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Jul 21, 2020

Directors upbeat on pandemic performance, survey finds

Boards urged not to sit on laurels

The vast majority of board directors believe they and their company’s executives have adapted well to the challenges arising from the Covid-19 pandemic, according to a new survey.

The PwC poll finds more than 95 percent of director respondents saying their executives are doing a good or excellent job of coping with obstacles such as interruptions to internal operations, supply-chain disruptions and talent shortages.

Ninety-eight percent say their company has done a good or excellent job managing remote working – a key marker given the ramped-up focus on human-capital management – and 93 percent give the same rating to management’s interactions with the board.

PwC polled more than 250 public company directors in May.

Paula Loop, leader of PwC’s Governance Insights Center, tells Corporate Secretary that despite their high levels of satisfaction with their company’s response to the crisis, boards should not sit on their laurels, noting that although most have done a good job, some have done better than others.

Some boards are already conducting look-backs to review how they and their company have performed and what can be done better in the face of a second wave of the pandemic or some other future crisis when ‘the bar will be set higher,’ Loops says. These reviews include looking at areas such as supply-chain reactions and communications with stakeholders such as employees, suppliers, customers, regulators and communities, she explains.   

Boards of directors, like everybody else, have had to adapt to new demands during the pandemic. Eighty-three percent of respondents note increased reporting from management, 67 percent say there have been more frequent board and committee meetings, 41 percent say there has been enhanced focus on and scrutiny of the financial reporting process and 21 percent say there has been a revised or newly implemented emergency succession plan for the executive team. Just 3 percent say there has been a revised or implemented emergency succession plan for directors.

Loop says she would have expected greater levels of attention to succession planning, particularly given the numbers of executives who have become sick with the coronavirus. An assessment of those preparations might be part of boards’ look-backs, she adds.

In terms of workload, 31 percent of directors polled say they are spending twice or more than twice the amount of time fulfilling their board duties.

Many companies switched to virtual AGMs this year and boards have done the same. The format is scoring high marks from directors: 93 percent say virtual meetings enable a level of overall director engagement, as well as personal engagement, that is good or excellent. Eighty-eight percent give the same high ratings to their ability to question or challenge management on the platforms.

Loop says that despite the drawback of virtual board meetings lacking human interaction, she is hearing that boards are accepting they don’t need to gather in person for every meeting in the future and she expects there to be a permanent shift along those lines.