Corporate Governance and its Effectiveness in Times of Crisis

7 minutes

Is there a place for corporate governance in wartime companies? A conversation with the head of the company began about this issue. There is only one answer: there is and there should be!

Corporate management, its effectiveness in times of crisis becomes even more important – because it is about the fulfillment of its main mission – business management and the business must survive Yuriy Sorochynskiy emphasizes

When the war started, the first question that arose was people, how to save them, the CEO of Nemiroff recalls. Therefore, the first points are the safety of people and the preservation of all assets.

The next step is to ensure a stable business, even in conditions of uncertainty. The relationship between management and the company’s supervisory board is very important.

“In times of crisis, the CEO of the company needs the expertise of the members of the Board of Directors, especially its independent members. The maturity of the members of the Council comes to the fore, their “maturity”, and their life experience (not even industry experience). Because they can, in addition to the usual support of the CEO, also provide a view of the situation from a different angle, which in this situation can be much more important,” – notes Yuriy Sorochynskiy.

The board of directors should be more proactive, while not getting in the way of minor interventions. At the same time, it is important not to be a “nanny” for the CEO who will do everything for him. There should be a healthy trade-off between assistance, risk sharing, and business support.

In a crisis, the CEO becomes an integrator-communicator not only from the inside of the business (between the supervisory board and management) but also from the outside, supporting and receiving help from others, for everyone to pass a difficult test together as quickly as possible and with the least losses.

“On February 24, our business was officially banned in the state,” – says the Nemiroff CEO. “Yes, our business is specific. But we act as the final link in a large chain, providing work to many related businesses. It took us 3-4 weeks to persuade the state to cooperate with us – to support the economy.”

Another topic discussed by the meeting participants is the return of owners/co-owners to operational business management. One of the reasons for such a step, according to the manager, is the existence of complex, bureaucratized business processes in which the business operates under normal conditions. There were certain procedures with a certain speed of decision-making, which suited everyone until February 24.

After February 24, the pace of decision-making has changed, and processes are moving in a different format. However, realizing that it is too late to reengineer processes and develop new scenarios, the business owner is ready to take responsibility for making management decisions.

“With us,” – adds the CEO of the company, – “the business processes, as they are built, do not take a lot of time to make certain decisions.” When production resumed, we returned to our usual work format.”

Should we change our approaches to risk assessment and response? Oksana Paraskeva asked about the next topic. – Those companies that took into account the risk of war at least to some extent are now more stable and feel better than those that – according to the classic response model – rejected this risk.

“I think we’re all going to start looking at risk a little differently – more meticulously, trying to paint different scenarios. At the recent meeting of the Board of Directors, during the procedure for considering risks according to the developed matrix, a completely different sensitivity to each of them was observed than at the meeting that took place before the war. Risk management is becoming quite relevant again,” – commented Yuriy Sorochynskiy.

Work for the future. Life after the war. What are the challenges facing the company?

“We only suspended for 2 months all our projects related to efficiency improvement, personnel development, and work on the expansion of sales markets. Then we continued to do it. They were included in our scenarios, and our business plans, and that’s how we continue to move.

This gives additional optimism to the team, which sees that even in these difficult conditions we do not stop, we are talking about constant development, constant improvement, – emphasized Nemiroff CEO Yuriy Sorochynskiy. – Those who do this homework now, instead of putting it off for later, after the Victory, will later gain competitive advantages. Precisely because, even in the period of crisis, one must think about the future and look ahead.”

You can watch the full video recording of the second meeting of the third season of the CorpGov & Live Talks project at the link: https://fb.watch/eqg4ECndVX/