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Not Your New Normal: Reflections on Director Development and Education Post-COVID-19
July 15, 2020
On June 16, in the final Spring session of The McMaster Collaboratorium, Terry Goodtrack, C.Dir., President and CEO of The Aboriginal Financial Officers Association (AFOA) of Canada, Kee Wong, Chair of The Australian Institute of Company Directors (AICD) Innovation Committee, Patrice Merrin, Independent Non-Executive Director at Glencore and Principal of The Directors College, Dr. Michael Hartmann examine what great governance means in the post-COVID-19 world and the new topics, best practices, challenges and responsibilities boards are now facing.
The traditional role of directors is to manage risk and risk and innovation are often at opposite ends of the spectrum. Company directors that ignore the importance of innovation, are putting the business at risk. The governance of technology and innovation are important for directors to understand, especially in developing competency around the future of work.
Multiple surveys have identified a ‘knowing-doing’ gap – where board directors are keenly aware of the importance of driving an innovation agenda but are not translating that knowledge into actionable insights. Too few boards have directors with digital literacy and awareness of the how the business is supporting innovation.
Connecting capital accumulation with social outcomes is more important Post-COVID-19 as the gaps became much more visible during the pandemic. Boardrooms are lacking in imagination and creativity remaining structured and ruled-based and often lacking independence. The culture of boards needs to change to embrace ideas and innovative thinking.
In the future, the comfort of a familiar environment has passed and the arguments around why things can’t be done will end. Change will occur because leadership has been forced to make decisions at an accelerated pace, through alternate communication mediums, during the pandemic.
Significant societal issues have come to the surface recently as people examine their values and beliefs. Diversity of thought must be embraced by boards and encouraged in boardrooms.
The pace and cadence of boards may change as these uncertain times unfold. Sustainability and consolidation are part of the future challenges. Overboarding is becoming more detrimental to directors as the workload shifts and increases. The community impact of corporate decisions, especially in human capital management, need to remain at the top of the agenda.
Corporations needs to rethink their values and purpose and consider whether they are taking more than they need and spending excessively in areas that do not support those values.
COVID-19 has provided opportunities for corporations to communicate with their shareholders in new ways – annual general meetings have gone virtual. With information being readily available through technology, the idea of an AGM may also shift in the future. Technology also provides the opportunity to monitor behaviour and support compliance.
Financial statements are made by accountants for accountants, but they need to be communicated to people where they are in the practical sense, and technology can assist that effort. The economy is shifting, and technology gaps need to be addressed to ensure that every community can participate.
The value that directors bring to their boards is in their individuality. The richer the base of experience and values among directors, the more prepared a board will be to manage risk and future challenges.
Diversity enriches the boardroom and harnessing the power of technology for good is a powerful way to close the gap and allow forward-thinking industries to leapfrog over old institutions.
Watch key messages from the webinar here.