What Directors Can Learn From HealthSouth
from
November/December 2003
by Betsy Atkins
When a crisis hits, it is essential that the board focus on the most important decisions first and not get sidetracked by details, says Betsy Atkins, who got the chance to help HealthSouth’s board do just that during her short time as a director of the troubled company. Among her priorities:
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Process is absolutely key. A board must be deliberate, thorough, and thoughtful. It must understand exactly where the company is at each step of its journey through crisis.
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One of the board’s first decisions has to be about the company leadership—especially, do you remove the CEO?
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If so, who is best equipped to step in and take over?
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You must get an accurate picture of the company’s financial situation. Are you in the zone of insolvency? You must hire the right experts, including a financial advisory firm with a good track record, to help you on this.
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Be risk-minded and anticipate the ripple effects of crisis. The announcement of an SEC investigation triggers bad press; that triggers a rating downgrade; that triggers reluctance among lenders to supply credit; that triggers a similar reluctance among vendors; now you have a liquidity crisis. Hire an experienced crisis-management firm to help you through it.
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Never lose sight of the fact that a board’s primary responsibility is to discharge its duty of care and loyalty as a fiduciary.
- Have the courage to exercise your business judgment and make decisions.
