Report

Leading the future: the rise of the virtual boardroom

Sarah Bell Sarah Bell

In recent months, directors have been forced to adopt the virtual boardroom to lead remotely. As offices re-open, Sarah Bell and Karen Brice argue that we must not lose what we've learned under lockdown.

We’ve all seen a lot of change recently. From the ground up, people’s lives, both personal and professional, have been transformed. This disruption hasn’t stopped at the virtual boardroom door.

Providing leadership in the middle of such uncertainty has seen boards revisit their roles, responsibilities and operating models, not least in how the board meets. Chairs are becoming more intentional, agendas shorter. Directors are reporting a more-focused approach to board meetings with critical current and strategic matters taking centre stage.

For new appointees, who are taking up roles without ever having met their fellow board members, a more collaborative way of working is a necessity, and their only means of building relationships and trust.

Many are saying that a more agile way of working better reflects business as we know it and has been a long time coming. NEDs often tell us that they find virtual boardroom discussions can be too formal and stifle creative thinking.

As pressure increases on executives to manage business continuity at the same time as meeting demands for bold, forward-facing solutions, boards need to take a positive approach; ensuring more time is spent on future objectives while seeking out opportunities to support the wider management.

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Accelerated change

Many of the changes now being adopted have long been on an agenda driven by the UK Corporate Governance Code. It’s aim has been to improve agility around emerging risks, help build trust with stakeholders at every level and evolve virtual boardroom dynamics.

While the Code has been a long-standing point of discussion in UK boardrooms, lockdown has forced talk into action. What was seen purely as a regulator-led push has suddenly become a market-driven necessity. The conceptual has become real.

There’s no denying the scale and pace of change has been challenging, but by tackling it head-on, businesses have made giant leaps forward in areas where such significant headway hadn’t seemed possible.

Now, as attention turns to life in the new normal, companies risk losing this progress, and the opportunity it represents, in a rush to return to ‘business as usual’. That could be a costly mistake when the Bank of England is anticipating up to 18% uplift in the next quarter’s trading.

Evolution, not revolution

We are now seeing a real desire to move forward, which will require drawing on earlier strengths while building on advances made during lockdown. It will also require boards to lean in more and lead by example.

There’s a danger, as boards oversee and encourage change elsewhere, that they miss a crucial dynamic of that process - the evolution of their own role within the business. To avoid that pitfall here are four areas you should be looking at:

1 Trust

How do you build a team, or even rewrite your licence to operate as one while driving positive change? How are you building trust? Good governance practice will help establish frameworks that enable:

  • effective strategic planning
  • early identification of emerging risks
  • space to build a mentoring culture from the board throughout the organisation.

Moreover, a clear learning and development plan for all board members will demonstrate an ongoing commitment to adding value to the business wherever possible. All of which helps foster trust.

2 Culture

Culture should be the marque of stability for an organisation in a world of change. But to be an effective one, people need to have clear sight of it and believe in it.

The board can lead on this by bringing in fresh perspectives, engaging in holistic oversight and staying open and accessible. Move beyond traditional structures, boundaries and hierarchical structures that can cause unnecessary tensions when normal modes of engagement are restricted.

The voice of the employee stakeholder will be increasingly important in the months to come as the spike in employee engagement scores seen during the crisis drop. The risk is that these drop below previous levels, indicating diminishing involvement and productivity.

Employee representation will need to go beyond ‘lip service’ if the board is to understand the real 'mood music'.

3 Composition

Executive directors report that they have learned more about leadership in the last six months than the many years before. The new-style leader is more connected, visible, strategic and tech-savvy, and is encouraging a flatter ‘trust-based’ culture that drives agility and pace.

Likewise, board dynamics will need to display these same attributes if members want to increase their value in the coming months. Progressive chairs know that new skills and styles will need to be adopted if the board is to remain relevant and effective.

So too with succession. Effectiveness can no longer be valued simply on technical skills and market intelligence. The new, virtual boardroom should demonstrate collective emotional intelligence, a growth mindset and collaboration. In short, diversity in it’s true sense.

4 Dynamics

From team processes, such as agenda focus, integrated conversation, and effective delegation, to adopting a bold stance on board composition, the chair needs to lead from the front on board dynamics.

Again, this will take courage, but if the board is to add real, ongoing value to the business, these are conversations that need to happen. In doing so, a board demonstrates a willingness to learn beyond the changes that have been demanded of them. They exhibit a determination not just to survive, but to change, evolve and thrive.

To discover how best to maintain your momentum on virtual boardroom dynamics and plan your next steps, speak to Karen Brice.

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The latest Corporate Governance Review, analysing trends in compliance and disclosure, will launch in November.