Bonus episode: Getting on board — a primer

Bonus episode

This episode, on Prosper:

Have you thought about joining a non-profit or corporate board? Maureen Jensen, chair and CEO of the Ontario Securities Commission, has served on many boards throughout her career. In this candid talk, Jensen shares what to expect as a board member, ideas for strategically finding opportunities and how to add value at the board table. This special episode is based on a live recording of the session “Getting on board” at the Women in the Financial Industry event held on Sept. 18, 2019. Transcript below.

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Melissa: Hi, I’m Melissa Shin, editorial director of Advisor’s Edge. Prosper will be back in just a couple of short weeks with brand new episodes, interviews and tips to help you build your practice so you and your clients can prosper. In the meantime, we wanted to bring you a very special clip from an event we host every year for women in the financial industry. During September’s event, I was fortunate enough to sit down with Maureen Jensen, chair and chief executive officer of the Ontario Securities Commission for a fireside chat called Getting on Board, where she discussed her experiences joining and serving on boards of directors. You’ll hear her insights along with some Q&A from the 350-person audience. We hope you enjoy it and hope to see you back here in a couple of weeks with our regular host Bruce Sellery and all-new episodes of Prosper. Melissa: What better way to wrap up the day than by talking about something really practical that you can think about and maybe make some changes today, tomorrow and thinking about in your career over the next 10 to 15 years. So we’ve probably all heard some stats about the dearth of women on boards and that’s why we’re here today, to talk about how to actually join a board and how to move the dial, as it were, on the number of women by maybe having some of you in this room contribute to changing that statistic. So Maureen, why don’t you start us off by telling us where we are with respect to women on boards. Maureen: Okay, so it wasn’t a secret, in 2014 we implemented a rule that said that public companies on the Toronto Stock Exchange should start reporting on the number of women on their board, the number of women in their executive team and whether or not… How they tracked it and did they have a policy and did they have a target? And so we put this in place. At that time, 11% of the board seats were held by women. So out of approximately, roughly 7,000 board seats, what we ended up with was only 11% for women. So we have been publishing a report every year to say how the numbers have changed. And the importance of this was not just is it still socially acceptable to have very few women around the board table, this was really about governance at the board. Maureen: What are boards supposed to do? They are supposed to be the governors of the organization, they’re the ones who challenge management, they’re the ones who help make decisions and set strategic direction. And what we were seeing was a lot of boards had a single viewpoint and a single voice. And so when you have that, you miss great risks. And we were seeing incredible Canadian icon companies having huge governance problems and big changes in their valuations, simply because they missed risks that were right around the corner and they didn’t see because they were thinking with the same thoughts. And so what we wanted is diversity at the board table. Maureen: So now here we are in 2019 and what we have are now approximately 15% of the board seats are held by women. However, there are some good things that have happened. There are more companies with at least one woman around the board table. And when we started 51% of the companies on the Toronto Stock Exchange had zero women on their board and now what we’re seeing is, as board seats are starting to turn over, about one in three seats is now filled by a woman. And it’s different for different industries, very large companies, over $1 billion in value, they generally have about 25% of their board seats are filled by women. And that goes down substantially, it only is 15, of course, when you look at under $1 billion. Maureen: And so, I think, it’s very important and most of the securities commissions across the country put in this comply-or-explain rule and we are seeing the needle move a bit. But there are three ways that other jurisdictions, globally, have ended up making the change. One, you can have a quota or you can have an established published target or you can do something like we did, was disclosure. And quotas will move the needle right away but what the jurisdictions that have tried to have quotas, once they moved the needle, it moves very quickly and then it stops. And if you have the quota for the number of women on the board, what they found was without having a quota for women who are chairs of boards, they actually had zero women chairs of boards. Maureen: And so every single one of these models has its downside. But some of the laggards in the industry were mining, oil and gas, and technology companies, surprisingly. But even those companies now, generally, it’s more than 50% of these companies have at least one woman on the board. Melissa: Well that’s great progress. And, also, I think it really helps the fact that they know that you will be looking at this every year and publishing a report and that they are accountable to you. Maureen: And it’s public, it’s not just us doing the work. And so when you get your information from the companies that you’re a shareholder of, they have to report on this, it’s in the materials and so you can ask a question. And we feel that this is really important for companies to disclose and for shareholders to think about, and then they can ask questions. Without the information, you can’t even ask the question. Melissa: Absolutely. So what kind of advice would you give to a woman who is looking to be a board member? Maureen: First of all, be careful what you wish for. You have to really ask yourself, is this really a role for me? So number one, you have to think about what are you bringing to the board table? Like do you really want to sit at this board? Is this a company that you feel passionate about? Is this a company that you’re comfortable with the managers of the company? Because if you’re sitting there, you’re taking liability, it’s a lot of time, and generally you don’t get paid very much. In not-for-profits you don’t get paid and charities you don’t get paid. And so this is really a labour of love and it takes a lot of work. Maureen: So you have to ask yourself, do I really have the time? Because it is time-consuming, generally six to eight board meetings a year. You have to be on at least one committee and if it’s a small board you’ll be on guaranteed two. There’s a lot of reading. So I’ll just say on the boards that I’m on, packages are somewhere between three and 400 pages and so you have to prepare for that. You also have to really understand what the peer comparators are, so you can understand… I’m on the ROM board, the Royal Ontario Museum. So you read annual reports of all these museums around the world and you try and understand what’s going on, but that’s all on your own time. Maureen: And then the biggest thing is at the table is not the time to get educated. You have to educate yourself beforehand and at the table you are going to be tasked with discussing and making some critical decisions for the organization. And this is the time to have a good discussion, so your interpersonal skills are really important and your ability to get to yes is really important because most of these things are not just votes, you do try and get to consensus. And it can be very raucous at times because the board may have one idea and the management have another idea. And so you really have to try and struggle to get to yes. Melissa: It’s a huge responsibility to be a director because you’re representing the stakeholder, usually the shareholders in a public corporation and sometimes donors and things like that. And you mentioned the idea of aligning with the values of the organization. You know, you’re a steward and you have to make sure that you agree with that. So what are some of the questions you might ask before joining a board? Maureen: So before understand the company that you’re joining, that’s number one. And understand how it’s perceived in the marketplace. So, we’ll talk about for-profits, but all this stuff is the same whether you’re a not-for-profit. So really understand that. Go and talk to some of the directors, see if you like them, see if you have similar viewpoints. Is it all top down? Then find out… Go talk to some of the employees, see what they think about their company. So I would say do your homework, that’s the most important thing to do. Melissa: Absolutely. And then of course you mentioned the time commitment. And it’s interesting because when you’re maybe earlier in your career you don’t have as much responsibility so you might have more time, but you don’t have all the knowledge that you need. And then when you get to that point, when you really do have all the knowledge, you might have a ton of responsibility in your job and then you don’t have that “free time” to read 400-page reports on the weekend. So what kind of experience do you need to join a board? Maureen: Well, I think what you have to do is you have to have been involved in managing a company in some way because you have to understand what the managers are going through. So I would think that for the most part, people who are looking at joining a board, they’re generally in their mid to later career. And this is an opportunity to start thinking about not just managing day to day and not just the financial statements and just being compliant with the law. This is about really thinking about what’s the strategy of the company? What are we going to do next year? Who are our biggest competitors? How are we going to compete? Is there a new product? It’s really thinking much further down the road. And it’s also holding management accountable for what they say to their shareholders and how they treat their staff and what their HR policies are, codes of conduct, all of those things the boards get involved with. Maureen: And so I would say to you that it’s generally people who have had a lot of life experience, but that doesn’t mean that you can’t start getting board experience early. Most people’s board careers start in the not-for-profit or charity work. And you can start that early because they… I mean you’re going to do it for free, they really use their boards to fundraise and to help do the work. And so they’re very open to have inexperienced board members come on and really help the charity. And as you go on a variety of boards over time, and I would suggest that… Maureen: I listened to the earlier panel and you know, we have kids, we have parents, we have busy jobs, nobody has any free time and everybody who has one minute of free time is on their phone now. But so you can probably do one board at a time when you’re younger because of all of the demands. But you can get little kernels of experience along the way and then you start being a… If you’re a good board member, the word gets around, here’s somebody who does the homework, who’s collegial, who comes prepared to every meeting. Who is smart and asks those thought provoking questions. You get picked up and then you’ll start getting tapped on the shoulder for the other boards. Melissa: Fair enough and I can actually say that, about the young person thing, is true. I joined a board in my twenties and then they asked me to be the chair a couple of years later. And I think it was that idea of it was a not-for-profit, they didn’t really have a ton of people interested. Not to diminish myself, but I think that was what allowed me to be able to get that experience. So I would encourage people who are interested, regardless of age, to find a cause that you’re really interested in and see if there is a board there. And you can start small, you know, condo boards and things like that, as well. Maureen: Right. And don’t overlook things like industry associations, that’s a great spot where you actually, you’re in that industry, you bring a valid viewpoint, you have experience there, you are very marketable. My first board, my career started off in the mining business and I joined the Prospectors and Developers Association. And so I started on a committee, then I was on the board and then I was on the executive committee, and over time you start getting involved in other industry associations. I ended up being on the board of Professional Engineers Ontario. All of those things add to your resume as you go along. Melissa: So how do you actually go about applying, or is there an application process, to become a director? Maureen: So it’s different in different places. For most corporate boards, public boards, there isn’t an application process. Basically they often use consultants to help them and so they will go out and they will say… Most boards now have a matrix of experience and backgrounds that they want. And so there’s generally a lawyer, an accountant. In the securities commissions there’d be people who have had extremely successful careers in different aspects of the business, whether it’s asset management or broker dealer and some of them adjudicators. And so what you do is you create this matrix and then they start looking for people. As people roll off a board, they say, we’re losing our securities lawyer who really understands M&A transactions, how are we going to find this person? And then you start looking for specific skills. Maureen: On the public side, there’s generally an application process. It’s a public process. You go on to a website and they list all of the public board seats that they’re looking for potential candidates for, and you submit your resume and you answer some questions. And then they’ll go through the culling process. So it ranges from the tap on the shoulder to a public process. But the most important thing is that if you are applying for a board, make sure that you have the requisite skills to be there. Melissa: Sure. And are there databases that you can submit your name to that might tell you about opportunities slash show others that you’re interested in opportunities? Maureen: Yep. Most industry associations, they would have those… It’s our board-ready people. A lot of it is networking, but there are consultants, search consultants, who specialize in board seats. And your board resume will be very different than your regular resume because it will talk about the boards that you’ve been on as opposed to just where you’ve worked. It’ll also talk about your experience and the types of transactions that you’ve been through. I will tell you that boards can be extremely time-consuming, especially a public board that may be going through a problem. I mean we look right now at the cannabis sector and you can see some of the things that are going on there. You can imagine that those board members are spending hours and hours a day working on issues. So you have to be prepared to do that. Melissa: Right. And that brings up, again, back to the question of if you have a full-time career and you would like to be a board member, how do you balance that? Maureen: You work all the time. Melissa: Okay. Maureen: That’s usually why you do it when your kids have left home. Melissa: Fair enough. Fair enough. And when we talked prior to this panel, you had talked about the idea that sometimes the corporation that you work for actually does support you becoming a board member. Maureen: Oh yeah, especially if you are in upper management or senior management, this is a fabulous way to get a different viewpoint on business and start thinking about business in a different way. So you will be promoted in the sense that you can… You know when they asked you at your performance review, “What do you think the good development opportunity would be?” You can say, “I would love to be on a board. I’d like to be on this charity board.” And then you could say, “So will you give me some time to do that?” Because if you’re going to develop yourself, you’ll take time anyway to do something, whether it’s a course or… So here’s another opportunity. Maureen: And if you are in a part of the business where you’re always trying to innovate, this is a great way to talk to other people, get yourself known outside of your own business. And it’s personality building, I will tell you it’s a very rewarding experience, but you will meet cantankerous people. You’ll meet people who think that they’re always right. You will meet people who never speak up. But the best boards you will meet engaging and engaged people. And it’s wonderfully… It’s just a wonderful experience. Melissa: Yes. And it gives you a new perspective on the work that you do day-to-day. Maureen: It does. Melissa: Because if you are really on a board, you have the bird’s eye view, you see the entire company, you have to consider within and without. Whereas maybe in your day-to-day job you have one focus, marketing or you work with clients and you don’t necessarily get to exercise some of those other muscles. So that can be part of the pitch is that you’re also developing yourself that way. Maureen: Yeah. And depending on the company, you get to engage with management at a very different level. And so you see incredibly smart people grappling with difficult problems because, I mean, it’s the big issues that come to the board. And you see how creative they can be and how they can turn a company around. There’s a lot of discussion about where the organization’s going and how we’re going to deal with difficult problems. It’s truly a wonderful experience, as long as you’re prepared for the work. And that you have to realize boards are not about me, me, me. It’s all about the collective whole and how we’re going to get to yes. Melissa: Right. So why don’t you walk us through what a board meeting is generally like and if you could also focus on that consensus element and maybe tell us some more stories from your time as director. Maureen: No, that’s another thing you never talk about what you talked about at the board table, ever. Melissa: Oh, it’s like Vegas, got it. Maureen: Ever. Okay, so I mean… I think most people here, you’ve been to a board meeting at some point, yes? Who regularly attends board meetings here? Lots of people. Okay. But not all, that’s for sure. So generally you get your package, quarterly board meetings are all about all of the statutory reporting that a company has to do. You get updates on what’s going on in HR, you get updates on revenue and the forecast and the budget and all of that. So that’s kind of normal course, so that would be four board meetings a year. But in between you are likely going to be talking about bigger issues. There’s usually a strategic session and a business planning session at some point through the year, where, sometimes on a regular cycle, you would be going offsite and you’d be working together to try and solve particular issues and think about, how is this company going to compete in this particular sector? What is our special value? What are we going to do? What kind of investments do we have to make? Maureen: All of these things will be brought to you in a package. It’s management’s job to come up with all of this, but it’s the board’s job to see that it all hangs together and it actually achieves what they’re trying to achieve. And so you will get very comprehensive briefings that you will have had to read beforehand. Then there’ll be a series of questions that you’re likely to be asked to make some decisions, whether you’re going to approve something to move forward or whether you’re going to challenge management. And you have to do it in a very telescope period of time and you have to have a good discussion about the real facts, not about minor edits and things like that. Maureen: So for the most part on the not-for-profit boards, I find that you meet more often because board members generally get involved in the business more and they also have more problems and generally more money problems. And so you have to be involved. So I would say, you know, it’s not uncommon to have 12 board meetings a year. Most will do four to six, but certainly on the not-for-profit side a lot more. Melissa: Sure, sure. And in terms of getting to consensus, what are some of the strategies that you’ve used to bring people on to your side or… Well, it’s not really about you, I guess- Maureen: No it’s not. Melissa: It’s kind of going to the side of coming to the right conclusion. How do you do that? Maureen: So that’s generally the job as a chair to try and to bring people to consensus. And I find the best thing to do is to be extremely clear about what you’re trying to achieve, make sure that everyone has all of the information that they need to make the decision, give them enough time to read it. That I would say if there’s one bugaboo that most board members have, it’s that they get a 600-page board package three days before the meeting. Right? Which is crazy and I’m guilty of it too, but it’s generally, you’re always trying to get right down to the wire. So how do you get there? You have respectful dialogue. You treat everyone like you would want to be treated, with respect. You become an active listener, that is super important. A lot of people don’t listen, they talk. It’s amazing what you learn when you close your lips and just listen. And you can actually see how people, they have emotional reactions to making different decisions. Maureen: And so you have to actually like each other and come together and agree on where you want this company to go and agree that it’s important that you get there together. And so, you know, there will always be somebody who has a very visceral reaction to a problem and will try and dominate. It’s really important for the chair to not let any one person dominate. Melissa: And you mentioned the potential of cantankerous folks that might be on the board with you. I know I’ve experienced certain things that way. And how do you create that relationship with that fellow board member and sort of diffuse some of the, maybe, more challenging conversations? Maureen: Oh, I think you get to know people as people. So one of the most important things is that often boards have dinners the night before the board meeting or where you can actually meet people and not talk about the office and not talk about the job, but just trying to get to know each other. It’s the same thing in any part of your life, is if you actually are human to human, it’s very hard then to turn around and say, “Well, I know more than you.” Because you all have kids and you all put your pants on one leg at a time. Right? And I would say that some of the boards that I’m on, it’s really great to have younger board members because they are approaching things differently. Maureen: And so I have really enjoyed… For example, right now the ROM board where we have people who’ve been ROM volunteers forever, people who are stars in the museum world, and then young members who have just joined the ROM a few years ago or maybe have worked there in the past. And the dialogue is great because there’s one common bond. You love the museum. Melissa: Right. That makes sense. At this time I wanted to open it up to the floor for questions. Attendee 3: I was on a board for a not-for-profit for several years and I loved it. It was mainly fundraising, but I would now like to look towards going to more of a corporate board. And I’m just wondering what the time commitment that I put into the not-for-profit, it was a real passion and love of my life, but it was a second job. Maureen: Mm-hmm (affirmative). Yeah. Attendee 1: So I just wonder if the time commitments are really very similar or do you think they’re maybe even greater demands? Maureen: So, it depends on what kind of for-profit board that you’re on. Some, no, not nearly as much as you would put in to a not-for-profit, but some yes, because… A large bank board, for example, will have much more of a strict schedule and you get large board packages, but they don’t have as many emergency board meetings. A small oil and gas company that’s having problems with its revenue stream is going to have many, many more meetings and much more of a discussion. So there is no standard, but I do find that not-for-profit boards take a lot more time. Attendee 2: I’m just wondering if you could share, out of all of your board experiences that you’ve had, a skill or a part of who you are in the workforce that’s developed as a result of your board work that’s translated really well into your career. Maureen: Yes, I can. Okay. So in the earlier panel, one of the panelists talked about the ability to public speak and I will tell you that the first board that I was on, I was working in the company and I was what was called then an exploration manager. So I was managing all the exploration across the country. The CEO of the company died and the board came to me and said, “We want you to be the new CEO.” And so I had never been on a board and I had never run a company, I didn’t know anything about the public markets at all. Which is, I shouldn’t say that sitting here, that’s what I do today. Melissa: It was a while ago. Maureen: But the most difficult thing I had… Like you can learn anything. Right? And the most difficult thing that I had was I was very shy and I was really good at my job, but I was really shy. And so here I was, I was the CEO of this company, and every quarter I had to talk to them all and tell them what I was going to do and they would grill me. And I got so used to speaking publicly through them and then through the shareholder meetings that I started to lose my shyness, I’m still shy, but I’m not afraid to speak publicly. And so that for me, certainly helped my career because I wasn’t uncomfortable to get up in front of an audience. So, that’s one area. Attendee 3: I work at a brokerage firm. I see a lot of small companies with zero representation from women. I think that more women should be stepping up to these small companies and putting forth the names of other women that they know. That would be, I think, amazing. In my experience, there’s absolutely no doubt in my mind that most of the men on the board of these small companies… No disrespect to the men present, I did see a couple. But there’s no doubt in my mind that there are many, many qualified women and probably quite a few of them in this room that would benefit publicly traded companies, especially the small ones that can’t afford the representation of more experienced individuals. Now, one thing I did want to point out is that there is some compensation and though it’s not a lot, there are some monies paid for attending- Maureen: Oh yes. Attendee 3: Directors meetings- Maureen: Yep. Attendee 3: And stock options. So there is a way to actually earn something for your time and if you can write a company or put them in the right direction, stock prices go up, everybody makes money, everybody’s happy. So let’s see more women up there. Maureen: Okay. Melissa: Did you want to make any comments? Maureen: Yeah. And yes, a lot of people… The smaller the company, generally boards are very much a collegial group, they’re people who work together. And certainly I come from the mining business originally, and it was very, very hard to find women at any of these board tables because they just said, “Well, there aren’t any women in the mining business.” Well, there are. And I’ll tell you another story that I was asked whether I would be interested in going on a board and one of the other board members said, “No way. I mean, why would we pick you when we can pick a really smart guy?” And I said, “Because I’m smarter than all of you.” So that’s what you got to do. Melissa: Well, I think that’s a great way to end. Maureen: Okay. Melissa: Everyone, please join me in giving another round of applause to Maureen Jensen. Maureen: Thanks.