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Proving it's easier to announce an action plan than implement one, parts of the B.C. health ministry's 2011 plan "to strengthen physician hiring and oversight and enhance public confidence" remain bogged down to this day in consultations.
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In all of my interviews with directors over the years, when I ask about a director's greatest regret the answer is consistently, "I should have spoken up when I had the chance." Chances are several of your colleagues are thinking the exact same thing.
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Two sets of criteria are part of your due diligence when making your decision to join a board of directors -- philosophical and practical -- and you need to assess both carefully before either accepting or passing on the invitation.
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2015 is shaping up to be a year where boards, once again, will be under intense pressure and scrutiny to get it right. Here is a list of trends and key issues, along with what boards are or should be doing in response.
In my teaching, research and consulting, I no longer use "NP-58201 Corporate Governance Guidelines," June 17, 2005 ("Guidelines"), that apply to publicly traded companies in Canada, as an example of exemplary corporate governance. Here are the ten deficiencies to the guidelines as I see them.
Not only is the millennial generation changing the meaning of corporate, they are also changing how corporations are run. Increasingly, corporations are changing their mission statements to better reflect the "triple bottom line," which emphasize their corporate social responsibility initiatives as a means to better appeal to the next generation of employees.
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1. Active owners focused on performance. Expect pressure by activists and institutions for boards to control under-performing management to continue unabated. Boards incapable or unwilling to rein in...
Strikes, picket lines and other forms of protest that require significant labour resources are ineffective against corporations that can use automation or outsourcing as significant bargaining chips. If this is the case, how are activists meant to effect real change? One way is in the corporate boardroom.
Many directors hang on to directorships for far too long. I counted several directors who have been on corporate boards for 10, 15, 20 and 25 years. Many directors hang on to directorships for far too long. I counted several directors who have been on corporate boards for 10, 15, 20 and 25 years.
I recently served on a governance awards judging panel assembled by the Canadian Society of Corporate Secretaries (CSCS). Winners of the awards were announced at this organization's annual conference in Halifax last month. I participated in a plenary discussion to discuss some of the winning practices.
Here are 10 Questions you should cover off before signing up as a Director with a non-profit Board. As a Director, ignorance is not bliss; it is your job to know about risks. You will demonstrate a lot of sophistication if you ask these questions before agreeing to join.
Non-profit organizations (NPOs) are governed by a board of highly skilled directors. While significant advances in technology and education have taken place over the past few years, director training has essentially remained the same for the past 20 years.
It is hardly surprising that boards do not focus on value creation, strategic planning, or maximizing company performance, survey after survey, as much as they do on compliance. Their compensation structure does not incent them to. Here is what is needed to align director pay with shareholder interests:
One of the best pieces of advice I've ever received as it relates to starting or building a business is this: Get a board of directors. Why would someone running a business want a board of directors? That's a great question and here is my humble opinion: Starting and running a company is hard work and at times it can be damn lonely.
What follows is a series of recommendations that could apply to any public board to: make it more focused on value creation; to strengthen real director independence, including from management; to strengthen management accountability to the board; and to strengthen board accountability to shareholders.
There is a concept, called short-termism, which could devastate finances in the future, and has in the past devastated the millions who rely on their paycheques or pensions in the corporate world.
I recently trained a group of directors and CEOs from the banking and agricultural sectors in Texas and Arizona. We discussed mutual expectations on the part of the board and management. The following represents the output of these discussions, which could apply to a variety of boards.
Trust at the board level is necessary at three intersection points: board and CEO, board member to board member, and CEO to C-suite. Why does trust matter? Think about the transactional costs of a low-trust relationship. In low trust relationships, suspicion abounds and parties feel compelled to paper every decision and every discussion. What can boards and executives do about this? Here is some advice.
Placing a price on carbon of anywhere from $10 to $80 a tonne can have a profound effect on business planning. It can help a company cut costs, while dramatically reducing its risk and exposure to rising energy prices and a price being put on carbon. Which brings us to an important question...
Only 150 out of 1000 Canadian companies had any diversity on boards. What is the business case for diversity on boards? There is no clear evidence that diverse boards create greater shareholder value. There is, however, evidence that diverse groups make better decisions and mitigate group-think.
The management of XL Foods Inc., which has been in the news for causing the biggest beef recall in Canadian history, has not figured out the most important issue is how the company governs food safety. Neither XL foods or its parent company appear to have any independent directors, who are essential to ensuring internal management does not cut corners.
No one likes to be controlled, least of which entrepreneurial employees. However, ask yourself if defective internal controls are worth the price, in terms of reputation and financial loss. It can indeed be a run on the bank if consumers don't have confidence, and it can get worse unless governance checks are put in place.
When boards engage law firms, should they use the same firm that management uses? We don't think so. Law students are taught that you cannot act for two clients whose interests are, or could be, adverse, e.g., a husband and wife in a divorce, a purchaser and vendor of a home, and so on.
Recently, there have been some examples of shareholder activism, at Yahoo, Research in Motion and CP Rail. What does not seem to dawn on people (at least not completely) is that if public company boards really understood and did their jobs, there would be no need for "shareholder empowerment." The only question in responding to a "concerned" or activist shareholder is: what is in the best interests of the company and its shareholders?
Think of it as walking into a neighbourhood leveled by a tornado. That pretty much sums up what a special type of CEO faces -- one who's been brought on after the termination or resignation of a scandal-ridden predecessor. A CEO version 2.0 has a lot to contend with in that kind of wake. Here are some tips...