The song “Don’t Fall Asleep at the Wheel” by Red Simpson tells the story of a veteran trucker offering advice to a beginner trucker. Red offers lots of great lessons to the young man including “try out your brakes… try to make time to read all the signs if you’re truckin where you ain’t been”. But, most of all, he offers his most important piece of advice – “don’t fall asleep at the wheel.”
It might be a bit of a stretch (and you’d really have to like old time country music), but Red’s song may offer something of value to Board members. I thought of it after reflecting on the conversation we had with Chris Makuch on episode 9. As we have noted before, the simple role description of the Board member as described by Jim Brown is to “direct and protect”. While this description is fairly straightforward, the execution of the role is a bit more complex. There are lots of factors for Board members to consider when they are discerning how to direct and protect their organization. Most of all, you don’t want to be perceived to be “asleep at the wheel” and neglect some aspect of the business that is preventing it from achieving its goals.
Our conversation with Chris reminded us of the importance of staying alert and having a clear understanding of who it is that “owns” your organization. Every organization has some set of “owners” or group that they are ultimately accountable to – be it shareholders, government, funders, the public, etc. The Board is ultimately acting on behalf of these owners and when the perception is that things aren’t going well, Board members are vulnerable to being removed. There are mechanisms in place to appoint, renew, replace, and remove Directors in any organization. It is critical to be aware of how those mechanisms operate as well as how your organization and its owners are measuring success. If the owners are uneasy with your performance or if they see large gaps in your business model, they may look to replace the Board and exert their influence so that they can “right the ship” according to the direction they plan to head. As a result, it is necessary to primarily focus on your organization’s health but to also keep a close eye on who owns the corporation and how they may push and pull levers to force decisions at the Board table.
In publicly owned corporations it is obvious that the owners are the shareholders. The challenge can be understanding who the shareholders actually are. Chris argues for the need to have transparency so that the Board knows who owns the corporation and can regularly engage with shareholders to build good relationships (hence the issues with proposed changes to form 13f). You may want to consider giving him a call if you find yourself in a situation on a Board without regular check-ins with shareholders. One of Red Simpson’s other pieces of advice is to “watch out for bears” – some sage wisdom for corporate Board members and a great reminder that professionals like Chris and MaisonBrison can help you keep an eye on an often overlooked but critically important piece of information.
In a not-for-profit corporation, the “ownership” is a little murkier. No one technically “owns” the corporation however there are overarching authorities that can significantly impact the work of the organization when their priorities differ. Government programs, new policies, or changing funder priorities, for instance, may force the Board to consider how they should react to the various policy levers at play that are outside of their control. If the Board is “asleep at the wheel” and not aware of these outside influences then it may be time for a serious rethink of who is around the table. It may also be time to give a directive to management to start bringing this critical information forward on a regular basis so that we can be aware of it, not be surprised by it, and ultimately stay focused on our purpose and mission.
So friends, stay focused on what matters and don’t fall asleep at the wheel.
This week we are joined by Chris Makuch, Vice-President of MaisonBrison, to talk about the importance of shareholder engagement and Boards under stressful situations. This was a great learning experience for us. Chris opened our eyes to the complex issues that arise for Boards related to this topic and it is a fascinating area to unpack. The questions we asked Chris included: – What are proxy contests, why are they important, and why should Boards care? – What should Boards be worried about when viewing activist investors? Do activist investors present opportunities for the Board? How can Boards stay informed about who owns the company? – How do you recruit Board members in light of possible proxy battles? How do you make sure you have diversity of opinion around the Board table? – How does the Board stay focused on key strategic and industry measures while there is added pressure from activist investors or powerful shareholders with different viewpoints? – What are some common red flags you have seen around Board tables? – How can Board members think like activist investors? – How much of an impact might the proposed changes to form 13f make on Canadian corporations?
This week Cathy Brothers, CEO of Capacity Canada joined us. Cathy works to increase the impact of Canadian non-profits. We jokingly call her the governance doctor because she works with so many organizations, she has a pretty good idea of what makes boards healthy and what ails them. (Her other nickname, earned in her many years of assisting boards, is the “governance queen”. ) We were fortunate she was able and willing to sit down with us.
So, what did we learn?
Importance ofRole Clarity In previous podcasts, we’ve identified role clarity as a principle of good governance. Cathy says that some questions of governance and role clarity “may seem intellectual” but they have critical implications. Role clarity helps a board recruit good members because candidates can more clearly assess whether the role is right for them. Additionally, nomination committees have clear expectations against which to assess candidates.
Clear expectations help board directors understand and perform in their roles. What do board members need to be clear about? Their role is oversight and strategy. Cathy encourages boards to look at “what’s coming down the road” and develop a vision of how we can serve the community better. Our benevolent service sometimes isn’t enough. Clarity about who makes decisions and how those decisions are made helps focus efforts and prevent conflict.
Intentional Board Recruitment, Development and Evaluation Andrew asked a damn good question. What should boards do when they have a problematic board member? Toxic board members damage organizations by driving away others and distracting from the board’s important work. Cathy urges us to prevent problematic board members through recruitment, development, and evaluation.
When recruiting board members, go beyond the standard skills matrix and also look at behaviours. Someone may be a successful CEO/lawyer/accountant/star volunteer, but they may also be a huge pain in the ass to work with. All things being equal, choose or find a candidate who is a delight. Recruitment should identify those who work well with others, understand the role of the board, think critically yet constructively contribute to strategy. Purposely recruit board members who have the potential to take on leadership roles. The only thing worse than not having anyone who wants to be Chair is only having one person who wants to be Chair who doesn’t have the confidence of their colleagues. Cathy suggests putting board succession planning on each agenda so that it stays an active item.
Board education can help improve performance of individual members and the overall Board. Maybe someone isn’t performing at a high level or they are being disruptive because they don’t understand their role. Education and frank conversations about board performance may be enough to improve board cohesiveness and performance.
Regular evaluation gives the board an opportunity for members to understand their own performance and to offer feedback on each other. Cathy says board members can either make improvements based on their evaluation or “weed themselves out” because “most of us won’t hang around where we’re not making a contribution”. Regular board evaluation is critical.
Why We Care About Governance Finally, a story Cathy told brought me back to why I care about governance. Cathy said she got into governance because she volunteered for organizations to make a difference and eventually realized that there was a considerable amount of time and resources being squandered because there weren’t effective decision-making processes. Good governance should offer us the opportunity to maximize our impact as individuals and organizations. Check out our conversation with Cathy here.
How does Cathy Brothers, CEO of Capacity Canada and “Governance Queen”, describe what makes Boards work well and what to avoid? Find out in this episode and listen as we glean some of her wisdom gained from decades of experience advising, supporting, and participating on Boards across the country.
Capacity Canada is also our resource of the week. Find more information about this great organization at www.capacitycanada.ca
A Board’s role does not change in a crisis. The dual role of the Board to protect and direct (as Jim Brown writes in The Imperfect Board Member), remains in place whether your Board is on a summer break when times are great or when you are wrestling with the chaos of a global pandemic.
That being said, the intensity of the level of change in the external environment will require a Board to increase the level of attention they are paying to how the organization is faring. Plans for reopening for the year ahead not only need some consideration from the Board but those plans will benefit from the scrutiny of the people around the table. When businesses, schools, and offices were closed back in the spring, the next step was not to simply pop open the binder marked “What to do in a global pandemic when everyone is required to stay at home for several months and no one knows what is going to happen from day to day.” There is no step by step playbook that is guiding our organizations. There is, however, the Board and a dedicated staff who will put the best interests of the organization at the forefront of their decisions and who are armed with their set of questions to keep everything on track. Board members need to be mindful that their CEO will be likely dealing with frequent stressful situations while s/he is trying to make decisions “in the weeds”. As a result of the demand for the CEO to be looking inward right now, there is a heightened need for the Board to stay focused outward , with the mission and purpose of the whole organization as the primary lens.
In 2019, the Florida State University football team stopped using a conventional playbook for their season. Typically a team will have a thick binder of plays from which they will draw during a game so getting rid of a playbook was pretty radical. Here’s what one of the players said about the strategy:
Not having a playbook means that the players have to know exactly what they’re supposed to be doing at all times.
That means a lot of repetition. It also means a lot of time in the film room.
“We have to watch so much film and you have to stay around your coaches in learning so much because we don’t have a playbook,” Terry said.
I think there are some lessons for Board members here. In this time of uncertainty and in the absence of a “playbook”, be clear about your role, spend extra time understanding the challenges facing the organization, be prepared to ask tough questions, be supportive of each other and your CEO, and stay focused on the horizon and the mission.
If you were joining a dance group then you would want to know what kind of dance the group practices. If you were joining a football team then you would need to know the type of offence and defence the team uses. When you join a Board you need to understand its governance model. Boards have different ways of broadly looking at their role in their organization. There are many different models of Board governance and it is important to know which one your Board uses so that you can understand more clearly your role as a Director. Marion Thomson Howell, President of Shaugnessy Howell Inc., Executive-in-Residence at Capacity Canada, and Vice-Chair of the Board of St. Mary’s General Hospital in Kitchener, Ontario, sits down with us to review 4 general categories of Board governance models and what Board members need to know about the implications for each model.
So you’ve sorted out your organization’s purpose, mission, vision, and values. Then you wrote a magnificent strategic plan that clearly aligns these elements and considers the challenges of your external environment. Now what? Well now you get to track your progress – a step all too often missed for many organizations and Boards. Enter Valerie Sluth, CEO and founder of Praxis Consulting, Board member on multiple Boards, and management consultant extraordinaire. Val speaks with us about the balanced scorecard and how you can properly oversee and measure the progress you are making on your strategic plan and initiatives.
A key document for many Boards is the Strategic Plan for their organization. But what is strategy and how should the Board engage in setting strategy and overseeing its implementation? Merv Hillier is the founder of consulting firm Nuvision. He is an educator, CEO, and Board member and he sat down with us to talk strategy. If you are wondering how involved the Board should be in both the planning and execution stages of strategy then this is the episode for you!
On Episode 11 our guest was Dr. David Malloy, Principal of King’s University College. Dave helped us understand what values are and how they can be put to work in organizations. Values-based leadership isn’t easy but boards shouldn’t shy away from it. Here’s what Dave had to say partway through our conversation:
Making decisions based on numbers is so damn easy. You know, the bottom line, there it is, let’s move on. Or making decisions based on policy, it follows policy, or it doesn’t. It follows procedures or it doesn’t. That’s the easiest form of decision-making. A favourite author of mine Christopher Hodgkinson calls those decisions “reducing to managerialism”. That’s so easy. The difficult decisions and the decisions that are leadership decisions are ones that are value based, because you’re going beyond policy, you’re going beyond the numbers to make a morally consistent choice. Those are more difficult decisions because they are a bit more amorphous than a number. I think that’s where leadership lives. That’s not where managerialism lives. That’s where leadership lives, at the realm of values. It’s hard.
So what did we learn? Dave gave us some practical steps on how boards can put values into action.
First, recognize your limitations. Boards may not be best positioned to identify an organization’s values but rather should initiate these conversations and listen to their employees and those they serve to identify values.
Second, for new leaders or board members entering an organization, observe artifacts and rituals to help understand what an organization values.
Third, recruit board members who have the same values as the organization and include values education in board training. We all have a general sense of what values are, but some training can help us develop a vocabulary for discussing how we put values into action.
Finally, use values as a screen for decision making. When your board faces a dilemma, identify your options, then identify how each option fits with the organization’s values. Keep those values front and centre so that members of the organization and community can hold each other accountable for practicing those values.
Organizations use the term “values” in strategic plans, policies, annual reports, and any number of other places. But what is a “value” and how should values play a role in conversations and decision-making at the Board table? Dr. David Malloy, Principal of King’s University College, is a philosopher and an expert on values & leadership. He sat down with us to define the concept of a value and to offer some advice as to how values should be intentional, explicit, and put into action throughout the organization – starting with the Board.
When I lead board orientations, I always try to take myself back to when I first joined a board. As a new Board member, I didn’t understand much about the role of the board, how the group functioned or much about how the organization worked. Sometimes my lack of experience and knowledge left me sitting there with little to say. Or if I did have something to say, sometimes I would worry that my comment or question would be off base and I might embarrass myself. Board members I serve with now sometimes look at me skeptically when I tell them of my first year of near total silence. Although these feelings are natural, if you’re going to serve as a board director, you need to contribute something, you need so say something, you can’t just sit there in silence. You would just be taking up valuable space from someone else who could contribute something. A great starting point for any Board member to contribute to the work of the Board is to always be prepared to ask good questions.
I developed a list of ten questions I believe its always okay for board members to ask. I give this list to board members and ask them to put it on the outside cover of their governance binder so that they always have it handy to refer to during meetings if they feel they have nothing to say. On the board I chair, I encourage board members to “get their stick on the ice” by making sure they speak at least once each meeting.
When Andrew and I discussed doing an episode on my ten questions, we came up with a better idea. Why don’t we take advantage of the expertise of our guests and ask them what questions they think are always okay for board members to ask? I’m glad we took this approach because our experts suggested some questions I hadn’t thought of. I won’t spoil the episode by reflecting on their questions now, but we encourage you to check out this, our tenth episode, for a revisit with some of our guests for their insights on questions.
We have a lot more to say about the value of questions in board meetings, but too much for this short blog. If we hear you liked this episode, we’ll do another one in the future and will include more discussion on the value of questions in this space.