Conference Board awards honor the best in Canadian governance
Rising to the top of any field isn’t easy. It takes a well-defined plan, a strong team, time and a lot of hard work. This is particularly true in the area of corporate governance. And with global financial markets in turmoil, maintaining the effective oversight and strategy that define good governance is of the utmost importance.
Recognizing outstanding achievement in corporate governance presents just as many hurdles. Much of what makes a governance program good is not obviously quantifiable and there are many subtle differences between companies and sectors. Nevertheless, the Conference Board of Canada in partnership with Spencer Stuart has for the past nine years identified the best-governed organizations in Canada.
As in previous years, the awards ceremony in Toronto, designated the Conference Board of Canada/Spencer Stuart 2009 National Awards in Governance, was a lavish affair that attracted around 300 leading lights from Canadian business and government.
Amanda Lang, host of Business News Network’s SqueezePlay, returned to host the event. To start things off, she posed a question that put an entertaining spin on the esoteric nature of governance: ‘Did you ever hear about the Buddhist who went for a hot dog? He stopped by a street vendor, asked for a dog … handed over 20 bucks. The vendor gives him the hot dog and turns away. The Buddhist says, ‘Hey, where’s my change?’ And the vendor says, ‘change comes from within.’’
The same is true of corporate governance: It too comes from within. While few people achieve Nirvana, the winners of this year’s awards can certainly lay claim to be on the path to the ultimate state of enlightenment. This year’s winners, TransAlta, Canadian Blood Services and the Saskatchewan Indian Gaming Authority (SIGA), join some of the most successful Canadian institutions which have taken past prizes.
In addition to Spencer Stuart, Deloitte & Touche, Ogilvy Renault, The Globe and Mail, Business News Network, Directors College, McMaster University, The Institute of Corporate Directors and L’Institut sur la gouvernance d’organisations privées et publiques also came together to support the event.
Coordinating change
To reflect the ever-evolving business environment, the advisory board responsible for selecting the winners continually updates the criteria. This year, they added an overarching dimension, assessing whether a company achieved ‘something important’ in the context of sustainability. While there must be solid governance processes in place to meet the requirements of securities, marketplace regulators, governments and other bodies that they are accountable to, it is equally critical that boards provide value in how they engage and deal with the hard issues that face their organizations – that they succeed in doing important things on behalf of their stakeholders.
Speaking to the assembled audience in Toronto, Anne Golden, president and CEO of the Conference Board of Canada, mused, ‘One thing was very apparent to me this year in looking at the stories of the top contenders and sector winners: the value of the transformative role of boards, especially in building or rebuilding shareholder confidence and trust.’
Golden expanded on the situation that is demanding boards commit to change. ‘Today’s crisis of confidence is of unparalleled proportions among lenders, customers, employees and the general public,’ she said. ‘Lenders don’t trust borrowers, or even other lenders. Companies don’t trust suppliers. And as for customers, … well, many of them don’t know who to trust. Lack of trust is reinforcing national and global recession. So when we say that trust is at the heart of the financial crisis, it is an understatement. … History teaches us that when it comes to the causes of key events, we must look to the climate of opinion. It is the overall culture of a society that determines what ideas take hold – or don’t – and what events become tipping points for change.’
Sustaining success
One of the winners that improved the way its board operates in this new and precarious milieu is TransAlta. According to the awards program, the board ‘contributed greatly to the company’s long-term financial success, as well as to success as defined by many other measures, including sustainable development.’ Stephen Snyder, president and CEO, accepted the award, mentioning the challenges the company faced when many independent power providers have disappeared from the market. For example, the company has faced strong pressure from activist investors. To smooth relations, their engaged and open board works with shareholders to navigate these turbulent times. Snyder pointed to effective risk management, which provides for an ongoing review of risks, and management’s willingness to take early and decisive action, as the main reasons for the company’s continued success.
The awards committee had this to say about the public sector award-winner, Canadian Blood Services: ‘The underlying governance driver that contributed to [its] achievement is the board’s focus on mission and its key success drivers, and the adoption and fostering of performance measurement and management processes.’ Board chair Verna Skanes took to the stage, highlighting the organization’s success in rebuilding trust following the systemic failure of Canada’s blood supply system; the company increased blood collections by 30 percent and raised the percentage of Canadians who believe transfusion is safe from 56 to 75.
‘I was particularly touched by the not-for-profit winner being SIGA because in some ways, it having won and the reason for which it won is indicative of the founding thinking of the event – that is governance matters across sectors and that all the various sectors have things to learn from each other,’ says Andrew MacDougall, president of Spencer Stuart Canada. ‘The reason why they won was their ability to continue moving forward while staying true to their principles. That achievement is really quite compelling.’
First Nations leaders Chief Reginald Bellerose, chairman of the governance committee of SIGA, and Ray Ahenakew, SIGA board chair, accepted their award, pointing out SIGA’s innovative combining of cultural and historical principals of the First Nations people and the shareholders as the basis for formulating its core policies and its approach to governance and business.
With change comes challenge
While he applauds the award recipients, MacDougall understands the challenges companies face this coming year. ‘Boards right now really have to spend a lot of time working out some very difficult issues including executive compensation and capital strategies. I think that the idea of a board actually making a contribution to the success of an organization is going to be all the more difficult because the issues they are dealing with are so complicated.’ Certainly, the winners offer inspiration to companies in Canada and across the globe.
