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GOVERNANCE ASSESSMENTS FOR EFFECTIVE BOARDS

GOVERNANCE ASSESSMENTS FOR EFFECTIVE BOARDS. Canadian Fraternal Association. Friday, May 16, 2014. Introduction. life insurance background working with boards across sectors, across Canada for more than 17 years board performance focus. Session objective.

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GOVERNANCE ASSESSMENTS FOR EFFECTIVE BOARDS

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  1. GOVERNANCE ASSESSMENTS FOR EFFECTIVE BOARDS Canadian Fraternal Association Friday, May 16, 2014

  2. Introduction life insurance background working with boards across sectors, across Canada for more than 17 years board performance focus

  3. Session objective Provide perspectives / guidance on assessing performance of effective Boards

  4. Context • Evaluations rarely done voluntarily • Insular (by necessity) • Key drivers: • Regulation / guidelines • Group think • Focus on governance inputs: • Generic best practices • Comply or explain “loophole” • Assessment criteria ≠ board effectiveness

  5. Common challenges • Directors not on the same page • Conflicting expectations / understanding • Difficulty raising performance issues • “Am I the only one who thinks this” • Lack of rigorous assessment • Avoidance: everything’s fine • Deck chair syndrome • Not to be confused with board chair syndrome!!

  6. Key drivers • OSFI Guidelines • CSA regulations • CCGG guidelines Industry practices set you up to be a follower. Not a leader.

  7. OSFI Guidelines = • Role of the Board • Board responsibilities • Board effectiveness • Board independence • Oversight function relationships • Risk oversight • Role of the Audit Committee FOCUSED ON INPUTS

  8. OSFI: Board effectiveness = Lack of explicit meaning or metrics • Judgment: sound, well-informed decisions • Initiative: exercise responsibilities proactively • Responsiveness: to issues identified by Management • Operational excellence: practices that permit open discussion, debate  BASED ON WHAT? RELATIVE TO WHAT WHAT’S THE BASELINE OR STANDARD

  9. OSFI Guidelines ADDRESSES KEY DRIVERS • Proactive • Accountability / ownership • Rigour • Proof of effectiveness < BEYOND BEST PRATICES OUTCOME FOCUSED

  10. Outcome Focused • Intended outcomes? • Rarely understood / defined • Difficulty measuring: often qualitative • Results achieved? • Gap outcomes vs. results? • Steps to close gap?

  11. REFOCUS ASSESSMENTS ON CANDID CONSIDERATION OF Different Questions RELATING TO GOVERNANCE VS. BUSINESS RISK

  12. Question #1 What does governance mean for your organization? • Create common understanding about the primary role of the Board & what governance means?

  13. Question #2 What would be lost if your Board ceased to exist? • Define the unique contribution the Board makes; the value it brings

  14. Question #3: What is the Board 100% responsible for? MANAGEMENT DUTIES BOARD DUTIES SHARED DUTIES

  15. Question #4 What’s the working relationship between the Board and the CEO? • how power will be shared • how the Board and CEO will work together • how conflict will be addressed • maintaining measured reliance on Management

  16. Question #5 What is the boardroom culture? • how will Directors conduct themselves and relate to each other? • what will the tenor and norm of meetings be? • does the Board / individual Directors model the behaviour it expects of Management? If not, why is it tolerated? • What are the boardroom elephants and why aren’t they dealt with?

  17. Question #6 What does the Board aspire to become? • What does the Board want to be able to say is true about its value, contribution, etc.?

  18. TD Canada Trust Centre 55 King Street West, Suite 716 Kitchener, ON  N2G 4W1 T: 519-502-0409 W: www.boardgovernance.ca E: john@boardgovernance.ca

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