Boards Behaving Badly: How to Improve Board Room Culture & Mitigate Governance Risk

In February I sat in on a webinar hosted by the Conference Board of Canada. The presentation was excellent outlining board relations, power, and governance impacts. I'm not convinced it was value for the money though; lesson learned.

My notes from the webinar follow:

Boards Behaving Badly: How to Improve Board Room Culture & Mitigate Governance Risk

Conference Board of Canada

February 20, 2015  John T. Dinner

·         Focus:

     ·         Boardroom dynamics and relationships

     ·         Directors working better together

     ·         Sharing power and control with the CEO

     ·         Giving priority to board behaviours/culture

     ·         From governance inputs to impact

·         Increasing recognition of importance of boardroom culture

·         Passive boards: lack meaningful steps to foster cultural issues

·         Good intentions can lead to bad culture and governance

     ·         3 tips:

          ·         Sit somewhere else

          ·         Wait for others to speak

          ·         Rather than criticize give card and coach

·         A lot of elephants in the boardroom

     ·         Getting directors on the same page

     ·         Difficult to express contrarian views

     ·         Fear disrupting momentum

     ·         Difficulty addressing people dynamics

     ·         Legacy governance practices

     ·         Disconnect between board/management performance standards

          ·         Boards often not at same level as management for behaviour

·         How to get rid of elephants

      ·         Need a tool to hold each other accountable for behaviour

      ·         No rationalization for bad behaviour

·         Board performance doesn’t happen in isolation; there is context

     ·         Logic for Board culture

     ·         Stream of regulation, guidelines, best practices, etc

     ·         Little attention to human dynamics (task oriented)

          ·         How directors work together

          ·         How the board shares power/control (more structural than relational)

     ·         Addressing boardroom behaviour

          ·         Focus on board structure and process

          ·         Culture critical to how boards perform

               ·         Without culture good process and structure doesn’t get you far

·         Broader context

     ·         Board culture: lack of leadership, lip service, Director assessments

     ·         Risk Adverse: status quo vs disruption

     ·         Western Values: individualism vs group collective

     ·         Key Drivers: regulation/guidelines, group think

     ·         Focus on governance inputs: generic best practices, comply or explain “loophole”; some boards are handcuffed. (Do best practices help or hinder – because others are doing it doesn’t mean it is effective

·         Proof of Context

     ·         Lack of will for boardroom change: culture is ill defined but entrenched

     ·         Lack of leadership on gender balance issue: need for legislation, Board of Directors modernization bill

     ·         Lack of rigorous assessment: avoidance, everything is fine

·         Key drivers

     ·         CDN security Association, other regulations

     ·         CCGC guidelines

     ·         OSFI guidelines

     ·         Industry practices produce followers, not leaders

·         OSFI Guideline

     ·         Role of the board

     ·         Board responsibilities

     ·         Board effectiveness

           ·         Lack of definition for metrics

     ·         Proactive: accountable, ownership – addresses key drivers

     ·         Rigour: proof of effectiveness – outcome focused, beyond best practices

     ·         What serves Kindersley?

·         Outcome focused

     ·         Intended outcomes: rarely understood/defined

     ·         Poor orientation

     ·         Results?

     ·         Gaps

·         Transformational Questions – 5 questions, culture can be a strength

     1.       What does governance mean for your organization? Common understanding of the Board’s role and what governance means?

     2.       What would be lost if your Board ceased to exist The unique contribution the Board makes; the value it brings. – strategic, competitive,

     3.       What is the boardroom culture?

                    i.                                    Conduct themselves, relate to one another

                   ii.                                  Tenor and tone of meetings

                 iii.                                   Does Board model behaviour expected of management? Board owns and models values and expected behaviour

                 iv.                                   What are the Boardroom elephants? Look from a risk perspective; not intentional or deliberate poses lots of risk with poor decisions (be proactive and take ownership)

     4.     What’s the working relationship between the Board and the CEO? (better define)

                    i.                                    How power will be shared

                   ii.                                   How the Board and CEO will work together

                 iii.                                   How conflict will be addressed

                 iv.                                   Maintaining measured reliance on management

     5.       What does it aspire to become?

                    i.                                    What does the Board want to be able to say is true about its value, contribution?

·         Bad behaviour is not intentional

·         Board self-assessment tool? (Kindersley Council conducted a review of ourselves before Christmas including a review of the Mayor - the CAO was reviewed previous to this)

     ·         A process

     ·         Start with self-assessment

·         Human Resource: compensation, principles, not too engaged with implementation of policies

Chamber of Commerce AGM

February 27th the Chamber of Commerce held their AGM. They have a Board Directors but no Executive was elected. Approximately 55 people were in attendance.

A guest speaker from the RCMP, whose name I didn't catch, spoke about Frauds and Scams. My notes of his talk follow.

President Tolanda Baker at the Chamber of Commerce AGM. Feb 27, 2015

Frauds/Scams

• Counterfeit note to internet misrepresentation, identity theft
• Fraud: deceit or falsehood
• Identity Fraud: unauthorized use, possession or tracking of personal information
• Unauthorized use of information to create fictitious identity
• To assume identiy for gain
• 2013-$11m lost by identity theft
• Actual estimated to be $220m
• 12 months to notice identity theft
• Identity theft is fastest growing fraud
• Identity needs: name, date of birth, SIN, driver's license, birth certificate, Passport
• There are 4 million more SINs active then people
• Use ID theft for banking, loans,
• Target group is 18 - 30
• Scam complexity and jurisdictional issues hampers law enforcement response
• Tell: need money quickly
• Prevent scam and fraud use only ID and credit cards that are needed
• If asked by phone for personal information ask how personal info will be used

Moment with the Mayor: Reframing Provincial and Municipal Relations

Hi Neighbours:

I have recently been reflecting on the relationship between municipalities and the provincial government given the Premier’s statement to arbitrarily change a revenue-sharing agreement. I think the relationship is due for a review and some changes. Here are my suggestions I shared with the Premier in a letter:

Another approach is needed to ensure the Province and municipalities can sustainably manage growth and change. Change is the new normal, and greater cooperation and flexibility is required by both the Province and Municipalities to successfully manage our mutual challenges. The following may be considered a framework for a new and enhanced Saskatchewan to help her realize her potential:

1.       An understanding between the Province and Municipalities, SUMA and SARM, recognizing that the Province and its municipalities are equal partners in stewarding Saskatchewan.

2.       Recognition that revenue for both the Province and Municipalities is the result of the joint effort between the Province and municipalities to increase the wealth of Saskatchewan.

3.       Recognition that the Province and Municipalities share responsibility for building, managing, and sustaining our province and municipalities.

                           i.            Respect for the roles, responsibilities, and obligations each partner undertakes to build and equip the province.

                          ii.            As partners working together a formal consultation procedure between the Province and Municipalities be established ensuring collaborative planning and strategies resulting in effective stewardship.

4.       Enhanced cooperation between the Province and municipalities ensuring certainty and predictability of government performance, standards, and planning.

5.       Recognition that municipalities are under-resourced, leading to an unhealthy dependence upon the Province and federal government for financial assistance to address necessary hard and soft infrastructure such as water, waste water, solid waste, and arts and recreation.

                           i.            Revenue-sharing that is considered ‘own source’ predicated on economic activity and independent of provincial government decision-making.

                          ii.            As the Province delegates greater responsibilities to Municipalities, the Province ensures adequate funding and resources is allocated to Municipalities to effectively and efficiently fulfill the responsibilities.

We are at a fortuitous time in Saskatchewan’s history. Saskatchewan’s tomorrow is today and we need to think and act wisely now to ensure yesterday’s dreams are tomorrow’s realities.

Please write or phone if you would like me to discuss a particular topic. If you have any questions or comments, drop me a line at the town office or email me at mayorenns-wind@kindersley.ca. You can also check out my blog at http://mayorjohn.blogspot.ca/. I appreciate your feedback.

Moment with the Mayor: Changes at the Landfill

Hi Neighbours:

I received an email recently with three questions about the changes at the landfill. Before answering, I want to provide some context around the landfill.

	2011	2012	2013	2014
Total Revenue	$365,234.53	$404,580.68	$406,884.35	$320,544.66
Total Expenses	$733,518.17	$593,547.51	$992,254.99	$1,249,054.78
Deficit	-$368,283.64	-$188,966.83	-$585,370.64	-$928,510.12

Many changes have been made at the landfill since the fire and it shows up with the size of the deficit. The Ministry of Environment has strict regulations the Town has to follow.

Here are the questions I received, and my response:

1 – Explain the charges at the waste site.

The charges at the landfill were implemented January 1, 2012 and there have been no changes to the rate since that time. What has changed this year is that a staff person is now stationed at the scale to determine the charge for using the landfill; a sign with the rates outlines the charges. There are two basic charges - charge by weight and charge by item. The Town is also ensuring compliance in two ways: excluded waste is not accepted, and if you need to dump stuff into the landfill, you will be escorted to the site. The escort is part of provincial legislation ensuring that no illegal dumping takes place and that the garbage is sorted correctly

2 – Do people from outside the local tax base pay the same rate as we do?

Only solid waste from the Town of Kindersley and the RM of Kindersley is accepted. Waste from all other areas is not accepted. This change has been in effect since the landfill fire. All waste is charged the same regardless if you are from the RM or the Town.

3 – Why is there so much difference in what one person gets charged as compared to the next person (for the same load)?

There should not be a difference in charge if you and I take the same stuff to the landfill. The staff person on site is still learning the system and I apologize for any mistakes that have been made. The goal is to ensure every person or business is charged based on the weight or the item of garbage they are disposing of.

Thank you for your continued patience as we implement a system designed to capture some costs and comply with provincial legislation.

Please write or phone if you would like me to discuss a particular topic. If you have any questions or comments, drop me a line at the town office or email me at mayorenns-wind@kindersley.ca. You can also check out my blog at http://mayorjohn.blogspot.ca/. I appreciate your feedback.

Community Safety Officer (CSO) Update and Correction

In my weekend post regarding the CSO I missed the costs regarding the radio.

The annual cost of being linked to central dispatch to be in touch with the RCMP is $25,000 per annum. Without this cost the startup and operational cost differential is less than $10,000 per annum.

Response to a Student's Questions for a Class Assignment about Leadership

A couple of weeks ago I received a student letter asking about leadership. The student in question visits Kindersley to visit their grandparents. I have reformatted the letter, and omitted the students name and school to protect the student’s privacy, to make it easier for me to respond to questions. The letter and questions follow.

I am a grade 6 student in Calgary AB. My class is having a mock election. This is an inquiry project.  I would like to collect some information about you and what you had to do to become an elected representative.

My class and I are learning about Government and Democracy. I have a few questions for you.

·         What do you think makes you a good leader and what made you want to take on this job as a political leader?

     ·         I have vision and values by which I lead: a community that is beautiful, just, with opportunities for individuals to pursue fulfillment, and where people can find healthy relationships

     ·         I try to communicate as much as is possible on a wide variety of relevant issues.

     ·         Inclusiveness is very important and that includes Council and community groups and individuals.

     ·         It is important to be disciplined in pursuing Council’s goals.

     ·         Good leaders need to manage themselves well. Often we have a bit in our brain that wants to hijack our emotions so we respond inappropriately. It is important to rest to manage the worst part of ourselves.

     ·         I was hesitant to run for mayor. A number of friends strongly encouraged me to run; if they hadn’t encouraged me I doubt I would have run.

     ·         My goal is to provide leadership that pursues our strategic goals, gives our community confidence in our governance, and prudently manages our money for today and tomorrow

·         Where did you grow up?

     ·         I was born in St. Boniface MB, grew up in Newcastle ON, and have lived in worked in southern AB, northeastern BC, Yellowknife NT, and in three communities in SK.

     ·         I have also worked overseas.

·         When your job as a Mayor is over would you want to run as a leader again or you might also take on a higher or lower position, if not why?

     ·         I don’t know if I will run again.

     ·         It requires a lot of time and commitment leading to financial sacrifice.

     ·         I doubt I would become a Councillor: it wouldn’t be fair to the incoming Mayor.

     ·         Regarding politics at the federal or provincial levels: we having incumbents and they are running again.

·         I would also like to know about your background, what job did you have before you became a leader.

     ·         I have an double Hons BA as well as two graduate degrees: Master of Divinity (MDiv.), and an Master of Business Administration (MBA).  I am a self employed management consultant.

     ·         I am a part-time mayor who spends about 30 hours a week fulfilling my responsibilities and am still a self-employed management consultant

     ·         I am married with three sons ages 8, 13, 15.
          

·         Everyone faces challenges during their career no matter what job they take, what was your biggest challenge that you had to take?

     ·         A big challenge is running in an election and being Mayor.

     ·         I resigned a very good position to go back to school.

     ·         I have worked on some excellent projects over the years that have forced me to grow professionally and personally. It is important to accept these challenges to help us become better to help other people and ourselves.

·         If you fix or change something to improve your town what would it be?

     ·         Kindersley, like Calgary, has a lot of challenges. I would like us to have a culture of collaboration to continue to build a community you would like to visit and live in.

My grandparents live in Kindersley, Saskatchewan. Your town is really nice. Since it is so small I can walk around without feeling unsafe or lost. My dad grew up there too. He went to Westberry elementary school. The school is always having something new built in their park each time I go there to visit some of my relatives.

Thank you for your time. You do not have to answer if you are busy and I would not mind if you have to get someone else to answer.  

Response to Email: The Community Safety Officer (CSO) Program

Council is considering having a Community Safety Officer (CSO). Here is an email I received about the initiative. The email is in italics and my responses are in regular format. I have not edited the email I received. There is a formatting issue I wasn't able to resolve in the post)

Hearing and reading a bit about this "new initiative" re Community Safety Officer

First of all, I'm dead against it, for a few key reasons:

1.       Costs to set up, and operate to be covered by a limited local population and business base.

•                     i.       The 2015 budget allocates a further $10,000 for this initiative.

2.       Benefits to our jurisdiction and defined boundary(ies), only have Town jurisdiction.

•                     i.       With the CSO program the Town will have partnerships with provincial agencies to better collect monies

3.       Ongoing operating, enforcement, legal, and administrative expenses...again 5000 people carry these costs.

•                     i.       We expect operational expenses to stay about the same. The extra initial costs are for training and certification.

4.       It's downloading and duplication, locally we pay all these CSO and related costs, in case of RCMP we have "some" subsidy

•                     i.            I absolutely agree that this is something downloaded by the federal government through the RCMP. The RCMP work according to priorities given to them rather than any priorities a municipality may have.
•                    ii.            The CSO gives Kindersley more risk assessment and compliance responsiveness.

5.       Start with "one", then 2, then, what???? slippery slope, unless "STOP " is clear and emphatic....it'll hang around and continue to resurface.

•                     i.       I agree with this comment but the downloading of police services is so far down the road we need to respond to the local gap.
•                    ii.       I believe we need to do more given the changes in the delivery of police services.
•                  iii.       We are working with our relevant parties in other areas, such as health, to ensure downloading is stopped.

6.       Given RCMP costs, and "possibility" that a "town" police force (City is better) may be viable in future years....why add CSO into local policing model

•                     i.       A local police force is significantly more expensive then contracting with the RCMP given our size.
•                    ii.       A better model might be the development of a provincial police force rather than local police services so costs are spread around. (Saskatchewan Provincial Police, SPP)
•                  iii.       CSO is a step that enhances the capacity of the bylaw officer without unreasonably increasing expenses and risk.
•                  iv.       CSO will potentially provide 5 areas where a better level of service can be provided:
•                                i.    Bylaw enforcement
•                                ii.  Agency collaboration for enforcement/compliance and collections of fines
•                              iii.  Community education surrounding the assessment of risks and gaining compliance
•                              iv.  Enforcement of provincial statutes such as traffic violations (speeding) and weights (over weight trucks degrading town infrastructure)
•                               v.  Ongoing development and accountability.

Above all....CSO legislation is not firmed up, its still going to be municipal in nature even after its done, and therefore fraught with legal risks/costs.

                    i.            Regretfully the training for the participants is occurring before the legislation is being finalized.

                   ii.            The legislation is based on the successful ‘Community Peace Officer’ program developed and implemented in Alberta

                 iii.            We have neighbours in West Central SK who are also implementing the program.

AND, when everyone else has their "frugal" jacket on, trying to tighten up expenses and future monetary liabilities....we should not be going here.

•                     i.       Yes, we need to be frugal, but we also have to use the tools available to collect revenue as well. A preliminary study I saw (I don’t have it with me) saw increased revenue offset increased implementation costs.
•                    ii.       Operating costs are expected to remain about the same.
•                  iii.       The CSO should not be developed and implemented as a revenue stream.

Between taxes, fees, levies, and NECESSARY future capital expenditures Town and residents are staring at....we should NOT be looking at the CSO project.

We are competing to attract and retain citizens, businesses, and employers.

•                     i.       The goal of any community is to have a family friendly community safe for everyone. To accomplish this requires assessing risks and obtaining compliance.
•                    ii.       The Anti bullying bylaw is a step in this direction as well and the CSO compliments this bylaw.

We must be wary of and avoid initiatives, projects, and expenditures that do or will hurt our competitive and financial position.

•                     i.       I totally agree but do not see how the CSO will do this.

We have to grow our population, a CSO adds no value to growth, only costs and risks.

•                     i.       I agree we need to grow. Growth is obtained by a combination of increased economic activity and quality of life.
•                    ii.       The CSO will be able to patrol school zones, rec areas, etc to ensure no speeding and no antisocial behaviour such as bullying occurs (can de-escalate and report to RCMP)

It does not improve our competitive position, our ability to attract or retain residents, employers, or companies.

•                     i.       I think people/businesses want to know what the rules are and have them applied fairly. The CSO contributes to this

Remember it is a limited tax base that pays, we are, in my opinion at the top end of "tax load" vis a vis others of like size.

•                     i.        I agree that we need to keep taxes in line with inflation.
•                    ii.       We are looking at growing revenue through growing our community:
•                                 i. Housing in Brookhollow Estates
•                                ii. New hotels
•                              iii.  New commercial developments
•                              iv.  There will be more announcements regarding commercial developments coming
•                               v.  New industrial development remains to be seen given the downturn in oil prices; however, this is an opportunity to further work towards increased economic diversification.

The CSO project gets no offset income or subsidy from Prov or Feds.

•                     i.       Regretfully this is true; however, as soon as we hit 5,000 people our payments to the RCMP increase from 75% to 90% regardless of our city status

AND, the front costs are one thing, the ongoing and op costs or deficits, expansion of,  are another.

•                     i.       The operating costs are not expected to vary significantly from current operating costs.

Once its in the side door and going, it will expand, and it will depend on tax base to cover shortfalls and deficits.

We can't afford it, now or in near future.

•                     i.       In communities in Alberta where it has been successfully implemented it has not run amok and has grew on proportion to population growth (Stony Plain)

In short, please tell admin an emphatic NO, we'll pass.

How's about...get us to City status, then look at City police "if warranted versus RCMP cost model" and skip CSO totally.

•                     i.       We are working to determine City Status; the City Act requires public consultation amongst other things. Personally, I am in favour of moving towards City Status.

My opinion, and that of many I've talked to.

•                     i.       Thank you very much for writing and please continue to write.
•                    ii.       The other that are referred to: please write or call.

Broncos that Haunt Us

Great! I received an email today reminding me of our walk of shame at SUMA. There is no good picture but here is one:

The Broncos Celebrating our Humilation. SUMA Convention 2015 (libby morin)

At least we lost to a good and respected Mayor and a good community.

Stoplights at Main and HWY#7

Patience is a virtue when it comes to working with other jurisdictions.

We just found out that Ministry of Highways has received approval to replace the components of the stoplights at Main and #7.

The parts should be available in about 6 weeks to go ahead with the repairs. Hopefully everything will be up and running by the end of March.

Moment with the Mayor: SUMA Highlights

Hi Neighbours:

Last week was the 2015 SUMA Convention in Saskatoon. It was a busy few days.

·         Councillor Henry and I attended a professional development workshop. I spent my time learning about Community and Land Use Planning while Councillor Henry learned more about municipal human resources.

     ·         During the planning session, we covered the roles of various players and what Council’s role is around decision making and planning.

·         A big topic of conversation has been the province’s public talk about reducing municipalities’ share of revenue sharing; I talked about in last week’s Bean.

    ·         The Premier received polite applause for his remarks. We are still waiting for the province’s decision regarding revenue sharing. It could have a significant impact on our budget affecting level of service and tax rates.

·         A workshop was also held on Procurement and the process for making good request for tenders and proposals. Our job on Council is to reduce the Town’s exposure to risk, get the best value for us, and ensure a fair process for the bidders

·         There was also a session on Community Safety Officers (CS0). Council is looking at going to this level of service to provide improved compliance and enforcement.

    ·         The purpose of the CSO is to provide a more responsive model of enforcement with locally set priorities focused on risk assessment and compliance.

·         Monday afternoon, I shared a lot of information regarding our Youth Council including how it works, budget, communication, training, and their work levels.

·         There were also business meetings around different sectors.

    ·         Again, revenue sharing was in issue and infrastructure.

·         Journalist Chantal Hebert was a guest speaker but due to weather and cancelled flights, she was unable to attend in person and attempted to deliver her message using Skype. Unfortunately, the connection wasn't as good as we needed for a good delivery.

     ·         What we could hear about Hebert’s message was that the balance of power has shifted to urban centres, specifically the suburbs.

·         Tuesday, over lunch, I met with the Ministers of Health regarding next steps to implement the Kindersley Health Services Needs Assessment. There will be nothing to report on this until the roll out of the report.

Please write or phone if you would like me to discuss a particular topic. If you have any questions or comments, drop me a line at the town office or email me at mayorenns-wind@kindersley.ca. You can also check out my blog at http://mayorjohn.blogspot.ca/. I appreciate your feedback.