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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

GOVERNANCE ASSESSMENTS FOR EFFECTIVE BOARDS

Canadian Fraternal Association

Friday, May 16, 2014

introduction
Introduction

life insurance background

working with boards across sectors, across Canada for more than 17 years

board performance focus

session objective
Session objective

Provide perspectives / guidance on assessing performance of effective Boards

context
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
common challenges
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!!
key drivers
Key drivers
  • OSFI Guidelines
  • CSA regulations
  • CCGG guidelines

Industry practices set you up to be a follower. Not a leader.

osfi guidelines
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

osfi board effectiveness
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

osfi guidelines1
OSFI Guidelines

ADDRESSES KEY DRIVERS

  • Proactive
    • Accountability / ownership
  • Rigour
    • Proof of effectiveness

<

BEYOND BEST PRATICES

OUTCOME FOCUSED

outcome focused
Outcome Focused
  • Intended outcomes?
    • Rarely understood / defined
    • Difficulty measuring: often qualitative
  • Results achieved?
  • Gap outcomes vs. results?
  • Steps to close gap?
refocus assessments on candid consideration of
REFOCUS ASSESSMENTS ON CANDID CONSIDERATION OF

Different Questions

RELATING TO GOVERNANCE VS. BUSINESS RISK

question 1
Question #1

What does governance mean for your organization?

  • Create common understanding about the primary role of the Board & what governance means?
question 2
Question #2

What would be lost if your Board ceased to exist?

  • Define the unique contribution the Board makes; the value it brings
slide14

Question #3: What is the Board 100% responsible for?

MANAGEMENT DUTIES

BOARD DUTIES

SHARED DUTIES

question 4
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
question 5
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?
question 6
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.?
slide18
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