Part 4 of “Ask A Director: What Lessons Have Boards Learned from COVID-19?”
Diligent Institute conducted extensive interviews with over two dozen experienced directors from different sectors, geographies, and backgrounds on how modern governance practices and behaviors are changing in response to the pandemic and its impact, which boardroom changes might be permanent, and directors’ most important lessons learned. This installment provides a compilation of director responses to questions about the pandemic and what it means for modern governance going forward, specifically boardroom culture and onboarding new directors. Read the full report here.
How Has COVID-19 Changed Boardroom Culture and Onboarding New Directors?
Panelists:
- Phyllis Campbell: JPMorgan Chase & Co. (Pacific Northwest), SanMar, US-Japan Council, and Allen Institute
- Anna Catalano: Willis Towers Watson, Kraton Corporation, HollyFrontier Corporation, Frontdoor, Inc., and Appvion
- Karen Clarke-Whistler: Enerplus Corporation
- Doris Honold: Credit Suisse International
- Tom Hunersen: Macquarie Global Infrastructure TRF (NYSE: MGU)
- Donna Wells: Mitek Systems (MITK), Apex Technologies (APXT), Betterment and Happy Money
Concerns about Boardroom Culture
Despite the board governance silver linings and innovations that have come out of the pandemic, directors have reservations about the rate of change in the boardroom, and fear that moving to exclusively virtual meetings could result in a damaging blow to boardroom culture and effectiveness.
“To ensure quality interaction in virtual meetings, agendas are becoming more focused, both in refining subject matter and more closely managing attendee lists. The board benefits from free-flowing discussions, and digital-only engagement can make that more difficult. In the absence of the informal interactions between directors and with executives at and around periodic board meetings, there is the danger members are left with a lesser sense of the state of the business.” -Tom Hunersen
“You miss the personal feeling of being able to read the room and looking at nonverbal cues. Board chairs need to work hard to ensure all voices are heard. We are looking at technological solutions like breakout rooms. I miss the informal chatting, so I have found virtual meetings to be more formalized in many ways.” -Karen Clarke-Whistler
Some Directors Onboarded during the Pandemic
For the directors who onboarded during the pandemic, and who have never met their fellow board members in person, the desire for in-person interaction to effectively govern is more acute.
“We need to be careful that we don’t go virtual 100% of the time. I miss the energy you get being in a room together. The virtual environment is not conducive to building a culture, which is created with the trust and familiarity that comes from bringing people together. The reason why this has worked so far is because people are going virtual with people they know very well. It’s not easy to establish camaraderie virtually if you are a new employee or director. I joined a private board during the pandemic, so I have never been with them, and I feel I don’t know those directors as well. I’ve spent a lot of time with the CEO on the phone learning about the business. I haven’t even taken a plant tour, and it’s a manufacturing company! I’ve been able to do the job because I get the materials, but the fact [that] I haven’t met people is a disadvantage for me. You feel left out, and there is something lost without the in-person interaction.” -Anna Catalano
“At Credit Suisse, I onboarded during the pandemic, which was difficult because I was unable to meet my fellow board members in person. There is so much context and history you need to know about, and this is much easier to learn in face-to-face interactions. The pandemic has shown me that although you can react quickly, this adaptation has its limitations. The longer it goes on, the more difficult it is to maintain the vital personal connections or to establish new ones. I have become more deliberate about establishing connection as a new board member. A big part of my introduction was over the phone. It was essential for me to ask personal questions and share my feelings to remind people of the personal component. Other board members and I had to make a conscious effort to remind ourselves that we are all dealing with other human beings who all have their unique challenges. Now that things have calmed down a bit in Europe, our boards have moved to conducting socially distant meetings in a massive board room, with all of us sitting two meters apart. It has made a huge difference for me, and really made me appreciate in-person connections.” -Doris Honold
Boards Rose to the Challenge of Onboarding Directors Virtually
Outside of the chemistry that is lost when a tight-knit group of directors cannot meet in the boardroom, directors are concerned for colleagues who have onboarded virtually, and some fear that these directors will be at a disadvantage. Here’s how some boards are getting around this drawback:
“How do you maintain culture and collegiality in a virtual world? I worry about recruiting new directors effectively as well as onboarding them virtually. Board buddy programs are very important. Utilizing that relationship can create a great peer coaching system to help directors figure out what the board culture is and what the relationship with management is. After we get out of a board meeting, you can look to that senior director to find out how you can improve and discuss what you did well. On video teleconferencing, it’s hard to see body language cues. These buddy systems are especially important when you’re bringing on more diverse directors who might not have ever been on a board before. Making sure they have the tools and the insight necessary to be effective early on is hugely important. Usually they bring different perspectives, so they need to know how to do that and be heard.” -Phyllis Campbell
“When the pandemic first hit, several of my boards were concerned that we’d lose momentum in our ongoing board refreshment process. We initially thought there was no way we could properly evaluate and select a new board member without having met with them face to face. We were also worried about the company adding senior leaders, for the same reason. Well, my companies have now added board members and senior executives who they’ve interviewed and onboarded 100% virtually and, so far, that’s worked out very well. The pandemic forced a mind shift, of course. But now that board members have become confident in making critical decisions based on virtual-only experiences, I don’t think there’s any going back. It’s a new tool in our toolbox going forward.” -Donna Wells
>>Continue to Part 5 of 7: How Has COVID-19 Changed the Future of Risk Management and Strategic Planning?
>>Return to Part 3: What Pandemic-Era Board Governance Practices and Mindsets Will Be Permanent?
>>Return to Diligent Institute.
