Skip to main content
Aug 31, 2008

Top of the heap

Conference Board honors top achievers in governance

Governance and compliance excellence is becoming evermore difficult – and important – to achieve. Many significant changes have taken place in the regulatory and broader business landscape in the early part of this century and with these changes has come a far greater awareness of the vital role effective governance plays in the success of organizations, from listed companies to not-for-profits to public sector groups.

Recognizing ‘the innovations of boards of directors and governing bodies that believe that governance is a dynamic and critical element of their organizations’ success,’ the Conference Board of Canada and Spencer Stuart introduced the National Awards in Governance. Now in their eighth year, the awards honor excellence in the field of governance innovation and have been handed out to some of the most prestigious institutions in the country. This year is no exception. The three winners were Royal Bank of Canada, the University of Alberta and Mountain Equipment Co-op (MEC).

So what exactly does an organization need to do in order to be considered for one of these awards? Obviously, having a sound all-around governance program is important, but it is far from the only criterion. As the Conference Board notes in its announcement of the 2008 winners, ‘We consider innovation to be the embracing of uniquely new approaches or the application of proven approaches in new circumstances or sectors. Innovation requires leadership. The connection between innovation and excellence is implicit – an absolute criterion is that overall governance must be of a high order if an organization is to qualify for an award. Each organization recognized in this booklet has achieved something important, demonstrated leadership and created experience that can benefit others.’

Best in class


Pat Beelby, university secretary at the University of Alberta, which won the public sector award this year for innovation in performance-oriented governance, explains, ‘We are extremely proud to win the award and be recognized for our governance structure, especially given the caliber of the other organizations we beat. I believe we received the award for truly being focused on strategic planning. We had an objective, which was to get the University moving forward in a big way, and we are achieving that.’

In announcing the award, the Conference Board took care to point out that outstanding governance at a university is a particularly fraught task, which makes the achievement even more impressive. According to the Conference Board, a confluence of unique factors makes effective university governance a challenging proposition in and of its own right, as well as in comparison with other sectors. In past years, perhaps because of the challenging nature of university governance, few such institutions have been applicants for these awards.

The University, which currently boasts 11,000 faculty and staff and serves over 36,500 students, set itself the ambitious target of becoming one of the world’s top 20 educational facilities by 2020. ‘We have a president who showed us the University could be a lot bigger than we are,’ attests Beelby. ‘We could expand from a provincial college to a more global player.’

In order to achieve this goal, a world-class governance program would also be required. ‘As part of this,’ Beelby continues, ‘we put in place some internal structures to manage ourselves from a global perspective and for a growth element.’

Beelby also credits the chairman of the board of directors for bringing a new perspective to the University. ‘Our chairman has a combined 200 years on corporate boards. We have found that the corporate board experience that the chairman brings to the table has been invaluable. He brings a different perspective than someone who has spent their entire career at universities or public institutions. One area that private company experience really helps is the knowledge of internal and external audit process. He also knows what he needs in order to make sure the board has the tools to do its job right and he is very good at knowing when to seek the counsel of outside advisers.’

The University takes a bicameral approach to its governance structure. There is the general faculty council which deals exclusively with academic matters. Then there is the business board which deals with operational matters and features a number of sub-committees. In addition there is also the deans-only council and the chair’s advisory council. ‘This affords us a very extensive filtration mechanism in our decision-making process,’ says Beelby.

Banking on success

In the private sector category, Royal Bank of Canada (RBC) took the top honors for innovation in the field of corporate performance management.

The opening question on the application form for the awards asks, ‘Why do you consider your organization to be successful and how do you measure success?’ In filling out this application Carol McNamara, corporate secretary for RBC, wrote, ‘At RBC, success is founded on ethical leadership, teamwork and a commitment to providing value for all stakeholders: shareholders, employees, customers and communities. RBC measures success in terms of successfully executing its strategy to achieve several overarching strategic goals, while meeting aggressive financial performance objectives set annually.’

The Conference Board commended RBC for creating ‘an innovative performance management framework aimed at facilitating more accurate and timely assessment of the success of strategic initiatives and their implementation. The objective was to enhance the agility of the board and management, leading to better and faster decision making enabling quick action when opportunities or weaknesses present themselves.’

Stressing that ‘information is the currency of corporate governance,’ considering RBC’s particular application, the Conference Board stated: ‘This board has led the way and been innovative in ensuring that the decisions it makes are formulated with a wide purview – that of the enterprise; that within the board, and between the board and management, debate about decisions is enlightened and forward-looking; and that the board has the information it needs to make a strong contribution to the success of the corporation beyond important compliance considerations.’

Honored by the accolades, McNamara explains the simple and practical reasoning behind RBC’s strategy: ‘Our framework for managing financial and non-financial performance provides information to the board and management in a manner that allows them to visualize it holistically within the context of the enterprise.’

Sustaining your shareholders

The third award, which looked at the not-for-profit sector, went to Mountain Equipment Co-op (MEC). The member-owned retail cooperative is well-known for its social and environmental leadership and it was presented with this award for innovation in sustainability strategy and short- and long-term success.

In presenting the award, the Conference Board recognized that MEC’s ‘governance innovation has been to develop a focus on a key dimension that will contribute to the organization’s success and to provide leadership for this key dimension by establishing policies, committing to a solid long-term vision that embraces that dimension, and then working with management to implement and drive forward business practices designed to achieve success in that area. The board is ensuring that the organization is truly sustainable and will succeed over the long-term.’

MEC features a nine-member board with directors being elected from – and by – the membership base across Canada. With its reputation for social and ethical behavior, and given the nature of the business and the attitude of the membership and customers, the board at MEC is very conscious of the fact that sustainability is not just rhetoric but is the ethos shared by most of its stakeholders. Thus, excelling in this area is not only in line with the attitude of the membership but provides a very real competitive advantage for the business.

Shortlist filled with accomplishment

Among the shortlisted companies, SNC-Lavalin is worth special mention. The company was a winner of the private sector award from the Conference Board in 2007 and this year was shortlisted for innovation in executive compensation. The engineering and construction company, which has offices in 30 countries and operates in over 100, was also the recipient of the 2007 Golden Gavel Award from the Canadian Coalition for Good Governance (CCGG). The CCGG award focuses on industry-leading disclosure practices. It is no coincidence that the 2007 award from CCGG parlayed into a shortlisting this year.

The Conference Board complimented SNC for ‘enhancing the breadth and depth of information that it discloses to shareholders and others about the firm’s executive compensation. It has been recognized as being at the forefront of corporate disclosure in Canada. … It is an excellent example of a board working smarter by using the disclosure initiative as an opportunity to assess the competitiveness of its compensation regime, a key element of its success potential.’

While this year’s winners are enjoying the well-deserved recognition, 2009’s hopefuls are working hard on developing new governance innovations that will make them the stand-out choice for the top prizes.

Many companies across Canada are aware that, in the words of Spencer Stuart’s president, Andrew MacDougall, ‘Superior governance is about more than a process or rules. It’s about the long-term success and sustainability of the enterprise.’

This attitude and the elements highlighted in the awards are also leading to a greater awareness among the investor community about the importance of long-term governance issues and the risks of focusing too heavily on short-term fads that add little to the overall performance and sustainability of an organization.

Brendan Sheehan

Brendan Sheehan is the former Executive Editor at Corporate Secretary magazine, and is a leading expert in public company governance and compliance. He regularly lectures on cutting edge governance, risk and compliance issues and is a regular...