EFFECTIVE CHAIRING SKILLS – or –

Large Credit Union ConferenceSeptember 18, 2008

Dealing with the Rhinocerous in the Room

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The Context Never before been as much attention and focus

on “good governance”

Increasing pressure on Boards to perform at a higher standard

Recent high-profile governance failures not result of Board’s lack of business acumen - rather their inability to “act like a board is supposed to act”

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The Context… Most corporate failures can be attributed

to failures in governance

Most failures in governance can be attributed to the inability to step up to the “difficult people issues”

Effective Chair skills reduce potential risk

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Leading through the difficult people issues will be the most challenging responsibility you face as Chair

Requires strong leadership, integrity, strength of character, emotional intelligence, wisdom

Lean on your governance policy/process to ensure that expectations are clearly communicated, there is commitment by individual Directors, and that the issues are “de-personalized” as much as possible

Meet the Rhinoceros – the “Difficult” People Issues: Governance Risk

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The Risks… Inability to fulfill accountability to

Members

Legal/regulatory risk

Potential personal Director liability

Potential negative impact on achieving desired business objectives

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Facing the RhinocerousHead On

If a rhinoceros were to enter this room now, there is no denying he would have great power here. But I should be the first to rise and assure him that he had no authority whatever.

Anonymous

Leading Through the Difficult People Issues

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For Example… The “silent” Director

The “non-silent” Director

Board polarization around “new” way of thinking versus “old” way of thinking

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For Example… Director that can’t take his/her

“customer” hat off

The non-contributing - unprepared/absent Director

Directors who take the meeting to places unknown…

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For Example…

Board meetings that take place at the water cooler – or on the drive home

Under performance (Board, individual Directors, CEO)

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The Risks: Ineffective or dysfunctional Board

Lack of strong leadership

Lack of clear strategic direction

Lack of clear direction to management

Poor Board/Management relationship

What Does it Take?

Strength Training

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The Solutions… Bad news – there are no “miracle” solutions

to people issues

Good news – you can, as Chair, make a difference

Put in place governance polices/process that will help avoid them arising in the 1st place

“De-Personalize” it

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Strength of Character

Leadership is a combination of strategy & character. If you must be without one, be without the strategy.

Gen. H. Norman Schwarzkopf

Role of a Chair

Inside the Boardroom:What Does it Take?

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Responsibilities Assuming principle responsibility for operation &

effective functioning of Board

Providing overall leadership without limiting principle of collective responsibility

Ensuring Board is able to function independently of management Generally (Board controlled Board meetings – not

management controlled) In camera meetings Engaging external advisors

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Responsibilities

Oversight/control over Board agendas (reviewing the “right” things, in the “right” way, with the “right” information)

Chairing meetings effectively (lots more in handout)

Ensuring Board compliance with governance policies & process

Maintaining effective relationship with CEO & Corporate Secretary

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Skills & Qualifications All those required by individual Directors & knowledge of

internal & external governance best practice

Following additional attributes: Strength of character & professional approach Emotional intelligence Credibility, stature, and ability to command respect

(Meeting participants need to know that you are “in charge” without being unnecessarily heavy handed)

Willing to accept accountability for meeting outcomes Ability to “step up” to table when required and deal

with difficult people issues

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Additional Attributes Ability to speak, listen and think at the same time

Ability to understand the issues and the larger context within which individual issues are being discussed (strategic objectives, etc. – don’t lose sight of the forest)

Ability to summarize discussion and identify key issues (what’s important, what’s not)

A respect for the integrity of the process (If you don’t respect the process, neither will the Board)

Directors generally will “step up” to the tone set by the Chair

Sense of humour

Helpful Hints

Tricks & Tools

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Challenges – Beyond Parliamentary Procedure

Effective meetings usually have little to do with adhering to rules of parliamentary procedure

Has more to do with skills & attributes of Chair (and board) in dealing appropriately with behaviour, staying focused

Maintain a speaker’s list

Your credit union will likely have already defined your expectations – Chair’s responsibility to ensure behaviour is consistent with expectations

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Skill or Art? Chairs must be able to carry on two different

conversations at once (external and internal)

Both participating directly in the meeting as well as “watching” the conduct of the meeting itself

Set the right “tone” from the beginning – a respect for the process – for example, be rigorous around walk-on agenda items, cell phones, blackberries, etc.

Let participants and management know that your expectations are that due process will be followed

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The Conversation in Your Head

Must be focused on the discussion and debate – but at same time must be asking themselves questions like:

Has this gone on too long? Why haven’t we heard from Director “x”? Have we heard too much from Director “y”? Have we gone off topic? Are we straying into micro-management? Are we focusing on the pertinent issues? Am I hearing any consensus – and if so what is it? Or in what areas do

we disagree? Can I try to formulate summary now? Are we really clear about what we’ve decided? Is management really clear about the direction we’re giving? Read the faces & thought bubbles around the table

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Consensus

Question: Is it the Chair’s responsibility to achieve consensus among the Board?

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The Lone Ranger & Tonto And remember what the Lone Ranger said to

Tonto

Chair’s RoleInside & Outside the Credit Union

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Before Meeting Ensure agenda is focused on “right” things, in “right”

way, with “right” amount of time allocated, and “right” information with which to make a well-informed decision

Ensure material out to participants in sufficient time

Familiarize yourself with issues & topics to be discussed (are there any items that may require an in camera session?)

Determine what the key issues or questions for the participants will be – in advance (this will help you ensure and/or guide the discussion in a manner that achieves expected outcomes)

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Before Meeting What requires approval or is for information only,

etc. (Familiarize yourself with “why” something requires approval – legal or regulatory requirement, Board policy, etc.)

Understand the background/history of the agenda item

Ensure that management will be speaking to key issues/executive summary – not repeating or reviewing all material sent out in advance

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Before Meeting Review minutes from last meeting – matters

arising?

Confirm expected attendance and ensure quorum will be present

Note - Clarify with Committee Members attendance expectations, that absences should be communicated to Chair as soon in advance as possible – share thoughts on agenda/material with Chair so that Chair can share those thoughts with Committee, etc.)

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Beginning of Meeting General welcome & introductions if necessary

Set tone/atmosphere for meeting at outset

Start on time Set ground rules (remind participants to turn off cell

phones, blackberries, etc.) – get participants attention from the outset

Review agenda and clarify/confirm with participants

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Beginning the Meeting Focus on Directors around the table –

management are there as resource only – this is your meeting

Clarify participant preference – would they prefer to ask questions and discuss points raised during presentation – or restrict to clarifying questions only during presentation?

Assume participants have read the advance material (if they haven’t – this will encourage them to do so in future)

DURING THE MEETINGNow…for the Good Stuff

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In Theory Things should go according to plan

Monitor management presentations & intercede when necessary

Are they on point? Taking too long? Addressed the key issues? Is management talking more than Directors? Is “ask” clear?

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In Theory Initiate and monitor discussion and debate

Are Directors contributing equally? Is one/several Directors doing all the talking while the rest

remain silent? Read the “thought bubbles” Encourage putting the real issues on the table Has a point been raised more than once by the same

Director? Once you’re comfortable that full discussion & debate has

occurred – bring discussion to closure Close by summarizing & clarifying issue resolution

(decision or direction to management – what remains to be resolved or deferred?)

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In Theory Note the Directors indicating they wish to speak

If necessary, keep list of order of speakers

In reality – easier said than done

Question – To what extent should the Chair actively participate in discussion and debate?

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End/Subsequent to the Meeting Conduct a meeting “de-brief” at end of each

meeting. Don’t just ask for general comments – ask for specifics:

What did you like about the meeting? What didn’t you like?

Review draft minutes for accuracy and completeness

Assess personal performance (ask yourself how you did – and where you could have done better)

Role of a ChairOutside the Boardroom

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Responsibilities Fulfilling responsibilities of office as articulated in

by-laws

Taking a leading role in ensuring effective communication between Meridian, Members, stakeholders, industry, regulators, and community

Representing the Board and its policies externally, including communicating Board decisions/positions to regulators and other government officials

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Outside the Boardroom Taking a leadership role in ensuring effective Board and

individual Director training & education planning & execution

Proactively lead the Board in its governance performance assessment processes – including mentor/performance related discussions with individual Directors

Fostering & facilitating an effective relationship between Board and Management (including acting as a liaison between the Board & CEO regarding compensation and/or performance assessment)

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Outside the Boardroom Ensure, with Board, quality of external reporting

(Annual reports, etc.)

Ensuring acquisition of requisite skills & qualifications & keeping up to date on governance best practice

Mentor to Vice-Chair (or successor)

Chair annual general and special meetings of Members

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SUMMARY Chair performance should be assessed regularly

Goal – participants leave meeting feeling their time was well spent

Goal – decisions/direction is clear – both to Board and to management

It’s really all about maintaining a “presence” and commanding respect – without being autocratic or overly controlling

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Summary Remember that director liability arises more

from a lack of due process and due diligence then it does from poor business judgment – so the process must be respected without jeopardizing meeting effectiveness

The greatest governance risk exists in the things “unsaid” which become the risks “unknown”

Know the “Chair’s Vocabulary”

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Phrase To Silly Sally – Thanks Sally, we

appreciate your perspective and think we have understood the point, which is…

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Translation

Sally – you’ve repeated yourself 12 times, and I think we’ve all got it – can we move on and possibly hear from someone else?

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Vocabulary In the interests of time…

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Translation Ok…enough of that…

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Vocabulary Perhaps we could hear the rest of

the Board/Committee members perspectives

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Translation We’ve heard enough from those who

keep repeating themselves – it’s time for the rest of the Board/Members to speak up

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Vocabulary I think your perspective as a

Member and a customer is very helpful for the Board to understand the potential implications of its decision

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Translation Take off your customer hat and think

bigger – like on behalf of the entire Membership – be a director – not a customer

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Vocabulary Albert, I know you have thoughts on

this issue which could be helpful to us – would you mind sharing them?

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Translation It’s time to contribute – it’s not

enough to attend a meeting, enjoy the meal, and go home (followed by a claim for reimbursement)

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Vocabulary Have we heard all perspectives? Are

we at a point that we can summarize our direction?

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Translation It’s time to wind it up…

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Vocabulary Silence…(until a side bar

conversation is completed – or the silence is noticed and side-bar ceases)

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Translation I’d like to maintain one meeting

going on at a time…we’re happy to wait until you’ve finished yours so we can have the attention of all Directors

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Vocabulary

Are we focused on the key governance issues that are of concern to us as a Board/Committee? – or are we getting too far into the details?

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Translation Let’s get out of micro-management

mode and focus on what’s important

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Vocabulary To Management: Perhaps you could

summarize for us what the key points are that you would like us to address

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Translation You’re taking too long, we’ve got it…

let’s get on to discussing the issues before we run out of time