Has COVID-19 changed the make up and functioning of the boardroom? Or has it merely held up a lens and made us focus on what has been evolving gradually for some time? Perhaps the pandemic has shown us where more change is still needed if businesses are to survive and thrive in a post-pandemic world. Whatever the case, the world has changed and that means staying still isn’t an option.
With experience working across a range of organisations in numerous countries across the globe, TPCL’s partners and associates have seen up close the challenges and the opportunities facing leaders over the last few months, the things that have changed and those that still need to.
Last month we kicked off a series of articles on leadership based on panel discussions with TPCL’s managing partners from around the world. In today’s post we’re focusing on the boardroom and how it has or hasn’t changed over the last few months.
Contributing to the discussion are TPCL founder Charles Brook, and managing partners Paula Abramovicz Erlich from Brazil, Frouke Horstmann from the Netherlands, and Laurent Jacquet from Belgium.
Working together to solve problems
The role of a board of directors is, when you boil it down to a single definition, fairly straightforward – to look after the interests of the business or organisation, its shareholders and its stakeholders.
What this actually looks like in practice, however, is likely to change over time. And in the case of a global crisis like the current pandemic, it may shift more rapidly than at other times. So has that been the case this year?
Laurent Jacquet, managing partner with TPCL Belgium, believes that one way the pandemic has impacted boardrooms is by increasing the focus on leadership diversity – even if the theory has been slow to translate into practical action.
“The vast majority of people in boardrooms are there because it serves the business,” he says. “But there is an increased awareness that greater diversity in these boardrooms is required and can be overall beneficial.”
“As an example, the Belgian government’s COVID-19 working group was initially only made up of health experts and political people. Then they thought, ‘Is this sufficient? Shouldn’t we ask other people to join this expert group?’ Because it’s not only about health; they understood that it would be wise to have different perspectives.”
Resistance to change at top level?
While specific problem-solving task groups may have demonstrated an accelerated move towards diversity of expertise, in the boardroom progress hasn’t always been as fast, especially in relation to gender diversity and ethnicity.
Paula Abramovicz Erlich, TPCL’s managing partner in Brazil, says that change has been slow – and the pandemic hasn’t done much to accelerate that.
“There has been a movement to try to include more women in boards over the last few years, but it hasn’t been extremely successful yet,” she says.
“There’s resistance around getting quotas. I think quotas are a temporary mechanism that help you ‘fix’ an inequality in the short term but don’t solve the problem. There’s still a lot of prejudice around getting women on boards.”
Charles Brook, TPCL’s founder, agrees that it’s a challenge but believes that quotas can be helpful in changing cultural norms.
“It’s a hard nut to crack because people like people that are like themselves,” he says. “It’s very easy, as the CEO, to recruit in your own image. And yet we all know diversity is important.”
“I know some people will see this as controversial but in countries where they have enforced more gender equality on a board, I personally think it is a good thing. Because we have to break the norms.”
The world is demanding diversity
One important business reason for increasing diversity at board level is increased pressure from wider stakeholders.
Charles says: “For some of my clients in the consulting world there’s been a very strong push from their clients to have wider, more diverse representation. So it’s becoming more client led, where clients are really having to be heard.”
Frouke Horstmann, TPCL’s managing partner for the Netherlands, agrees – but acknowledges that balancing stakeholder interests is a real challenge for board members.
“There’s a lot of pressure from society for boards to be more focused on not only profit creation but real value creation. The pool of stakeholders has broadened so it’s not only about focusing on the shareholders who put in money in your company, but all people.”
“There’s more focus on purpose and planet, more B Corp organisations – not just the smaller businesses but bigger ones like Danone in the US. The problem is that some boards really get on board with this but then the more old-fashioned shareholders do not always buy into that. So there’s this real tension for them.”
TPCL virtual event, 17 November 2020: Diversity is a given, inclusion is a choice
Opening up the conversation with tech
Of course, representation – having the ‘correct’ number of women, ethnic minorities and so on at board level – is just a first step towards true diversity.
“It’s one thing having a diverse group of people in a boardroom and then there’s how much space they get to share their views and how much their views are valued and acted on,” says Charles.
“One way I believe COVID has positively impacted on diversity is that many board meetings, if not all, are happening virtually now and I’ve noticed that people are having more of a say because of that. Technology is more or less forcing more people to have a voice. It’s harder to sit in a room and just talk over other people.”
In fact, restrictions on travel and the resultant increase in remote meetings thanks to the pandemic may well mark a long term step change that allows a wider pool of people to input into what might once have been more local conversations.
“People are starting to say, ‘I’m not traveling for a four-hour meeting. This is working fine over Zoom.’” says Paula. “Board members don’t all necessarily live in the same city, so we may see more representation of different countries or cities coming together more easily.”
Operations vs strategic focus
Another change that TPCL’s leaders have noticed since the pandemic started is the shift from strategic discussion to more operational conversations. This, our experts warn, is natural but could be dangerous in the long term.
“The current situation is forcing more tactical conversations to be happening in the boardroom, because things are changing on a day-to-day basis,” says Charles.
“There’s less and less time spent stepping back and looking at the big picture and wider system. Less and less time spent on the why. Why are we here? How can we engage with the ‘why’? I think that’s an issue, albeit a downstream issue.”
The problem with prioritising operations over strategy is that it can be all too easy to lose sight of the organisation’s vision. This can filter down into every level of the business, ultimately resulting in a disconnect for the very people who keep the business operating on a day to day basis.
“Due to the crisis a lot of boards are in survival mode, either just holding on in there, trying to survive or at best trying to see how to create opportunities,” says Laurent. “That means that wider systems and purpose have been put a little bit on the side. But people need to put that back on the table.”
“I’m talking to a lot of people who are saying, ‘I’m actually starting to disconnect from my organisation, because if I work for A or for B, there’s no difference. I’m working from home in front of my computer and that sense of belonging is starting to fade away.’”
“It is that risk of lower engagement and difficulty in holding onto their people that puts the purpose and the why back in front of the boardroom table. They may be in survival mode but they still need to keep that in mind.”
In part two of this discussion featuring Charles, Frouke, Laurent and Paula, we’ll pick up on the theme of employee engagement and explore the important subject of culture. Keep an eye out on our social channels or sign up for our newsletter to stay up to date with the latest insights from TPCL’s Leadership experts.
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@copyright TPCL (2020)