Tag Archives: performance evaluation

What should Frank do?

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Here, this is a good study case about a current problematic on a boardroom… a Powerful CEO and useless board. Published by Julie Garland McLellan in www.mclellan.com.au

The case studies are based upon real life; they focus on complex and challenging boardroom issues which can be resolved in a variety of ways. There is often no single ‘correct’ answer; just an answer that is more likely to work given the circumstances and personalities of the case.

 

Although these are real cases the names and some circumstances have been altered to ensure anonymity. Each potential solution to the case study has different pros and cons for the individuals and companies concerned. Every month this newsletter presents an issue and several responses.

 

Consider: Which response would you choose and why?

 

Frank has been recently elected to a board position with a NFP, which is quite large with 500 employees and $70m in assets. The board has a strong CEO, who seems to do what she wants. In the past the board was relatively weak and the CEO needed to use her expertise without relying on theirs. The board could have been described as ‘light weight’ in regard to governance and corporate knowledge. One board member, for example, is a microbiologist with great critical thinking but no understanding of how to run a company. This led to a culture where the CEO would respond to board queries by asserting that the matter of interest was “an operational issue” and for board members to rationalise her response by accepting that the CEO “has it under control”.

 

The board recognised its weakness and sought out some new company directors with governance training and corporate understanding; hence Frank’s invitation to stand for election. Frank is encountering opposition in asking critical questions of the CEO and trying to probe for information, because the board says the business is under the CEO’s control.

 

He is concerned the board has a weak Chairman who does not support the board in taking effective control or oversight. He is seriously considering if he should stay and try to improve matters slowly or if he should leave as he truly feels the board is dangerously negligent. However, he likes a challenge, believes in the objectives of the NFP, and feels that his fellow directors are honest and well intentioned.

 

What should Frank do?

 

Here, you have three different expert answers: click here

Drag your corporate boards into the digital age

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The Globe And Mail published the Monday, Feb. 25 2013 a new article about Leading Boards !!! By Ivor Tossell.

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When corporate directors need to read up on company affairs in the run up to a board meeting, they can find themselves sitting on telephone books’ worth of paperwork. Never mind reading it – it also needs to be delivered and securely disposed of afterwards. Enter Leading Boards – content management software tailored to help boards of directors and built for the age of the iPad.

The goal is better governance, says Jean-Marc Félio, the company’s president: A more-informed board will make better decisions, and the sooner new directors can be brought up to speed on a board’s decision-making history, the sooner they’ll step up and offer effective guidance.

“Directors don’t have access to information. You have a new director coming in, it will take three to six months before they’re up to date,” he says. “Giving them access to their archives is already a big change.”

Leading Boards acts as both a security-minded information repository and a decision-making hub. Many of its features, which include access to old minutes and files, the ability to search documents by content and collaborative document-editing, are available through its regular web interface. But Mr. Félio puts his firm’s emphasis on its iPad app, which takes advantage of the touch interface to offer document-management tricks such as highlights and annotations. (In the interests of security, annotations are purged after a meeting has run its course, and documents returned to their original state.)

In addition to offering full access for board members, the software can act as a venue to create a virtual meeting space that puts specific users together with just the documents they need to see; anxious stakeholders, for instance, can be invited to a session with two or three directors, and just the relevant documents from the archives. Alternately, a suitor interested in buying a stake in the company could be given an account on the system allowing access for due diligence.

It also tackles the decision-making process itself, letting boards create structured debates, in which a question is mooted and members can add arguments into ‘pro’ and ‘con’ lists. After the meeting, the decision-making process is expunged, leaving only its result for the record.

The six-person startup’s software is used by about 60 companies in Canada and beyond. Mr. Félio says its touch-based capabilities are important in speeding adoption among board members – not always the youngest members of an organization, nor the most eager to embrace technology. The company experimented with buying small computers for clients, but found that, regardless of the training Leading Boards offers, the iPad was far more intuitive.

“There is one old board member who called and said ‘I don’t need your training any more. My five-year old granddaughter taught me.’”

See the article: Montreal startup drags corporate boards into the digital age

Major Differences Between Roles of Direction and Management

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In this article, we will remind the principal differences between the boards of directors and the management of the company.

Source: Guide Pratique de Médiatisation du Gouvernement D’Entreprise

DIRECTORS

MANAGERS
Decision-Making Required to determine the future of the organization and protect its assets and reputation. They also need to consider how their decisions relate to stakeholders and the regulatory framework. More concerned with implementing board decisions and policies.
Duties,Responsibilities They have the ultimate responsibility for the company’s long-term prosperity. Directors are normally required by law to apply skill and care in exercising their duty to the company and are subject to fiduciary duties. They can be personally liable if they are in breach of their duties or act improperly. They can be held responsible sometimes for the company’s acts. Not usually bound by directional responsibilities.
Relationship withShareholders Shareholders can remove them from office. In addition, a company’s directors are accountable to the shareholders. Appointed and dismissed usually by directors or management; they seldom have any legal requirement to be held to account.
Leadership Provide the intrinsic leadership and direction at the top of the organization. Day-to-day leadership is in the hands of the CEO; managers act on the director’s behalf.
Ethics, Values Play a key role in determing the company’s values and ethical positions. Must carry out the ethos, taking direction from the board.
CompanyAdministration Responsible for the company’s administration. Related duties associated with the company’s administration can be delegated to management, but this does not relieve the directors of their ultimate responsibility.
Statutory Provisions In many countries, there are numerous statutory provisions that can create offenses of strict liability under which directors may face penalties if the company fails to comply. These statutory provisions do not usually affect managers.

Increase the number of women on corporate boards? Some business women gave advices…

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Here, you can read some advice from business women about How Can We Increase the Number of Women on Corporate Boards?

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Adele Gulfo, Pfizer, Regional President, Latin America

“Before we see a trend-break in the percentage of women in the boardroom, we need to solve the “leaky pipeline” that diminishes the potential talent pool. Start by encouraging women to find “sponsors,” not “mentors.” Simply put, mentors help you personally, acting as a coach and helping with decisions or challenges. But sponsors have significant influence inside an organization and advocate on your behalf, especially when high profile assignments are being discussed and names considered. Getting more women on boards begins with getting more women in mission-critical P&L roles. And sponsorship is critical to opening doors to these jobs.”

Grace Lieblein, Vice President, Global Purchasing and Supply Chain, General Motors

“If you look on boards, one of the primary reasons we are not seeing more women joining them is that typically they are looking for candidates who either have board experience or are leading large operations. We are locked in a kind of vicious circle: Because there aren’t many women on boards today and also not enough women in CEO or in key positions, they aren’t seen as natural candidates for joining boards.”

Ilene H. Lang, President and Chief Executive Officer, Catalyst

“Let’s talk about what’s not holding women back. It’s not lack of CEO experience. Almost half of F500 board seats in 2011 are occupied by directors without CEO experience. And it’s not a supply problem with respect to board-ready women. If you look at only one potential source of directors—current Executive Officers of F500 companies—you will find over 700 women, enough to fill every board seat that comes available in the next year (with women to spare). When you consider that boards often seek directors with international expertise, and you add women in top leadership positions at companies in just four countries (Australia, Canada, Great Britain, and Israel), your pool expands to over 2,000 women.

“So why the lack of progress? Men join boards every year at a higher rate than women. When Catalyst analyzed new appointments to F500 board seats from 2009 to 2011, we found that men filled 81 percent of the new seats! Thus, women’s appointments to boards have only been sufficient to maintain the status quo, rather than move the needle.”

Liz Mohn, Vice-Chairwoman, Bertelsmann Foundation

“For many women it remains difficult to have it all: career, children, partner, and household. And major decisions on all those issues often come to the fore between the ages of 30 and 40—the “rush hour” of life. For many people, especially mothers, rush hour is all day. A woman’s work is never done, as they say. It is here that employers must play a role. They must move away from office time towards flexible working hours and focus on results. By doing so, organizations and their leaders can serve to encourage women.”

Rossana Fuentes Berain, Editorial Vice President, Grupo Editorial Expansión

“A major initiative is needed to bridge the gender gap and use it as one of the variables to measure a country’s competitiveness. What is the path for achieving it? Education, mentoring, and support in the careers of women must be a priority to improve conditions for diversity in the business world, and make way for a generation that has been prepared and is ready. There are no excuses.”

Susan Segal, President and CEO, Americas Society and Council of the Americas

“One of the key reasons is an unwillingness to take a risk. Existing CEOs, boards, and headhunters appear unwilling to take the risk to incorporate new people and different perspectives—so the easy path is just more of the same: same pool of candidates, same process, and same ideas.

“Women must also take some responsibility for the current dilemma. They must promote themselves better and proactively find mentors willing to fight for them inside and outside of their companies. Women also need to network more effectively and aggressively, while standing up for their goals and ideas.”

 

His article is extract from: How Can We Increase the Number of Women on Corporate Boards?

 

E-Governance: Boards of directors now turn to board portal to work smarter, safer and… greener !

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Published in 20/20, the Canadian Manufacturers and Exporters (CME) magazine.

A recent Deloitte study indicates technology is getting more and more popular in boardrooms. For a long time, directors were resistant to changes

If, nowadays, laptops and tablets are commonly used by directors in many companies, the major change is really the emergence of board portals. It’s more than a “tech trend’’ — it’s about governance.

Among the tough new regulations that have appeared in recent years, the Sarbanes-Oxley regulation started a new era for companies (public or private), governmental agencies, and even non-profit organizations. Their directors now all face the same challenge and have to perform their duties in a productive and safe environment. Forget time and distance, they have to be available and up-to-date with the organization’s documentation to make accurate decisions when needed, and sometimes — most of the time — fast. They are advisors and also decision-makers.

To address this new paradigm, board portals have ­recently appeared in the boardrooms of companies among the Fortune 500. A few American competitors actually share their same “sweet-pot’’ — the international financial centers like New York, London and Singapore — but ignore the balance of the market.

Leading Boards, a Canadian company based in Montreal, provides a powerful, easy-to-use and secure board portal to meet the needs of an untapped market in Canada and abroad, especially in emerging countries. Leading Boards realized that not only the Fortune 500 but also medium-sized companies and junior public companies were in need of tools like board portals to better equip their boards and committees.

Leading Boards designed a priced multi-language unique board portal to address that market. And the demand is growing with companies always looking to be one step ahead.

“It’s more an investment than a cost,” says CEO Jean-Marc Felio. “With the introduction of the iPad version, directors are browsing in archives with the keyword search tool. They are a lot more efficient for the benefit of all.”

Argex Titanium has recently decided to have their audit committee and board of directors work with a board portal, and chose Leading Boards.

“At Argex, we have directors and committee members in different cities and even different countries,” explains Robert Guilbault, chairman of Argex Titanium. “Leading Boards helps them work, collaborate, and prepare their meetings wherever they are, anytime they want. It’s easy-to-use, available on iPad, and bilingual. Leading Boards was a natural answer to our needs, and comes with great training and support service.’’

The board portal also makes life easier to newly ­appointed directors who can, at their leisure, have access to the “memory” of the company and become familiar with past issues, decisions, and documents, and be well prepared to take decisions on current situations.

Last but not least, Leading Boards brings a “paperless’’ solution to boards and committees which helps control their financial impact as well as their ecological impact. A green ­solution turns out to be an investment that will carry its own returns.

After a year of commercialization and several hundred users later, Leading Boards entered into a partnership with Canadian Manufacturers & Exporters (CME) and now equips the CME board of directors and its audit committee as well.

“This partnership enables CME to provide our members ­preferred prices with Canada’s best software for the ­management of boards and committees,” says CME President & CEO, Jayson Myers.

To learn more about Leading Boards or to ask for a live demo, call 1-855-404 5377
or visit its website: www.leadingboards.com

Source: 2020magazine

9 keys issues for board of administrators in 2013

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Here you have a list of the key issues that are newly emerging or will be especially important in the coming year. Each year, the legal rules and aspirational best practices for corporate governance, as well as the demands of activist shareholders seeking to influence boards of directors, have increased. So too have the demands of the public with respect to health, safety, environmental and other socio-political issues.
Looking forward to 2013, it is clear that in addition to satisfying these expectations, the key issues that boards will need to address include:

1. Working with management to encourage entrepreneurship, appropriate risk taking, and investment to promote the long-term success of the company, despite the constant pressures for short-term performance, and to navigate the dramatic changes in domestic and world-wide economic, social and political conditions.

2. Working with management and advisors to review the company’s business and strategy, with a view toward minimizing vulnerability to attacks by activist hedge funds.

3. Resisting the escalating demands of corporate governance activists, which this year will continue the efforts to increase shareholder power and dismantle takeover protections and include proposals to separate the positions of Chairman and CEO and to lower the percentage of outstanding shares necessary for shareholders to call a shareholder meeting.

4. Organizing the business, and maintaining the collegiality, of the board and its committees so that each of the increasingly time-consuming matters that the board and board committees are expected to oversee receives the appropriate attention of the directors.

5. Developing an understanding of shareholder perspectives on the company and fostering long-term relationships with shareholders, as well as coping with the escalating requests of union and public pension funds and other activist shareholders for meetings to discuss governance and business proposals.

6. Developing an understanding of how the company and the board will function in the event of a crisis. Many crises are handled less than optimally because management and the board have not been proactive in planning to deal with crises, and because the board cedes control to outside counsel and consultants.

7. Retaining and recruiting directors who meet the requirements for experience, expertise, diversity, independence, leadership ability and character, and providing compensation for directors that fairly reflects the significantly increased time and energy that they must now spend in serving as board and board committee members.

8. Working with management to cope with the proliferation of new regulations and changes in the general perception of business that have followed the financial crisis.

9. Dealing with populist demands, such as criticism of executive compensation and risk management, in a manner that will pre-empt increased regulation and avoid escalation of activist’s demands while at the same time furthering the best interests of the company.

This article is extract from:  Key Issues for Directors in 2013

Four areas of inquiry in the compliance function.

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The compliance function is an independent function that identifies, evaluates and controls the risk of non-compliance of the establishment.

How to make the board compliant? What are the areas which can help you to fulfill this function   ? What is the impact for a board portal ?

Here, there are four areas of inquiry that a board should take up with the company’s chief compliance officer.

Structure questions

This area consists of questions which will help determine the fundamental sense of a company’s overall compliance program. The questions should begin with the basics of the program through how it operates in practice. Such inquiries should allow each board member to communicate the main elements of a compliance program.

Culture questions

This area should focus on the culture of the organization regarding compliance. Board members should have an understanding of what message is being communicated not only by senior management but also by middle management. Equally important, the board needs to understand what message is being heard at the lowest levels of the company.

Areas of risk

Board members ‘need to know what process is being used to identify emerging risks’. Such risk analysis would be broader than simply a legal or compliance risk assessment; it should be tied to other matters, such as ‘business continuity planning and crisis response plans’.

Forecast

A truly effective and informed board knows where the company stands at the present moment, but it also has a strategic plan for how the compliance and ethics program can continue to excel. This could be encapsulated in a one-three-five year compliance game plan. However, the compliance program should be nimble enough to effectively respond to new information or actions, such as mergers or acquisitions, divestitures or other external events. If the dynamic changes, ‘you want to get your board’s attention on the changes which may need to happen with the [compliance] program’. This is best accomplished by obtaining buy-in from a board that understands the role of forecasting the compliance program going forward.

 

This article is extract from : Board of directors and compliance: four areas of inquiry

Why boards need “fresh eyes” to carry through their mission?

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The “fresh eyes” can be defined as being able to see things that others do not. Boards acquire fresh eyes when they add outsider directors to their board.

They are called outside directors because they are not employees or stakeholders in the company. They are especially beneficial when a board has become static in composition (same people, all internal board members, etc.), and, therefore, have been addressing problems in the same way.

There is the board principle I’ve always subscribed to: “eyes in, fingers out.” This means the board function is not to run the company, but to pick the management and set policy.

 

The board’s job is to govern and management’s job is to manage. Here are the right ways outside directors can use their fresh eyes to a board’s advantage.

6 Reasons ‘Fresh Eyes’ Can Help Your Company

  • They have different perspective on issues. They aren’t tainted by the existing board’s view on issues and haven’t been part of the politics that have created the issues.

 

  • They have experiences and views from other industries that may have already experienced and solved the problems or issues being discussed. Many times more established industries have already dealt with the challenges faced by newer industries. Outside directors can bring that knowledge to the board to help expedite the creation of effective solutions.

 

  • They have a new network of resources for the board to consult. Outside directors bring a whole new set of contacts and connections that can be leveraged.

 

  • They will ask new and different questions to stimulate the board’s decision-making process. An outside director will ask questions as a way to gain perspective, which will force the existing company to think about its own responses and possibly have “ah-ha” moments related to the situation.

 

  • You need to bring in someone who is not a specialist, but someone who has been involved in all areas of running a business. A board member needs to be able to see all sides of a problem and all the implications it can have. Outside directors are usually highly qualified generalists who know a lot about all aspects of running a business.

 

  • They can bring a new understanding of a subject that the board does not have. Outside directors usually have a specialty (i.e. industry knowledge or skill set) they leverage to educate the boards they join. For example, one of my specialties is data storage and disaster recovery. I help boards understand their responsibilities and their exposure when they do not have a proper plan in place for the company they are guiding with respect to data backup and recovery.

 

This article is extract from 6 Reasons Why Every Board Needs ‘Fresh Eyes’ by Larry Putterman.

10 Ways To Measure The Tone At The Top

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By Donna Epps

To complete our series on Governance especially Board evaluation, let me show you an comprehensive article on the corporatecomplianceinsights.com website. Donna Epps, the author write about the  management’s ”tone at the top” and the Dodd-Frank Act’s. 

What is the Dodd-Franck Act’s?
The author explain, “The Dodd-Franck Act’s is offering potentially large rewards for tips about possible securities law violations, this could be an opportune time for compliance executives to consider new ways to evaluate their company’s tone at the top.”

In other words, directors in Boardroom have today many ways and tools in their hands to limit the risks’ management . Donna Epps going further that and lists 10 ways to assess the current state of an organization or a Board of Directors.

 
1- Extent and nature of wrongdoing

2- Anonymous incident reporting

3- Social media reputation assessment

4- Employee surveys

5- Tone of management communications

6- Group discussion

7- Facility visits

8- Exit interviews

9- Interviews and focus groups

10- Customer complaints

 

Read the article on corporatecomplianceinsights.com

To read more: 
Board Evaluation: What areas of operation are evaluated regularly or annually?
In CAMERA Board Session… Why?

2011 Board Practices Report – Deloitte

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This report by the Deloitte Center for Corporate Governance and the Society of Corporate Secretaries and Governance Professionals provides results from a survey of over 200 corporate secretaries on topical governance questions, including shareholder engagement, board committees, strategy, and sustainability. New to this eighth edition is an analysis of director qualifications, which includes insight on board composition related to gender, age, and ethnicity…

2011 Board Pracices Report by Deloitte