Introduction
The challenges posed by the Covid-19 pandemic have, more than ever, called on directors to focus on ‘what matters most’. The extreme volatility and fast pace of change of the past year have caused many companies to have a strategic ‘reset’. Having initially been in ‘defence mode’ – pivoting operations at speed, for example, or moving to a fully remote and digital environment – this crisis-born need for agility has led to intense focus and clarity on changing corporate strategy to deal with a changed future.
Here is a summary of what Jonathan Knight identified as the key trends that have driven the top FTSE-listed firms’ boards and their organisations’ performance during the pandemic:
- A shift towards shorter, sharper and, where needed, more frequent board meetings.
- Speed of decision-making. The ability to make a decision quickly – even if it turns out to be wrong – and communicate it well, has been a far more reliable indicator of successful leadership than, say, qualifications.
- Separation of ‘supervisory’ board discussions from strategic ‘steering’ board discussions, to allow for unimpeded focus on the organisation’s core strategic issues.
- A move towards having hybrid board meetings - with the strategic, ‘steering’ board discussions being held in person, and the supervisory ‘performance’ board discussions taking place virtually. This hybrid format can also allow for:
External subject matter ‘experts’ to participate as guests in the technical sections of the board meeting, practically and cost-effectively;
Greater diversity and inclusion on boards, which enhances performance;
A reduction in the carbon footprint of board meetings.
- Asking a lot of the detailed questions on ‘supervisory’ agenda items before the board meeting (to keep the meetings pithier and more focused). This has also increased the number of interactions by directors between board meetings.
- A range of hybrid office working arrangements emerging, based on the type of work being done and therefore the amount of time employees need to be physically present in the office. This ranges from:
the ‘anchored operator’ (0-20% remote work), such as a scientist in a laboratory; to a
‘pattern specialist’ (80-100% remote work), someone whose work follows a regular process and defined pattern - such as a call centre worker with a script.
- Organisations with leaders demonstrating a high EQ have seen great benefits in their organisations’ performance, through excellence in communication and generation of high levels of engagement and trust. Proactive over-communication with employees during the pandemic kept up motivation and morale - and allowed leaders to identify and resolve concerns before they became larger issues. Effective leaders realised that without regular touch points, it would be very easy to lose all sense of how employees were feeling during lockdown, and they focused hard on overcoming that risk.
- A greater focus on ‘people’ and ‘community’, with regular reporting on core metrics:
56% of CEOs now plan to capture physical wellbeing and health analytics;
51% of CEOs plan to capture psychological, mental and emotional wellbeing analytics;
48% of CEOs are now embedding select ESG metrics relating to goals into their executive.
- A ‘detox’ of board reports – focusing on a smaller set of key metrics, presented via a one-page ‘dashboard’ report.
- The importance of the role of the Company Secretary and their interaction with the Chair, as one key element in achieving focus on ‘what matters most’.
- An even stronger realisation that employees and key stakeholders have a marked preference for businesses that have purpose, together with the importance of Integrating ESG/sustainability across the whole business, rather than treating it as an ‘add on’.
- An emphasis on the triple bottom line of ‘profit, people, planet’: companies that prioritised people, with CEOs who supported the wellbeing of their employees (even if it seemed to hurt profitability in the short term), in fact outperformed those that didn’t.
Here are some of the key points made by our panel of local experts in the context of the challenges they faced as local businesses, with many of their comments echoing, illustrating and expanding on the themes Jonathan had referred to:
Martin Talbot (Healthspan)
- Having a clearly defined mission and purpose made decision-making quicker and easier in the midst of all the ‘noise’ and uncertainty created by the pandemic.
- There was a need to filter the amount of data the board looked at, to focus on the key metrics that mattered most over the short term.
- Technology was used as a key enabler.
- One disaster recovery site was disposed of – is the era of having extensive disaster recovery sites over?
- Having given employees the chance to work flexibly, absenteeism reduced by 30%.
Alex Herschel (Guernsey Electricity)
- Horizon scanning was key – it is important to focus on the long-term risks, rather than being preoccupied with just the short-term risks.
- Companies need to have a strong moral compass to drive their businesses post-pandemic.
- Companies also need an action plan on how they are going to embed sustainability practices post-pandemic – firms need to have strategies that adequately and effectively take into account: Human Capital, Natural Capital and Social Capital.
- There is no vaccination against climate change!
Matt Horton (Aztec)
- It is important to keep an ongoing focus on strategic planning, despite the short-term challenges and obstacles presented by the pandemic.
- Having a good strategic framework, with flexibility built in, allowed the business to pivot where needed. It also made it easier to take account of regional differences in the operating model.
- The pandemic highlighted the importance of having a good IT function and business continuity team.
Jonathan Creasey (Creasey’s)
- It was all about people and communication. Of critical importance was ensuring that consistent, accurate information was disseminated to all staff in a timely manner – especially as the situation was changing so rapidly.
- Safety become a top concern – the basic requirements outlined in Maslow’s ‘Hierarchy of Needs’ - physiological and safety needs - came right to the forefront as a result of the pandemic.
- Trusting the management teams – and sufficiently delegating to them/giving them autonomy - was a key ingredient to maintaining productivity and performance.
Summary
There is a window of opportunity to learn from the lessons of the pandemic for organisations’ approaches to strategy and leadership, to reflect on different approaches and emphases that have been seen to work really well under immense pressure. We hope that the opportunity to hear our speakers’ ideas and experiences of strategic adaptability and leadership in the face of crisis and dramatic change was valuable to our members and others attending our mid-term event - and may help our local leaders in business and other organisations to develop some of these ideas and experiences even further in the Guernsey setting.
The IoD firmly believes that better directors make better businesses, and it was clear from the panel debate and audience participation that Guernsey can punch well above its weight in this regard. Having high-quality businesses with a pool of well-qualified directors is key to the Bailiwick’s continued success. Broadening and deepening that pool is one key to our island’s ability to continue to punch above its weight in the challenging environment that we will face post-pandemic.
Guernsey has a large number of high-calibre, well-qualified directors (indeed the island has one of the highest percentages of Chartered Directors per capita than anywhere in the world) and this commitment to high professional standards and continuous professional development will continue to set Guernsey apart from other international finance centres in the years to come.