C (3:22)

It's great to be here with you, Emma.

A (3:24)

So, Ted, what are some of the other key skills that board members should utilize in moments of volatility?

C (3:30)

One key trait is being able to ask the right questions, but also ask those questions in the right way. Directors are there for oversight on behalf of shareholders, but also to make the management team better. If a director gets into a meeting and starts asking questions that feel like a trap, the management team will just shut down. These conversations are a dance. It's important that directors build and maintain excellent relationships with the management team and fellow directors. You need a constructive but not deferential relationship with the CEO and other senior executives. There should be some productive tension in the conversation that produces both value for the board and the management team.

A (4:08)

That's exactly right, Ted. The art of questioning, especially during periods of uncertainty, is critical. It's important to support as much as challenge, and it's key that you have the right non executive directors around the table with a diverse range of experiences so that they are qualified as an aggregate to make sure that each critical aspect is covered off. So the financial, the strategy, the remuneration. Each of these different aspects, if not properly interrogated, can be a downfall. To give an example of where things did go wrong, the Boeing 737 Max crisis demonstrates what can happen when boards fail to ask sufficiently probing questions or perh missing the right skills and experience around the table. It's a stark reminder that having the right directors asking the right questions, especially the uncomfortable ones, isn't just good governance. It can be the difference between averting disaster and catastrophe. Being a great collaborator is essential here. The quality of your relationship with your CEO and fellow directors often determines how effective you can be when the stakes are at their highest. And of course, no relationship is more critical than that between chair and CEO. So Gwenel, to turn it back to you, we've mentioned the importance of collaboration and connectivity between the board and management. But often that line between them can become more blurred during high pressure situations. What do you hear from your board director clients about how they decide when they need to step in versus when to let management handle decisions during critical moments of volatility?

B (5:44)

Well, what we hear from the board directors we speak to is that it's really important for them to remember that fundamentally Their role is non executive. They do however, have an important and active role to play. It's important that they make themselves available to the executive team when required. The CEOs and the CFOs that we've spoken to have appreciated their director's ability to attend not only the scheduled meetings, but also the ad hoc board meetings, but also their responsiveness to their requests for a call where never needed by the executives. The chair has an important role to play in all of this by staying close to the executive team, acting as a sounding board, but also leveraging the other board members expertise as appropriate and required. The external perspective and the network that the non executive directors bring from their other board is also highly valued by the executives. And one of our clients found it particularly useful during a cyber attack when his chair introduced him to another CEO who had gone through the same thing very recently.

A (6:45)

That's a great example, Cornell. And something I'm hearing a lot too actually. Cyber attacks of course becoming ever more prevalent. And a CEO recently told me how he proactively reached out to another leader suffering the same thing that he had gone through quite a few years previously. And a whole network of peers had reached out to him. And when you're facing these critical decisions like do you pay the ransom, do you get your tech into an island, do you restart the whole system? And there's no precedent that you know of being able to tap into what others are doing is more important than ever. And directors will have a wealth of knowledge and experience from a multitude of sectors. And often they will have seen both sides of the coin serving in an executive and a non executive capacity. So Ted, what's your perspective on this question about knowing when and how to step in?

C (7:36)

Yeah, one piece of advice I'd like to give directors is to help slow things down in moments of volatility. Good executives have an instinct to act and to take action. Directors help them take a pause and breathe in those moments. Directors and boards need to work with management in high pressure situations to make sure that the team is thinking clearly, can defend its rationale on decisions, and serve as a sparring partner to help management teams come to great conclusions that align with the company's values and purpose. Directors should only step in to force issues when there is an existential crisis or they've lost confidence in the management team. Directors need to follow the principle of noses in and fingers out. But fingers out doesn't mean the directors are not informed about all of the options they need to be engaged in coming to conclusions and Aligned on that messaging together.

A (8:29)

I couldn't agree more, Ted. And this is perhaps the most delicate balance directors face during a crisis. I think that principle, noses in, fingers out, perfectly captures the tension. And getting this balance wrong during a period of real crisis can undermine management's effectiveness or leave the board exposed to governance failures. Ultimately, a board is there to ensure they have the right people running the business. And during volatility, it can be even more revealing for a management team. As Warren Buffett famously shared, it's only when the tide goes out that you can discover who's been swimming naked. And for example, lots of people cited this quote during the pandemic, suddenly CEOs, CFOs were under an extraordinary amount of pressure. And whilst we didn't see that much leadership change in the moment because of course it couldn't make sense, actually after the pandemic there was quite a lot of change because people had been really exposed. So Gwenel, coming back to you, as we just mentioned, knowing where the line is between management and the board is critical. Something board directors also need to navigate is balancing their individual perspective with the board as a whole. How can a director balance sharing their individual perspective with creating consensus with the rest of the board, especially during periods of volatility?

B (9:44)

The chair has a crucial role to play here, orchestrating the board, making sure that every board member contributes their expertise to the conversation, but then crucially manage the discussion to a conclusion in a timely manner so that the executives can jump into action. The role of the non executive directors in that situation is really to express their view very clearly and strongly, but ultimately to accept cabinet responsibility once the board has made the decision exactly right.

A (10:14)

Guenel Rushing agreement without proper deliberation is exactly when boards make their worst decisions. And that concept of cabinet responsibility is so important you can and should debate vigorously in the boardroom. But once a decision is made, everyone needs to be aligned. And it's tough as a board when in the US for example, you only meet four times a year. In Europe it tends to be around eight times a year. But there are big gaps between these critical decision making moments and so how information is shared between times, the role of the chair and talking to board members one on one in advance of a board meeting. This kind of input is so important to make sure that a consensus can be agreed on perhaps the most fundamental decisions like do we have the right CEO? Do we have the right cfo? Is it time to change? So coming back to you now, Ted, experienced directors oftentimes do serve on multiple boards and this could create competing demands during periods of volatility. What's your view on how you practically manage your time and energy in these circumstances?

C (11:16)

This can be one of the bigger challenges when one is shifting from a full time executive role into being a full time board member. Before taking a board roll on, directors need to think through how they will manage their time. The reality is if you are on three or more boards, one of your boards is likely in some form of crisis all the time. That could be an M and A issue, it could be an unexpected CEO transition or it could be a regulatory event. In the case of the COVID pandemic, all companies were put into crisis at the same time. Not showing up for meetings isn't an option. So boards and directors need to figure out how they're going to delegate responsibilities to their key committees, board leaders and others. And then an individual director needs to do the work to make sure they are up to speed on the important work that those subgroups are handling. In these moments. It's crucial that a board and its directors have invested the time to get to know each other and the management team so they have trust in one another and understand how everyone operates.

A (12:14)

That's such practical advice. Ted and of course lots of the proxy agencies like ISS and Glassdoor and then some of the very big investors like BlackRock have issued specific guidance against overboarding where they count the number of so called points that individual directors have, one for a non exec, two for a chair, and for example more than four or five points is considered overboarding. This is by no means a perfect science and these agencies don't actually count privately owned businesses, whether it's private equity backed or family owned, which can be a bit counterintuitive as these cases might take the most time. But nonetheless it does show that people are putting a real spotlight on how much time you are committing, particularly if you're a chair, which is of course by far the most time consuming role and very different to that of being a non executive director. I personally would stress that if you are a good non executive director, it really shouldn't be that you're feeling stretched time wise. If you've been an executive in the past, that's a very different rhythm and having to step up occasionally to a different level of intensity shouldn't feel like a problem. And actually you're probably overstepping the mark if you are experiencing undue stress. So Gwenelle, in the last few years uncertainty has become the new normal in your work with non executive Directors, what are you hearing are some of the ways that they can remain mentally sharp and objective when serving during a prolonged period of uncertainty?

B (13:42)

Well, it is true that dealing with a crisis is time consuming. It's a lot of hard work, and the non executive directors need to be prepared for that and especially make sure that they have sufficient capacity if any number of their boards require more of their time at the same time. What we have heard from board members, however, is that dealing with a crisis is even harder on the executive team. And the view is that the board members need to take into the executive's well being, particularly as they are making crucial decisions for the future of the business under intense pressure. The chair in particular has an important role to play in ensuring that the CEO is coping well with the stress and is able to think clearly. We heard examples of a chair, for example, taking his CEO for a walk outside of a building for a bit of fresh air and a sense of perspective. And another one providing a safe space where the CEO could freely and sometimes loudly express his frustration, possibly anger, to his chair before going back into the fray.

A (14:47)

Those examples really highlight the human dimension of crisis leadership. And that's why oftentimes, for example, chairs will encourage the CEOs they work with to have a mentor, to have an outlet, because it can't be their partner, it can't necessarily be their chair. And some individuals really need that external perspective. Somebody who isn't associated with anything else to do with their business, but he can help them really see the wood from the trees, give really sage advice. So for our final question in the lounge today, I'd like to come back to you, Ted. What questions should an individual director be asking themselves and proposing to the board after navigating through a crisis?

C (15:27)

That's a great question, Emma. The learning that happens after a sustained period of volatility is often more valuable than the response during it. But without structured reflection, those lessons get lost in the relief of moving past the immediate challenge or crisis. This is where directors can help build organizational resilience by ensuring the board captures and institutionalizes the lessons from their crisis experience. Directors need to evaluate their individual contribution. Where did you add value? And where could you have been more effective? A director once told me that on his way to the airport, he was feeling quite clever about how he redirected the conversation during the board meeting. But in hindsight, he realized that he'd shut down any conversation or discussion by sharing his viewpoint so forcefully. Before he boarded the plane, he called the lead director and asked him to Reopen the conversation at their next session so they could make sure that the board knew where everyone stood. Now that's unusual. Self awareness. In addition to your own performance, make sure that the board reflects on overall board dynamics and information flow. What worked well, what needs to change the next time. The board should also document key decisions and their rationale while they're fresh. This becomes institutional memory that helps the board perform better in the future. As Winston Churchill once said, never let a good crisis go to waste.

A (16:47)

I love that Winston Churchill quote. And the reality is that all boards nowadays are having moments of crises. What we actually see is that incredible friendships are formed, remarkable bonds when these groups of non executive directors and management have worked through incredibly tough times together. I have clients who still get together annually maybe for boards they sat on 10 years ago because they work so effectively as a team together to overcome something really challenging. So whilst it can feel very difficult in the moment, actually these experiences are incredibly bonding. And it's a privilege is what individuals constantly tell us. It's such a privilege to be able to do the work of a non executive director to support management and to have that much broader vantage point that it allows than when you're in your day to day mode of executing as somebody in a full time role. I hope today's episode has given you deeper insights into how to navigate your responsibilities as a board Director during periods of extreme pressure and sustained uncertainty. And thank you so much Gwenell and Ted for sharing your perspectives. In 30 seconds this is what we've learned. Stay calm, exercise sound judgment and lead with empathy. These three traits are essential for board directors Navigating Volatility Remember, nose is in, fingers out. Be deeply informed and engaged, but don't cross the line into managing the business during periods of volatility. Support your CEOs well being during prolonged stress. A CEO who can't think clearly is a risk to the entire organization. And finally, never let a good crisis go to waste. Structured post crisis reflection is where the most valuable learning happens and builds resilience for the future. If you have any topics or burning questions you'd like us to cover in future episodes of Leadership Lounge, then please get in touch. Email your questions to redefinersusslerynolds.com until next time. Goodbye.