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When There Is No CEO: How Boards Of Directors Should Prepare For And Respond To A Crisis
From:
Edward Segal, Crisis Management Expert Edward Segal, Crisis Management Expert
Washington, DC
Friday, October 28, 2022

 

 

Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award-Winning Book "Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies" (Nicholas Brealey, 2020)    



CEOs are often called on to provide leadership in a crisis. But what does an organization do when, for whatever reason, there's no one in the corner office to respond to a disaster, scandal, or other business emergencies?

Companies could find themselves in this vexing situation if they don't have a succession plan for when their top executive dies, is fired or resigns, and board members cannot work together to address the crisis.

While rare, delays happen. These worst-case scenarios that become a reality create a crisis for organizations.

'Boards Have A Responsibility'

The possibility of not having a CEO available to lead an organization through a crisis "is one that every company and board should plan for because the consequences can largely be mitigated through proper preparedness," Eric McNulty, associate director of Harvard's National Preparedness Leadership Initiative, said via email

"Boards have a responsibility to ensure they are fit to execute the trust bestowed upon them by shareholders and stakeholders alike, which expands during times of crisis,"  Debra McCormack, who leads global board effectiveness and sustainability at Accenture, said via email.

If there is no CEO or he or she cannot be involved in the decision-making process, "directors should be prepared to lean in to support management, based upon the skills, experiences and capabilities of the individual board members and the area(s) of need," McCormack noted.

6 Key Questions

Responsibility, Impact, And Support

She said that the questions the board may be asking during this time include the following:

  • Is this crisis the responsibility of the entire board, or should this be assigned to a committee or create a subcommittee to oversee and report back to the full board?
  • How will this crisis impact our brand and reputation? What steps are necessary to protect them?
  • Do we have the right leaders to manage this crisis, or do they need additional support?

'Bringing Order To Chaos'

Before taking action, a board should find out all they can about the situation.

"An effective board member should orient around process—bringing order to chaos —versus jumping straight to the response," Meredith Parfet, founder and managing principal of Ravenyard Group, a crisis management consultancy, said via email.

"Lead with the question, 'What is the crisis?' "It sounds simple, but it inevitably unearths multiple viewpoints, highlights overlooked issues, and guides who should be on the crisis response team," she observed.

"Then the board needs to help the organization set a few priorities. Ask, "What are we trying to protect or preserve? What is the purpose of our brand, and how do we maintain it through this crisis," Parfet said. 

"The board can be a powerful voice for calm and reason by doing what the best boards do best, focus on process, listen carefully to multiple perspectives, maintain independence," she concluded.

Preparation

Relationships

Ideally, boards will have prepared for this type of crisis, which includes establishing appropriate relationships with others, Harvard's McNulty, and co-author of You're It: Crisis, Change, and How to Lead When it Matters Most, recommended.

"The board liaison to the crisis team should have a relationship with the crisis team lead much the way that the chair of the audit committee has a relationship with the finance team," he said.

Exercises And War Gaming

"The crisis team should exercise a response where the CEO is not available, and the board should participate [in the exercise] in order to refine protocols, clarify which decisions will be elevated to the board, and practice establishing an operating rhythm," McNulty advised.

Having a plan of temporary succession that is "ready for the contingency of an absent CEO can be established and tested," he concluded.

"A great way to be prepared for future events that could have a significant impact on your business is to test plans by war gaming," John Harte, managing partner at Integrity Governance, said via email.

"For boards,  it provides sophisticated simulation and validation of strategy and contingency plans through predictive analysis. This way ideas, proposals and theories are put under pressure and can be examined to [their] breaking point," he advised.

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Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0

Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.

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