Foreword by the SEViX founder, Mr. Rainer E. Ulrich
Not all corporate crises are the result of external influences, such as the Corona crisis.
A crisis may result from the death or incapacity of the CEO. If he becomes entangled in contradictions or involved in a conflict, whether through management errors, complacency, a personal problem or corruption, and therefore can no longer manage the crisis objectively, or if confidence in the CEO's leadership is completely shaken, the supervisory board must decide whether to dismiss or remove the CEO.
In such circumstances, the supervisory board must take a more active role, which may include appointing a CEO ad interim. Dealing with a crisis in which management is unable to provide effective leadership poses significant challenges for the supervisory board
The challenges and duties of the Supervisory Board in the crisis
In the current crisis situation, the Supervisory Board must demonstrate its personnel competence in particular and assume entrepreneurial responsibility. To this end, it can strengthen the supervisory body by appointing new members. It is also its duty to dismiss the management board or individual members of the management board prematurely if there is a massive loss of confidence or if the management board is unable to provide clear answers to critical questions. However, it appears more serious if a board member lacks the entrepreneurial ability to manage a crisis or a fundamental entrepreneurial competence. This applies in particular if the management board fails to file a required insolvency petition (justifiable reason within the meaning of Section75 (4) of the German Stock Corporation Act (AktG) inability to manage the company properly). The supervisory board may have to prepare its own analysis and corporate concept with the assistance of experts. In the restructuring phase itself, the supervisory board must check whether the necessary measures are defined in a timely manner and with the necessary care, and must press for their implementation.
If the Supervisory Board does not comply with the aforementioned monitoring obligations, which, as described above, may also result in an obligation to act with regard to a possible replacement of the Executive Board, it is liable for damages. The legal starting point for this liability is Section 116 (1) AktG, which refers to Section 93 (2-6) AktG.
The Supervisory Board thus shares a high degree of responsibility for developing a clear analysis of the company, the "right" strategy for the company based on this analysis, and for ensuring "good" management of the company by a suitable Executive Board.
Today more than ever, therefore, the question arises as to the competence of the supervisory board. The supervisory board must be able to ask the right questions.
The necessary areas of competence of the supervisory board in the crisis
To do this, it must be able to cover several areas of competence. The areas of competence certainly include financial and control competence, in order to fulfill the causal tasks and duties of a supervisory board. With Corona, however, other areas of competence will come to the fore and priorities will change. These are: Social competence, strategic competence, and competence in the area of innovation.
The Supervisory Board should first and foremost be in a position to assess whether the corporate strategy and the business model developed by the Executive Board and management are promising and competitive. To this end, it must have its own strategic competence, enabling it to ask questions about the type of strategy adopted, competitive position, competitive advantages, market shares or market analyses. Are the company's key performance indicators (KPI's) worse, the same or better than the industry average? There should also be knowledge about strategic realignments or strategy development processes. No supervisory board can fulfill its strategic control duty, which is more important today than ever before, if it lacks certain building blocks.
It is not only in the Corona crisis that a strong board or CEO acting strategically and entrepreneurially is particularly important.
The topic of innovative capability will play a very decisive role in future competition. Future viability and competitiveness will depend on it. Today's Supervisory Board can only fulfill its monitoring duty if it constantly examines the company's ability to innovate and calls for the necessary key figures to this end.
Identification and appointment of the right board
The core task and core competence of the Supervisory Board lies in identifying and appointing the right Executive Board member, and this applies in particular to the appointment of the CEO. Here, the supervisory board has a high responsibility when it entrusts the management of a company to someone who will be decisive for the results and development of the entrepreneur's future in competition and for its employees.
In this context, the supervisory board must pay particular attention to the ability of the management board to implement a permanent strategic transformation that never ends. However, the social competence of the supervisory board also requires quick action and the admission of wrong decisions, should there have been wrong appointments to the management board.
In the case of dismissals of board members and immediately required replacements, a CEO ad interim is an optimal option for the supervisory board:
The CEO ad interim is immediately available, he has a high level of social and strategic competence, no high severance payments have to be made to him in the event of a separation, and he can certainly be tied to the company for the longer term in the event of success. The CEO ad interim is a solution that is still too little known and used by supervisory boards. The Corona crisis in particular will bring this model to the fore.
Summary
The requirements for the professional supervisory board of today have changed with Corona. The rights and duties of the supervisory board outlined require a new evaluation and prioritization of areas of competence that every supervisory board should fulfill. This should be in its own interest - it shares the liability and responsibility.
SEViX GmbH has developed its own Quick Check, which enables one's own assessment of the required fields of competence of a modern supervisory board. Also, one will find an answer to whether one still seems suitable only to be a controller or to fill a role that also enables the examination, discussion and elaboration of strategic issues and the ability to innovate.
The Supervisory Board has special, challenging tasks and duties in the Corona crisis, where it must act and act consistently as a sparring partner for the Executive Board. The number of extraordinary Supervisory Board meetings must increase during the crisis. It is its hour
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