Playing the Game

Playing the Game: Women on Boards

Missed a post on this topic, yesterday.

The game targets women from the US and Canada. The dynamics are slightly different if the players are  Norway, Sweden, Finland , Denmark and the Netherlands. These countries have proportionately higher numbers of women in elected positions, and quotas for women on Boards. Canada and the US rank somewhat lower, have a lower proportion of women in elected positions and have comply or explain provisions with regulators. Therefore, they have somewhat fewer women on boards.

However, there are nuances here as well. Canada's lower representation seems to relate to industry mix and form size. The resource and materials sectors have the lowest proportion of women on boards. These sectors employ the fewest women (about 20% of their workforces), meaning that there are proportionately much fewer women in the pipeline. The finance and insurance sectors have a higher share of women employed in that sector and have a higher proportion of women on boards....about 17%. 

If you are in the US, its different again. There , 10-11% of resource company board members are female. In materials, it is 17-18%. 

Something else is at play, which you, as an ambitious woman, wanting to get on a board will need to consider: company size. In Canada, size matters. Large firms (revenue of > $5b) have 3-4 times the number of women on boards than do small firms (<$1b in revenue). Its not just turnover that makes it easier for a woman to get onto the board of a larger company. It is also that larger companies are more likely to embrace gender diversity. 

But that is not all. Ambition tends to go hand in hand with desire to be paid more. Larger firms also pay directors a lot more than do smaller firms. 

Finally..where to look, at least in Canada...S&P/TSX or S&P 500? 

Consider the categories you may want to consider if you are ready to get on a board: 

• telecom services..somewhat better for S&P/TSX
• consumer staples..somewhat better for S&P500
• utilities...a little better for S&P500
• consumer discretion..about the same
• fiancials...ditto
• health care...better for S&P 500
• industrials...ditto
• IT...ditto
• energy...a lot better for S&P 500
• materials...a lot better for S&P500

If you are just starting out and you want to get "in the pipeline" consider what industry to work in. You would have a greater expectation, the theory goes of working in an industry with a large pipeline to the top. So, healthcare, where 80%+ of the employees are female. (education, financial/insurance and accommodation and food services at 60%+).

Or the other argument is that women don't get placed on boards so easily in construction firms, forestry, mining/oil/gas, transportation and warehousing, utilities/manufacturing because these typically have only 20% and less of the workforce composed of women. Although one might argue that a woman who is able to rise in this male dominated industries would be a "shoe in" for a board position.

So, if you wanted to play the game, let each player choose what university qualifications they might seek, and then choose a card from the careers deck designating where they will be initially employed. 

Employment options (bottom to top) would include:

• construction
• fishing
• forestry
• mining/oil/gas
• transportation
• utilities
• manufacturing
• wholesale
• agriculture
• prof/scientific
• real estate
• arts, culture
• public admin
• retail
• food service
• finance
• education
• health care 

Some of these are not in either the S&P500 or the S&P/TSX. So, if a player drew down on one of these cards as a career, they would need to consider strategies to move onto the boards of a company which would be "listed|". 

So, there may be an info gap. Players will need to be familiar with the make up of certain sectors. 

How might the game be structured accordingly?? So, to a previous blog, you will need to pay close attention to your continuous learning strategy, what the needs of the sector are when it recruits directors and as a consequence, how you choose both a mentor and a sponsor. So, to win the game, you must play the long game. 

Incovenience

Inconvenient Truths

In my last post, I pointed to some ethical, social responsibility and reputational factors our Pension Board might consider when investing our money. There are , however, some inconvenient truths (one might want to consider the advice of the UK's Walker report). 

Well run companies do run afoul of prudent and honest practices. Consider the case of SC Lavelin and their bribery of foreign officials as they attempted to secure contracts in the middle east. Or consider the  major grocery stores here in Canada , recently accused of price fixing on bread.

I mean....really???

Who the hell are these people???

Who ever they are, those on the board have just lost whatever good reputations they had. But, in any case, these grocery chains had all the right policies and reporting. They met regularly with key institutional investors. They also reported on the implementation of their social responsibility policies. Each had whistleblower policies. Several even had anti corruption statements. 

So, Institutional Investors may be excused if they were duped. 

There are limits to due diligence when investing our money. 

There are other ways that Institutional and Retail Investors may be duped into believing that the corporation in which they are investing, is credible. 

Risk management may not be properly overseen, monitored or reviewed by the board. 

Remuneration may not be aligned with shareholder interest. This makes our own say on pay a very important function for our own board, as investors. 

Frankly, corporate disclosure may be inadequate, even when it is coming from the Lead Independent Directors.

So, a few questions which our Board may want to ask when reviewing our investments include:

• are the majority of board members independent? This is a legitimate question to pose and comes from OECD governance guidelines, Dey (if you are Canadian),NYSE, TSX, Cadbury)
• Is there organized: Induction/orientation, recruitment based on skills evaluation, continuous learning for board members?
• Do the NED's meet regularly without management? Can they hire independent advisors to investigate issues, on an as needed basis?
• Is there independent representation on the : Audit, Compensation and Remuneration Committees?
• Are there performance reports not only about the Corporation but also about the Board and management?
• Are Corporate Governance guidelines published?
• Are the positions of Board Chair and president separate?
• Are member service lengths delineated? After what period does a board member cease to be considered independent?
• Is there disclosure of :risk, finance and compensation, performance. and environmental and social impacts? (the latter might have been helpful to investors of Loblaws concerning their Joe Fresh Brand)

What might we expect our Board to report upon when investing our money. The company's:

• transparency
• honesty
• openness
• board independence
• the number of women on the board (and board diversity)
• accountability
• fairness (corruptibility) 
• risk management (and reputation)
• sustainability

I wonder , does the NBPSPP Board consider these factors when evaluating our investments?

More Questions & Women on Boards Game

NBPSPP-more questions

Well, what other questions might a pension board ask of itself?
There is sup[posed to be a policy about lobbying. There isn't one.

But this ought not stop the Board from asking what impacts Pension Reform might have on prospective plan members. (The Feds are exploring ways to help Canadians save more for retirement). Has the Board met with Liberal MP's from the Province to discuss what, if any impact these changes might have on expectations for this Plan? Did the Board submit any comments to Minister Morneau? If so, when were retirees to be briefed or, when was their input sought?

If you looked at CAPSA's site, you would have seen the prominent role that risk management plays in the management of a pension plan. What are our risk management metrics? Is there  risk testing and how often is this performed? Are there factors which prompt this? What are our performance measurement indicators? These questions tie into the 3 functions of a Pension Board. These include:

• investment management. What guidelines are there to help the Board oversee this function and why aren't these published? Are there investment policies and procedures and are there investment performance objectives? All of these are available through other pension plans. Why not ours? Or am I missing something?
• pension plan management.
• pension plan and fund administration. To this point, is there a written funding policy in place? 

So, how does the Board monitor the companies in which the Plan invests. This goes to the policies about social responsibility investments (which one would assume the union representatives would be interested in) and ethical investing (which everyone should be interested in). Our board ought to be disclosing its voting activity, reporting this periodically to the members. Finally, it is one thing to declare that a breach of the conflict of interest principles will be dealt with harshly. How are these identified and managed?

How does a Pension Board determine if the companies in which it invests are ethical? One should first consider what are the ethical pitfalls. These might include:

• moral hazards
• perverse incentives
• degree to which the company engages (or doesn't)  institutional investors
• responsibility shown (or not) by the companies (in which we invest) to environmental change 

There are some things to consider when evaluating companies for our investment.

• Where applicable, do they subscribe to the NYSE Governance Guidelines?
• Do they have a policy related to fair dealing?
• From Saucier, do they have a code of conduct?
• From NP 58-201, do they have a conflict of interest policy?
• Does the company have a reputation of complying with regulations? 
• Are there whistleblowing provisions?

By checking this out and briefing Plan members accordingly, the Board is able to assure the members that the Plan's assets are protected and there are limits within which the Board pursues investment opportunities.  Not only this, the Board is able to assure plan members that the reputation of the Plan is protected. 

Tomorrow..risk management, crisis planning and Pension Boards. I may also be able to provide some assurance that NBPSPP is , if not great, at least ok. 

Questions, Questions

5 Questions the Pension Board needs to ask

I am puzzled.
I suspect that it is a life condition.
But I am puzzled by what appears to me, a mere retiree, at the few questions the NBSPP Board seems to ask..or encourages the members to ask.

There is the matter that the Lead Independent Director does not meet with the representative of the key stakeholders. The LID  does  not meet with those of us who might be activist stakeholders (not that any of us have really been identified). Nor are there mid term meetings with retirees for no reason except to brief us on the discussions of the Strategic Planning Committee.
Oops.
We don't have one. 

So, what questions ought new Board members ask of the Board?

1. What, in the view of the Board are the key aspects of good pension plan governance?
2. Does the Board use CPSA's Self Assessment Questionnaire to evaluate how effectively NBPSPP follows effective governance principles? Does the Board reference the CCGG governance principles? Does the Board reference CICA principles on good governance?
3. Is there a Committee responsible for pension investment , only?
4. Is there a Compensation Committee? And, do the retirees have say on pay?
5. What is the Board's mission? values? vision? beliefs? 

More details about the CAPSA and the governance principles it espouses may be found at

www.piacweb.org

Look for the Funding and Assessment Guidelines

If you want the "Cook's Tour " of these guidelines go to

www.slideshare.net/BethuneWhiston/capsa-governance-guidelinesquestionnaire

This presentation on slideshare and LinkedIn covers in 19 pages what it has taken me several posts to cover. 

5 more questions tomorrow. Have you found the suggested policies yet? I'll provide links tomorrow, as well.

More on the City of Saint John

These more recent posts are tracking how our elected representatives are being led around by the public service when they ask inconvenient questions. When Councillor Mackenzie asked a question during the budget presentation about innovation, the answer focused on "continuous improvement", which is actually the antithesis of innovation. A cult of "doing more with less", of austerity-so popular with those with cushy and unassailable jobs- is fostered in the halls of our City. By the way, if you want to get a better perspective about the whole austerity movement, check with Anonymous or better yet, ask any Greek about how that's working for them. 

More serious readers on the topic will consult Piketty's book "Capital". and a companion piece "Bowling Alone" by Putnam. These actually provide answers to some of this foolishness. 
It won't take long to figure out that the 1% are enriching themselves at our expense, that we now live in a rule by lawyers amd not a rule of law, and that the tools by which we can take back control of our communities, provinces and nation is through more active civic engagement.
That is...act local.
But I digress. 

The come back answer to the city manager would more appropriately have focused on asking how the City is providing  quality service. What is the resident experience in this City? 

Who knows??

It has never been asked.

Quality may be defined as meeting or exceeding a customer's expectation first time, every time at the lowest possible cost. This definition fits the Ward system of this City's governance. In this case, what are the service expectations of each Ward? How is service currently delivered in each Ward?

A really good association to consult is Excellence Canada-once known as the National Quality Institute.

www.excellence.ca

More specifically, if Councillors really wanted to seriously challenge these dopes, the course: 

Measuring Excellence in Customer Experience

offered in August 2018 would be a good start. 

For Councillors and for the rest of us, one should first have the data of how service is delivered and what services are most required. And, so that citizens can help the Councillors interpret this data, they should have access to it through open data portals. Saint John has  un-populated open data portals. And, I would argue, it is missing even titular portals. It has

• Transportation but no data about use of bus routes, demand for such routes, use of roads, parking use, ticketing;
• Public safety use but no data, nothing about crime rates, nothing about relationship with the health system (wait times in the ER, response to psych calls, where);
• Arts community is not described nor is there anything  about use, most popular venues, use of venues, growth and demand, demand for what entertainment. 
• Health status of the population; demand for service, access to primary care-none of this is listed
• Educational attainment determined only in general ways and not by school district. The School Boards are absent from this portal. 
• Demographics is not described by Ward. 
• Volunteerism is not described..nor is civic engagement. 
• Small business development and the development of social enterprise is not included. 

No wonder citizens are at a loss as to how to contribute to the governance of their City and no wonder City councillors are left hanging after asking good questions.

They don't have the data ask a follow up question to pin down plans. 

There are tags for this in other Cities. These are called Smart Cities. And Smart Cities, I would argue, start the discussion with open portals and data available to all citizens.  

Problems of Innovation

NBPSPP and stewardship

Is NBPSPP missing the boat and thereby leading us, the retirees, onto a problem? The analysis so far might lead one to conclude this. It is, after all, not a very large plan. And, it earned, last year, only 7.5% and change when, realistically, it might have earned 10%-12%. 

Perhaps we ought to help them look at the context for fostering stewardship. To do this, the Plan needs to adapt to the social, economic and perhaps, the political needs of the province and it needs to adapt to the needs of the plan members. 

• Does the Plan have a clear identity and what are the values it uses to invest our retirement savings? 
• Is the plan and the way investments are managed, sensitive to changes to the external world? Why, for example, during the annual meeting is there no mention of the anticipated changes to the political and economic climate, globally? How might this affect our plan's financial health?
• Is working solo the best strategy? Would we better off hitching our star to CPP and throwing in with them? Would this provide cover for us in the event of a national or global problem? During the 2008 melt down, our plan took a beating and has only just recovered...one of the last plans to do so. 
• Do we have enough liquidity to remain agile in today's markets? Can we be responsive to the needs of the Plan members? What are the needs of the plan's members? And, how might the plan advocate on our behalf?

Responding to NBPSPP

What ought we look for in terms of policy guides from our Pension Plan Board? How can we be assured that the plan is acting with the best principle available?

Other than the assurance that everyone is independent (which they aren't) and must act in the  best interests of the plan, first and foremost (which they may) and that they are selected through a nominating process (which is not transparent), we really don't know what their ethical guidelines are. 

Here are a few policies which are available through other plans. 

• Ethical Practice and Social Responsibility: guides investment practice 
• Code of Conduct and Code of Ethics: guides board behaviour
• Pensioner Rights Statement: guides what info we can have, whether we have, as an example, a say on pay, whether we get to nominate board members, whether we hear the audit report from the LID and can ask questions accordingly.
• Corporate Governance Guidelines: so what policies are in place to guide the governance process
• Say on Pay for Vestcor: even is this is only symbolic, it is worth a lot. 
• Whistleblower guidelines both for staff  and for pensioners. 

Those are pretty general. Most responsible corporations have these. Its just that we don't, at least not yet. But, the policies on ethical practice can be, and ought to be, more specific. These policies would include:

• a policy on lobbying..who and for what. And, how is this activity  reported to the pensioners
• Board education...what, why and how is it linked to the skill matrix?
• Audit and its independence. And , is there an internal audit which is reported to the audit committee?
• Is there a policy on personal trading and related party transactions? 
• Is there an anti bribery and corruption policy.

Other pension plans have these policies.

Why don't we? 

How to blow off an elected representative

Councillor Mackenzie, Ward 2, asked a good question during the City Manager's budget presentation. He asked why we were so focused on "efficiency and cost cutting" and not so interested in innovation. The City Manager blew him off by stating that the managers were focused on continuous improvement. (without actually saying what they were doing). I touched on this a couple of days ago.

What is "continuous improvement"? This is a word much thrown about by sanctimonious public servants when asked a reasonable question by a person elected by the citizenry to attend to our interests. 

Continuous Improvement's hay day was during the introduction of the Shewart Cycle of plan-do-check-act. Japan of the 1980's made hay with this..... and their economy boomed.
As did Motorola, 3M and GE. 

How's it working for them now??

Not so good.

Innovation is in the proverbial dumpster. Managers drove themselves into a frenzy of efficiency and  forgot, largely, about the needs of the customer.

These companies and this country became really efficient operations with nothing new to sell. 

The cult(ure) of the nation and these companies became one of efficiency, driven by data. As a consequence they lost their edge,which was innovation.

And this is what I think Councillor Mackenzie was getting at. 

If I can expand on where I think he was going, he was advocating that the City of Saint John and its management staff ought to customize how and where efficiency is planned and implemented.
So, instead of a cult of efficiency, managers and unions consider what programs to focus their analysis on.
So, pick your battles.
I think that Councillor Mackenzie was reminding the city Manager that the role of management (and to a certain extent the unions) is:

• to challenge the basic assumptions which form the basis for service delivery in the City,
• for whom and
• why it is being done.
• Why not examine city services by neighbourhood? Can demand and delivery be streamlined?
• What data is used? Is there anomalous information which would also inform decision making?
• Who are the stakeholders in service delivery? 

Value Stewardship

NBPSPP & Stewardship

Is the Board of NBPSPP (the New Brunswick civil service pension plan) a good steward of the plan's assets. Over the last couple of weeks, areas of some concern in the plan's oversight and management have been raised. The term "stewardship" has been thrown out, but without a definition.
So , what is stewardship and how might one know that a board is an effective steward?

Stewardship is about fulfilling the Board's responsibility in growing the Plan's assets entrusted to it. 

The key characteristics to ensure growth include:

• a plan making it resilient to crises;
• a plan ensuring that growth is value driven;
• structures and processes providing Vestcor with a clarity of purpose; 
• strategic.

To be an effective steward of the assets consigned to its care, a Board needs , first , to be informed both about the assets and the needs of the plan's members. Any decisions that the board makes needs to be substantiated. To do this , properly, the Board members need to know:

• the purpose of the plan;
• its own core values;
• its capabilities. That is the abilities of each board member and each committee;
• the plan's risk profile;
• the characteristic which define the plan's membership. 

Further, the Board needs to be able to communicate clearly with the key stakeholders as well as the individual members. All need to know what process to accomplish this, is. 

Board leadership is critical. We would expect that the Chairman:

• can assure us that the composition of the board is capable of reaching its targets;
• ensures that the board and its members have sufficient preparation to accomplish these objectives;
• can assure us that the board has the appropriate capabilities to accomplish its work; and that the Board chair has a process to replace any under-performing board member. 

To demonstrate effective stewardship, the Board should have policies which address:

• Board effectiveness
• board-staff relationships (in this case the management of Vestcor)
• Governance processes

Key documents might include:

• Board member skill profile
• Performance feedback forms (  committee leadership, members)
• Board Chair review form
• Board Chair Skill Profile
• Board profile process
• Board Committee structure
• Committee Terms of Reference
• Compensation grid for Vestcor
• An organizational (aka Plan) sustainability profile. 

The next post will focus on how to set a context to foster a culture of stewardship within the Board. 

Clue...less and stewardship

Am I clueless about harassment?

I think so. 

There are clear measures for social responsibility nd ethical practice for corporations. Research has indicated hat where corporations have at least 20% of their boards made up of women, they will be ranked in the Ethisphere Magazine's Most Ethical Companies list. 
ethisphere.com/magazine

There are several criteria which Ethisphere takes into consideration.

1. number of women sitting on the board. (so greater than 20% of the board membership is female)
2. larger corporations are likely to have more women in leadership positions and on the board. This was also found in the TD bank review of gender representation on Canadian boards. Smaller organizations typically had fewer women on the board. TD Bank's analysis that larger companies will have more resources to commit to promoting diversity generally. (TD: Making Diversity and inclusion a Strategic Priority) 

The Ivey Business School (UWO) made a business case for appointing more women to the Board. (Sept/Oct 2004). In this case the author, Stephenson suggests that more women on the board results in better defined conflict of interest guidelines and a codes of conduct. 
www.ivey.uwo.ca
also
www.iveycases.com

The Journal of Ethics (2003) notes that organizations having more women on boards results in a greater corporate involvement in community citizenship and hence a more robust approach to corporate social responsibility. 

So, one might conclude that those corporations with a robust approach to CSR are more likely to support diversity of thought and less likely to tolerate aberrant behaviour, such as abuse and harassment. 

I don't think that this is the end of this topic. 

Harassment and gender equity

Gender equity, harassment and preventions

A couple of days ago, I thought that I hit on a strategy to prevent harassment and systemic bigotry (essentially) against women, especially those in the workplace...and perhaps, beyond. It seemed that everywhere one turned, women were subjected to abuse. Even Dustin Hoffman, so admired by many, has been scooped up in these revelations. 

In my hubris (because that is what it was), I identified 3 areas for consideration including political, economic and social systems. I believed,  possible only in the intellectually blind, that through quotas, encouragement and those arguments acknowledging the qualifications of women for leadership positions, the scourge could be erased. 

Wrong.

Stupid me. 

My partner asked...what happened to common decency, aka, civility?

I guess one would need to revisit Jane Austin to find such a period?

My research was faulty. 

Political

In many countries, women in legislative functions are a relatively recent phenomenon. (1907-Finland;1919-UK; 1922-Sweden; 1963-Singapore; 1973-Switzerland). the problem is that merely representing women...or having female elected reps is not enough, especially if an election comes without executive authority/power. 

So, if we consider the Nordic countries, it was not until the 1970's that women held even 20% of seats in government. Did this represent a critical mass? In 2004, in Sweden could count 45% of elected reps being female. Or did that constitute a critical mass? By 2005, 50% of cabinet positions held in that country were held by women. 

So, might one say that a longer history of women in elected positions would lead to greater social equity (and therefore less harassment)?

Evidently not.

There is some evidence to suggest, in fact, that as women secure positions of authority, a kind of placid contentment sinks in and society moves onto to other issues. 

So, without evidence, we might conclude that societies with women with a shorter history of involvement in executive positions are more likely to aggressively assure themselves that women are to be treated with respect owed as human beings. 

Maybe.

What has been found is that in those countries where women figure prominently in the legislature, women also figure prominently on corporate boards. 

Pay Equity

What one earns is typically a badge denoting social status within and outside of organizations. However, while the principle of equal pay for equal work has been generally endorsed across western societies, there remains a persistent gender pay gap. Even in a highly regulated labour market such as Australia, the gap between men and women is over 10%. In the US, the least regulated of the OECD countries, the gender pay gap is a whopping 25%-30%. 

So, in this case, at least , and as far as women nominated to corporate boards, those countries with a smaller gender pay equity gap, women are more likely nominated and appointed to corporate boards. 

What's next?

How well do companies with women in leadership positions-or with a critical mass on corporate boards- fare in terms of ethical conduct? That will be my next look at the issue of harassment.

Independence and Board Quafications

What ought independence look like for NBPSPP?

In yesterday's post, the way the NBPSPP Board defined director independence was reviewed. Several questions were raised and problems  identified. One might want to the Canadian Coalition for Good Governance www.ccgg.ca to get more details about director independence and how it ought to be operationalized. Specifically consider the best practices document. For a much more detailed document about independence, go to Cassels/Brock at
www.casselsbrock.com
and go to the 2017 document entitled The Matrix to Defining Director Independence in Canada. 

A summary of these guidelines follow:

1. Maintaining a majority of independent  directors on the board.
2. Appointing a chair of the board..or a lead director who is an independent director.
3. holding regularly scheduled meetings of independent directors where members of management are not in attendance.
4. Appointing a Nominating Committee composed entirely of independent directors.
5. Appointing a compensation/remuneration Committee composed entirely of independent directors. 

What does this do to the leadership of the Board, because currently, the Board Chair, by this definition, would not be Independent.

If this Board was to work to this definition, there would be an independent board leader...

• chosen by the full board
• is an outside and unrelated director
• identified in the annual report
• evaluated annually against a position description
• is appropriately compensated
• is assured the resources necessary to function

The desirability of providing for a strong independent board leader should be a consideration in recruiting new board members. 

There are several problems noted here as far as the Board appears to be functioning.

1. There are no governance guidelines, yet
2. There are only 2/11 independent board members
3. The Board Chair is not independent
4. There is no Nominating Committee
5. There are no nominating guidelines and no succession plan for board members and board leadership. 

There are several committees to consider with regards to independence: Audit (NI 52-110), and Compensation. What might these look like. With regards to Compensation, is there say on pay for members to exercise?

Director training

Director Continuing Education

The last blog referenced continuing education for directors and particularly entry level directors. If you are planning to begin a career in governance , try out the non profit training programs available, nationally and depending on where you live, locally. 

Charity Village has an excellent board kit, offered reasonably at less that $100. You can access this at

www.charityvillage.com/cms/active-learning

This site will give you access to the programs

• Boards that work
• Networking. 

You will also reference this site regularly because it offers real time webinars on , amongst other topics, governance

The United Way offers interesting resources through BPC. This particular site is rich with resources available nationally and (unfortunately, perhaps) resources available only in central Canada.

www.thebpc.ca/the-resource-file/governance

Local volunteer bureaus are also, generally, a wealth of information. For example, Volunteer Ottawa has a variety of excellent resources. Go to

www.volunteerottawa.ca/cgi/page.cgi/workshops.html

And, don't forget what universities have to offer. The University of Saskatchewan has a good governance course offered through a MOOC offering on Canvas.net, sponsored by Athabasca University, a leader in the MOOC movement. 

However, I have written  at length about the ICSA's DEAP program and this should not be forgotten. This program is offered in Canada, typically in Toronto and Vancouver over 3 days and covers:

• Accountability
• Financial Management
• Enterprise Risk Management
• Strategy

all from a governance perspective. 
https://www.icsacanada.org

The successful completion of this program results in an Acc.Dir designation. 

However, there are also programs offered through the Conference Board of Canada at

www.conferenceboard.ca

and at the Institute of Corporate Directors

www.icd.ca/Home.aspx

This program is coordinated through the Rotman School of Business and results in a certified director designation. 

The Institute on Governance also offers a governance program.

https://iog.ca

Tomorrow, we can look at some resources available to directors.

Women in Corporate Leadership

To summarize, there are 8 arguments supporting the recruitment of women to corporate boards

• There are an increased diversity of opinions in the boardroom;
• women bring an added strategic input to the board;
• women provide additional influence and a diversity of leadership styles to director positions;
• women at director levels provide female role models and can serve as mentors-and at times, sponsors;
• the company's image with stakeholder groups is improved;
• given that women are increasingly surpassing their male counterparts in educational qualifications, they may also have greater capacity to contribute to boards than do their male counterparts
• there are more qualified female than male director candidates
• women ensure better board room behaviour. 

reference Burgess and Tharenou (2002) "Women board directors" in the Journal of Business Ethics 37(1) 39-49

In particular , women have been found to contribute to governance reducing the CEO's dominance owing to their power sharing style. Further, female directors, especially outside directors, contribute to an independent view to the board and can change the strategic direction of the corporation. That this has been known since the very early 1990's and has still not been acted upon is astonishing.

(reference the work of Bradshaw et al, 1992 and subsequently, 2000)

But, to be effective, don't bother to bring on a "token" female director.

Won't work and will do nothing for Corporate value. To be effective, there needs to be 3 or more women added to the board. Despite this research, barely 20% of FP500 have a critical mass of 

women on their boards. (Catalyst)

But, will this have an effect on systemic bias against women, which so often manifests itself in sexual harassment? 

What are the major forces conspiring to suppress the role of women in society, consigning their status to treatment almost as chattels.

The explanatory variables are:

• social...the presence of women in senior management
• political..the presence of women in government leadership positions
• economic...gender pay gap. So, the success (or lack of it) of pay equity legislation. 

Tomorrow, we will begin to look at each of these elements. Do they matter?

Answers to Equity Questionnaire from December 9/2017

1) 1928; 2) 1920; 3) 1918; 4) 1978; 5) 1964; 6) 2080; 7) 53 ; 8) 42; 9) 66; 10) F; 11) T

Transparency and Competence

NBPSPP, Board Bios and Transparency

To follow up on yesterday's post, if you have not read the NBPSPP 2016 Annual report and you are a pensioner with this plan, you should...especially the Trustee biographies. If nothing else, it will assuage any fears you might have that the board is under qualified.

To be sure, there is a lot more training that they might profitably receive to enhance their governance skills. Certification or Accreditation would be high on that list. It is, in fact somewhat surprising that this has not been broached given that one of the trustees was on the board of the CICA.

Go to the CICA website.

There are some truly excellent materials focused on governance including downloadable handbooks. 

Some trustees have had non-profit board experience and one continues that journey.

So, what skills are they likely to have developed as a consequence of some of this corporate and non profit experience? 

The National Study of Board Governance Practice in the Non-Profit and Volunteer Sector in Canada, a new non profit director can expect to learn:

• how to evaluate the board based on agreed governance practices
• measure the effectiveness of board meetings
• determine stakeholder satisfaction
• set board goals and measure success in reaching these
• build milestones into that process
• distinguish between evaluating the board and measuring the effectiveness of the organization
• learn how to measure both over time
• determine the relative success of the strategic plan's implementation
• use qualitative as well as quantitative measures
• set expectations for board members and monitor performance accordingly
• set expectations for board members and evaluate it based on accomplishments
• hold annual peer, board and individual member assessments. 

The annual report references some board education supplied to the board members. None of these opportunities dealt with governance. Nor was there reference made to the kinds of newspaper materials circulated to the board. Nor was there any reference made to the use of external governance authorities in board continuing education. 

So, once the website is up and posted (2018) presumably the kind of education board members will receive in the next fiscal year will be shared with those of us who are pensioners. 

More on this tomorrow. Did you know that despite union affiliations, directors on NBPSPP are still designated as independent? How does that work, I wonder?

Get Known

Strategies to getting known

The Skills Matrix

In yesterday's blog, I suggested that you build a team around you in your quest to secure a directorship. One of the first tasks you need to undertake with that team is to determine what you think that you have to offer as a director, by corporation and by sector. Be mindful of the key issues both the media and government are emphasizing:

• fewer than 6% of independent board leadership positions in Canada are held by women;
• typically few women are appointed to the audit, compensation and nominating committees of the board;
• those F500 companies with the most female directors outperformed those with the fewest ;
• those boards yielded a 26% higher return on invested capital and 16% higher return on sales;
• boards which have a diverse membership tend to have a positive CSR profile.

Consider comparing your expertise to the targeted needs of the company in which you are interested and the broader sector you wish to be a part of. What are these skill sets?

• governance leadership
• governance preparation
• board committee experience including: audit, strategic, nominating, social responsibility
• corporate financial performance
• diversity
• public policy
• international experience
• financial accounting
• IT
• marketing

Targeting Companies

Your next step would be to develop a list of companies that best fit your skills and expertise. Be aware that the Canadian context provides some unique challenges. Firms in the energy and materials sector account for about 15% of the S&P/TSX composite index. And, also in Canada, the resource and materials sector have the lowest share of board seats held by women at about 7% nd 6% respectively. The low representation is perhaps not surprising given that there is a thinner pipeline of women with industry specific knowledge. 

Consider , however, that these sectors have been scrutinized with the introduction of Bill C-60 as well as the Foreign Officials Public Corruption Act. Women with international public policy and risk management/assessment expertise as described by Ernest and Young (2012) may prove welcome additions to Boards of corporations in these sectors as they attempt to mange government and public scrutiny.

An easier path for women might be to pursue directorships in industries where there is a robust pipeline for women with industry specific knowledge. Stats Can data shows that 60% of workers in the finance and insurance industries are women. 

Would be directors might also want to consider firm size when targeting sectors. The smaller the frm, typically, the fewer the number of women on the board. The larger the firm, the more women on the board.

Not only in Canada, but globally, larger firms tend to be early adopters of gender diversity policies at an executive and board level. These firms often have a higher public profile and tend to be under greater scrutiny to improve firm performance. They also tend to have more resources and larger networks at their disposal to recruit talent. 

Volunteer

Serving as a Board member of a non-profit can help building a network of director colleagues. It can also be used as an effective starting point in one's career as a director. 

Such a step can serve as a proving ground for a new Board member, introducing her to concepts of board functioning. Good governance has certain principles common across all sectors. These are : 

• transparency
• clear allocation of roles and responsibilities
• financial probidity
• accountability and 
• looking at outcomes. 

There is an important caveat to consider. Non profit directorships are typically not posted. So, any prospective candidate should be prepared to initiate a conversation either through an existing board member or through the local Volunteer Bureau or United Way. 

Consider carefully the advantages provided by volunteerism. These can lead to an expanded network, an opportunity to learn elements of governance and an enhanced public and sometimes industry-widw profile. More on this tomorrow.

Another "play" to advance your interest in governance

Getting to know you

The first time director may not be well known. To get better known, try 2 approaches. 

• write a bio.
• find a sponsor and a mentor (2 different skill sets-so 2 different people)

Biography

Write a board bio of yourself clearly delineating your expertise and consequent value to a prospective board. Susan Stautberg, referenced in the last blog, and President of PartnerCom Corporation, a New York based company, operates governance boot camps for women who want to be corporate directors. She recommends that aspiring directors describe their analytical and "team" smarts rather than simply listing their work experience. Be prepared for the question:

"Can you be around a table, synthesize a lot of information and ask the right questions?"

Be prepared to describe what you excel at.

Excel

As early as 1997, researchers noted that women who are publicly recognized and have a high profile have attained a greater number of directorships than those women-equally accomplished- but with a lower profile. These researchers recommended that women who seek appointments as directors should develop a conscious strategy to creating a public image. Seek the advice of a PR consultant in developing a profile for career achievements.

Profile

Women might wish to use a range of strategies to increase their profile. These strategies include:

• attracting media coverage
• public speaking
• using talk back and letters to the editor
• developing contacts with journalists
• participating in business and professional forums
• entering public debates

In this way, women will likely build networks and perhaps alliances, that will support their ambitions to become directors. 

Sponsorship and mentorship

Mentors and sponsors..2 different animals (so to speak). And both are important. And, both are people of influence; the former within the organization, the latter within an industry. 

A mentor is typically and older, more experienced and more senior member of the individual's organization who takes the younger, less experienced individual under his/her wing. The mentor serves as a sounding board, a counsellor to and an advocate for the aspiring staff member. A mentor will serve as a coach or trusted advisor on challenges or decisions. 

A sponsor is has significant influence within the targeted sector. (S)he will advocate on the candidate's behalf, for high profile assignments. Placement in these assignments can position the prospective director to be noticed by search firms, Nominating Committees and /or influential directors. 

Don't be shy

Lobbying search firms is a good idea. These firms keep evergreen lists of likely board candidates, kept updated continuously for the time when a corporation asks them to do a search for prospective candidates fitting a certain profile. Proactively approaching search firms with a "bio" describing skill sets and targeting a specific sector, serves notice that a candidate has both the interest and requisite skills to serve as a director. 

The next blog will address how to prepare yourself  while doing good. Volunteering can provide you with expertise as a director.

Develop a game plan

Take control of your (director's) career

Many first time directors found their way onto boards through a structured and vigorous search strategy that began with director certification. 

If you are considering this route to start your climb into a corporate directorship, consider these 3 key elements:

• certification through an organization which offers
• the opportunity for networking and the presence of an alumnus which encourages networking and is
• affordable. 

ICSA's Director Education and Accreditation Program (DEAP) provides all these elements. In 2010, David Miriguay, ICSA's Director of Education (Canada) considered the advantages of DEAP compared to other Canadian offerings in the following areas:

• teaching/learning activities/delivery method
• objectives/goals& topics
• benefits/value add
• price
• pre-assessment procedures
• evaluation/assessment methods
• expertise of instructors
• recognition of program
• partners/sponsors

DEAP's 4 module program leads to an accredited director designation, an affiliate membership, access to ICSA's topical webinars, membership in one of its across Canada chapters and a link to 45000 members world wide. The course work covers principles of governance, financial reporting, enterprise risk management and strategy. While other programs benchmarked against DEAP cost between $20k and $30k, DEAP cost $3500. So, as a program for entry level directors, this provides good value. 

There are programs in addition to DEAP, targeting women aspiring to become directors.

• OnBoard Bootcamp www.onboardbootcamps.com
• Women Corporate Directors which offers best practice updates and networking opportunities www.womencorporatedirectors.com
• The Susan Schiffer Stautberg Leadership Foundation which identifies and grooms high potential female directors www.thetaras.org/ssf.htm

Tomorrow I will provide another arrow to add to your quiver as you seek to advance your career as a director. 

Critics of quotas

A message to critics of quotas

A report from the Corporate Women  Directors International (2013) noted that quotas have proved effective in increasing the numbers of women appointed to corporate boards, and in a short period of time. A recent Pitt Law study ( Working Paper no. 2012-13 May 2012) noted that a significant driver in promoting equity of opportunity for women in the board room were quota laws. 

None the less, critics of quota have been unrelenting, citing 5 consequences of imposing quotas including:

• the trophy phenomenon
• the celebrity phenomenon
• elitism
• statistical anomalies
• de-listing

The trophy director phenomenon refers to those who hold seats on more than 4 corporate boards. In an effort to comply with the Norwegian quota law, as an example, one woman was named to 11 Corporate boards. No country was immune. In the US and France, appointing celebrities has provided certain corporate boards with the opportunity to emphasize a sensitivity to gender equity in leadership. 

The Pitt Law report concluded that in the US, between 2001 and 2006, the appointment of celebrity women rose from 19-80, with the same women appointed and re-appointed.

However, what this ate failed to show was how  many women restrict these directorships to 3-4 boards. The reports are made without background disclosure. And with out this disclosure, a deeper review of who is a member of what board, the percentages reported by either side of the argument for-or against- quotas are meaningless. 

Laura Tyson (Jan2003) has some good advice. Nominating Committees should consider candidates from such sources as unlisted companies, private equity firms, business services, consultancies and organizations in the non-commercial sector. Derek Higgs (2003) advises corporations to consider a broader definition of diversity to include: age, ethnicity, nationality as well as gender so that candidates are selected in keeping with the needs and challenges of the corporation and its strategies. 

So, all this is ambiguous. Likely, Canada will not mandate quotas. And, regulators and politicians do not appear to have a stomach to impose quotas (Quebec aside). Therefore, what can women do to take control of their own fates? 

That is our next blog.

The Pipeline to the Board

More on Canada

As I noted in a previous post, the current Canadian mantra is that companies can set targets for themselves, make use of recruitment firms and then watch the marketplace for strong female candidates. In fact this is the way Harold Ballard drove the Leafs franchise into the ground....if you can remember that far back. When was the last time the leafs won the Stanley Cup..1967. 

We have learned that Senator Herieux Payette authored a Senate bill (Bill S 203) to mandate the increase of women on Crown Corp boards and other public institutions to 50%. We also learned that this was watered down to 40% (Bill S-212). It still did not realize bipartisan support and eventually died. 

This was an attempt to mirror the work that Quebec had done towards promoting gender equity... and as it happens quite successfully. 

A voluntary initiative launched in 2012 by the Catalyst Accord encouraged FP500 corporations to increase membership of women on Boards to a paltry 25% by 2017 ...so by the end of this year. 

By the end of 2013, the federal government of the day formed an advisory council to recommend strategies to business to recruit more women to corporate boards. John Manley, one of the advisory committee members called Canadian progress to gender equity on Boards "pathetic" 

He's right.

The Ontario government , in 2013 tried to engage the Ontario Securities Commission in the effort by watering things down even further , trying to mandate a comply or explain framework. 

The institutional shareholders, who hold 60% of the shares of the FP 500 through the ICGN agreed with this approach. the CCGG also agreed but suggested goals be revisited after a set time period. 
Perhaps 3 years was suggested, in much the same way the Charles Dickens character, Oliver Twist, asked his minders in a poor house for more gruel. (Please sir, might I have some more??).

To be fair, the CCGG also recommended that these same companies be required to disclose a target for broad diversity (as opposed to gender equity) and report annually on the progress towards attaining these. 

The bottom line is that not much is happening in Canada . Over the period of this debate, Canada has slipped in the global rankings from 6th place to 9th place. The number of women on corporate boards in Canada has increased from 12.4% to 13.1%. So, Canadian achievement has not progressed as quickly as have, for example, Australia (increase of 6 positions globally and 6%); Germany (an increase in 4 positions and 4%); France (an increase of 7 positions and 9%). 

The Australians have it right

What to learn from the Australians

In my last post, I noted that the Americans amended SEC Item 407(c)(2)(vi) of its Regulations S-K to set out guidelines for the Nominating Committees to follow with respect to recruitments processes and attention to diversity membership. Specifically, they were to consider issues of diversity during both the recruitment and nominations processes. This activity was to be guided by a Board policy related to diversity together with a procedure on its implementation and evaluation. As I also noted, the flaw in this otherwise laudable approach was that "diversity" was not defined, for the purposes of the regulation. Therefore, the definition used varies according to region and corporate culture and included race, background, experience, and education as well as gender. 

The weakness of the Canadian approach was covered. 

In 2010, the ASX made amendments to the ASX Corporate Governance Council as these applied to promoting gender diversity on Boards of ASX listed companies. 

Again, the Canadians might take notice. While the TSX focused its attention on Boards recruiting the right mix of skills and experience, the ASX has included gender diversity as a criteria for Board recruitment. The ASX recommends that Boards should make a statement as to mix, skills and gender diversity a Board seeks to achieve. The ASX also recommends that Boards disclose , in a statement in their annual reports, how they expect to achieve diversity. The ASX also expects corporations to publish their diversity policies AND goals and to evaluate how effective they have been in achieving those goals.

There is , however, more sophistication at play than one finds either in Canada or the US. The ASX has recognized that the problem in  recruiting women to the Board may lie in the "pipeline" of women to the Board. Corporations are also expected to report on the proportion of women in the corporation, the proportion of women in senior management positions as well as the number of women on the Board. The focus of the ASX , therefore is also o developing women for leadership positions within the Corporation. 

The ASX, in fact, provides a practical approach to the implementation of the CCGG recommendations.

Canada, glaciers and corporate gender equity

What do these have in common??

Calls for reform to the make up of Canadian corporate boards are one thing. Whether Canadian corporations are heeding these calls is quite another. In fact, change is being made at glacial speed.

Women comprise about 48% of Canada's labour force but hold barely 15% of board seats on the FP 500. And, their representation has stayed stubbornly t about 11% for the last 5 years. This representation has moved somewhat for federal Crown corporations from about 29% 5 years ago to about 32% presently. 

Close to 30% of the FP 500 have 2 or more women on the board. Companies with 1 woman on the board but less than 25% comprise 47%. Companies with between 25% and 25% women directors comprise 9%. Companies with at least 35% female directors comprise 3%.But somewhat over 40% still have no female representation. At the rate of change of adding women to boards of directors, 20% of all board seats on FP 500 companies will be held by women by 2020. 

Maybe its time to legislate equity?

As several industrialized countries have discovered, legislation is needed to achieve balanced board representation. Switzerland, Spain, Norway and France have passed the requisite regulation with a goal of achieving 40% by 2018. By comparison, our Federal Advisory Council for Women on Boards in 2014, set a voluntary goal of 30% representation by 2019. 

Is bias against women systemic? Is it based on our own cultural norms? Is that why what appears on its merits to be a no brainer, it is still not embraced? I would think so.

1) when did women get the vote in the UK?
2) when did women get the vote in the US?
3 when did women get the vote in Canada?
4) when did Canadian women get common possession of property with a spouse?
5) when were Canadian women allowed to sign property documents without their husbands signature?
6) At the current rate of recruitment, how long will it take women t have gender parity on FP500 boards?
7) Having women on boards will increase the rate of return on equity by___%
8) Having women on boards will increase the rate of sales by____%.
9) Having women on Boards will increase the return on capital by____%
10) Governments make the same expectations of themselves in appointments of women to agencies, boards and commissions as  they have of boards in similar circumstances T___F___
11) It is believed by Board nominating committees that a woman's responsibilities in the home will hinder her ability to perform her duties as a board member. T___F___

Answers provided tomorrow
Also to watch for. The Sears employees lost much of their pensions thanks to the mismanagement of that brand. Is your government pension also at risk? I looked at mine and was less than impressed.  A checklist to evaluate how your plan's directors manage your plan pension plan. 

The legislation mantra

I'm From the Government and I'm here to.......

Really?
Here to help, are you?!

The current Canadian mantra is that companies can set targets for themselves, make good use of recruiting companies and then watch the market place for strong female candidates for their boards. 

One voluntary initiative, launched in 2012 is the Catalyst Accord. The Accord was a call to action for Canadian corporations to increase the overall  proportion of FP 500 board seats held by women to 25% by 2017.

They didn't make it.

Also in 2012, Canada's then Conservative government signalled its intent to advance as a matter of federal government policy , gender equity in the board room. The scheme was to link corporations to a network of women with professional skills and expertise. 

Kinda smacks of candidate Romney's infamous election gaff when he announced that he had binders of resumes of competent women to serve in his government. 

But, back to Canada.

The government of the day acted in true Canadian fashion and ....appointed a committee (advisory council) to suggest to businesses how to recruit more women to directorships. These, presumably are the same companies on the FP 500 who already knew how to proceed with recruitment consultants in place to help them. 

Now, we wouldn't be Canada if we let the Feds act alone. No, we have provincial governments who can also duplicate what the Feds do. In 2013, Ontario (also in its budget address) declared a goal to generate broader gender diversity inn board rooms across businesses in Ontario. It enlisted the help of the Ontario Securities Commission through which 50% of Canadian companies are registered. The intention was to set out comply or explain guidelines for companies to describe what they are doing to bridge the gender gap in Corporate governance. However, it would be to government to consider the best way for firms to disclose their approaches to gender diversity.

The OSC would then take steps to amend its disclosure rules by requiring publicly traded corporations to describe how they are promoting gender equity , in their annual reports. 

Institutional shareholders-who hold the majority of shares in corporations listed on the TSX, agreed with this approach (through the ICGN. The CCGG however added the caveat that this should be re visited in 3 years to see if the comply or explain approach actually worked. The CCGG also suggested that corporations also describe how their efforts are working. If they are not and are not meeting defined targets , they are expected to explain why. 

The Quebec government has had nothing to do with this meely mouthed approach. In 2004, Quebec imposed a 50:50 rule for public sector companies. By 2011, 52% of directors were women. 

In 2011, a Quebec Senator, Celine Herieux-Payette introduced Bill S 203, which was subsequently referred to the Senate Standing Committee on Banking, Trade and Commerce. The Bill recommended that an approach similar to PQ's be adopted for Canadian Crown Corporations. It was subsequently re-introduced with a 40% quota but has failed to get traction. 

The Canadians might want to consider the US approach, which is, actually getting some traction. In 2009, the SEC amended item 407(c)(2)(vi) of its regulations S-K to set out guidelines for Nominating Committees to follow with respect to recruitment practices and attention to diversity practices. It would not be a federal case for Canadians to do the same with respect to Canadian NP 58-201, 58-101 FI or 58-101F2. 

Of course, given that this would be specifically to advance gender equity, there would need to be a clear definition of what is meant by diversity. 

Does comply or explain work...or are mandated quotas better?