Government response to Covid-19 is redefining how we work. A small number of businesses are flourishing; leading industry names are undergoing major structuring; many have enforced a hiring freeze; and without a doubt some businesses will fail. Most sectors face tremendous complexity in the transition from lockdown to the new normal over the coming months. Strong leadership will characterise the companies that navigate this well. It is therefore no surprise that Fidelio continues to see targeted hiring at both Board and Executive level. As one economy after another comes out of lockdown, there is a focus on senior roles that are key to today’s survival and also provide the leadership capability for the transition. In this Table Talk, we set out four key functions which are evidently important for corporate recovery where targeted hiring continues.
1. The Board
The work of the Board continues. To an extent Boards, in particular the Non-Executive Directors, have always worked remotely, and so Board Meetings have transitioned relatively smoothly to video or audio communication. While there are limitations to this method of convening, Fidelio sees the majority of Boards focusing on the essential. Indeed in this crisis, unlike the last, many Boards are doing what good governance requires:
Supporting the Executive to keep the show on the road in the short-term
Providing critical direction for the medium and long-term
The Holy Grail is a Board able to combine agility of thought and action with strategic, long-term orientation. In today’s crisis CEOs need Boards that contribute real-time to tough decisions on liquidity, capital adequacy and cash conservation but are also alert and thoughtful to the very real reputational risks of dealing with any key stakeholder or shareholder “unfairly”. As such Board hiring continues via virtual interviews and panels and already we see Nomination Committees:
pay careful attention to the governance of Search
shore up the skill matrix for the transition with a focus on corporate transformation and employee, stakeholder engagement skills
ESG is the best framework we have for transitioning to the new norm and as one leading Chair recently commented, “it’s now all about the S”. Employees are front and centre stage as companies handle:
Extraordinary pressures on the business
Unprecedented working arrangements
Even greater complexity to come with the “return” to work
And of course, the reality and fear of sickness
Against this backdrop the Chief People Officer and his or her team are key. If there have been failures to deliver in recent weeks at both government and corporate level, it is frequently because HR processes have been overwhelmed. The move to lockdown and furloughing happened quickly and, in many instances, smoothly. But fairness issues – perceived or otherwise – have not always been handled well. And the return to on-site or office working will require sustained focus, management and good judgement. The People function needs to be properly led and resourced; the alternative is too great a risk. We are certainly seeing companies that had under-invested here move quickly to strengthen this function.
While governance may be functioning better in this crisis than the last, the voice of business is still not being heard. Governments took decisions on the lockdown that seemed to take little account of the needs of business. As business and society transitions to a new norm, issues of fairness and inequality, as well as climate risk, will not subside. Quite the contrary and the companies that succeed will be those that can clearly demonstrate that they are doing right by both their stakeholders and their shareholders. This will include articulating decisions that may be unpopular with the public and the media but may be the right decision for the company and its stakeholders. In times of crisis it is a grave risk for companies to appear tone deaf to the mood of the nation. Boards should be insisting that a highly competent communications / corporate affairs function is in place. Its absence may severely curtail the strategic options open to the company. Companies that prove flat-footed in their communications risk losing their licence to operate. And as a key sub-set of communications, employee engagement must be conducted with sensitivity and professionalism. Here too Fidelio is seeing companies invest.
4. Investor Relations
Engagement with stakeholders will be critical for companies transitioning to the new norm, but shareholders matter and access to capital cannot be taken for granted given the enormity of the recession ahead. If valuations are to be rebuilt there is an urgent need for clear and consistent communication with both debt and equity investors. Solvency and cash management for near term survival have become a major focus, and all investors are keen to understand the Board’s plan for business recovery. Nor does ESG sit outside the valuation framework. On the contrary it is institutional investors who continue to hold Boards and companies to account on all aspects of ESG – from climate change to diversity and inclusion. This puts a premium on a proactive Investor Relations team with the skills and experience to manage the company’s financial narrative and communicate effectively will all market participants. We see evidence that Boards of quoted companies increasingly seek reassurance that the IR function is well regarded internally and externally, and combines the communication and valuation skills necessary to succeed in the role.
Fidelio builds Boards and leadership teams through Search, Evaluation and Development. For more information on how we can assist with critical leadership appointments above, please contact Mark Cumberlege on +44 (0)20 7759 2200 or email@example.com.