THE ROLE OF THE BOARD IN TIMES OF DISTRESS
Besides immediate concerns over employees’ health, the primary priority of businesses during the fierce downturn is continuity.
For many companies, managing for cash will replace managing for profit.
Boards need to decide on two important issues.
- The first pertains to resources. How much built-up financial resources that would have gone into investment, innovation and strengthening of the business should be used to deal with the crisis and keep the organisation intact as much as possible?
- The second, related issue is about stakeholders. How should the board balance the interests of various stakeholders? Do we keep most staff on the payroll or do we dismiss them to minimise losses? Do we pay a dividend to shareholders or do we suspend it to avoid more radical cost-cutting? Do we shore up the company’s finances or do we also help others in the company’s ecosystem?