I doubt that Yeats had today’s events in mind when he envisioned the widening gyre, but he might as well have. For it could be that things are indeed falling apart, the center may not be holding, the falcon can’t seem to hear the falconer. Time will tell.
Media-chronicled turmoil extends across social, political and economic frameworks. And all this has major implications for commerce, to which boards are called to respond in a very significant way.
Periods of such exceptional volatility, uncertainty and ferment are extremely rare. Over the last 25 years, only a few examples come to mind: the Great Recession of 2008; the combination of terrorist attacks and the Enron fraud in late 2001; and (perhaps) the political and economic uncertainty following the 2017 inauguration.
Each of these circumstances were marked by exceptional market unease, social unrest and declining confidence in public institutions. The ceremony of innocence was drowned by fear of future events - a disquieting environment for any business enterprise.
The same elements appear in today’s atmosphere of uncertainty. The current miasma is most prominently symbolized by the government shutdown, but its malodor extends further. It can also be sensed in the effects of hyper-partisanship, the anticipation for the Special Counsel’s report, increasing recessionary fears, trade conflict, significant market fluctuation, the inflation rate and more.
These are business conditions in which boards must stand tall in order to help secure the long term sustainability of the corporate mission. Much greater engagement will be expected of board members with respect to both the affairs of the company and the portfolio of the leadership team.
The gray line separating the roles of governance and management functions must temporarily become translucent at the least, transparent at best. Directors must leave the bench, and join the team on the field—if only for a few key plays.
Such engagement can be manifested in several ways. First, by increased familiarity with the tumultuous events and their impact upon the company, it workforce and its customers. Second, by full awareness of management’s responsive plan. Third, by more active than normal participation in board affairs and the promotion of ideas and solutions. Fourth, by continuing collegiality with and support of senior leadership. Fifth, by greater sensitivity to the impact of events on the company’s workforce culture.
Sixth, by increasing (in an orderly fashion) director access to senior executives apart from board meetings. Seventh, by requiring management to provide relevant information to the board, and to making context and clarification more available as the board may require. Eighth, by leveraging the diversity of perspectives of board members. Ninth, by increasing meeting frequency as necessary. Tenth, by engaging in candid conversations about corporate direction with key stakeholders.
This call for greater board engagement is based on more than traditional fiduciary principles. In some respect it is a logical extension of ESG concepts and corporate citizenship principles.
Corporate executives are increasingly recognizing the challenges confronting business in the current maelstrom. Some, like Merck’s Kenneth Frazier, view it as “an opportunity to help bridge some of these chasms in understanding in our society.”
As Martin Lipton has noted, companies have a useful point of view to share in the public policy dialogue. Boards can be supportive by providing CEOs with guidance on the related messaging and any specific political activity, making sure they are consistent with the corporate business and its purposes.
Ours is both a resilient society and economy. The capacity to withstand crisis and instability seems inbred in the national fabric. But corporate directors can not afford to let events take their course. Their duties to corporate stakeholders require them to stand tall with management when the darkness drops, providing leadership and direction while not overreacting. Even if anarchy is not quite yet loosed upon the world.
