The Crisis in the Boardroom

In this chapter, we extend the reflections made in the first edition of this book on the nature of the Global Financial Crisis (GFC) of 2008, by including further observations on the consequences of the Covid-19 crisis and of the Ukraine war up to the deflagration of Israeli-Hamas crisis in October 2023. Observations lead to acknowledge a change of nature in the current crisis time: from cyclical crisis made of short-term critical events, largely analyzed by management literature, to what we called “never ending crisis”, where crisis is intense, global, and lengthy. The overall impact of the change of nature of crisis on Boards is manifold. First, short termism exacerbates since an enduring crisis stimulates quick, almost immediate, reactions. Boards are therefore called for reacting fast. Second, centralization remains a common reaction to uncertainties, but if the crisis is lengthy the negative consequences of centralization emerge in terms of organizational effectiveness. Therefore, Boards get more careful about the adoption of centralization in the long run. Third, the never-ending crisis encourages parochial attitudes in the Boards given the ongoing uncertainty about business results. By being intense, global, and lengthy, current crisis envisages a deep transformation of society whose direction is not yet clear. The crisis persists delaying the arrival of any foreseeable future. In such a context, short-termism and parochialism seem to characterize even more the Boardroom since Boards cannot see the end of crisis. In conclusion, the change of nature of the current crisis seems to be detrimental to the decision-making process at the Board level: the more intense, global, and lengthy the crisis is, the less effective the decision-making process may become.