Leading in a brave new world - How the boardroom changed for the better December 2020 - Deloitte
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Leading in a brave new world How the boardroom changed for the better December 2020
Contents
Introduction 1
Purpose of this report 3
Global impacts 5
Local impacts: a community crisis 7
Respond 12
Boardroom impacts: changes to governance 18
Recover 25
Thrive 29
Perspectives from Chairs 34
In their own words 36
Contact us 38
ii
Leading in a brave new world | Chairs’ research report 2020
Introduction
In the crucible of crisis, resilient leaders are defined first
by who they are and what they do at different times
and across multiple priorities.1
As early as March 2020, we were seeing In this spirit of sharing, I reached out to the
the power of leadership in response to the community of Chairs from Australia’s largest
immediate impacts of COVID-19. Business organisations to discuss the impacts of the
leaders, political leaders, community COVID-19 crisis on their organisations, their
leaders and leaders in their fields leaned boards and on their role as Chair. For each
into their deep knowledge and learned conversation, the focus was to identify the
experience to make choices that truly significant shifts, the impact on strategy,
impacted lives. purpose and governance and how key learnings
can be carried forward for a more positive
Since then, leaders across the globe have and prosperous future.
been constantly tested as they steer their
organisations through one challenge after I share these fantastic insights, suggestions
another, relying on speed over elegance and reflections from Australia’s most prominent
and making critical choices based on an Chairs in the hope that their insights can boost
uncertain future. leadership capability across all industries,
as well as confidence in their stakeholders that
In the midst of all this, what we witnessed the future looks more stable in their safe,
here in Australia was quite remarkable. This resilient hands.
crisis encouraged a great camaraderie across
corporate Australia, encapsulated in an
eagerness among business leaders to share
experiences and learn from one another with
the hope of emerging in a position to thrive.
1 https://www2.deloitte.com/global/en/pages/about-deloitte/articles/the-heart-of-resilient-leadership.html?icid=covid-19_article-nav-heart-of-resilient-
leadership
1
The numerous negative impacts of this crisis
cannot be discounted and we can never forget
the loss of lives and livelihoods that have been
endured. However, the many silver linings
of this crisis are revealing themselves and
these seeds of optimism have the potential
to take organisations, the boards that lead
them and the wider community to a much
better place, where purpose becomes as
meaningful as profit.
Thank you to all of the Chairs who generously
gave their time to talk with me about their
experiences. I am truly grateful and hope you
find value in this playback from your peers and
important insights from your shared journey.
Tom Imbesi
Chairman
2
Leading in a brave new world | Chairs’ research report 2020
Purpose of this report
At the start of this crisis, Deloitte developed a clear framework
to help us – and our clients – navigate this period. Our Respond,
Recover, Thrive model continues to guide us, allowing us to remain
calm, confident and resilient as the longer term impacts unfold.
This report has been structured to Chairs from 46 ASX100 boards were
reflect this framework, looking back interviewed between September and
through the lens of the Respond dimension, November 2020. Interviewees came from
moving into Recover, then unlocking a diverse range of industries and sectors
a new normal where organisations – and and consequently experiences varied widely.
the communities they serve – can Thrive.
Accordingly, the intent of this report is to share
key insights from conversations with Chairs of
Australia’s largest listed companies about their
experience leading through the COVID-19 crisis.
The report uncovers the significant and
permanent impacts on boards and executive
leadership as a result of the crisis. It also
provides practical leadership advice and key
strategic considerations to current and future
boards to ensure they can effectively plan
for and lead their organisations through
the next crisis.
3
Leading in a brave new world | Chairs’ research report 2020
The report uncovers the significant and
permanent impacts on boards and executive
leadership as a result of the crisis.
The Chairs were each asked five key questions:
01 04
When this crisis hit, what immediate Are there any grounds for optimism?
changes did you make? What are you looking forward to as
we enter the post-crisis period in 2021
and beyond and what key learnings from
02
this crisis will you be taking forward?
05
To what extent did the crisis impact
your organisation’s strategy?
What advice would you give to Chairs
of the future?
03
Through necessity, boards have operated
differently during the period. What have
you changed and what will you continue
to do differently from a governance
perspective in the future?
4
Leading in a brave new world | Chairs’ research report 2020 Leading in a brave new world | Chairs’ research report 2020
Global impacts
Setting the scene: The economic and health state of the world
CHINA
3.2
UNITED EUROPEAN 3.2
KINGDOM UNION
777.0 499.7
-21.7 -7.5
FRANCE
708.9
CANADA -18.9 SOUTH KOREA
293.7 9.7
-13.0 SPAIN -2.9
UNITED STATES 891.6 JAPAN
751.3 -22.1 15.1
-9.0 -9.9
ITALY TAIWAN
768.5 0.3
-17.7 -0.6
MIDDLE EAST ASEAN-5
AND CENTRAL ASIA 40.6 NEW ZEALAND
118.2 -3.4
LATIN AMERICA 5.2
-4.1 VIETNAM
AND THE CARIBBEAN 0.3 -12.4
669.1 0.4
-8.1
SUB-SAHARAN AFRICA AUSTRALIA
27.6 35.6
-3.0 -6.3
Cumulative deaths per million persons as of November 18 2020 (Regions)
Region GDP growth forecast of calendar year 2020
GDP growth year to June 2020 (Country)
Source: International Monetary Fund October 2020 World Economic Outlook; Our World in Data
Leading in a brave new world | Chairs’ research report 2020
Local impacts:
a community crisis
Deeply and intrinsically connected.
Prioritising and maximising community impact was
a key feature of boards throughout the crisis.
The impacts of COVID-19 have been Indeed, for many of our interviewees, the tone
devastating, with broad effects across for Australia’s response was set early with the
the business community, stakeholders Government’s swift roll out of stimulus and
and society as a whole. As such, this support programs like JobKeeper. Organisations
health crisis required an extremely followed suit, activating elements of their
different response – with a focus on crisis management plans such as distributing
purpose and values and prioritising community funds or providing mental health
the wellbeing of the broader community assistance. Some took actions like renting
more strongly than ever before. property in local communities to keep staff
members safe in countries heavily affected
All Chairs agreed that their primary focus was by the spread of the virus.
on supporting their employees, community,
and their customers. This focus was at the Moving forward, Chairs acknowledged that
forefront of every decision as they responded both impact on community ‘through the
to the crisis. In one instance, a Chair shared lens of purpose and values’ and achieving
that their board took only 30 seconds sustainable profitability will be a permanent
to approve a COVID-19 community fund feature among boards.
to the value of 10 million dollars.
All Chairs agreed that their primary
focus was on supporting their employees,
community, and their customers.
7
Leading in a brave new world | Chairs’ research report 2020
Tips for building sustainable
community trust:
1. During annual strategy-day planning, agree collectively as a board
to the medium to long-term community projects and initiatives their
organisation should pursue in line with the organisation’s purpose
and values.
2. Establish scorecards that drive accountability and evaluates success
of executive leaders making an impact on community (e.g. the number
of community initiatives and projects led and delivered in a financial year).
3. Ensure capital allocation and investment decisions are evaluated
not just on returns, but perceived impact on the broader community.
Stakeholders: a broader ecosystem This ‘human’ response filtered from the top
The focus of boards during the crisis down as well as bottom up. A number of
has not just been about shareholders – Chairs explained that their board and executive
but a broader ecosystem of employees, teams took a reduction in their short-term
customers, and the community. bonuses or reduced their salaries to minimise
redundancies, or to pass on bonuses to their
As alluded, the days of the shareholder frontline workers. While not the sole intention,
as primary stakeholder are gone. Chairs these decisions created an enormous amount
acknowledged that the COVID-19 crisis has put of goodwill with staff and unions.
greater emphasis on empathy, prompting them
to consider and expand their view of the full
spectrum of stakeholders. Additionally,
Chairs recognised they ‘have all experienced
this very human response’ and are committed
to the maintenance of a more empathetic
approach beyond this crisis.
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Leading in a brave new world | Chairs’ research report 2020
Indeed, COVID-19 reminded many organisations Rightfully, shareholders remain an important
that a customer-centric approach has many and critical part of Australian business.
benefits beyond customer satisfaction. On several occasions, Chairs noted increased
Organisations in the Energy, Banking and interaction with investors and proxy advisors,
Telecommunications sectors leaned heavily one Chair even recounting how they’d spent
towards customer support and acknowledged more time communicating with shareholders
many people may not be able to pay their in the last six months than the entire decade
bills. Chairs understood that helping their prior. Shareholders have become increasingly
customers in distress also went a long way interested in what boards are doing and
to building trust. why they are doing it. Despite the ever-rising
demand for their time, Chairs see this type
of engagement with shareholders – and all
The context is different stakeholders – as a key aspect of the role
and a positive step.
to the past – business
is there to serve all of
our stakeholders and
the first among equals
is the customer.
Tips for building stakeholder trust:
1. Build purpose and values into the 4. Ensure the board has the right type
organisation’s strategy and increase and breadth of information and
visibility by the board on purpose and education regarding the impacts
on what being purpose-led looks like. of the company’s operations on
stakeholder interests – how well does
the board understand the company’s
2. Challenge management by asking, vulnerable customers?
‘Should we?’ rather than ‘Could we’?’
and ‘Do we deliver the right
outcomes to all stakeholders, 5. Challenge management
and not just shareholders?’ on the effectiveness of
consequence management.
3. Consider whether the company’s
management focuses enough on 6. Actively focus on root cause and
‘Should we?’ learnings from what has gone wrong
and build this focus into the ‘routine’
of the board.
9Leading in a brave new world | Chairs’ research report 2020
Purpose over profit
Boards have led first through the lens
of purpose and values to build and
Tips for a successful
enhance trust with a targeted ESG agenda. ESG approach:
Changing employee, customer and
1. Request a formal ESG assessment
community demands have prompted
to ensure the organisation has
a shift towards Environmental Social and
an ESG strategy, including KPIs
Corporate Governance (ESG) becoming a part
for assessment.
of the fabric of boards. Rather than detracting
from this, COVID-19 has reinforced the
importance of ESG. As one Chair explained, 2. Review the organisation’s ESG
‘You’re not allowed to stop. Analysts and some framework and make sure it is
shareholders still ask and expect us to focus fit for purpose, particularly in light
on being a good corporate citizen.’ of the crisis.
The pandemic followed the February 2019
release by the ASX Corporate Governance 3. Identify ESG metrics and
Council of the 4th Edition of the Corporate targets that are relevant to the
Governance Principles and Recommendations. organisation – consider, for example,
the industry, the type of business
The new edition was developed in response and associated risks.
to emerging issues around culture, values
and trust and key thematic changes included
defining the purpose of the organisation 4. Establish specific ESG roles and
as a board responsibility, articulating responsibilities, and imbed ESG
and disclosing its values, better oversight performance KPIs into executive
of conduct, and increased focus on the remuneration programs.
management of non-financial risks,
including environmental and social risks.
5. Urge management to engage
with stakeholders.
Given the crisis, boards must therefore ensure
that moving forward, they have a robust
ESG framework that encourages behaviours 6. Insist on high-quality internal
required to protect their reputation and ESG reporting.
community standing and build long-term
sustainable value for shareholders.
7. Encourage disclosures and
goal setting.
There was a quantum shift
by business in focusing on
people and community first
ahead of short term financials.
10Leading in a brave new world | Chairs’ research report 2020
Remuneration: executives and staff
To drive accountability and promote
sustainable ESG outcomes, boards are
Tips for developing
balancing ESG and profitability metrics executive remuneration
to formulate executive remuneration. in the context of ESG:
This year especially, boards recognised 1. Ensure a meaningful portion
that they have had to be careful when of the variable remuneration is
exercising discretion in relation to remuneration linked to the ESG metrics to drive
outcomes to not disproportionally reward the desired outcomes.
executives based purely on profit measures,
in an environment of increased unemployment,
financial stress and health concerns. 2. Ensure transparency and clarity
on how the pay structure and
Speaking with the Chairs, it was clear that metrics align to performance
the crisis underscored the importance of and the organisation’s purpose
non-financial factors and having a strategy and strategy.
that promotes positive ESG outcomes.
Therefore, demonstrable commitment by 3. Provide a clear rationale for the
the organisation to ESG factors will likely be remuneration outcomes produced
expected, particularly through linking ESG by the model.
metrics to executive remuneration, which
in the past has been a real challenge for
boards. Guidance on how to design
remuneration structures that include non-
financial metrics is expected when ASIC’s
Corporate Governance Taskforce publishes
its second report, the release of which was
delayed, likely due to COVID-19.
11Leading in a brave new world | Chairs’ research report 2020
Respond
People as priority.
The immediate response to the crisis was focused
on people, in particular, wellbeing, health and safety,
engagement and remote working operating models.
Most Chairs reflected on the how their Interestingly, and perhaps also not surprisingly,
organisations made immediate shifts Chairs shared that the engagement of
from focusing on business to the health employees was strong throughout the crisis
and safety of individuals and the community and attributed this to initiating regular calls
during the crisis. Chairs and their boards between employees and the executive
cited people, engagement, culture and leadership, releasing regular updates and
remote working models as a top priority, communication as well as sending out pulse
ensuring quick business decisions to checks to understand employee morale and
support people. One Chair echoed countless opportunities to uplift engagement. In light of
others, ‘It’s a health crisis first and people this, increased communication between boards
are the priority’. and executive leadership with their people will
be a key feature moving forward to ensure
Indeed, Chairs were struck by the severe sustainable employee engagement.
distress caused by the pandemic and
concerned about the increase in mental Most Chairs also agreed the unfolding
and physical health issues, the potential of COVID-19 had not been without benefits,
of job losses, and the need for so many in the such as accelerating trends that may have
community to care for children, elderly family otherwise taken decades, including an almost
members and friends, or those who were immediate shift to virtual working which
unwell. Many Chairs noted how important it benefited many, most notably providing
was for them to support mental health through greater inclusion and flexibility for women.
strategies such as surveys and management
decisions including compulsory annual leave.
We had an overwhelming
desire to protect our staff.
12Leading in a brave new world | Chairs’ research report 2020
The pandemic has certainly brought out the best
in people as leadership shows its human side,
a side now firmly established in directing the recovery.
While not without exception, most Moving forward, Chairs understand the need
respondents agreed that hybrid working to put people first – expanding the leadership
has proven our nation’s ability to adapt at mindset to include all stakeholders because
speed, focus on community and innovation, it’s the right thing to do. This new mentality
and lead with trust. While some felt initially is unleashing a range of previously unexplored
unprepared for this, many conceded the benefits; most notably that happy and
technology was already in place; it was active ecosystems of people result in high
just a case of ‘pressing go’. Communication engagement, improved productivity and
improved in quality and frequency, not better customer service.
only at an internal organisational level,
but externally with government and Consequently, there are surprising outcomes
between competitors who opened in revenue recovery and improved results, and
dialogues and worked together to best ultimately, better return to shareholders. Our
service the community. respondents were united about the need to
continue implementing these positive learnings.
Not all interviewees are convinced the changes Now the challenge for boardroom leaders,
are here to stay. There’s an expectation that businesses and communities is to build these
workforces will return to offices, albeit with insights into new ways of living and working.
much more flexibility and Chairs will wait to The pandemic has certainly brought out the
see the impact of COVID-19 on long-term best in people as leadership shows its human
culture, learning models, ongoing projects, and side, a side now firmly established in directing
mental health and wellness – and subsequently the recovery.
what they and their boards can do to give
targeted support to all stakeholders.
13Leading in a brave new world | Chairs’ research report 2020
Choices on liquidity Short, sharp, regular meetings and distributed
Strengthening balance sheet and liquidity decision making, often via the creation of sub
positions was an immediate board priority. committees to ensure key strategic choices
were made quickly.
In the initial response to the pandemic, Chairs
and their boards addressed immediate liquidity One matter that came up several times was
risk and stabilisation challenges. When it experience from the global financial crisis,
came to the burning platform of liquidity when some corporates had facilities but were
arrangements some faced questions around not able to draw on them. When faced with the
drawdowns, pay cuts, reductions in staff hours, same possible risk this time, some corporates
stand-downs, and ultimately, redundancies. drew down on their facilities and effectively put
money into their bank accounts. Further, many
While many cited their experience through explored equity raises and some even quickly
recessions and slowdowns as helpful, there proceeded because they were concerned there
was little doubt they were traversing unfamiliar might be a flood of equity raises, and they
territory. Commentary included discussion wanted to be first to market.
of tricky liquidity decisions – for example,
where operating margins were down but
large losses were forecast – and the difficulty
in knowing how to respond when it was near
impossible to predict what would happen
next, or how hard hit Australia and the globe
would be.
14Leading in a brave new world | Chairs’ research report 2020
Business performance and resilience Looking ahead, many respondents believe
Balance sheets and liquidity positions were the pandemic will transform their organisations
reviewed and there was increased board permanently. One Chair revealed more had
scrutiny and focus on business performance. been achieved in three months in terms of
speed, decision making, and innovation than
According to several respondents, would ever have been achieved over a much
the immediate pandemic response went longer period without the pandemic.
considerably well; commentary was positive
around the unfolding of crisis management As conversation turned to how the immediate
plans, business continuity approaches, response would impact the future, interviewees
workforce responses, and adaptation to the generally agreed the long-term nature of the
increase in technology reliance. Interviewees crisis corroborated the need to hold onto their
recognised that good companies have crisis people and customers. For example, the low
management policies in place – and they know interest environment made it easier to carry
how to use them. debt, and therefore make deferrals of payments
and assist customers, with people-first
With greater certainty around managing approaches potentially increasing stakeholder
the crisis operationally, Chairs shared that loyalty as the economy recovers.
they shifted their focus to organisation
strategy and business performance. They
spent a greater portion of board meetings
assessing the drivers of underlying business
performance, such as the impact of the crisis
on short-to-medium term profitability given
changing customer, market and competitive
dynamics. Chairs used these forums as an
opportunity to make strategic choices around
how to uplift business performance to ensure
competitive positioning was maintained.
15Leading in a brave new world | Chairs’ research report 2020
Case study
Limiting customers in store: where big data meets
donuts – and skills of the heart.
In the midst of pandemic chaos, And… with a ‘whatever it takes’
one retail group decided against attitude, one individual store manager
a strictly analytical approach to even decided to provide free coffee
maximise customer head counts and donuts to waiting customers,
and instead empowered their local speaking with them at a distance,
store managers to make decisions. and explaining the need to limit store
capacity to keep them safe.
The board understood it was the
managers who knew how their A move that demonstrated how skills
individual shops operated, knew their of the heart as well as skills of the head
community, and knew how long it took are a mighty combination.
to get customers through checkouts,
and how many people they could safely
have inside given government guidelines.
In short, the board trusted local
leadership to make the right calls.
This allowed the retailer to act far
more quickly than if they had only
used big data to make decisions. It not
only made the process more efficient
but provided a human approach that
empowered local management and
improved overall customer engagement.
16Leading in a brave new world | Chairs’ research report 2020
‘The dinosaurs are back in favour’ It was these seasoned Chairs and executives
Board members who have experienced that could recognise the nature of cycles and
multiple crises in the past, played a critical engender a sense of caution, balance and see
role for the CEO and executive leadership strategic growth opportunities through the
teams during the pandemic. uncertainty. They understood what it meant
to ‘leave something in the tank’ for when the
According to interviewees, seasoned board cycle moved into a new phase. One respondent
members with crisis and recession experience spoke of the need to ‘balance returns with
were highly valued and played a critical role investing in the future, be strongly capitalised,
in advising their CEOs and executive leadership and be able to take advantage organically
team on crisis management, strategy, and and inorganically when things eventually turn’.
operations during the initial response to the
pandemic. The newer directors and executives A vast majority of Chairs agreed that in
who had not previously experienced such crises, resilient leadership comes to the fore
a crisis felt very supported by directors with the priority to preserve and generate
providing insight in dealing with a deep crisis, capital, have clear accountability for outcomes
or as one Chair lightheartedly quipped, and controls, and allocate scarce resources with
“The dinosaurs were back in favour”. efficiency. And while most agreed leadership
is important, interviewees identified a shift –
it’s now more about earning the trust of people
“Playing solid defence, who’ve invested large parts of their lives and
livelihoods in the organisational ecosystem.
with great offense”.
Punit Renjen, Deloitte Global CEO
on resilient leadership
Key considerations for Chairs • Put the customer at the centre: Trust local
• People as priority: Maintain a focus on management to make the right local choices.
the human impact of external and internal • Duties for directors: Provide leadership
factors, guided by purpose and values. that ensures decisions taken fulfil duties
• Deliver strong messaging: (including safe harbour/temporary relief).
Clear communication boosts trust. • Lean into experience of seasoned board
• Accelerate new business models: directors: Recognise expectations have
Look for opportunities to fast-track better shifted so Chairs need to stay in touch
business systems, such as virtual working. and keep pace.
• Assess liquidity risks: Review upcoming • Set relationship cadence with CEO:
significant commitments and the Encourage a closer working relationship
organisation’s ability to meet them, as well with the CEO through more frequent
as working capital and funding position. interactions and provide counsel and
a sounding board.
17Leading in a brave new world | Chairs’ research report 2020
Boardroom impacts:
changes to governance
Is the role of the Chair becoming harder?
Throughout the crisis, Chairs needed to adapt their governing styles
in order to lead virtual board meetings effectively while maintaining
strong connectivity with board members – moving forward the role
of Chairs will likely integrate these adaptations to various degrees.
Historically, the Chair’s primary role In particular, Chairs shared that they
as ‘first among equals’ has been to needed to adapt their skills and usual style
organise the business of the board when moderating virtual board meetings.
and board meetings. Establishing basic etiquette is an important
consideration for the Chair such as having
As team leaders, Chairs have been impacted every director appear on the video screen
by the loss of informal get togethers of and having a mechanism for the Chair to see
the ‘board-as-team’ during the pandemic. meeting attendees when they speak. Ensuring
These ‘board-as-team’ impacts have been all directors have the opportunity to speak
compounded by board meetings themselves has been aided by ‘mic mute’ and virtual
becoming virtual. The whole boardroom hand up functionality. Depending on board
dynamic has altered and Chairs have noted size, conducting a round robin process may
it’s harder to read a virtual room, and they’ve be valuable, alternatively having the Chair
found guiding discussion, debate, and nominate those with pertinent expertise
decision-making more challenging. While to speak first on specific matters may work
several boards have been forced to adopt better. Vote taking should not assume that
a model of virtual board meetings, it seems silence is assent.
the jury is still out on how effective such
meetings may be over the longer term.
It’s the unspoken word
that is now harder to get.
18Leading in a brave new world | Chairs’ research report 2020
Chairs have also had to adapt for the change The ability to build camaraderie among
in ‘board-as-team’ and boardroom dynamic the board and executives in person,
by arranging more frequent virtual catch is also sorely missed. Chairs have sought
ups with individual directors. Such meetings to supplement this with many, many more
assisted Chairs in better understanding how calls, while also experimenting with innovative
each director is thinking and feeling about ways to connect using virtual drinks, virtual
an issue or agenda item putting less reliance dinners or simply virtual chats. While Chairs
on ‘reading the room’ in meetings. don’t feel that these are as effective, they
have been valuable, nonetheless.
Finally, a recurring theme was that Chairs
missed the benefit of the pre board dinners
and the coffee break chats, where they
The lack of social and
can pick up on body language, personal
nuances, ‘gut feels’ and ascertain intangible pre board dinners has made
observations of board members like mood
the life of a Chair harder.
and changes to a person’s disposition.
19Leading in a brave new world | Chairs’ research report 2020
Long-term shifts: Accordingly, there is strong sentiment of boards
more active stewardship needing to continue to exercise more active
The crisis has led to a number of stewardship of the organisation to ensure they
permanent, long-term shifts in how board maintain meaningful oversight of management
meetings and committees will be governed. and business operations.
According to our Chairs, almost all boards What also strikingly stood out were the
shifted to weekly meetings. There was major formation of sub committees to expedite
cut back on paper and detailed reports, decision making and push choices to a local
a shift in agenda to have more discussion time level. Frequent, short meetings and pulse
than formal presentations, and a setting checks by boards also paved the way for
up of temporary sub committees to deal with sub committee meetings in a similar cadence.
‘business as usual’ which allowed more time
in board meetings for critical issues and to
focus on strategy. This has been a revelation
for some – enabling deeper dives into the
business and enabling the board to focus
on what’s important.
Many are now reflecting on how to rebalance
this for the post pandemic period and retain
some of the value. And while interviewed Chairs
acknowledged the shift in agenda toward
strategy and business performance – versus
compliance, governance and risk – leaders must
strike the right mix. Active stewardship focuses
on culture, challenge, accountability and
long-term stakeholder outcomes.
20Leading in a brave new world | Chairs’ research report 2020
A new era of sub committees: COVID-19 has provided a unique opportunity
more frequent, but shorter meetings for boards to meet more frequently but for
In many of our conversations, a shorter time. Some boards have held weekly
interviewees mentioned the formation or fortnightly meetings during the crisis period.
of sub committees to deal with immediate More frequent but shorter meetings have
issues, decision making, and governance. afforded multiple benefits for boards including
a reduced but more targeted set of information
One Chair described the creation of to consider as well as more meaningful
a ‘Cash Committee’ to focus on liquidity, discussion and focused decision making
as well as a ‘COVID Safety Committee’, on critical items.
each convening on a weekly basis. Another
interviewee cited a ‘Financial Performance As a result of the crisis, Chairs now have the
and Planning Sub Committee’ comprised opportunity to embed some of these benefits
of three board members, but with invites longer term and we may expect to see some
extended to others as required. Chairs also further recalibration of board calendars
spoke of the need to ensure good governance, and meeting agendas that pick up the good
mutual support across priorities and KPIs, governance disciplines and efficiencies this
and alignment with executive committees. has brought about.
21Leading in a brave new world | Chairs’ research report 2020
Equilibrium: physical But perhaps the biggest conundrum for
and virtual meetings Chairs and boards is how to keep connected to
A hybrid model will be a key feature what is happening in operations on the ground.
of future board meetings. The value of virtual site visits, including use of
drone technology for boards taking the pulse
Going forward, the majority of Chairs of the organisation, may well depend on the
interviewed plan to move to a hybrid nature and geography of business operations.
model with a mix of face to face and virtual
meetings. Face to face may be reserved Chairs of organisations that have a global
for more critical issues and decisions, while presence shared that they are more likely
virtual is considered suitable longer term to embrace virtual site visit capabilities over
to the more mechanical board functions the longer term, while local operations remain
such as periodic policy approval. subject to ongoing in person site visits by
directors who seek to connect with operational
For our interviewees, hybrid had varied staff and/or customers. Occupational Health
interpretations: and Safety is one area where it may be more
challenging to conduct any meaningful walk
• A combination between virtual and physical
through via virtual technology.
meetings throughout the year with a leaning
towards more physical than virtual as the
new normal.
• Virtual in allowing directors to choose to
dial into a physical meeting, which might
have previously been frowned upon.
• Hybrid could mean that not all directors
may travel to sites, but local based board
members can be on the ground and other
board members can dial in and
use technology to connect in.
22Leading in a brave new world | Chairs’ research report 2020
Virtual AGMs: here to stay? For this reason, it’s important that virtual
Virtual AGMs have presented both AGMs are set up in a way that retains as much
challenges and opportunities – given of the beneficial qualities of a physical AGM
the ongoing debt on its long-term as possible and does not exclude the smaller
viability, Chairs are likely to adopt investors of the company. For Chairs, in
a hybrid approach. particular, this presents a new challenge
as they are the ones that need to ensure
In response to the pandemic, temporary all parties have a fair opportunity to participate
amendments were made to the Corporations in the meeting.
Act to enable virtual AGMs, and it looks like
this could be here to stay with the Government To be effective – and to ensure full transparency
currently seeking stakeholder views on exposure of all questions asked by stakeholders – Chairs
draft legislation that makes virtual meetings could consider staying ‘connected’ to their
under the Corporations Act 2001 permanent. audience throughout the meeting by having
their cameras turned on, monitoring (or having
someone monitor) the comments or use
I don’t want virtual AGMs ‘virtual hands’ (depending on the online
platform used) to ensure no questions are
to become a fixture. being missed, double-check the technology
I don’t think it is an is working, share a detailed agenda and
formal rules of conduct (including how to ask
enriching experience. questions) with shareholders well in advance
of the meeting and make sure to follow
through during the AGM.
Given virtual AGMs have only been allowed
for six months, it’s too early to understand While the debate as to whether virtual AGMs
their true impact. However, some impediments will become permanent continues, the view
have already surfaced that go to the heart from several Chairs is they will most likely
of the purpose of AGMs. An AGM is one of the adopt a hybrid approach.
few occasions where boards are questioned
for their actions, required to provide answers
and held to account by shareholders. Our Virtual AGM went like
However, virtual AGMs can be perceived
as an opportunity to deflect and avoid clockwork. It’s amazing how
questions and hide behind a screen, leaving quickly and well it worked.
retail shareholders without a voice to raise their
concerns and further eroding what precarious
trust and confidence they have in boards.
23Leading in a brave new world | Chairs’ research report 2020
Board and C-Suite, Chair and CEO: Perhaps the most significant benefits
relationships in overdrive of this change in working relationship
The crisis presented the opportunity to have been realised at a human level as
deepen the relationship and trust between trust and respect has deepened.
Chair and CEO, driven by more frequent
catch ups and updates.
We now catch up weekly to
COVID-19 provided an opportunity for test ideas, soundboard and
the CEO to work more closely with the Chair
and for the C-suite to tap into board and challenge ‘what am I missing?‘
director experience to support implementation
by management of strategy. Chairs supported
CEOs by anchoring decision making under
uncertainty in mission and values. Boards
supported C-suites through stepping closer into
critical operations including crisis committees,
command centres, and communications.
24Leading in a brave new world | Chairs’ research report 2020
Recover
Scenario planning: looking long.
Scenario planning has become a key feature of board meetings
to help drive adequate forward thinking and ensure robustness
of crisis management plans to address future adverse events.
As the pandemic played out, Chairs and We heard Chairs express the need to widen
their organisational leaders, in light of testing parameters, which often included
significant uncertainty, took to scenario looking at where buffers could be placed,
planning to explore options, drive better for example, within supply chains. ‘What if’
decisions, inform long-term strategies, stress testing was prevalent, particularly
and determine the impact on their for informing the roll-on effects as strategy
organisations, industries, and markets. moved through respond and recover
into thrive.
Unsurprisingly, several interviewees reported
an increase in the number of scenarios they The overall feeling around the value of
explored – up to 50 different scenarios, from scenario planning was positive. Many
doomsday to off the chart recovery. Many respondents felt it held their organisations
spoke to a focus on liquidity, while others in good stead and were pleased with how
were more interested in how scenario planning the technology held up in reflecting the
could help people get more comfortable unparalleled circumstances. Or as one
with a broad range of possible outcomes Chair described, ‘When it comes to
of the crisis. scenario testing, nothing is too wild’.
We can’t predict the
future so we use scenarios
to plan forward.
25Strategic choices: We accelerated our
stop, start, accelerate
creative thinking around
Corporate strategy remained largely
unchanged throughout the crisis; however, what is possible.
it provided an opportunity for boards
to conduct a strategic pulse-check.
In some cases, existing strategies were ripe
The pandemic provided boardroom leaders with advantage, for example, one interviewee
with the opportunity to reflect on which explained how the ability to operate with
strategic choices to stop, start and accelerate. a ‘laser focus on safety’ was already built into
Overwhelmingly, Chairs confirmed their their sector DNA. Other interviewees discussed
strategies remained relatively unchanged. how operating across global economies meant
they were able to mitigate individual slowdowns
What had shifted was the pace, with by using stop and start strategies.
COVID-19 accelerating productivity and
efficiency and challenging the ambition A large number of Chairs also spoke about
of execution. Organisations had identified Australia being a safe place to reset business.
the productivity gains realised from the abrupt As a country we’ve handled the pandemic
shift to technology during the pandemic as well as any developed nation, even taking
and saw increased value to be extracted. into account the Victorian second wave. This
For some, the strategic focus remained on brings more specific exploration to the fore,
growth or increasing output, with one Chair such as whether sustainable supply chains,
even describing a countercyclical approach for example, might be increasingly domestic.
of accelerating their strategy to increase Further, some respondents said that call centre
investment in capital expenditure. Others strategies were being reviewed with a positive
echoed this sentiment or were actively view to moving a higher percentage on shore.
looking at acquisitions. Future greenfield investments would also
be increasingly evaluated based on pandemic
Key to this continuation of strategy was the response. In many ways, Australia has never
pleasant realisation that many had initially looked better off in terms of attracting
underestimated the ‘substitutability’ factor: domestic and offshore investment with a ‘CV’
their corporations could pivot, resulting that’s received a valuable and enviable upgrade.
in a milder economic impact. Often a long-
term view of retaining talent and attracting
customers was also driving this strategic A large number of our
behaviour. While it was business as usual Chairs also spoke about
for strategy, a number of interviewees spoke
about reviewing specific components, such Australia being a safe
as simplifying growth markets and segments, place to reset business.
risk mitigation (e.g. within supply chains),
or revisiting other elements like workforce
operating models and IT roadmaps.
26Leading in a brave new world | Chairs’ research report 2020
Fast track: digital For example, in areas of healthcare where
transformation and innovation digitisation has been slow on the uptake,
There was a clear focus and a global health pandemic left little choice
action among boards and executive other than to come up to speed. Other
leadership in accelerating digital elements assisting sectors include using the
transformation agendas. recovery to build-in new functions, such as
digital supply chains. Risk was also heavy on
When Chairs were asked about strategy, their the agenda during the crisis recovery phase
minds quickly turned to digital acceleration. and onward. Boardroom leaders and their
A significant portion of Chairs called attention organisations must clearly also acknowledge
to the heavy investment in digital and online. the risk ramifications attached to the
More than half of interviewees explicitly spoke acceleration of these trends, with
of accelerating investment in digital, data, Chairs recognising the need to focus
cloud, cyber and IT transformation. on key risk pillars, such as cyber security.
The need for Australia to become fluent in Overall, most Chairs feel positive about the
virtual exchanges, with minimal disruption rapid expansion of innovation and digitisation.
in an already uncertain environment, was Some even expressed palpable excitement
prevalent and interviewed Chairs were eager at how this has amplified creative thinking
to explore the facets of this change and and changed beliefs around what’s possible,
uncover productivity gains. creating enthusiasm for everything from
simplification to automation, experimentation
Our respondents expressed great respect and beyond.
for the ability of workforces to adapt to virtual
and hybrid modes. Almost overnight, clients
and customers changed their expectations More than half of
to reflect the new circumstances. For example,
interviewees explicitly spoke
in the banking, retail and consumer sectors,
there’s been an explosion in online transactions of accelerating investment
and purchases, the ramifications of which
in digital, data, cloud, cyber
are largely predicted to mark the beginning
of a cashless society. According to some and IT transformation.
interviewees, the lack of digital capability
in some industries was stark, but upskilling
was expedited by the urgent nature of the crisis.
27Leading in a brave new world | Chairs’ research report 2020
Business performance: empower now authority to, ‘Get on with it because there was
Local management were empowered to simply no other choice.’ The simple truth was
make strategic choices at pace throughout senior leadership couldn’t travel to interstate
the crisis, delivering positive business or overseas sites, so virtual workarounds were
outcomes – given this, there is positive as good as it got.
Chair sentiment in ensuring this heightened
sense of local empowerment is retained. From drone technology to live action head
or handheld cameras, video touring with
Prior to the pandemic, the future of work was employees who were able to access sites was
a hot topic. Then suddenly, the future arrived. as close to the ground as boardroom leaders
Off the back of this, our Chair interviewees could get. As a result, local leaders found
acknowledged the deep change occurring themselves empowered with authority
across organisational operating models and to do what was needed.
workplace culture, with many respondents
also agreeing it’s only the beginning of a much During the interviews, many Chairs commented
more connected, communal, and people- that this was quite empowering for local
focused future. management and they rose to the challenge.
Chairs also spoke about wanting to retain this
Specifically, distributed leadership, future heightened sense of empowerment as it was
operating models, and an empowerment culture good for the business.
were central topics covered in conversation as
key to a quick and a successful response and
subsequent recovery. Chairs spoke of having “Having engaged people is
little to no time for deliberation, which meant
giving local management and committees the
the best way to mitigate risk”.
Tom Imbesi, Chair, Deloitte Australia
Key considerations for Chairs • Challenge operating models: Engage
• Review scenario plans: Look long and in constructive discussion and debate on
realise no scenario is too wild to contemplate. the pros and cons of flexibility and agility
and decide on a suitable operating model
• Trust your strategy: Pick up pace on the
(i.e. physical, virtual or hybrid) for the
elements that suit and pivot fast to bridge
organisation’s BAU activities, meetings
any identified gaps.
and events (e.g. board meetings and AGMs).
• Positively embrace innovation: Allow
• Actively listen: Stay well informed by
for rapid digital upskilling and expand
monitoring and reviewing employee
views on what’s possible.
surveys and soundings – understand
• Empower a broader leadership team: the impact on culture.
Reap the rewards of an engaged and active
• Loop back to assess impact: Receive
leadership ecosystem.
regular reports on the real outcomes
• Remember active stewardship: Increase of any policy change implementation.
focus on culture, challenge, accountability
and long-term stakeholder outcomes.
28Leading in a brave new world | Chairs’ research report 2020
Thrive
Embrace the long view: with an eye to vulnerabilities.
Chairs are optimistic about the future of Australia, however there’s
caution that uncertainties will likely remain for some time.
Our boardroom leaders are optimistic Chairs warn that a prolonged economic
about Australia’s prospects to bounce recovery may still force some organisations
back quickly from this crisis and many are into further job cuts, a winding back of
justifiably bullish about their aspirations government stimulus and support will
for growth in their organisations. The exacerbate the pain for many and ongoing
enviable health response here positions impacts – particularly to productivity –
us well for a sharp recovery and business due to a general deterioration in mental
leaders should be confidently poised health all counter the pervading optimism.
to take full advantage of this. Also, one Chair noted that while a vaccine
may help our lives return to a sense of
However, this is balanced by a recognition normalcy much quicker, it’s unlikely to
that many of the longer-term impacts – have an immediately positive impact on
particularly on younger Australians who the economy in the short-term, which
have been disproportionally displaced – may prove frustrating to many.
may still reveal themselves including a possible
exacerbation of intergenerational wealth
issues and impacts on superannuation. It’s impacted small
Some raised concerns about the disparity
and medium business
of wealth in the community more broadly, disproportionately, as well
fearing that the crisis has widened the gap
between the haves and the have nots and
as affecting the younger
suggesting social policies may need some worker more than the
review to manage this into the future. One
thing is clear, Australia must not leave young
experienced, and women
people or minority groups behind. have been adversely
affected more than men.
29Leading in a brave new world | Chairs’ research report 2020
Plus, Chairs reflected that the crisis has At a macro level, Chairs remain aware that
uncovered gaping holes in some industries, Australia is also likely to feel the pressure from
such as the devastating revelations of the poor ongoing geopolitical changes and international
state of the aged care system with possible instability. A transitionary government
permanent shifts in other industries such in the US, Brexit in the UK and simmering
as hospitality, tourism and higher education. diplomatic relations with China, compounded
It’s impacted small and medium business with the nasty second wave of COVID-19
disproportionately, as well as affecting the now sweeping the globe, will all have some
younger workers more than the experienced, direct ramifications for business here. Chairs
and women have been adversely impacted are concerned that we don’t let short-term
more than men. Attention must be paid reactiveness cloud the critical long game
to fix these faults fast, as well as support we will need to play, particularly when it
for hospitality, tourism, retail and service comes to trade.
industries that are essential employers,
particularly of younger segments
of the community.
30Leading in a brave new world | Chairs’ research report 2020
Crisis creates opportunities: and Our speed to control the virus for now also
amplifies our national strengths positions us as a world leader in terms of health
The world is and will be very different – and government response, offering a crucial
innovating and adapting will be key road map to other countries for a potential path
to Australia’s long-term prosperity. out of this crisis. Australia is placed firmly in the
spotlight on the world stage and our business
Many interviewees shared an ambitious and political leaders should look to cement
hope that the very things the world already this as our recovery and thrive trajectories
recognises as our strengths will see an even continue upwards.
greater demand than ever before, positioning
Australia as a net-beneficiary of the crisis.
Australia is placed firmly
They hope to see a laser sharp focus from
in the spotlight on the
leaders within sectors such as mining, that are
expected to continue to blaze a trail of recovery world stage and our
to benefit not just those organisations but boost
business and political
the prospects for the wider community.
leaders should look to
The Chairs identified other key sectors such
cement this as our recovery
as education and tourism where we can innovate
and extend our global leadership position and thrive trajectories
and they are confident we will continue to
continue upwards.
be a supplier of choice to the world for food
and other in demand natural resources.
Australia is better
placed and better led
than most countries.
31Leading in a brave new world | Chairs’ research report 2020
Brave, passionate leadership: However, many Chairs agree that physical can’t
helping boards thrive be replaced and will likely be saved for business-
While the crisis has brought many critical discussions and decisions. Less domestic
challenges, it is an unprecedented and and international travel for board members also
exciting time for Chairs – diversity potentially frees up time that can be spent on
of experience and board composition more immersive experiences, such as site visits,
will enable strong leadership within giving our boardroom leaders fresh perspective
organisations in opportunistic times and deeper insights into their operations and
and during times of crisis. teams. It will also enable more international
leaders to accept Australian board positions as
Our Chair interviewees would have every
they don’t need to travel a week of every month
reason to feel fatigued after many months of
for board meetings. In turn, this should aid in
intense focus. Instead they sound emboldened
attracting international and more diverse skills
by their recent experience and committed to
onto Australian boards, where previously
continuous improvement of their boards. Chairs
the travel was a big inhibitor.
noted that now is the time to remain passionate
and be brave in leading their organisations into
the future.
Skills are one thing, but
The flexible and hybrid working models that passion and excitement
many organisations relied on with great success, are as important.
will continue to enable boards for the future.
New technology will allow smarter business
models and productivity gains, and the cadence
of governance may be irrevocably changed
through the use of different technologies to
assist with decision-making. WhatsApp, Skype,
Zoom, digital blackboards and interactive
portals will allow for more rapid, quick decisions.
An expectation of ongoing limits on business
travel may mean less physical, face-to-face
board meetings.
32Leading in a brave new world | Chairs’ research report 2020
While there is no denying that the Human aspects that businesses may have
experienced heads around the board room previously misjudged, such as emotional
tables of Australia were able to lean into their intelligence and vulnerability, should be seen
impeccable credentials to stabilise the ship as a strength and not a weakness. Looking
during this crisis, going forward there will be for opportunities to bring new blood onto
great benefits to embracing diversity in all its boards, giving them time to shadow and
forms on boards. Diversity of experience in learn from more experienced directors,
terms of age, cultural background, education was a focus for many boards pre-pandemic,
and skills will enable broader and better but seems even more important now to build
leadership within organisations in good times resilient organisations.
as well as when times are challenging. And as
one Chair aptly noted, ‘Skills are one thing, but
passion and excitement are as important’, and
investing emotionally in the business and the
industry are important.
Key considerations for Chairs • Learn and adapt: Actively focus on root
• Encourage a bold growth agenda: cause and learnings from what has gone
But stay mindful of macro issues and wrong and build this focus into the ‘routine’
potential ongoing human impacts. of the board.
• Stay focused on purpose: Develop • Re-evaluate remuneration: Develop
a purpose and strategy that is remuneration structures aligned with the
focused on a long-term view, including organisation’s long-term view and desired
restructuring and improving the culture and social expectations .
organisation’s financial position. • Keep pace with digital transformation:
• Leverage strengths and opportunities: Ensure the organisation is equipped to
Pay it forward to support other be able to work in a highly digital and
organisations and countries. technological environment.
• Keep on caring: Treat the community • Commit to diversity in all forms:
as an important stakeholder and have The best business choice now for boards
greater regard for community expectations. of the future.
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