Governance, Risk and Ethics: A New Age of Accountability

We share our lessons learned throughout our experience at the 2015 CSCS Excellence in Governance Awards and Conference

Over the last few days at the CSCS Annual Conference and Awards we have seen examples of both excellence and failure in governance, heard from both academic and industry thought leaders, delving into many hot topics of corporate governance in Canada today. The discussions have provided us perspective to help guide us through today’s challenges in corporate governance. The conference covered Risk, Diversity, Ethics, CEO Succession Planning along with the Evolving Role of the Corporate Secretary. I will come back to the lessons learned from  sessions shortly, but will first start with the presentation everyone was talking about throughout the conference both in anticipation and reaction.

Without a doubt, a conference highlight, apart from the memorable traditional Quebec folklore dance and lumberjacks, was the keynote discussion with Andrew Fastow, Former Chief Financial Officer of Enron Corp. All participants were anticipating the presentation of his keynote address on Tuesday and it did not disappoint, kicking off with his “infamous” admission, I cheated fair and square. Going through his history he highlighted the shocking problem as he had received both an award for CFO of the Year from CFO Magazine within the same six months of receiving his prison ID  card for the same actions and decisions. He dubs himself the Chief Loophole Officer for his time spent at Enron. He is very candid in admitting his guilt and admits that in the moment, it was his own character flaws which prevented him from ask  not only is this allowed – but is this right? All the deals done we approved by the board, lawyers and advisors, they technically complied with the rules, but they undermined the principle of the rules since they ultimately rationalized their way to the answers they wanted. His focus was short term, meeting quarterly goals, not the long term health of the organization. With governance scandals, like Enron, we have seen a renewed emphasis on principles and the awareness of both the financial and reputation risk of a business choice. He cautions board members to ask – if this were a private company and I was leaving it in the hands of my grandchildren, would I make the same choice? Your answer will then also tell you, is it  right? (read the article on Fastow’s presentation via Globe and Mail here)

We can learn so much from both mistakes and successes. On Sunday evening we were joined by a fantastic group of Directors College Alumni, Faculty and Sponsors. We first and foremost want to congratulate the award winners, all of which demonstrate examples of excellence in Governance in Canada. For the second year in a row The Directors College presented “Best practices in strategic planning, oversight and value creation by the board” at the CSCS Excellence in Governance Awards. We are extremely proud to have presented this year’s award to ATB Financial. Having our faculty, Prof. Richard Leblanc, Associate Professor, Law, Governance and Ethics, York University and alumni Geoffrey Creighton, President, In-house Counsel Worldwide, amongst the awards judges panel it was fascinating to hear their feedback on the shortlist of nominees and the award winner. ATB views all strategic decisions through the lens of “why does ATB exist?” addressing this as a part of their decision making and strategic planning allows them to have a broader view on value creation than its peers. Amongst other things it sets ATB apart in strategic planning, oversight and value creation. ATB takes rigorous measures to ensure its board can make the best contribution to strategic oversight, setting them up for success. (find the complete list of this year’s winners here)

Before we go deeper into a conversation of particular interest let’s cover some key takeaways we learned throughout the conference:

  1. “Get the right people around the table” – Beverly Behan, Founder & President, Board Advisors, LLC and faculty of The Directors College; open your pool, it’s not just the CEO experience that’s important. If you’re open to mentoring first time Board Members with the right skill set then you open the options for a more diverse board. As Joan Conley, Senior VP and Corporate Secretary, Nasdaq OMX Group Inc, mentioned Beverly’s book Great Companies Deserve Great Boards gives practical advice you can implement on your next board meeting with workable approaches for tackling issues like getting new talent into the boardroom to engaging effectively amongst others.
  2. Understand there are both financial and non-financial risks. There is a slippery slope of evil and ethics/compliance issues are always also seen as a board failure, not just management. The compliance policy needs to start from the top with the board but needs to be relayed throughout all levels of management to become an organizations culture.
  3. What does getting CEO Succession planning right look like? Understanding that placement recruiting is not the same as succession planning. The CEO needs to have the mindset that it is a partnership between HR, the board and the CEO. The organization also needs to understand a first time as CEO it is a career change – not just a job change and needs to be dealt with accordingly in terms of on boarding.
  4. “If you mix up the boardroom with people of different backgrounds they’ll ask tougher questions” Prof. Richard Leblanc, Associate Professor, Law, Governance and Ethics, York University. Yet we kept hearing the excuse, the pool for diverse board members is too small – “lying liars” Phyllis Yaffe, Chairperson, Cineplex Inc., says. People are more comfortable with people who look like them but building a pipeline of diversity where you can foresee holes in skills helps you plan for new directors. Using the skill set matrix you fill the holes you need and build diversity on your board that will at the end of the day enhance the conversation at the table and best represent your customer base.

We wanted to take a moment to review an interesting conversation from the conference which was based around the evolving role of the Corporate Secretary in Governance. With new titles appearing like Chief Governance Officer, what does this mean? In the plenary session with The Directors College Alumni, Geoffrey Creighton, President, In-house Counsel Worldwide, along with fellow panellists Lyne Bouchard, Professor, School of Management, Laval University, Elizabeth Watson, Founder & President, WATSON Advisors Inc., and Brigitte Catellier, Corporate Secretary & Head of Governance, HSBC Bank of Canada, we learned that it is no longer sufficient to be simply seen as the administrative assistant to the board.

The Corporate Secretary is the bridge between the board and management. We heard David Beatty, Conway Director, Clarkson Centre for Business Ethics and Board Effectiveness, University of Toronto, in the opening keynote address comment that Corporate Secretaries are the conductor of communication over the chasm that separates the board and management. Both the upward communication to the board and downward communication from the board is important. As Lyne mentioned, more important than meeting minutes is the Corporate Secretary’s role in facilitating that communication. Our Faculty Christopher Chen, National Director, Executive Compensation, HayGroup Limited, and his colleague Mathe Grenier, Director HayGroup Limited, reviewed trends in governance from their recent annual report Best Practices in Corporate Governance. Among many trends the report reviews directors education and its impact on the relationship with the Corporate Secretary and management. At the end of the day the boards experience with the Corporate Secretary reflects on the organization. A rigorous Corporate Secretary gives confidence of a rigorous organization. If it’s true, an organization gets the board they deserve, then a Corporate Secretary should also encourage boards to be prepared and rigorous. As outlined in the HayGroup report, directors education benefits include awareness of standards and regulations of being a board member, awareness of the issues facing the board and education around risk and financial knowledge required for the role. However the report also notes it’s only a small percentage of boards that have invested in directors education. When we then started to think about all the other hot topics from the conference; ethics, diversity, risk, trends in regulations, they would all be in some way benefit from governance education. Giving board members confidence to ask the tough questions ensuring the organization is compliant, providing strategic oversight and enabling a diverse pool of eligible board members to become board ready applying their needed skills in seat at the table. At The Directors College we build our programs on three pillars; Forward Thinking [Know], Values-driven [Be], and Change Enabling [Do]. These pillars arm our alumni with the knowledge to be ready for the role of director, the values and perspective to offer strategic board oversight and the confidence to ask the tough questions to enhance the conversation around the boardroom table.



For more information contact

Kathleen McGuire
613-526-3090 ext 301

What our graduates say?

“The Directors College experience has been nothing short of exceptional, with immediate benefit within the boards on which I serve. Undoubtedly, this program supports its brand of being the gold standard in board governance effectiveness. Of particular benefit was the opportunity to share the learning experience with colleagues within their various roles at the boardroom table. I have developed an enriched knowledge base from which to draw, as well as an enhanced quality network. Without hesitation, I recommend this program, and congratulate its faculty and staff for its commitment to excellence within its mandate.”

Silvia Martini, Vice-President, Interlink Research Inc.

“I performed a significant amount of research when selecting an option for advanced governance education. All of my research pointed to The Directors College. Being the only university accredited program was important, but more important, was that the faculty has an amazing balance of academic and professional background. No other program offers such a unique and high learning environment – the perfect balance of academia and real examples. The experience is demanding and allows you to generate a vast networks of peers who are dedicated to raising the bar on governance – truly the gold standard.”

Daniel Johnson, B.Comm, C.Dir., Chief Executive Officer, Innovation Credit Union

“The Chartered Director program provided me with a solid foundation in governance which built my confidence to comprehensively serve as a director. The exceptional content and educational process enhanced my curiosity, courage and ability to ask the right questions on crown, non-profit and corporate boards.”

Victor T. Thomas, C.Dir., H.R.C.C.C., Vice Chair, SaskEnergy

“I thought the entire program was very well developed and comprehensive. You never know what to expect when you sign-up for these programs and this exceeded my expectations and was a great learning opportunity.”

James Scongack, C.Dir., Vice-President of Corporate Affairs, Bruce Power LP

“I found the Chartered Director Program to be an excellent forum to understand how strong governance complements effective management. The ability to create and execute an effective strategy is significantly enhanced by a robust process inclusive of board engagement where the right questions are asked and expected outcomes are identified. I truly enjoyed the setting which fostered a strong level of interaction that was supported by quality presentations and material. As CEO of a Shared Service Organization set to deliver benefits to its members, I see the advantage of having a number of our board members participating in this program.”

Tony Di Emanuele, MBA, C.Dir., President and CEO, Mohawk Shared Services

“A strong board needs a combination of industry knowledge and sound judgement. You need people able to challenge one another, but in a productive environment. The Directors College provides skills, perspectives and tactics to drive value as an effective and successful board member. As a graduate of the Chartered Director Program, I found The Directors College an excellent survey of the critical issues and developing trends of today’s corporate environment. I highly recommend The Directors College.”

The Honourable John Manley, P.C., O.C., C.Dir., President & Chief Executive, Canadian Council of Chief Executives and former Deputy Prime Minister of Canada

“The changes that impact corporate governance are establishing a pattern of increased accountability for the delivery of long-term value to customers, shareholders, employees and society. Proper corporate governance is now being defined to include knowledge of critical elements such as risk management and the measurement of strategic performance. At the end of the day, each board will be judged on its ability to effectively deliver value, rather than on its structure. The Directors College innovative program fills a unique and important gap in providing knowledge and insight as to how this expectation can be met. CMA Canada is pleased to be a sponsor of this timely initiative.”

Steve Vieweg, C.Dir., CPFA (Hon), FCPA FCMA, CEO, CPA Western School of Business

“As an organization focused on educating corporate secretaries, the CSCS believes in furthering the potential of board members to better contribute to building effective governance structures. Given the key role of directors and corporate secretaries in applying proper boardroom practices, corporations need to ensure that these individuals meet a professional standard. The Directors College curriculum covers all the formal regulatory issues for directors and also addresses the informal skills of building effective and appropriate relationships with senior management. We see significant benefits to this program and CSCS is pleased to endorse it.”

Lynn Beauregard, President, Canadian Society of Corporate Secretaries

The Directors College has developed a director education program which goes well beyond the fundamentals to address the structures and the behavioural components of principle-based governance. I am proud to be associated with the Directors College and I am honoured to lend my name to the College’s graduate award.

Gilbert Bennett, Director and Former Chairman of the Board, Canadian Tire Corporation Limited