The Post-Covid Reality of Corporate Boards: Challenges and Opportunities of Virtual Meetings
Since the start of the Covid-19 pandemic, corporate boards have faced a series of difficult decisions and changes. From virtual meetings to dividend payments, board leaders have had to adapt. To explore some of these topics, Headspring has recently organised a virtual event and invited a group of non-executive directors to discuss these issues.
Among the speakers were seasoned executives and board members of many organisations, including Giuseppe Tringali, Aldo Olcese, Laura González-Molero, Jorge Medina, Juan Antonio Gomez Bule and Maria Rotondo Urcola.
Held as part of Headspring’s new corporate advisory services, the event was attended by over 30 guests who have a seat at the boards of some of the world’s leading organisations such as Santander and Amazon.
When it comes to virtual board meetings, it was discussed that this new way of working online requires a review of the governance operating model in companies in which it is also necessary to review the current responsibilities of directors in a framework where parts of its actions are supported by technology.
In line with the above, it is expected that many companies will have to review their internal policies more frequently. If to date many companies have been doing this review every 3 or 4 years, it is foreseeable that from now on it will have to be done much more frequently to adapt to the new possibilities offered by technology.
The Impact of Technology
New technologies have exceeded many of the expectations of board directors and have greatly facilitated the functioning of meetings during the COVID-19 crisis. In general, their contribution has been very positive, although there are some questions that need to be addressed:
- Guarantees on the digital identity of those attending meetings.
- Risks of manipulation of the recordings.
- The permanent threat of cyber-attacks.
- Jurisdiction of the data stored.
- Who has access to the meeting recordings and how.
Speakers and guests also agreed that it would be appropriate to open a debate on the need to establish an official regulatory registry of companies that offer storage, management and communication services of reserved and sensitive information for the Boards of Directors so that independence of criteria and action and avoid market manipulations and use of privileged information.
The new virtuality brings a series of important improvements in the management of corporate boards that must be recognized:
- Saving time and expenses by not travelling for meetings.
- Generally shorter meetings and in which the interventions are more thoughtful and more precise. Again, time optimization.
- Ease of holding more conferences and urgent meetings where more members are available.
- Facility to create more international councils with the involvement of advisers from distant locations.
Despite these benefits, there are also risks and negative elements associated with a more virtual way of working, the most prominent being the loss of “closeness” implied by the relationships that are established in the face-to-face relationships as well as during the meetings. In this sense, some important negative aspects considered by our guests include:
- Greater difficulty in solving complex problems
- Lack of spontaneity and personal contact, which makes it difficult to build trust between the different board members.
- Deterioration in the contribution of directors who may already have a lower level of proactivity and participation due to the format that sometimes makes it difficult to exchange opinions.
- Risk of controlling hostile directors who may operate with a lower level of visibility in their interactions.
- The frequent need to turn off audios and videos to improve the technical quality of transmission could open the door to the possible impersonation of directors as well as the lack of attention and responsibility on the part of some, without any control capacity.
- Bad quality of connections can impact the members’ ability to understand the real problems. This is particularly relevant for members who are not fully involved with the business on a regular basis.
- The virtual management of the meetings generally involves a greater effort for all the members of the council, but especially for the presidents and secretaries, since it requires greater organisation and coordination.
There is a consensus that the online format has come to stay and, in the future, the operation of the board meetings will have to be hybrid (face-to-face and online). While much of the interaction will be virtual, there will necessarily have to be face-to-face spaces, especially for boards of greater strategic importance and in which a high level of participation and involvement is required.
It is also pointed out that the boards will have to be consistent with the prevailing ways of working in the companies they represent to lead by example.
Corporate Governance Advisory
Board members, chairs and non-executive directors today are required to lead and shape organisations in an environment where codes and regulations proliferate, creating both unanticipated challenges as well as new business opportunities. But in order to leverage the opportunities, board members and non-executive directors need to be proficient technically, whilst not losing sight of the bigger picture and applying the best practices in governance.
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