Trust in Times of Crisis: Corporate Perspectives
Our guests for episode 91 are Peter Wakkie and Tjeerd Wassenaar, talking about trust, crisis management, and corporate governance, leveraging their extensive experience in legal and corporate roles. They emphasize the critical importance of maintaining trust, highlighted through an example of an M&A transaction impacted by the COVID-19 pandemic, demonstrating how unexpected events can complicate negotiations and the importance of adaptability and integrity in such situations.
They emphasize the importance of proactive risk management, advocating for a strategy that involves staying ahead of potential threats to protect the company’s reputation and maintain trust. They discuss the necessity of a “trust but verify” approach and highlight the value of clear, enforceable rules over ambiguous principles to ensure consistent corporate behavior, reflecting on how these practices integrate into a company’s DNA.
Peter shares his cautious stance on using communication experts during crises, stressing the conflict between the need for transparency and the potential legal repercussions, advocating for a balanced approach to crisis communication.
A significant focus is given to the practical application of the Three Lines of Defense model in risk management, emphasizing the need for active involvement and regular checks across company units to prevent crises effectively.
The podcast wraps up with reflections on the evolving business climate in the Netherlands, particularly discussing the challenges posed by the disconnect between business expectations and governmental actions. They explore how different corporate governance approaches, like the stakeholder model prevalent in Europe, impact business operations and decision-making, particularly in contrast to the shareholder-focused models in the UK and the US.
Crisis and the importance of trust between Board members
I’ve been in situations where there was a crisis, and it’s very important that the board members then act as a unified body. And for that, you need to have good relationships with your other board members. You need to know them also on a personal level, because if you don’t, then in a crisis situation you have diverging views, board members are not willing to delegate the responsibility for dealing with the crisis to a few individuals, and you need to do that to be effective. And also then you, if there’s no common trust, then board members may wish to preserve their own individual reputation instead of working for the collective good because they have other board positions as well, they want to protect those board positions from what is happening in a crisis, so it’s very important that you not only have a formal good relationship with your fellow board members, but also that you know and trust each other at an individual level.
About external (communication) advisors
if you hire litigation lawyers and other specialists, that you try to determine the objectives that you want to achieve as a company and as a board, and you need to have an idea where you want to end up. And I say that because in particular with litigation lawyers, they are very convincing people by nature, they have to convince a court or in the US a jury, and they can be very convincing to board members as well. And I think it’s important that you stay in control as a board and don’t let the advisors take control.
