Modern board management – expert panel perspective

How are leaders of boards evolving how their board of directors operates to best perform in this age of fierce competition, diverse recruitment pressure, and intensifying governance regulation? And how can technology play a role in supporting modern board governance? 

We consulted a panel of financial organizations, a non-profit, and an industry governance regulator to learn about how their board role and priorities are evolving. 

In this article, we share questions and answer highlights from interviews with governance executives at Vancity Credit Union, C.D. Howe Institute, Point West Credit Union and the Financial Services Regulatory Authority of Ontario (FSRA). The interviews explore how the boards of these organizations are evolving to best perform including engaging new directors, getting strategic value from the board, embracing technology, managing data security and governance, and what they see coming next.

Modern challenges to board management

Across diverse industries and board structures, CEOs and board chairs interviewed expressed five modern priorities to boost board contribution to organization performance: 

1. Board directors must contribute ever greater strategic insight. 
2. Recruitment has never been more continuous – director and CEO terms are getting shorter.
3. Onboarding and engagement of new directors must be rapid and effective.
4. Board portal technology has become essential for board efficiency and data security. 
5. Embracing diversity is requiring boards to define their unique ideal board composition.

Panel of board leaders 

Board executives of four organizations representing a cross-section of financial organizations, non-profits, and regulators contributed their perspective on modern pressures for boards to best perform. 

• Shona McGlashan – VP Governance and Corporate Secretary, Vancity Credit Union. Vancity is a values-based financial co‑operative serving the needs of its more than 525,000 member-owners and their communities in the Coast Salish and Kwakwaka’wakw territories, with 59 branches in Metro Vancouver, the Fraser Valley, Victoria, Squamish and Alert Bay.

Vancity’s member-elected board is a group of nine directors. The Vancity board guides the credit union’s strategy and services and oversees leadership performance on behalf of its members. Directors participate in regular board and committee meetings from across the province of British Columbia. 

• William (Bill) Robson – CEO, C.D. Howe Institute. The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies.

The current C.D. Howe Institute board is made up of 27 members including private sector leaders, senior academics, and policy leaders who meet biannually. The board’s main responsibilities are to monitor the Institute’s pursuit of its mission, to ensure continued independence and quality research, and to oversee efficient use of resources and donations.

• Amy Nelson – CEO, Point West Credit Union. Point West Credit Union is based in Portland, Oregon and was founded in 1932 with a long history of serving underserved communities. After being on the brink of closure in 2007, Point West rebuilt its capital and strategic focus. Today, Point West has $94M in assets under management.

The current Point West board has seven volunteer directors who are member-elected to advocate for how Point West can serve the needs of the community, guide the strategic direction of the credit union, be advocates for marginalized community members and programs, and monitor CEO performance and progress.

• Alena Thouin – Corporate Secretary & Deputy General Counsel, Financial Services Regulatory Authority of Ontario (FSRA). The FSRA is an independent regulatory agency created to improve consumer and pension plan beneficiary protections in Ontario. FSRA assumed the regulatory duties of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) on June 8, 2019. FSRA is flexible, self-funded, and designed to respond rapidly to an evolving commercial and consumer environment.

The FSRA Board of Directors is currently has seven members who are appointed by the Lieutenant Governor in Council on the recommendation of the Ontario Minister of Finance, with one member designated as Chair. The Authority is accountable, through the Minister, to the Ontario Legislature.

Panel interviews

Perspectives of the panel were gathered during phone interviews, and contributors were provided the opportunity to review the article and provide follow up comments prior to publishing. Interviews explored the themes of evolving role of board teams, board succession and onboarding, and data security and the role of board technology. Presented in this article are interview highlights, some of which are edited for brevity and clarity.

Evolving board priorities

The EY Top Priorities for Boards in 2019 report listed five areas of focus for today’s boards: strategy, governance of risk management, recruitment and setting culture, communication and engagement, and enhancing board performance. 

We asked the expert panel about the evolving role of their board teams and present-day priorities. Responses reveal that the modern board directors are expected to be highly engaged and informed to participate in critical decisions, and internal board governance teams are growing more sophisticated. 

Q: How has the role of your board team changed in the last few years? What pressures do you face to perform?

Shona McGlashan (Vancity): Boards need to be more capable, resilient, and adaptable than ever before. They have become ever more strategic, moving away from box checking and compliance and focusing on adding strategic value.

For almost all organizations, competitive landscape disruption is coming fast, and if your board is not a strategic asset to your organization, then that is a huge opportunity cost. Disruption is the new normal with fierce competition. Vancity, like many other organizations, has a team that is dedicated to ensuring that the strategic conversations between the board and the executives are taking place at the right level and the right time so that the organization’s strategy is realized. 

The days in which the board were just a bunch of your mates getting together for steak and cigars are long gone. Now boards need to be able to provide thoughtful advice, constructive challenges, and guidance to the CEO and executives. How do you set them up for success in the conversations they’re having and the guidance they are giving? It’s really an art and a science.

Amy Nelson (Point West): Credit union size matters less and less, in an ever-increasing complex industry. This parlays into board and supervisory committee members being held to a greater level of fiduciary responsibility and understanding.

Our volunteer directors know and care about their credit union, but also work to understand its impact in the community. That is a broader role than what has been expected of board members in the past. We want board members to understand who they are serving, how they are helping the community, what reports and trends tell them, and how to advocate for change. It used to be just the CEO’s and executives’ role; now board members are expected to know some of that data too, to understand the effects of their leadership within the community they serve. 

Bill Robson (C.D. Howe Institute): My goal is to make sure our board members are exposed to aspects of C.D. Howe Institute’s operations that take advantage of their skills. Our board continues to expand its focus beyond financial risks to other areas like operational business continuity and new areas to do with IT, for example. We’re also expanding board participation in validating the integrity of our research.  I want the board to feel comfortable asking why we took on a particular topic, how we vetted the work, or what the review process looks like. To support a meaningful and productive dialogue on our research excellence, we’ve instituted an outside audit of our processes, and we report on that audit to the board.

I’m trying to give the board enough of a view of everything, so they feel comfortable asking questions about it and making sure we’ve covered off the most salient risks to the organization. I want us to have equally good protection on the quality of the research side as on more traditional governance metrics.

In an organization that deals with public policy, there is always going to be a lot of grey area when it comes to your measuring your effectiveness. It’s not often the case that the Canadian government says, “this policy decision was informed and influenced by research from the C.D. Howe Institute.” They typically don’t give that sort of credit for a variety of reasons. So, our board needs to play a role in providing oversight on the value we deliver. 

Alena Thouin (FSRA): I would say the role and expectations of the Corporate Secretary has really expanded to become a Governance Professional, overseeing the governance requirements of an organization with a blend of operational, technological, and consultative skills connecting stakeholders across the organization.

Board diversity

With so much recent focus on diversity, we explored board recruitment with the expert panel. Deloitte’s Board Practices Report 2019 found that 94% of surveyed boards are looking to increase board diversity with most focus on increasing gender diversity. 

Recent research has highlighted that including a broad mix of people in executive and board roles is good for business. McKinsey’s 2017 Delivering Through Diversity report details the direct relationship between organizational diversity and financial performance. The report found a positive correlation between the highest levels of board gender diversity and their likelihood of above-average profitability. Increasing the cultural diversity in an organization yields even greater value with the most ethnically diverse boards 43% more likely to be more profitable than their less-diverse competitors. The study has been repeated in different countries and over time and has found consistent results. We asked the panel about their approach to diversity around the boardroom table and in leadership.

Q: There is a focus right now on diversity of board members. Is that a focus for your board?

Amy Nelson (Point West): Our credit union went through a board shift and our demographics changed from 2015-2019 including a drop in average member age of 10 years. Our younger credit union members tend to be the early adopters of our new loan products, services, and technology. It’s been helpful to have representation of this younger clientele on the board and supervisory committee both from a fiduciary and safety soundness standpoint, and their diverse professional backgrounds provide a strong backbone. 

Our board make-up also shifted from having four out of four leadership positions held by men to now having three out of four leadership positions held by women. We were very intentional about adding different avenues for getting people interested in volunteerism. Previously, we leveraged our existing board members to refer people from their own circles, which resulted in members that looked and thought exactly like them.

In an effort to gain diversity, we took a multi-pronged approach to recruitment which has resulted in diversity in multiple ways – gender, race and origin, socio-economic, age, career path, geographic location, household makeup, and more. We’ve posted board opportunities at colleges and on Facebook, worked with our community partners and we’ve recruited from member listening sessions to get that diversity. The value of having a diverse board is that we are better prepared to understand the needs of a variety of populations and hone our services to their specific needs. 

Having a board portal was a must for us when we dropped our average age and attracted volunteers with highly professional or mobile careers. Board members insist on having access to board meeting materials online and from anywhere. We need to remove barriers so younger members can participate in a way they’ve become accustomed to in their personal and professional lives. They are busy people and expect to connect at different times from different locations. 

Shona McGlashan (Vancity): Vancity has made it a priority to have a diversity of backgrounds on the board. Our board is quite diverse with seven women and two men from a variety of backgrounds. The board continues to work on articulating what diversity really means for our board membership. What does great look like? Many people look at Vancity’s board and say to us, “you’re doing a great job compared to the landscape and in general as a board.” But that is not our scorecard – we still need to create it.

I have spoken extensively about board diversity, but now the conversation is shifting to be about board inclusion. You can find a diverse cast of characters to make up your board but how do you create a board culture in which everyone is able to contribute? That’s a conversation of great interest to me at the moment.

Bill Robson (C.D. Howe Institute): The conversation about board diversity and recruitment at our board isn’t focused on younger recruits as much as on a diversity of perspectives and backgrounds – and an open mindset. Our board members cannot think in absolute terms. If you are someone who meets people that think the same way as you on a policy issue, and conclude they’re good people, and meets people who think differently than you, and concludes they’re bad people – that limited mindset isn’t useful in a research environment. 

A director that’s valuable to the C.D. Howe Institute must be comfortable with not agreeing with everything we publish because our mission is to reveal fact-based findings. We publish papers over time that can contradict each other, so you can’t possibly agree with both. You’ve got to be motivated to uncover new facts, and an evolving point of view of Canada’s needs which may not be the perspective you started with.

Sometimes the best-fit directors for us are those who’ve lived long enough to understand they were wrong about a few things. Our directors understand that data-driven research is essential to informing policy and a strong Canada. 

Board recruitment and succession

A recent report by Spencer Stuart on 2017 board recruitment found that the average retirement age of S&P 500 corporate boards was 63, with 71% of organizations having a mandatory retirement age. While the organizations we interviewed have considerably younger membership overall, we asked about their evolving recruitment practices and their outlook on board and executive terms to better understand shifting succession planning.

Q: We’re hearing from many boards that recruitment demands are increasing and terms are shortening. How is that affecting you?

Alena Thouin (FSRA): As a new public sector board with appointed members, we are leveraging Aprio as a key tool to quickly get new board members up to speed, and are building out resources for to be ready for board turnover. Aprio is especially effective for sharing resources like codes of conduct and board policies all in one centralized place. Our goal is to create a library of resources so new board members can learn from past board experience. 

Amy Nelson (Point West): Lots of boards are wrestling with the concept of term limits. Our board is not as concerned about that because they expect there’s going to be turnover, and embraced the fresh perspective which comes with change. 

Embracing change turns the focus to succession planning. What knowledge, skills, and abilities does the board want to retain and be continuous, when change occurs? We started using a new tool called Succession App to help us with succession planning. Volunteers fill in a form annually about their tenure, leadership and committee intentions, and the projects they want to work on – it ensures we have regular conversations about tenure and board resources.

Many of our newer volunteers tend to join with a mindset they will be of service and have an impact to the organization for one three-year term. A few will seek to serve two or three successive three-year terms to fulfill a mission to provide specific connections or resources and support the progress of the organization they feel good about before moving onto the next thing. And other times volunteers’ personal situations change and a family duty, or promotion, or another big milestone will cause them to need to shift their community commitments.

Shona McGlashan (Vancity): The board’s recruitment role is continuous. We need to support our board members to quickly get them up to speed and understand our business. A unique responsibility for our board, given that we are a member-owned cooperative with elected board members, is ensuring Vancity members have the information they need to make an informed vote. 

Not all directors will have the attributes and experience necessary to be fully effective at the beginning of their terms, so it’s important that Vancity provides them with the tools and education they may need to do their best work – including understanding credit union operations, regulatory guidelines, director code of conduct, and providing a snapshot of our organizations current strategic priorities and market realities.

All Vancity directors are required by law to complete Level A of the Credit Union Directors’ Achievement (CUDA) Program. Directors are also provided with an annual allowance towards attendance at conferences or professional development courses related to their duties as a Vancity director. We continuously look for educational opportunities related to emerging business issues we face at a board and committee level.

Beyond recruitment of directors, some say recruitment of the next CEO is the single most important thing a board does. There is an increasing awareness of how time consuming and energy consuming CEO recruitment and succession planning can be. Putting processes in place to be ready for that work provides strategic advantage to any organization. The day to start thinking about CEO succession planning is the day the new CEO walks in the door of her office.

Data security

Given the increasing corporate focus on data security and the wide-reaching impacts of data breaches, reports suggest that boards are being expected to bring expertise and prioritize data security issues. Our respondents share their perspectives on the shifting importance of data security. 

Q: How are you managing the intensifying focus around board data security?

Bill Robson (C.D. Howe Institute): Our situation is less intense than many organizations because we don’t have the same level of risk of cyberattack. Like many organizations, our challenge is in ensuring we’re doing all the things we know we should do – not just ensuring security protocols are in place but ensuring behaviour throughout the organization is wise and safe. Every board should ask questions of their organization to say “What are you actually doing for data privacy and security? How often are the cycles of review? Help me understand what you’re actually doing.” The devil is in the details when it comes to privacy, security of information, and data security.

Amy Nelson (Point West): Data security is certainly top-of-mind. We have an information security committee that is management-based but that reports to the board on our activities. We recently conducted a knowledge, skills, and ability checklist exercise for our board and supervisory committees, and it was determined that in addition to audit knowledge and experience, there was a need to find someone who has information security knowledge as well. 

Zeroing in on data security for our board information – that was a key motivator in choosing Aprio. A purpose-built board portal secures not just the information distributed for meetings but the note taking and discussions of the board. Without a portal, there is always the risk of an errant email or someone downloading data to a device that is compromised. Boards cannot take that risk.

Role of board technology

With the priorities and composition of boards changing, we asked the panel about the role of technology on supporting efficient board operations, like board management software. Respondents agreed that board portal technology is really table stakes in this day and age, with board members, especially younger directors, expecting that they will be well supported with modern technology for real-time communication including while mobile and traveling.

Q: Do you see technology playing an evolving role in how your board operates? Is that changing? 

Shona McGlashan (Vancity): I wouldn’t want to go back to the bad old days of photocopying board books! Having all board materials indefinitely available online is critical for modern governance and transparency as well as to make communication convenient. For me, the electronic distribution of documents is now a hygiene factor. I can’t imagine running a board with paper communication anymore.

On the virtual meeting front, we are still struggling, and I know a lot of others are struggling with making conferencing in remotely as effective and productive as face-to-face meetings. There is still room for technology to improve to enable us to meet just as effectively when we’re joining from different locations as when we’re all in the same room.

Amy Nelson (Point West): Technology is playing a larger and larger role in our director education and development.  We use board technology not just to securely access board meeting information, but to support onboarding and engaging new members. When new members join our board, we rapidly orient them to our meeting calendar and library in Aprio, then the board uses the comments section for timely on-the-spot training. We are not having to slow down our meeting discussions to catch people up, new members are actively learning from peers while in the board portal prepping for a board meeting. 

To support reporting with regulatory examiners, the portal is an efficient means of monitoring the level of engagement of our directors outside of what is documented in board meetings. Our examiners are not just looking at meeting minutes, they are looking to committee minutes, to qualitative data to verify that committee members know their stuff.  Aprio enables us to capture a record of training, and of board critical competencies.

Technology for virtual meetings is another focus for our board. For most of our meetings, at least some members will call in. We have the good fortune of having a board chair who understands how to pause and ask questions and engage people on the phone. She knows how to focus and be productive with callers and live attendees, and I look forward to technology evolving to better engage people not in the room.

Alena Thouin (FSRA): We are really a new board, so technology has been essential in helping to get everyone on-boarded and up-to-speed quickly. Our board uses the Aprio portal tool to facilitate communications across multiple geographies and to ensure members have anywhere, anytime access to board materials. Easy-to-use technology encourages members to work from different locations, participate in more committees, share, and collaborate.

Q: Focusing in on board portal technology, what do you see needing next to support efficient meetings and communication for your board? 

Amy Nelson (Point West): Our board members are increasingly using their smartphones to perform both personal and professional tasks, wherever they are. There is an expectation that board portal tools will catch up to the trend to facilitate quick board tasks on smartphones like voting, surveys, and meeting and update management. I look forward to seeing more and more capabilities added to Aprio mobile apps. 

Shona McGlashan (Vancity): Board directors value board functionality that facilitates collaboration – the objective of many engaged boards. It’s not that long ago that texting and chat tools weren’t even around. I expect that board portal software will have to keep pace with the evolving ways humans want to interact and share ideas.

Bill Robson (C.D. Howe Institute): Data security is here to stay as an ever-present-priority for boards. I expect board portal tools will remain under pressure to keep pace with evolving security features to reflect the privacy rigor that sensitive corporate data merits. Given the evolving nature of the threats, board portal security has to continue to evolve as well. The C.D. Howe Institute has a number of policy councils that engage with the research team, policymakers, and academics – many of the features that make Aprio valuable would be useful for them as well.

Alena Thouin (FSRA): Talk with any board and you’re likely to hear that shorter board tenures are here to stay. With board member turnover at an all-time high, board portals that facilitate new member onboarding will lead the market. The capabilities are already there in the technology organized around meeting briefings – it’s thinking about how to serve up education of newcomers to the board and support continuous board education.

In summary – 5 modern challenges to board performance

Across the panel interviews with board executives at Vancity Credit Union, C.D. Howe Institute, Point West Credit Union, and the Financial Services Regulatory Authority of Ontario (FSRA), these five modern priorities for board performance emerged:

1. Board directors must contribute ever greater strategic insight – Almost unanimously, our expert panel described an environment of increasing expectations on board directors for informed, strategic insight. In order to succeed in an increasingly competitive space, organizations are more frequently engaging directors for input on strategic decisions. Our panelists advocate taking advantage of board members diverse skills (finance, risk management, technology/innovation, business development, and so on) and continuously educating directors on the organizations and industries in which they are participating so that they may contribute constructively.
2. Recruitment has never been more continuous – director and CEO terms are getting shorter – While experienced experts remain valuable on boards, board leaders are focusing more recruitment efforts on next generation directors and executives that are younger. With the next generation, boards are observing that younger directors and CEOs join with the expectation of making a meaningful contribution in a shorter tenure than seen historically.
3. Onboarding and engagement of new directors must be rapid and effective – In an age of continuous recruitment, and new recruits heightened expectations to contribute immediately to board conversations and decisions, boards must have processes and technology in place to effectively onboard and engage new directors and leaders. Board teams must orient newcomers with the critical organization knowledge for new members to lend constructive perspective, and ensure compliant behaviour related to governance requirements and data security.
4. Board portal technology has become essential for board efficiency and data security – When asked about the role of technology in efficient board operations, the panel regarded using a board portal as table stakes. Board portal software is seen as an essential utility for onboarding new directors, timely distribution of board meeting materials, supporting pre-meeting document markup and online discussions, performing votes, plus efficiently managing meeting calendars. The question now is how best to use technology to support continuous board education and ever evolving demands for new methods of collaboration including via smartphone.
5. Embracing diversity is requiring boards to define their unique ideal board composition – Organizations see value in having a board that is diverse and representative of their membership, their customers, and the communities they serve – the next step beyond diversity is inclusion. Just as those audiences differ, boards are still working to define the unique diversity of members to comprise a high performing board for their specific organization. While many of the profiled boards have achieved gender balance, these organizations continue to actively prioritize diverse board recruitment including members of different ages, ethnic, and demographic backgrounds. The board of directors is seen as an opportune group to draw both a representation of market demand and critical board competencies.

Thanks to our panel

Every conversation with people who use the Aprio board portal for board management is a chance to learn about emerging board priorities that we aim to serve. We sincerely appreciate the time and deep insight shared by this expert panel. These conversations were an opportunity for our team to learn from four admired board executives and we express our sincere thanks to Amy Nelson, Bill Robson, Alena Thouin, and Shona McGlashan for contributing their candid perspectives. 

Learn more about the role of technology

Aprio helps organizations large and small to efficiently run board meetings, keep directors up to date, and keep information secure. We provide feature-rich technology and exceptional customer service that has earned us the reputation of providing the best value on the market. See how technology can help your board operate most effectively to be ready for modern challenges – take an Aprio tour.

References:

Delivering through Diversity, McKinsey & Company, January 2018

Spencer Stuart Board Index, Spencer Stuart, 2018

Board Practices Report – common threads across boardrooms, Deloitte, 2019

EY Center for Board Matters – Top priorities for boards, EY, 2019