“If you are going through hell, keep going” – good governance in times of crisis.
Meet Peter Sarasyn , a passionate entrepreneur and director with ample experience in various administrative contexts both in family-run organisations and companies listed on the stock exchange. Peter wishes to inspire you and shares his experience with this interesting article about governance during a crisis.
Director and CEO of organisations with passion, nerve and confidence
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Please introduce yourself and explain the context in which you carry out your mandates
I have experience as a director and CEO of family-run (industrial) holdings, have worked as a partner at companies offering professional services with a strongly hierarchical culture and have also worked as a Managing Director for various entities of a group listed on the stock exchange. These days, I am a director and CEO at a Belgian family-run organisation and, for example, the following themes are a high priority for the boards of directors that I am a part of: The COVID-19 crisis and the consequences for our customers (production capacity/supply chain challenges), the financial performance of the operational entities (versus the budget), family governance, sustainability and digital business transformation in relation to the new earning and future business models.
Why did you decide to become a director?
Wishing to be a director has always been related in some way with wanting to take the initiative and wanting to build up and achieve something that had a useful purpose. As a consultant for large organisations, I've worked on 4 continents and this has made me humble. It has also made me thankful that I've got sufficient knowledge and experience to always have added value in boards of directors. My membership and the GUBERNA training courses have also helped me with regard to this.
I am convinced that organisations can be successful when the board of directors shows effective leadership. These days I'm also intrigued by the ESG sustainability objectives that means that I also see my role as a director as a social responsibility while searching for better results for the company and for society.
What have been your experiences up to now?
With this interview, I want to share my experiences in managing during times of crises. As a director, I've been confronted with situations where it is extremely important to keep a cool head and make smart decisions and continue to make them while being a member of various boards of directors. The pressure is high and emotions often run high too. Within this environment, boards of directors and management teams must undertake actions and directors may be made liable for the wrong decisions. The board of directors, after all, is a collegial body that is responsible for the continuity and success of the company in the long term.
These days, organisations find themselves in a continuously evolving and ever more complex becoming environment, what is commonly referred to as the nearly unpredictable VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world, where one must always be on the lookout for a threat of a crisis. Management and the board of directors must take action to guide the ship through the storm. A board of directors must continue to think and keep calm, even when the house is nearly going up in flames.
You must be able to discuss everything and there must not be any taboos in a correctly operating board of directors. Not easy for a family-run business where some topics are very personal for a family shareholder. The “elephant in the (board)room” saying.
When the same debates continue to be had, they can quickly lead to conflict and then it is important that the board of directors intervenes quickly. If not, there is a probability that:
- The other agenda items are not sufficiently discussed;
- The consultation results in marathon meetings, which is not beneficial to effective decision-making;
- Sides are created in the board of directors, which means that other decisions are blocked and/or are no longer taken in an unbiased manner;
- In the worst case scenario, the divisions become known outside the board of directors such as, for example, amongst employees or other stakeholders.
To maintain the balance between the different interests within a board of directors and the interest of the company as such and also to prevent tunnel vision, the usefulness of external (independent) directors cannot be stressed enough.
The interaction between the board of directors and management will, for example, improve the internal communication during crisis situations. The tandem of chairperson and CEO is therefore essential in difficult times.
As has been rightly indicated in the Buysse Code (5.19), the chairperson is, after all, “a key figure who:
- Ensures that the board of directors operates as it should;
- Is aware of what is going on amongst shareholders, directors and management;
- Is a point of contact and sounding board for each of these players;
- Takes initiatives quickly and expertly where required;
- Has the profile of a mediator and an arbitrator;
- Is an ambassador for the company.”
The Buysse Code also states:
- “The chairperson presides over the board of directors. The chairperson takes the measures necessary to create a climate of trust within the board of directors, which contributes to open discussion, constructive criticism and support for the decisions of the board. The chairperson ensures that all points of view can be discussed and aims at reaching consensus within the board of directors.” (5.20)
- “The managing director and the chairperson are in regular contact and exchange information in a timely manner. They support each other and respect each other's roles.” (5.23)
The chairperson can indeed act as the “deminer” in all his/her wisdom and based on his/her role to achieve a climate of trust. A must because every CEO may at some point be in conflict with a director or his/her board of directors. As the CEO of an organisation, I regard the board of directors as my strategic partner, my sounding board and my adviser. Until now, I, as the CEO, have also been a member of the board of directors. The success of the organisation, after all, is mainly dependent on the effectiveness of the board of directors. I have learned something valuable from each chairperson with whom I have worked together up to now. I'm very grateful for that.
Which impact does the current crisis have on your role as a director?
You cannot always prevent a crisis. As the board of directors, it's best to be prepared for a crisis because, if not, it will be overwhelming and you cannot take the main role. The last thing an organisation needs is a board of directors that is also in a panic and isolates itself in a ‘panic room’. Everybody is under pressure and everything happens at the same time if you do not keep your eye on the ball. Someone must keep a cool head to prevent chaos. When things heat up, the CEO and his/her board of directors must show leadership because, at that moment, all stakeholders will be looking at you to guide them through the storm. In other words, keep calm and carry on because even if everything is burning around you, a board of directors and a CEO can never afford not to keep calm.
One of the characteristics of crisis situations is that they can change quickly. The capability of adjusting quickly is essential within this context. I believe that a board of directors must not stubbornly keep hold of a plan during crisis situations. Instead, it is important that the board of directors receives sufficient updates from experts in the line of fire who know exactly what is going on based on which the board of directors and the CEO can adjust their strategy. Good directors must be able to think five to six steps ahead as chess players do. Responding in a timely manner must, however, not be confused with acting hastily. A board of directors must take decisions fast but in a well-considered manner. My big example and mentor in this is without a doubt Winston Churchill.
During a crisis (as with the COVID-19 health crisis, a hostile takeover, a necessary restructure or any other situation that involves much uncertainty), there is a risk that the Managing Director (and his/her management team) ends up being overtired because so much is hitting the organisation at the same time from various sides. During such moments, I've learned that you should keep your energy level firmly in focus rather than how you spend your time because you will be confronted with an "everything is a priority" situation. It is important at such times that you dare set priorities and that you can quickly arrive at well-considered decisions. As a Managing Director, I've always been able to count on the support of my chairperson at such times (when I think back on this). It can get very heated during meetings in the boardroom, but, ultimately, it is important for the organisation that constructive cooperation ensues and that the Managing Director is supported in implementing what was, without a doubt, already difficult choices. Do not forget that, during a crisis situation, it is very probable that nobody is really in full control. It is up to the board of directors and the Managing Director to manage appropriately and consistently regarding the suitable response to a crisis event by correctly deploying resources and people that will lead to a solution.
In your opinion, which competences and skills are essential to be a good director?
I'm convinced that, at such difficult times, the diversity amongst the members of the board of directors makes the difference. If problems occur, it is important that you come up with solutions based on different points of view and backgrounds. The most frustrating issue for a leader is when, in the first instance, there doesn't seem to be any other options. Based on the governance reflection, boards of directors will, at such times, often first think in terms of controlling legal risks and communicating with shareholders and investors. Nevertheless, a lot more is at stake. Such as customers and employees.
What do you consider to be your specific added value for a board?
If you end up in a storm, it is not the time to decide, as the board of directors, to wait until the storm clouds have passed. I have learned to enjoy the rain at different moments during the past few years and therefore I have a great capacity to keep on leading and thinking in precarious situations.
In addition, I'm now an expert in (digital) business transformation, strategic planning and leadership of companies and organisation cultures for both traditional incumbent organisations that are searching for a future-proof model and for healthy companies with a daring ambition to grow.
Which themes deserve full attention in the boardroom?
It’s still a challenge to keep energy levels high within the board of directors and to continue to believe during a crisis. The faster members of the board of directors can engage with a clear vision, the better for the organisation. A board of directors must, after all, exude confidence and it is best if all the members say the same thing once they have left the boardroom. It’s a moral duty!
Don't forget that a crisis also forces decision taking, which means that critical situations that sometimes have been present for many years, can finally be tackled. You simply need to make a decision during a crisis as a board of directors: make short-term decisions that will often have a long-term impact. A board of directors shows effective leadership when it can keep a cool head under pressure and, at that moment, can also think ahead and develop a long-term vision from the existing situation. As a board of directors, you must then have reliable information and sufficient data to assess all possible scenarios (and also consequences).
A crisis is not the time to change the composition of the board of directors (possibly the CEO, if required, but that is a different discussion). By contrast, the role of the board of directors will strongly depend on the (internal or external) context and will be in proportion to the crisis situation in which you end up in. In an internal situation where the CEO does not implement the required policy or if a conflict of interest situation occurs in relation to management, the controlling task of the board of directors will strongly hold a prominent place. The strategic role will disappear somewhat to the background due to this. In other situations, the strategic role of the board of directors will actually become more important because, during a crisis, the emphasis may also be on the short-term strategy. In accordance with the stakeholder model, sometimes the coordinating role of the board of directors will be more significant and, in particular, in a board of directors of a holding where participations in the operational entities are the main assets.
During normal conditions, the board of directors meets every month or two months, but, in a crisis situation, the board of directors will meet more frequently in accordance with the requirements/time pressure (for example, during the first wave of the COVID-19 crisis, many companies were confronted with sharply dropping sales fairly unexpectedly and suddenly because the authorities announced self-isolation measures and non-essential stores needed to close) and/or depending on the impact (such as, for example, crisis situations when a company ends up in a media crisis and the correct external communication strategy is crucial to weather the storm). The board of directors will also be in more frequent contact with management.
Do you have any tips for (future) members of the board?
I primarily want to say to future directors that I hope they can gain experience from a young or younger age with regard to and in participating in a board of directors. The provisions and regulations in accordance with the articles of association and legal ones are sometimes overwhelming and especially if you are not legally minded, but the corporate governance codes are practical in nature and, for me, the most suitable director is still someone with a lot of common sense and integrity who will do what is right and important for the organisation.
How did the GUBERNA education programmes contribute towards your success as a director?
I am a member of GUBERNA since 12 years already (I'm therefore a fan) and have been accredited by GUBERNA as a director since 2014. The GUBERNA study courses and, in particular for me, the Board Effectiveness study course has taught me not just necessary but mainly practical knowledge of the corporate governance codes by taking effective part in the lively debates about the application of the corporate governance codes.
How does the GUBERNA Alumni network support you in your role of director?
GUBERNA has contributed to my knowledge network and, in this way, I never feel alone in relation to what sometimes are difficult issues to take decisions on as a director. Due to the many network opportunities, I have mainly met many new, fascinating people with whom I share the same passions to manage organisations in a sustainable and sound manner and to help them grow.
Over de interviewer
This interview has been conducted by Ingrid De Poorter
Managing Partner De Groote – De Man, director at various companies, Professor UGhent
+32 9 225 23 16
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