THE pandemic has been a mere six months but to many company heads, it probably seems longer. Running a business in times like this is stressful to say the least. Businesses everywhere, in every sector, have been tested to their limits.
Regulations and risks are constantly in flux, so agility has become the most prized asset. But looking further down the line, the way that businesses will be run will look remarkably different after the lessons of this pandemic have been digested.
One of the biggest changes that management now has to consider is how checks and balances will be carried out post-Covid-19. With fewer employees working on site, checks and balances will need to be automated. Internal controls that need to be done manually and require physical presence at the minute will need to evolve.
For every process, companies need to have meaningful systems and technology in place that detect any problems. Be it to do with employee performance or accountability and compliance, businesses need to move to a continuous monitoring concept that is not dependent on being physically present. Some controls that are reliant on people being at work onsite will soon be obsolete.
Alongside this move for automated checks and balances is the fact that employee safety will now be put front and centre of company policy. Expectations - from regulators and employees themselves - will change in the future, and companies need to have the right procedures to protect their staff.
This was blatantly obvious in the latest earnings season when companies across the board highlighted the ways that they were keeping their employees safe in their quarterly results.
Any news of Covid-19 infection among staff or clients will no doubt hurt any brand, especially in our hyper-connected world. So one can bet that companies are doing more than just paying lip-service when it comes to employee safety.
Even before the pandemic, the increased emphasis on employees within the scope of corporate governance was already evident. In the latest Code of Corporate Governance released by the Monetary Authority of Singapore, boards are encouraged to adopt "an inclusive approach by considering and balancing the needs and interests of material stakeholders". In a post-Covid-19 world, this will likely include a particular focus on safety.
Protecting employees over these past few months has led to an epochal shift where tens of millions globally have been working from home. Undeniably, this has led to some corporate governance headaches.
Cyber security is one of the biggest concerns for companies as employees work remotely, with productivity coming a close second. As this new trend of working from home will likely continue, the moniker "WFH" will soon morph into working from anywhere. Hence, companies need to have clear remote-work policies that ensure the confidentiality of their data especially those of employees and clients.
At a board level, this pandemic is also likely to bring monumental changes. And the biggest one will hopefully come down to diversity. In a time of crisis, the presence of diversity is essential to challenge companies to look at problems differently and more inclusively. Solutions will also be more wide-ranging. The more diverse the people around the table are, the more likely the board is to avoid the trap of such biases.
In a way, the movement towards working flexibility also lends itself to greater gender equality at work. Women often cite the work-home balance as one of the difficulties of climbing the corporate ladder. But perhaps as work becomes more adaptable, this will lead to a more gender-diverse workforce and leadership.
This pandemic has raised doubt about many companies' existing business models. Businesses that have previously not had a digital footprint are now scrambling to catch up. And traditional brick and mortar shops are urgently building an online presence. But with this push towards digitalisation, many board members may need to ask themselves some difficult questions about their value and skill set.
For years, governments and companies have been calling for general upskilling of the workforce but rarely has this argument been applied to the highest echelons. An understanding of the digital world will be necessary, and boards will have to exemplify that. Within a few years, it may be that the depth of a board member's technical knowledge may not be sufficient for them to make decisions at such a level.
Covid-19 has been a rude awakening for many firms. But now that the unimaginable has occurred, board directors and executives will not be pardoned for not having a "full playbook" for future upheavals. While the regulatory environment may be a little more forgiving during this crisis, this probably will not be the case further down the line. As the pandemic pushes all of us into a new normal, checks and balances have to move along with it.
- The writers are from PwC Singapore.
- Marcus Lam is Assurance leader and David Toh, Governance, Risk and Controls leader.