As companies begin to get a better grasp on the longer-term ramifications of the ongoing coronavirus pandemic, a new survey of 280 public company board members conducted by Chicago-based IPA 100 firm BDO USA finds that the safety of stakeholders – including employees, customers and vendors – is the top governance oversight challenge and priority they’re confronting.
In prioritizing safety – with 87% having implemented new or expanded workplace safety procedures and 71% saying that ensuring employee welfare was their top short-term priority – the board members in BDO’s Board Pulse Survey are, for the time being, putting employee welfare ahead of environmental, social justice and governance (ESG) issues such as promoting leadership diversity (though building a more diverse board/leadership team was the top long-term ESG priority for half of respondents).
“When we talk about ‘employee welfare’ it’s important to recognize that it goes beyond social distancing and hand sanitizer,” says Amy Rojik, BDO national assurance partner and director of the firm’s Center for Corporate Governance and Financial Reporting. “It’s really looking at the workforce holistically, and a lot of the conversations in the board room are centered on the human capital aspects of the employee base and focusing on the broader physical and mental well-being of the employee. Board members understand that these things really do have long-term effects on a company’s sustainability and profit.”
In terms of the widespread move to remote work, most board members believe the shift is likely to be permanent in many cases. Companies are looking to benefit from greater workplace flexibility, broader geographic reach and freed-up capital as they reimagine office space needs and reduce real estate liabilities and travel expenses. Among respondents’ firms, 38% laid off or furloughed workers, while 51% plan to transition to long-term remote work for at least some of their workforce and 28% are planning to reduce their real estate footprint. Even as they embrace more remote work, however, companies will need to focus on two significant challenges – mitigating cyber risks and maintaining corporate culture.
“Most companies are used to operating in some sort of shared physical space with groups of people gathering and interacting every day,” Rojik says. “But how do you keep that together when you now have a workforce that’s geographically dispersed and communicating mainly by video or chat technology? How do you ensure that people in remote environments are getting the support they need? I think that’s why you see the rise of human capital on the board agenda, as well as in the mix of board skill sets. Because it’s going to be very important for companies going forward as they try to figure this all out.”