Home Library Translate
A A A
Share »
Follow us on Facebook Follow us on Twitter Follow us on LinkedIn
Connect »

Blog: Boards of Directors

Menu

  • This Blog's Home
  • Guest Writer Submissions
  • Policies
  • To Subscribe to a Blog
  • About
  • Feedback

Practical Tips for Boards in Times of Crisis

By Julie Garland McLellan on January 24, 2012

Company directors are currently working harder than ever before as they attempt to steer their companies through the chaos caused by the global financial crisis. Many organisations that have suffered (or even precipitated) the crisis displayed most of the externally visible attributes of good governance. Good governance structures and reporting are associated with good corporate performance but they are not, on their own, sufficient to cause it.

Here are some tips to help your board to value substance over form and to perform under pressure:

  1. Expect the unexpected! Plans made before the crisis or in its early stages may need to be changed. A good way to stay alert to changed requirements is to note and review the assumptions on which each plan was based. Then if a key assumption changes (such as the exchange rate) the plan can be reviewed to see if any change is required. False assumptions are a risky basis for a plan.
  2. Watch your people. Uncertainty is unsettling and astute competitors may use this crisis to remove under-performing team members from their employ and entice your best people to replace them. Tell your staff that they are valued and that you will fight to retain them. Unless, of course, they are under performing. In that case, it might be time to review commitments.
  3. Understand your business and the key drivers of value creation in it. Be particularly aware of any changes that may threaten a previously unassailable competitive advantage. You may need to delve deeper into the operational aspects of the business than you did in the past.
  4. Watch your cash flow. Do not let customers and suppliers use you to subsidise their working capital. Be particularly alert to changes in payment schedules. They could be the first warnings of future defaults. You may find that you can no longer project your cashflow reliably into the future. That is a problem but will only become acute if you cannot cover your obligations as they fall due. Be sure that you are not trading whilst insolvent.
  5. Secure your funding. Now is not the time for a capital deficit. Be sure that you have sufficient capital. This is not the best of times for capital raising, but it is an even worse time to be undercapitalised. Expensive and hard-earned capital is better than no capital.
  6. Revalue your assets. What are they really worth now? Will future cash-flows justify their carrying values on the books? Again, you may need to dig into detail that was previously left to management.
  7. Revisit tip 2 (above). What will be the costs associated with any redundancies? How will these affect cash-flows? What bonuses and other payments (such as long service leave) might impact your cash-flow projections?
  8. Talk to your shareholders, donors and/or members. It doesn’t matter if you are a large listed corporation, a family business, a non-profit or something else. These stakeholders will be concerned about the effect of the crisis on their company and you have a duty to keep them well informed.
  9. Reassess your board. Is it capable of governing through this crisis? Are additional skills needed? How can you improve the board’s performance?

10.  Revisit your risk management. Things have changed and you must ensure that new risks are identified and plans put in place to manage these. Keep your risk register as current as possible and be sure that appropriate powers for dealing with risks (and opportunities) have been delegated to the right people.

Whilst these are difficult times for all organisations the true test of good governance is that it will help to establish better performance over the long run and to ensue survival in the short term. Here’s hoping that YOUR governance meets that test; good luck!

______________________________________
Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website and LinkedIn profiles, and get her books Dilemmas, Dilemmas: Practical Case Studies for Company Directors and Presenting to Boards.

« Previous Next »

Search Our Site

Meet this Blog’s Co-Hosts

Carter McNamara of Authenticity Consulting, LLC, provides organization development and consultant training services, and is developer of the Free Management Library. [Read more ...]


Julie Garland-McLellan uses her experience and depth of knowledge in corporate governance to show boards with limited resources how to be more effective through practical governance innovation and know-how.
[Read more ...]


Nick Lindsay of Elemental CoSec, provides corporate governance, legal and company secretarial advice to a wide range of companies in the UK.
[Read more ...]

Recent Blog Posts

  • Will beneficial ownership registers spread around the World?
  • Governing an entrepreneur – a dilemma
  • Can a director serve two interests? – a dilemma
  • When a director knows what isn’t in the papers – a dilemma
  • Should the MD have a vote? – a dilemma
  • Association boards and conflicts of interest – a dilemma
  • Issues for a prospective owner director – a dilemma
  • 51% compliance with the UK Corporate Governance Code
  • 10 Myths About Boards of Directors
  • How to manage excessive demands on time (from a powerful person)? – a dilemma

Categories of Posts

  • Accountabilities, Laws and Ethics
  • Basics and Overviews
  • Basics and Overviews
  • Board Committees
  • Board Evaluations
  • Board Meetings
  • Board Membership
  • Board Training and Dev.
  • General Resources
  • Recurring Activities
  • Roles and Responsibilities
  • Supervising CEO
  • Uncategorized

Related Library Topics

  • Board / Employees Roles
  • Board Basics
  • Board Development
  • Board Models
  • Board Operations
  • Board Policies
  • Board Staffing
  • Board Training
  • Committees
  • Compensation of Members
  • Evaluating the Board
  • Laws and Ethics
  • Meetings
  • Roles and Responsibilities

Library's Blogs

  • Boards of Directors
  • Building a Business
  • Business Communications
  • Business Ethics, Culture and Performance
  • Business Planning
  • Career Management
  • Coaching and Action Learning
  • Consulting and Organizational Development
  • Crisis Management
  • Customer Service
  • Facilitation
  • Free Management Library Blogs
  • Fundraising for Nonprofits
  • Human Resources
  • Leadership
  • Marketing and Social Media
  • Nonprofit Capacity Building
  • Project Management
  • Quality Management
  • Social Enterprise
  • Spirituality
  • Strategic Planning
  • Supervision
  • Team Building and Performance
  • Training and Development
About Feedback Legal Privacy Policy Contact Us
Free Management Library, © Copyright Authenticity Consulting, LLC ®; All rights reserved.
  • Graphics by Wylde Hare LLC
  • Website maintained by Caitlin Cahill

By continuing to use this site, you agree to our Privacy Policy.X