Since the financial crisis, the challenges facing modern businesses have dramatically increased in scope, frequency and impact. New digital entrants, economic shocks, regulatory changes and senior misconduct are just a few of the causes of firms finding themselves in hot water. For those ill-equipped to handle such disruptions, the results can be disastrous. But, boards that are willing to take a proactive and bold response can crystallise that rarest outcome of a crisis: an opportunity.Most boards need a step change in approach. The first thing that should be avoided when navigating these choppy waters is an over-reliance on established management thinking. To date, much of conventional governance and well-proven leadership approaches have been based on companies operating in a steady state environment. Though well-established, these “peacetime” rules and procedures are largely ill-suited to firms facing out-of-the-ordinary situations. Focusing too heavily on set procedure could lead to a failure to look at the bigger picture, which is often a major barrier to a successful recovery. Those directors who fail to look at the wider context are often reluctant to admit that a corporate crisis is developing in the first place. In order to have a chance at navigating their way through a disruption, boards must be able to recognise and identify the issues they are facing as quickly as possible. A recent report, researched by Alvarez & Marsal and Henley Business School, has analysed the real life experiences of more than 70 seasoned UK executive and non-executive board directors, who have led companies under the most difficult circumstances, including Thomas Cook, BAE Systems and Skype. The research has revealed that a clear-headed approach and a willingness to accept and confront the weaknesses within a business, is absolutely critical in a challenging situation. Read more about the boardroom:
- Board games and misbehaviour: A tug of war between directors and shareholders
- What makes a balanced board of directors?
- The role of the FD and its power to influence the board
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