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"First in Good Governance":
Eyes on accountability, ethics, transparency and integrity
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Charlie Coffey, O.C.
Executive Vice President
Government Affairs & Business Development
RBC Financial Group
Association of Fundraising Professionals (AFP)
Annual Congress
Metro Toronto Convention Centre
Toronto, Ontario
Tuesday, November 29, 2005
Louise, what a special treat to be introduced by the Royal
Winnipeg Ballet's Director of Development. Given your recent
return from the trip of a lifetime to India (which must mean
a backlog of priorities on your desk), it's great that you
managed to attend the AFP Congress. I've heard of your work
with Communications Canada (while I was in Winnipeg), Canadian
Heritage and the Winnipeg Symphony Orchestra, not to mention
your fundraising experience and various community leadership
associations…and now, you're a "development"
asset to the RWB team. I hope to catch up with the Company
in Ottawa this January, as I'm told the performance of Dracula
is literally "bloody good ballet"! Thanks very much
for bringing back some marvelous memories…
Welcome to this management academy called First
in Good Governance - with eyes on accountability, ethics,
transparency and integrity. Since this is the last session
of the day, there's no way I'll hold your captive attention
for 90 minutes. Besides, an interactive approach is infinitely
more enjoyable. So here's the plan…my remarks are designed
to offer a stimulus to the topic and discussion - afterwards,
I invite you to share some of your stories about first
in good governance. We want to hear from Louise Pujo (RWB),
Heather Ferguson (The Hearing Foundation of Canada), Kenneth
Aucoin (University College), Sheree Allison (Big Brothers
Big Sisters/Boys & Girls Club), Hailee Morrison (Pathways
to Education) and others. By the way, my remarks will be posted
on the RBC web site this week (www.rbc.com)....and
I did bring a few copies with me.
Let's get started…as many of you are aware, the Institute
on Governance (IOG) "is a Canadian, non-profit think
tank founded in 1990 to explore, share and promote responsible
and responsive governance in Canada and abroad." Here's
an excerpt from its October 2005 newsletter:
"Since Enron, we've had one corporate scandal after
another, including WorldCom, Parmalat, Hollinger and Nortel.
As a result, good governance has become a priority item for
many business boards of directors. The public sector has followed
suit, showing a new zeal for governance. Auditor generals
have taken to reporting on the governance of their audit 'clients'.
Ministers have been called to account for perceived failures
of governance in Crown corporations. Non-profit Board chairs
and executive directors have headed in droves to seminars
by governance 'experts'. The Gomery Commission's activities
have drawn further attention to flaws in public governance."
The message from the President in the IOG newsletter goes
on to state: "Business remedies are not always relevant
to 'public purpose organizations', organizations which embrace
both governmental agencies and the non-profit sector. In business,
the focus of recent governance discourse has included director
independence; the need to separate the role of the CEO and
the board chair; the need for a robust audit committee; and,
for corporations doing business in the USA, the provisions
of the Sarbanes-Oxley Act (SOX). However, 'director independence'
is of little concern to organizations whose ownership is in
public hands. In most Crown agencies, the role of chair and
CEO are already separate. Most public (and non-profit) organizations
have no interest in the provisions of SOX. Moreover, what
one doesn't see in the business literature on good
governance is much attention to issues such as the legitimacy
of board members, their ability to represent their constituency
effectively, or the challenge of improving governance where
an organization has multiple accountabilities. It's time we
started defining standards and principles for sound governance
in a public (and non-profit) setting."
I, for one, couldn't agree more. While there's learning to
be shared among all sectors, it's time to hear and read more
about Canada's top 25 non-profit and public boards, not just
the top 25 corporate boards in Canada, as listed recently
in Canadian Business Magazine (August 2005). With that preamble,
I want to share some insights and stories about First in
Good Governance - with a focus on accountability, ethics,
transparency and integrity. When referring to integrity, especially
in the context of governance, I'm often reminded of what Warren
Buffet, likely the world's most successful investor, said:
"In looking for people to hire, you look for three qualities:
integrity, intelligence, and energy. And if they don't have
the first, the other two will kill you."
Listen to this quote from Ann Florini, Senior Fellow, The
Brookings Institution and ask yourself if it applies to your
organization: "NGOs are a bunch of people whose currency
of power is information and the ability to make arguments
and persuade people to change how things are done…to
have that kind of power you have to have access to information."
I'm pleased that Renae Addis and Neil Uttamsingh of RBC Community
Investment in Ontario have joined us this afternoon, as it
will be added value to hear a corporate perspective on the
question of access to information - for example, is RBC perceived
to be approachable - willing to share information?
There's a terrific new book entitled The Source: Twelve
Principles of Governance That Power Exceptional Boards,
which defines governance "not as dry, obligatory compliance,
but as a creative and collaborative process that supports
chief executives, engages board members, and furthers the
causes they all serve - (enabling) non-profit boards to operate
at the highest and best use of their collective capacity."
It suggests that "the difference between responsible
and exceptional boards lies in thoughtfulness and intentionality,
action and engagement, knowledge and communication."
I couldn't help but reflect on RBC's commitment to cultivating
a strong governance culture and creating shareholder value
through our Code of Conduct, Charter of the Board of Directors,
our annual Corporate Responsibility Report and Public Accountability
Statement.
As I describe the twelve principles, determine which ones
your board is leveraging and watch for the words accountability,
ethics, transparency and integrity that are used throughout:
- Constructive Partnership: Exceptional boards govern
in partnership with the chief executive, recognizing that
the effectiveness of the board and chief executive are interdependent.
They build this partnership through trust, candor, respect,
and honest communication.
- Mission Driven: Exceptional boards shape and uphold
the mission, articulate a compelling vision, and ensure
the congruence between decisions and core values.
- Strategic Thinking: Exceptional boards not only
align agendas and goals with strategic priorities, but also
use them for assessing the chief executive, driving meeting
agendas and shaping board recruitment.
- Culture of Inquiry: Exceptional boards institutionalize
a culture of inquiry, mutual respect, and constructive debate
that leads to sound and shared decision making.
- Independent-mindedness: Exceptional boards apply
rigorous conflict-of-interest procedures, and board members
put the interests of the organization above all else when
making decisions.
- Ethos of Transparency: Exceptional boards ensure
that donors, stakeholders, and interested members of the
public have access to appropriate and accurate information
regarding finances, operations and results.
- Compliance with Integrity: Exceptional boards
promote strong ethical values and disciplined compliance
by establishing appropriate mechanisms for active oversight.
They use these mechanisms, such as independent audits, to
ensure accountability and sufficient controls; and to reduce
the risk of waste, fraud, and abuse.
- Sustaining Resources: Exceptional boards link
bold visions and ambitious plans to financial support, expertise,
and networks of influence, while ensuring that the organization
has the infrastructure and internal capacity it needs.
- Results-oriented: Exceptional boards measure the
organization's progress towards mission and evaluate the
performance of major programs and services. They gauge efficiency,
effectiveness, and impact, while simultaneously assessing
the quality of service delivery, integrating benchmarks
against peers, and calculating return on investment.
- Intentional Board Practices: Exceptional boards
purposefully structure themselves to fulfill essential governance
duties and to support organizational priorities.
- Continuous Learning: Exceptional boards evaluate
their own performance and assess the value they add to the
organization. They embed learning opportunities into routine
governance work and in activities outside of the boardroom.
- Revitalization: Exceptional boards energize themselves
through planned turnover, thoughtful recruitment and inclusiveness.
They see the correlation between mission, strategy, and
board composition…they understand the importance of
fresh perspectives and risks of closed groups.*
Speaking of continuous learning or as the Japanese say "kaizan",
here's more research and some stories that should convince
us all to take a closer look at being first in good governance,
with eyes on accountability, ethics, transparency and integrity.
In 2003, a fascinating study was released entitled Transparency
in the Networked Economy. The study examined the experience
of 28 companies such as Wal-Mart, British Airways, Sony and
the World Trade Organization. In his speech to the Western
Frontier International Group Governance Reform in Canada Conference
on November 9, 2004 in Winnipeg, Minister Reg Alcock, President
of the Treasury Board referred to the study and some of the
key drivers that make the world a more transparent place -
key drivers that include:
- "The speed, flexibility and reach of communications,
driven by the accelerating power and pervasiveness of information
technologies;
- The insatiable public appetite for information - the desire
to see better value for money;
- And, the increasingly important role of knowledge, trust
and reputation in driving success."
The Minister also stated that "one of the conclusions
in the study is that more transparent and participatory forms
of governance will enable organizations to become better attuned
to stakeholder concerns and more broadly accountable to these
expectations." This is first in good governance
at work…and with the federal election campaign in full
swing, it will be interesting to see how good governance plays
in the minds of the public and in the casting of votes across
the country.
On November 3, 2005, Peter Burrows of BusinessWeek magazine
wrote: "Today's Good Governance Award goes to…the
board of Hewlett-Packard. That's not a sentence I would have
foreseen myself writing…but yesterday, HP announced that
board members from now on would need to win a majority of
shareholder votes to be re-elected to the board. If they don't,
they're required to submit their resignation. OK, we're not
talking about a perfect democracy here; the board retains
the right to refuse that resignation, and thereby keep Mr.
or Mrs. Unpopular on board. But either way, this is a bold
step towards making directors more accountable. If more companies
followed suit, it could help corporations finally get out
of the doghouse of public opinion they built for themselves
thanks to the scandals of the late 1990s. This is first
in good governance at work…
As published in the January/February 2005 edition of Atlantic
Business Magazine: "A truly effective Board needs to
be as competent in dealing with adversity as it is in handling
growth and success, Rex Anthony says, the chairman of FPI
Limited, a Newfoundland and Labrador-based seafood company.
The corporate governance committee regularly reviews directors'
performances with bi-annual surveys, which ask for direct,
'brutally frank' evaluations of the Board. Anthony says this
kind of honesty is the cornerstone of good governance. "We've
had some challenges, and we might not always agree…but
it's easy to deal with when you have a Board that's not afraid
to speak its mind." This is first in good governance
at work…
And finally, here's an example of the impact of governance
with a unique twist. Professor Sylvia Bashevkin, Principal
of University College in Toronto, wrote a compelling paper
this year, "Assessing Urban Citizenship in the Context
of Municipal Restructuring: The Case of Women in London and
Toronto. "This paper is among the first to assess the
urban citizenship implications of disparate metropolitan governance
changes. Using the concept of citizen representation as its
main conceptual anchor, the study examines longitudinal patterns
in two cities that underwent divergent institutional and political
leadership experiences during the late 1990s and following.
The study concludes that institutional and leadership shifts
can hold immediate and meaningful consequences for urban citizenship."
This is also first in good governance at work…
When I consider Sylvia Bashevkin's paper, plus the other
research and stories, print headlines pop into my mind: "Women
still missing at the table", "Governance: One size
doesn't fit all", "Everybody is in a state of self-examination"
and "Board diversity - the need to embrace it."
And I may as well tell you what I often encourage people to
do. Check out a company or organization web site to find out
if a link to governance is on the home page. This speaks volumes
about leadership in good governance. In addition or alternatively,
do a Google search on a company or organization to see what's
been said and done about its commitment to governance. Commitment
and communication of that commitment makes a significant difference.
In closing, you may be familiar with the article, Six
ways to put Canada first. It was part of a national call
to action on June 28, 2005 entitled "Canada First: Taking
the Lead in a Transforming Global Economy." It begins
like this:
"To build consensus around a national strategy, we must
do more than put the interests of the country ahead of those
of individual citizens, businesses, interest groups and governments.
We must agree to be bold in our vision for the country, to
seek to put Canada first among nations in areas that are key
drivers of national prosperity." Not surprisingly, the
first of the six ways is first in good governance.
Although the authors — Richard L. George, Thomas d'Aquino,
Dominic D'Alessandro, Paul Desmarais, Jr., Jacques Lamarre,
Gwyn Morgan and Gordon Nixon - are the chief executives respectively
of Suncor Energy Inc., the Canadian Council of Chief Executives,
Manulife Financial, Power Corporation of Canada, SNC-Lavalin
Group Inc., EnCana Corporation and RBC Financial Group, my
reason for referring to this piece has more to do with each
and every one of you. At the end of the day, good governance
is much more than the sum of it parts - it's about breaking
the mould in leadership - the brand of leadership that the
seven CEOs display in the article and in business. A first
in good governance call to action article could also be
written by seven women CEOs, seven heads of Crown corporations,
seven heads of hospitals or universities or seven CEOs of
non-profit organizations. I say, why not?
When you return to the office after the conference, think
about the leadership possibilities in your organization, in
terms of what you can do to push the envelope on good governance.
And remember that "people often rise to great heights
the same way kites do. Against the wind. Not with it."
Special thanks to Jill Palmer for inviting me to share part
of this AFP Congress day with you…now let's hear what
you have to say about first in good governance!
*Excerpted from The Source: Twelve Principles
of Governance That Power Exceptional Boards. Washington, DC:
BoardSource 2005, www.boardsource.org
Governance and Non-profit Board Links:
Transparency in the Networked Economy: Rise of the Transparency
Network was produced for the Digital 4Sight's Leadership in
the Networked Economy (LNE) research program.
http://www.developmentgateway.org/node/133831/sdm/blob?pid=4591
Institute on Governance
http://www.iog.ca/news/oct2005.pdf
BOARDSOURCE: Building effective non-profit boards
http://www.boardsource.org/default.asp?ID=1
Charity Village.com - Canada's supersite for the non-profit
sector http://www.charityvillage.com/cv/guides/guide4.asp
Charity Channel - Connecting non-profit professionals worldwide
http://charitychannel.com/enewsletters/nbgr/
Ivey Business Journal, November/December 2005 http://www.iveybusinessjournal.com/topics.asp?intTopic_ID=7
Assessing Urban Citizenship in the Context of Municipal.
Restructuring: The Case of Women in London and Toronto
www.cpsa-acsp.ca/papers-2005/Bashevkin.pdf
Canada First! Taking the Lead in a Transforming Global
Economy. A Statement of the Executive Committee Canadian Council
of Chief Executives
http://www.ceocouncil.ca/en/view/?document_id=429&area_id=1
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