need to ensure that they discuss the right issues with the right people present. One key issue here will be how Chairs ensure that Board agendas cover all they need to, and how NEDs get an understanding of what’s going on outside those items formally scheduled, when they are even more remote from the business. Another key issue will be how Boards ensure the right people are involved in key decisions given the wide-reaching impacts of the crisis and potential difficulties in preparing all those needed to attend?

A linked issue that has crept onto the regulatory agenda is whether NEDs with multiple Board positions are able to properly commit to each Board given the increased volume and criticality of Board meetings in all firms, or whether there a risk that ‘over-boarding’ means that such NEDs won’t be able to attend meetings or have the bandwidth to contribute effectively.

Conclusion

Boards have responded effectively to C19; quickly adapting to the new arrangements required by social distancing to help businesses’ initial crisis response to the pandemic. With the virus set to have wide-reaching, long-lasting impacts and turn virtual Board meetings into the new normal, it will be important for each firm to assess the impact of such meetings on Board dynamics and priorities in order to ensure these new arrangements can best support the key strategic decisions that will need to be taken further down the line.