How 2020 has changed corporate board work

Hosted by Neil Amato

Corporate board work may have changed forever as a result of COVID-19. The lessons corporate directors take away from the pandemic will be critical to company survival and success beyond 2020. Paula Loop, CPA, the leader of PwC’s Governance Insights Center, explains in this podcast episode how boards have been changed and what they’re thinking about as they navigate the pandemic’s effect on business.

What you’ll learn from this podcast episode:

  • Why Loop says now is the time to learn lessons and be better prepared for the next crisis.
  • Why there seems to be a disconnect between board members and corporate crisis management plans.
  • The lessons boards have learned about digital transformation, customer habits, and corporate real estate needs.
  • The board topics on which male and female directors differ.

Play the episode below or read the edited transcript:

To comment on this podcast episode or to suggest an idea for another episode, contact Neil Amato, a
JofA senior editor, at


Neil Amato: Paula, discussing the PwC corporate directors survey, which I believe is an annual survey, what does this latest one show you about board’s ability to rapidly adjust to all the changes that have happened in 2020?

Paula Loop: Yes, this is our Annual Corporate Directors Survey for 2020. We've been doing it for several years, and it gives us lots of really good insights regarding what’s going on in the boardroom, what’s on the minds of public company directors. And I think this year what we really learned is that while there was a, obviously, a significant crisis that happened in the spring of this year and we're working our way through it this year, there were other even significant things that were going on around the crisis that boards were also able to get their arms around and make progress towards as well as dealing with the crisis. So we saw things, for example, they showed an increased awareness and focus on ESG, environmental, social, and governance issues.

A continued focus on shareholder and shareholder engagement and transparency with shareholders. So lots of things were going on as well as dealing with the crisis. So it was a very interesting year for directors. I think they probably have spent more time in meetings than they had in the past. But they seemed to have gotten a lot done as well.

Amato: So we’ll come back to that, spending a lot more time in meetings, in just a bit. I’m going to ask about one of the stats that’s in the key findings that 37% say their board fully understands their company’s crisis management plan. They have that number, that’s about a third to 40%. But they give their companies overall really high marks for how they’ve navigated the pandemic from an operational perspective. Why is there such a difference on that front?

Loop: Yeah, I think it was surprising to us as well, right. So right out of the gate, any question we really asked related to how did your company deal with the crisis from going to remote working, employee satisfaction during that time, communication with either clients, suppliers, shareholders, all that. Any question that we really asked around the immediate reaction to COVID and the immediate ability to deal with the pandemic got really high marks. So I think generally I would say that I think boards felt like, wow, this is something that we weren’t expecting. It was the real unusual crisis that hit us all and surprisingly, our management teams did a really very good job in dealing with it.

Now, if you peel that back a little bit and you ask more about, well, how do they really understand the company’s crisis management plan and what needs to happen and the protocols and all that, there’s still basically directors are still saying that, OK, now they’ve worked through a crisis. But they’re not sure they still really understand the nitty gritty of the crisis plan. Albeit, they have confidence that the company can deal with the crisis, but they don’t have the ins and outs of the process. And when we asked — pulled back the onion a little bit more even on that topic, I think there was also some learnings on the how the board deals with a crisis.

So that was another component that I think boards learned a lot about what their role is in the crisis and have actually made some — maybe are thinking about steps for improvement as the crisis progresses. And they also prepare for the next crisis that comes around the corner.

Amato: So a note that we are recording the 28th of September. Regarding when these answers were collected, I may have missed it in there. But can you tell me when the directors were responding to the survey?

Loop: It really was right around the beginning and uncertain time of the pandemic. So March to early May time frame.

Amato: Thank you for that. Not specifically survey-related but I think definitely board-related, board management-related. How do boards decide what to do about using cash reserves and then is now the time to spend them?

Loop: Well, I think that’s an interesting question. It probably depends highly on the circumstances for each company, right. I mean certainly when we got into the COVID situation in March, in the very beginning I think liquidity was the number one thing that companies and boards were focusing on because no one really understood much about the crisis. We had no idea how long it would go on for, what the toll would be. Nobody really was comfortable forecasting revenue, for example, or forecasting collections. All those things were in question, and I think you saw lots of companies in the March to May and even a little bit beyond that time frame going out an renegotiating or negotiating revolvers and lines of credit and other things that they would have access to cash should they need it.

Because again, that unknown was such a big question. So I think it really depends on the business you’re in, the industry you’re in, how you went into the crisis, what your balance sheet looked like at the time, and then your ability to do some forecasting, which have gotten better now that we're in September. But it really was a challenge in the first several months of the crisis.

Amato: Yeah, so obviously you haven’t really had a chance to go back to them and find their sentiment maybe a week ago or something. But do you feel like, I don't know, this is — I’m asking you to speculate, that they see more of an end now?

Loop: Well, I think that for companies they see a little bit more of a we're in a steady period, let’s just say, right. Like I said, in the beginning, nobody really — I mean the forecasting and scenario planning was really the craziest part of it. But trying to figure out what is the next month potentially look like from a revenue or a sales perspective and then even harder, what would nine months or three months or six months out look like? Well, now that we've been in the pandemic for several months, we have fairly consistent – I think businesses are seeing a fairly consistent view of what’s going to happen with their products and their sales, their customers, their suppliers, all that sort of thing.

They’re much — it’s much easier to forecast the future. Now, it’s still not as easy as it probably would have been a year ago, but it’s much easier to do that. So I think that’s really what companies need to be able to figure out the crystal ball of what’s coming ahead. They need to get a little bit of consistency, and once they can start to get sort of a consistent environment, they can do that a little bit easier.

Amato: The introduction to the report says with everyday life upended, boardrooms changed drastically. Gone were the site visits, the strategy retreats, and board dinners. Gone was the boardroom itself. So how has the process of board work changed since, say, early March?

Loop: Yeah, I think board work has changed quite a bit. First of all, I think many boards went to some sort of a consistent update or meeting format so that they could stay abreast of what was happening with the pandemic, the impacts on the company. So we saw lots of companies that were doing standing board calls once a week, every Saturday morning or once every other week kind of a thing. Depending on, again, where you were with the liquidity crisis, what other crises you have that you were trying to deal with. And that was in the beginning, and part of it was because I think boards wanted to be very respectful of management. Management was quite busy dealing with all these different issues and running around, and they didn’t necessarily have all the answers either.

So they wanted to try to make it a consistent, timely, and effective update for the management teams so they didn’t take up too much of their time. So we saw that in the beginning quite a bit. I think companies have pulled back from that, or boards have pulled back from that, as we steadied a little bit in the environment. But I still think that you’re getting more updates on different things than you would normally have gotten. I think a very typical topic, for sure, is let’s get into where do we see the forecast going? And you probably wouldn’t have spent that much time on it, it would have been look, we're making budget or we're not making budget or what have you. Now, it’s more the nitty gritty of why aren’t we, what is it, what component, is this component coming back on the market, is this component not working well in the market.

So I think you're getting more details now than you were. I’m not hearing of a lot of boards that are going back to in-person meetings yet unless it's something where you can easily drive. The board is fairly local, let’s just say, and they feel like they can do something appropriately socially distanced for everyone to participate. But in most instances, board members are coming from all over the country for a meeting, and so I think most boards are still doing their calls and their sessions virtually. Which makes it hard, right, because there’s a lot of conversation that happens, there’s the meeting conversation. But there’s the conversation that happens over lunch, that happens on the way to getting a cup of coffee and back, and this and that.

And that even some boards have onboarded new board members in this time period. They were bringing on a new board member, and people haven’t even met that person in person yet, right. It’s all been done virtually. So I think board meetings, in general, are still challenging.

Amato: What do you see now as the future for in-person board meetings?

Loop: I think boards, like companies, I think we've all — this has all worked fine and we've all been able to do things remotely and we've proven to ourselves that we can if we need to. But I think for most boards and most companies, management teams, and even teams in companies, we do recognize that there is some value to coming together in person. Maybe not all the time, but certainly at some point, right. I think everybody feels that that’s a missing human activity that we all think that we need.

So I guess I could see boards saying going forward well, wow, maybe we can have one or more meetings during the year virtually because we've figured out how to do this and this works. But I would also say that I think boards will continue to try to come together in person if they can, if it’s safe.

Amato: How can boards oversee capital decisions in general, people management, health, welfare, and safety, maybe things that they didn’t even have to think about in addition to all their previous — I know those things were a focus previously. Or at least under their purview, but it seems like they’ve come to the forefront more.

Loop: Yeah, I mean returning to the workplace, that whole concept of how, the safety aspects to it, the costs aspects to it, all of that, was a really big topic for companies that probably came around in like the April, May time frame, I would say. But it continues to be on the list because companies still have not been coming — been going back into the workplace. So and I think boards start from the very beginning just getting an update on what was the company thinking about. What were the costs associated with it? What are the safety concerns? How are you going to manage those? So I think that became a very much a regular board topic in the late April, early May timeframe through now.

I think on every board call that I’m on and that others are on, that topic comes up of: Well, what do we think the timing is now? When do we think we're going back to the office or not? What are we doing with analyzing real estate costs? What are we doing as we think about safety for our employees? So those topics are definitely on the agenda on a regular basis.

Amato: What are examples of some of the things that forward-thinking boards have done to — using words from the report — “inspire positive change” amidst all of this disruption on so many fronts?

Loop: Yeah, I think the one thing that COVID did teach us, right, was to be able to be agile, to pivot if you need to, to think differently, to learn from this experience we're all going through, and see what can you take from this that will be valuable going forward. So I mentioned earlier real estate costs, right. So I know that almost every company that I interact with while they are recognizing that there’s a need for people to come back to the office and be together at some point, they’re also recognizing that there’s potentially a core group or a small group or a significant group of people that might be able to work substantially remotely going forward.

And then we might not need the same real estate footprint that we’d always traditionally had and thought was so imperative to our business. So there’s an example. Another example of learning is interfacing with consumers. Consumer companies learned a lot during the crisis. They learned a lot about where consumers like to go to buy things. I think many consumers that didn’t do a lot of online shopping and so forth are now pretty good at it, right. And so it kind of forced a different behavior. So companies should be reacting and seeing those cues and thinking about: OK, how are we going to change things going forward related to that?

Digital transformation, so many things can be automated, can be done differently using technology. And almost all companies recognize right when the crisis hit that the more you have that, the more you were leveraging technology in the past or even adopting digital and doing some transformation there, the more prepared you were to deal with a remote process. Even if it's remote working, if it’s remote selling, whatever it was. So I think many companies, again, are thinking about switching up some of their investment spend and putting more investment spending into accelerating their technology or digital transformations. So I think it's really important for boards, when there’s a time of crisis like this and things are really changing rapidly, to make sure you’re sitting back and capturing the potential highlights from this and that thing that you can leverage going forward that will improve and change your business.

Instead of saying the whole time, I just want to go back to where we were. I want to go back to status quo. Instead, thinking about are there some nuggets in here that we can take forward and are really going to change us and accelerate our strategy for the future.

Amato: So I’m going to ask two questions about the makeup of boards before we end with closing thoughts. First, I saw the statistic that 34% of directors believe it's important to have a racially diverse board. How has that feeling changed if any over the years? And especially in 2020 as COVID has also disrupted things, but there has been a racial justice conversation in this country that’s been obviously prominent.

Loop: Yeah, so a couple of things, one, that percentage, we've asked that question over the years, and it hasn’t really had significant change in the last several years. But remember that our survey was done right before the real focus on this in the country, in the media, and everything that happened in the late May, June time frame. I would say just anecdotally, so not survey-related, that many boards that I’ve interacted with in during this last summer and up until now are talking quite a bit about what do we need to do to better diversify our board?

So I think it’s getting a lot of attention, I think there’s a lot of work still to be done for many underrepresented minority groups as well as gender diversity. If you really want to make your board representative of the working population, there is a lot of room to go to get there. And so I think boards need to continue to focus on that and think about that with a really broad lens.

Amato: There’s a section in the report on I think it’s seven areas where male and female board members seem to disagree. Could you hit a couple of the highlights of those differences?

Loop: Yeah, it is interesting. We always like to sort of slice and dice the survey results to see if there’s any differences by gender or by board tenure or something. And the ones that we see by gender are very interesting. We see female directors see much more of a connection between environmental, social, and governance, so ESG-related issues and company strategy and thinking about things a little bit differently related to those areas. So I think that’s one area where diversity on the board might be a little bit helpful. Also, the female directors that we've asked when we ask: What inhibits board diversity? Couple of examples there: They are more likely to say that board leadership just isn’t invested in board diversity or even say that the company leadership is not as invested in diversity and that’s why we're not seeing as much change on the board.

So that’s more likely a female view than a male view. I think female directors are a little bit more focused also on diversity from a broader sense and the importance of that on the board. They think that they give gender, racial, and ethnic diversity, age diversity, operational diversity, really all sorts of elements of diversity, they value higher than their male colleagues.

Amato: Paula, this has been very informative today, but I’ve kind of driven the conversation. So in closing, I’ll say is there anything else from the survey that you would like to pass on that you think is important that we haven’t discussed?

Loop: Yeah, I think the one thing I would add that I think is an interesting topic. We heard a lot of advancement around the board’s understanding and thinking about ESG. And what the board needed to do there and vetting it more in the strategy discussion and all of that. The one area that we were a little bit surprised that we didn’t see as much progress in is the board’s ability to sort of link the importance of ESG with the bottom line. And so I think that’s an area that we still need to do a lot of work on. And I think it's also for executive teams, also still need to do some more thinking about. Maybe some more return on investment analysis and effort to really understand how environmental, social, and governance issues will benefit the company’s bottom line or not.

And boards need to follow and understand that as well because we clearly see that that’s one gap where institutional investors and other investors are really pushing this agenda. But it’s not connecting from a financial perspective with the board members.

Amato: Paula, thank you very much.

Loop: You are entirely welcome.