Tag Archives: social responsability

10 important topics for board of directors in 2013

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The havard law school forum gave ten good topics that board of directors should consider for the next years 2013.

“A fog of uncertainty hangs over U.S. public companies as 2013 approaches. The looming fiscal cliff, increased regulatory burdens, the ongoing European debt crisis, growing Middle East unrest and slowing global growth are just a few of the uncertainties companies will have to navigate as they chart a course for the coming year. Here is our list of hot topics for the boardroom in 2013:

1.Oversee strategic planning amid fiscal and economic uncertainty as America approaches the fiscal cliff

2. Assess the impact of mobile technology and social media on the company’s business plans

3. Address cybersecurity

4. Oversee the management of reputational risk

5. Set appropriate executive compensation as shareholders increasingly voice dissatisfaction with pay practices

6. Assess the impact of health care reform on the company’s benefit plans and cost structure

7. Ensure appropriate board composition in light of changing marketplace dynamics and increasing calls for diversity

8. Monitor the company’s need for, and ability to retain, key talent

9. Prepare for more government regulation

10. Manage information overload “

 

Read more: Top 10 Topics for Directors in 2013

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.

Peter Hadekel: Montreal startup develops governance tool

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This article come from Thegazette, write by Peter Hadekel

MONTREAL — Better corporate governance has become a top objective of just about every publicly traded company. Boards of directors are more scrutinized than ever before by analysts, shareholders and regulators.

Amid an outbreak of corporate fraud over the last decade, legislative changes have placed a lot more responsibility and accountability on the shoulders of directors.

Now, a small Montreal startup has identified a way to help boards work more efficiently and with greater transparency

The business, known as Leading Boards, started four years ago under entrepreneur Jean-Marc Félio after he had served as director of a non-profit organization.

At the time, the organization needed to distribute a number of documents to directors and Félio realized that a digital system for sharing and archiving documents would make sense.

He spent a couple of years developing a software program with an information-technology specialist and then took eight months testing the product with a range of small, medium and large enterprises.

At the end of 2010, Leading Boards began to commercialize the system and has signed 60 clients so far — many of them either publicly traded firms or non-profit institutions.

The system is a secure “board portal” that reduces or eliminates printouts and multiple copies of documents. It can eliminate courier service costs and reduce meeting preparation time, Félio says.

“Just look at the amount of paper that is sent to the board of a large company — it’s the equivalent of about two telephone books every month.”

Directors often find they need to consult a corporate document of some kind only to find that it’s not at hand and they need to have it sent. They get another set of the same binders when they come to a board meeting.

That wastes even more money. Document costs can run to more than $15,000 a year for a single committee of seven directors.

Leading Boards puts together a complete archive of documents ranging from agendas and minutes of meetings to financial statements, directors’ committee reports and corporate policy statements.

The system has been developed with the practical needs of directors in mind. “You get powerful search engines, information sharing, quick, easy access,” Félio says. Agendas are interactive and directors can write personal or shared notes in a “Post-it” style.

Perhaps the biggest gain is increased transparency. The system can be set up to allow different levels of access, whether by shareholders, regulators or fellow directors.

It’s best suited for iPads and tablets, he says.

Félio worked in film and television and taught communications at the university level before taking the entrepreneurial plunge. He financed the startup out of his own pocket but recently got an additional investment from an angel investor to help him develop the market.

Leading Boards is not the only player in this game. Two other software providers — BoardBook and BoardVantage — service the market for Fortune 500 companies in the U.S.

But Félio hopes to capitalize on the market in Canada for smaller, listed companies that need to save time and money on governance and compliance.

Among clients that have recently signed up are two publicly traded mining companies in Quebec: Argex Titane Inc. and St-Georges Platinum & Base Metal Ltd. Both companies said they expect the software package will wind up improving board governance.

The trilingual nature of the software package, offering English, French and Spanish capabilities, will open up new avenues of growth in Europe and Latin America, as well the Middle East and North Africa, Félio believes. He is already in discussions with a firm about a joint venture to sell the product in France.

The company hosts the web-based system for clients who pay an annual service fee. It has about half a million dollars in annual revenue so far and six employees, expecting to double in size every year.

Among the non-profit or public organizations using the system is Montreal’s Palais des congrès, he said. Expressions of interest have come from a number of other provincial agencies.

Ten things for boards of directors to avoid

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Here we will see ten things that a boards of directors can avoid to improve their performance.

 

 1. Avoid presentation overload

Presentations should not dominate board meetings. If your board meetings consist of a scripted agenda packed with one presentation after another, there may not be sufficient time for substantive discussions. The majority of board meetings should be focused on candid dialogue about the critical strategic issues facing the company. Management should feel confident that the board will read these pre-meeting materials, and the board must commit an adequate amount of time in advance of the meeting to do so. Board portal can help administrators to be prepared before the meeting.

2. Avoid understating the importance of compliance

There is no room for a culture of complacency when it comes to compliance with laws and regulations.

3. Avoid postponing the CEO succession discussion

CEO succession planning is one of the primary roles of the board. During this time of rebuilding and prior to the implementation of new regulations, boards should assess where time is being spent and perhaps redirect focus on succession.

It is important to note that the succession planning process is continual and doesn’t end when a new CEO is selected.

4. Avoid the trap of homogeneity

The topic of board composition and having the “right” people on the board continues to receive much attention. The board needs to assess whether this new mix translates into a positive and productive board dynamic. Boards should take a closer look at the expertise, experience and other qualities of each member to ensure the board that can provide the right expertise. Diversity of thought provides the perspectives needed to effectively address critical topics, which can contribute to greater productivity and ultimately a stronger board.

5. Avoid excessive short-term focus

Recent history offers many examples of modern corporate entities managing to reach short-term results at the expense of long-term prosperity. The board can demonstrate its leadership by being the voice of reason and openly discussing the sustainability of strategic initiatives. This can result in a well-governed company with a greater chance of achieving long-term, sustainable success.

6. Avoid approvals if you don’t understand the issue

Complex issues can have significant implications for the survival of an organization. It is up to directors to make sure that they understand issues that can alter the future of an enterprise before a vote is taken. If you don’t adequately understand the issue, ask for more education from management or external experts. True consensus results from a thorough debate and airing of the issues before the board, resulting in a more informed vote by directors.

7. Avoid discounting the value of experience

As a director, it is important to recognize the value that your experience can bring to the issues at hand. It is bringing together the diverse skills and experiences of each director to lead the company through challenges. Directors can provide greater insight by being ‘situationally aware’ when evaluating events and courses of action to take.

8. Avoid stepping over the line into management’s role

A board that makes management decisions will find it difficult to hold the CEO accountable for the outcome. A director’s role is to oversee the efforts of management rather than stepping into management’s shoes. Directors must make a concentrated effort to ensure that they have clarity on management’s role, which is to operate the company.

9. Avoid ignoring shareholders

A company’s shareholders are among the most important and potentially vocal constituents of the enterprise. Concerns can sometimes be addressed by providing shareholders an audience with the board to air their concerns.

10. Avoid a bias to risk aversion

With the recent focus on excessive risk-taking and its impact on the credit crisis, there is concern that companies and boards may become risk-averse.

 

This article is extract from: Ten things for boards of directors to avoid by Deloitte

Smaller boards for better governance

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How small boards can be more efficient than bigger? What is the impact on the daily governance?

Robert Pozen, a Harvard Business School lecturer and former general counsel for Fidelity Mutual Funds, try to give an answer.

 

 

Mr. Pozen says « its high-functioning boards, not legislation, which leads to better governance. He went on to note there do too many “social loafers” on boards who are investing too little time understand the issues of the company they are supposed to be serving. »

 

« The problem with 14 or 18 directors is social loafing. If you’re part of that big of a board the thinking of many is, ‘well, someone else will take care of it.’ If you don’t feel that responsibility it is a very bad dynamic, » says Mr. Pozen.

Some board portal accessories as pool and debates can allows you to create a better dynamic on your board.

 

He thinks they should be no more than six directors on a board, along with the CEO, and that they should meet more than six times a year spending two to three days a month on board business. They should also be paid more for the extra work.

 

They should also be no mandatory retirement age for board directors as many are retired executives who still have a lot to contribute after they leave their companies.

 

“When you have executive sessions, people actually talk about what the problems of the company are. I think it’s a good idea to have executive sessions before every meeting. On a larger scale it suggests what is really important in governance is not so much all of these rules, but what you have as the culture of the board and how the peers view themselves,” says Mr. Pozen.

 

The average for financial services boards around the world is 14 members of which only three have financial experience.

 

This article is extract from: Why good governance can come from smaller boards

How diversify your boardroom?

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`The number one issue in corporate governance is the diversification of boards.

The results confirm this as the Canadian Board Diversity Council found. Only 150 out of 1000 Canadian companies had any diversity on boards.

What is the business case for diversity on boards?

 

There is also evidence that women make better monitors of management and that performance of men increases when women join boards. The other business case for diversity is a simple talent issue.

 

So how do boards diversify themselves? What are leading practices the best boards are doing?

 

 

Step 1: Recruit directors solely on the basis of competency, not on whom you know.

A board is a team. Team members have different abilities. “Competency” can include experience, skills, knowledge and behaviours. A good board draws up a matrix of competencies it needs on one axis and individual directors along the other. It defines the competencies and the scale, and then individual directors assess themselves relative to each other.

 

Step 2: Recruit directors whom you do not know personally and who are first-time directors.

Once you have the desired director competencies, the next step is to recruit directors who fill this gap. Cast your net wide and go beyond personal and professional networks. Have a diligent way of short-listing resumes and ask candidates to address the specific competencies you need.

Don’t be afraid to short-list diverse candidates whom you likely will not know, including first-time directors who have stellar qualifications your board needs.

 

Step 3: Link director time on the board to performance.

Have on boarding, coaching and development for new directors. Then, assess each director on his or her contribution at regular intervals.

 

Step 4: Be prepared to be accountable.

Consistency and follow-through are the only means by which diversity can be achieved. We can expect that some current directors may object to these best practices. Change is difficult and upsetting the status quo is threatening.

 

Finally, you should disclose the basis upon which directors are recruited, developed and assessed so shareholders can vote meaningfully on each director at the time of renewal or removal. This sets the tone that the board holds itself responsible and accountable to shareholders in the same way it expects management to be accountable to itself. Your board and organization will be the better for it.`

 

This article is extract from: Four Steps to a More Diverse Corporate Board

Why not set up board’s police?

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Imagine a new law enforcement bureau is formed to investigate and bring to justice the perpetrators of crimes on Nonprofits’ Boards?

 This elite force, known as The Board Police, works mostly undercover, passing themselves off as ordinary citizens serving on unsuspecting boards looking to identify boards or individual board members guilty of governance crimes or misdemeanours.

Here are the top crimes we want you to be on the lookout for!

Loitering - You know what it means to loiter, it’s to stand idly about or linger aimlessly. It is reported that a high percentage of nonprofits’ board members are accused of this crime!

Impersonating a board officer - In many meetings, you may have difficulty spotting the board officers.

Dereliction of Duty - This one may require some detective work as the most flagrant violators rarely show up at meetings.

Þ    Be careful: However, exercise care here, as taking too much interest may certainly out you as an undercover operative!

Harassment – includes any kind of behaviour that is intended to annoy, disturb, alarm, torment, upset, or terrorize another.

Disorderly conduct - Reports exist of instances where a few board members get so worked up that they become verbally abusive and begin shouting at others in the room.

Misappropriation of focus – We know you’re familiar with misappropriation of funds — which itself is a serious crime. However, misappropriation of focus is also serious, but often undetected.

Conspiracy - You may not witness this at first as it takes time to earn the trust of the conspirators and be taken into their confidence. Conspiracy occurs when two or more people get together to plot and plan a course of action.

Þ    You’ll know you’re in when you get invited to the “special meeting” of the select board members.

Obstruction of governance – any act or action that distracts the board from having substantive discussions or decisions about important issues or policies to move the organization forward in a strategic manner.

Þ    They are all ploys to prevent real governance from occurring.

 

We need you to be diligent in your work!

This article is an extract from: Crimes and Misdemeanours of Nonprofits Boards

 

 

Staying ethical in a competitive world

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“Ethisphere Institute, a New York City think tank, has unveiled its sixth annual list of the
(WME).

The list identifies organizations with fair business practices and standards compared with their industry peers. Achieving this level of recognition can be a challenge for many companies because finding the right leadership to guide an organization through difficult economic times, while also meeting expectations for ethical conduct, is not always easy.
 
This year, nearly 5,000 companies were nominated but only 145 made it onto the list. According to Ethisphere, the 2012 list includes representatives of more than three dozen industries, from aerospace to wind power, with 43 of the winners headquartered outside the US.


Ethisphere methodology includes measuring the nominated company’s governance structure against checklists from organizations like GovernanceMetrics International. If a company fails to have a ‘good’ rating due to bribery allegations, corporate citizenship, regulatory and ethical issues, it is automatically tossed out of the list.This year’s first-time recipients included Hasbro, Realogy, Petco, Britain’s Ethical Fruit Co, Thrivent Financial for Lutherans and Henry Schein, along with 31 others. Some 18 companies were removed from last year’s list this time due to ethical violations or lack of social responsibility initiatives.The economic climate over the past several years has made it particularly difficult for top leaders and executives to land a place on the Ethisphere list. When the bottom line is under stress, other objectives can become secondary, or be completely ignored. Just look at the number of now-defunct firms and fraudulent activities the SEC and Department of Justice have cracked down on in the past year. For a firm to make it onto the WME list is, therefore, undoubtedly both an honor and an achievement.Marriott International is one of the few companies to secure a hard-earned spot on the ethical companies list not once but five times in the past six years. So how does Marriott maintain its sharp focus on ethical practices in a highly competitive world?

Well, ethics is correlated with leadership and it all starts with the tone at the top. The company’s executive leadership in its Bethesda headquarters and in regional offices around the globe has set an example admired throughout the industry.
 
In Marriott’s law department, general counsel and executive vice president Ed Ryan and his team have taken to heart the principle established by the hotel operator’s CEO and chairman John Willard Marriott (JW) and COO Arne Sorenson, as they have helped guide the company through some of its toughest times.”

This is an extract from Corporate Secretary, to read more: www.corporatesecretary.com


Corporate Governance and Corporate Social Responsibility (CSR)

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From corporate governance… 

The corporate governance concept was born just after the economic crash of 1929.  However corporate governance as we know today only appeared at the mid-1990.
The corporate governance is a set of processes, regulations, laws, and institutions that have an important influence on the way that the company is managed, administered and controlled. It involves a set of links between the different stakeholders of the organization. Furthermore the whole decision-making process (shareholders, board members and the CEO) is influenced by governance.
To summarize, corporate governance is about how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world.

…To corporate governance and CSR

The corporate governance has changed. Now, it is not enough to control how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world. For many companies the corporate social responsibility is a way to better engage with many of their stakeholders, including investors and consumers. Corporate governance and CSR are resulting into formalization and definition of ethical policy, a better oversight of safety principles, setting up risk management program, and many other policies.
The Corporate Social Responsibility is a way for organizations to improve clearly corporate governance processes.