Four effective ways for a board to steer its way through a crisis

1. Know when to step in and stay out

When a business is in crisis, board directors must roll up their sleeves and step into the action. This doesn’t mean they should overstep the mark by micromanaging every decision the CEO makes or lose sight of the long-term vision. Rather, boards must be ready to adapt to the needs, timelines, and capabilities of the CEO and executive team. On these occasions, weekly, if not daily, meetings and an intensified committee workload will be the rule rather than the exception. In extreme (typically last resort) situations, board members may need to assume executive roles. This might be the case when the CEO or key executives are the source of the crisis or are unable to lead effectively. In 2019, Peter Voser, then chairman of Swiss engineering group ABB, became interim CEO when the incumbent agreed with the board to step down. Voser’s confident leadership helped ABB to navigate a challenging restructuring process, maintain employee morale, and focus on long-term goals until a new CEO was appointed.

2. Know when to maintain independence

A good relationship between the chair, board members, and CEO is key, but never more so than in times of crisis. Trust and proactive communication are crucial for the board to oversee and support management decisions effectively. At the same time, the board has a responsibility to preserve its independence, assessing all available options thoroughly to make swift decisions based on the available information at the time. The chair and select directors should also establish direct relationships with key stakeholders, such as investors, clients, regulators, and government bodies, ensuring the board’s independence and oversight role. Further, they should allocate resources and support for critical third-party assistance to maintain this balance during challenging times.

3. Know how to manage emotions (yours and others)

In a crisis, the stakes are high, emotions run deep, and the pressure on the board and senior management can feel overwhelming. Careers and reputations are on the line, with the threat of job losses and potential long-term legal action. Yet, these very moments can forge unity and solidarity within teams. The chair’s pivotal role is to create a safe place for open challenge and dialogue, remaining accessible to fellow directors, the CEO, and senior executives. They serve as a crucial conduit between the board and senior management, ensuring the board stays informed without swamping management with demands. Recognizing the full toll of a crisis is vital. The board must address the leadership’s emotional, physical, and psychological well-being. Vigilance for early warning signs – denial, blame-shifting, or trivial distractions – is essential, requiring tactful intervention. Promoting norms for respectful communication and decision-making can mitigate emotional reactions. In highly charged situations with emotional outbursts and overreactions, providing space for board members and executives to express and work through their emotions can refocus efforts on critical tasks. By upholding values of empathy, compassion, and care, the organization encourages openness and sharing personal challenges, normalizing vulnerability as a strength.

4. Know how to lead by example

Board directors and senior leaders are constantly under scrutiny – not just for their decisions and actions but also for their behavior, commitment, and values. When Deutsche Bank faced financial and legal challenges, CEO John Cryan embraced austerity by agreeing with the board to take a reduced salary and forgo bonuses, aligning with the bank’s cost-cutting measures. Directors and senior leaders must model healthy behaviors and emotional self-regulation, maintain a positive spirit, and avoid negative comments. The chair and CEO, in particular, should present a unified front, showing solidarity and a shared commitment to managing the crisis with confidence and decisiveness. Despite all the challenges, it’s crucial to approach meetings with a positive attitude and productive energy. Effective directors and leaders understand how their emotional responses affect their behavior and strive to maintain high energy levels and reduce stress. Leading by example encourages the company’s executives to mirror this attitude. Staying calm and composed, even in high-pressure situations, sets the tone for the organization. Celebrating small wins and practicing gratitude can also help counteract negative bias.

As seen with Uber, crises often have cascading effects that throw up new risks. The saying “it will get worse before it gets better” often holds true. Situations tend to deteriorate before improving, so boards must rely not just on solid crisis planning and “hard facts” but also be acutely aware of the soft factors that can help or hinder crisis management.