The Covid-19 pandemic has challenged many corporate boards’ crisis management skills, and lately, that has meant deciding what to do with workers – the backbone of the American economy. Since no one can accurately predict when the pandemic will be over, corporate directors have critical workforce and human capital management decisions to make that will determine whether their companies will survive. Boards that mismanage workforce strategy now will face bankruptcy or worse in 2021.
The 2020 BDO Board Pulse Survey reports that as corporate boards have had to react to multiple crises this year, the safety of stakeholders (including employees, customers and vendors) emerged as the top short-term governance oversight challenge and priority for 71 percent of respondents. Additionally, when asked about long-term governance oversight challenges and priorities, the safety of stakeholders was selected by 46 percent of respondents, second only to “Building a more diverse board/leadership team” (50 percent).
During what has been billed as the time of “stakeholder capitalism” it appears boards have indeed realized that much more of their success is tied to the wellbeing of stakeholders. As companies struggle with the disruptions caused by the coronavirus pandemic, it has become clear that companies with a stable workforce are primed to do better. Amy Rojik, National Partner, BDO Center for Corporate Governance says companies are adjusting their strategies for developing, retaining and maintaining their workforce under ever-changing conditions created by the pandemic.
“To get the company through this period, boards are asking themselves, Do we have the right talent? And How do we maintain that talent?,” Rojik says. “Risk management and industry expertise are extremely critical. Boards need the enterprise risk management approach because of all the newer risks that have cropped up for the majority of companies. Understanding how to prioritize those risks at the board level is extremely important.”
BDO spoke to 280 directors for the survey and came away with this advice for managing a workforce during the current Covid-19 related crisis.
• Get the communication structure right. Most boards designated one board member as liaison between the board and management team. Consistent communication alleviates pressure from management to have to continually report to the board while trying to run the business.
• Make sure board has the right talent to reboot strategic plan. During this crisis, there were clear winners and losers. Some companies gained new opportunities through virtual technology and other companies’ entire operations were shut down by the impact of the pandemic. The faster boards can move companies to digital or virtual product lines, the better. You might need to import talent to get the plan right. “Companies that already have been investing in digital transformation are probably having a much better time of it,” says Rojik.
• Demonstrate vision on human capital management. Although many companies feel they must shed workers in the short term, no company can lose its best talent and expect to remain a leader in their industry. Layoffs should not be the first option.
“There may be other options like salary cuts, job sharing or other opportunities so that you do not lose your talent pool because the expectation for the companies is that once you get beyond the immediacy of the pandemic, you really want to be in the position to rebound,” says Rojik. “Even though digital and visual transformation has emerged, you still need people at the end of the day to run your business.”
• Reimagine the company’s relationship with its workers. The survey reported that 51 percent of respondents had plans of transitioning at least some employees to long-term remote work. That can change the employer-employee relationship. Boards may need to ask: Are we providing enough resources in this newfound virtual environment for our employees to support the culture within the organization? Are we being mindful that this is a totally new world and that our employees are wrestling with a lot of new challenges both professionally and personally, including a home life and workplace life that are completely blurred?
The board must adjust its strategic plan to account for employees well-being as essential to the company’s sustainable growth. “Workplace safety is more than we clean our offices and we seat our employees six feet apart,” says Rojik. “It’s more holistically about the employees’ mental and physical health in general in order to allow them to continue to be productive in the workplace.”