Making difficult business decisions
However, common to all is that every director or business owner, no matter the size of their business, the industry sector they work in, where they are located, or their official title, will be having to make difficult decisions as the ‘new normal’ becomes a reality.
Making difficult decisions, especially those that impact shareholders, investors, staff, and suppliers, is something directors do, day in and day out. However, during and after a crisis their decision-making skills are going to be tested more than ever before.
Despite the inevitable focus on short-term fire-fighting, it is hoped that a sense of perspective will be maintained regarding the longer-term purpose and values of their organisation, which will enable them to think about the crisis as an opportunity to adapt and renew their organisations.
Director Competency Framework
The Institute of Directors’ (IoD) unique Director Competency Framework (Pictured) provides an accessible, measurable and achievable guide to the knowledge, skills and mind-set required, to not only perform effectively as a director, but to successfully lead an organisation whatever the sector, industry or location.
As we come out of the COVID-19 crisis, directors will need to demonstrate expertise in all of the competencies within the framework. Yet, there are a few that will set the best directors apart.
Leadership and Stakeholder Relations Experience
Knowledge of, and experience in, leadership and stakeholder relations will be crucial as negotiations take place over the coming months. Naturally, relations with staff will be at the forefront of most directors’ minds, but they will also need to show strong leadership during discussions with suppliers, landlord or indeed tenants, their local councils, the media, and customers too.
Good Communication Skills
Good communication skills are always essential for effective directors, and again now more than ever. Communications from leaders will need to be at clear, consistent, and delivered, by a variety of means, with integrity. If the news being shared may have a negative impact on those receiving it, directors should be as transparent, and above all, as authentic as possible.
Being Emotionally Intelligent Leaders
Directors who are aware of themselves and others are doing their utmost to be emotionally intelligent leaders. They use emotional information to guide their thinking and behaviours and can adjust their leadership style, or the way they communicate, in line with the stakeholders they are interacting with at any given time.
There are few directors who will be able to hand on heart say they have mastered all of the competencies from the IoD framework. The best directors are those that recognise they need to continually improve their knowledge, skills, and mindset.
Yet, above all, it is worth remembering that the Board is the body with ultimate legal responsibility for the organisation. Consequently, it needs to demonstrate accountability to stakeholders – not least governments and the wider concerned public.
Ultimately, directors are moving into a new world where more is expected of them than ever before. Boards are being asked to steer their organisations towards achieving their objectives while operating effectively, responsibly, legally, and sustainably.
Whilst challenging at the best of times, the COVID-19 crisis and recovery will put leaders to the test.
The IoD: run by directors, for directors
With the COVID-19 pandemic taking a heavy toll on businesses, the Government has reacted with significant levels of support including the Job Retention Scheme (JRS) and the Self-Employed Income Scheme (SEISS). However, one group that has ‘fallen through the cracks’ is a significant chunk of the directors of small companies.
This is because many of these directors tend to receive most of their income through dividends. They do so as it’s tax efficient and more flexible – meaning they only pay themselves in proportion to what the company makes on a given year. Spanning across all sectors, many people in this situation don’t necessarily earn very much.
Unfortunately, tax returns don’t distinguish between dividends from the company you run and from any other investments. As the Government understandably doesn’t want to subsidise the latter, it hasn’t supported this income through either the JRS or SEISS.
Lobbying on behalf of directors
The IoD has led calls for this to change, pointing to ways a paper trail could be provided. But, with little sign of a rethink, it has also suggested a simpler grant scheme could provide a way forward.
Despite the challenges in this crucial area, the IoD has managed to secure progress for directors during the pandemic in other areas, including changes to state aid rules helping access to loans, and a delay to IR35. It was also, notably, a key driver behind the new Corporate Insolvency and Governance Bill. A key issue under the current economic conditions, this new Act gives directors more breathing space when it comes to insolvency and other areas. More information about these changes and other support for directors can be found on the IoD website at iod.com.
A difficult time for many directors
It’s more important than ever to be part of a community of your peers, to make your voice heard, and to develop yourself as a professional.
From start-ups to established businesses, the IoD is passionate about serving the unique needs of all directors. Understanding the challenges that directors face – day to day and during a crisis – the IoD seek to empower members with leading expertise and support.
Support for directors at any stage of their career
Offering high quality personal and professional development, senior level peer support, and the chance to influence policy makers at the highest level, as well as access to its specialist help and resources along with a wide range of online events, IoD membership is a wise investment for all directors.