The Changing Role of a Board Director

The role of a board director has changed in the past few months. Board directors have numerous responsibilities to the company and hold multiple critical deliberations throughout the year. Accordingly, the COVID-19 pandemic has upturned this already demanding job. It has generated more commitments and has led to the rise of multiple issues for boards to consider, in addition to their usual duties. From a broader perspective that stretches beyond what’s typically associated with business, their role has been further extended far and wide.

What is a Board Director?

What exactly is a board director? Board directors are responsible for overseeing the performance and setting the overarching strategy of the company. They also ensure accountability among the executives of the company as they represent the cumulative interest of the company’s shareholders. The different positions and responsibility of each board director all contribute towards ensuring good corporate governance of the company.

Essentially, a board directors contribute towards structuring dividend payments to shareholders and executives. They review financial information, agree on annual operating budgets, and establish legal governance. Board operations are an integral part on how the company is conducted from a top level perspective.

The New Role of the Board Director in the Face of Pandemic

The COVID-19, however, has primarily disrupted forecasts, forcing boards across the world to restructure their priorities and responsibilities to be able to respond swiftly to the needs of all stakeholders. Board directors were called to face complex issues such as ensuring business continuity, dealing with market volatility, surviving the negative financial impact, and creating health policies for their employees.

When the pandemic started, companies of all sizes across the globe experienced a disruption on a scale never seen before. Some companies observed unprecedented growth opportunities caused by an uptick in demand for their services and products, while many others faced pushbacks, being forced to lay off employees to save the company.

Companies falling into this second category had to redefine their priorities to ensure the well-being of many affected stakeholder groups.

Here are the main roles and responsibilities that have shifted the role of a board director in boards across the globe:

Evolved Commitment

The structure of most boards is based on a shareholder-first mindset. However, the pandemic has exposed the fallacy of this thinking. When the crisis rendered societies vulnerable, businesses have emerged as critical ingredients of nation-wide stability. They provide communities with a sense of purpose and delivering jobs to large chunks of society.

Upon recognizing the important role of the business, a growing number of board directors have switched from following the shareholder-first mindset to a commitment that includes all stakeholders, i.e., employees, suppliers, communities, shareholders, and customers.

Board directors are now accountable to the enacting the best governance possible of all aspects of the organization in the face of such disruption and time of crisis.

Need to Prioritize

Because the board’s commitments have been stretched to include a broader range of stakeholders, the reach of their responsibilities has widened. Board directors should recognize that it’s nearly impossible to attend to the needs of all stakeholders at the same time. Therefore, the board has to work in cycles and take care of the needs of the specific stakeholder group one at a time.

This approach calls for an efficient information flow where the board has insight into the current state of every stakeholder group. Information flow also helps the board make better long-term strategic decisions even when economic forecasts aren’t entirely reliable.

More Frequent Meetings

With the explosion of matters to take care of and the more advanced level of deliberations necessary to arrive at decisions, boards have found themselves in need of more frequent remote meetings to maintain an efficient decision-making process.

The sheer volume of tasks the COVID-19 has generated makes it difficult for the boards to tackle all pertinent matters with pre-crisis meeting frequency.

Need for Information

With the rapidly fluctuating environment caused by the pandemic, the boards need to be equipped with accurate information. Building a framework for information sharing between the management and the board will be critical to ensure a streamlined decision-making process.

Accurate information regarding all five categories of stakeholder relations, company performance, and risk management is necessary for the board to be effective in executing good governance.

Support for Strategic Thinking

To design the post-crisis strategy that considers the newly arisen needs of the stakeholders, boards will have to work with management closely.

Because allocating resources for short- and long-term objectives and goals has changed, the board has to run many different scenarios. They do so to see how these decisions can impact various stakeholders and areas of the business.

The management will have to provide the board with critical information quickly and efficiently. Having a single secure platform for all documents and reports will help keep the data organized and easily accessible.

Support System for Management

Boards have to develop a robust communication framework. They need to design strategic plans that reflect the company’s short- and long-term needs and stakeholders. The communication framework should provide a seamless way for the management to share information. In these unprecedented times, however, boards should also be readily available to give advice and support to executives and senior leadership.

The Board’s New Role

The COVID-19 pandemic has disrupted the operations of many companies across the world. For the boards to navigate the crisis swiftly, they need to effectively meet the needs of various stakeholders. As such, a single platform for remote collaboration and meetings can help keep tasks organized. Convene provides organizations of all sizes with tools that ensure high-level collaboration and communication.

Find out more about the key features of Convene or start a no-commitment free trial.