How RBC improved its director onboarding

A key challenge for corporate secretaries is ensuring that boards have the right composition and that directors are ready and able to perform their duties as effectively as possible. Such work is among the reasons why Royal Bank of Canada (RBC) is the recipient of this year’s best overall corporate governance – international award.

The onboarding of new directors has become an increasingly important part of promoting board effectiveness, as directors face a greater variety of challenges, responsibilities and liabilities. There is less time for directors to get up to speed with a company’s risk profile, current issues and corporate strategy. Corporate secretaries are key to making this process as smooth and successful as possible.

Over the awards review period, RBC targeted this area by implementing a mentorship program for new directors, developing an online education resources portal for the board and refreshing the orientation processes for board committee chairs, using enhanced materials and meetings with management.

The focus on extensive orientation, including meeting with executives, reflects the board’s desire that directors should be effective as soon as they are in place, says Karen McCarthy, vice president, associate general counsel and secretary with RBC. The mentorship program pairs new directors with a longer-tenured member. ‘The mentorships are designed to help new directors understand the culture of the board, how it works,’ McCarthy explains. The program entails monthly conversations, in person or otherwise, to discuss topics such as what happened at the most recent board meeting.

The online portal, meanwhile, provides directors with information on regulations, best practices, the business and its strategies, and governance trends.

One such governance trend has been the emergence and increasing focus on matrices to track the skills and experience of directors to make sure the right people are on the board – and to help identify who the company should be targeting to fill any gaps. This is taking place amid growing pressure from shareholders for increased diversity on boards, as evidence shows that this is associated with improved performance.

During the review period, RBC hired an independent third-party consultant to help identify the skills and experiences needed on the board to support the firm’s strategic objectives, and introduced a new board competency matrix to highlight talent that the board will need. ‘Not many companies have done this,’ McCarthy says, adding that diversity of thought and experience is important for a board to succeed.

Among other things, RBC has committed to introduce an enhanced proxy access regime consistent with the Canadian regulatory framework, which does not require companies to have such bylaws, unlike in the US. The bank has also improved its community and sustainability reporting by adding new disclosure in the ‘Statement on lobbying and political contributions’ section of its report On governance and integrity.

This article originally appeared in the Winter issue of Corporate Secretary.