The Value of Public Sector Board Appointments

Written by:
Audrey Wubbenhorst, MA, MBA
Business Professor, Board Director

Early in my career, I had the privilege of working with a very senior leader at a major financial institution.  At the time, she had significant board experience and was Chair of a large Canadian university.  I was working with her on Communications and travelled with her to listen to her speeches and media interviews.  Over and over again, she would be asked about her career and she spoke candidly about the value that board service brought to her career.

At the time, I started looking into serving on a board.  Altruvest had an online learning program which I completed.  They also had a live database of postings.  I applied to serve on the board of a women’s shelter.  I was interviewed for the role by a panel and was successful.  I worked with that organization for two terms (about six years) and saw them open a new, larger, accessible building.  I had the opportunity to work with all levels of government and contribute to major organizational changes.  I also made some lifelong friends.  It was time well spent.

I took a break from board service for a few years when my son was born but I kept my eye out for openings.  In 2011, Toronto Community Housing was looking for a number of board members.  I applied online without any connection to the organization.  After another panel interview, I was appointed to the board – my first public appointment.  I later was successful in being appointed to the Central LHIN and Build Toronto.  These crown agencies are unique in that they are complex, highly visible and play important roles in our cities and provinces.  Overall they are excellent experiences for developing business acumen, leadership and strategic thinking.

Now I teach a number of courses and have been fortunate to work with students interested in careers in all kinds of fields.  I advise them to get started on their board careers early.  They have so much to offer and have the gift of time to commit and learn.

If you are interested in public appointments, you can find them here:

You can also join Women Get on Board as a member https://womengetonboard.ca and you will receive regular email blasts with board opportunity postings. I will be facilitating a session that will be hosted by Women Get On Board on September 21st,  on “How to Get Appointed to a Public Sector Board” – to register, click here: http://bit.ly/WSSep212017

Are You Thinking of Creating an Advisory Board?

Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Co-founder & CEO, Women Get On Board

I’m often asked about whether an emerging company should create an Advisory Board versus forming a governance fiduciary board. My response to entrepreneurs thinking of creating an Advisory Board is to be strategic in the formation of your Advisory Board.

An Advisory Board is not a Board of Directors with legal and fiduciary responsibilities. In contrast, an Advisory Board does not have any formal legal responsibilities and liabilities. Rather, an Advisory Board is created by the CEO of the company to get advice and support.

Over the years I have been invited to serve on Advisory Boards & Councils and have enjoyed providing strategic advice and guidance. More recently, I had the opportunity to create an Advisory Board for Women Get On Board, consisting of members with experience and connections in governance, law, investment banking, accounting, financial services, corporate finance, mergers and acquisitions, professional development, and media. Thank you all for your commitment and support to help us fulfill our mandate to connect, promote and empower women to corporate boards.

Five key strategic considerations when creating an Advisory Board:

  1. What is the purpose of this Advisory Board?

Usually an emerging company creates an Advisory Board to augment the talent on the leadership team with accomplished and connected business leaders. These business leaders are thought leaders, connectors and influencers that will use their network to make connections and provide strategic guidance and expertise to help accelerate growth, manage risk and enhance operational performance.

  1. Who do you want to invite on your Advisory Board and what is the value they will add?

First of all, you will want to prepare a skills matrix to identify the skills/expertise you need on your Advisory Board. You may want to bring in business leaders who have skills/expertise in areas like Digital Media, Private Equity & Venture Capital M&A, Capital Markets, IT, Sales and Marketing, as well as knowledge of the industry. It also helpful for prospective Advisory Board members, know the company they keep!

  1. How would you compensate your Advisory Board members?

If you are an emerging company, cash is king. You can certainly grant some form of stock options or equity to the Advisory Board for their time and their network. Or maybe it is about these business leaders paying it forward and helping an emerging company with its strategic planning, access to capital and customer introductions.

  1. Should there be term limits and is there a succession plan?

It is important when you ask someone to join your Advisory Board to define the expectation of their time commitment. Most Advisory Boards that I have been involved with typically have a 2 to 3-year term and meet 3 to 4 times a year in person. Sometimes there is a sub-committee that you will be asked to serve on, and occasionally there will be calls with the CEO on as-needed basis.

As you build your Advisory Board the skills/expertise you need in the early formation of your emerging company may be different as you grow. Be mindful of your succession plan for renewal of your Advisory Board members.

  1. What is the mandate of the Advisory Board?

Do you have a terms of reference or a mandate for the Advisory Board that describes the following items?

Expectation – What is the expectation of the role of your Advisory Board members. Is it to provide strategic guidance, for introductions, or to attend meetings?

Time Commitment – Is there a meeting schedule? How often will you meet?

Term Limits – How long is the term?

Compensation Terms – Is it a “pay it forward” or are there stock options or some form of equity, or a retainer?

Marketing – Will you be showcasing your Advisory Board members on your website and other marketing materials?

Once you have thought through these five key strategic considerations on creating an Advisory Board, it is really up to the entrepreneur to engage members of their Advisory Board. The more engaged your Advisory Board members are the more they can help you grow your emerging company!

Why a Diverse Board Makes Good Business Sense

 

Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Co-founder & CEO, Women Get On Board

There is a lot of focus currently on the topic of diversity on boards. The underlying premise for diverse boards is no longer about good corporate citizenship but rather about contributing value to a business, and that makes good business sense.

Top 5 Business Reasons for Diverse Boards

  1. Improve corporate financial performance. Studies have shown that companies with more diversity on their board have had higher financial performance in three important measures: Return on Equity, Return on Sales, and Return on Invested Capital.
  2. Enhance decision-making quality. Diversity of thought comes from, race, gender and ethnicity and extends to age, culture, personality, skills/expertise, educational background and life experiences. More diversity on boards helps avoid ‘group-think’ and increases independence, which can enhance the quality of decision making on the board.
  3. Broaden networks to tap into for board renewal. Board members should ask themselves:
    ~Does the composition of the board represent the employee base, the customer base or business partners/competitors?
    ~What skills or perspectives do we need to broaden that is not currently on the board?
    ~What is our diversity mandate and what steps have we taken to increase board diversity? (For more information on diversity mandates, please read my related post: Are you advancing your Board Diversity mandate?)
  4. Foster innovation and creative thinking. Functionally diverse teams are more innovative, set clearer strategies, are more likely to react to competition, and are quicker to adapt to organizational changes.
  5. Enhance board effectiveness. Boards need to be accountable for their own actions and this begins with evaluating their own performance through annual board assessments.

If you are building a diverse board because it makes good business sense and are seeking qualified diverse board candidates, please email connect@womengetonboard.ca.

Understanding Your Role on a Board

Originally posted on September 15, 2015.

Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Co-founder & CEO, Women Get On Board

There are two roles you must play on a Board, one is Oversight and the other is Value-add.  I will highlight both roles with an extract from a chapter that I co-authored with Donna Price in 2008’s Entrepreneurial Effect by James Bowen and Glenn Cheriton, titled Corporate Governance-Directors of Emerging Companies.

(To promote understanding of a director’s role on a board and how to prepare for board opportunities, I am again co-facilitating Women Get On Board’s Getting Board-ready workshops from October to December 2016. Learn more about them here: http://womengetonboard.ca/workshops/.  Hope to see you there!)

The Oversight role on a Board

“The primary responsibility of directors is to oversee the management of the business and affairs of a corporation. This is referred to as an oversight duty. As a general matter, a business corporation’s objective in conducting business is to create and increase shareholder value. To this end, in addition to performing an oversight duty, boards also perform a value-added role. Decision-making generally involves developing corporate policy and strategic goals with management and taking actions on specific matters related to those policies and goals. Other matters, such as changes in the charter documents, election of officers, (and other matters referred to above), require board action (and sometimes shareholder action) as a matter of law.

All directors must understand that decision-making and oversight responsibilities come from prescribed standards of duty and conduct.

The corporate statutes impose two principal duties on directors: A fiduciary duty and a duty of care. As fiduciaries, directors have an obligation to act honestly and in good faith with a view to the best interests of the corporation.

As a director, you must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. This is known as the duty of care. In discharging the duty of care, a director must be concerned about process at least as much as, and perhaps more than, the actual decision taken. The duty of care underscores the need to implement corporate governance procedures to guide the board in decision-making. This means that pre-meeting, meeting and post-meeting practices should be oriented to providing the right information within a timeframe that will permit diligent discussion and decision. If a board makes a decision that may be contentious from a business perspective, provided the board gave sufficient thought and consideration to the decisions and were otherwise diligent, it will not normally be criticized. This is sometimes referred to as the “business judgment rule” and generally speaking, courts will not substitute court judgment for the business judgment of the board.”

The Value-Add Role on a Board

“In the formative years of an emerging company, the director’s role is more often weighted to a value-add role and as the company matures the role becomes more weighted to an oversight role.

Keeping in mind that the overall role of the board is to maximize shareholder value, directors also provide a level of insight, business acumen and personal network that extends beyond the company’s management team. These are some of the components that contribute to a director’s value-added performance.

The collective board should have sufficient industry knowledge and domain expertise (such as technical, operational or governance) in order to add value to board decisions and strategic priorities. Paramount to their duties, directors must select and oversee the CEO and monitor company performance. A value-added board should provide insight, advice and support to the CEO and management on key decisions and issues confronting the emerging company. Caution: “Nose in, Fingers out!” Boards must balance being too engaged in the day-to-day operations, with performing an oversight role.”


Women Get On Board presents Getting Board-Ready Workshops

These workshops help women gain insights and learn about the skills they need to prepare for board opportunities. Each half-day workshop will be facilitated by corporate directors and governance experts.

Understanding your role on a Board Wednesday, October 5, 2016  http://bit.ly/WorkshopOct5
How to prepare yourself for Board Roles Wednesday, November 2, 2016 http://bit.ly/WorkshopNov2
How to get yourself on a Board

 

Wednesday, December 7, 2016 http://bit.ly/WorkshopDec7

 

 

What Should Directors Think About When it Comes to Compensation Governance?

Interview by Antoinette Burrell, Communications Manager, Women Get On Board

Paul Gryglewicz, Senior Partner at Global Governance Advisors speaks about the key elements of Compensation Governance.

What are some of the current aspects of the Human Resource Compensation Committee’s (HRCC) governance process you think is critical for a newly appointed director?

 Any new director who has been appointed to the HRCC needs to get up to speed on the annual work plan the committee traditionally undertakes.  This may include a one-on-one talk with the compensation committee chair and other board members who are decision makers along with the head of HR and CEO.

It’s important to understand how that particular board manages the compensation process in order to get a perspective about how the process works. The director should start by reviewing a typical employment agreement (at a minimum that of the CEO) to understand the legal terms of the contract and various severance arrangements that could be owed to executives.

It then builds into understanding how the annual bonus and equity plans work by reviewing those documents. A review of this information will provide a new director with better clarity on the goal setting, vesting conditions, and other compensation agreements currently in place.

What are some key fundamentals that directors should understand about total executive compensation design that are relevant in today’s market?

First, get a firm understanding of the compensation philosophy and what compensation components the organization offers to key executives. For example, are they getting an annual bonus, a long-term incentive or both?

Then, review how the HRCC has traditionally managed the annual process. If there is a bonus structure, is it discretionary or formulaic? Find out which performance metrics are used to measure performance. Also, compare how others in the industry reward for executives in similar roles.

Finally, do some research to find out how the stakeholder community perceives executive compensation at your organization and determine the disclosure requirements for the organization.

What is one tip you would provide when a board needs to hire an independent advisor on executive compensation?

Boards should hire early in the fiscal year, so the advisor has the ability to understand the business and compensation strategy. During the hiring process, they should consider the characteristics of the individual. It should be someone who is forthright about recommendations, especially when there are tough decisions to be made. It’s also important for the individual to have extensive industry knowledge and be highly responsive, especially in demanding or urgent situations.

What are some good reference materials that directors should read to help them be current and be effective as a director in the area of executive compensation & CEO succession planning?

There is a lot of great literature on executive compensation out there in the marketplace. First off, a good daily read includes writings on what the media is saying about executive compensation. Get a sense for the pulse of the community in order to stay current on important topics and trends.

Secondly, seek out information published by associations. The Institute of Corporate Directors, The Directors College and/or Canadian Coalition of Good Governance publish a lot of thought leadership pieces related to compensation and succession planning. They offer a good balance of written material and also seminars that you can attend in person.

Third, look to professional services companies such as independent compensation advisory firms and law firms who often present a well-rounded perspective of the issues.

Last but certainly not least, it is also important to ensure an enriched annual education forum is provided to Human Resources Compensation Committee members – this can be done via a consultant coming in to do a custom education session or by attending some of the industry association events that may occur throughout the year.

What is one area in executive compensation that you think directors need to understand from a regulatory perspective?

Executive Compensation decisions need to be handled proactively. Best practice is to have the HRCC meet four times per year to review and discuss various compensation and human capital issues and continue that cycle in order to keep the information current. I would also highlight that if the HRCC gets the Corporate Secretary to minute all of the education events and conferences attended by each of the board members throughout the year, it provides good background to include as part of the annual circular (Proxy). This ensures that the board is prepared to explain the processes and activities as they happened, and also that information is reported accurately before too much time passes. Doing this presents well when the information needs to go into the public disclosure document.

The shareholder community has been on an escalating scale spending more time and attention scrutinizing board’s decisions on executive compensation, so it is critical the board understands who are the major shareholders and what are the proxy voting guidelines each follows.  Directors need to be aware that “shareholder acceptable”decisions that were made 2-3 years ago may not be viewed as favourably today.

A good example of this is the emerging negative view the shareholder community is taking on “out of plan”awards (i.e. special bonuses, for the executive doing something extraordinary for the shareholders in a given year – such as a meaningful acquisition). Historically and to a certain extent today, boards would provide special incentives over and above the current compensation arrangements.  These decisions are about to face more scrutiny of being acceptable coming into the 2017 AGM season.

In addition to this, the expectation that long-term incentive awards continue to adopt some form of performance conditions in order to vest is continuing to be reinforced through higher adoption of Performance Share Units (“PSUs”).

Want to learn more about Compensation Governance?

Women Get On Board in Partnership with Global Governance Advisors presents its inaugural Compensation Governance workshop. Register at http://bit.ly/WorkshopSept22.

 

Are You Advancing Your Board Diversity Mandate?

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Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Co-founder & CEO, Women Get On Board

It still surprises me that in the 21st century Canada’s boardrooms are not more diverse. In fact, I often get asked to consider a board opportunity because the company is looking to add diversity to their board. As of January 2015, the Ontario Securities Commission’s (OSC) implemented disclosure rules for TSX-listed companies to “comply or explain” in regards to their board diversity. It is hopeful that this will lead to positive changes ahead in how corporate boards recruit new board members.

Be an Agent of Change
As a corporate director, I believe that the OSC “comply or explain” disclosure rules present an opportunity to build stronger boards through change. There is research to support that more women on boards brings better financial performance including higher return on sales and better stock growth. As well, non-financial performance, like bringing diverse viewpoints, skills and experience, can improve overall decision making, enhance a company’s capacity to build a pipeline of potential future women executives and encourage innovation.

So, how can you be an Agent of Change in making board diversity a strategic opportunity for board-building? The first step is to ask yourself these 10 questions to help advance your Board diversity mandate.

10 Board Diversity Mandate Questions

  1. Do you perform an annual board assessment of your current board composition, and do you have diversity of thought, skills, experience, gender, age, industry and geographic?
  2. Have you defined what board diversity means to your company in terms of the commitment and needs?
  3. Do you have set term limits and/or age limits for your current board?
  4. Do you have a board diversity policy that sets out targets for women representation on your board?
  5. Do you go outside your current network when looking for new board talent?
  6. Do you have an internal diversity champion?
  7. Do you perform an annual board performance evaluation for board renewal?
  8. Do you keep an evergreen list of diverse board candidates for board renewal?
  9. Do you have a board succession planning process?
  10. Do you ensure there are diverse board candidates in the board search process? (Do you know about Women Get On Board and our directory that we are building of qualified women corporate directors?)

Diverse boards enhance a company’s financial and non-financial performance. So, let’s all step up today and collectively be Agents of Change in advancing board diversity in Canada. Together, we can make a difference in advancing diversity as a strategic opportunity for board-building.

Top 3 Tips for Building Your Board Profile

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Written by:
Deborah Rosati, FCPA, FCA, ICD.D
Corporate Director, Co-founder & CEO, Women Get On Board

Getting started on your board journey includes building a board profile. So, how does one go about it?  It starts with asking yourself what your value proposition is, and what unique skills and experience you bring to a board.

Here are my 3 tips for helping you build your board profile:

1. Define your unique value proposition

Boards are made up of a diversity of thought with members bringing different culture, experience, gender, ethnicity, age and geographic representation. So, what is it that you can bring to an already diverse board? What is your unique board value proposition?

Think of it like an “elevator pitch” where you have 10 seconds to tell someone what you bring to a board. In my case, I say that I have entrepreneurial and financial expertise with high growth and transformational companies in the technology, retail and consumer sectors.

2. Be true to what you passionate about

You need to pursue organizations that deal with what you are interested in or passionate about. For myself, I am passionate about dance. When I was asked to join Canada’s National Ballet School’s (NBS) Board, they asked me why was I interested in NBS, and I replied, “I always wanted to be a ballet dancer.”

Think about companies outside of your industry experience. It can be very rewarding to leverage your skills in a new industry with a whole new network and community to engage with. After spending over 20 years in the technology industry, I was asked to join a retail board, which made me excited because I love to shop. But, I am also a Canadian consumer so I understood that I could bring that perspective to the Board.

Get involved in your Alma Mater. Begin by serving on committees or councils to reconnect with your university and go back on campus. I started getting involved with Brock University by serving on the Dean’s Advisory Council for the Goodman School of Business, then on the President’s Advisory Council and was then asked to join the Board of Trustees.

3. Research the companies or industries that you are interested in

Review their values, mission and strategy. Do they align with your own skills, experiences and values? Will you add value?

I always evaluate Board opportunities in three ways:

  1. How can I add value?
  2. Do I have a personal statement of the attributes I can bring to the board?
  3. How can I use my network to make meaningful connections to grow the business?

Building your Board profile is an ongoing process that takes time and takes focus. Good luck!

Interested in Getting Board-Ready? Registration is still open for Women Get On Board’s ‘How to get yourself on a Board’ workshop on March 30th:  http://bit.ly/March30Workshop

Don’t miss a chance to win a Free Board Planning Consultation from Women Get On Board!
Sign up for our mailing list, refer a new member, or become a Women Get On Board member before April 30th, 2016, and be entered automatically into a draw for the chance to win a free Board Planning consultation – a $500 value. Visit www.womengetonboard.ca to sign up, refer or become a member by April 30th, 2016!

The Risks and Realities of Being on Boards:
 Advice from Beverly Topping

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Beverly Topping, founder of Today’s Parent magazine and former president of the Institute of Corporate Directors, gave a rousing and informative talk at Women Get On Board’s inaugural roundtable event on February 10th, 2015.

Women in today’s business environment are standing up and speaking out but there’s still a long way to go towards achieving gender parity on corporate boards in Canada.  Beverly gave sound advice to the roundtable on how to get on corporate boards and how to be an effective board member.

Here are the highlights from Beverly’s talk:

Being Visible

Canadian boards are becoming more diverse and data shows that companies with women on their boards are more effective. However, real work still needs to be done so that more women and minorities can become directors, as it’s easy for people not to notice when boards aren’t diverse.

Speaking Up

“Don’t underestimate what you already know” — that was one of Topping’s most prominent pieces of advice. “Women often don’t trust their intuition when it comes to corporate governance,” Topping said. However, women should be comfortable with being leaders. These individual skills are recognized as essential to business success.

Clear, effective, and considerate communication is key. Speaking deliberately, using silence to good effect, and staying focused; taking part in a thoughtful conversation helps conversations form and contributes to an atmosphere of respect.

Beverly recommends using the W.A.I.T. (Why Am I Talking?) method. This method of evaluating your own comments before you speak can help make you more effective during board meetings. When you speak up, you want to be taken seriously and heard. Talking too much dilutes the impact of your words.

Standing Out

True success on boards comes from planning and achieving goals. Topping recommends that women who want to become corporate directors take a broad look at the operational aspects of their jobs, like implementing new payroll systems, initiating IT transformation and developing company-wide IT strategies.

Boards look for and seek out candidates that get things done, “You have to put in the work of a CEO to get to the board level,” she said. “Boards are looking for working CEO experience. You have to put in the work of a CEO to get to the board level. You have to want to get things done.” So looking at, and being able to communicate your operational experiences, indicates that “you can get things done”.

However, women also need to be aware of the difference between what skills they offer and what the company’s management can benefit from. When interviewing for a board position, it’s important for women to be clear about what skills they offer and how those skills meet the company’s needs.

Having a mentor relationship is also extremely important to being successful on a board. Having a senior member of the board act as a mentor to provide advice and context will help lead to long-term success.

Avoid the lure of your smart phone. Do not pick it up when you are in meetings!   This is an important nugget to remember in the boardroom and in any business situation. Instead of looking at your phone, engage the people at the table with conversation; learn about them and their lives —there is a fine balance in accomplishing this.

Being Committed

One of the biggest risks of being a board member is that a person’s individual reputation is tied to the company. When the company’s reputation suffers so does the board member’s. Successful board members need to care passionately about their companies and be committed towards improving and maintaining their company’s reputation.  The board must work as an effective team and even, at times, as a functional family.

Good media management skills are also important. This involves engagement on social media, such as staying on top of industry news through Twitter and Quartz, and being aware of executive bios/opinions on LinkedIn and trending discussions. It’s also incredibly important to be aware of what employees are saying outside of the workplace about the company — their comments affect what the rest of the world sees.

Our next event is on April 8th, Seek Out Mentors and Sponsors.

For more information about Women Get On Board, please join our mailing list.