From Where We Sit

Post-crisis recovery and its challenges

Mhycke Gallego Mhycke Gallego

Quoting a famous movie line walang personalan, trabaho lang, the new work-from-home reality proved these two concepts as inseparable — that we can cook, play with our kids, or book a Grab meal while working. This shift has strengthened our resiliency as a people and our culture of being a communal society. In our household, we assign tasks among household members: one takes care of marketing within the budget and chores are rotated among family members. In my case, I have never missed our 8:00 dinner — the same time at which our barangay siren sounds to indicate the start of curfew.

As I write this article, my cousin reminds me that we are on the 100th day in our community quarantine. If I may summarize, assuring our people’s health and ensuring a robust cash position for corporate survival has occupied most of our business leaders’ time in this period. We have built systems and processes and revisited our policies and procedures around those two areas — all within the confines of our homes-now-turned-offices.

What will the next 100 days look like? How do we prepare for recovery and the next normal? What recovery issues and governance challenges will occupy the board’s agenda in the short term?

Post-crisis recovery issues

A recent survey of 306 directors by the National Association of Corporate Directors (NACD) reveals that more than half of board members (54 percent) surveyed say that the changing way in which work gets done is the top post-crisis recovery issue of organizations. This shift in normalcy is a rising concern for boards. NACD Senior Manager Barton Edgerton states: “There is a strong consensus that, at least in the near term, companies will need to find ways to get work done differently than before the crisis and that some of this will likely be fueled by the acceleration of digital transformation.” Threats to cybersecurity and privacy have also surfaced around these new working styles.

The survey also shows that the following trends will have an impact on the post-crisis recovery of organizations: reduced global demand (35 percent), acceleration of digital transformation (32 percent), continued disruption of supply chains (29 percent), a major shift in customer preferences (28 percent) and greater concern for employee health (25), among others. These trends have pushed down traditional board governance issues on investor activism (4 percent) and emphasis on purpose over profit (3 percent) to the lowest ranks.

Governance challenge in the next three months

When asked about the top governance challenges the board expects to face in the next three months, many report that historical strategies are unlikely to survive the post-crisis years. Shaping a realistic post-crisis strategy (60 percent) is the top governance challenge listed by respondents in the NACD survey.

Board members also need to understand the risks stemming from the crisis and get up to speed on all the emerging risk dimensions of the crisis (46 percent). As more members require more interaction with senior management, striking a balance between good governance and not overburdening management (45 percent) is also among the top challenges. Other challenges include: overseeing financial health (45 percent), maintaining business continuity and resilience (32 percent), and managing internal controls with a remote workforce (24 percent), among others. These have pushed board succession planning (5 percent) and director recruitment (4 percent) to the bottom of the list.

While a plurality (48 percent) of board members report that they will continue to regularly communicate with management more than it had before the crisis, less than half (48 percent) of directors do not believe that virtual board meetings are as effective as in-person meetings. These results present another set of dilemmas in board and management dynamics, as restrictions are imposed on senior leaders, because of the age limitation under the quarantine guidelines and the expectation to adapt to today’s technology-driven next normal.

This dilemma brings to mind how my father was introduced to webinars and Zooming (Zoom meetings), and how my ten-year-old niece teaches her grandfather how to use a computer mouse and navigate through the various options and icons of Zoom.

Indeed, this next normal has brought our families closer and deepened relationships. It has allowed our family members to see the work we do to provide for them. It has also allowed us to spend more time with family and learn more about their daily routine, challenges, and sources of happiness, as well as and how we should be there for intimate moments. In the next normal, my highest regards go to colleagues who can work from home and simultaneously play, read, cook, bathe, pray, do chores or become one with their families.

Mhycke Gallego is a Partner of Advisory Services and head of Knowledge Management of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory and outsourcing firms in the Philippines with 23 partners and more than 900 staff members. We’d like to hear from you! Tweet us: @GrantThorntonPH, like us on Facebook: P&A Grant Thornton, and email your comments to mhycke.gallego@ph.gt.com or pagrantthornton@ph.gt.com. For more information, visit our website: www.grantthornton.com.ph.

 

As published in The Manila Times, dated 24 Juen 2020