Boardroom clear-outs. A new epidemic? Investors become Dons.
“You’re not a wartime Consigliere Tom” was Don Corleone’s reason to his adopted brother.
Godfather analogies are rife through business leadership & advice, from “Go to the Mattresses” to “It’s not personal. It’s strictly business” …and who could ignore Michael’s regaling of gun-wielding Luca Brasi’s negotiation tactic or ‘either his name or his brains would be on the contract’.
But the Wartime Consigliere move is one that is being replicated in an increasing number of main board, and investor/backer meetings during the Coronavirus pandemic.
Seven phone calls in 10 days with a mixture of Chairmen, CEOs, Business Leaders and PE/Venture Capital backers have shown discussions about the quality of existing management and leadership teams across businesses. Those currently sat around these boardroom tables often having been more than adequate in peace-time, have suddenly exposed weaknesses in wartime.
Most have expressed a desire to add to their board(s), introducing new Commercial and Intellectual Firepower, new experience, new skills. Some in replacing roles left out in reorganisations over recent years or merged as the lesser component in another Director’s remit.
Some however are discussions about ‘Tom Hagening’ certain Directors, not just collective weakness or deficit of experience around the leadership table, but specific individuals being left wanting as the business suddenly ‘go to the mattresses’ and being set to be replaced.
We’ve started planning two searches already, discussing how to address those apparent weaknesses with newly-created appointments, with slightly more generic conversations with three other businesses seeking to replace individual members of the SLT.
In one case, a VC-backed business, the discussion is about replacing the entire 4-man board based on their ability to cope in this current wartime….and high on the discussion is the move to a female dominant board, and increasing the ‘years of experience’ average.
It isn’t really a new phenomenon; we saw similar moves after the financial crisis 10 years ago, as the move towards more prudent finance-background GMs, MDs & CEOs saw the ‘numbers guy’ get the top job in over 80% of cases from 2010 to 2014.
…..nor is it a ‘opposition politics’ approach of crystal ball, hindsight benefitted criticism of decisions taken weeks earlier in the heat of battle.
But it is a wake-up call to a lot of business leaders, and in particular, significant shareholders as they analyse the planning/quality/time/cost of the previous recruitment processes or often just the level of remuneration investment into their senior management.
The most commonly cited observation from those seeking to ‘Tom Hagen’ a member of their leadership team, was that the individual’s appointment had not been fully planned or thought out. Specifically that the short AND long term objectives had not been fully mapped, and the appointment influenced by cost & speed, not quality. Francis Ford Coppola was famous for the planning detail he carried over from Mario Puzo’s book of the Godfather to the films, as witnesses by this photo of his notes on Puzo’s book. As with recruitment, too little time and planning detail leads to a substandard output.
Another telling factor is the reduced tenures of senior execs, lessening the business experience of the average board members and leaving them even more unprepared for periods of crisis management.
Beyond that, it is an increased cognisance of what just might be needed from a board of directors, and a wartime consigliere.
“It’s not personal. It’s strictly business.”
So what does make a strong wartime business leader?
I had a Zoom call (what else in the current climate) with a few of the contacts that make up our ‘Virtual Board’, a collection of varied executives I’ve put together, offering their advice for free out to businesses in the current climate. We talked through the leadership traits sought by organisations to help them through the coronavirus crisis.
Humanity, Empathy & Inclusivity
Senior leaders are always under financial pressure from investors, with good reason as the damage the virus is already causing to many businesses is significant. But employees don’t want to hear how much the virus is costing the business, they want to know that although their leaders are employed to lead and run the business, they are also human, that they care for their employees and that they share and understand what they are going through.
An HR Director on our Virtual Board advises that the overall leader must lead from the front, displaying the values and behaviours they expect from their teams….but it doesn’t mean being isolated. Leaders often pride themselves their ability to make resolute decisions and find relying on the decisions/opinions of others more difficult, but in times like these, when everyone is outside of their comfort zone, that becomes a key skill.
Always a key leadership skill, even more so at the moment. The agility to change strategies, plans and work schedules but also your own leadership style, especially as different leadership styles will likely be required as 2020 progresses through different stages. A CEO on our Virtual Board suggested that the current affiliative and inclusive style of leadership, reaching decisions through consensus and reliant on relationships, may have to give way to a more directive, expedited pacesetting or ‘run to keep up/make up for lost time’ approach once the virus starts to lessen its grip on global market economies.
Never more than in crisis, leaders know they need to communicate with all stakeholders, communicating quickly and clearly to get and keep ahead of potential issues, rather than mitigating false information.
Communicating with employees is equally critical, especially in detailing the protocols being put in place to keep them, and their jobs safe.
Suppliers, partners, vendors & customers likewise benefit from transparent communication. Whether setting up project teams to share intelligence, or merely candidly advising of current and expected positions, whilst understanding and showing empathy to the positions of others to ensure collaboration, mutual understanding/appreciation and the ability to provide an effective roadmap is in place; one Chairman on our Virtual Board has already set in place numerous Project Teams to monitor and provide updates to all partners/vendors.
Investor Relations & Corporate Communications likewise need to work in unison with all the above to ensure commonality of message.
Ultimately, all organisations need to communicate differently. Hospitality has different concerns to global travel; both have different concerns to global manufacturers or industrial B2B groups. Tailoring communication to all stakeholders becomes even more critical.
A Comms and Marketing Leader on our Virtual Board advises that “Authenticity and transparency is critical, everyone is in some degree nervous about the micro and macro implications of the Coronavirus, keeping all stakeholders in your business engaged, informed as well as safe is essential. Engaging the Human Resources and various Team Leaders is key to maintaining a steady hand, and upholding confidence as much as possible. Dealing with concerns, right down to an individual level, without becoming proactively alarmist, is vital.”
She also added that authenticity and transparency can mean it is ok to admit to being afraid, or to admit to not knowing something immediately. Communications should always centre around “here’s what we know, what we don’t know, and what we’re trying to find out,”
Business as usual. Effective, realistic & secure
It is right that a business leader’s focus should be on keeping employees and their families safe, secure and free from contagion. The security that brings will have untold benefits in the long-term preservation of ongoing operations.
For businesses, that includes contingency plans within the Supply Chain. A Supply Chain exec on our Virtual Board has advised several business on the validity of secondary suppliers for key components and inventory, avoiding not only delays but also the avoidance of premium pricing for fast turnaround.
Longer term planning also needs focus, a seasoned NED specialising in M&A advises. Certain routine tasks can be pushed back; reporting structures, long-term workflow planning and more general BAU process improvements, but for those building towards key parts of M&A and/or restructuring projects are worthy of pushing on with, and even accelerating, not only to keep the broader leadership team aligned on strategy, but also to take advantage of opportunities that might arise, both external opportunities, but also sense-testing the validity and realistic achievement of timetables set. Those expectations can more easily be reset at the moment, both internally and externally.
Out of Office not Out of Work
Government lockdown stipulations that all work that can be done from home must be done from home has tested business’s ability to offer effective flexible working. Less than 20% of the UK workforce routinely worked out of the office prior to the epidemic, and for many of those is was a infrequent lifestyle choice for the employee, and a begrudged capitulation for the employer, in the knowledge that it would often be an imperfect solution, devoid of a full suite of tools at the employees’ disposal.
One certain outcome of the virus will be a dramatic shift in the perception and acceptance of home-working, backed up with the ability to do so. Downloads of office software, and especially communication apps have surged in the last two months. Zoom saw 200 million calls per day in March, rising to 300 million last month. For reference, last year it never went above 10 million per day.
A CTO on our Virtual Board advises that modern technology makes the ability to facilitate home-working comparatively easy at a rudimentary level, basic communication and remote access to server based systems are commonplace, but to ensure optimum (or even just maintained) productivity and business performance, investment in more advanced systems can yield benefits.
But the challenges to business though mass remote working reach far greater. Aside form the impact on productivity, the impact of more people working from home more often can have a huge impact on leadership. Teams typically thrive on the physical environment and face-to-face collaboration. To have such an enforced remote structure can bring about significant destabilisation.
A COO on our Virtual Board with a background in digitalisation warns of the investment (monetary AND time) needed to ensure optimum remote working, from understanding every physical constraint (IT/UC infrastructure) through to frequent contact. He even voiced the benefit in transferring some aspects of the workplace culture to the home from team-meetings done by video, to social interaction and participation. He even facilitated an end-of-month celebration on the last day of April by delivering a drink to members of his team to toast a successful month.
But he also voiced that leadership attitude is key to making remote working ‘work’. Trust is at the centre of that attitude, alongside realism.
His final word was more cautionary, physical and cyber security. 100s, potentially 1000s of unfamiliar log-in locations using non-controlled devices brings security challenges. He advised the creation of a security team/function to monitor abnormal behaviour whilst having contingency plans in place where necessary.
Buzz word of the moment. Internally and externally, engagement is key, but it is also something leaders struggle with in normal times. A Forbes survey last year showed that fewer than half of employees said they were ‘highly engaged’ at work; and the task is even harder with remote working.
Our HR leader states there are many approaches to aiding workplace engagement, but she recommends a three-step approach. Listen to employees. Act on their feedback. Evidence the action on their feedback.
Look to tomorrow.
Business has long embraced ‘purpose’ beyond profit maximisation, the benefit of stating a businesses purpose, then encouraging the entire business to revolve around that purpose has far reaching benefits from employee engagement & collaboration, PR/marketing clarity and even long term profitability.
Our Virtual Board’s Marketing Director warns against abandoning such purpose in favour of maximising short-term profitability. She advises that from experience, strong leaders are able to use and fall back on the shared purpose and community during period of short-term crisis that yield longer term benefits, internally, but especially externally. Witnessing the number of charitable endeavours many consumer businesses are embracing at present by facilitating the supply & distribution of everything from medical equipment and cleanliness products right through to food and provisions to vulnerable people.
Adversity yields strength.
The Covid-19 pandemic will without question identify great businesses, and business leaders. Business history is riddled with businesses that were created in times of crisis. Disney, FedEx, GE, HP, IBM, Microsoft. More recently WhatsApp, Airbnb and Groupon. More than a $trillion of current value in 9 businesses.
But beyond that, the links between the coronavirus and opportunities to contribute to society and provide business value simultaneously are already starkly obvious. There will be many leaders who emerge from this virus crisis, they will be amongst our future greatest business leaders.
Back to Don Corleone…. “I have always believed helping your fellow man is profitable in every sense, personally and bottom-line”…
Contact me to find out more about out Virtual Board