The Directors Chair

36 Listed //Winter 2012/2013

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The Directors Chair

Master class
In The Directors Chair with David W. Anderson: Jalynn Bennett, veteran
executive, chair and director, has an array of insights and advice for
boards grappling with risk, driving growth or boosting their effectiveness
Photography by Jeff Kirk

Theres deep, and then theres Jalynn Bennett deep. A senior executive, director and
chair multiple times over; a veteran of private boards, public boards, crowns,
nonprofits, panels and committees; and a champion for women in business and
boardroom diversity, Bennett approaches every challenge with the been-there,
still-doing-that assurance of an expert. Here, in conversation with governance
and leadership adviser David W. Anderson, she compares private board service
with her public company work, discusses how boards can effectively challenge
and help refine managements take on strategy, business opportunities and
acceptable risk, and shares some lessons learned from her years as a pioneering
female executive and board member.

Jalynn Bennett
Primary role
Independent Director
Current organizations
Director: Teck Resources, Cadillac Fairview, SickKids Foundation, several private companies; External Member,
Departmental Audit Advisory Committee, Human Resources & Social Development, Canada
Former executive roles
President, Jalynn Bennett and Associates; Commissioner, Ontario Securities Exchange; Vice-president, Corporate
Development, Manulife Financial
Former chair
Corporate Governance Committee, CIBC; Trent University Board of Governors; Investment Committee and Audit
Committee, Ontario Teachers Pension Plan; Pension Committee, Bombardier; Audit Committee, Sears Canada; Vicechair, Westburne Inc.; Vice-chair, The Public Accountancy Council of Ontario
Former director
CIBC, Nortel Networks, Sears Canada,Bombardier, Rexel Canada Electrical, CanWest Global, Bank of Canada,
Ontario Power Generation, Ontario Teachers Pension Plan, Public Accountants Council (Ontario), Trent University,
United Way of Greater Toronto, The Wellesley Central Hospital
Education
BA (Economics), University of Toronto
Honours
k
Honorary Doctor of Sacred Letters, Trinity College, University of Toronto (2004)
k
Member of the Order of Canada (2000)
k
Fellow of the Institute of Corporate Directors (1999)
Current age
69
Age when first became a director
42
Years of board service
27

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The Directors Chair

David W. Anderson The first boards you served on were private-equity

investments. Youve also served on boards of some of Canadas bestknown public companies. How does private versus public ownership
affect directors work and experience?
Jalynn Bennett Directors of private companies, particularly those held
as private-equity investments, have an obvious identification with
the owner and thus are inclined to think and act with that owner in
mind. Knowing the owners or owners interests means directors understand the intent of the investment and the direction of the business.
Consequently, we can delve into our work with a clear purpose.
David W. Anderson Private company directors seem to work from a

more fluid definition of what it means to be a director, moving along

the spectrum toward operations more readily than public company
directors. On a practical level, how do you see the roles differ?
Jalynn Bennett Private company directors want to dive into the business.
Their mandate from the outset feels different. On public company boards,
theres a greater restraint, as the division between governance and
management is more definitive by tradition. As a result, discussion on
public boards tends to be at a higher level of abstraction. Although public
company boards are far more engaged today, private-equity directors still
tend to be more finely attuned to the detail of the business and willing to
be more directive with management. Coming onto public company
boards in the early 1990s, I was surprised by the dearth of information
compared to what I was used to as a private-equity director. Certainly,
public company boards today receive much more information than in
the past, but they struggle with how to cope and what to do with it.

A board needs to know where opportunities and vulnerabilities lie in terms of value
creation and it must have a robust
decision framework governing how
liabilities are understood and mitigated
David W. Anderson So how do directors resolve the tension between

needing more information to do their job but finding it harder to do

their job with all that information?
Jalynn Bennett The problem with information overload is twofold: it
makes it hard to know whats essential and its hard to know how deep
to go. These are constant struggles. How information is presented often
adds to the difficulty, making it a challenge to filter and discuss the
seminal issues. On some boards, directors take the initiative, instructing
management to provide information summaries, greater context and
tighter content in their reports. I see executives now being better at
facilitating board-level discussions and decision-making, with CEOs
getting to the point on strategic concerns, CFOs summarizing key data
points and interpretations on audit issues, and HR offering salient points
for board input on compensation philosophy. The question boards must
answer is, Where should the debate focus?
David W. Anderson How do boards get to the right answer?
Jalynn Bennett A board needs to know where the business opportunities

and vulnerabilities lie in terms of value creation and it must have a

robust decision framework governing how the liabilities are understood
and mitigated. Understanding the business at this level is necessary for
the board to form a view on appropriateness of the strategic plan, the

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background of CEO and succession candidates, and integrity of

financial statements. Boards must be equipped to understand these
elements. More basically, a board must judge whether management itself
knows where the opportunities and downsides lie, and thus whether
management is looking at the right issues. Board debates are much more
productive when directors know clearly what managements inclinations
are on the issues. Otherwise, all you have is an academic discussion
disconnected from the reality of the business. In todays world, this is
particularly important in enterprise risk management. The board needs
to know what management thinks the risks are and assess them for
comprehensiveness, appropriate weighting and efficacy of mitigation.
For both strategy and risk, the board should ensure an iterative dialogue
with management to have the best chance at focusing the debate where
it needs to be.
David W. Anderson Coming out of the financial crisis, boards and their

audit committees are spending a lot of time on financial risk. Does

the focus on this risk become a risk itself?
Jalynn Bennett In the midst of pressure and distraction, directors must
remain aware of why they are thereto ensure accuracy in the
financial statements and related public disclosures. The board joins
management, the internal auditor and the external auditor as one of the
four pillars to ensure investors in the companys equity and debt can
rely on such disclosures to make their own assessments of corporate
health. But the job of the board doesnt stop with the integrity of financial
statements. In Canada, the duty of care means directors are there to
ensure and promote the welfare of the overall organization. To do so,
the board must assess the leadership and employee capacity to deliver
upon the mission of the organization, ensure that how management
plans for the future is linked to the risks in the current business, and
understand what management thinks could happen in the future and
how those future risks may evolve. Good strategic and risk processes
are responsive to future threats and opportunities.
David W. Anderson Throughout your decades of governance service,

youve emphasized the quality of leadership both on the board and in

management. Whats the link between leadership and business success?
Jalynn Bennett Its simple: if you dont have the right leader and team
in place, the organization is more likely to stumble. Good leaders
and good support for leaders from above and beloware crucial to
creating value and managing risk. From a board perspective, talent
management and CEO succession are vital processes. Boards have a
responsibility to ensure management and employees are appropriately compensated with incentives linked to long-term value and not
to excess risk-taking that could hurt the organization.
David W. Anderson Boards themselves have been more risk-averse in

light of the financial crisis, prioritizing value preservation over value

creation. Is it time for boards to re-weight from risk to opportunity?
Jalynn Bennett This is an ongoing tension between making sure bad
things dont happen versus creating value. There is no doubt 2008
and 2009 were very traumatic collectively in the Western world, as we
almost all went over the cliff. Now is the time for the focus to shift back
to value creation. Having learned some painful lessons, we can position ourselves for the future.
David W. Anderson What are the lessons for boards arising from the

financial crisis?

Jalynn Bennett The last five years have taught us just how tough it is to

govern and manage complex companies and underline the need for

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The Directors Chair

business basics: a strong balance sheet and a good handle on cash flow.
The fiscal crisis also gave us a reality check; if things start to go bad, you
cant predict how bad theyll get. So it behooves the board and management to face the worst-case scenarios and know what options exist to
preserve what they can. The reality is, if things are catastrophic, the board
cant save a company. All it can do is try to position the company to
survive. If survival isnt possible, the board has to manage it down with
least damage to stakeholders. Group fear can be very hard to resist.
But when things look blackest, the board should also force itself and
management to ask, If things do get better, how can we be positioned
to take advantage of a more constructive environment?
David W. Anderson What steps do you suggest boards take to be better

prepared for the unexpected?

Jalynn Bennett Directors must push themselves to think outside the box,

becoming better at lateral thinking. Its customary for a board to hold

an annual strategic offsite and then check in throughout the year on
managements progress. Many boards now take time to revisit that
strategy and course-correct in the year. I think boards need to go further
and carve out blue sky and stormy sky time to imagine what could
happengood and bad. Boards cant take their business model for
granted. Directors need to ask basic business questions of management
to discover what could threaten their economic ability or social license
to operate. Management still needs to provide the strategic plan but, in
addition, tell the board how the company will respond under both positive and negative conditions for each major initiative.

David W. Anderson Dealing with such unpredictable circumstances

can impose considerable burden on a board and its leadership. How

can board chairs tap the best of their boards?
Jalynn Bennett Board chairs play a critical role realizing the value of
directors varied perspectives and experience. Good board chairs
encourage every director to express views, stimulate debate and then focus
board discussion toward a constructive conclusion. I think the value of
diversity on a board is best shown when times are tough. An effective
board chair is like an orchestra conductor who makes sure each instrument
is heard at the right time to deliver a harmonious performance. If there was
ever a time for creating diverse boards to govern companies, now is it.
David W. Anderson You are a thoughtful and determined advocate of

women serving on boards. How is gender helpful in directorship?

Jalynn Bennett Research shows that boards benefit from diversity. Women,
like men, have a perspective that is based in their lived experience
an experience and a way of being that is relevant to business decisions
and the means by which those decisions are made. Having only one or
predominantly one such perspective is not productive. A balance on the
board would makes it as strong as it can be, which is in the interest of
the board and the organization. Women are well-suited to board service
as they generally prefer a collegial environmentprecisely the type of
environment that high-performing boards strive to create.
David W. Anderson Is the solution to getting more women on boards pro-

moting more women in managementto create a larger pool of talent?

Jalynn Bennett Yes, as we have more women in management, well have

more ready for directorship. But we have many women now who are
visible exercising leadership roles and are ready for board service. One
of the big obstacles to getting these women on boardsand this is
true for men, toois that there is less opportunity. We have been trending
toward fewer public boards of large companies, as businesses merge
and head offices hollow out, and those remaining boards are comprised of

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fewer directors. CIBC had 36 people on its board when I joined about 20 years
ago as the sixth woman. It now has 15 directors, four of whom are women.
David W. Anderson Given the greater competition for board seats, how

should governance committees approach director nomination?

Jalynn Bennett Governance committees need to be absolutely clear what

they are looking for in terms of skills and experience their boards need
to add value to the business. This process of finding the right candidate
should be gender-neutral. Just picking the best woman identified is not
doing the board or women a favour. Where governance committees ought
to be proactive is in making a diligent effort to have women represent
30-40% of the candidate pool. A fair process will recognize that women
are well-suited to board service.

When things look blackest, the board

should also force itself and management
to ask, If things do get better, how can
we be positioned to take advantage of a
more constructive environment?
David W. Anderson The European Union is considering following the

path of some European countries in mandating a proportion of the

board be held for women. What methods for achieving better representation of women do you favour?
Jalynn Bennett The solution is to ensure diversity is built into the
nominating process. Encouraging chairs of boards and governance
committees to act on the research and use robust processes, bias-free,
will go a long way. Forcing numerical outcomes would be inconsistent
with our tradition and culture. In any case, rules can backfire; there are
examples in Europe of boards appointing wives and widows of current
or former chairs and directors to make up the numbers. If there has
to be a rule, it should not dictate an outcome, but what the process has
to include.
David W. Anderson You were the first or only woman on several boards.

What advice might you have for women considering board service?

Jalynn Bennett Spend time getting to understand the culture of the

organization and the board and express yourself in a way that will
be heard and effective. This is true for women and men.

David W. Anderson From your vantage point, how would you character-

ize the state of Canadian leadership vis--vis women?

Jalynn Bennett Women in business leadership are strong and getting

stronger. A hopeful sign: it seems that recruiters for UK boards are

looking for Canadian women, as they have a wide range of skills
and a personal style that fits on UK boards. Canadian companies
take notice. Its a small leap for business leaders here to show appreciation for Canadian womens strength.

David W. Anderson, MBA, PhD, ICD.D is president of

The Anderson Governance Group in Toronto, an
independent advisory firm dedicated to assisting boards
and management teams enhance leadership performance.
He advises directors, executives, investors and regulators
based on his international research and practice. E-mail:
david.anderson@taggra.com. Web: www.taggra.com.
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